Canadian miner Wheaton Precious Metals International (WPMI) has entered a definitive agreement with Allied Gold for the acquisition of a gold stream from the company’s Kurmuk Project in Ethiopia.
WPMI will provide an upfront payment of $175m (C$245.72m) to Allied, disbursed in four equal instalments during the construction phase, subject to customary conditions.
This strategic acquisition is set to enhance Wheaton’s production profile with an average of more than 16,000oz of gold per year for the first ten years.
The project is expected to boost Wheaton’s gold reserves by 0.18moz, with additional increases in measured and indicated resources, as well as inferred resources.
Wheaton Precious Metals president and CEO Randy Smallwood said: “Wheaton is pleased to announce a streaming agreement with Allied to advance the construction of the Kurmuk project, which is set to be the first commercial gold mine in Ethiopia.
“This fully permitted, high-quality development project offers significant exploration potential, supported by a team at Allied with a proven operating track record. We are excited to partner with Allied to unlock opportunities that empower the local communities and help drive the growth of Ethiopia’s emerging metals and mining sector.”
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In exchange, WPMI will purchase 6.7% of the payable gold until 220,000oz has been delivered, after which the purchase rate will drop to 4.8% for the mine’s lifespan. Notably, these percentages will adjust if debt of more than $150m precedes the gold stream in priority.
The Kurmuk Project is forecasted to have an 11-year mine life based on reserves, with first production by mid-2026.
The agreement also includes a completion test based on expected gold production and mining rates, a right of first refusal for WPMI on any future precious metal transactions related to Kurmuk and an option for Allied to buy back a portion of the stream in the event of a change of control.
The gold stream encompasses the existing mining licence for Kurmuk and an additional 50km radius around the licence until 255,000oz of payable gold is delivered.
Wheaton’s participation in Allied’s equity financing, which concluded on 18 October 2024, amounted to C$20.15m, contributing to total gross proceeds of C$221m.
As of 30 September 2024, Wheaton had approximately $694m in cash and, coupled with its $2bn revolving term loan and operating cash flows, is well positioned to fund this acquisition and future investments.
