30th Jul 2010 07:53
FOR IMMEDIATE RELEASE 30 July 2010
allied gold limited
("the Company")
NOT FOR DISSMENATION OR DISTRIBUTION IN THE UNITED STATES AND NOT FOR DISTRIBUTION TO US NEWSWIRES
QUARTERLY REPORT FOR PERIOD ENDED 30 June 2010
Allied Gold Limited ("Allied Gold" or the "Company") (TSX:ALG; ASX:ALD; AIM:AGLD) is pleased to announce that it has filed its quarterly report to the Australian Securities Exchange ("ASX") for the period ended June 30, 2010. The quarter's highlights include:
SUMMARY
·; Simberi (PNG) gold production up 24% quarter on quarter to 18,109 ounces. Total cash costs US$614/oz (A$695/oz) for quarter.
·; Gold Ridge (Solomon Islands) A$150 million project refurbishment and redevelopment on time and on budget for delivery in March 2011.
PRODUCTION
Simberi Operations (PNG)
·; Gold production 18,109 ounces for quarter and 64,327 ounces for twelve months to 30 June.
·; Total quarterly cash costs US$614/oz (A$695/oz) (down 16% qoq). Annual cash costs $US729/oz (A$823/oz).
·; Mining volumes 793,679 tonnes (up 24% qoq).
·; Mill processing 544,317 tonnes (up 24% qoq).
·; Gold production 18,109 ounces (up 24% qoq).
DEVELOPMENT
Gold Ridge (Solomon Islands)
·; All construction contracts awarded, refurbishment activities continue. Tenders for contracted project power received pending award. Phase 1 mining fleet delivered.
·; Site infrastructure including accommodation, civil earthworks and operations building commenced.
·; Landowner resettlement on track.
·; Reserve optimisation increased mine life to 9 years, an increase of 134,000 ounces or 12%.
Simberi Operations (PNG)
·; Recent debottlenecking programme completed and production improvements reflected in quarter.
·; The SAG Mill for oxide expansion purchased and civil works for increased tankage commenced.
·; Simberi sulphide pre-feasiblity study and review of options to increase oxide plant throughput to 5 Mtpa due in September.
·; Additional earthmoving mining equipment mobilised to facilitate expanded plant mining rates.
EXPLORATION
PNG Exploration
·; Exploration drilling, both core and RC, totalled 7,080 metres.
·; Work concentrated on testing targets on the periphery of the Pigiput (PIG) and Pigibo (PBO) deposits and at the SE Sorowar and Botlu Prospects.
·; Better down hole intercepts received:
SDH085 18m @ 3.69g/t Au from 173m in SU (PIG)
RC1817 25m @ 2.13g/t from 5m in OX (PIG)
SDH091 55m @ 1.23g/t from 119m in TR, SU (PBO)
RC1813 24m @ 1.84g/t from 32m in OX, TR, SU (PBO).
SOLOMON ISLANDS Exploration
·; Mobilised RC rig to Gold Ridge.
·; Commenced building Exploration team.
·; Started line clearing for upcoming IP survey.
·; Application submitted for additional 130m² of ground.
CORPORATE
·; Quarterly gold sales 16,526oz at US$1,186/oz (A$1,386/oz).
·; US$35M loan with IFC/World Bank established.
·; Cash & equivalents US$75m (A$85m) at quarter's end.
OUTLOOK
Simberi - September quarter production forecast between 18,000-19,000 ounces. Budgeted 12 month gold production ending 30 June 2011 the estimate at 73,000oz from oxide production while the plant expansion to either 3 Mtpa or 5 Mtpa finalised.
Gold Ridge - Pre development continues with first gold expected during the March 2011 quarter. Gold production to the period ending 30 June 2011 is estimated at around 30,000oz.
OPERATIONS
SIMBERI - PAPUA NEW GUINEA
·; Gold production 18,109 ounces for quarter and 64,327 ounces for twelve months to 30 June.
·; Total cash costs US$614/oz (A$695/oz) for quarter and $US729/oz (A$823/oz) for twelve months.
·; Mining volumes 793,679 tonnes (up 24% qoq).
·; Mill processing 544,317 tonnes (up 24% qoq).
Plant throughput being exceeded commensurate with plant oxide plant debottlnecking programs.
A second elution column now operational, larger Intertank screens installed to all CIL tanks. Rope conveyor and ore delivery conveyors were upgraded to 600tph, conveyor rain covers installed.
Remaining debottlenecking and optimisation works include the installation of larger agitator gear boxes and new wet ends for tanks 1, 2 and 3 which have been procured.
The Simberi process plant is now exceeding name plate capacity and gold recoveries exceeding design criteria.
Mining operations performed 24% above budget despite excessive seasonal rainfall. This was primarily due to the completion of all major all weather access haul roads and bench predevelopment works in the main Sorowar open pit.
Simberi is now an owner-operator mine, with the expiry on 30 June of a contract between Simberi and civil contracting group Mine Site Construction Services (a related party entity).
The company has also mobilised an additional 5 articulated dump trucks, 1 excavator and 2 bulldozers to increase mining rates in advance of the proposed oxide expansion initiatives and also maximise production during available working periods. The full benefits of production and incremental cost reductions in mining rates will be seen in the September quarter.
SAG mill for the oxide expansion has been purchased, detailed civil design for leach tanks and lime slaker completed. Tenders for thickener received. The underground HV electrical cables have been removed and earthworks for the CIL tank foundations is about to commence.
Geotechnical drilling for the SAG mill foundations has identified underlying marine sedimentary sequence and further drilling is planned to delineate better foundation conditions. Tenders for tank and structural steel for CIL and slaker have been received and soon to be awarded.
Infill drilling carried out at Pigiput-Pigibo and extensional drilling ongoing at Sorowar South and Samat, for a total of 19 diamond cored holes for 5,128metres, and 19 reverse circulation holes for 2,215 metres.
Simberi Sulphide Prefeasibility Study (PFS)
The Simberi Sulphide Prefeasibility Study is nearing completion due for release in the September quarter.
The identification of large oxide mineral resource overlying the sulphides has necessitated an additional review of the existing CIL oxide treatment plant capacity which is currently being expanded to 3Mpta to look at possibly 5Mtpa expansion.
All the metallurgical test work has been completed other than the roaster SO2 off gas work which will be completed in July. As previously reported process recoveries for sulphide ores via roasting on site of a concentrate is approximately 82%.
The Resources estimated have been completed and the Reserve estimates and subsequent mining strategies and capital and operating cost are being generated, again in line with delivery possibly of 5Mtpa oxide ore.
Environmental studies including tailings and waste material disposal have been completed but being reviewed further in line with higher oxide processing rate.
Current total oxide and transitional Measured and Indicated Resources are 37.1Mt @ 1.13g/t Au for 1.350 million contained ounces. The sulphide Measured and Indicated Resources are 44.7Mt @ 1.37g/t Au for 1.966 million contained ounces.
Preliminary studies indicate +30Mt of mineable oxide resource from the Pigiput-Pigibo-Sorowar pits overlying possible 14 Mt mineable sulphide resource at Pigiput-Pigibo.
Estimated waste is ~50Mt or a waste strip ratio of 1.1.
GOLD RIDGE - SOLOMON ISLANDS
·; A$150 million refurbishment and redevelopment on schedule for first gold pour in March 2011.
·; Site infrastructure including accommodation village upgrade and operation buildings on schedule. New Administrative office completed.
·; Landowner resettlement program on track to have northern mine area communities relocated. Fabrication and shipment of resettlement housing commenced.
·; Pre - operation manning buildup commenced with training of local employees and appointment of senior staff.
An EPC lump sum contract for A$64.3M was awarded to GR Engineering Services (GRES) for refurbishment and expansion of the process plant and ancillaries. Engineering design, drafting is well advanced, and procurement of long lead item completed
GRES have mobilised to site and completed the removal of old equipment and key components (such as ore crushing and grinding) have been stripped for repair or refurbishment or exchange. Steel for three new additional leach tanks has arrived and erection of the tanks commenced.
Construction equipment including cranes and mining fleet consisting of haul trucks, excavators, dozers and other road maintenance and heavy vehicle support arrived in May.
The mine warehouse building has been completed and procurement and systems have been installed.
In February dewatering commenced of the previously built Tailing Storage Facility. Pumping on schedule and will result in reduced levels by October to allow tailings placement to commence when operations start.
Mining activities and the first deliveries of ore to ROM Stockpile expected in the December quarter. Operator training has commenced and construction related earthworks have commenced.
Tenders for power supply where issued, reviewed, and award is pending. The power station will be delivered as a buy-own-operate (BOO) by the contractor with 14 MW of installed capacity and base load requirement of 8.1 MW.
Contract for mine camp refurbishment and expansion and landowner village resettlement housing was awarded. Camp refurbishment and installation of additional accommodation units is continuing to provide for approximately 200 camp beds.
The Administration building was completed in May and is now fully equipped and operational with computing and internet facilities and communications installed.
The General Manager of Gold Ridge Mining Limited (GRML) was appointed and commenced duties on site in June and a Resettlement Manager has also been appointed.
Pre-operational manning in selected positions has commenced with a strong focus on employment and training of people from the Gold Ridge area.
The landowner resettlement program is on track as part of plans to gradually move local villagers. Fabrication of 300 resettlement houses - at the rate of 30 a month - has commenced.
The first 90 homes to cater for landowners in the northern mining area will be erected and occupied by December 2010. The remaining landowners residing in the southern mine area will be resettled by June 2011.
The Gold Ridge Geological Resource model was reviewed and a new Reserve estimate derived based on an assumed US$850/oz gold price. This increased Probable Reserves Gold Ridge's inventory by 134,000 ounces - or approximately a year of production.
Allied mobilised a reverse circulation (RC) drill to site in June to carry out pre-mining grade control and sterilisation drilling, as well as some near mine exploration.
EXPLORATION
Simberi Gold Project in PNG
(Allied Gold 100%) ML 136
Core and RC drilling tested the open periphery of both the Pigiput and Pigibo deposits. Two (2) diamond core holes / 600m and 7 RC holes / 790m were completed in the quarter.
Exploration drilling also commenced at Botlu, Samat and SE Sorowar prospects, with the aim of confirming and expanding the known mineralisation. Assay results are awaited.
At Botlu, 5 core (1,316m) and 2 RC (240m) tested re-modelled sulphide targets, down dip and along strike of the previously exploited Botlu Oxide deposit.
At Samat, similar targets were tested by 1 core (292m) and 10 RC (1,185m) holes. Eleven core holes totalling 2,654m were drilled at SE Sorowar, testing the area between the north dipping Pigiput and south dipping Sorowar deposits.
Better down hole intercepts in 7 diamond core and 1 RC holes assayed subsequent to the March 2010 resource estimate, at Pigiput, include:
·; SDH085 18m @ 3.69g/t from 173m (SU)
·; SDH087 27m @ 1.53g/t from 47m (OX)
·; SDH088 35m @ 1.53g/t from 0m (OX)
·; RC1817 25m @ 2.13g/t from 5m (OX)
Gold mineralisation remains open at Pigiput, both to the north east and south west and down dip to the north.
Assay results for 4 diamond core and 3 RC holes drilled at the adjacent Pigibo, included better downhole intercepts:
·; SDH090 19m @ 1.87g/t from 118m (TR)
·; SDH091 55m @ 1.23g/t from 119m (TR, SU)
·; SDH095 29m @ 1.30g/t from 120m (SU)
·; RC1813 24m @ 1.84g/t from 32m (OX, TR, SU)
The on-going drilling campaign is designed to support the Sulphide and Oxide Expansion Studies based around the Pigiput and Pigibo deposits.
Tatau and Big Tabar Islands in PNG
(Allied Gold 100%) EL 609
Preparations, including drill refurbishment, were completed in preparation of mobilisation of crew and equipment to Tatau early in the September quarter.
Diamond drilling is planned for five prospects, with an IP geophysical target at Mt Letam the first to be tested.
Gold Ridge in Solomon Islands
(Allied Gold 100%)
Preparations for exploration in 2010 included:
·; Mobilisation of an RC drill to Gold Ridge, with an initial task of detailed RC drilling of Namachamata deposit.
Line-cutting for an IP geophysical survey planned to commence in mid-July. IP program to commence subject to contract availability in the
·; September quarter.
·; Employment and training of first members of exploration staff.
·; Additional 130m2 of prospecting area under application.
CORPORATE
CASH AND DEBT
·; Gold sales during the June quarter of 16,526 ounces (up 17% qoq) reflected higher production.
·; The average price of US$1,186/oz (A$1,386/oz) reflects the unhedged profile of the company.
·; In June, Allied secured a US$35 million debt facility with the International Finance Corporation.
·; The facility is expected to be drawn down in the September quarter. The 5-year facility has no principal repayments before November 2011 and no gold hedging required.
·; Allied continues to review proposals relating to various standby and similar natured credit facilities with a view of establishing such facilities in calendar 2010.
CASH FLOW STATEMENT
·; The cash generated from operations was utilised primarily in the capital expenditure initiatives within Simberi and Gold Ridge.
SECURITIES ON ISSUE
·; As at 30 June 2010, Allied Gold has 1,040,132,142 ordinary shares on issue. As at 30 June 2010, 19,237,059 ordinary shares were subject to voluntary escrow.
·; The shares are listed on the Australian Stock Exchange (ASX), Toronto Stock Exchange (TSX) and currently on the London Alternative Investment Market (AIM). The shares are interchangeable.
·; Allied Gold continues to progress migration of its London AIM listing to the London Stock Exchange (LSE).
·; The Company is considering the merits of a share consolidation to reduce the number of shares on issue in due course.
Notes:
i. Of the 30,102,500 options expiring 31 October 2011, 9,375,000 vest upon the share price reaching $A0.70.
ii. Of the 1,500,000 options expiring 31 December 2011, 500,000 vest upon the share price reaching $A0.70.
iii. Of the 37,500,000 options expiring 31 December 2013, 15,000,000 vest on 7 December 2010; 15,000,000 vest upon the share price reaching $A0.70 and 7,500,000 vest upon Allied Gold producing 100,000 ounces of gold in the period 1 October 2009 to 31 December 2010.
. OUTLOOK
Simberi - September quarter production forecast between 18,000-19,000 ounces. For the 12 months ending 30 June 2011 the estimate is around 73,000oz from oxide production while the plant is expanded to either 3 Mtpa or 5 Mtpa.
The detail of the Simberi Sulphide Pre-feasibility Study and expansion options for the Simberi oxide circuit is due in September. The aim being to increase gold production from the oxide ores, access sulphides faster and deliver incremental expansion synergistic with the needs of sulphide development
Gold Ridge - Development of the 120,000 ozpa Gold Ridge mine is fully funded with Allied's cash at bank and IFC loan.
Pre-development continues with first gold expected during the March 2011 quarter.
Construction activities accelerate in the September quarter with installation of three additional leach tanks and the commencement of the thickener. The tailings detoxification tank will also be scheduled for completion in September as will the reestablishment of power lines and associated infrastructure. The refurbishment of the SAG mill will be approximately 50% completed by the September quarter.
Mining activities will also increase with operator training, completion of starter pit designs for Valehaichichi and Namachamata pits. As at 30 June, Allied has invested/spent A$50 million on the Gold Ridge refurbishment and redevelopment. Key items such as mining fleet were purchased in the March quarter.
Exploration - Simberi near term exploration continues to focus on various sulphide mineralisation targets around the Botlu and Samat areas. The estimated near 1,000,000oz Inferred Sulphide resource under the Sorowar open pit (ALD - Ann Rpt 08 - 09, pg 23) will also be targeted.
Additional emphasis will also now be towards increasing the Oxide resources to underpin future mine life to support the oxide plant expansion initiatives. Continued drill results will be released through the September quarter.
At Tatau Island, mobilisation of crew and equipment is scheduled for early in the September quarter. Diamond drilling is planned for five prospects, with an IP geophysical target at Mt Letam the first to be tested.
At Gold Ridge, a company-owned drill rig is onsite focused on sterilisation and grade control activities as well as the commencement of broader exploration initiatives.
The company's senior geological consultant conducted an extensive review of past exploration activities in the Solomon Islands with a view to identifying highly perspective copper gold mineralised prospects. An application for prospecting is under consideration for an additional 130km². On granting, the company will hold over 250km² of exploration tenements in largely under explored greenfields exploration areas.
A full complete version of the Company's quarterly report to the ASX for the period ending June 30, 2010 is available on the Company's website (www.alliedgold.com.au), ASX (www.asx.com.au), and SEDAR (www.sedar.com).
For more details please contact:
Frank Terranova Chief Financial Officer +61 7 3252 5911
Simon Jemison Investor and Media + 61 418 853 922
Rebecca Greco Investors (North America) +1 416 839 8610
John Carrick-Smith Investors (UK) +44 20 7559 6710
Beaumont Cornish Limited
Roland Cornish
Beaumont Cornish Limited
T: +44 (0) 20 7628 3396
Competent Persons
The information in this announcement that relates to Mineral Resources, Project Financial modelling, Mining, Exploration and Metallurgical results, together with any related assessments and interpretations, has been approved for release by Mr C R Hastings, MSc, BSc, M.Aus.I.M.M., a qualified geologist and full-time employee of the Company. Mr Hastings has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr Hastings consents to the inclusion of the information contained in this release in the form and context in which it appears.
Forward-Looking Statements
This press release contains forward-looking statements concerning the projects owned by Allied Gold. Statements concerning mineral reserves and resources may also be deemed to be forward-looking statements in that they involve estimates, based on certain assumptions, of the mineralisation that will be found if and when a deposit is developed and mined. Forward-looking statements are not statements of historical fact, and actual events or results may differ materially from those described in the forward-looking statements, as the result of a variety of risks, uncertainties and other factors, involved in the mining industry generally and the particular properties in which Allied has an interest, such as fluctuation in gold prices; uncertainties involved in interpreting drilling results and other tests; the uncertainty of financial projections and cost estimates; the possibility of cost overruns, accidents, strikes, delays and other problems in development projects, the uncertain availability of financing and uncertainties as to terms of any financings completed; uncertainties relating to environmental risks and government approvals, and possible political instability or changes in government policy in jurisdictions in which properties are located.
Forward-looking statements are based on management's beliefs, opinions and estimates as of the date they are made, and no obligation is assumed to update forward-looking statements if these beliefs, opinions or estimates should change or to reflect other future developments.
Not an offer of securities or solicitation of a proxy
This communication is not a solicitation of a proxy from any security holder of Allied Gold, nor is this communication an offer to purchase or a solicitation to sell securities. Any offer will be made only through an information circular or proxy statement or similar document. Investors and security holders are strongly advised to read such document regarding the proposed business combination referred to in this communication, if and when such document is filed and becomes available, because it will contain important information. Any such document would be filed by Allied Gold with the Australian Securities and Investments Commission, the Australian Stock Exchange and with the U.S. Securities and Exchange Commission (SEC).
Neither the ASX, TSX or AIM exchanges have approved, nor disapproved, the form or content of this announcement.
Related Shares:
ALD.L