TSX Quarterly Report

FOR IMMEDIATE RELEASE 14 February 2011

allied gold limited

("the Company")

TSX Quarterly Report and management Discussion and Analysis 31 december 2010

Allied Gold lodged its Quarterly Report and Management Discussion and with the TSX today for the period ended 31 December 2010. Extracts are as follows:

HIGHLIGHTS - THREE MONTHS ENDED DECEMBER 31, 2010

§ Simberi (PNG) - Simberi produced 18,921 ounces for the quarter at a total cash cost including royalties of US$652/oz. Mill throughput is running at a consistent 2.4 Mtpa and recoveries were at 88.5% for the quarter and 89.9% for the December half. During 2011 the Simberi plant will be expanded towards 3.5 Mtpa as part of an approved A$32million budget to lift output to 100kozpa. Allied continues to review the options for a further incremental expansion to process 5 Mtpa of oxide ore. A bankable feasibility study (BFS) on a 2.5 Mtpa roaster circuit to process Simberi's sulphide ores is due at the end of 2011.

§ Gold Ridge (Solomon Islands) - 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 A$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. Plant commissioning is imminent and first gold is due in the March quarter.

·;   Exploration - At Gold Ridge exploration in the quarter focused on grade control and will move towards pit extensions and new opportunities in the March and June quarters. At Simberi, encouraging sulphide intercepts were returned from the Botlu pit. On Tatau, drilling at Mt Letam/Talik did not return significant intercepts and core drilling has moved to other targets at Mt Tiro, Pepewo, and Seraro before returning to Mt Letam/Talik. 

§ Corporate - During the quarter Allied achieved a realised gold price of US$1,382/oz. As at 31 December 2010 cash at bank was A$36.5 million. During the Quarter, the Group achieved a profit after tax of A$8.3 million. The audited profit after tax for the half year ended December 31, 2010 was A$9.4 million.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This management's discussion and analysis ("MD&A") of Allied Gold Limited ("Allied Gold" or the "Company") is dated February 11, 2011 and provides an analysis of the Company's performance and financial condition for the three months ended December 31, 2010 (the "Quarter"). This MD&A should be read in conjunction with the Company's audited interim consolidated financial statements for the three months ended December 31, 2010 and the notes thereto. These documents, along with others published by the Company are available under the Company's profile on the Canadian System for Electronic Document Analysis and Retrieval ("SEDAR") at www. sedar.com.

The consolidated financial statements of Allied Gold and the financial information contained in this MD&A were prepared in accordance with Australian equivalents to International Financial Reporting Standards as defined by the Australian Accounting Standards Board ("Australian IFRS") and are fully compliant with International Financial Reporting Standards as issued by the International Accounting Standards Board. All amounts in this MD&A are expressed in Australian dollars unless otherwise identified, and references to "A$" are to Australian dollars.

This MD&A may contain forward-looking statements that are based on the Company's expectations, estimates and projections regarding its business and the economic environment in which it operates. These statements speak only as of the date on which they are made, are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. Examples of some of the specific risks associated with the operations of the Company are set out in the company's most recent Annual Information Form ("AIF") under the section entitled "Risk Factors". Actual outcomes and results may differ materially from those expressed in these forward-looking statements and readers should not place undue reliance on such statements. Readers are also referred to the "Cautionary Note Regarding Forward-Looking Statements" in this MD&A.

Overview

Allied Gold is a gold production company whose shares are listed on the Toronto Stock Exchange ("TSX") under the symbol "ALG", on the Australian Securities Exchange ("ASX") under the symbol "ALD" and on AIM, a market operated by the London Stock Exchange plc under the symbol "AGLD". Allied Gold's major assets are its 100% owned Simberi gold project (the "Simberi Project"), which is located on Simberi Island, the northernmost island of the Tabar Islands Group, in the New Ireland Province of eastern PNG and its 100% interest in Australian Solomons Gold Limited ("ASG"), the owner of the Gold Ridge Gold Project ("Gold Ridge") which is located on Guadalcanal Island in the Solomon Islands.

The Simberi Project

The Simberi Project is located in the Pacific Rim of Fire, one of the world's proven and most prospective gold jurisdictions. The Simberi Project is comprised of: (i) an open-pit mining operation with an associated gold processing plant, located within PNG mining lease 136 ("ML 136"), which comprises 2,560 ha on the eastern side of Simberi Island; and (ii) a larger 69 sub-block/233 km2 area under PNG exploration license 609 ("EL 609") covering the remainder of Simberi Island and most of the adjacent Tatau and Big Tabar Islands to the south. The Simberi Project is based on seven separate deposits on the eastern portion of Simberi Island (Sorowar, Samat North, Samat South, Samat East, Pigiput, Pigibo and Botlu South). Sorowar in the north is by far the largest resource. Samat North, South and East lie to the south and while relatively small are also relatively high grade. Pigiput, Pigibo and Botlu South lie between the Sorowar and Samat areas and are of intermediate tonnage but at a grade similar to Sorowar. All prospects lie within 2-3 km of each other. The project area also includes other less well defined prospects and anomalies.

The Simberi Project is the subject of a technical report (the "Technical Report") entitled "Simberi Gold Project, Simberi Island, Papua New Guinea" dated September 25, 2009 prepared for Allied Gold by Stephen Godfrey and John Battista of Golder Associates Pty Ltd. and Phil Hearse of Battery Limits Pty Ltd., all of whom are independent qualified persons as defined in National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101"). The Technical Report has been filed with certain Canadian securities regulatory authorities pursuant to NI 43-101 and is available for review under Allied Gold's SEDAR profile at www. sedar.com.

The Gold Ridge Project

In November 2009, the Company acquired control of Australian Solomons Gold Limited ("ASG").

ASG is an Australian-based mineral resource exploration company that was incorporated under the Australian Corporations Act on September 10, 2004. ASG converted its Australian legal status to a "public" company on April 4, 2006, which was confirmed by the Australian Securities and Investment Commission on September 6, 2006. The general development of the business of ASG has focused entirely on the Gold Ridge project on the island of Guadalcanal in the Solomon Islands (the "Gold Ridge Project").

ASG acquired the Gold Ridge Project in May 2005. The Gold Ridge Project consists of a mining lease that covers an area of 30 km2 and a prospecting license in the area surrounding the mining lease that covers an area of 130 km2. The mining lease is administered under a mining agreement between ASG and the Solomon Islands Government. ASG holds the Gold Ridge Project through certain wholly-owned Australian and Solomon Islands subsidiaries.

Prior to ASG acquiring the Gold Ridge Project, previous owners of the Gold Ridge Project had constructed a 2Mtpa open cut mine starting in 1997 and mined the Valehaichichi deposit commencing in August 1998. The Gold Ridge Project was eventually shut down in September 2000 by a subsequent owner as a result of escalating civil unrest in the Solomon Islands. The Regional Assistance Mission to Solomon Islands ("RAMSI') was created in 2003 in response to a request for international aid by the Governor-General of the Solomon Islands. RAMSI is a partnership between the people and Government of Solomon Islands and fifteen contributing countries of the Pacific region. RAMSI is helping the Solomon Islands to lay the foundations for long-term stability, security and prosperity - through support for improved law, justice and security; for more effective, accountable and democratic government; for stronger, broad-based economic growth; and for enhanced service delivery. The Australian government continues to support RAMSI, contributing in excess of A$200 million per annum for various development and support initiatives.

During the 22 months that the Gold Ridge mine was actively operating, the total gold production amounted to approximately 210,000 ounces. The Gold Ridge Project has considerable infrastructure remaining from the previous operations, although major refurbishment is required to most of the plant and equipment at site. Mine site infrastructure includes workshops and warehouse, water supply, power generators and building, road access, tailings storage facility, and an on-site camp for 150 people which have recently been refurbished.

The Gold Ridge Project is the subject of (the "Technical Report") entitled "Estimation of Recoverable Gold Resources Gold Ridge Project" dated November 27, 2008 prepared for Australian Solomons Gold Limited by W J A Yeo, MAusIMM PhD of Hellman & Schofield Pty Ltd who is an independent qualified person as defined in National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101"). The Technical Report has been filed with certain Canadian securities regulatory authorities pursuant to NI 43-101 and is available for review under Australian Solomons Gold's SEDAR profile at www. sedar.com.

In March 2010, Allied Gold formally commenced a A$150 million project to redevelop the Gold Ridge project. Information regarding the current status of the project is provided in the section of this MD&A headed "Projects - Gold Ridge".

SIMBERI, PNG

Mill Throughput - Annualised mill throughput for the quarter was 2.4 Mtpa (compared to previous 2.0 Mtpa nameplate) and the process recovery remains consistent at 89-91%. Most of the plant debottlenecking activities undertaken during 2010 were in evidence in the December quarter.

Inventory Adjustment - The December quarter saw the company recognise and account for 100,000 tonnes of scats (pebble reject material) that has been stockpiled but will be accessed in the future. There was also an increase in gold in circuit of approximately 1,600 ounces, but this will be reduced in coming months due to plant modifications.

Oxide Plant Expansion - Work progressed on the 3.5Mtpa Simberi oxide plant expansion 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.

Plant Refurbishment - The de-bottlenecking and optimization 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.

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

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, SOLOMON ISLANDS

The A$150 million redevelopment of the fully-funded 120,000ozpa Gold Ridge gold mine located in the Solomon Islands advanced significantly in the December quarter, with commissioning expected to commence in February 2011.

Budget - 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.

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 the March 2011 quarter.

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 the March 2011 quarter.

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.

During the quarter, resettlement of 241 people from the Valehaichichi pit was undertaken and further houses will be built in 2011 as part of the approved relocation plans. 

Mining - Gold Ridge took delivery during the quarter of a larger mining fleet of seven ridged frame 60 tonne haul trucks, two 85 tonne 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.

CORPORATE

Cash - Cash at bank as at 31 December was A$36.5 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$1,382/oz (before amortization of deferred hedging losses) in the December quarter on sales of 16,621 ounces.

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.

Profit after tax - During the Quarter, the Group achieved a profit after tax of A$8.3 million. The audited profit after tax for the half year ended December 31, 2010 was A$9.4 million.

EXPLORATION - COMMENTARY

Simberi, PNG

Highlights included testing extensions of gold mineralisation into Sulphide below Sorowar pit and the 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 Sep '10 Qtr. Another 11m @ 1.33g/t Au from surface in an adjacent hole (RC1834) indicates the mineralization 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.

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 search for gold in oxide resources around Pigibo and Sorowar deposits.

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. 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, 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. The targets identified by the IP survey 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 '11 quarter.

A complete listing of weighted average grades of mineralized intercepts in holes recently drilled at Gold Ridge, defined by a range of sample gold grade cut-offs, is presented in Table 6 below. The method of sampling and calculation of the average grades (the same as used in Table 1 to Table 5 for Simberi down hole intercepts) is appended below Table 6.

Explanatory notes applying to Table 1 to Table 6 that follow.

Broad down hole intercepts are determined using a cut-off of 0.5 g/t Au and a minimum grade*length of 5gmpt. Such intercepts may include material below cut-off but no more than 5 sequential meters of such material and except where the average drops below the cut-off. Selvage is only included where its average grade exceeds 0.5/t. Using the same criteria for included sub-grade, supplementary cut-offs of 2.5g/t , 5.0g/t and 10g/t are used to highlight higher grade zones and spikes. Single assays intervals are reported only where >5.0g/t and >=1m down hole. No high grade cut is applied.

 Drill core was cut with a diamond saw and half-core samples were taken for assaying, generally over one metre intervals. The samples were bagged and delivered to the Company's on-site sample preparation facility in the same secured compound at Simberi. The core samples were then crushed to minus 2 mm and riffle split with half the sample pulverised to 90% passing 75 microns. Approximately 150 g of pulverised sample was bagged for shipment to the selected analytical laboratory. The remaining half core and coarse crushed material and a 200 g reference pulp sample were all archived in an adjacent locked storage area.

RC samples, collected below a cyclone over 1 metre intervals, were split to 1kg (Simberi) or 2kg (Gold Ridge), using a single tier riffle splitter. The 1kg samples were bagged and delivered to the Company's on-site sample preparation facilities at the site where the drilling was done, either Simberi or Gold Ridge, The RC cutting samples were then crushed to minus 2 mm and riffle split with half the sample pulverised to 90% passing 75 microns. Approximately 150 g of pulverised sample was bagged for shipment to the selected analytical laboratory. The remaining cuttings material and, at Simberi, a 200 g reference pulp sample were archived in an adjacent locked storage area. 

The pulversised samples were analysed either by an ALS (ALS_TSV) or Genalysis (GEN_TSV) laboratory (both independent of the Company) in Townsville, Australia or, for Simberi samples only, an on-site Company laboratory at Simberi dedicated to exploration samples (EXLAB). The Company's QA/QC procedures include the insertion of approximately 15% commercially produced analytical standards, crushed and pulverized duplicates and blanks in each sample batch. 

 The gold assay method is either Fire Assay with a 0.01g/t Au detection limit (ALS_TSV and GEN_TSV) or Aqua Regia digest of a 25g charge with a 0.02g/t Au detection limit (EXLAB). Samples, with a reported below detection grade, are assigned a grade of half the detection limit. Duplicates, inserted for QC purposes, are not averaged. Where reported, Ag grade is its weighted average over the same interval as that defined by the Au intercept. Ag is determined by ALS_TSV using an Aqua Regia digest of a 0.5g charge followed by ICP OES analysis, with a detection limit of 0.2g/t Ag.

In core holes, intercept grades are calculated using sample grades weighted by sampled length divided by interval length. This results in any included core loss being assigned zero grade. The average grade over the length of hole sampled is shown as a ranking guide and is calculated without any cut-off applied.

The information provided in this report/statement/release constitutes Mineral Exploration Results as defined in JORC code, Clause 16. It is inappropriate to use such information for deriving estimates of tonnage and grade without fully taking into account its complete relational context.

Table 1 Botlu - Simberi >0.5 g/t Mineralised Intercepts Reported Dec Qtr 2010

Table 2 - Sorowar, Simberi >0.5 g/t Mineralised Intercepts ‐ Reported Dec Qtr 2010

Table 3 Samat - Simberi Deposit >0.5 g/t Mineralised Intercepts ‐ Reported Dec Qtr 2010

Table 4 SE Sorowar Simberi Deposit >0.5 g/t Mineralised Intercepts ‐ Reported Dec Qtr 2010

Table 5 Pigibo - Simberi Deposit >0.5 g/t Mineralised Intercepts ‐ Reported Dec Qtr 2010 -