Press Release: Wheaton Precious Metals Announces the Acquisition of a Gold Stream from Allied Gold's Kurmuk Project

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Wheaton Precious Metals Announces the Acquisition of a Gold Stream from Allied Gold's Kurmuk Project

PR Newswire

VANCOUVER, BC, Dec. 5, 2024

VANCOUVER, BC, Dec. 5, 2024 /PRNewswire/ - Wheaton Precious Metals$(TM)$ Corp. ("Wheaton" or the "Company") is pleased to announce that its wholly-owned subsidiary, Wheaton Precious Metals International Ltd. ("WPMI") has entered into a definitive Precious Metals Purchase Agreement (the "Gold Stream") with Allied Gold Corporation and its wholly owned subsidiary Allied Gold Services Inc. (together, "Allied"), in respect of the Kurmuk Project located in Ethiopia (the "Project" or "Kurmuk").

"Wheaton is pleased to announce a streaming agreement with Allied to advance the construction of the Kurmuk project, which is set to be the first commercial gold mine in Ethiopia," said Randy Smallwood, President and CEO of Wheaton Precious Metals. "This fully permitted, high quality development project offers significant exploration potential, supported by a team at Allied with a proven operating track record. We are excited to partner with Allied to unlock opportunities that empower the local communities and help drive the growth of Ethiopia's emerging metals and mining sector."

"We are delighted to partner with Wheaton on this streaming financing. This began as a multi-party process although it soon became apparent to us that Wheaton would be our partner of choice. They conducted detailed and extensive diligence, were supportive of our efforts, worked with us in evaluating and considering optimization opportunities and recognized the inherent value of our Kurmuk project, a value that we believe significantly exceeds the value implied in our share price. We take our sustainability programs seriously, and it was a delight to see Wheaton not only support these programs but provide suggested improvements. We also welcome Wheaton as a shareholder with a share position acquired in Allied's recent overnight marketed equity financing." commented Peter Marrone, Chairman and CEO of Allied Gold Corporation. "The stream financing now allows us to complete the gold prepay which is the final component of our planned comprehensive financing package for the development of the Kurmuk project. The gold prepay is expected to be led by the lending syndicate for Allied's revolving credit facility, with proceeds available to Allied following the completion of the stream financing. We expect the Kurmuk mine will become one of the more significant precious metal mines in the world delivering significant production and cash flow following its construction."

Transaction Key Terms

(All values in US$ unless otherwise noted)

   -- Gold Stream Upfront Consideration: WPMI will pay Allied total upfront 
      cash consideration of US$175 million (the "Deposit") in four equal 
      installment payments during construction, subject to certain customary 
      conditions. 
 
   -- Streamed Metal: WPMI will purchase 6.7% of the payable gold until a total 
      of 220 thousand ounces ("Koz") of gold has been delivered, at which point 
      WPMI will purchase 4.8% of the payable gold for the life of mine. During 
      any period in which debt exceeding US$150 million ranks ahead of the Gold 
      Stream, the stream percentage increases to 7.15% and decreases to 5.25% 
      once the drop-down threshold is reached. Payable gold is calculated using 
      a fixed payable factor of 99.95%. 
 
   -- Production Profile1: Attributable Gold Stream production is forecast to 
      average over 16 Koz of gold per year for the first ten years of 
      production. The Project is forecast to have an 11-year mine life based on 
      reserves alone with additional upside from resources and significant 
      exploration potential. First production is anticipated in mid-2026. 
 
   -- Production Payments: WPMI will make ongoing payments for the gold ounces 
      delivered equal to 15% of the spot price of gold 
 
   -- Incremental Reserves and Resources1: The addition of the Kurmuk Project 
      will increase Wheaton's total estimated Proven and Probable Mineral gold 
      reserves by 0.18 million ounces ("Moz"), Measured and Indicated Mineral 
      gold resources by 0.03 Moz and Inferred gold resources by 0.02 Moz. 
 
   -- Other Considerations: 
 
          -- The Gold Stream will include a customary completion test based on 
             expected gold production and expected mining rates. 
 
          -- WPMI has obtained a right of first refusal on any future precious 
             metal streams, royalties, prepays or similar transactions relative 
             to the Kurmuk Project. 
 
          -- In the event of a change of control prior to the earlier of 
             completion and January 1, 2027, Allied will have an option to 
             buyback one third of the stream. 
 
          -- The Gold Stream will cover the existing mining license for 
             the Kurmuk Project and until 255Koz of payable gold are delivered 
             to WPMI, an additional 50km radius around the mining license. 
 
          -- Allied and certain subsidiaries will provide WPMI with corporate 
             guarantees and certain other security. Other Allied subsidiaries 
             will provide guarantees and security in respect of the Sadiola 
             Mine pending the delivery of certain Kurmuk related security 
 
          -- Allied is expected to comply in all material respects with the 
             International Finance Corporation's Performance Standards on 
             Environmental and Social Sustainability, the Voluntary Principles 
             on Security and Human Rights, the Global Industry Standard on 
             Tailings Management, and WPMI's Partner/Supplier Code of Conduct, 
             which outlines Wheaton's expectations in regard to environmental, 
             social and governance ("ESG") matters. 
 
          -- The Company participated in Allied's equity financing completed on 
             October 18, 2024 in the amount of C$20.15 million, with gross 
             proceeds totalling C$221 million. 

Financing the Transactions

As at September 30, 2024, the Company had approximately $694 million of cash on hand and believes that when combined with the liquidity provided by the available credit under the $2 billion revolving term loan and ongoing operating cash flows, WPMI is well positioned to fund the acquisition of the Gold Stream as well as all outstanding commitments and known contingencies and provides flexibility to acquire additional accretive mineral stream interests.

About Allied and the Kurmuk Project

Allied Gold Corporation (TSX: AAUC, OTCQX: AAUCF) is an international gold mining company with a diversified portfolio of long-life assets that have significant near-term growth upside.

The Kurmuk Project is an advanced stage development project in the Benishangul-Gumuz region of Ethiopia. The project involves a two-phase development plan requiring a total capital investment of approximately $500 million. The initial phase of early works was completed mid-2024, and Allied anticipates capital expenditures to reach approximately $100 million in 2024. Construction activities are progressing well to date and the project remains on schedule with production expected to begin by the second quarter of 2026. The project aims to achieve an average annual gold production of approximately 270Koz over the first five years and sustain an average of over 240Koz annually over a 10-year mine life, at All-in sustaining costs of approximately $1000 per ounce. The current project design encompasses the Dish Mountain and Ashashire deposits, with numerous exploration targets across the Kurmuk Project's expansive 1,450 km(2) exploration territory.

Attributable Gold Mineral Reserves and Mineral Resources -- Kurmuk Project

 
 
            Tonnage                Contained 
 Category      Mt    Grade Au g/t   Au Moz 
----------  -------  ------------  --------- 
  Proven      1.5        1.51           0.07 
----------  -------  ------------  --------- 
 Probable     2.6        1.35           0.11 
----------  -------  ------------  --------- 
   P&P        4.1        1.41           0.18 
----------  -------  ------------  --------- 
 Measured     0.2        1.30           0.01 
----------  -------  ------------  --------- 
Indicated     0.5        1.35           0.02 
----------  -------  ------------  --------- 
   M&I        0.6        1.34           0.03 
----------  -------  ------------  --------- 
 Inferred     0.4        1.62           0.02 
----------  -------  ------------  --------- 
 

Notes on Mineral Reserves & Mineral Resources:

 
1.  All Mineral Reserves and Mineral Resources have been estimated in 
    accordance with the 2014 Canadian Institute of Mining, Metallurgy and 
    Petroleum $(CIM)$ Standards for Mineral Resources and Mineral Reserves and 
    National Instrument 43-101 -- Standards for Disclosure for Mineral 
    Projects ("NI 43-101"). 
2.  Mineral Reserves and Mineral Resources are reported above in millions of 
    metric tonnes ("Mt"), grams per metric tonne ("g/t") and millions of 
    ounces ("Moz"). 
3.  Qualified persons ("QPs"), as defined by the NI 43-101, for the technical 
    information contained in this document (including the Mineral Reserve and 
    Mineral Resource estimates) are: 
    a.  Neil Burns, M.Sc., P.Geo. (Vice President, Technical Services); and 
    b.  Ryan Ulansky, M.A.Sc., P.Eng. (Vice President, Engineering), both 
        employees of the Company (the "Company's QPs"). 
4.  The Mineral Resources reported in the above tables are exclusive of 
    Mineral Reserves. 
5.  Mineral Resources, which are not Mineral Reserves, do not have 
    demonstrated economic viability. 
6.  Kurmuk Project Mineral Reserves and Mineral Resources are reported as of 
    December 31, 2023. 
7.  Kurmuk Project Mineral Reserves are reported above gold grade cut-offs 
    ranging from 0.30 to 0.45 grams per tonne assuming $1,500 per ounce gold. 

(MORE TO FOLLOW) Dow Jones Newswires

December 05, 2024 19:23 ET (00:23 GMT)

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