Allied Gold picks $80M raising after nixing UAE funds

Allied Gold (TSX: AAUC; US-OTC: AAUCF) is raising $80 million through a public offering to fund further engineering and growth initiatives at the Sadiola mine in Mali and its Côte D’Ivoire mine complex.

Under an agreement with Canaccord Genuity and National Bank Financial as joint bookrunners, Allied plans to sell 15 million common shares priced at $5.35 each — its market open price last Thursday. The stock closed the session at $5.40 apiece with a market capitalization of $1.76 billion.

The offering comes after the company announced that it will not go ahead with the previously agreed private placement with Ambrosia Investment Holdings, a United Arab Emirates-based investment fund.

Sadiola mine

In February, Allied announced that it would form a partnership with Ambrosia — run by UAE businessman Ahmed Amer Al Amry — on the Sadiola mine, which is currently undergoing a phased expansion. Under the agreed framework, Allied would sell its 80% stake in the mine as well as 12% of the company to Ambrosia for nearly US$500 million ($690 million) to help fund this expansion.

However, the equity placement part of the agreement — for about $150 million — would not proceed, Allied said in a release, citing factors such as rising prices of gold and its shares since the announcement. However, it added that Ambrosia is willing to continue advanced discussions related to the joint venture.

The Sadiola mine in western Mali is expected to have a mine life of 19 years with a long-term production target of 300,000-400,000 oz. annually. The mine reserves are estimated at nearly 7 million ounces.