Gold Co. Receives Million Dollar Milestone Payment
Research Report

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Disclosures for Canaccord Genuity, Allied Gold Corp., December 20, 2024

Analyst Certification Each authoring analyst of Canaccord Genuity whose name appears on the front page of this research hereby certifies that (i) the recommendations and opinions expressed in this research accurately reflect the authoring analyst’s personal, independent and objective views about any and all of the designated investments or relevant issuers discussed herein that are within such authoring analyst’s coverage universe and (ii) no part of the authoring analyst’s compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the authoring analyst in the research, and (iii) to the best of the authoring analyst’s knowledge, she/he is not in receipt of material non-public information about the issuer. Analysts employed outside the US are not registered as research analysts with FINRA. These analysts may not be associated persons of Canaccord Genuity LLC and therefore may not be subject to the FINRA Rule 2241 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. Sector Coverage Individuals identified as “Sector Coverage” cover a subject company’s industry in the identified jurisdiction, but are not authoring analysts of the report. Investment Recommendation Date and time of first dissemination: December 20, 2024, 11:58 ET Date and time of production: December 20, 2024, 11:58 ET Target Price / Valuation Methodology: Wheaton Precious Metals Corp. - WPM Our target price is predicated on a 50/50 blend of a 2.2x multiple applied to our operating NAVPS estimate plus net debt and other corporate adjustments and a 25.0x multiple applied to 2025E EBITDA. Allied Gold Corp. - AAUC Our target price is based on a 50/50 blend of a 0.5x multiple applied to our forward-curve-derived operating NAV less net debt and other corporate adjustments and a 4.0x multiple applied to 2025E EBITDA. Our target multiples reflect the company’s relative geopolitical risk profile and proportion of NAV tied to development projects. Risks to achieving Target Price / Valuation: Allied Gold Corp. - AAUC Mining risks: Allied faces the general risks inherent to mining companies related to operating and capital costs, availability of capital, permitting requirements and timelines, technical and operating performance, reserve and resource models, social license and community relations, taxation and royalty regimes, and regulatory and political risks. Gold price risk. Allied’s revenue is almost 100% dependent on the price of gold which can be volatile. We estimate a $100/oz decrease in the gold price lowers are NAV by ~11%. Financial risks. Allied’s growth plans are dependent on the company’s current financial resources and cash flow and could require additional funding to cover any potential cost or schedule overruns or as a result of production issues. If additional funding is not available on desirable terms, the company’s projects could get delayed or deferred. The company’s ability to make scheduled debt and interest payments or refinance its debt obligations is dependent on the company’s cash flow and financial resources. Development risks. The success of the company’s development projects, including Kurmuk and the Sadiola expansion, and the construction and start-up of new mines by the company, is subject to a number of factors, including the availability and performance of engineering and construction contractors, mining contractors, suppliers and consultants, the receipt of required governmental approvals and permits in connection with the construction of mining facilities and the conduct of mining operations (including environmental permits), the successful completion and operation of open pits, the comminution/adsorption/desorption/recovery plants and conveyors to move ore, among other operational elements. Timelines to permit new mining operations continue to increase and permitting requirements are becoming more stringent. The capital expenditures and time required to develop new mines or other projects are considerable and changes in costs or construction schedules can affect project economics. Geopolitical and security risks: With operations and projects located in Mali, Côte d’Ivoire, and Ethiopia, Allied faces increased geopolitical risks including a relative history of political instability, potential for economic sanctions, and, in some cases, terrorist activity. 58% of our NAV is based in Mali, 25% in Ethiopia, and 13% in Côte d’Ivoire. Wheaton Precious Metals Corp. - WPM The typical investment risks associated with any mining investment include commodity and exchange rate risk, permitting and technical (developmental/operating) risk. The greatest risk to the share price of Wheaton Precious Metals is the silver price. However, margins are protected by the low purchase cost of its silver streams.

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In a December 20, 2024 research note, Canaccord Genuity analyst Carey MacRury maintained a Buy rating on Allied Gold Corp. (AAUC:TSX; AAUCF:OTCQX) with a CA$9.00 target price, following the company's receipt of a US$43.75 million milestone payment from Wheaton Precious Metals Corp. (WPM:TSX; WPM:NYSE) and securing a US$75 million gold prepay arrangement.

The gold prepay agreement requires Allied to deliver 2,802 ounces of gold per month over 12 months starting in October 2026, equating to a realized gold price of US$2,231/oz. The agreement represents a 13% cost of capital based on the current forward curve, compared to consensus gold prices of US$2,515/oz in 2026 and US$2,220/oz in 2027.

Construction at Kurmuk is accelerating with approximately US$100 million in capex expected by year-end 2024 out of a US$500 million budget. The site has over 400 workers with contracts awarded to DRA Global and Mota-Engil, and mining expected to start in Q2 2025. Power line construction is set to begin in Q1 2025, with a 20-year agreement at US$0.04/kwh from a new dam.

The company's pro forma funding position stands at approximately US$500 million, including US$95 million in cash at Q3-end, recent equity proceeds, the Wheaton stream payment, and the gold prepay. An additional undrawn US$100 million credit facility is also available, positioning the company as fully funded for the estimated US$400 million in remaining Kurmuk capital spending.

The CA$9.00 target price is based on a 50/50 blend of 0.5x multiple on forward-curve-derived operating NAV and 4.0x multiple on 2025E EBITDA, reflecting geopolitical risk profile and development project exposure.

The share price at the time of the report of CA$3.30 represents a potential return of 173% to Canaccord's CA$9.00 target price.