Allied Gold Corporation has officially confirmed the news of entering into a streaming transaction with Triple Flag International Ltd., a wholly-owned subsidiary of Triple Flag Precious Metals Corp. As per the agreed terms, Allied will receive a US$53 million upfront cash payment and an ongoing payment equal to 10% of the spot gold price. In exchange, Triple Flag will have the right to purchase 3% payable gold from each of Allied Global’s Agbaou mine, and Bonikro mine. In Agbaou mine’s context, the gold stream rate will step down to 2% of payable gold after the delivery of 29,000 ounces of gold. As for the Bonikro Stream, here, the gold stream rate will step down to 2% of payable gold after the delivery of 39,300 ozs. More on the same would reveal how both the sources are subject to a period of certain minimum deliveries. You see, from 2024 to 2027, an annual minimum of approximately 2.50 to 2.75 thousand gold equivalent ounces (“GEOs”) will be delivered under the Agbaou Stream, and on the other hand, an annual minimum of 3.50 to 4.25 thousand GEOs will be delivered under the Bonikro Stream. Moving on, these Streams will also cover the existing mining and exploration licenses for the Agbaou and Bonikro mines. Another detail worth a mention here is how Triple Flag has committed to work with Allied to identify social programs in the communities surrounding Bonikro and Agbaou, all for supporting the same with a separate investment.
As for what the transaction signifies, for starters, it crystallizes the enormous value in the Allied Gold’s CDI complex. It also implies a valuation multiple significantly higher than that at which the company’s shares currently trade in the market, or the price at which the company went public. The valuation, interestingly enough, delivers a rather interesting follow-up to Allied Gold’s objective of conceiving a sustainable production platform which can generate 180,000-200,000 gold ounces per annum on a combined basis and a mine life greater than 10 years for the complex, driven by an extensive exploration program, cost optimizations, and process improvements. Next up, the transaction will also look to capitalize upon the attractive cost of capital in play here. This translates to how, after evaluating different financing options, it was concluded that the given project provided much better cost of capital than any other alternative, including equity financing. To build upon, the companies’ streamlined agreement also offers a competitive cost of capital based on Proven & Probable Mineral Reserves and remains favorable when assuming Mineral Resource conversion and exploration upside.
“We are delighted to partner with Triple Flag on this streaming agreement. This transaction not only underscores the inherent value of our Côte d’Ivoire assets, as it implies a valuation multiple significantly higher than that at which the Company went public and the price at which the Company’s shares currently trade in the market, but it also provides us with the financial flexibility to advance our exploration, growth, and optimization initiatives at a competitive cost of capital, which is significantly better than other alternatives evaluated, including equity financing,” said Peter Marrone, Chairman and CEO of Allied Gold Corporation.
Complimenting the financial value it delivers, this particular transaction even provides enhanced financial flexibility, considering the advance amount ensures self-funding for Allied’s extensive exploration program attached to the CDI Complex, with a total of $16.5 million allocated for 2024 to advance highly prospective sites such as Oume, Akissi-So, Agbalé, and other targets. Apart from that, it allows for the acceleration of improvement projects to increase the reliability in operations, optimize plant capacity, and bring forth value and extensions of mine life. In essence, Allied Gold views the stated flexibility to facilitate capturing further upside beyond the current life of mine plans.
