ALLIED GOLD ANNOUNCES FOURTH QUARTER AND YEAR END 2023 RESULTS: ESTABLISHING A SUSTAINABLE PRODUCTION PLATFORM WHICH LAYS THE FOUNDATION FOR SIGNIFICANT GROWTH AT IMPROVING COSTS

2024-03-26

TSX - Toronto Stock Exchange · Gold · Canada

Canada NewsWire

TORONTO , March 26, 2024 /CNW/ - Allied Gold Corporation (TSX: AAUC) ("Allied" or the "Company") is herein reporting its financial and operational results for the fourth quarter and full year 2023. Production during the quarter totaled 94,755 gold ounces ("oz") with sales of 93,073 oz at total cost of sales, cash costs (1) and all-in sustaining costs ("AISC") (1) per oz sold of $1,634 , $1,398 , and $1,593 , respectively. A progressive increase in the number of ounces produced was observed throughout the year. Production in the first quarter was approximately 78,600 oz, and concerted efforts were made to stabilize and normalize production in the second and third quarters, achieving a range of 84,000-86,000 oz. As anticipated, the Company delivered its strongest production period in the fourth quarter, resulting in full year 2023 production of 343,817 oz with sales of 343,085 oz at total cost of sales, cash costs (1) , and AISC (1) on a per oz sold basis of $1,600 , $1,418 and $1,569 , respectively.

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FOURTH QUARTER AND FULL YEAR HIGHLIGHTS

Financial Results – Strong Liquidity to Support Growth Initiatives

Fourth quarter net earnings (2) of $5.4 million or $0.02 per share basic and diluted. Adjusted fourth quarter net loss (1)(2) of $4.6 million or $0.02 per share basic and diluted, largely reflecting tax adjustments as well as non-recurring items related to public listing costs, unrealized gains and losses on financial instruments and share-based compensation. Net cash generated from operating activities for the quarter was impacted, as anticipated and previously disclosed, by cash-based transaction costs related to the public listing which were accrued in the third quarter, but paid during the fourth quarter. Reflecting this, net cash used in operating activities was $4.8 million for the three months ended December 31, 2023 . Excluding the transaction related items, and their working capital movement impact, net cash used in operating activities would go from the reported $4.8 million outflow to operating cash inflows of $9.6 million on a normalized basis. Cash flows from operating activities are expected to materially increase in 2024, with increased production contributions and lower costs driving sequential improvements. Cash and cash equivalents totaled $158.6 million as at December 31, 2023 . The Company is actively pursuing non-dilutive sources of additional capital to further strengthen its balance sheet and capture the inherent value of its assets. Allied also has access to financing through a three-year $100 million Revolving Credit Facility, which it does not anticipate utilizing in the near term. Together with internally generated cash flows, these strategies provide the Company the financial flexibility to execute on its business plan, aiming for significant near-term production growth at improved costs.

Operational Results – Sustainable Production Base Set for Improvement

Strong quarterly production of 94,755 oz, representing a meaningful increase over third quarter production of approximately 12%. Fourth quarter production demonstrates the ability of Allied's mines to exceed a minimum expected annual production of at least 375,000 oz, before further optimizations and costs improvements. Total cost of sales, cash costs (1) and AISC (1) per gold ounce sold of $1,634 , $1,398 , and $1,593 , respectively. Sequential improvements are expected in 2024, continuing through the 2026 outlook period. In 2024, Allied anticipates producing 375,000 to 405,000 oz of gold at a mine-site AISC (1) of $1,400 /oz. Achieving the higher end of this guided production range primarily hinges on the successful completion of mine contractor transition at Agbaou, where efforts to enhance efficiencies and maximize long-term value are underway, notwithstanding the short-term impacts on production. While not currently reflected in Allied's official one-year guidance, the operating trends clearly support the Company's vision of achieving significant growth at substantially lower costs. This vision is quantified in the outlook for 2025 and 2026, with the Company targeting production of 400,000-450,000 oz at a mine-site AISC (1) below $1,375 for 2025, and positioned to surpass 600,000 oz at a mine-site AISC (1) below $1,225 for 2026. These projected improvements will be supported by additional oxide ore from Diba and exploration targets such as Sekekoto West, FE4, and S12, alongside the Phase 1 expansion at Sadiola. Furthermore, modest yearly increases in production at Bonikro, enhanced by cost improvements as PB5 advances, stable production at Agbaou, and the commencement of production at Kurmuk in 2026, will further enhance the Company's sustainable production platform.

Sustainability

The Company did not report any significant Environmental Incidents for the three months or year ended December 31, 2023 . For the year ended December 31, 2023 , the Company reported 7 Lost Time Injuries ("LTI"), resulting in a Lost Time Injury Rate ("LTIR") of 0.49 (4) . For the year ended December 31, 2023 , the Company reported a Total Recordable Injuries Rate of 1.32 (4) . During the last quarter, the company started to strengthen the Sustainability management system including drafting new sustainability policies, framework and key corporate standards.

Advancement of Key Growth Initiatives

On September 7, 2023 , construction activities at the expanded Kurmuk Project commenced through a two-phase development plan, bolstered by the previously announced strategic consolidation of the minority interest, bringing the Company's ownership to 100% (3) . During its review of the Kurmuk development plan, the Company decided to pursue an expanded project involving an upgrade of the processing plant's capacity from 4.4Mt/a to the confirmed design of 6.0Mt/a. This expansion, as indicated in the 2023 Front End Engineering and Design (FEED), leverages major equipment already owned by the Company, reducing implementation risks and capital intensity. The advancement of the Kurmuk project into the execution phase represents a significant milestone. This phase involves the establishment of Allied's project management framework, the appointment of an EPCM contractor, the initiation of detailed engineering and early works, and the procurement of critical project services and infrastructure along with strengthening relationships and engaging with local stakeholders. The expanded project is now expected to achieve an average annual gold production of over 290,000 oz over the first five years and sustain over 240,000 oz per year with AISC (1) targeted below $950 per gold ounce, with a 10-year mine life based solely on Mineral Reserves. The Company is advancing highly prospective targets near the planned mill given the preliminary results and geological settings, and pursuing a strategic mine life extending for at least 15 years. The project execution requires development capital of approximately $500 million , funded by available cash on hand and cash flows from producing mines, with the first gold pour expected in the second quarter of 2026. Engineering and early works activities at Diba have progressed, with a maiden Mineral Reserve estimate declared as of December 31, 2023 , consisting of 6.1 million tonnes of Proven and Probable Mineral Reserves at a grade of 1.43 g/t, containing 280,000 oz. The Company has also been actively engaged with local communities and upgrading roads and infrastructure. Advanced grade control drilling has commenced during the first quarter of 2024, setting the stage for mining and processing of Diba in mid-2024. The total development costs for the Diba Project, including expenses for an access road to transport ore to the Sadiola plant, are anticipated to be $12 million . The additional production from Diba, anticipated to commence in mid-2024, is expected to play a crucial role in optimizing operational efficiency and financial performance at Sadiola, particularly as it increases revenue, lowers AISC (1) and enhances cash flows in 2024 and 2025, significantly supporting the Company's growth plans during this period. Over the last several years, the Company has been advancing a strategy of optimization and expansion at Sadiola. Initial efforts related to the stabilization of the operation, primarily in relation to the existing processing capacity of mostly oxide ores, although followed by a phased expansion to process fresh ores, with the objective of increasing production and cash flows in the short and longer terms. Present efforts have focused on increasing the inventory of oxide and fresh ores, the latter significantly, optimizing mining and processing, conducting several technical studies on processing fresh ores through existing facilities to be followed by the development of a new plant for processing fresh ore exclusively and implementation of augments to existing facilities to benefit the existing plant and planned new plant for processing fresh ore. Meaningful improvements in production are targeted in the short term as a result of the contribution from Diba high-grade oxide ore, with the objective to support production levels between 200,000 and 230,000 ounces per year in the next two years, reduce AISC (1) , increase revenue, and provide robust cash flows in 2024 and 2025, to support development projects across the Company. This approach will enable the mine to continue producing at elevated levels while incurring lower near-term capital costs. Following this period, with the commissioning of the Phase 1 Expansion, the mine is expected to support an average production level between 200,000 and 230,000 ounces per year through 2028, by processing more fresh ore with higher grades and lower recoveries. This strategy not only optimizes the use of existing Mineral Resources but also aligns with our commitment to extend the life of the mine and enhance its profitability. Pre-construction activities for the Phase 1 Expansion are progressing well, with detailed engineering, procurement, and execution planning activities continuing through into the new year. The updated engineering study for this phase has reconfirmed total capital expenditure of approximately $61.6 million and the design to treat up to 60% of fresh rock at a rate of up to 5.7 Mt/y in the existing process plant. Upgrades in infrastructure to prepare the site for the next phase of investment will also be advanced in this period. The Phase 2 Expansion, planned as a new processing plant to be built beginning in late 2026 and dedicated to processing fresh rock and oxides at a rate of up to 10Mt per year, starting in 2029, is expected to increase production to an average of 400,000 ounces per year for the first 4 years and 300,000 ounces per year on average for the mine's 19-year life, with AISC (1) expected to decrease to below $1,000 per gold ounce. Capital expenditures for this phase are estimated to be approximately $400 million inclusive of infrastructure upgrades. While the investment in the Sadiola Project is delineated in phases for planning purposes, it is critical to recognize that these phases are part of an integrated development effort, aimed to significantly increase Sadiola's production, enhance its profitability and longevity, and reaffirm the commitment to the Company's stakeholders as demonstrated by the over $127 million invested in Sadiola to date, which has allowed for a material increase in production and Mineral Reserves and advance the project to the execution phase, the planned expenditure of $100 million between 2024 and 2025, and over $350 million expected to be spent from 2026 to 2029 by which time both the modified existing plant and new plant will be commissioned and functioning. The Company is also advancing opportunities for optimization of the project, including metallurgical test work and a pre-feasibility study to potentially increase recoveries by over 10% through the use of flotation and concentrate leaching. This study, supported by the Company's phased investment, seeks to improve the project's financial performance significantly. With this long-term and value-focused strategy, the Company is well-positioned to affirm that the advancement of the Sadiola Project is proceeding as planned, reinforcing Allied's commitment to operational excellence and long-term value creation.

Growing Mineral Inventories and Continued Exploration Success

Allied's key growth initiatives as well as its near-term guidance and longer-term outlook are underpinned by the expansion of Mineral Reserves and Mineral Resources, which not only support the sustainability of the company's production platform but also offer flexibility to boost near-term production and cash flows, particularly from near mine targets such as Oumé, situated north of the Bonikro mill, and Tsenge, located to the south of the planned mill at Kurmuk. Key highlights of the growing mineral inventory, which were previously announced on February 21 , 2024, include:

Increasing Proven and Probable Mineral Reserves which, as at December 31, 2023 , were reported at 11.2 million ounces of gold contained within 238 million tonnes at a grade of 1.46 g/t, an increase of over 300,000 ounces versus the previous year, or 190% of depletion. This increase reflects meaningful growth at Sadiola, Agbaou, and Kurmuk, with partial replacement of mining depletion at Bonikro. Expanding Total Measured and Indicated Mineral Resources grew to over 16.0 million ounces of gold contained within 330 million tonnes at a grade of 1.51 g/t, up from 15.2 million ounces in the previous year. This expansion was partly due to the conversion of Inferred Mineral Resources, which ended the year at 1.8 million ounces contained within 43 million tonnes at a grade of 1.29 g/t. At Kurmuk's Tsenge area, initial drilling at secondary targets in the latter part of 2023 revealed grades and widths with economic potential, while surface sampling in high-priority areas yielded very promising results that are being followed up with drilling at the beginning of 2024. Exploration drilling is currently underway at Oumé, while resource drilling at Agbalé in the Hire area is progressing alongside efforts to extend and define new targets. These activities are part of a comprehensive strategy aimed at extending the strategic mine life in Côte d'Ivoire to beyond 10 years, with the goal of achieving annual production rates of 180,000 to 200,000 oz at reduced costs. Highlighting ongoing exploration success, the updated Mineral Reserves and Mineral Resources, released alongside the Company's guidance and outlook, have yet to fully reflect Allied's continued investment in exploration, with $32 million allocated for 2024. This investment underscores the significant upside and geological prospectivity at the core of Allied's portfolio. Anticipating comprehensive updates, the Company expects to deliver a detailed exploration update on Kurmuk in early April, followed by insights on Sadiola and Bonikro.

Allied's operations, optimization efforts, and expansion projects outline a promising trajectory for growth and efficiency. Key highlights for the Company's guidance and outlook include:

Operational Guidance

The Company's production is expected to exceed a minimum annual production level of at least 375,000 oz, as evidenced by the run rate delivered in the fourth quarter, before further optimizations and cost improvements. In 2024, Allied anticipates producing 375,000 to 405,000 oz at a mine-site AISC (1) of $1,400 per oz sold, marking a significant increase in production and a material reduction in costs. Allied continues to advance operational improvements and cost savings initiatives across its portfolio of producing assets. The Company is dedicated to leveraging the installed capacity at Sadiola by advancing Diba and other near-mine oxide targets to increase production and cash flows in the short term. Production is expected to be weighted to the second half of the year with quarter over quarter variances due to mine sequencing and the implementation of operational improvements. With the first quarter almost over, production across all operations is in line with plan. Production in the quarter is expected to be 85,000 to 88,000 oz with increasing production in the second and third quarters, and with production in the fourth quarter consistent with the third quarter, all of which will align with Allied's guidance of 375,000 to 405,000 oz for 2024. The integration of mining operations at Agbaou and Bonikro under the same mining contractor, which was initiated late last year, is planned to be completed during the first quarter of 2024 and is now well advanced. This is expected to capture future enhanced operational synergies to be realized in the subsequent quarters. Processing improvements at Bonikro, planned to be completed in the first quarter of 2024 and which are also well advanced, coupled with strong mine performance demonstrated since late 2023 and improved performance at Agbaou with the implementation of better mining protocols under the new mine contractor, are also expected to contribute to the improved performance from the Côte d'Ivoire mining complex in the next quarters. Sadiola, in turn, is poised for sequential production increases in these periods, supported by the addition of high-grade oxide ore from Diba along with other operational improvements which should see production increase significantly in each of the next few quarters. An access road between the plant at Sadiola and Diba has been completed and preparatory work is ongoing. Production from Diba is expected to begin late in the second quarter and development work is presently on track.

Development and Outlook

The company has commenced and is advancing construction activities at its transformative Kurmuk Project. Exploration Drilling continues to extend mine life and long-term value, particularly at Kurmuk and in Côte d'Ivoire. These developments across Allied's portfolio—including enhanced production and cost efficiencies at Sadiola and Bonikro, along with promising exploration and operational optimizations at Agbaou and Kurmuk—collectively reinforce a positive outlook to achieve significant value creation and position the Company to deliver 400,000-450,000 oz at a mine-site AISC (1) below $1,375 per oz sold in 2025. With the step change driven by planned commercial production at Kurmuk, Allied will be positioned to deliver >600,000 oz at a mine-site AISC (1) below $1,225 per oz sold in 2026, materially repositioning the Company.

Financial Flexibility

The Company's ability to deliver on this positive outlook and to unlock the significant value in its large and expanding mineral inventory is supported by the financial flexibility needed to internally fund these optimization and growth initiatives. Based on recent gold prices, the Company expects to be fully financed based on cash flows, however as a precaution, so that the Company is not dependent on gold price, Allied is actively executing a select number of non-dilutive alternatives including streams on producing assets and a gold prepay facility. This strategic direction is prompted by the current capital markets not fully capturing the inherent value of the Company's assets, leading Allied to seek alternative sources of capital that offer low-cost options with the added benefit of more accurately reflecting true value to market participants. Among these initiatives, Allied is in advanced discussions to implement a stream for approximately $50 million on non-core assets, with the competitive tension in the market supporting the potential to raise proceeds of about $75 -100 million from a small 0.75-1.00% stream on Sadiola. Additionally, the Company aims to secure at least $100 million in proceeds by late 2024 or early 2025 through a gold prepay facility, which not only brings forward revenue but also includes a built-in gold price collar amidst favorable market rates, acting as a hedge against gold price depreciation during the construction of Kurmuk. Furthermore, Allied has completed negotiations and entered into a Revolving Credit Facility, which it does not expect to draw upon in the near term, reinforcing its financial strategy to support growth while mitigating downside price risks.