ALLIED GOLD ANNOUNCES THIRD QUARTER 2024 RESULTS: IMPLEMENTING OPERATIONAL IMPROVEMENTS, SECURING KEY REGULATORY APPROVALS, ADVANCING DEVELOPMENT AT KURMUK AND SADIOLA, AND STRENGTHENING FINANCIAL FLEXIBILITY THROUGH STRATEGIC INITIATIVES
TORONTO, Nov. 7, 2024 /PRNewswire/ - Allied Gold Corporation (TSX:AAUC) (OTCQX:AAUCF) ("Allied" or the "Company") is herein reporting its financial and operational results for the third quarter of 2024. Third quarter production of 85,147 was consistent with the first two quarters of 2024 and the comparative quarter of 2023. Year-to-date production of 258,459 was nearly 10,000 ounces higher than the comparative period of 2023.
Production in the third quarter included minimal contribution from Korali-Sud (previously referred to as Diba) at the Sadiola mine. Korali-Sud, a higher-grade oxide ore body, was expected to represent a significant component of the Company's production at Sadiola for 2024 and 2025, displacing some of the lower-grade ore originally planned to be fed through the plant. It is now expected to represent a significant component of production for the fourth quarter of 2024, continuing through 2025 and early 2026. This is anticipated to improve both production and cost efficiency. In the second quarter, the Company began operations and stockpiling from Korali-Sud, although operations were suspended early in the third quarter, as the Company was required to complete the permitting process for Korali-Sud under the new 2023 Mining Code. Now fully permitted, the Company has begun processing stockpiled material and broader production activities. Korali-Sud is planned as a bridge between current operations at Sadiola and the completion of the first phase expansion, which will allow the plant to process more of the fresh ore. This first phase expansion commenced in the fourth quarter of 2024 and is expected to be completed by the fourth quarter of 2025, which will allow for sustainable production at Sadiola of at least 200,000 ounces per year. Lastly, the Company continued to drill other areas of oxide mineralization at Sadiola, including Sekekoto West, FE4, FE2.5 and Tambali South, so that they can serve as backup ore feed for Korali-Sud, as the first phase expansion is completed.
Production exceeded sales of 78,939 ounces in the period due to the timing of shipments in relation to gold pours, particularly at Korali-Sud. AISC(1) per ounce, which is calculated on an ounce sold versus produced basis, was impacted by certain expenditures being divided by a lower denominator, which is expected to normalize in the fourth quarter. Total cost of sales, cash costs(1) and AISC(1) per gold ounce sold were $1,750, $1,514, and $1,811, respectively. For the nine months ended, total cost of sales, cash costs(1), and AISC(1) on a gold ounce sold basis were $1,635, $1,419, and $1,619, respectively, which better reflect the Company's costs, compared with elevated costs during the third quarter, which were impacted by administrative delays related to production at Korali-Sud.
Cost improvements are expected for the remainder of the year. At Sadiola, which will meaningfully impact the consolidated result, this will be achieved through the increased production resulting from the inclusion of oxide ore from Korali-Sud in addition to other operational improvements. Further, as expected and guided, Bonikro's sustaining capital and AISC(1) in the third quarter were impacted by capitalized stripping at PB5. The stripping activities being carried out during the year, and the expected ramp-up of stripping activities in the fourth quarter, will improve production and costs for the next few years, as high-grade ore will be exposed while significantly lower waste removal is planned.
The Company estimates production in the fourth quarter of 98,000 ounces to 102,000 ounces, making it the highest production quarter of the year and comfortably corroborating the Company's position that the production platform of the Company's current operations is in the 375,000-400,000 range, as previously disclosed. Mostly, production increases in the fourth quarter are attributable to more fulsome contributions to production from Korali-Sud which has had a nominal contribution to production year-to-date. Estimated production for the fourth quarter also accounts for reduced throughput when processing ores from Korali-Sud, as a result of clay content in those ores. Presently, ores from Korali-Sud are processed separately from ores from Sadiola under a tolling arrangement given different ownership of Sadiola and Korali-Sud. The Company is seeking approval from mining authorities to blend ores from the two deposits thereby optimizing throughput and production. The foregoing production profile is before any capital programs that will result in a step increase in production, notably from Kurmuk and the Sadiola expansion.
THIRD QUARTER HIGHLIGHTS
Financial Results
Third quarter net loss(2) was $108.0 million or $(0.43) per share basic and diluted.
Adjusted third quarter net earnings(1)(2) of $50.6 million or $0.20 per share basic and diluted, primarily reflecting adjustments for non-recurring items related to the Mali agreement (discussed below), tax adjustments, and unrealized losses on the revaluation of financial instruments.
EBITDA(1) for the three months ended September 30, 2024 was a loss of $69.1 million, an improvement over last year.
Adjusted EBITDA(1) was $52.1 million representing a significant increase from the prior year comparative period. The Company's strong Adjusted EBITDA(1) demonstrates its strong cash-flow generating ability and continued operational efficiency.
Operating cash flow before income tax paid and movements in working capital was $87.2 million, up significantly from the comparative prior period.
Net cash generated from operating activities for the three months ended September 30, 2024 was $72.6 million. This compares to an inflow of $2.2 million in the prior year comparative quarter. Current period cash from operating activities was positively impacted by higher realized gold prices and proceeds of the stream with Triple Flag that closed during the third quarter. Working capital impact was modest for the quarter, with mostly offsetting decreases due to the buildup of prepaid balances, VAT, stockpiles and finished goods inventory, and increases due to general timing of accounts payable.
Cash and cash equivalents totaled $95.4 million as of September 30, 2024. Cash balances increased significantly subsequent to quarter end with gross proceeds of approximately C$221 million received during October.
Operational Improvements and Significant Developments
Throughout 2024 and continuing in the third quarter, management made a series of improvements to its operational improvement plans to ensure a materially stronger fourth quarter and to position the Company to achieve its 2025 objectives and beyond, effectively strengthening and de-risking the production platform moving forward. These actions include:
Mining, Processing, Exploration and Administrative Improvements: The Company has been progressing to an operationally focused approach to the business and has implemented a series of improvements and optimizations, that once again support a strong fourth quarter and beyond. These include:
Increases in mining and waste movement to achieve spatial compliance and access higher-grade ores, resulting in a lower-than-planned cost per ton.
Processing plant optimizations have increased total tonnes milled across all operations throughout the year, which is expected to continue through the fourth quarter. Notably, operations in Côte d'Ivoire achieved substantial gains, with third-quarter milling rates up 15% at Agbaou and 39% at Bonikro compared to the first quarter.
Consolidating and integrating critical activities, such as contract mining services awarded to Mota-Engil, a leading global mining and construction organization. Consolidating mining services with a well-capitalized partner is expected to enhance consistency, reliability, and to improve logistics and supply chain expertise, including customs and importation.
Exploration initiatives aimed at extending mine life, focusing on expanding the Mineral Reserves of oxide ore at Sadiola and advancing exploration at several high-quality targets within the Kurmuk project.
Leadership Strengthened to Drive Operational Performance:
The Company has appointed Johannes Stoltz as Chief Operating Officer, leveraging his 28 years of mining experience and deep knowledge of Allied's operations. Johannes' transition into the role has been occurring since the beginning of 2024, and he has been primarily responsible for optimizations and improvements initiated to improve operations from early this year, making strong progress toward achieving sustainable and predictable production goals starting in the third quarter. This appointment is part of an orderly succession plan that had begun at the beginning of the year as his predecessor was nearing retirement, and the company having determined that for its optimizations plan, and having improved its plant functions, a focus on mining was critical and its head of operations should be a qualified mining engineer.
Allied has strengthened its Board of Directors by adding a new Board Member, Oumar Toguyeni. Mr. Toguyeni is a highly experienced global mining executive, with over 35 years of mining expertise. His career has included senior leadership positions at major international mining companies such as BHP, Alcoa Inc., IAMGOLD Corporation, and he has also recently been appointed to the Board of Directors of Hummingbird Resources. He very recently joined the board of that company in connection with the restructuring and recapitalization of the company initiated, and financially supported, by its largest shareholder. Beginning his career as an exploration geologist, Mr. Toguyeni has gained extensive experience in Europe, North and South America, the Caribbean, and particularly in West Africa, where he is based. His executive career includes senior operational and sustainability positions in Mali the result of which, together with his in country relationships, will assist in management of and board oversight over the Company's in country efforts. Fluent in English and French, he brings a wealth of international experience and insight to the Board. He is a geologist and also holds a Master of Business Administration degree.
The Company is further consolidating its management into its head office in Toronto, rationalizing legacy offices throughout the organization.
Adoption of a governance approach aligned with best practices established by public companies, emphasizing rigorous risk management and sustainability practices.
Securing Fiscal and Regulatory Framework in Mali: During the third quarter, the Company entered into a definitive protocol agreement (the "Agreement") with the Government of Mali (the "State"), providing for renewal of the exploitation permit for Sadiola, advancement of the nearby Korali-Sud property including the issuance of a definitive exploitation permit for large-scale mining and processing of mined ore at the Sadiola plant, and the fiscal and regulatory framework for the phased expansion of the operations. Subsequent to the Agreement, other producers in the country reached similar arrangements with the State. The Agreement establishes a strong foundation for certainty and consistency, and leads to the Company continuing to operate in-country and able to pursue growth plans that result in stronger production and cash flow. The Agreement provides several benefits for the Company, setting the stage for advancing the Company's operational and expansion plans:
Permit Renewals: The Exploitation Permit for the Sadiola Gold Mine has been renewed for ten years, and allows for further renewals after the initial ten-year term until all Mineral Reserves are depleted. This renewal enables operational continuity and supports the Company's phased expansion plan, which provide for the realization of Sadiola's inherent value.
Fiscal and Regulatory Stability: The Agreement provides fiscal and regulatory stability, in which royalties align with the new mining code, although also provides for derogations from certain royalties. The derogations have substantial financial value, as compared to the mining code itself. In addition, the Company's ownership of Sadiola remains at 80%, with the State owning a carried 20% (the State's ownership of Korali-Sud will be increased to 35% whereas the Company will retain 65%) and maintain rights to fiscal stability, mediation and arbitration. As the Company was the first to complete negotiations and discussions culminating in the Agreement, the Company also secured a most-favoured-nations right which allows for it to claim any right or benefit settled with other companies operating in-country. This framework supports the phased expansion at Sadiola, fostering increased production and cash flow and creating a foundation for optimization projects to enhance recoveries and throughput.
Approval of Korali-Sud: Korali-Sud represents significant value and offers near-term production and cash flow, advancing strategic goals at Sadiola.
Potential Upside through Joint Ventures: The Company believes that entering into the Agreement has certain qualitative benefits which include increased goodwill which applies, in addition to other areas, to the pursuit of other in-country mining opportunities with the recently formed State mining company. These include nearby deposits which would benefit Sadiola.
Tax Stability: Under the Agreement, Mali has agreed to abandon all outstanding claims related to the Company's customs, income and other tax matters up to the date of the Agreement, offering a clean slate for tax-related matters moving forward.
Kurmuk Progress: During the quarter, Allied continued the advancement of the Kurmuk Gold Project, progressing earthworks, camp construction, and supply chain activities according to schedule, including key agreements aimed at securing cost-effective operations. A signed 20-year Power Purchase Agreement with Ethiopian Electric Power ensures sustainable energy for Kurmuk at a fixed rate of US$0.04 per kWh, positioning it as one of the lowest-cost operations globally. Additionally, following a broad and competitive process, Allied selected Mota-Engil Group as its mining contractor, with preparations underway for mining operations to begin mid-2025. Mota-Engil, a multinational engineering and construction leader with nearly 80 years of expertise across Europe, Africa, and Latin America, will bring vital experience to Kurmuk, supporting commercial production goals by mid-2026. This selection aligns with Allied's strategic assessment of its West African operations and the performance of existing mining contractors on-site. Year-to-date, $47.6 million has been invested in the project, excluding capitalized borrowing interest under IFRS. Fourth-quarter expenditures are expected to increase as construction activities continue to ramp-up. The project remains on track on physical progress, however 2024 capital expenditures are now expected to be approximately $100 million excluding capitalized interest, below the original estimate of $155 million. The difference is mostly the result of detailed and optimized execution planning, favorable contract negotiations which lowered upfront payments, preference for local contractor deployment with lower mobilization costs, and optimization of certain earthworks. Some of these payments have been deferred into the first half of 2025, and consequently, the project remains on budget.
Executing Financial Strategy: Allied continued to enhance financial flexibility to support growth plans this quarter through an overnight public offering for C$221 million and a $53 million gold streaming agreement with Triple Flag Precious Metals Corp. The Company is also in advanced discussions for a $150-$175 million gold stream on Kurmuk, covering approximately 6%-7% of its production, with a step-down to 4%-5%, and a $75 million gold prepay package. These initiatives validate significant opportunities across the asset portfolio and demonstrate Allied's ability to attract substantial investment at a low cost of capital, enhancing financial flexibility and accelerating cash flows.
Operational Results and Outlook
As previously disclosed, production is expected to be back-end weighted, with quarter-over-quarter variances driven by mine sequencing, access to higher grades per the mining plan, and the implementation of operational improvements. Third-quarter results and year-to-date production were impacted by temporary suspension related to permitting in accessing higher-grade ore at the Korali-Sud (Diba) property, as well as previously disclosed power issues in Côte d'Ivoire.
For three months ended September 30,
For nine months ended September 30,
YTD Percentage
2024
2023
2024
2023
Improvement
Gold Ounces Produced
85,147
84,473
258,459
249,062
4 %
Fourth Quarter Expectations:
The Company expects production in the fourth quarter of 98,000-102,000 oz, making it the highest production quarter of the year.
Run-rate production is expected to comfortably support the Company's platform within the 375,000–400,000 oz range, as previously disclosed, even before the impact of capital programs anticipated to drive a step increase in production, particularly from Kurmuk and the Sadiola expansion.
2024 Production Expectations:
Full-year production is expected to be 360,000–367,000 oz, an increase of approximately 20,000 oz at the midpoint, or over 5% from 2023 production levels.
Cost Expectations:
Costs for the first half of the year were in line with expectations, and with anticipated strong production in the second half, full-year costs were initially projected within the guided range.
However, challenges encountered during the third quarter, along with the updated full-year production expectation and anticipated effects of Mali's 2023 Mining Code, are expected to increase full-year AISC(1) costs by approximately $200 per oz relative to prior expectations.
Expenses are expected to continue trending lower through the remainder of the year, with quarter-over-quarter savings and improvements anticipated alongside a significant increase in fourth quarter production. As costs decrease and production rises, the per-ounce cost of general and administrative expenses is projected to decline at an even greater rate.
Advancement of Key Growth Initiatives
Kurmuk Development
The Company continues to make substantial progress on the Kurmuk Project, achieving key milestones to date, including:
Successful completion of early works and project setup
Completion and filling of the construction water dam
Substantial completion of key engineering packages
Procurement of major services and critical equipment
Final negotiations of key construction contracts in preparation for the fourth-quarter construction ramp-up
Establishment of the starter camp and advanced construction of the main camp
Initiation and steady progress on plant site and general facility earthworks
The mining contract for Kurmuk has been awarded to Mota-Engil, a Portuguese-based engineering and construction company with demonstrated competency and robust financial capacity, following a comprehensive tendering process conducted by the Company. The award will advance pioneering earthworks at an early stage, allow sufficient time for the importation and mobilization of equipment well ahead of the timeframe when mining will begin, and also allow for the early establishment of infrastructure, support and training of personnel.
Year-to-date, $53.9 million has been invested in the project, including capitalized borrowing interest under IFRS, or $47.6 million excluding interest. Fourth-quarter expenditures are expected to rise, primarily supporting:
Further progress on earthworks, including main water dam excavations
Ramp-up of concrete, batch plant, and civil activities
Start of steel fabrication and other construction activities
Advancement of main camp construction
Procurement of other services and supplies
The Company remains on track with the physical progress of the Kurmuk Project; however, capital expenditures are lower than the original estimate for the year. Full-year direct project cash flow spending (excluding capitalized interest) is now expected to be approximately $100 million, compared to the original estimate of $155 million. This difference is primarily due to detailed and optimized execution planning, favorable contract negotiations with local contractors that reduced upfront payment requirements, a higher proportion of local contractor deployment with lower mobilization costs, and a redesign of certain earthworks, which reduced quantities and related schedule. Some of these payments have been deferred to the first half of 2025, and consequently, the project remains on budget.
The Kurmuk Project's development plan involves a total capital investment of approximately $500 million. Anticipated production is expected to average 290,000 oz annually over the first five years, sustaining over 240,000 oz annually over a 10-year mine life at an AISC(1) of $950 per oz. The recently awarded mining contract to Mota-Engil, which provided competitive rates consistent with the Feasibility Study, along with the previously announced Power Purchase Agreement with Ethiopian Electric Power, further supports the project's economics by securing an experienced and reputable mining contractor and reliable, affordable hydroelectric power. Grid connection is expected ahead of the first production in mid-2026.
Exploration efforts have also been positive, particularly at the Tsenge gold prospect, confirming high prospectivity and reinforcing Allied's goal of significant Mineral Resource growth. These advancements underscore Allied's commitment to establishing Kurmuk as a major gold mineral province in Western Ethiopia.
With Kurmuk fully permitted, licensed, and progressing on plan and on budget, the Company remains well-positioned to achieve first production in mid-2026, delivering long-term value to stakeholders. Continued updates will be provided as construction and exploration activities advance in line with the project's objectives.
Sadiola Protocol Agreement and Phased ExpansionDuring the third quarter, the Company entered into a definitive protocol agreement (the "Agreement") with the Government of Mali (the "State"), providing for renewal of the exploitation permit for Sadiola, advancement of the nearby Korali-Sud property including the issuance of a definitive exploitation permit for large-scale mining and processing of mined ore at the Sadiola plant, and the fiscal and regulatory framework for the phased expansion of the operations. Subsequent to the Agreement, other producers in the country reached similar arrangements with the State. The Agreement establishes a strong foundation for certainty and consistency, and leads to the Company continuing to operate in-country and able to pursue growth plans that result in stronger production and cash flow.
The Agreement also provides for certain payments to the State. On October 12, 2024 the Company made an initial upfront payment, and the Company intends to make an additional and final payment by March 31, 2025 from cash flows. In addition, the Company also settled certain tax and other obligations. In accordance with accounting standards, all amounts were expensed during the quarter. The aforementioned items resulted in an impact to current income tax expense of $33.7 million, and $81.9 million to other losses. Lastly, part of the Company's business plan, and reflected in the Agreement, is the Company undertaking to proceed with the phased expansion at Sadiola.
Present efforts have focused on increasing the inventory of oxide and fresh ores, significantly optimizing mining and processing, conducting several technical studies on processing fresh ores through existing facilities, and planning the development of a new plant for processing fresh ore exclusively. This includes implementing enhancements to existing facilities to benefit both the current plant and the planned new plant.
Meaningful improvements in production are targeted in the short term through the contribution from high-grade oxide ores from various sources, 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.
The discovery of additional economic oxide mineralization has the potential to improve upon these targets. Exploration activities, resource modeling, and engineering studies are in progress for several areas and new discoveries of oxide ore, including those at S12, Sekekoto West, FE4, and Tambali South, among others. These developments are a key part of the Company's strategy, allowing for the optimized utilization of existing resources and infrastructure, further contributing to production and cost improvements for the next several years, and providing mine plan flexibility with more areas for mining.
The aforementioned 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 Sadiola Gold Mine is expected to support an average production level between 200,000 and 230,000 ounces per year through 2028, although 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.
Project pre-construction activities for the Phase 1 Expansion are progressing well, and with the Agreement now in place, formal modifications to the existing plant are expected to begin in the fourth quarter and extend into 2025. Allied expects to invest approximately $65 million through 2025 in this first phase of the Sadiola expansion. The updated engineering study for this phase has reconfirmed 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. With the completion of plant modifications in Phase 1, contributions of oxide ore from Korali-Sud and other recently discovered oxide deposits within the Sadiola mining license area, Sadiola is expected to produce up to 230,000 ounces of gold per year in the period before the new plant—contemplated in Phase 2—becomes operational. Upgrades in infrastructure to prepare the site for the next phase of investment will also be advanced during the Phase 1 Expansion.
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 10 Mt per year, targeted to start in the second-half of 2028, is expected to increase production to an average of 400,000 ounces per year for the first four 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 Gold Mine Expansion Project is delineated in phases for planning purposes, it is critical to recognize that these phases are part of an integrated development effort aimed at significantly increasing the Sadiola Gold Mine's production, enhancing its profitability and longevity, and reaffirming the commitment to the Company's stakeholders. This is demonstrated by the over $127 million invested in the Sadiola Gold Mine 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 2028 by which time both the modified existing plant and new plant will be commissioned and functioning.
Further, the Company is investigating the merits of a more progressive expansion of the existing plant beyond the year 2025, with the objective to target similar ultimate production levels at improved capital intensity.
The Company is also advancing opportunities for optimization of the Sadiola Gold Mine Expansion Projects, including metallurgical test work and a pre-feasibility study to potentially increase recoveries by over 10 percentage points 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 Gold Mine Project is proceeding as planned, reinforcing Allied's commitment to operational excellence and long-term value creation.
Financing Strategy
The Company's ability to unlock significant value from its expanding mineral inventory is supported by the financial flexibility needed to fund optimizations and growth initiatives. While Allied expects to finance much of this through cash flows based on recent gold prices, it is strategically enhancing its capital structure with a combination of financing options.
Recently, Allied raised approximately C$221 million through an overnight public offering and over-allotment, with proceeds directed toward optimizing Sadiola's operations and advancing the Kurmuk construction project. This equity issuance not only increases trading liquidity and broadens Allied's investor base—enhancing its eligibility for greater index inclusion with only modest dilution—but also reduces the Company's dependency on cash flows. This flexibility allows Allied to focus on long-term shareholder value through growth and asset improvements, including extended mine life at Agbaou and expanded Sadiola operations.
Allied's recent US$53 million streaming agreement with Triple Flag Precious Metals on Agbaou and Bonikro further supports its strategy of securing capital at a competitive cost, with minimal shareholder dilution. Building on this success, Allied is finalizing a $225-$250 million Kurmuk funding package, comprising a gold stream and prepay facility, to advance development of the Kurmuk project. Expected to close by the end of 2024, this package reflects Kurmuk's strong geological potential and has attracted significant market interest.
The prepay facility will accelerate cash flows with a built-in gold price hedge, supporting Kurmuk's anticipated mid-2026 construction timeline and balancing capital requirements. Allied's strengthened financial position also provides flexibility to reinvest operational cash flows into potential Sadiola expansions, maximizing asset value and shareholder returns.
Sustainability
The Company did not report any significant Environmental Incidents for the three and nine months ended September 30, 2024.
For the quarter ended September 30, 2024, the Company reported three Lost Time Injuries ("LTI"), resulting in a Lost Time Injury Rate ("LTIR") of 0.75(4).
OPERATING RESULTS SUMMARY
For three months ended September 30,
For nine months ended September 30,
2024
2023
2024
2023
Gold ounces
Production
85,147
84,473
258,459
249,062
Sales
78,939
91,164
248,686
250,012
Per Gold Ounce Sold
Total Cost of Sales
$ 1,750
$ 1,593
$ 1,635
$ 1,587
Cash Costs(1)
$ 1,514
$ 1,424
$ 1,419
$ 1,426
AISC(1)
$ 1,811
$ 1,546
$ 1,619
$ 1,561
Average revenue per ounce
$ 2,390
$ 1,935
$ 2,247
$ 1,901
Average market price per ounce*
$ 2,474
$ 1,928
$ 2,299
$ 1,930
*Average market prices based on the LMBA PM Fix Price
Sadiola
For the three months ended September 30, 2024, Sadiola produced 39,138 ounces of gold, compared to the 43,525 ounces produced in the comparative prior year quarter. Production in the third quarter included minimal contribution from Korali-Sud at the Sadiola mine. Korali-Sud, an oxide, higher-grade ore body, that was expected to represent a significant component of the Company's production at Sadiola, displacing some of the lower-grade ore originally planned to be fed through the plant for 2024 and 2025, is now expected to represent a significant component of production for the fourth quarter of 2024, continuing through 2025 and early 2026. This is expected to improve both production and cost efficiency. Ore from Korali-Sud was exposed and made available for mining as planned in late June, to commence industrial-scale tests at the Sadiola plant. These tests were aimed at confirming and optimizing processing parameters. As a result, limited quantities of ore were processed during the second quarter to conduct these tests and assess the plant's behavior and controls, particularly for the higher-grade ores, and these tests were successful. The plant trial yielded production at better-than-expected grades. Production from Korali-Sud has recommenced, at better grades and recoveries than expected, now that the Company has received the necessary authorizations for processing Korali-Sud ore at Sadiola. Operations were suspended early in the third quarter, as the Company was required to complete the permitting process for the ore body under the new 2023 Mining Code. Now that it is fully permitted, the Company has begun processing stockpiled material and broader production activities.
Ongoing exploration at Sekekoto West, FE4, and Tambali South aims to expand near-surface oxide gold resources, supporting short-term production growth and cash flow. During the third quarter, Sadiola increased total tonnes mined to accelerate waste stripping and enhance oxide availability for operational flexibility in 2025. Concurrently, plant automation enabled record tonnes milled, positioning the Company to recover from the oxide shortages stemming from earlier Korali-Sud delays.
Gold sales for the current quarter were lower than production, solely resulting from timing of shipments and consequent sales.
Given the overall economic position of the State of Mali, and an assessment of recoverability, the Company agreed to not claim 16 billion CFA francs ($27.2 million) of VAT, and consequently impaired those credits in the quarter.
During the third quarter, exploratory and resource drilling programs were conducted on the Sadiola mining license. A total of 180 holes were drilled, covering 21,706 meters, with five exploration drill rigs. Drilling efforts were focused on the Sekekoto West, FE2.5, and Borokone prospects, as well as the Tambali deposit, with expanded programs on these sites during the quarter.
Exploratory drilling at Sekekoto West continues to extend strike length; while the area is closed off to the south, it remains open to the north along 50-meter spaced drill lines. Additional exploratory and resource drilling is planned in this area for the fourth quarter, following the end of the wet season. At FE2.5, infill resource drilling on 25-meter centers was completed on the central part of the eastern trend, and initial exploratory drilling was conducted along a second, parallel trend on the western contact. Deeper drilling in fresh rock has intersected sulphide mineralization in silicified and vein-impure carbonates, though at lower gold grades.
At Tambali, resource drilling for shallow sulphides continued on the deposit's eastern flank. Mineralization has now been traced to the edge of the waste dump separating the Sadiola main pit and Tambali pits, presenting an opportunity to connect these zones with previously drilled areas in the Sadiola deposit hanging wall. Toward the end of the quarter, a coring rig was deployed for a round of resource core drilling to further define the sulphide resource at Tambali.
Finally, at Borokone, the first intersections of oxide mineralization were encountered, with further exploratory drilling scheduled for 2025.
Bonikro
Bonikro produced 27,369 ounces of gold during the three months ended September 30, 2024, compared with 23,628 ounces produced in the comparable quarter of the previous year. Third-quarter production represented a meaningful increase over both the second and first quarters, as the challenges and impact of in-country power issues were mitigated, and the stockpile was drawn down, providing greater flexibility and availability of ore for processing.
The sequential increase in gold production over the second and first quarters of 2024 was driven by high-grade ore from Stage 1, increased waste mining from Stages 3 and 5 to ensure a sustainable ore supply to the plant, stable ore supply with recoveries above plan, and increased plant throughput due to skill training and leadership changes. Furthermore, the stripping of Pushback 5 ("PB5") during 2024 will expose higher-grade material for 2025 and 2026. Although the 2024 cost profile reflects these activities, they are expected to significantly reduce the mine-site AISC(1) to below $1,050 per ounce by the end of the outlook period.
Several additional opportunities to optimize the plant are being pursued, including operational and maintenance improvements, comminution circuit optimization, increased gravity gold recovery, and better slurry density and viscosity control practices. Several of these initiatives have already been implemented or are under study, and they will ultimately lead to improvements in mill rates, as well as greater predictability of throughput and recoveries. During the second quarter, the sizing screen panels were modified from 40mm to 35mm, improving the mill rate by nearly 9% with the current ore blend. The Company expects to provide updates on further initiatives with year-end results.
At Bonikro, expected cost reductions are to be achieved through the normalization of production with the more self-reliant power strategy. However, as expected and guided, Bonikro's sustaining capital and AISC(1) in the third quarter were impacted by capitalized stripping at PB5. The ...
