Allied Gold: Allied Gold Unlocks Ethiopian Production

Allied Gold delivers below $950 AISC at Kurmuk versus current operations at $2,100 and industry averages above $1,850, creating massive operating leverage as gold trades above $2,900. This structural cost advantage translates directly to superior margins while competitors struggle with inflation and declining ore grades.

Management is stockpiling $260 million cash plus launching overnight marketed offerings while capital markets remain accessible, positioning for countercyclical expansion. This contrasts sharply with peers who burned cash during the previous cycle and now face funding constraints at peak valuations.

Kurmuk represents untapped 275,000 ounce annual production in a jurisdiction where the government prioritizes mining as 10% of GDP by 2024. Allied benefits from first-mover advantage while Ethiopia's developmental state model provides infrastructure support and regulatory stability for established operators.

• Q4 2025 Record Production: Sadiola Phase 1 expansion commissioning in December drives Q4 to highest quarterly output above 100,000 ounces, demonstrating operational leverage as higher grades across all operations boost margins significantly while AISC drops below $1,850 per ounce.

• Overnight Equity Offering: October marketed offering provides additional growth capital while gold trades near all-time highs, strengthening balance sheet for opportunistic acquisitions as peers face financing constraints during volatile market conditions, positioning Allied as consolidation leader.

• Kurmuk Plant Commissioning: Construction milestone in late 2025 triggers commissioning phase for 290,000 annual ounce capacity in first five years, with commercial production beginning Q2 2026 adding 77% to current output and establishing Allied as Ethiopia's largest gold producer.

• M&A Consolidation Wave: Industry-wide strategic consolidation creates acquisition targets as mid-tier producers with sub-$1.5 billion market caps face liquidity pressures, enabling Allied to leverage its strong balance sheet for accretive deals in favorable jurisdictions.

• African Mining Hub Strategy: Ethiopian government infrastructure investments and 10-year tax incentives transform Allied into regional mining champion, leveraging first-mover advantage as institutional investors rotate into African gold exposure amid geopolitical diversification trends.

• Portfolio Optimization Evolution: Scale benefits from 650,000+ annual ounce production profile attract institutional capital and enable index inclusion, while operational synergies across three jurisdictions deliver sustainable cost advantages as global mining costs continue inflating.

Ethiopia's frequent non-transparent regulatory changes and customs commission adjustments create unpredictable compliance costs for mining operations. Recent power permit freezes for industrial users and shifting investment incentive frameworks signal policy uncertainty that could impact Kurmuk's construction timeline and operational economics.

Kurmuk's $600 million capex faces 4% annual mining cost inflation amid supply chain pressures and energy price volatility. Complex logistics for transporting equipment to remote Ethiopian sites, combined with mechanical erection delays, threaten budget discipline as global construction costs surge 15-20% above 2023 levels.

Allied's aggressive capital raising during peak gold valuations exposes shareholders to dilution if metal prices correct before production begins. The company's opportunistic financing strategy assumes continued capital market access, but mining equity valuations remain volatile with 30-50% leverage to underlying commodity moves.