31st Oct 2007 07:01
Allied Gold Limited31 October 2007 For immediate release 31 October 2007 ALLIED GOLD LIMITED ("ALLIED" OR "THE COMPANY") QUARTERLY REPORT FOR THE PERIOD ENDED 30 September 2007 As required by the rules of the ASX, the Company has announced its quarterly report for the period ended 30 September 2007. "HIGHLIGHTS • Good progress continues to be made in the construction of the Allied Gold's 100% owned Simberi Oxide Project, located in offshore Papua New Guinea. First gold production is now anticipated in the December 2007 quarter, an approximate five week delay from the schedule previously advised. • Total project costs incurred to date are AUD$74.4 million and the total spent and committed to date is AUD$80.1 million. The forecast total cost for the project is AUD$87.0 million, an increase of 4.8% from previous estimates. Increased costs were due to company agreed scope changes, over budget EPCM contractor costs, additional freight charges, and holding costs due to slippage in the construction timeline. Allied Gold remains fully funded to project commissioning. • Initial draw-down of the US$25 million Finance Facility for the Simberi project occurred during the quarter. As a condition precedent to the Facility, Allied Gold hedged 170,000 ounces of gold at an effective price of US$700/oz for delivery between March 2008 and December 2011. 68,000 ounces of the program are through a Participating Gold Forward Option where the company participates in any price upside above US$700/oz. • Exploration drilling recommenced with one of the four drilling rigs operational and a second rig commissioned subsequent to period-end. The first hole MN-02 located at Monun Valley resulted in an assay of 30.9m at 1.21 g/t Au from 28m, ending in mineralization. • More significant results were received from 5-metre composite channel sampling along bulldozed tracks. The best results were: • 45m at 3.42 g/t gold • 55m at 1.66 g/t gold, both near the planned aerial rope conveyor route • 120m at 0.95 g/t gold in Monun Valley. • Geophysical and soil geochemical surveys on Simberi and Tatau islands continue to identify new drill targets. Major induced polarisation (IP) survey commenced on Big Tabar Island. OXIDE MINE DEVELOPMENT AND PROJECT CONSTRUCTION The Simberi Oxide Gold Project is a Stage 1 open-pit mining project which willextract ore from at least seven deposits which represent the known surface andnear-surface oxidised caps to underlying sulphide gold mineralisation on easternSimberi Island. After the initial delivery of ore by standard truck haulage, oredelivery will be by an aerial rope conveyor to a conventional CIL(carbon-in-leach) processing facility. Allied has current total Oxide / Sulphide Resources of 2,389,000 ounces of goldof which 783,000 ounces of oxide and transitional gold reserves and mineralresources are within designed open pits. The project is fully permitted and hasthe support of local landowner groups and Government. The project development remains on schedule for project delivery in the Decemberquarter of 2007, with commissioning due to commence in November and the firstgold pour currently scheduled for mid December 2007. Some construction delays have been experienced due to the late arrival ofstructural steel and difficulties in obtaining work permits and visas for theworkforce of the structural and mechanical installation contractor. This timeslippage has had some repercussions on capital costs with the latest estimate oncost to complete the project resulting in a less than 5% increase toapproximately AUD$87 million. During the quarter construction activities reached high levels as the processingplant leach tanks were completed, the power station units and the high voltageline were commissioned, and earthworks and concrete foundations associated withthe Aerial Rope Conveyor (RopeCon) were completed. Work is now centred on the processing plant, aimed at completion of pipingerection and installation of electric components and instrumentation. Process plant civil works are 96% complete, overall process plant design workand procurement is 99% complete, and structural steel erection is 67%. One ofthe major outstanding tasks remains the laying of the Deep Sea TailingsPlacement (DSTP) pipeline, which is now scheduled for early November 2007. Preparations for the laying of the DSTP pipeline are well advanced with thediving contractor mobilised to site, all equipment ready, and construction ofthe seawater pump platform advancing. The RopeCon contractor, Doppelmayr, mobilised to site after arrival ofstructural equipment and the completion of civil works. There has been furthertime slippage in the program for commissioning of this innovative piece ofequipment with the latest schedule calling for it to be operational in the June2008 quarter. However, this will not impact ore supply to the process plant asthe mining schedule calls for ore delivery via standard road haulage in theinitial six months of the project. At the end of the reporting period total costs incurred to date were AUD$74.4Mcompared to the budgeted amount of AUD$73.8M. The total spent and committed todate is AUD$80.1M. The forecast total cost for the project has increased fromAUD$83M to AUD$87M. Cost increases were due to company agreed scope changes,over budget EPCM contractor costs, additional freight charges, and holding costsdue to slippage in the construction timeline. Allied Gold remains fully fundedto project commissioning. The mining contract was awarded during the quarter and earthmoving is advancingaccording to the revised mining schedule. Future milestones include: •Deep Sea Tailings Placement system completed November 07 •Plant Commissioning November 07 •Aerial Rope Conveyor operational May 08 •First Gold Pour December 07 EXPLORATION SIMBERI ISLAND - ML 136 and EL 609 Two of four drilling rigs purchased in April 2007 arrived at site. At the end ofthe quarter, the DFM400 diamond rig had completed 160.5m of coring: 59.9m inhole MN002 and 100.6m in hole MN006 at the Monun Valley prospect. Assay results for the first drill hole of the reactivated drilling program havebeen received, with MN002 recording an intercept of 30.9m at 1.21 g/t gold from28m. Hole TIG mE TIG mN RL m Azi./Dip From To (m) Intercept Au g/t Oxidation (m)MN002 44690.49 209476.12 125.44 270/ -60 28 58.9 30.9 1.21 OX, SU MN002 was drilled as part of a series of holes to test the validity of thepostulated south east extension of the Sorowar deposit. This was a positiveresult, but unfortunately the hole was terminated at a down-hole depth of 59.9mdue to lost circulation in bad ground. Core from drillholes MN006 and MN005 iscurrently being processed. The dual-purpose UDR650 drilling rig from Ghana arrived towards the end of thequarter and was being assembled along with its compressor unit. This rigcommenced drilling in late October 2007. The two new South African Rockdrill3000 drilling rigs are currently being mobilized to site. All personnel requiredto operate this equipment have been sourced and drill pads have been prepared. Construction and commissioning of Allied's purpose built sample preparation andassay laboratory should be completed during the December quarter. This willallow for 7 to 14 day sample turnaround, a substantial improvement on currenttime frames. SURFACE EXPLORATION ON ML 136 The ground geophysical pole-dipole IP survey continued on Simberi Island withthe cutting of 20.50 line km and the reading of 18.25 line km. The survey isbeing run along north-south lines 200 metres apart and extending from coast tocoast. The coverage of the entire ML at this line spacing should be completed inthe forthcoming quarter. C-horizon geochemical soil sampling is being routinely undertaken along IP linesat 50-metre intervals: samples of decomposed bedrock (C-horizon soil) arecollected with bucket-type augers, typically from depths ranging down to 5metres. This sampling is primarily to delineate geochemical pathfinder elementdispersion haloes and secondly to determine gold concentration. Some 751 augersamples were collected during the quarter. There is very strong evidence of a significant (approximately 300 metre)north-westerly extension of the Sorowar deposit, based on the following soilauger geochemistry: ------- SAMPLE TIG Co-ordinates Au --------- -------------- mE mN g/t --------- -------- -------- ------- 214036 44000 210150 0.48 214037 44000 210200 0.65 --------- -------- -------- ------- 214041 44000 210400 4.68 214042 44000 210450 0.22 --------- -------- -------- ------- 214722 43800 210500 3.03 214723 43800 210550 0.24 214724 43800 210600 1.19 --------- -------- -------- ------- This apparent north-westerly strike extension of the Sorowar mineralization isalong the pronounced linear magnetic 'low' that hosts the Sorowar deposit, the'low' being a manifestation of magnetite destruction by hydrothermal fluids. A new zone of strong C-horizon soil gold values has also recently beendiscovered on ML136, located between the RopeCon Pylon #2 and the plant site: ------- SAMPLE TIG Co-ordinates Au -------- -------------- mE mN g/t -------- -------- -------- ------- 205880 44800 209200 5.78 205881 44800 209250 1.29 -------- -------- -------- ------- A second significant zone of strong C-horizon soil gold values has also beendiscovered immediately south of the Patan prospect: -------- SAMPLE TIG Co-ordinates Au -------- -------------- -------- mE mN g/t -------- -------- -------- ------- 212006 45400 209850 4.46 212007 45400 209900 2.85 212008 45400 209950 1.31 212009 45400 210000 0.67 -------- -------- -------- ------- Kennecott drilled 10 holes at this prospect in 1990, with the best recordedoxide intercepts being: RC433: 18m at 2.64 g/t gold from surfaceRC436: 7m at 1.30 g/t gold from surfaceRC441: 2m at 21.85 g/t gold from 4m Composite channel sampling of benches cut for access to these drill padsincluded a 5 metre intercept that returned a bonanza grade of 204.17 g/t gold.This zone has never been tested by drilling. The re-establishment of theKennecott benches has been completed and this has revealed presence of anextensive hydrothermally altered intrusive breccia. Additional benching iscurrently in progress. CHANNEL SAMPLE RESULTS FROM ML136 Some 383 five-metre composite channel samples were collected during the quarterand assay results continue to reveal significant new intercepts along bulldozedtracks: €45m at 3.42 g/t gold plus €55m at 1.66 g/t gold, located 250m south of RopeCon Pylon 2, as well as €120m at 0.95 g/t gold in Monun Valley. These former two intercepts are 30-50m apart and their weighted average is 2.45g/t gold. They appear to comprise a single zone of mineralization that is opento the east and west. This mineralization is located approximately 1 km from theplant and is a new discovery with no prior drilling in the immediate vicinity.The location of these intercepts on a coincident magnetic 'low' and aradiometric potassium channel 'high' underlines the utility of aerial geophysicsin the target selection process. TATAU & BIG TABAR ISLANDS - EL 609 C-HORIZON SOIL SAMPLE RESULTS FROM SW TATAU ISLAND (EL609) Reconnaissance C-horizon geochemical soil sampling on the SW Tatau IP grid hasbeen undertaken along lines at 50-metre intervals, the lines being spaced 800metres apart. To date, 15 of these samples have exceeded 1.00 g/t gold, some ofwhich are well away from known prospects: Sample TIG Co-ordinates Au (g/t) No. mE mN 200851 37293 190687 16.70 200413 37293 188424 6.85 200414 37293 188424 5.50 200828 36480 189874 4.04 200920 35914 190440 4.03 200471 36975 188106 3.35 200440 37434 188566 2.68 200679 36020 187151 1.87 200832 36621 190015 1.79 200203 37399 187399 1.73 200409 37258 188389 1.65 200966 35490 190015 1.51 200401 37116 188247 1.28 200439 37434 188566 1.16 200469 36975 188106 1.05 EXPLORATION ON BIG TABAR ISLAND (EL609) During the quarter a start was made on the exploration of the Tupinda Caldera atthe northern end of Big Tabar Island. A temporary camp has almost been completednear the centre of the caldera. Prior to the commencement of this program, the geological evaluation of theTupinda Caldera was undertaken by Kennecott Exploration around 1990. Thisevaluation involved a very limited ground geophysical gradient-array IP programas well as some bench composite sampling and surface chip sampling. The benchsampling was limited in scope and returned: €55m at 1.01 g/t gold €40m at 2.11 g/t gold €135m at 0.30 g/t gold The average of 9 surface grab samples returned 301 g/t silver. A limitedfollow-up grid soil sampling program was subsequently undertaken by NordResources but follow up drilling never eventuated. The Allied program consists of north-south oriented lines spaced 200m apart andrunning from rim-to-rim across the caldera. A ground geophysical pole-dipolesurvey has commenced along these lines, and during the quarter 35.60 km of linewas cut, of which 23.78 line km was read. Geochemical samples of decomposedbedrock (C-horizon soil) were collected in parallel with this program at 50msample spacing, using bucket-type augers, typically from depths ranging down to5 metres. Some 506 auger samples were collected during the quarter, the samplingbeing primarily undertaken to delineate geochemical pathfinder elementdispersion haloes and secondly to determine gold concentration. Preliminary results indicate the discovery of a strong IP chargeability andresistivity anomaly near the centre of the Tupinda caldera. This feature appearsto be around 1,000 metres across and is coincident with anomalouscopper-molybdenum concentration in soil auger samples. Such anomalism isgenerally associated with porphyry systems. EXPLORATION FORWARD PROGRAM During the forthcoming December quarter, two drilling rigs will be engaged inexploration drilling with a further two arriving at site towards the end of theperiod. The RC rig will be engaged in resource definition drilling on the southeast extension of the Sorowar deposit, and the testing for new oxidemineralization at the Adora prospect (immediately east of the Samat deposits).The diamond drill rig will be deployed to test IP chargeability anomalies in theAdora and Patan prospects. Some 7,700 metres of core and 48,000 metres of RCdrilling is budgeted for, over the next 8 months. Large-scale reconnaissance IP surveys will continue during the forthcomingquarter, with one unit operating on Simberi Island and the other continuing onthe reconnaissance IP survey over the Tupinda Caldera, to assist in thepreparation of a drill program early next year. Both IP units are company-ownedand operated and soil auger geochemical surveys are being run concurrent withthe geophysical work. CORPORATE CASH AND DEBT At 30 September 2007, Allied Gold Limited had AUD$13.0 million cash in hand.Drawdown of the Simberi Finance Facility took place during the quarter and atperiod-end Allied had drawn down US$19.3 million (approximately AUD$21.3million). GOLD HEDGING Allied has hedged 170,000 ounce of gold at an effective price of US$700/oz fordelivery between March 2008 and December 2011. The Participating Gold ForwardOption that the company has entered into allows Allied to participate in anyupside in the price of gold for 40% (representing 68,000 ozs) of the company'shedging commitment while remaining protected at US$700/oz at all times as aworst case on the entire 170,000 ozs hedged. SECURITIES ON ISSUE Issued securities at the end of the quarter comprised; 339,974,710 fully paid ordinary shares listed on the Australian Stock Exchange(ASX) and on the London Alternative Investment Market (AIM) 2,040,000 unlisted options exercisable at $0.40, 4,210,000 unlisted optionsexercisable at $0.50 and 750,000 unlisted options exercisable at $0.80 expiring31 December 2008." Copies of the announcement can be viewed and downloaded on the Company's website - www.alliedgold.com.au or as a link to this announcement. http://www.rns-pdf.londonstockexchange.com/rns/6486g_-2007-10-30.pdf For more information:Mark Caruso T:+61 8 93533638Managing Director Roland Cornish T: +44 (0) 20 7628 3396Beaumont Cornish Limited The information in this Stock Exchange Announcement that relates to projectfinancial modelling, mining, exploration and metallurgical results, togetherwith any related assessments and interpretations, has been approved for releaseby Mr. R. Hastings, MSc, BSc., M.Aus.I.M.M., a qualified geologist and full-timeemployee of the Company. Mr Hastings has sufficient experience which is relevantto the style of mineralisation and type of deposit under consideration and tothe activity which he is undertaking to qualify as a Competent Person as definedin the 2004 Edition of the "Australasian Code for Reporting of ExplorationResults, Mineral Resources and Ore Reserves". The information in this Stock Exchange Announcement that relates to explorationresults, together with any related assessments and interpretations, has beenapproved for release by Mr Bohdan (Bob) Burban, Dip.App.Geol., F.Aus.I.M.M., aqualified geologist and full-time employee of the Company. Mr Burban hassufficient experience which is relevant to the style of mineralisation and typeof deposit under consideration and to the activity which he is undertaking toqualify as a Competent Person as defined in the 2004 Edition of the"Australasian Code for Reporting of Exploration Results, Mineral Resources andOre Reserves." The information in this Stock Exchange Announcement that relates to Ore Reserveshas been compiled by Mr J Battista of Golder Associates who is a Member of theAustralasian Institute of Mining and Metallurgy. Mr Battista has had sufficientexperience in Ore Reserve estimation relevant to the style of mineralisation andtype of deposit under consideration to qualify as a Competent Person as definedin the 2004 Edition of the "Australasian Code for Reporting of ExplorationResults, Mineral Resources and Ore Reserves". Mr Battista consents to the inclusion of the information contained in this ASXrelease in the form and context in which it appears. 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