A Member of Pat McKeough’s Inner Circle recently asked for his advice on Allied Gold Corp., a Canadian-based gold producer with three operating mines and significant development and exploration properties across Africa.
Pat likes the strong production outlook, experienced management, significant insider ownership, and promising expansion projects that could substantially boost future revenue. However, he notes investors should be careful of gold stock volatility, plus the company’s African asset concentration - this presents above-average political risk.
Allied Gold Corp. (Symbol AAUC on Toronto; www.alliedgold.com), is a Canadian-based gold producer with three operating mines, a significant gold development project and exploration properties throughout Africa.
The company’s principal properties are the Sadiola gold mine in the Kayes region of West Mali (80% ownership), the Bonikro (90% ownership) and Agbaou (85% ownership) gold mines in Cote d’Ivoire, and the Kurmuk gold development project in Ethiopia (100% ownership).
Allied Gold was founded in 2011 as a private company. In 2023, however, it combined its business with Allied Merger Corp., a company started by former executives of Yamana Gold. Yamana was taken over in early 2023 by Pan American Silver, following the sale by Yamana of its Canadian assets to Agnico Eagle Mines.
The new Allied Gold began trading on the Toronto Stock Exchange in September 2023.
Yamana Gold was led by CEO Peter Marrone, who founded the company in 2003. Marrone is now chairman and CEO of Allied Gold. Notably, in December 2023, Allied Gold announced that Marrone, along with other members of the company’s management and founding shareholders, had bought a substantial number of the company’s shares.
Consequently, the directors and officers of Allied Gold now hold more than 22% of the company. That’s a plus for public investors because it gives insiders more incentive to boost Allied Gold’s performance and stock price.
In the three months ended December 31, 2024, Allied Gold reported record gold production of 99,632 ounces. That represented a 16% increase over the average production of the three previous quarters in 2024.
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This production growth was driven by strong output from the Sadiola Mine (54,210 ounces) and the Côte d’Ivoire Complex (45,422 ounces).
The company also saw improvements in its All-in Sustaining Costs, which are expected to be no more than $1,780 per gold ounce sold in the fourth quarter of 2024.
Allied Gold ended the quarter with over $340 million in cash. Meanwhile, the company continues to make progress on its growth initiatives, with the Kurmuk project construction and the Phase 1 expansion at Sadiola both on schedule and within budget.
The company has not paid a dividend since going public.
Allied Gold: Expansion projects on track to boost annual gold output
Allied Gold recently announced its 2025 guidance and near-term outlook. The company expects to produce between 375,000 and 400,000 gold ounces in 2025. Allied Gold projects mine-site level All-In Sustaining Costs for 2025 to range between $1,690 U.S. and $1,790 U.S. per ounce. This guidance reflects the company’s focus on expanding production while managing costs effectively.
Key to Allied Gold’s growth strategy are two major projects: the Kurmuk project in Ethiopia and the Sadiola expansion. The Kurmuk project is progressing on schedule and on budget, with first gold production anticipated in the first half of 2026. Meanwhile, the first phase of the Sadiola expansion is set to complete in the fourth quarter of 2025.
These developments are expected to significantly enhance Allied Gold’s production capacity, with Sadiola projected to produce 200,000 to 230,000 ounces annually from 2026, and Kurmuk contributing substantially from mid-2026 onwards.
Like most gold stocks, the company’s shares are heavily influenced by gold prices. Still, its rising production outlook—spurred by its highly experienced management team—provides lots of speculative appeal for investors. Offsetting that is the above-average political risk of having all its mines in Africa.
Recommendation in Pat’s Inner Circle: Allied Gold is okay to hold for aggressive investors.
