Each week, Mining Technology’s editors select a deal that illustrates the themes driving change in our sector. The deal may not always be the largest in value or the highest profile, but we select it because of what it tells us about where the leading companies are focusing their efforts, and why. We pick apart the deal itself and the industry theme behind it. This new, thematic deal coverage is driven by our underlying Disruptor data, which tracks all major deals, patents, company filings, hiring patterns and social media buzz across our sectors.
The deal
Allied Gold will take over 100% of Elemental Altus Royalties’ wholly owned subsidiary Legend Mali III.
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This will grant Allied Gold the operation of Legend Mali’s indirectly owned mining license for Korali Sud and Lakanfla, collectively known as the Diba project. Elemental Altus will maintain a net smelter return from the project of as much as 3%.
Why it matters
The Diba project, which has an annual gold production of 57,290oz, is situated only 15km from an Allied Gold processing plant that currently services its flagship Sadiola gold project.
The 107km² Diba licence itself is adjacent to Allied’s own Sadiola large-scale licence. It means that Allied can expand its flagship project’s range while also allowing both projects to benefit from organisational economies of scale. Improved production, reduced costs and optimised strategy can all be had from the expansion.
Frederick Bell, Elemental Altus CEO, stated: “We selected Allied as the successful bidder given the incredibly compelling operational synergies with their adjacent Sadiola Gold mine complex, which is one of the largest and longest operating multi-open-pit gold mines in Mali.”
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By GlobalDataBell continued: “Oxide material from the project is expected to be fast-tracked to production at Sadiola, greatly accelerating the time to first royalty cash flows, while also mitigating risks associated with the construction of a new mine.”
A resource estimate conducted by Elemental Altus in 2022 identified approximately 200,000oz of gold stored in oxides readily available to be extracted, in areas which will be added to the Sadiola mine plan. On top of this, the report estimated the project contains potentially as much as 474,000oz more of gold.
In the short term, the products of the Diba project will strengthen cash flows and liquidity for Allied at a time where it is investing resources into the construction of its Kurmuk gold project in Ethiopia. With Diba already established and operating, this is expected to be an easy process.
The detail
Allied Gold will pay Elemental Altus $6m (A$8.92m) for control of the Diba project. It will also take a productive royalty from the project’s output. This will account for 3% of the first 226,000oz of gold from the Korali-Sud area and 2% on all future production in excess of 226,000oz from the whole project. The $6m will be distributed in line with production milestones.
