Allied Gold (TSX: AAUC) has secured $175 million for the development of its Kurmuk project in Ethiopia. The funding comes via a subsidiary of Wheaton Precious Metals (TSX: WPM).
The arrangement will see four equal payments made to Allied for total consideration of US$175 million, to assist in funding the construction of the project. In exchange, Wheaton has secured a stream on 6.7% of the payable gold until 220,000 ounces of gold have been delivered. Once this milestone is met, Wheaton will see its stream reduced to 4.8% of payable gold for the life of the mine.
Should any debt in excess of $150 million rank ahead of the stream at any point in time, the stream will increase to 7.15%, and then will decrease to 5.25% once the drop down threshold is met.
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In exchange, Wheaton will pay 15% of the spot price of gold for the ounces delivered to it. The stream is expected to average 16,000 ounces of gold delivered per year for the first ten years of production, with the Kurmuk project currently estimated to have an 11 year mine life, with upside from resources and exploration potential.
The Kurmuk project is anticipated to begin production in mid-2026. The project is currently estimated to have annual production 270,000 ounces of gold over the first five years of production, with average production of 240,000 ounces of gold for the mine life, at all in sustaining costs near to $1,000 an ounce. The project is fully permitted, with construction already underway.
“The stream financing now allows us to complete the gold prepay which is the final component of our planned comprehensive financing package for the development of the Kurmuk project. The gold prepay is expected to be led by the lending syndicate for the Company’s revolving credit facility with proceeds available to Allied following the completion of the stream financing. We expect the Kurmuk mine will become one of the more significant precious metal mines in the world delivering significant production and cash flow following its construction,” commented Peter Marrone, CEO of Allied Gold.
Allied Gold last traded at $3.43 on the TSX.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
