Half Yearly Report

FOR IMMEDIATE RELEASE 14 February 2011

allied gold limited

("the Company")

Interim financial report for the six months ended 31 December 2010

Allied Gold lodged its Audited Interim Financial Report with the ASX today for the period ended 31 December 2010. Extracts are as follows:

DIRECTORS' REPORT

Your directors submit the consolidated interim financial report of Allied Gold Limited and its controlled entities (together referred to as the "economic entity" or "the Group") for the half-year ended 31 December 2010.

DIRECTORS

The Directors of the Company in office during or since the end of the half-year were:

Mr Mark V Caruso

Mr Sean Harvey

Mr Monty House

Mr Anthony Lowrie

Mr Gregory H Steemson

Mr Frank Terranova

All Directors have been in office since the start of the half-year to the date of this report unless otherwise stated.

RESULTS

The consolidated profit of the economic entity after providing for income tax was $9,388,992 (2009: loss $22,415,769).

DIViDENDS PAID OR RECOMMENDED

No dividends were paid or declared during or in respect of the half-year ended 31 December 2010.

REVIEW OF OPERATIONS

Simberi Gold Oxide Project

Oxide operations

Mill throughput is running at a consistent 2.4 Mtpa and recoveries were at 89.9% for the December half. Key operating statistics for the mining and processing activities for the period from 1 July 2010 to 31 December 2010 are summarised in the table below:

Expansion Studies

During 2011 the Simberi plant will be expanded towards 3.5 Mtpa as part of an approved $32million budget to lift output to 100kozpa. Work progressed with the award of leach tank and new diesel tank construction and delivery of materials and equipment delivered to site, including civils materials, plate and structural steel, and SAG mill and components. Civil works for the construction of two new leach tanks and lime slaker will commence in the March quarter. Installation of a new SAG mill, which has been delivered to site, will commence in the September quarter. Allied continues to review the options for a further incremental expansion to process 5 Mtpa of oxide ore.

Plant Debottlenecking

The de-bottlenecking and optimisation initiatives the Company commenced in 2010 have all but been completed. The final upgrade of the Leach & CIL Tank motors, gearboxes & agitators is ongoing and will be completed in the March quarter.

Pigiput Sulphide Study

The scope of work and $8m budget for advancing the Simberi sulphide development to Bankable Feasibility Study (BFS) has been agreed.

Extensional and definition drilling for sulphide resources continued. Assays received to date indicated disbursed sulphide mineralisation at Sorowar controlled structure and possibly lithology, while at Botlu interesting intercepts have been recorded including 27m @ 5.26g/t from 40m in hole SDH142. (Refer to exploration summary for further detail)

Gold Ridge Project

The A$150m 120,000ozpa fully-funded redevelopment is on time and on budget. Committed and incurred expenditure on the project is at 85% and the remaining $20 million budget incorporates a number of operational and commissioning costs. Mining commenced in November 2010 and as at mid- January approximately 130,000 tonnes of ore was on the ROM pad.

Construction - The redevelopment of the process plant comprises refurbishment and expansion of the plant from 2.0Mtpa to 2.5Mtpa throughput. Work by the project's EPC contractor includes:

o Installation of crushing and grinding; crusher and SAG mill refurbishment due in January 2011.

o Classification and leaching; existing agitator gearboxes and motors renewed/refurbished

o Installation of three additional leach tanks is complete, cyclone tower and new cyclones installed.

o Gold recovery; new equipment including a new leach reactor.

o Tailings disposal thickener has been completed as well as the tailings detoxification tank. The tailings dam has been dewatered and tailings and return water lines, and pump and choke stations have been completed.

o Power has been installed by Aggreko ready to provide power in January 2011.

o Raw process water will be available in January with installation of new river pumps and re-establishment of the intake weir.

Allied's owners scope of work includes earthworks, mine pre-operations mine development, infrastructure rebuilding including buildings and offices, accommodation village, purchase of mining fleet and construction equipment, first fill and spares, and employment of mine operations personnel and operations training.

All construction associated earthworks have been completed. Pre-mine operations have progressed well including; warehousing, spares, first fills and reagents, site administration, mine and plant operations personnel in place.

Mining - Gold Ridge took delivery of a larger mining fleet of seven ridged frame 60 tonne haul trucks, two 85tonne hydraulic excavators, and a mobile crushing and screening plant. The mine haul roads

to the Valehaichichi and Namachamata pits have been established and mining at Valehaichichi has commenced with approximately 130,000 tonnes of ore delivered to the ROM stockpile. Drilling and blasting for mining commenced in December with 6 blasts successfully completed quarter end.

Exploration

Simberi - Highlights included testing extensions of gold mineralisation into Sulphide below the Sorowar pit, development of a new 3D model of sulphide resources at Botlu.

On Simberi, 29 core holes (3,952m) and 27 RC holes (1651m) were completed during the quarter.

Assays were received for 6,592 samples (including QC) with further 516 samples awaiting analysis.

At Pigibo, RC hole RC1833 (32m @ 2.68g/t Au from 21m in OX, TR) confirmed the down dip continuity of a similar intercept in RC1819 reported in the September 2010 quarter strikes SW towards Boltu. Access was prepared for follow-up RC drilling.

At Botlu, two notable down hole intercepts of 27m @ 5.26g/t Au from 40m in SU, including 2m @ 43.3g/t Au from 64m, (SDH142) and 33m @ 2.15g/t Au from 119m in SU (SDH163) helped confirm the new 3D model of mineralisation in sulphide.

At Sorowar, Phase1 core drilling was completed with 12 holes / 2,152m completed. The drilling targeted mineralisation in the Sulphide zone, below the Sorowar Oxide deposit. Significant intercepts below the planned oxide pit included 20m @ 4.42g/t Au from 111m in OX, SU (SDH149) and 34m @ 1.99g/t Au from 83m in TR, SU (SDH152);

At SE Sorowar, better intercepts included 38m @ 1.15g/t Au from 28m in OX (SDH143) and 9m @ 16.5g/t Au from 128m, incl 1m @ 86.6g/t and 1 m @ 30.1g/t, though a limited impact on resources is expected.

Three holes, including RC1857 with 6m @ 1.57g/t Au from surface, in series of 24 reconnaissance RC holes / 1,471m testing soil anomalies along a track north of the Pigibo deposit, located significant mineralization at surface. Follow-up channel sampling in progress will assist planning to further RC drilling.

Tatau / Tabar Islands, PNG - On Tatau drilling was focused on the Mt Letam and Talik prospects with 6 core holes for 1,171 metres completed during quarter.

Three holes were completed at each of the Mt Letam and Talik prospects. The holes at Mt Letam tested an IP chargeability anomaly and gold associated with quartz veining found in a previously drilled core hole. Quartz veining and a disseminated sulphide-bearing breccia unit (the likely cause of the geophysical anomaly) were intersected, and both associated with trace amounts of gold. At Talik, two core holes confirmed weak alteration zones in inter-fingered microdiorite intrusive and andesite both associated with minor amounts of disseminated and fracture-hosted pyrite and some veining.

Assays were received for 555 samples (including QC) and a further 302 samples, from Talik holes, are awaiting analysis. No significant gold intercepts reported to date.

Gold Ridge, Solomon Islands - In the December quarter 1,490m of RC drilling was undertaken at the Namachamata deposit; with total 3,524 metres drilled since start-up completing the resource definition program.

The RC drilling, now at approximate 20m intervals on 25m spaced lines, is focused on confirmation of gold grades and determination of metallurgical recovery indicators. The main purpose of the drilling is to establish indicators of gold recovery for better mine planning. Sample assays of the new drilling are generally in line with previous results.

Assay results were received for 42 drill holes, with samples for a further 19 holes pending. Better down hole intercepts included 30m @ 4.12g/t Au from surface (GRC0032), 25m @ 6.97g/t Au from surface (GRC0033) and 36m @ 2.77g/t from 3m (GRC0054) occurring within the designed pit.

An Induced Polarization (IP) survey of 2.5 line kilometres was completed and has helped define moderate to steeply dipping anomalies associated with both the Dawsons and Kupers deposits.

Corporate

Cash - Cash at bank as at 31 December 2010 was A$36.4 million. A US$35 million 5 year loan from the IFC was drawn down in September 2010. Principal repayments for this loan will commence in November 2011.

Hedging - The company is hedge-free following the unwinding of its hedge position in early 2010 and achieved an average gold price of US$1370/oz in the December quarter on sales of 16,621 ounces. In the interim results due in mid-February the company will adjust the achieved average gold price downward by US$2.1 million to amortise the loss that was realised on termination of the hedge book.

Lead Director - Mr Sean Harvey was appointed a Director in March 2010, and in-line with TSX and AIM governance principles was appointed in mid-December as the Lead Independent Non-Executive Director. The Board of Allied has resolved to put to shareholders the issue of 1,500,000 unlisted options to Mr Harvey at an exercise price of 50c expiring on 31 December 2011 with 1,000,000 vesting immediately and 500,000 vesting upon the share price trading at or above 70c for 5 consecutive days. The motion will be put to shareholders at the Company's next general meeting of members.

SUBSEQUENT EVENTS

No matter or circumstance has arisen since 31 December 2010 that has significantly affected, or may significantly affect:

a. The Group's operations in future financial years, or

b. The results of those operations in future financial years, or

c. The Group's state of affairs in future financial years.

FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES

Simberi Project, PNG

Pigiput Sulphide Study

The aim is to deliver the BFS by the end of 2011 with the critical work to be completed incorporating (i) further sulphide resource and reserve definition and metallurgical drilling and (ii) roaster pilot plant test work. The BFS will be optimised in 2012 in parallel with obtaining government permits to build and operate a sulphide process plant and mine. The BFS will deliver an economic study on a 2.5Mtpa flotation and roaster circuit, integrated with the current expanded oxide and mining processing expansion project.

Simberi Exploration Outlook

In the March quarter exploration activity will include core drilling targeting sulphides beneath the Sorowar pit and further extensions at Botlu. Core drilling at Pigiput and Botlu will provide bulk samples for metallurgical test work for the sulphide feasibility study. RC drilling will focus on the search for gold in oxide resources around Pigibo and Sorowar deposits.

Tatau / Tabar Islands, PNG Exploration Outlook

In the March quarter the focus will be on core drilling at Mt Tiro, Pepewo and Seraro prospects on Tatau Island and line cutting and soil sampling for IP survey at Banesa prospect, Tabar Island.

Gold Ridge Project, Solomon Islands

Plant Commissioning

Plant commissioning is imminent and first gold is due in the March quarter.

Work is on time and on budget with approximately 85% of the project budget committed and incurred. The remaining A$20 million to be spent primarily involves commissioning and operations start up costs and community/village construction activities in coming months.

Gold Ridge Exploration Outlook

The targets identified by the IP survey conducted during the December 2010 quarter will be followed up with infill surveying in the March quarter. Drill targets to 150m can be tested with RC holes, the deep targets would require core drilling. A core rig is programmed to commence drilling in the March 2011 quarter.

OTHER INFORMATION

The registered office and principal place of business is Unit B9, 431 Roberts Road, Subiaco WA 6008.

AUDITORS' INDEPENDENCE DECLARATION

The auditors' independence declaration under section 307C of the Corporations Act 2001 is set out on page 7 for the half-year ended 31 December 2010 and forms part of the Directors' Report.

Signed in accordance with a resolution of the Directors.

Dated at Perth this 11th day of February 2011

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE HALF-YEAR ENDED 31 DECEMBER, 2010

The accompanying notes are an integral part of these interim consolidated financial statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER, 2010

The accompanying notes are an integral part of these interim consolidated financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE HALF-YEAR ENDED 31 DECEMBER, 2010

The accompanying notes are an integral part of these interim consolidated financial statements.

 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE HALF-YEAR ENDED 31 DECEMBER, 2009

The accompanying notes are an integral part of these interim consolidated financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE HALF-YEAR ENDED 31 DECEMBER, 2010

The accompanying notes are an integral part of these interim consolidated financial statements.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL REPORT

1. Reporting entity

Allied Gold Limited ("the Company") is a company incorporated in Australia and limited by shares, which are publicly traded on the Australian Stock Exchange, the Toronto Stock Exchange and on AIM, a market operated by the London Stock Exchange Plc. The interim consolidated financial report for the half-year ended 31 December, 2010 comprises the Company and its controlled entities (together referred to as "the Group").

The consolidated annual report of the Group as at and for the year ended 30 June, 2010 is available upon request from the Company's registered office at Unit B9, 431 Roberts Road, Subiaco WA 6008.

2. Statement of compliance

The interim consolidated financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001 and AASB 134 Interim Financial Reporting. The interim consolidated financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards ('AIFRS') as they pertain to interim financial reports.

The group financial statements of Allied Gold Limited also comply with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").

The interim consolidated financial report does not include all of the information required for a full annual financial report and should be read in conjunction with the annual financial report of the Group as at and for the year ended 30 June 2010 and should be considered together with any public announcements made by the Company during the half-year ended 31 December, 2010 in accordance with the continuous disclosure requirements applicable in the jurisdictions in which the Company's shares are traded.

3. Significant accounting policies

The significant accounting policies applied by the Group in this interim consolidated financial report are the same as those applied by the Group in its consolidated financial report as at and for the year ended 30 June 2010.

4. Estimates

The preparation of the interim consolidated financial report in accordance with Australian Accounting Standards requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. These estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

In preparing this interim consolidated financial report, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated annual financial report as at and for the year ended 30 June 2010.

5. Segment reporting

Management has determined that the operating segments based on reports reviewed by the Executive Chairman and the Chief Financial Officer that are used to monitor performance and make strategic decisions. The business is considered from both a geographic and functional perspective and has identified four reportable segments.

Papua New Guinea consists of mining and processing and mineral exploration activities undertaken at the Simberi project. Solomon Islands also consists of mining and processing and mineral exploration activities. As the project is not currently in production, all costs related to the Solomon Islands project are capitalised for financial reporting purposes. The performance of the two geographic sectors is monitored separately.

The segment information presented to the Executive Chairman and the Chief Financial Officer does not include reporting of assets and liabilities or cash flows by segment. 

5. Segment reporting (continued)

1In Papua New Guinea the mineral exploration costs are capitalised for financial reporting in accordance with Australian Accounting Standards. In the Solomon Islands both Mining and Processing and Mineral Exploration costs were capitalised for financial reporting in accordance with Australian Accounting Standards

5. Segment reporting (continued)

The Executive Chairman and the Chief Financial Officer assess the performance of the operating segments based on a measure of contribution. This measure excludes items such as the effects of equity settled share based payments, and unrealised gains / (losses) on financial instruments. Interest income and expenditure are not allocated to segments, nor are corporate expenses as these activities are centralised.

6. Financial income

Included in financial income for the half year ended 31 December 2010 is an amount of $4,000,000 being income derived by the Group as a consequence of settling a financial liability for less than its book value.

7. Property plant and equipment

7. Property plant and equipment (continued)

Included in property assets capitalised under finance leases of $18,157,134 (half-year ended 31 December, 2009: $3,560,403).

Included in property plant and equipment are assets under construction amounting to $150,192,041 (half year ended 31 December, 2009: $16,580,763).

8. Exploration and evaluation expenditure

9. Borrowings

The following table sets out the movements in borrowings during the half-year:

1 Interest on the secured bank loan will be capitalised until the construction of the Gold Ridge mine is completed.

10. Provisions

Movements in the provision for rehabilitation and restoration during the half-year are set out below:

11. Contributed equity

(a) Ordinary shares

Ordinary shares entitle the holder to one vote per share and to participate in dividends and proceeds on winding up of the company in proportion to the number of and amounts paid on the shares held.

11. Contributed equity (continued)

(b) Options

The table below sets out the movements in options during the half-year:

Notes:

(i) Of the 27,275,000 options expiring 31 October 2011, 8,325,000 vest upon the share price trading at $A0.70 or above for five consecutive days.

(ii) Of the 1,500,000 options expiring 31 December 2011, 500,000 vest upon the share price trading at $A0.70 or above for five consecutive days.

(iii) The 31,175,000 outstanding options expiring 31 December 2013, had all vested as at 31 December 2010.

(iv) 7,500,000 options were forfeited during the period as the vesting conditions were not met.

Each option is convertible into one ordinary share in the company when exercised. Options do not participate in dividends and do not give holders voting rights.

12. Share based payments

In 2006, the group established a share option program that entitles key management personnel and senior employees to purchase shares in the entity. The terms and conditions of the share option programme are disclosed in the consolidated financial report as at and for the year ended June 30, 2010.

Duringthe six-month period ended 31 December 2010 an amount of $1,252,500 was transferred from the share based payment reserve to the Statement of Comprehensive Income to reverse the value of options previously expensed that were forfeited during the period due to non-market vesting conditions not being met.

13. Related party transactions

Arrangements with related parties continue to be in place. The nature and terms of transactions with related parties are consistent with those described in the consolidated financial report for the year ended 30 June, 2010.

14. Commitments and contingencies

Except for the matter noted below, there has been no significant change to the Group's commitments and contingencies since 30 June 2010.

As at 31 December 2010 a member of the group was pursuing an insurance claim in respect of an item of equipment that was previously leased under the Dry Hire Agreement with Minesite Construction Services Pty Ltd, a related party of which Mr Mark Caruso is a director, which was terminated on 1 April 2010. Dependent on the outcome of the insurance claim, the Group may be required to meet some or all of the amounts being claimed. The group's maximum exposure under the claim is estimated to be $400,000.

15. Subsequent events

No matter or circumstance has arisen since 31 December 2010 that has significantly affected, or may significantly affect:

a. The Group's operations in future financial years, or

b. The results of those operations in future financial years, or

c. The Group's state of affairs in future financial years.

DIRECTORS' DECLARATION

In the Directors' opinion:

1. The financial statements and notes set out on pages 8 to 20, are in accordance with the Corporations Act 2001, including:

(a) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

(b) giving a true and fair view of the consolidated entity's financial position as at 31 December 2009 and of its performance for the half-year ended on that date; and

2. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Directors.

___________________________

Mark V Caruso

Chairman

Perth

11th February 2011

A copy of the full reports alond with the Auditors Report can be viewed and downloaded on the Company's website www.alliedgold.com.au and as a link to this announcement.

For further information, contact:

Simon Jemison Investor Relations & Media + 61 0418 853 922

Rebecca Greco Investor Relations, North America +1 416 839 8610

David Simonson c/. Merlin PR +44 20 7726 8400

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Roland Cornish

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T: +44 (0) 20 7628 3396