Resource Update

20th May 2009 11:37



For immediate release 20 May 2009

ALLIED GOLD LIMITED 

("ALLIED" OR "THE COMPANY")

RESOURCE UPDATE

GOLD RESOURCES INCREASE BY 45% TO 4.7 MILLION OUNCES 

SILVER RESOURCE EXCEEDS 10.1 MILLION OUNCES

HIGHLIGHTS

130.2 at 0.97g/t gold from 228.8m in hole SDH017 113.5m at 0.99g/t gold from 86.5m in hole SDH018 105.0m at 1.06g/t gold from 201.0m in hole SDH019

  

Pigiput Resource Upgrade

Pigiput in this report refers to the area west from the Pigibo deposit and east to the Pigiput East deposit a distance of about 800 metres and north of ridge towards the Sorowar deposit, a distance of approximately 500 metres. This is set out in Figure 1 in the attached ASX announcement. The mineralisation generally dips towards the north and has a plunge to the northwest. This is set out in Figure 2 in the attached ASX announcement.

On the ridge top the mineralisation presents as free milling gold in oxides. At a depth of around 100 metres the mineralisation is contained in unoxidised sulphides (mainly pyrite). The deepest part of the mineralisation drilled to date is about 250 metres below sea level or from the top of the Pigiput ridge to the bottom of the mineralisation is a vertical distance of approximately 500 metres.

Since the first drill hole was installed in 1986 a total of 269 drill holes comprising 72 diamond cored holes and 197 reverse circulation (RC) holes have been drilled. This amounts to a total of 48,348 metres of drilling of which 13,063 meters is diamond core and 35,285 metres is RC. Refer to figure 1 for location of drill holes. 

In 2008 drilling was carried out at Pigiput East to define an oxide gold resource that had been identified through surface sampling. This drilling was in most part confined to testing the oxides and as such the holes were terminated about 100m metres below surface level. A few widely spaced older deeper holes had intersected gold mineralisation in sulphides including;

In late 2008 drill hole SDH0011 was drilled to test deeper down dip mineralisation and this was followed by further drilling in the first quarter of this year including diamond holes drilled to test down dip extensions of the sulphide mineralisation. The results of this drilling were encouraging in that it defined wide zones of gold mineralisation although the grade was only around 1 g/t, with the exception of SDH011 which resulted in a better grade as indicated in the highlights below.

. 95.7m at 1.79g/t gold from 83.3m in hole SDH011

130.2 at 0.97g/t gold from 228.8 in hold SDH017

113.5m at 0.99g/t gold from 86.5m in hole SDH018

105.0m at 1.06g/t gold from 201.0m in hole SDH019

91.7m at 0.97g/t gold from 209.0m in hole SDH021

These deeper holes have also exposed a difference in the mineralogy, with elevated silver and increasing base metal content, and an alteration style with broad zones of variably intense carbonate and quartz-carbonate replacement and fracture fill alteration. This differs from the lower silver tenor and dominant pyrite alteration in the higher level up dip portions of the mineralisation. 

An example of the elevated silver can be seen in hole SDH017 shown below.

20m at 95g/t silver from 276m and 7.1m at 136 g/t silver from 317.9m

This current Pigiput Resource estimate carried out by Golder Associates has resulted in an additional 1.451 million of Measured, Indicated and Inferred gold Resource ounces. The new estimate is compared with the previous estimate in Table 1 below.

Resource Class	Material	March 2009			May 2009			Change
		Mt	g/t Au	Koz	Mt	g/t Au	Koz	Mt	g/t Au	Koz
Measured	oxide  transitional sulphide				4.1	0.97	128	4.1	0.97	128
Indicated	oxide  transitional sulphide	7.2	0.98	227	3.3 0.3 10.0	0.92 1.13 1.67	98 11 537	-3.9 0.3 10.0	1.03 1.14 1.67	-129 11 537
Inferred	oxide  transitional sulphide	1.6 4.7	0.79 3.2	41 484	0.9 1.4 33.7	0.94 0.83 1.26	27 37 1365	-0.7 1.4 29.0	0.62 0.82 0.94	-14 37 881
Total		13.5	1.73	752	53.7	1.28	2,203	40.2	1.12	1,451

Table 1 Pigiput resources above 0.5g/t gold, May 2008 estimate compared to March 2009

The major resource increase has been in the sulphide material as a result of the deep down dip material and inclusion of additional sulphide intersections from holes drilled after 2004, and a change in the sulphide estimation methodology. The previously reported Inferred Resources for the sulphide material was estimated using an Inverse Distance Weighted method and reported at above 1.6g/t gold cut-off grade. The current estimate has been calculated using Ordinary Kriging and reported at a 0.5g/t gold cut-off. The increase in oxide resources is mainly due to the addition of the Pigiput East mineralisation that was reported independently in the March quarter 2009 Report. There has been a slight adjustment to these figures under this current estimation with 14Kozs less in the oxide allocation and an additional 48kozs reporting to transitional material.

This current increase in oxide resources at Pigiput in conjunction with recent additional oxide resources at Sorowar (73Kozs Inferred, Indicated and Measured) that were released to the market on 24th October, and pending oxide reserve estimations currently being carried out will add to the project oxide mining life.

The extended sulphide mineralisation at Pigiput will under pin future sulphide development which is currently the subject of a Pre-feasibility Study that is evaluating the potential for 80,000 to 100,000 ounces of gold production from these resources.

With the addition of the new Pigiput resources the total Simberi gold Measured, Indicated and Inferred Resources for all material types now totals 4.71 million ounces as shown in Table 2 below.

Simberi Gold Resources by Material Type	Measured			Indicated			Inferred			All Categories
	Mt	g/t Au	Koz	Mt	g/t Au	Koz	Mt	g/t Au	Koz	Mt	g/t Au	Koz
Oxide Transitional Sulphide	13.83 0.60 1.30	1.24 1.18 0.93	553 23 39	13.63 1.71 16.92	1.06 1.15 1.36	465 63 742	7.62 2.05 69.54	1.07 0.89 1.12	262 59 2,504	35.07 4.36 87.76	1.14 1.03 1.16	1,280 145 3,285
Total Resource	15.73	1.22	615	32.26	1.22	1,270	79.21	1.11	2,825	127.19	1.15	4,710

Table 2 Total Simberi gold resources by material type

100% attributable to Allied 

Operator: Allied 

The Measured, Indicated and Inferred silver Resource for the combined Sorowar and Pigiput deposits totals approximately 10 million ounces as indicated in Table 3, below. These resources are reported as stand alone and have not been included in the gold resource statement as gold equivalents.

Simberi Silver Resources by Material Type	Measured			Indicated			Inferred			All Categories
	Mt	g/t Au	Koz	Mt	g/t Au	Koz	Mt	g/t Au	Koz	Mt	g/t Au	Koz
Oxide Transitional Sulphide	8.0 0.6 1.3	0.85 1.15 1.87	219 22 73	9.4 1.3 6.9	2.34 2.64 1.87	707 110 669	12.3 2.3 72.1	0.69 1.03 1.87	274 76 8,024	29.7 4.2 80.3	1.26 1.55 2.24	1,200 209 8,766
Total Resource	9.9	0.99	314	17.6	2.63	1,486	86.7	3.00	8,375	114.2	2.77	10,175

Table 3 Pigiput and Sorowar silver resources by material type (Note: silver Resources refers only to combined Pigiput & Sorowar deposits).

SIMBERI SULPHIDE STUDY - UPDATE

Drilling of the fifth and last metallurgical hole at Pigiput to obtain fresh sulphide samples for metallurgical testing has been completed. Stage 1 metallurgical testwork is now complete and has focussed on comminution and flotation optimisation. Preliminary results on the flotation are very encouraging with a reduction in concentrate mass pull to below 15% while retaining recoveries above 85%.

Resource definition drilling at Pigiput is being accelerated by the mobilisation of an additional contracted diamond core drill rig and support equipment bringing the total drill rigs on site to 5. The program will involve the drilling of approximately 11,500m of diamond and RC drilling. This will provide sufficient sample density to convert the resources to reserves. This drill program will be completed in the third quarter 2009. Stage 2 metallurgical testwork which will commence in June will look more closely at concentrate quality and possible oxidation routes including roasting. Other methods such as ultra fine grinding will be further investigated. Given the size of the resource the company will also investigate increasing the scale of initial gold production from the proposed Sulphide Development which is currently planned at 80,000-100,000 oz p.a.

In addition to the Sulphide Development Feasibility Studies, the company has initiated engineering work to optimise the performance of the existing CIL plant. The optimisation will investigate the expansion and increase in the processing capability of the CIL plant to allow mining of Pigiput oxides in conjunction with Sorowar oxides and to establish requirements to possibly treat concentrate tails or an oxidised concentrate product.

The full version of the ASX announcement is available from the Company's website, www.allied.com.au and as a link to the announcement:

http://www.rns-pdf.londonstockexchange.com/rns/5670S_-2009-5-20.pdf

 

For more information: 

Mark Caruso Executive Chairman	T:+61 7 93252 5911
Roland Cornish Beaumont Cornish Limited	T: +44 (0) 20 7628 3396

Competent Persons

The information in this Stock Exchange Announcement that relates to project financial modelling, mining, exploration and metallurgical results, together with any related assessments and interpretations, has been approved for release by Mr. 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 ASX release in the form and context in which it appears

The information in this Stock Exchange Announcement that relates to Mineral Resources estimates for Sorowar and Pigiput has been compiled by Mr S Godfrey of Golder Associates who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Godfrey has had sufficient experience in Mineral Resource estimation relevant to the style of mineralisation and type of deposit under consideration 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 Godfrey consents to the inclusion of the information contained in this ASX 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).

The technical information in the Announcement was prepared under the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" (JORC).

Glossary of terms used in the Announcement: 

A 'Mineral Resource' is a concentration or occurrence of material of intrinsic economic interest in or on the Earth's crust in such form, quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge. Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories.

 

An 'Inferred Mineral Resource' is that part of a Mineral Resource for which tonnage, grade and mineral content can be estimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified geological and/or grade continuity. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain quality and reliability.

 

An 'Indicated Mineral Resource' is that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confirm geological and/or grade continuity but are spaced closely enough for continuity to be assumed.

 

A 'Measured Mineral Resource' is that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a high level of confidence. It is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are spaced closely enough to confirm geological and grade continuity.

Tonnage - An expression of the amount of material of interest irrespective of the units of measurement (which should be stated when figures are reported)

Grade - Any physical or chemical measurement of the characteristics of the Analysis (Value) material of interest in samples or product

Cut off grade - The lowest grade, or quality, of mineralised material that qualifies as economically mineable and available in a given deposit. May be defined on the basis of economic evaluation, or on physical or chemical attributes that define an acceptable product specification

Mineralisation - Any single mineral or combination of minerals occurring in a mass, or deposit, of economic interest 

Assay - The proportion of a particular metal (eg Au and Ag) in a sample derived by laboratory analytical techniques.

Analysis limits of detection for Au is

 

Simberi mineralisation types are:

Oxide - extremely weathered material (cyanide leach recoveries > 90%), 0.5 g/t Au cutoff

 

Transitional - distinctly weathered material (cyanide leach recoveries 50-90%), 0.5 g/t Au cutoff

 

Sulphide - Slightly weathered to fresh material (cyanide leach recoveries generally

Ounce - 1 troy ounce = 31.10348 grams

Tonnes - Are estimated on a dry basis and defined as a measurement of mass equal to 1000kg which is equivalent to 2204.622 pounds.

Mineral Resource estimate - An estimate of tonnage and grade (mineral content) of a deposit by a variety of techniques including geometrical classical methods and or geostatistical methods. 

ENDMSCILFFIETIIFIA

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