Allied Gold Q3 2025 Earnings Call Transcript

Quartr
Provided by Quartr
November 6, 2025

Key Takeaways

  • Positive Sentiment: Sadiola Phase 1 finishing in December — new mill/crushing circuit will allow up to 60% fresh ore throughput, driving higher grades, improved recoveries and management expects Q4 production to be up ~40% with lower unit costs.
  • Positive Sentiment: Kermuk remains on schedule with engineering largely complete, long‑lead equipment on site and first gold targeted by mid‑2026, which management calls a transformational, tier‑one asset for future production and cash flow.
  • Positive Sentiment: Strong Q3 cash generation and liquidity — adjusted EBITDA roughly $110M, operating cash flow ~ $182M–$200M and cash of ~$262M, while AISC fell to $2,092/oz QoQ; company reiterates 2025 production guidance of greater than 375,000 oz.
  • Negative Sentiment: Geopolitical and fuel‑supply risk in Mali — management reports operations currently normal and supplies improving, but warns prolonged fuel shortages or instability could disrupt logistics and pose operational risk.
AI Generated. May Contain Errors.
Earnings Conference Call
Allied Gold Q3 2025
00:00 / 00:00

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Operator

Thank you all for joining us this morning. Before I turn the call over, I need to advise that certain statements made during this call today may contain forward-looking information, and actual results could differ from the conclusions or projections in that forward-looking information, which include but are not limited to statements with respect to the estimation of mineral reserves and resources, the timing and amounts of estimated future production, cost of production, capital expenditures, future metal prices, and the cost and timing of the development of new projects. For a complete discussion of the risks, uncertainties, and factors which may lead to the actual financial results and performance being different from the estimated contained in the forward-looking statements, please refer to Allied Gold's press release issued last night announcing Q3 2025 operating and financial results.

Operator

I would like to remind everyone that this conference call is being recorded and will be available for replay later on today. Replay information and the presentation slides accompanying this conference call and webcast are available on Allied Gold's website at alliedgold.com. I will now turn the call over to Peter Marrone, Chairman and CEO.

Peter Marrone
Chairman and CEO at Allied Gold

Operator, thank you very much. Ladies and gentlemen, let me begin this conference call by pointing to the quote at the bottom of the first slide of our presentation, and I would like to repeat that quote. "Let's not react to speculative headlines on geopolitical matters. We continue to operate normally." We refer to Mali in particular, and particularly in light of recent headlines. Let me begin by talking about the people of the country. They are industrious, entrepreneurial, and overwhelmingly in the country, across the population, there is support for mining. Similar to many countries, the politics, geopolitical circumstances go on. Mostly, they are stable. Sometimes changes occur. Business goes on, and this is especially true for mining. Recent disruptions in fuel supply into the capital of the country affect only the capital, and there are signs of improvement. Regional governments and internationally, support has been offered.

Peter Marrone
Chairman and CEO at Allied Gold

National efforts to counter the factors that have disrupted the fuel supply have received local, regional, and international endorsement. Prolonged fuel shortages do risk civil unrest and other challenges. So far, this has not occurred, and fuel supplies have begun to enter the capital. While there has been unexpected government change in the country before, and this is true for many countries, it has not been the result of external forces, and that seems to be true now as well. In those times of government change, I remind everyone that mines have continued to operate normally, production and cash flows were generated. We have no reason to believe that this is not true now, and we attribute that to the industrious and entrepreneurial nature of the people. We support business as usual, regardless of political affiliation or affinity, and regardless of localized conflicts.

Peter Marrone
Chairman and CEO at Allied Gold

With that then, our Q3 was certainly ordinary and normal course. We had solid production of just over 87,000 oz that sets us up for a strong Q4. We had strong cash generation, just under $110 million of adjusted EBITDA, and an operating cash flow of just under $200 million. We made significant progress on the Sadiola Phase 1 expansion and the Kurmuk development. Our all-in sustaining costs of $2,092 per oz were down 11% as compared to the second quarter, as we had indicated for the second quarter conference call we would expect. We expect further reductions in Q4 with higher grades at Sadiola, particularly with a Phase 1 expansion completed over the course of the next few weeks into December. Operations are performing well. We are operating normally at Sadiola, and that carries strong momentum into the fourth quarter.

Peter Marrone
Chairman and CEO at Allied Gold

At Agbaou, production quarter over quarter from Q2 to Q3 was up 43%. We expect that sustained production to continue into Q4 and into next year. At Bonikro, we're on plan. Grades are where we expect them to be, recoveries and throughput improved. We expect that will continue into this quarter and the quarters to follow. We had adjusted EBITDA to conclude of $110 million, cash flow of just under $200 million, and cash balances at the end of the third quarter of just over $262 million. What to expect then in Q4 and beyond? Sadiola and Bonikro will be notably higher. We indicated up to 40% higher in Q4 over Q3. We are almost halfway through the quarter, and we can see that production ramp up progressing very well. Our Q4 costs are expected to improve.

Peter Marrone
Chairman and CEO at Allied Gold

Momentum from that is expected to continue into the first quarter of next year and throughout the year. We stand by the guidance of a production level for 2025 that is greater than 375,000 oz. That sets us up for a consistent 100,000 oz per quarter at improved costs, leading to improved financial performance. Kurmuk kicks into production by the middle of the year. With that, ladies and gentlemen, let me pass the call to Johan, our Chief Operations Officer, to go through our production in more detail.

Johan Stoltz
COO at Allied Gold

Good morning, Peter, and good morning, everybody. Thank you very much, Peter, for the headlines. I would like to start off with the, on slide three, the operations, starting off with Sadiola. The operations were stable and on plan. I was at Sadiola last week, and operations are running normally. We're not seeing any logistic disruption and consumable inventories, including fuel, remain at normal levels. The operation is running normally with noticeable improvements. Production is on track to meet the full-year guidance, with Q4 expected to be 40% higher than previous quarters. Phase 1 expansion remains on schedule for completion in December, enabling us to treat up to 60% fresh ore in the mill feed. Bonikro was on plan with higher grades, better throughput, and recoveries. The stripping and maturity of pushback five and pushback three will provide us access to higher grades at lower cost in Q4.

Johan Stoltz
COO at Allied Gold

Agbaou production increased 43% quarter-on-quarter, as Peter also alluded to. Driven by higher grades and throughput and operational improvements. Overall, operations were on plan. Positioning us higher. Production, and lower unit cost in Q4. If we go to the next slide. Regarding the Sadiola Phase 1 expansion progress, the Phase 1 expansion remains on schedule and continued to advance through Q3 and into Q4. Mechanical installation of the new mill and crushing circuit is complete. The mobile pebble crusher is on site and ready for the December commencement. Engineering and pre-leach thickener is on its way to support higher fresh ore processing with Phase 1 nearing completion. We expect new commission circuit to be ready to receive ore late in the fourth quarter. At that point, Sadiola will be able to process up to 60% fresh ore through.

Johan Stoltz
COO at Allied Gold

The plant, which will materially lift throughput rates, improve recoveries, and lower processing costs. This expansion will bring additional flexibility into the operation and pave the way for lower cost and improved predictability. In short, Phase 1 is on plan. Commissioning begins in December, and it will set up structural setup change for Sadiola production and cost base. Moving over then to the Kurmuk progress. Kurmuk continues to advance on schedule. Engineering and the substantial complete. The site extension is well underway. The plant construction, including the mechanical erection, concrete works, and the key infrastructure such as water or the water dam, is advancing. Logistics are active. Long lead equipment is on site. Initial ore supply has been established from both Ashashire and Dish Mountain. The plant capacity has been approved to 6.4 million tons per year, which enhances the long-term production profile.

Johan Stoltz
COO at Allied Gold

Looking ahead, priorities to complete the mechanical and electrical infrastructure works, build up to the three-month high-grade stockpiles, connect the power line, and advance to the pre-commissioning. Upcoming priorities include the completion of the construction, build the high-grade stockpiles, as alluded earlier, provide the line connection, and the pre-commissioning. We maintain on track for first gold by mid-2026. With this, I'd like to pass over to our Chief Exploration Officer, Don Dudek. Thank you.

Don Dudek
Chief Exploration Officer at Allied Gold

Thanks, Johan, and good morning. Hello, everybody. One thing I want to emphasize for Sadiola, and it's something we tend to forget because of time, but this deposit has produced over 8 million oz of gold, and we have 10 million oz of mineral resources on the books. Because of the robustness of the system, we see the potential, or we have an exploration goal to add another 3.5 million oz of resources within the next five years, including within that is about 1 million oz of oxide inventory and resources. Our exploration strategy underpins our long-term production profile for this project and supports mine life extension at attractive returns. The oxide zones are located near infrastructure, and oxide boosts flexibility and profitability within our operations.

Don Dudek
Chief Exploration Officer at Allied Gold

Our drilling is focused on near-mine targets, and really, we're targeting those zones which have higher than average grades, which again supports the long-term plan. They also provide an optionality for production that will again service us over the long term. We have 19 years of mineral reserves, and we see this increasing over time, just again based on the robustness of the system. When you look at these systems in West Africa, a lot of the large gold zones, they really don't—we haven't found the limits of them, and the limits are more defined by operation cost profile versus running out of mineralization. That is something very important to keep in mind. In this last year, we've seen significant success at four different zones, and again, that was touched upon in the exploration news release.

Don Dudek
Chief Exploration Officer at Allied Gold

These discoveries, as noted before, validate the scale, the scope, and the potential of this mineralizing system. Going forward, drilling will remain active into year-end and continue through 2026 and beyond. We are prioritizing the targets with the highest potential, again with the focus on oxides. We are initiating new geophysical surveys over a 2.5 km stretch of productive stratigraphy that already has produced a couple of recent near-term gold deposits. This area has never been systematically tested, and as we march ahead with the drill, we keep on finding more mineralization. Our results from this work will be summarized in an updated mineral resource estimate in Q1 2026. This update will capture new discoveries, oxide additions, and extensions. Furthermore, we plan exploration updates for Kurmuk in Ethiopia late this month and for our project group in Côte d'Ivoire in early 2026.

Don Dudek
Chief Exploration Officer at Allied Gold

With that, I'll pass things off to Jason to discuss the Q3 financial performance.

Jason LeBlanc
CFO at Allied Gold

Great. Thanks, Don. Good morning, everyone. In Q3, the business delivered another solid quarter of financial results. Adjusted net earnings were $0.29 per share, and adjusted EBITDA came in at almost $110 million, reflecting strong operating performance and improving costs across the portfolio. We generated $182 million in net operating cash flow during the quarter, and it ended with a cash balance of $262 million. Giving us strong liquidity into Q4, and as we finish up the construction of Phase 1 at Sadiola and at Kurmuk in Q2 next year. All-in sustaining costs were $2,092 per oz, an improvement of 11% quarter over quarter, despite higher royalties from gold price. Overall, Q3 delivered strong cash flow generation, improving costs, and higher margins.

Jason LeBlanc
CFO at Allied Gold

More importantly, we're positioned for a stronger Q4 with a combination of increased production, lower unit costs, and higher gold prices that will result in a step change in cash flow generation to end the year. As just mentioned, most imminently in Q4, we have our best production quarter of the year, driven by production increases at Sadiola and Bonikro in the range of up to 40% over Q3. At Sadiola, we wrap up the Phase 1 expansion and have the benefit of new oxide zones to complement higher-grade fresh ore that can now be processed through the new mill at a higher throughput rate than before. At Bonikro, our intensive stripping campaign over the last year is finishing up, and the mine starts a higher-grade mining sequence with modest waste removal in Q4. Our improving performance does not end there.

Jason LeBlanc
CFO at Allied Gold

As we look to 2026, the operating and financial performance will transition to a higher sustainable platform with the completion of our development projects. Importantly, the predictability and operational flexibility of Sadiola and our Côte d'Ivoire complex improves prospectively. In Côte d'Ivoire, we move to more direct ore extraction at higher grades with less waste movement. At Sadiola, we're able to primarily rely on the abundant higher-grade fresh ore reserves as primary plant feed for up to 60% of throughput. Oxides fill the balance of the mill, compared with being the primary feed source in this and recent years. Furthermore, new oxide discoveries represent optionality to potentially increase production levels at Sadiola up to 230,000 oz per year in the medium term. Finally, at Kurmuk, first gold is fast approaching.

Jason LeBlanc
CFO at Allied Gold

This will be a step change for Allied, adding a new long-life, low-cost asset that significantly increases group production and cash flow. Kurmuk is expected to be transformational to our portfolio and financial profile. On the chart here, you can see the production growth we are expecting in coming years. This will correspond to impressive top-line growth in today's gold environment, but more impressive will be the leverage effect we see in EBITDA and cash flow generation because of our fixed overhead and decreasing unit operating costs, or ASIC. With that, I will hand things back to Peter for his wrap-up.

Peter Marrone
Chairman and CEO at Allied Gold

Thank you very much, Jason. In terms of just to conclude the presentation of coming milestones with our Sadiola exploration update, as Don mentioned, we've demonstrated value creation short-term and long-term, finding more oxides and expanding the already robust inventory of fresh ore. We have updates coming for our other mines. That includes an exploration update for Kurmuk in November and for the Côte d'Ivoire complex in January. Expect that we will have completed the Sadiola Phase 1 expansion late this year, literally over the course of a few weeks now. That has huge impact on operational flexibility because of that abundance of fresh ore. We have an analyst and investor site visit of Kurmuk, which is expected early in Q1.

Peter Marrone
Chairman and CEO at Allied Gold

We have the Sadiola Phase 2 expansion update, how we intend to progress to get to that 350,000 oz-400,000 oz per year, which we plan to deliver in January next year. We have had a team in Mali and Côte d'Ivoire last week on our reserves and resources to complete their work so that we can provide an end-of-year reserve and resource update, including the impact of Oumé on the Côte d'Ivoire complex. Of course, included in that is Kurmuk, which we expect in February. Our Q4 results, of course, are expected soon after the completion of the quarter in late January or early February. We will provide an update on Agbaou and its reserves and resources, which we expect in the second quarter. We start Kurmuk operations in the middle of the year.

Peter Marrone
Chairman and CEO at Allied Gold

I should say with respect to Agbaou that, of course, the objective there is an extension of mine life. Ladies and gentlemen, we've committed to improving. Improvements in block models and mine plans, our mining efforts, our processing, creating organizational effectiveness that begins with hiring senior local persons to manage our operations. All of that is now in place. We do not identify here the results of that, but those results include improving production and costs this quarter, the quarter that we are now in, and into next year. New equipment, better utilization, better mine plans, competent operators, access to higher-grade ore, enhanced mining access, and flexibility. That positions us for a strong fourth quarter and an even stronger 2026 across all measures, including production, costs, and cash flow. Operator, perhaps at this point, we can open the call to questions.

Operator

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Just a reminder, we ask you to please limit yourself to one question and one follow-up only. After that, you can simply join the queue again. Thank you. Your first question comes from Carey MacRury from Canaccord Genuity. Please go ahead.

Carey MacRury
Carey MacRury
Equity Research Analyst at Canaccord Genuity

Hi, good morning, Peter, and team, and congrats on the good quarter. I guess my first question is just on Sadiola Phase 2. Phase 2, or sorry, Phase 1 is almost complete. Sounds like you're adding more oxide. When realistically, how should we think about the timing of when you'd actually commit to Phase 2. In terms of putting a shovel in the ground?

Peter Marrone
Chairman and CEO at Allied Gold

Yeah, so let's begin with first principles, Carey. As I said a few moments ago. Either with our year-end results or in advance of that, so that would mean in January, we will provide an update on what we intend to do with Phase 2. We have a feasibility study for a new plant. Up to 10 million tons per year, and that gets us that production platform of 350,000 oz-400,000 oz. That would idle the existing plant. We would commit to expenditure by the end of 2026. We would be in production by late 2028 or late 2029. As I mentioned, that would also mean that we will have decommissioned the existing plant. Over the course of the last 18 months, we've been looking at an alternative. It's something that we were very familiar with as a management in Yamana.

Peter Marrone
Chairman and CEO at Allied Gold

We're looking at how can we take the existing plant, further modify it to increase its throughput. Not to 10 million tons per year, but something in between the current level to 10. How do we improve recoveries so that we get to a similar production level in the range of 350,000 oz per year? With two improvements. The first is potentially less capital, and the second is better capital efficiency. In other words, we're not committing to that capital completely upfront. We're just about complete on that technical work. With the completion of that technical work, we have board meetings in December. We expect then that in January, at the latest, with our fourth quarter results, we will provide you with our take on what is the best course for us, taking all factors into account.

Peter Marrone
Chairman and CEO at Allied Gold

What is the best capital efficiency, delivers the best results, and the greatest certainty?

Carey MacRury
Carey MacRury
Equity Research Analyst at Canaccord Genuity

Okay, great. Maybe just, reserves and resource price is pretty low compared to we're sitting at $4,000 an oz. I guess within your portfolio, are there any specific assets that really have better optionality at maybe not $4,000, but higher prices than reserves and resources?

Peter Marrone
Chairman and CEO at Allied Gold

Yeah, really good question. That one really applies to Agbaou. Part of the effort on Agbaou is a three-part program that we've undertaken to improve mine life. One of the first parts of that is, can we look at the pit design at our gold price? We're looking at a $2,000 pit design. What does that do in terms of, and of course, the infill that follows from that, what does that do in terms of extending mine life? The other two components, of course, are a possible underground and regional exploration opportunity. We'll have more to say on that into next year, as I mentioned, but you should expect that for that asset, we will be using a $2,000 gold price for reserve estimation.

Peter Marrone
Chairman and CEO at Allied Gold

We're reviewing what our peers are doing more generally to see what they have already done or what they're planning to do. So we're evaluating at this point. Where I'm personally leaning, but we have to have lots of discussions with management, is a $2,000 gold price for reserves across the board to complement what we're already doing at Agbaou and $2,300 for resources.

Carey MacRury
Carey MacRury
Equity Research Analyst at Canaccord Genuity

Great. That's good for me. Thanks, Peter.

Operator

Your next question comes from Justin Chan from SCP Resource Finance. Please go ahead.

Justin Chan
Director of Mining Equity Research at SCP Resource Finance

Hi, guys. Thanks and congrats on the quarter. I'll consolidate. Instead of one question of follow-up, if you wouldn't mind, I'll ask two separate questions. Just one's on. Just on the accounting. The two prepays that were mentioned at the end of September in the documentation, were those included in cash flow from ops? Just to make sure my model's counting for everything correctly, that's my first one.

Jason LeBlanc
CFO at Allied Gold

Yeah, that's right, Justin.

Justin Chan
Director of Mining Equity Research at SCP Resource Finance

Okay. Thanks very much. Okay, thanks. Appreciate it.

Jason LeBlanc
CFO at Allied Gold

Look at EBITDA, they're not there though.

Justin Chan
Director of Mining Equity Research at SCP Resource Finance

Okay, gotcha. Gotcha. Okay, thanks. That's very helpful. I mean, there's a lot of headlines over the weekend, especially just on supply chains and fuel availability in Mali. I was just curious if you guys could give some color on maybe what you're seeing on the ground. Sometimes there's obviously difference between what media says and what the actual operators are seeing. Yeah, could you give us your perspective on the current operating situation?

Peter Marrone
Chairman and CEO at Allied Gold

Yeah, I tried to address that at the beginning, Justin. I think it would be wrong for us to talk about what is the geopolitics of one thing or another, other than to say that, look, it's business as usual. There is a fuel disruption. There are many reasons for that fuel disruption that has affected the capital. Interestingly, as the first of these articles was published on Friday of last week, we understand that roughly 200 trucks-250 trucks filled with fuel came into the capital. And that's about a week's supply, and that's typically the way that the capital runs. The best that we can say at this point is that there is no disruption to fuel supply lines or other supply lines relating to the mines. There has been some disruption as a result of some insurgency activity in and around the capital.

Peter Marrone
Chairman and CEO at Allied Gold

It does appear to us as if there is some alleviation of that. I repeat what I said before. This is a business-as-usual situation. We in the country, those who are familiar with the country, those who are familiar with countries such as this, have seen this sort of thing before. At the end of the day, the best way that I can describe it is, regardless of disruptions, business must go on and does go on. That is what we expect here.

Justin Chan
Director of Mining Equity Research at SCP Resource Finance

Gotcha. Thanks. Now, very clear. Yeah, appreciate the reiteration.

Operator

Your next question comes from Mohamed Sidibé from National Bank Capital Markets. Please go ahead.

Mohamed Sidibé
Mohamed Sidibé
Equity Research Analyst at National Bank Financial

Hi, Peter and team. Thanks for taking my questions. Just maybe to start with the Q4 guide that you gave with Sadiola and Bonikro being potentially up to 40% higher. What would it take to see, I guess, both operations be closer to that 40% mark? What are the key drivers that we should look for at Sadiola and Bonikro?

Peter Marrone
Chairman and CEO at Allied Gold

I'll turn to your hand in a moment, but bear with us, Mohamed. We are ahead of our expectations for the quarter so far. In the case of Côte d'Ivoire, we're more than 5% ahead. In the case of Sadiola, just a few percentages ahead. Again, on a production platform, we expect to be greater than Q3. I think you should expect that we will be able to meet the expectations of getting close to or at that 40%. Johan, I will summarize by saying that in the case of Sadiola, it is these oxide discoveries that were made earlier this year that you're bringing into production, going through the development process and bringing into production. Of course, by the end of the year, it's the phase 1 expansion that completes and being able to process some of a greater percentage of fresh ore.

Peter Marrone
Chairman and CEO at Allied Gold

In the case of Côte d'Ivoire, all that effort that's been undertaken to date, including, for example, at Agbaou. Where we had waste removal that was very significant in the second quarter that increases production. We're going to higher grades at Bonikro as a result of that waste removal. That's what accounts for that higher level of production. Johan, did you want to supplement that with anything more specific?

Johan Stoltz
COO at Allied Gold

Peter, you've summarized most of it. I want to say that the hard work from the team started in January up to now created flexibility within Sadiola. You've alluded to the oxide deposits and also the mill startup that will enhance the throughput in Sadiola with higher recoveries. More predictable, more flexibility was given into the Sadiola as well as into the CDI complex. That enabled us to move ore to and from between the various plants. Let's set ourselves up to where we are currently. We're ahead of the Q4 numbers. As you alluded, we're halfway through the quarter already. The positive trend, the teams are doing well, the plans are coming together nicely. Looking forward to the end result. Definitely very close to the 40% mark, if not slightly higher, Peter.

Mohamed Sidibé
Mohamed Sidibé
Equity Research Analyst at National Bank Financial

Great. Thanks a lot for that answer. Jesse, if I could move on maybe on exploration. I think you provided a pretty good update at Sadiola with a lot of oxide potential on your exploration target there. I wanted to maybe shift to Côte d'Ivoire and the visibility at Agbaou and Bonikro. I know there's an update that is coming, but how do you currently look at those two assets in terms of mine lives remaining? What do you envision them to ultimately be as a potential source of production for you guys? Thank you.

Peter Marrone
Chairman and CEO at Allied Gold

Again, at this point, we have not completed the work, but Oumé contributes comfortably to Bonikro's increase in mine life. We publicly have said we want to get to at least 180,000 oz per year from the complex, so roughly 50% from Bonikro and 50% coming from Agbaou. Oumé contributes very meaningfully to that mine life extension. It looks as if we will be above the 10 years for Bonikro. Agbaou is a bit more complex because it is further behind in terms of the exploration effort. With what we are doing, looking at and doing drilling into reachable, throughout it, reachable underground. What we are doing with the pit shell with a $2,000 gold assumption, and what we are doing with the broader outside of the compensated area exploration effort, we will begin to demonstrate. We will not get with that update next year.

Peter Marrone
Chairman and CEO at Allied Gold

I do not believe that we will get to 10 years of mine life for Agbaou, but we will begin to demonstrate that it is more than the roughly two years of mine life that we currently carry. We think significantly in excess of that. I believe in our MD&A with our second quarter, we indicated that we were looking at four- to five-year extension. That was our objective. We expect that the exploration results and the other efforts that we are undertaking with technical services will demonstrate at least that. Finally, then, what is our objective? Our objective is at least 10 years of mine life at 180,000 oz per year. Where we are finding that objective, we are trying to get to 200,000 oz per year at at least that 10 years of mine life. With that, this becomes a meaningful asset, a very meaningful asset. It will not have the prominence.

Peter Marrone
Chairman and CEO at Allied Gold

It does not have the tier one status of Kurmuk and Sadiola, but it does. It is meaningful. It does contribute to the share price. By my estimation, taking the existing mine life as we show it based on reserves and resources and getting to 10 years of mine life at 200,000 oz per year, by my estimation, it adds somewhere between $8 and $10 per share. I think that's pretty significant.

Mohamed Sidibé
Mohamed Sidibé
Equity Research Analyst at National Bank Financial

Thanks a lot for that, Peter. That's very helpful. I guess, finally, you've strengthened your balance sheet with the forward sales agreement, the raise post-quarter, as well as the good cash flow from operations there. As you're heading into the completion of Kurmuk, a better 2026 and free cash flow, the sector is getting, I guess, a little bit hotter in terms of M&A. Could you maybe share your thoughts on further consolidation down in West Africa or M&A opportunities that you may be looking at from the acquisition side? Or is that more of a 2027 event and Kurmuk remains a main priority alongside Sadiola?

Peter Marrone
Chairman and CEO at Allied Gold

Boy, what a question. If we'd gone back a year ago, Mohamed, I would have said, of course, we should be looking at acquisitions, what are the opportunities in Africa, in other developing parts of the world? That's where we still think there's the best juice, where we think the best value. Frankly, over the course of the last several quarters, we've had a bit of an epiphany. When we look at Kurmuk, that's a real prize. It's a tier one asset. I repeat what I said before. It's a tier one asset. We're now looking at how we expand its throughput to match the size that we already carry for the SAG mill to that 6.4 million tons per year from the 6 million tons per year. That gets the production platform to over 300,000 oz per year.

Peter Marrone
Chairman and CEO at Allied Gold

With all the sustaining costs, as we've described them, that means that we're generating some impressively robust cash flows. From a production point of view, mine life point of view, and from a cash flow point of view, it is a tier one asset. The same would be true for Sadiola. I can't think of very many mid-tier companies that are underpinned by two tier one assets. That epiphany to which I referred is that we're going to keep our eyes on the prizes here. Keep your eyes on the prize. We don't think that there is anything that is as compelling as engaging in the completion of these efforts that we have inside the company that get us to that roughly 800,000 oz of production beginning next year to 600,000 oz, and then a few years after that to that 800,000 oz.

Peter Marrone
Chairman and CEO at Allied Gold

We think that is what delivers the best value for shareholders. We become a real catch at that point as well. That has not escaped us.

Mohamed Sidibé
Mohamed Sidibé
Equity Research Analyst at National Bank Financial

Thanks a lot for that, Peter. Thanks for the question there.

Operator

Your next question comes from Ingrid Rico from Stefo. Please go ahead.

Ingrid Rico
Ingrid Rico
Managing Director at Stifel

Yeah, good morning, Peter and Allied team. I have, I guess, two follow-ups on Sadiola. I appreciate the comments, Peter, on the progressive expansion options and how you guys are evaluating that. I noticed in the press release, I think it was, that you will be proceeding with a pre-leach thickener, and you're going to be adding that in 2026. I guess my question would be, one, on what sort of cost budget do you have for that? And two, what would it do with the recoveries or the improvement on the circuit by adding that thickener?

Gerardo Fernandez
Chief Development Officer at Allied Gold

Hi, Ingrid, Gerardo. It's a small CapEx ticket. It's about $7 million-$8 million. What it does is allow us to manage the density better so we can increase the proportion of fresh rock up to 90%. Depending on the flexibility from oxides, also can lead to increased throughput. The beauty of it is it works. It's necessary for both scenarios, the full expansion or the progressive expansion. We decided to go ahead and start engineering and start the construction next year so we can see the benefits as soon as possible.

Ingrid Rico
Ingrid Rico
Managing Director at Stifel

Okay. Excellent. Just, I guess, more near-term and sort of the grade. Expectation that we could start to see as the Phase 1 expansion is completed and you're able to put more of the fresh ore in, should we think of grade picking up Q4 and into 2026? What sort of grades should we be looking for with that Phase 1 completed?

Peter Marrone
Chairman and CEO at Allied Gold

Yes, you should expect to see the grade improves. Gerardo or Johan, do you want to address where we expect the grade to be?

Gerardo Fernandez
Chief Development Officer at Allied Gold

Maybe I can comment long-term. Ingrid, if you look at the inventory of fresh rock in Sadiola, that is in the range of 1.8 g per ton. Some areas are higher than that. Some areas are lower, but that's the bulk of the, or that's the average of the bulk of the reserves, which is the fresh rock. Long-term, that's what we should be tracking towards. In terms of oxide, there is an oxide to connect with what Don was describing with the new opportunities to add moderate grade or high-grade oxides, which allow the plant to increase capacity and recoveries. Maybe Johan can comment on the shorter term.

Johan Stoltz
COO at Allied Gold

Great question. Gerardo, I think your numbers are spot on around the 1.7 g-1.8 g a ton. We do find these honey pots around the Sadiola property with higher oxide grades. If we look at the average over the life of mine, it sits around the.

Ingrid Rico
Ingrid Rico
Managing Director at Stifel

Okay. Perfect.

Peter Marrone
Chairman and CEO at Allied Gold

Ingrid, we're not complete the quarter yet, but if we go over the course of the last couple of weeks, so it's a meaningful part of the short term of the quarter, we are experiencing, because of some of those honey pots, as Johan described it, we are experiencing grades that are better than what we had in plan.

Ingrid Rico
Ingrid Rico
Managing Director at Stifel

Okay. That's excellent. If I can squeeze just one last question on Kurmuk, I appreciate that we're going to get that update on the exploration very soon. Just how should we think, and maybe just some comments if you can, on the infill drilling and how that's shaping up for grade reconciliation and looking into the grades as you start sort of commissioning and ramping up next year?

Peter Marrone
Chairman and CEO at Allied Gold

Don's on the line. Don, did you want—Don's remote. If you're available, Don, can you answer that?

Don Dudek
Chief Exploration Officer at Allied Gold

Yes. We're not doing a lot of infill drilling. We're mostly focusing on extending the resources down dip, down plunge, along strike. Really trying to bulk out the reserve pits as we see them today. We are seeing continuations of the mineralized zones, and yet have not found the limits of the system. They're also looking for other optionality things. We've talked about Tsenge before, which is a 7-km-long gold-in-soil trend. We've been drilling at the south end of that for a good part of the year. We have a few other targets that we're moving up the list. We've talked about this for Sadiola in terms of optionality. Newer close-to-surface discoveries will provide more optionality for Kurmuk going forward. The update near the end of this month will present all of that.

Gerardo Fernandez
Chief Development Officer at Allied Gold

Maybe to complement. Ingrid, to complement Don's comment and addressing your question. Don was referring to what we're doing now, looking into the future, but what was done in the past, in 2024 and into the beginning of 2025, was to do confirmation drilling, especially around Dish. Not much in Ashashire, but heavily in Dish. That information has been modeled. We have ore exposure now with the mining at both deposits, and we're confirming the interpretation, the geology, and the drilling is also confirming the grades and the mineralization as we had it in the plan. It is very positive from that perspective of risk management and sets the rest in a good position to the start of operations next year.

Ingrid Rico
Ingrid Rico
Managing Director at Stifel

Great. Thank you. Looking forward to that Kurmuk update later this month. Thanks.

Operator

Before we proceed, again, if you want to join the queue, simply press star one. Your next question comes from Luke Bertozzi from CIBC. Please go ahead.

Luke Bertozzi
Luke Bertozzi
Equity Research Analyst at CIBC

Hi, good morning, Peter and team. Just to follow up on Ingrid's question on the pre-leach thickener at Sadiola, can you give us any indication of when that pre-leach thickener could come online? Should we be expecting that to impact 2026 production? Thanks.

Gerardo Fernandez
Chief Development Officer at Allied Gold

Yeah. Look towards the end of 2026. Yeah, we haven't issued guidance, so we cannot quantify how much impact will be or disclose it. We have an idea, but bear with us when we issue guidance. We'll reflect it there.

Peter Marrone
Chairman and CEO at Allied Gold

Luke, we've indicated that we see Sadiola in its current form, before the second phase, partial or whole expansion, being in a range of 200,000 oz-230,000 oz per year. This is part of the plan to get to that higher level of production. We'll have more to say on it as we complete some of the work to the end of this year when we give our guidance early next year.

Luke Bertozzi
Luke Bertozzi
Equity Research Analyst at CIBC

Yeah. Okay. Thanks. The rest of my questions have been answered, so I'll leave it there. Thanks again.

Operator

There are no further questions.

Peter Marrone
Chairman and CEO at Allied Gold

Operator, does any other questions?

Operator

No, there are no further questions at this time. So I would now like to turn the call back over to Peter Marrone for the closing remarks. Please go ahead.

Peter Marrone
Chairman and CEO at Allied Gold

Ladies and gentlemen, thank you very much for your participation on this call. We look forward to several of the milestones that we mentioned being provided. Any questions or comments, please do reach out to any of us. We look forward to seeing many of you in person at our site visit at Kurmuk in January. Thank you very much.

Executives
    • Jason LeBlanc
      CFO
    • Don Dudek
      Chief Exploration Officer
    • Peter Marrone
      Chairman and CEO
    • Gerardo Fernandez
      Chief Development Officer
    • Johan Stoltz
      COO
Analysts
    • Justin Chan
      Director of Mining Equity Research at SCP Resource Finance
    • Carey MacRury
      Equity Research Analyst at Canaccord Genuity
    • Luke Bertozzi
      Equity Research Analyst at CIBC
    • Ingrid Rico
      Managing Director at Stifel
    • Mohamed Sidibé
      Equity Research Analyst at National Bank Financial
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