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Allied Gold (TSX, NYSE: AAUC) has poured its first gold at the Kurmuk mine in Ethiopia, bringing its newest and lowest-cost operation into production as the company targets annual output of about 800,000 oz by 2029.
The Toronto-based miner expects Kurmuk to produce 25,000 to 35,000 oz of gold in 2026 before increasing output to between 240,000 and 270,000 oz next year. Commercial production is scheduled for the end of 2026, with the mine expected to reach its full designed capacity in early 2027.
“The project, operations, and in-country teams have done an outstanding job bringing Kurmuk from a greenfield site to its first gold pour,” Allied Gold’s management and board of directors said in a statement.
The milestone marks a significant step in Allied’s African growth strategy following the collapse of a $4-billion takeover by China’s Zijin Gold earlier this year. Kurmuk is expected to become a major contributor to the company’s production growth alongside an expansion at its Sadiola mine in Mali.
Production ramp-up
Allied is completing the installation of remaining power infrastructure and mobilizing its full haulage fleet at Kurmuk, with both activities scheduled to finish this month. Gold recovery rates are expected to improve as the operation ramps up, reaching targeted levels in early 2027.
The company forecasts production of 55,000 to 65,000 oz in the first quarter of 2027, with annual output rising to about 300,000 oz in 2028.
Kurmuk is expected to average roughly 300,000 oz annually over its first four years before stabilizing at approximately 240,000 oz a year for the remainder of its mine life.
The ramp-up remains dependent on completing infrastructure and achieving planned recovery rates, with the operation yet to demonstrate sustained commercial production.
Across its portfolio, Allied forecasts consolidated gold production of 400,000 to 435,000 oz in 2026, increasing to between 615,000 and 670,000 oz in 2027. Further growth will be supported by the Sadiola expansion.
Takeover aftermath
Allied’s production milestone follows the failure of Zijin’s proposed acquisition after Chinese regulators did not approve the transaction before the deadline.
Zijin, which is indirectly owned by the Chinese government, offered $44 per share in cash for Allied in January, valuing the miner at about $4 billion. The offer marked an all-time high for Allied’s shares and would have ranked among the year’s largest gold mining acquisitions.
Although the takeover collapsed, Zijin retained a 9.2% stake in Allied. The Canadian miner has used proceeds from that investment to complete and ramp up Kurmuk, advance Sadiola, increase production at its Côte d’Ivoire operations and fund exploration across its portfolio.
Allied’s longer-term capital allocation strategy includes continued investment in growth, maintaining a strong balance sheet and potentially returning cash to shareholders.
The company is considering introducing a base dividend in 2027 and launching a normal course issuer bid to repurchase up to 10% of its public float, subject to Toronto Stock Exchange approval.
The proposed shareholder returns would mark a shift toward distributing capital as Allied moves from major mine construction into higher production, although the timing and scale of those returns remain dependent on its operational and financial performance.
