29th Jan 2010 10:10
FOR IMMEDIATE RELEASE 29 January 2010
allied gold limited
("Allied", "Allied Gold" or "the Company")
"This press release is not for dissemination in the United States and shall not be disseminated to United States news services."
QUARTERLY REPORT FOR PERIOD
ENDED 31 December 2009
SUMMARY
December 2009 quarter production increased 24% to 17,456oz despite nine days of lost production.
Cash costs reduced by 11% to A$810p/oz.
Mitigation initiatives to counter 9.2m annual rain fall nearing completion.
Successful A$159M capital raising and TSX listing.
Acquired 96.6% ownership of Australian Solomons Gold Limited (ASG).
PNG exploration program continues to be accelerated.
Prioritisation of Solomon Islands' exploration targets imminent.
PRODUCTION
Papua New Guinea Operations
Record mining volumes with quarterly mining volumes increased by 23% to 653,205 tonnes
Plant throughput in line with last quarter at 482,865 tonnes sustaining nameplate capacity of around 2.0M tpa annualised.
Oxide expansion study completed and project fully funded. Final investment decision due in March 2010 quarter.
Sulphide PFS progressing with exploration results supporting initiative.
Solomon Islands Operations
Management integration commenced.
Constructive meetings with Government and Land Owners undertaken.
Construction contract renegotiation and review of BFS expected to be completed by March 2010.
EXPLORATION
Papua New Guinea Exploration
Mineralisation remains open with expected resource upgrade in March 2010 quarter.
Results underpin a minimum 100,000oz p.a. PFS sulphide expansion study being finalised.
Solomon Islands Exploration
Existing geological workings being evaluated and targets further optimised. Aggressive exploration campaign being designed and expected to commence in June quarter 2010.
CORPORATE
Quarterly gold sales increase by 17% to 17,971oz with realised gold price of A$953/oz (US$866/oz).
Compulsory acquisition and integration of ASG in progress.
Hedge book declines with net position less than 38,000 oz as at 31 December 2009 and further reducing to less than 30,000oz in January 2010.
OUTLOOK
Forecast March 2010 quarter production of around 17,500oz due to five days lost production in January regarding the illegal cease work order and around four days of planned shut down for debottlenecking works.
Objective of completing 200,000oz annual production capacity by March quarter 2011 remains on track.
Exploration update and revised group resource due March 2010 quarter.
Key Metrics - PNG Simberi Island
|
Previous QTR July - Sep 2009 |
Current QTR Oct - Dec 2009 |
Financial Year 2010 |
||
|
Waste Mined |
tonnes |
65,011 |
158,084 |
223,095 |
|
Ore Mined |
tonnes |
467,368 |
495,121 |
962,489 |
|
Total Mined |
tonnes |
532,379 |
653,205 |
1,185,584 |
|
Ore Processed |
tonnes |
489,256 |
482,865 |
972,121 |
|
Grade |
g/t gold |
1.03 |
1.26 |
1.14 |
|
Recovery |
% |
87.2 |
88.5 |
88.1 |
|
Gold Produced |
oz |
14,072 |
17,456 |
31,528 |
|
Gold Sold |
oz |
15,420 |
17,971 |
33,391 |
|
Average Realised Gold Price |
A$/oz US$/oz |
1036 862 |
953 866 |
991 864 |
|
Mining Costs Processing Costs Site Services / Admin Operating Cash Cost Royalty Ore and Inventory Adjustments Total Operating Cash Costs |
A$/oz A$/oz A$/oz A$/oz US$/oz A$/oz A$/oz A$/oz US$/oz |
201 454 170 825 687 25 57 907 755 |
171 402 173 746 680 22 42 810 736 |
184 425 171 780 683 24 49 853 744 |
OPERATIONS
Simberi Gold Project in PNG (Allied Gold 100%)
Oxide Operations
Oxide Expansion
Plant Debottlenecking
Plant debottlenecking activities progressed in the current quarter with the following activities:
Sulphide Development
Pigiput Sulphide Study
Government and Land Owner Status
On 23 December 2009, Allied Gold announced that an illegal cease work order and cultural gorgor that symbolizes a stop work process with land owners were issued against Allied Gold's operations on Simberi Island.
On 4 January 2010, Allied Gold announced that specific issues had been dealt with which occurred on Simberi Island, resulting in nine days of lost production in December and four days in January.
The Company continues to participate in the review process relating to the Memorandum of Agreement 1996 (MOA) which governs the operating commitments and distribution of royalties between all Stakeholders involved in the Simberi Mining Operation.
The company received the full support of the respective PNG Mining regulators and associated bodies during the landowner operational standstill. A formal delegation from the Mineral Resources Authority (MRA) travelled to site and were directly involved in the various processes.
The company continues to abide by its legal obligations and is not in breach of any permits, land owner agreements or any other legal arrangements relating to the good standing of any mining activities.
Despite the illegal protest, the company has remained respectful of the minority dissidents on Simberi and continues to engage in a consultative and collaborative dialogue with all stakeholders. Allied Gold continues to engage with all relevant stakeholders to ensure its legal rights to operate are enforced.
Gold Ridge Project in Solomon Islands (Allied Gold 100%)
The executives of the company made several visits to the Solomons Islands to meet with the stakeholders of the Gold Ridge Project. Meetings were held with Government officials, principal landholders and downstream associations, along with the local and expatriate workforce.
The asset has been in 'Care and Maintenance' mode but the plant, in particular, is in very good shape. During the reporting period several key aspects of the redevelopment plan were advanced, including:
Dewatering of the Tailings Storage Facility - This has gradually filled up over the nine (9) years, the mine has been closed and needed to be dewatered to allow for operations to recommence. Over the course of 2009, a treatment plant was constructed to allow processing of the water to meet strict water quality guidelines. Late in November, the water quality guidelines were met and pumping to the Tinahula River commenced. The project is anticipated to take approximately six months.
Relocation - This is a key process that needs to be carried out so that mining can commence. During the quarter, the final Census (population and location data) was completed and various relocation sites were accessed after the traditional ground breaking ceremonies were carried out. Final house designs were agreed and a supplier was identified. It is anticipated that the first order for housing will be placed early in the first quarter of 2010. Over 300 houses will be built on five separate sites during the resettlement period.
Site Building Construction - The main administration building (stage 2) construction commenced. This is being built by local tradesmen, largely trained by the company. It is scheduled for completion by the end of February.
The company has also begun the process of acquiring earthmoving equipment, light vehicles and has recommenced engineering studies on the plant and infrastructure.
Recruitment of key personnel has begun and they will concentrate on the training, OHS and operational systems that need to be in place to ensure a smooth transition to operations.
EXPLORATION
Simberi Gold Project in PNG (Allied Gold 100%) ML 136
Gold assays were received for samples from 11 diamond core holes, with the best down hole intercepts including:
SDH061 44m @ 1.12g/t Au from 254m in SU
SDH062 27m @ 1.65g/t Au from 94m in SU
SDH063 61m @ 1.81g/t Au from 158m in SU
SDH064 7m @ 4.95g/t Au from 128m in SU
SDH065 53m @ 3.38g/t Au from 128m in SU
SDH066 5m @ 6.02g/t Au from 298m in SU
SDH067 18m @ 2.58g/t Au from 134m in SU
SDH068 33m @ 15.0g/t Au from 78m in SU
(Refer to press release dated 21 January 2010 for full details.)
Big Tabar Island in PNG (Allied Gold 100%) EL 609
Tatau Island Simberi in PNG (Allied Gold 100%) EL 609
Gold Ridge Project in Solomon Islands (Allied Gold 100%)
CORPORATE
CASH AND DEBT
CASH FLOW STATEMENT
|
Dec 2009 Quarter(1) A$ Million |
6 months ended 31 Dec 2009 (1) A$ Million |
|
|
Net cash provided by operating activities |
(5.6) |
(6.9) |
|
Net cash used in investing activities |
(4.1) |
(10.0) |
|
Net cash provided by financing activities |
148.4 |
150.9 |
|
Net increase / (decrease) in cash and cash equivalents |
138.7 |
134.0 |
|
Cash and cash equivalents at the beginning of the period Effects of exchange rates on cash and cash equivalents |
15.7 1.2 |
20.5 1.1 |
|
Cash and cash equivalent at the end of the quarter |
155.6 |
155.6 |
|
(1) Unaudited numbers. |
GOLD HEDGING
|
Year Ending 30 June |
FIXED US$700 OZ |
|
FY 2010 |
17,358 |
|
FY 2011 |
20,154 |
|
TOTAL |
37,512 |
Note: a) The mark to market on the hedge book as at 31 Dec 2009 was A$14.9M
SECURITIES ON ISSUE
As at 31 December 2009, Allied Gold has 1,036,712,735 ordinary shares on issue. 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.
|
Exercise Price(iv) |
Maturity(v) |
Options outstanding at beginning of quarter |
Options issued |
Options expired or cancelled |
Options exercised |
Options outstanding at end of quarter |
|
$0.50 options |
31/10/2009 |
180,000 |
|
(180,000) |
|
- |
|
$0.45 options |
31/12/2009 |
3,400,000 |
|
(3,400,000) |
|
- |
|
$0.80 options |
31/12/2010 |
1,000,000 |
|
|
|
1,000,000 |
|
$1 options |
31/12/2010 |
1,000,000 |
|
|
|
1,000,000 |
|
$1.25 options |
31/12/2010 |
1,000,000 |
|
|
|
1,000,000 |
|
$1.50 options |
31/12/2010 |
1,000,000 |
|
|
|
1,000,000 |
|
$2 options |
31/12/2010 |
1,000,000 |
|
|
|
1,000,000 |
|
$0.35 options(i) |
31/10/2011 |
36,325,000 |
|
(5,862,500) |
(450,000) |
30,012,500 |
|
$0.31 Options |
31/12/2010 |
1,699,427 |
|
|
|
1,699,427 |
|
$0.35 Options(ii) |
31/12/2011 |
- |
1,500,000 |
|
|
1,500,000 |
|
$0.50 Options(iii) |
31/12/2013 |
- |
37,500,000 |
|
|
37,500,000 |
|
$0.50 options |
31/12/2013 |
- |
1,175,000 |
|
|
1,175,000 |
|
|
|
|
|
|
|
|
|
|
|
46,604,427 |
40,175,000 |
(9,442,500) |
(450,000) |
76,886,927 |
|
|
|
|
|
|
|
|
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 - 31 December 2010.
OUTLOOK
In the March quarter, the company will accelerate the re-development of the Gold Ridge Project by the rescheduling and re-commencement of existing processing plant refurbishment works. The company will complete the process of formalisation and documentation of all existing government approvals.
A dedicated company team has been mandated to review all aspects of the existing feasibility study with a view to producing a technical and financial optimisation which will accelerate gold production ahead of the existing plant programme.
Solomon Island exploration focus will be expanded to include the 130 square kilometres of exploration tenure in the Solomon Islands through the acquisition of ASG. The company is committed to the reinterpretation of all geological data and the recommencement of drilling at Gold Ridge.
PNG exploration will continue to dedicate resources to Pigibo sulphide and look to recommence drilling activity on Tatau Island.
Operationally, gold production remains on track to produce a minimum of 17,500oz for the quarter, cognizant of the time lost due to the January landowner and cease work order stoppages, and a scheduled maintenance to the CIL processing tanks.
The March quarter will see the delivery of the PNG Sulphide pre-feasibility study and a significant resource upgrade. The company is fully funded to deliver its objective of producing 200,000oz annual production by March quarter 2011.
The company will proactively continue to promote itself to its global diversified shareholder base and unlock the value of its assets by translating into consolidation of its share price.
For further information, contact:
Allied Gold Limited
Mark Caruso
Executive Chairman
T:+61 8 93533638
Frank Terranova
Chief Financial Officer
T: +61 7 3252 5911
M: +61 448 187 557
Beaumont Cornish Limited
Roland Cornish
Beaumont Cornish Limited
T: +44 (0) 20 7628 3396
Qualified Person
The Technical and scientific information contained in this news release was reviewed by Mr Colin Ross Hastings, MSc, BSc, M.Aus.I.M.M.,MSc Geology, Allied's General Manager Resource Development and the Qualified Person as defined by National Instrument 43-101 of the Canadian Securities Administrators responsible for the development programs. Additionally 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"
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).
Related Shares:
ALD.L