Allied Gold AAUCF has reached a preliminary agreement with Mali’s government, securing a 10-year permit for its Sadiola gold mine and permission to exploit the nearby Diba deposit. This development comes as the military-led Malian government implements new mining laws aimed at boosting state revenues through increased royalties and state ownership.
The Sadiola gold mine, located in Mali’s Kayes region, has been Allied Gold’s key asset since its acquisition from Iamgold Corp IAG in 2020. The mine is operated through Société d’Exploitation des Mines d’Or de Sadiola SA (SEMOS), where Allied holds an 80% stake and the Malian government retains 20%. Sadiola boasts significant gold reserves and is currently undergoing an ambitious expansion project. The new agreement with the Malian junta incorporates plans to develop the nearby Korali-Sud (Diba) deposit.
Allied Gold’s expansion plans for Sadiola are divided into two phases. The first phase, projected to cost $65 million, focuses on maintaining steady production, improving infrastructure, and modifying the existing processing plant. This phase aims to increase gold production to between 200,000 and 230,000 ounces annually for at least four years. Key improvements include upgrades to the plant’s milling and crushing capabilities to handle more fresh ore. Additionally, $5 million will be invested in cyanide detoxification, accelerating environmental compliance.
The second phase, slated to begin in 2026 and conclude by 2028, involves constructing a new processing plant specifically designed for fresh ore. Allied has allocated $400 million for this phase, with the potential to transform Sadiola into a top-tier, low-cost gold producer. The new plant and infrastructure are expected to significantly increase production, potentially reaching 400,000 ounces per year, making Sadiola a generational asset for the company.
However, the ongoing geopolitical situation in Mali presents challenges. The country is facing multiple ongoing armed conflicts and increasing de-globalization, making mining outside top-tier jurisdictions riskier. The presence of the Wagner Group, a Russian paramilitary organization, and the jihadist group JNIM, aligned with Al-Qa’ida, pose additional threats to the country’s long-term stability.
Following the news of the agreement, Allied stock closed the day at CA$2.79, falling 3.8%. Barrick Gold GOLD, another major mining company, is closely monitoring the situation in Mali as it operates a tier 1 Loulo-Gounkoto mine with over 7 million gold ounces of reserves. The company’s vigilance highlights the heightened risk associated with mining operations in the region.
