Kitco Mining special coverage of
the Gold Forum Americas is brought to you by Metalla Royalty and
Streaming. Peter Marrone is back, having successfully built and sold Yamana Gold.
He's looking to do it again with his new venture, Allied Gold. This is Paul Harris for Kitco Mining
at the Gold Forum Americas in Colorado Springs. Peter, welcome back to Kitco. Happy to be
back. Well, welcome back to kick and welcome back to the gold sector. No retirement, no
film production company, no playing golf. You just right back at it leading another
gold venture. Well, I've said to you before, I've never golfed in my life and I think it
would be dangerous picking up a golf club. And frankly, this is a lot of fun building
new companies, particularly in this industry. I've grown to love this industry. And so
it's a lot of fun to build new companies, a lot of hard work, but I'm looking
forward to. They're doing that. Now, Allied Gold is an African gold producer
with a considerable development pipeline. Um, you're producing about 350, 000 ounces a
year, but most people have never heard of the company before. It seems to be one of those well
kept secrets. Why Allied Gold and why a venture in Africa? Not dissimilar to 2003 with Yamana.
They were assets that had been known but forgotten about. Uh, that had development plans
that were far better than people anticipated. And the same is true here. The difference in
this case is that the production platform is substantially greater. One of the mines
is a Satiola mine. It is a known mine. It was known by IM Gold and Anglo
Gold. It has been run historically as an oxide mine. And here we are now with
an extension of mine life to the oxides. But the future of this mine is the fresh
rock. And that fresh rock is at higher grade. It will require a new plant. But the
processing through that new plant means that the production platform is certainly in excess of
300, 000 ounces per year and likely closer to 400, 000 ounces per year. I like to call it a
generational mine because it will run for at least a couple of decades based
on proven and probable reserves. That's the platform here in the documentation
that's been released. You're talking about doubling production or the aim of doubling
production to around 700, 000 ounces a year and then perhaps a line of side onwards towards a
million ounces per year. Um, it sounds like you've also, as part of that perhaps have an M and a
mandate much like you did when you grew your mana. How would you see the company growing? If
I may, let me talk first about the, uh, the growth profile of the company. You mentioned
three 50. We're forecasting at least 3 60, 000 ounces this year from the three mines in
addition to Sadiola. We have two mines treated as a complex because they're so close together
in Cote d'Ivoire, the Bonnaco and the Agba mine. That number increases to 700, 000
ounces. I deliberately put a plus to that because based on proven and probable reserves
alone, we get to over 700, 000 ounces. By 2029 with a step up in 2026, but that number is
likely going to be a lot higher than that, because what we saw as part of our due diligence,
and we've been conducting due diligence, certainly since in the last five months, including
site diligence, is that there's gold everywhere. So we expect that the proven improbable will
increase. That means then that plus gets as close to 800, 000 ounces of production.
That's not a big leap. To go from 800, 000 ounces all the way through
to a million and frankly, I'd like to take this company to one that
is more than a million ounces per year. We did it before with Yamana getting from 84, 000 ounces in 2003 to a million ounces by the time
we sold it in 2023. I think we can do better than a million ounces. Do we have a mandate on M&
A? That will depend on our shareholders. I'd like to make the case to them that we've
been successful as a management in Yamana. In demonstrating that we can
deliver returns from acquisitions, that we serially create value in our
acquisitions. And if we have that mandate, then we will look to how we can look at M& A
to expand on the organic growth. May I say one more thing? Part of what we'd like to do here
is to lean very heavily on emerging markets. I know that there is this wisdom out there
that companies should be going into developed markets. But I'm finding that where the
juice is, where a lot of the returns are, Our emerging markets in frontier because
it seems that the permitting process is fast tracked same requirements as one
would find in the developed market, but heck if I wanted to develop a project in
Canada today, it would take me somewhere in the range of eight years just to get a permitted
and yet in some developing parts of the world as little as two and that goes to returns and
we're fully permitted on all of our projects. You're using the personal pronoun, we a lot. And
so I think it's important to highlight this isn't just you start a new venture. It's a lot of
the Yamana gold C suite that's come with you. Um, so people, you know, people you trust, people
you've worked with a long time and that, you know, can deliver. So that management team is coming
into allied gold to drive that company forward. Yes. The we is not the royal. We
hear the, we is a management, uh, while. Um, that management includes the
legacy Yamana management, at least at the C suite level. It also includes a management
that was already in progress being developed, uh, for ultimately taking the company public,
the private company going public in Ally Gold. It includes the, the, the legacy management,
including the founder. Of the company. Founders of the company, Greg Winch and
Justin Dibb, they, in the case of Greg, he stays on in the management. Justin's on our
board of directors, but also pivotal role in, in as a consultant, because we are in parts
of the world that we have not operated before. He has been there for the better part of a
decade, maybe as long as, as a dozen years. And it would be the height of hubris and,
and conceit for me to be able to say that we could pick up on, we, the legacy management of
Yamana, uh, Could pick up on all that corporate knowledge of being in these countries
within a few months or, or a few quarters. So we have all of that corporate knowledge
retained in the company. That's the way. That must be a critical aspect at
this juncture in time, given the, uh, the political situation in much of West Africa.
How, you know, there's been several coups in different countries. How concerned are you about
the political stability in parts of West Africa? I confess that, uh, that I'm not. I'm
as concerned as one should be from a security point of view and from a protection of
persons and protection of asset point of view, but geopolitics is geopolitics, there is
one concern or another in one jurisdiction or another. As I said a few moments ago,
the way that I think investors should be looking at this is about returns and the
geopolitical situation is a factor that is included into the return calculus, but it is
not the only factor to be included into that. I mentioned a few moments ago permitting,
so if we're in parts of the world where the geopolitics is a bit more challenging than,
let's say, Canada or the United States or other developed parts of the world. But heck,
today, even in developed parts of the world, the geopolitics is becoming challenging. But
if it takes a multiple of the amount of time it takes to get permitted in that part of the
world versus some of these countries that, from a headline point of view, have geopolitical
challenges, then I have to take that into account. If I can be permitted and developing an asset
within four years, but in a developed part of the world, it takes a better part of eight
to 12 years to do that, that goes to returns. In a gold equities market like we have, some would say it makes more sense to stay
private or be private. So why go public now? I think ultimately precious
metals mining companies should be public because the access to capital is there.
Uh, because if one wants to be, um, uh, critically look at possible M& A opportunities,
you touched on that a few moments ago, then being public is clearly something
that, that helps. One develops a currency. We would like to look at where are the M&
A opportunities. We think that investors are interested in finding their champions.
Hopefully we're one of those champions. We demonstrated in Yamana that we could deliver
returns off of the investments that we made in our acquisitions. We'd like to do it
all over again and demonstrate that we can deliver those returns that requires public
currency requires a company to be public. It does seem to be a number of
single asset gold developers and producers in West Africa that have
seen their share prices, you know, really hit by some of the goings on the political
goings on in parts of the continent. And so there does seem to be a lot of opportunities
there as when you can break out the check. There are opportunities, but I'd say
that. We're in this very unique time and why our timing could not be better.
And again, very reminiscent to me of the startup of Yamana in 2003. We had the
dole drums of precious metals. No one was interested in 2002 coming into 2003.
Then we know how that movie turned out. We know what happened to gold price into
the gold equities. Gold price is strong and I believe it will get stronger.
The gold price will go higher. I think that there is truth to that. And
when I look at the gold equities, we're trading at a discount as if gold
price is not trading above 1, 900 per ounce. And I think that represents an impressive
upside for investors willing to look at precious metals equities. Allied gold listed
in Toronto. Why did you choose that market rather than Toronto, sorry, rather than
London or New York? Well, Toronto is, perhaps some of it is, is, uh, what
we know, what I personally know. And the success that we've had in
other ventures that have listed on Toronto. But I would, I would say that
for a precious metals mining company, certainly one that even the size of ours, roughly
1. 3 billion dollars of market capitalization, even a company of that size and
scale is still comparatively small. And a precious metals mining company of a
certain size will attract more attention on the Toronto Stock Exchange than it would on other
stock exchanges in the world. At some point we have to consider a migration, or at least a
supplemental listing on some of these other exchanges. You are aware that Yemana was listed on
New York after Toronto, and then London as well. And hopefully we'll follow the same
progression in the case of Allied. We've touched on M& A. A little bit, Peter, specifically related to Allied Gold, but
I'd like to get your a wider view from you, if I may, the market would seem to be in a good
position for producers to be acquiring smaller companies whose share prices have been really,
really hit and filling out their pipelines. Yet, um, it doesn't seem to be a great deal
of activity there. Your peers aren't really doing this. Why do you think that is? That
would require a much longer conversation. But my impression is that some of it is the. The
technical work that's gone into the projects, part of it is also investors and
the skittishness of investors. There's still a certain skittishness
on the part of the investing public on have we earned the right to engage in M and a
transactions. So if we couple it all together, it's understandable that larger companies would
be reticent to want to acquire smaller companies, particularly companies that are advanced
exploration or development stage companies. Are we certain about the capital that's required?
Are we certain about the permitting processes required? These are some of the things
that I think will go into the evaluation on the part of the larger companies. But
I think, frankly, there are opportunities, but the opportunities are not on just, not
just on, on, uh, development stage companies. I think the opportunities are across the board.
There are companies that are languishing, but they're producing companies with multiple
assets. Yamana demonstrated earlier this year, That we could make value for investors by busting it up so that two companies bought the
relevant parts of each for each of them. Do I believe there are other
opportunities like that out there? Absolutely. And those are some of
the things that I think should be pursued. You mentioned that the gold price is still
relatively high and producers are making, you know, decent margins. Yet the stock
prices are not really reflecting that. When do you think gold stocks will get a break?
The when is always the difficult part for me, but, but will it occur? I think the answer is
yes. Will it occur within a period of that is short to intermediate term rather than longer
term? So let's say realistically within a year to a few years, I think all the telltale
signs of gold price doing well are there. And this time we're, we're also
coupling that with the fact that the equities are trading as if gold
price is not 1900 plus dollars per ounce. So I think that we're in this perfect
storm of precious metals prices going higher, but the equities. Following suit and frankly,
probably doing better than precious metals. Let's look at what's going on with worldwide debt.
Someone has to explain to me on the deficit side, how is it that a country like the United States
as robust as its economy is as successful as it has been for the last several years at avoiding
the pitfalls of recessions, explaining to me why the deficit is as high as it is worldwide debt
is at a level that is a multiple of where it was. Before the pandemic in 2019 2020
interest rates are going higher. It just seems to me that we're in this
perfect storm of socioeconomic tensions, then coupling with geopolitical tensions that
will cause gold prices to go substantially higher. And I come back to my thesis, which
is that if the gold equities are trading as a gold price is discounted at 1900 when gold
price goes substantially higher, 2500, 2700. I think that the gold equities will do a lot
of catch up and to boot, actually accelerate above that. Interesting. Okay, Peter, next 18
months or so, 12, 18 months, hopes and fears? Uh, lots of hopes, very few fears. Uh, I, I would
not be doing this. One of the things that has not been said that is important to say is that, um,
unlike a lot of precious metals mining companies, the man, the former management of Yamana
invested in this round of financing. So we've reached just over 260 million, 40
million of that came from us as we were coming in. Our view was, we're not just hired guns.
We're here as investors aligning ourselves with public investors. We wouldn't have done that
if we didn't think that there was opportunity. Clearly there's risk, but we wouldn't
have done that if we didn't think the risks were manageable and the
opportunities were far greater. Well, I wish you the best of luck with Ally
Gold. Peter Maroon. Thank you very much for joining us. Thank you. And this is Paul Harris
for Kitco Mining at the America's Gold Forum in Colorado Springs. And if you like what you
see, don't forget to subscribe. Kitco Mining's special coverage of the Gold Forum Americas is
brought to you by Mattala Royalty and Streaming.
