Gold indeed based in the sun in 2025.

The global gold mining industry benefited from strong demand and high prices in 2025, with gold prices crossing the USD 5500/oz mark in January, 2026, supported by persistent inflation concerns while betting that the US Federal Reserve would slash interest rates.

Big global funds poured cash into gold ETFs, and world central banks were aggressively hoarding tons of bullion to break away from the US dollar.

However, the rally lost momentum in April 2026, with gold correcting to around USD 4,867/oz, down 12.9% y/y. Even so, Allied Gold, a Canada-based gold producer operating across Africa, is expected to benefit from generally favorable conditions for gold prices, as the high prices directly inject cash and stronger profit margins into its massive African development pipelines. This favorable pricing environment has been reflected in its latest quarterly performance.

Shiny at the top

Allied Gold delivered a strong operational performance in Q1 26, with gold production up 14.2% y/y to 96,016 ounces in Q1 26, from 84,040 ounces in Q1 25, mainly supported by stronger output from the Bonikro and Agbaou mines. The average realized gold price increased by 70.3% y/y to USD 4,873/oz in Q1 26 from USD 2,860/oz in Q1 25.

Therefore, revenue increased 13.8% to USD 394.1m (from Q1 25’s USD 346.1m), driven by higher gold prices, despite lower sales volumes. However, EBITDA fell 24.7% y/y to USD 77.7m (vs. USD 103.2m in Q1 FY25), due to higher employee stock compensation costs and losses from revaluing financial instruments.

As a result, net income attributable to shareholders was a negative - USD 58.3m in Q1 26 compared to a profit of USD 15.1m in Q1 25, although adjusted earnings remained strong.

Meanwhile, the company continued to record significant cash outflows towards growth projects, particularly the Kurmuk expansion in Ethiopia. This resulted in a free cash outflow of USD 61.2m in Q1 26, compared to a free cash inflow of USD 23.9m in Q1 25.

Digging for upside

The stock has delivered a strong run, gaining 72.3% over the past year, although the market still appears unconvinced about the next leg of growth. At CAD 35.5 (USD 25.5), the stock remains well below its 52-week high of CAD 43.8 (USD 31.4), suggesting investors are still waiting for clearer execution on expansion plans and sustained support from higher gold prices.

The Street remains cautiously optimistic on the stock: one of the two analysts covering it has a “Buy” rating, while the other in on “Hold”.

Their average target price of USD 31.97 implies around 25.6% upside potential from current levels. That’s a moderately bullish outlook despite lingering execution and commodity price risks.

Rising costs

Mining operations in African countries face risks from changing regulations and permit delays that could easily derail timelines and spike the company’s bills. Gold prices could tank in the future, instantly crushing profit margins. Then there’s rising fuel, power and labor costs on top of this.

Allied Gold’s future growth relies entirely on hitting expansion deadlines at sites such as Kurmuk. Any supply chain bottleneck, equipment failure, or bad ore quality will immediately tank cash flow. Even the CAD 5.5bn Zijin buyout comes with delays before that deep-pocket funding actually helps.