Executive Summary / Key Takeaways

• Allied Gold is executing a clear path to double production from 375,000 ounces in 2025 to over 800,000 ounces by 2028-2029 through its Kurmuk development and brownfield expansions, positioning it as one of the few mid-tier producers with a credible senior producer growth trajectory.
• The company trades at a significant discount to West African peers despite demonstrating operational stability, strong cash flow generation, and industry-leading growth prospects, creating a potential re-rating opportunity as execution de-risks the story.
• A multi-jurisdictional portfolio across Mali, Côte d'Ivoire, and Ethiopia provides meaningful risk mitigation against single-country political instability that has disrupted competitors, though exposure to Africa's complex geopolitical backdrop remains the central risk to the thesis.
• Recent operational milestones—including a new energy program at Sadiola and significant exploration advances at Kurmuk—signal accelerating execution, but the $500 million Kurmuk capital program and ongoing Mali political tensions represent critical swing factors for both timelines and costs.
• A C$175 million equity raise in October 2025 provides necessary growth capital, yet profitability metrics lag established peers, making margin expansion and all-in sustaining cost reduction the key variables to monitor for the investment case to materialize.

Setting the Scene: The West African Gold Opportunity

Allied Gold Corporation explores and produces gold and silver ores across three African jurisdictions, operating a portfolio that spans from producing mines to advanced development projects. The company's revenue model is straightforward: extract gold from open-pit mines, sell to refiners at spot prices, and drive value through operational efficiency and reserve expansion. This simplicity belies the complexity of operating in West Africa's gold belt, where geopolitical instability, infrastructure deficits, and capital intensity create high barriers to entry but also high returns for successful operators.

The industry structure is dominated by senior producers like Barrick Gold (TSX:ABX) and emerging mid-tiers including Endeavour Mining (TSX:EDV) and B2Gold (TSX:BTO), all competing for finite resources, talent, and infrastructure in a region that accounts for over 5% of global gold production. Allied Gold's position is unique: it is neither a mature senior producer nor a speculative junior explorer. Instead, it represents an emerging mid-tier that completed a reverse takeover in September 2023, listing on the Toronto Stock Exchange with a US$970 million market capitalization—the largest mining IPO since 2010. This recent public market entry explains why the company remains underfollowed relative to its growth profile, creating the valuation disconnect that defines the investment opportunity.

The strategic value proposition rests on three pillars: a diversified asset base that mitigates jurisdictional concentration risk, a pipeline of brownfield expansions that offer lower-cost growth than greenfield development, and an advanced-stage project in Ethiopia that could add 200,000 ounces annually by 2026. Unlike peers concentrated in single countries—exposing them to Mali's 32% output drop in 2025 or Ghana's regulatory shifts—Allied Gold's three-country footprint provides operational optionality that becomes valuable when political risk materializes.

History with a Purpose: From Reverse Takeover to Growth Platform

Allied Gold's public history under its current name began in September 2023, when Mondavi Ventures Ltd. completed a business combination and reverse takeover with Allied Gold Corp Limited and Allied Merger Corporation. This transaction is significant not as a corporate formality but because it created a listed vehicle with a clean balance sheet and access to public capital markets precisely when gold prices and West African mining interest were re-accelerating. The concurrent US$267 million financing provided the growth capital to advance the Kurmuk project and optimize existing assets, setting the stage for the production doubling plan.

The company's origins as a private entity focused on African gold assets explain its asset quality. The Sadiola mine in Mali, the Bonikro, Hiré, and Agbaou interests in Côte d'Ivoire, and the Kurmuk project in Ethiopia were acquired and developed through prior cycles, giving Allied Gold a portfolio of assets with known geology and established infrastructure rather than speculative greenfield exposure. This history de-risks the development pathway compared to peers building from scratch, as Kurmuk's two-phase development plan leverages existing knowledge and nearby infrastructure.

Technology and Operational Differentiation: The Energy Program Edge

Allied Gold's competitive moat is not software but operational excellence in power generation and processing efficiency. In October 2025, the company launched a new energy program at Sadiola that exemplifies this advantage: a staged approach beginning with additional diesel generators and control systems, followed by a hybrid power solution combining medium-speed thermal units with a photovoltaic plant and battery energy storage systems. This is significant because power costs represent 20-30% of operating expenses in remote African mines, and the hybrid system will meet Phase 1 expansion requirements at materially reduced costs while improving reliability.

The impact is direct: lower all-in sustaining costs (AISC) and improved plant stability translate to margin expansion and extended mine life. While competitors struggle with diesel price volatility and grid instability, Allied Gold's proactive energy strategy creates a cost advantage that compounds as production scales. The program's first stage completes in December 2025, providing near-term catalyst visibility that peers with less advanced energy planning cannot match.

At Kurmuk, the company is modifying the plant to support a two-phase development with $500 million total capital investment. This is not merely a construction project but a strategic decision to build for 200,000 ounces annual production over a 10-year mine life. The scale and continuity of mineralized systems demonstrated by recent drilling in November 2025 confirm that this capital will unlock substantial value, with production expected by Q2 2026—an aggressive timeline that, if met, would outpace most development projects in the region.

Financial Performance: Growth Funding and Margin Compression

Allied Gold's third quarter 2025 results demonstrate operational momentum despite a challenging year. The company produced over 87,000 ounces and sold 92,000 ounces, generating revenue that supports full-year guidance of 375,000-400,000 ounces. This production level implies annual revenue of approximately $712 million at current gold prices, representing strong year-over-year growth that validates the asset optimization strategy.

The financial metrics reveal a company in transition. Gross margins of 39.7% and operating margins of 25.8% are respectable but trail best-in-class peers like B2Gold (61.6% gross margin) and Perseus Mining (TSX:PRU) (28% gross margin, but with superior cash generation). The negative profit margin of -3.58% reflects heavy investment in growth rather than operational inefficiency—Allied Gold is spending on exploration, energy infrastructure, and plant modifications while production ramps up. This creates a temporary margin compression that should reverse as Kurmuk comes online and Sadiola's energy program reduces costs.

Cash flow tells a more nuanced story. Operating cash flow of $180.66 million in Q3 indicates strong underlying cash generation from existing operations, but free cash flow remains negative at -$83.86 million annually due to the $500 million Kurmuk capital program. The recent C$175 million equity offering, priced at C$27.35 per share, provides necessary funding without over-leveraging the balance sheet, leaving debt-to-equity at a conservative 0.33. This raise is crucial because it de-risks the development timeline, ensuring Kurmuk's Q2 2026 production target remains achievable despite the challenging capital environment for junior miners.

Competitive Positioning: Diversification vs. Scale

Allied Gold's multi-jurisdictional portfolio creates a risk profile fundamentally different from its direct competitors. B2Gold's concentration in Mali exposes it to the same political instability that reduced national output by 32% in 2025; Endeavour Mining's focus on Côte d'Ivoire and Burkina Faso creates similar concentration risk. Allied Gold's three-country spread means a disruption in Mali—such as Barrick's recent disputes that halted Loulo-Gounkoto operations—would not cripple the entire enterprise. This diversification is a genuine competitive advantage that reduces earnings volatility and justifies a premium valuation, yet the market currently prices AAUC at a discount.

Scale remains the primary disadvantage. B2Gold's Q3 production of 254,369 ounces dwarfs Allied Gold's 87,000 ounces, giving B2Gold superior bargaining power with suppliers and lower per-unit overhead. Perseus Mining's net cash position of $837 million and zero debt contrasts sharply with Allied Gold's negative free cash flow, providing Perseus with strategic optionality during downturns. However, Allied Gold's growth rate—doubling production in three to four years—exceeds any of these mature peers, creating a potential inflection where scale advantages could reverse if execution delivers.

The valuation metrics crystallize this opportunity. Allied Gold trades at an EV/EBITDA multiple of 8.62x, higher than B2Gold's 5.17x but significantly lower than Perseus's 15.02x. This middle-ground valuation fails to reflect that Allied Gold's EBITDA should more than double as Kurmuk ramps up, while B2Gold's growth is modest and Perseus's premium multiple already reflects its superior financial position. The price-to-operating cash flow ratio of 10.24x is attractive for a company growing production at 100% over three years, suggesting the market has not yet priced in the earnings power of the expanded asset base.

Outlook and Execution: The 800,000 Ounce Path

Management's guidance for 2028-2029 production exceeding 800,000 ounces is ambitious but achievable if the current trajectory holds. The Kurmuk development, targeting 200,000 ounces annually by Q2 2026, is the primary growth engine. This timeline is aggressive—most African development projects take 4-5 years from feasibility to production—but Kurmuk's advanced stage and Allied Gold's experienced team increase the probability of on-time delivery. The $500 million capital program is fully funded through the C$175 million equity raise and existing cash flow, removing a major execution risk that plagues development-stage peers.

Sadiola's expansion, supported by the new energy program, will add incremental ounces at lower cost, while Côte d'Ivoire assets provide stable base production and exploration upside. Early 2026 exploration updates for the Côte d'Ivoire portfolio are expected to "underpin the significant value and optionality in the Company's portfolio," potentially adding new reserves that extend mine life beyond current estimates. This exploration momentum is important because it addresses the key investor concern: whether Allied Gold can replace reserves as quickly as it mines them.

The critical execution variables are AISC reduction and political stability. Management emphasizes that expansion efforts will lower costs and position AAUC as a low-cost producer. If Sadiola's energy program delivers the expected 15-20% power cost reduction and Kurmuk achieves the targeted $800-900 per ounce AISC, margins would expand dramatically even at flat gold prices. Conversely, delays in Kurmuk commissioning or renewed political unrest in Mali could compress margins through higher security costs and operational disruptions.

Risks and Asymmetries: What Could Break the Thesis

Three material risks threaten the investment case, each with direct implications for earnings power. First, Mali's political instability is not hypothetical; the country's gold output dropped 32% in 2025 due to security challenges. Allied Gold's Sadiola mine is exposed to this risk, and a production halt would eliminate approximately 30% of current output, delaying the path to 800,000 ounces and straining the balance sheet. The company's diversification mitigates but does not eliminate this risk, making Mali stability a key variable to monitor.

Second, the $500 million Kurmuk development represents a massive bet on Ethiopian permitting and infrastructure. While the project is advanced, any delay in licensing, power grid connection, or water access could push the Q2 2026 start date into 2027, increasing capital costs and reducing the net present value of the investment. This execution risk is compounded by Ethiopia's internal conflicts, which could disrupt logistics and labor availability.

Third, scale disadvantages create financial fragility. Allied Gold's smaller production base means fixed costs are spread over fewer ounces, resulting in higher AISC than established peers. If gold prices decline below $1,800 per ounce, the company would face margin pressure more acutely than B2Gold or Endeavour, potentially requiring dilutive equity raises to complete Kurmuk. The current ratio of 0.70 indicates limited near-term liquidity cushion, making operational cash flow critical.

The asymmetry, however, is compelling. If Allied Gold executes on all three fronts—Kurmuk on time, Sadiola energy savings materializing, and Côte d'Ivoire exploration extending mine life—the company would transform from a 375,000-ounce producer to an 800,000-ounce low-cost senior producer in under four years. This would likely command a re-rating to peer-average multiples, implying 50-75% upside from current levels even without gold price appreciation.

Valuation Context: Pricing in Execution Risk

At $22.22 per share, Allied Gold trades at a market capitalization of $2.76 billion and an enterprise value of $2.63 billion, reflecting a modest net cash position. The EV/EBITDA multiple of 8.62x sits between low-cost producer B2Gold (5.17x) and premium operator Perseus Mining (15.02x), suggesting the market is pricing in moderate execution risk without fully crediting the growth trajectory.

The price-to-operating cash flow ratio of 10.24x is attractive for a company growing production at over 20% annually, particularly when compared to B2Gold's 11.48x and Perseus's 7.45x. The key difference is that Perseus generates superior margins and has a net cash position, justifying its premium, while B2Gold's lower multiple reflects mature growth. Allied Gold's multiple implies the market expects execution to deliver on promised growth, but is not yet paying a premium for that optionality.

Balance sheet strength provides downside protection. Debt-to-equity of 0.33 is conservative, and the recent C$175 million equity raise ensures Kurmuk funding without excessive dilution. The absence of a dividend (0% payout ratio) is appropriate for a growth-stage company, preserving cash for high-return investments. If Allied Gold can achieve the targeted 800,000 ounces at AISC below $900, the implied free cash flow generation would support a valuation 40-60% higher, even at current gold prices.

Conclusion: Execution at an Inflection Point

Allied Gold Corporation represents a rare combination of credible production growth, jurisdictional diversification, and discounted valuation in the West African gold sector. The path from 375,000 to over 800,000 ounces by 2028-2029 is not speculative; it is backed by funded development at Kurmuk, operational improvements at Sadiola, and a stable base in Côte d'Ivoire. This growth trajectory would place Allied Gold among the fastest-growing gold producers globally, yet the stock trades at a discount to peers who lack similar expansion potential.

The investment case hinges on two variables: execution of the $500 million Kurmuk development on time and on budget, and maintenance of operational stability across the three-country portfolio despite Africa's geopolitical challenges. The energy program at Sadiola and ongoing exploration success suggest management can deliver on the first; the diversified asset base provides some cushion on the second. If both hold, the valuation gap to peers should close as production doubles and AISC declines, delivering senior producer returns from a mid-tier platform. For investors willing to underwrite execution risk, Allied Gold offers asymmetric upside in a sector where growth is scarce and geopolitical diversification is increasingly valuable.