Allied Gold CEO open to piecemeal sale after Zijin deal falls through

Allied Gold Corp. AAUC-T chief executive Peter Marrone is open to a new transaction that would see the company sold in a piecemeal fashion after the Canadian gold miner’s $5.5-billion deal with China-based Zijin Gold International Co. ZIJMF fell apart last week.

On July 29, Toronto-based Allied called off its plans to be acquired by Zijin as Beijing’s takeover regulator dragged its feet on approving the transaction.

Mr. Marrone, in an interview with The Globe and Mail on Thursday, indicated that he is open to a new deal that could see the company sold to more than one buyer, and even drew comparisons with his earlier experience in selling Yamana Gold Inc.

“My objective is to deliver value,” he said. “If delivering value is similar to Yamana, where there was a split of a company, one piece going to one company, one going to another, and that delivers the maximum value to our shareholders, then I will always entertain anything that delivers that type of value.”

Shares in Allied rose by 5.3 per cent Thursday on the Toronto Stock Exchange to close at $28.95 apiece.

In January, Allied agreed to be acquired by Zijin for $44 a share, which at the time represented a record high for the stock.

After the buyout was cancelled last week, Allied shares nosedived by 18.6 per cent.

Instead of moving ahead on a full-scale acquisition of the Canadian miner, Zijin instead agreed to acquire a 9.2-per-cent holding in Allied at a much lower per-share price. The Chinese company agreed to pay $32.55 a share for a stake worth $417-million.

Before running Allied Gold, Mr. Marrone was a founder of Yamana and the company’s executive chairman. In 2022, he agreed to sell Yamana in a two-pronged transaction to Agnico Eagle Mines Ltd. and Pan American Silver Corp. after an earlier proposed deal with South Africa’s Gold Fields Ltd. ran into trouble.

Allied operates gold mines in Mali and Ivory Coast and produced more than 97,000 ounces in the second quarter. The company is starting up a new mine in Ethiopia called Kurmuk next month, and it has a major expansion planned at its Sadiola operation in Mali.

In a conference call on Thursday, after the release of the company’s second-quarter earnings, Mr. Marrone said that the company’s attractiveness has gone up considerably compared with when it announced the now-defunct takeover deal with Zijin.

“Today, many months later, we’re more advanced and a better company,” he said. “We have delivered on our plans that improve the company and increase that value. I’m comfortable saying to everyone on this call that we present a unique and strong value proposition.”

While Mr. Marrone is extremely bullish on Allied’s prospects, he is critical of many analysts, as well as some investors, for assigning too low a valuation to the company’s shares. He said much of that is based on their “lazy” habit of painting all operators in Mali with the same risky geopolitical brush, regardless of the quality of the asset, or a company’s individual track record in the West African country.

While some Canadian companies operating in Mali, including Barrick Mining Corp., have encountered serious setbacks resulting in production being idled for long stretches at a time, Allied’s Sadiola mine has operated for more than 20 years without interruption, Mr. Marrone said.

“The implication of all of that is that it grossly discounts the value of the asset based on a perceived risk, but not a real one if we look at the continuity of operations in the country,” he said.

Mr. Marrone maintains that smart investors see through the noise.

“It represents a true value proposition for a discerning investor who says, ‘I get it. This is over-penalization. This is not a failed state. This is not a country that is in collapse.’ You cannot run a business if that were the case. And we’re all running high-quality businesses.”