(Kitco News) - African gold miners should not be trading at a discount to their peers due to heightened geopolitical risk, says Peter Marrone, chairman and CEO of Allied Gold (TSX:AAUC).
Marrone spoke to Kitco Mining in late March.
"I would argue that geopolitics is an input into the return calculus, but it is not the determinative point," he told correspondent Paul Harris.
Allied Gold has two producing mines: Sadiola in Mali and the Côte d'Ivoire complex. It is also developing the Kurmuk advanced greenfield project in Ethiopia.
Marrone noted Africa is a continent of 50-odd countries, some more stable than others. But the bigger question is how a mining company generates returns. Factors include permitting times — longer in other jurisdictions like Canada — the mineral endowment, grades, and the quality of the personnel.
"I'd say there are no places in the world that deliver the types of returns that one can get in Africa," Marrone said, adding, "If a place delivers a better return than another, then it should be valued better than that place that delivers the lower return."
Marrone was asked about his comment that the African model, referring to the state earning royalties in the 10 to 20 percent range, is superior. "I think there's an element of alignment that can't be overlooked," he said. "To be able to say that there's a direct ownership interest, I think, provides greater assurance to me as an executive and as an investor and other investors that we will maintain that social license to operate."
Last year Allied Gold produced 343,000 ounces and this year's guidance is 400,000 oz. Marrone said that, between adding ounces through exploration at its existing mines and bringing its Kurmuk project online in 2026, Allied is looking to double its annual production.