Allied Gold closes $175 million offering
Allied Gold Corp. [AAUC-TSX, AAUC-NYSE] said it has raised $175 million from an overnight public offering of common shares.
Allied is a Canadian gold producer. It operates a portfolio of three producing assets and development projects located in Cote d’Ivoire, Mali and Ethiopia. Allied has said it aspires to become a mid-tier next-generation gold producer in Africa and ultimately, a leading senior global gold producer.
Its portfolio includes the Sadiola mine in Mali where Allied is focusing on exploration and development of high-grade oxide deposits to maximize low-cost oxide feed and boost near term production and cash flows. Sadiola is expected to produce up to 205,000 ounces of gold this year at an all-in-sustaining cost of US$1,735 an ounce. The company was previously in the news when it announced details of a $175 million streaming agreement with Wheaton Precious Metals Corp. (WPM-TSX, WPM-NYSE), a move that secures financing for Allied’s Kurmuk gold project in Ethiopia.
Under the agreement, Allied was set receive a $175 million upfront cash payment to support funding of its growth strategy, which is underpinned by the low-cost, fully permitted Kurmuk project.
The marketed offering that closed Friday consisted of 6.4 million common shares priced at $27.35. Allied Gold shares advanced on the news, rising 0.93% or 23 cents to $24.97. The shares trade in a 52-week range of $28.76 and $8.94.
The company said it will use the proceeds to fund optimization and growth initiatives, particularly to accelerate development of infrastructure for the next phase of expansion at Sadiola, which includes improvements in processing capacity and acceleration of the implementation of the recently announced energy program.
Proceeds will also be used to modify the plant under development at Kurmuk to increase average processing capacity for higher levels of production and begin the transition to owner mining at more operations.
The company is forecasting annual production of 375,000 ounces of gold this year after reporting third quarter production of 87,000 ounces. That included 42,174 ounces from Sadiola and 44,846 ounces from the company’s Cote d’Ivoire Complex. At Kurmuk, the objective is to build at least three months worth of high-grade stockpiles to support the start of operations in mid-2016. Meanwhile, the key focus for the rest of the year at Kurmuk is on logistics for transporting equipment and materials to the site, finishing technical concrete works around the grinding area, and advancing the mechanical erection of the processing plant site. The project aims to achieve average annual gold production of approximately 290,000 ounces of gold in the first five years and 240,000 ounces over a 10-year mine life.