(Ecofin Agency) - Following an 8% rise in 2023, gold prices have surged by approximately 30% since the start of 2024. While certain gold producers are capitalizing on this trend, companies such as Galiano are constrained by contracts that require them to sell their output at pre-established prices, which can be lower than current market rates.

Galiano Gold announced on December 4 that it terminated its gold purchase and sale agreement with Red Kite Opportunities Master Fund, a deal established several years ago. This move releases Galiano from its previous obligation to sell gold at a predetermined price, positioning the company to benefit from rising gold prices under specific conditions. 

Since entering the deal with Red Kite Opportunities Master Fund, Galiano has delivered 1.7 million ounces from its Asanko gold mine. In the past two years, a notable increase in gold prices—around 30% this year—has created a discount of about 2% between what Galiano received and the current spot price of gold. While it was anticipated that Galiano would deliver up to 2.2 million ounces, terminating the agreement cost the company $13 million.

Galiano Gold's CEO, Matt Badylak, expressed satisfaction with the company's strong, debt-free balance sheet, highlighting the financial flexibility it provides to terminate the purchase agreement, which allows AGM to sell gold at market prices and adds significant value as they execute their business plan.

On December 5, 2024, gold was trading at about $2,650 an ounce, suggesting a significant potential for growth, as noted by several analysts. Trump’s election has somewhat hindered the upward momentum of gold prices; however, the World Gold Council believes this downturn will be short-lived. In a report released last month, Goldman Sachs echoed this sentiment, predicting that gold could reach $3,000 an ounce by December 2025.

For Ghana, the expected rise in revenues from Galiano Gold's direct access to elevated gold prices may result in increased earnings from the Asanko gold mine. Ghana’s government benefits from a 5% royalty on mining revenues and receives a 10% share of the profits and other taxes, including a 35% corporate income tax. 

Asanko yielded 86,607 ounces of gold throughout the first nine months of 2024, with full-year production anticipated at 120,000-130,000 ounces.

Emiliano Tossou