Allied Gold (NYSE:AAUC) reported second-quarter production of more than 97,000 ounces and first-half production of more than 193,000 ounces, while Chairman and CEO Peter Marrone said the company expects stronger operating performance in the second half as grades improve at existing mines and its Kurmuk project in Ethiopia enters production.
The company reported adjusted net earnings of $0.44, operating cash flow of $133 million, adjusted EBITDA of nearly $167 million and all-in sustaining costs below $2,200 per ounce sold for the second quarter. Allied Gold ended the quarter with $192 million in cash. Marrone said the company expects to have a pro forma cash balance of just under $500 million after closing Zijin Gold’s strategic investment.
Kurmuk commissioning targets September production
The Kurmuk mine in Ethiopia is in commissioning, with production expected to begin in September, according to Marrone. The operation is expected to produce at least 250,000 ounces annually, while the company cited a 240,000- to 270,000-ounce production range and an average closer to 300,000 ounces annually from 2027 through 2030.
Chief Development Officer Gerardo Fernandez said the project was progressing through commissioning activities, including work on crushing and plant systems. He said ancillary infrastructure, including the tailings storage facility and water dam, was finished or substantially finished, while the main haul road was nearly complete and usable.
Fernandez said mining reconciliation has been performing well against the updated block model, with the company reaching higher-grade zones at the Dish Mountain and Ashashire deposits. He said Allied Gold was building a stockpile of higher-grade ore and expected to follow the mine’s planned grade profile closely. In response to an analyst question, he characterized high-grade material as ore above 1.5 grams per tonne, with another category between 1 and 1.5 grams per tonne.
Marrone said the mine’s ramp-up is expected to take four to six months and that higher-grade material nearer the surface could support production of about 30,000 ounces per month during the early period. He said the timing of September startup would affect the mine’s output for 2026, and therefore the company has not provided a specific annual production estimate for Kurmuk.
The company expects Kurmuk’s all-in sustaining costs to be below $1,200 per ounce and potentially below $1,000 per ounce, citing low expected power costs. Marrone said the grid power line is expected to be available for September production and that the company has backup generators and sufficient supplies to support production this quarter.
Existing operations expected to improve in second half
At the Sadiola mine in Mali, Allied Gold expects second-half production to increase through higher feed grades and greater throughput. Marrone said costs should trend lower as production rises and expenditures decline. The company is also pursuing process-control upgrades, installation of a pre-leach thickener and a power strategy that includes refreshed diesel generators and solar generation.
Marrone described Sadiola as a long-life asset transitioning from oxide ore to fresh ore processing. The first phase of the expansion allows the plant to process more than 60% and as much as 70% fresh ore, he said. Allied Gold is targeting near-term production of 200,000 to 230,000 ounces annually before moving toward 250,000 to 275,000 ounces and, ultimately, more than 300,000 ounces annually.
The company expects engineering work for Sadiola’s next expansion phase to continue through 2026. Marrone said construction of a permanent second-stage crushing circuit and larger ball mill is expected to run through 2027 and 2028, with production from that expansion planned for 2029. He said the company estimates Sadiola’s longer-term all-in sustaining costs could decline to about $1,200 per ounce.
In Côte d’Ivoire, Allied Gold treats the Bonikro and Agbaou mines as a single complex because the sites are roughly 17 to 18 kilometers apart and offer operating synergies. Bonikro exceeded the company’s first-half plan due to higher grades and throughput, according to Marrone. He said production is expected to exceed annual guidance, with fourth-quarter output above third-quarter output.
Agbaou is expected to maintain steady production in the second half, with lower costs than those recorded during the first half and last year. Marrone said the company has increased Agbaou’s proven and probable reserves by 60% and now targets production of 200,000 ounces annually from the Côte d’Ivoire complex for at least 10 years.
Capital priorities include Sadiola spending and potential investor returns
Responding to questions about Mali, Marrone said Allied Gold faces no restrictions on repatriating capital from the country. He said capital allocation decisions within Mali have been based on business considerations, including the company’s plans to reinvest in Sadiola.
Chief Financial Officer Jason LeBlanc said approximately 75% of the company’s annual cash taxes were paid in the second quarter, reflecting the tax-payment profile in its operating jurisdictions. He estimated cash tax payments could be about $15 million to $20 million per quarter for the rest of the year.
Looking ahead, Marrone said the company intends to build cash balances while funding work at Sadiola and evaluating other opportunities. He said the Zijin investment could accelerate Allied Gold’s ability to consider cash returns to shareholders, including through a dividend policy, although he said the board would want to see sustained cash flow and cash balances before implementing such returns.
Allied Gold expects to provide a further exploration update in the fourth quarter, discuss additional Sadiola expansion details by the first quarter of next year, and host a Kurmuk site visit during the first quarter of 2027.
About Allied Gold (NYSE:AAUC)
Allied Gold (NYSE: AAUC) is a publicly listed company that operates in the gold mining sector. The firm’s business centers on identifying, acquiring and advancing gold-bearing properties with the objective of creating and operating economically viable mining assets. Allied Gold’s activities are typical of junior and mid-tier gold companies, encompassing exploration, resource definition, development planning and the eventual production and sale of gold.
Core business activities for Allied Gold include mineral exploration programs to discover and delineate gold resources, feasibility and engineering studies to assess project economics, permitting and mine development work where projects progress to the construction phase, and operational oversight for producing assets.
