Allied Gold Corporation (AAUC:CA) Q3 2025 Earnings Call Transcript

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Overview

The earnings call revealed strong financial performance with increased gold production and cash flow. Despite high costs, there were operational improvements and optimistic guidance for future production. The Q&A section highlighted progress on key projects and no disruptions in supply chains, while management's focus on current projects over M&A suggests a stable strategy. Overall, the positive financial metrics and guidance outweigh concerns about cost pressures and political risks, leading to a positive sentiment.

Key Financial Performance

Gold Production 87,000 ounces in Q3 2025, setting up for a strong Q4. Production at Agbaou increased 43% quarter-over-quarter, driven by higher grades and throughput. Bonikro production was on plan with improved grades, recoveries, and throughput.

Adjusted EBITDA $110 million in Q3 2025, reflecting strong operating performance and improving costs across the portfolio.

Operating Cash Flow $200 million in Q3 2025, showcasing strong cash generation.

Cash Balance $262 million at the end of Q3 2025, providing strong liquidity for upcoming projects.

All-in Sustaining Costs (AISC) $2,092 per ounce in Q3 2025, down 11% quarter-over-quarter due to operational improvements despite higher royalties from gold prices.

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Operating Highlights

Sadiola Phase 1 Expansion: Significant progress made; mechanical installation of new mill and crushing circuit complete. Commissioning begins in December, enabling treatment of up to 60% fresh ore, improving throughput rates, recoveries, and lowering costs.

Kurmuk Development: Advancing on schedule; plant construction and key infrastructure progressing. First gold expected by mid-2026, with plant capacity approved at 6.4 million tonnes per year.

Production Growth: Q3 production of 87,000 ounces sets up for a strong Q4, with expected production increases of up to 40% at Sadiola and Bonikro. 2025 production guidance exceeds 375,000 ounces.

Exploration Success: Exploration at Sadiola aims to add 3.5 million ounces of resources within 5 years, including 1 million ounces of oxide inventory. New discoveries to be included in Q1 2026 resource update.

Cost Efficiency: All-in sustaining costs reduced by 11% quarter-over-quarter to $2,092 per ounce. Further cost reductions expected in Q4 with higher grades and operational improvements.

Cash Flow and Liquidity: Q3 adjusted EBITDA of $110 million and operating cash flow of $182 million. Cash balance at $262 million provides strong liquidity for ongoing projects.

Operational Flexibility: Sadiola Phase 1 expansion enhances flexibility with fresh ore processing. New oxide discoveries provide optionality to increase production to 230,000 ounces per year in the medium term.

Portfolio Transformation: Kurmuk development to add a long-life, low-cost asset, significantly increasing group production and cash flow by mid-2026.

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Risk or Challenges

Geopolitical Instability in Mali: The company operates in Mali, a region with political and geopolitical uncertainties. While operations have continued normally during past government changes, prolonged fuel shortages and potential civil unrest pose risks to operational stability.

Fuel Supply Disruptions: Recent disruptions in fuel supply to the capital of Mali could escalate into broader challenges, including civil unrest, which may indirectly impact mining operations.

Regulatory and Political Risks: Unexpected government changes in Mali and other regions of operation could introduce regulatory hurdles or operational uncertainties, even though mines have historically continued to operate.

Cost Pressures: All-in sustaining costs remain high at $2,092 per ounce, despite recent improvements. Sustained high costs could pressure margins, especially if gold prices fluctuate unfavorably.

Project Execution Risks: The Sadiola Phase 1 expansion and Kurmuk development are on schedule, but delays or cost overruns in these projects could impact future production and financial performance.

Economic and Market Risks: Dependence on gold prices for revenue makes the company vulnerable to market fluctuations, which could affect cash flow and profitability.

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Guidance & Outlook

Production Expectations: Production in Q4 is expected to be 40% higher than Q3, driven by increases at Sadiola and Bonikro. Sustained production levels are anticipated into 2026, with a target of over 375,000 ounces for 2025, equating to approximately 100,000 ounces per quarter.

Cost Projections: Q4 costs are expected to improve due to higher grades and operational efficiencies. The completion of the Sadiola Phase 1 expansion will lower processing costs and improve predictability.

Sadiola Phase 1 Expansion: The expansion is on schedule for completion in December 2025. It will enable processing of up to 60% fresh ore, increasing throughput rates, improving recoveries, and reducing costs.

Kurmuk Development: Kurmuk is on track for first gold production by mid-2026. The plant capacity has been approved at 6.4 million tonnes per year, enhancing long-term production.

Exploration and Resource Updates: Exploration efforts aim to add 3.5 million ounces of resources at Sadiola within the next 5 years. An updated mineral resource estimate is expected in Q1 2026, capturing new discoveries and extensions.

Operational Improvements: Operational flexibility and predictability are expected to improve with the reliance on higher-grade fresh ore at Sadiola and direct ore extraction at higher grades in Cote d'Ivoire.

Financial Performance Outlook: The company anticipates a step change in cash flow generation in Q4 2025, driven by increased production, lower costs, and higher gold prices. Kurmuk is expected to significantly enhance group production and cash flow upon commencement.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:What is the timing for committing to Sadiola Phase 2?

A:An update on Phase 2 will be provided in January, with a feasibility study for a new plant up to 10 million tonnes per year. The commitment to expenditure is expected by the end of 2026, with production starting by late 2028 or early 2029.

Q:Are there specific assets in the portfolio with better optionality at higher gold prices?

A:Agbaou is being evaluated with a $2,000 pit design to extend mine life. The company is also considering a $2,000 gold price for reserves and $2,300 for resources across the board.

Q:Were the two prepays mentioned in the documentation included in cash flow from operations?

A:Yes, the two prepays were included in cash flow from operations.

Q:What is the current situation regarding supply chains and fuel availability in Mali?

A:There is a fuel disruption affecting the capital, but 200-250 fuel trucks recently arrived, providing about a week's supply. There is no disruption to supply lines for the mines, and operations continue as usual despite some insurgency activity.

Q:What are the key drivers for Sadiola and Bonikro to achieve up to 40% higher production in Q4?

A:Key drivers include oxide discoveries at Sadiola, the Phase 1 expansion, and higher grades at Bonikro due to significant waste removal earlier in the year. Both operations are ahead of expectations for the quarter.

Q:What is the current mine life and production potential for Agbaou and Bonikro?

A:Bonikro is expected to have over 10 years of mine life, while Agbaou is working towards extending its mine life beyond the current 2 years, aiming for 4-5 years initially. The goal is to achieve 10 years of mine life at 180,000-200,000 ounces per year for the complex.

Q:What are the company’s thoughts on M&A opportunities in West Africa?

A:The company is focusing on completing its current projects, such as Kurmuk and Sadiola, which are considered Tier 1 assets. M&A opportunities are not a priority at this time.

Q:What is the cost and impact of the pre-leach thickener at Sadiola?

A:The pre-leach thickener will cost $7-8 million and will allow the plant to manage density better, increasing the proportion of fresh rock up to 90% and potentially improving throughput. It is expected to come online by the end of 2026.

Q:What are the expected grades for Sadiola with the Phase 1 expansion?

A:Long-term grades for fresh rock at Sadiola are expected to average 1.8 grams per tonne, with some higher-grade oxide zones providing additional upside.

Q:What is the status of exploration and infill drilling at Kurmuk?

A:Exploration is focused on extending resources down dip, down plunge, and along strike. Confirmation drilling has validated the geological interpretation and grades, setting the project up for operations next year.

Q:Review of Unclear Management Responses

A:Management avoided providing specific details on the impact of the pre-leach thickener on 2026 production, stating that guidance will be issued later. Additionally, they did not provide a clear timeline or specifics on M&A opportunities, focusing instead on current projects.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

AAUC Transcript

Allied Gold Corporation (AAUC:CA) Q3 2025 Earnings Call Transcript

Positive11-7

AAUC Report

Allied Gold Corp 6-K

6-K

2025-08-07

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