TIDMAGLD
RNS Number : 3468A
Allied Gold Limited
31 January 2011
FOR IMMEDIATE RELEASE 31 Janaury 2011
allied gold limited
("the Company")
ASX Quarterly Report for the quarter ended 31 december 2010
Allied Gold lodged its ASX Quarterly Report along with an
accompanying presentation with the ASX today for the period ended
31 December 2010. Extracts are as follows:
The company's audited half year results and related management
discussion and analysis (MD&A) will be released in
mid-February.
Comment by Executive Chairman Mark Caruso: "Simberi in Papua New
Guinea continues to deliver consistent performance evidenced by
strong production in all areas and the appropriate reduction in
cash costs. Construction activities will accelerate significantly
in January on an expansion to 100,000ozpa and I am sure it will not
be Simberi's last. At Gold Ridge in the Solomon Islands we approach
commissioning in the coming weeks that will see Allied lift its
group production to 200,000 ozpa and deliver robust additional cash
flow allowing us to take advantage of our expansion and exploration
opportunities in PNG and Solomon Islands."
QUARTERLY HiGHLIGHTS
-- 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 $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 $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 where 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$1,370/oz. As at 31 December 2010 cash at bank was
A$36.4 million.
SIMBERI , PNG - PRODUCTION METRICS
YEAR SEP Q DEC Q 6 Months
2009-10 2010 2010 2010-11
------------------ -------- ---------- ---------- ---------- ----------
Waste T 634,296 535,193 528,031 1,063,224
------------------ -------- ---------- ---------- ---------- ----------
Ore T 1,981,500 594,497 655,288 1,249,785
------------------ -------- ---------- ---------- ---------- ----------
Total mined T 2,615,796 1,129,690 1,183,319 2,313,009
------------------ -------- ---------- ---------- ---------- ----------
ore processed T 1,949,650 570,473 583,031 1,153,504
------------------ -------- ---------- ---------- ---------- ----------
Grade g/t 1.18 1.09 1.14 1.11
------------------ -------- ---------- ---------- ---------- ----------
Recovery % 87.9 91.3 88.5 89.9
------------------ -------- ---------- ---------- ---------- ----------
Gold Produced Oz 64,327 18,206 18,921 37,127
------------------ -------- ---------- ---------- ---------- ----------
Gold Sold Oz 63,980 16,935 16,621 33,556
------------------ -------- ---------- ---------- ---------- ----------
Ave Gold Price AUD $1136 $1363 $1382 $1372
------------------ -------- ---------- ---------- ---------- ----------
Ave Gold Price USD $999 $1223 $1370 $1296
------------------ -------- ---------- ---------- ---------- ----------
Mining Cost $A/oz 179 161 198 180
------------------ -------- ---------- ---------- ---------- ----------
Processing
Cost $A/oz 380 342 369 356
------------------ -------- ---------- ---------- ---------- ----------
Site Services
Cost $A/oz 232 191 202 197
------------------ -------- ---------- ---------- ---------- ----------
AUD Cost $A/oz 791 694 769 732
------------------ -------- ---------- ---------- ---------- ----------
USD Cost $US/oz 701 629 763 693
------------------ -------- ---------- ---------- ---------- ----------
Royalty $A/oz 25 29 27 28
------------------ -------- ---------- ---------- ---------- ----------
Inventory Adjust $A/oz 7 +6 -139 -68
------------------ -------- ---------- ---------- ---------- ----------
Total Cost
AUD $A/oz 823 729 657 692
------------------ -------- ---------- ---------- ---------- ----------
Total Costs
USD $US/oz 729 660 652 655
------------------ -------- ---------- ---------- ---------- ----------
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 1600 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 $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 January 2011.
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
January 2011.
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
85tonne 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.
The project is on budget and on track with commissioning
expected during February and March and first gold due to be poured
in the March quarter.
CORPORATE
Cash - Cash at bank as at 31 December was A$36.4 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$1370/oz in the December quarter on sales of 16,621 ounces. In
the interim results due in mid-February the company will adjust the
achieved average gold price downward by US$2.1 million to amortise
the loss that was realized on termination of the hedge book.
Lead Director - Mr Sean Harvey was appointed a Director in March
2010, and in-line with TSX and LSE 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 next general meeting of members.
Share and options on issue - As at 31 December 2010, the Company
had 1 042,206,569 shares on issue. This represents an increase of
2,074,427 in shares during the quarter with the increase being a
result of the exercise of options. The following table summarises
changes in options on issue during the December 2010 quarter:
Options Options
outstanding Options outstanding
Exercise at July 1 Options expired or Options 31 December
Price Maturity 2010 issued cancelled exercised 2010
------------ ----------- ------------ -------- ------------- ------------ ------------
$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 31/10/2011 30,012,500 - (2,362,500) (375,000) 27,275,000
$0.31
Options 31/12/2010 1,699,427 - - (1,699,427) -
$0.35
Options 31/12/2011 1,500,000 - - - 1,500,000
$0.50
options 31/12/2013 38,675,000 - (7,500,000) - 31,175,000
76,886,927 - (14,862,500) (2,074,427) 59,950,000
------------ ----------- ------------ -------- ------------- ------------ ------------
Notes:
(i) Of the 27,275,000 options expiring 31 October 2011,
8,325,000 vest upon the share price trading at or above 70c for 5
consecutive days
(ii) Of the 1,500,000 options expiring 31 December 2011, 500,000
vest upon the share price trading at or above 70c for 5 consecutive
days.
The weighted average exercise price of all options outstanding
at the end of the period was $A0.44.
The weighted average time to expiry of all options outstanding
at the end of the period was 2.15 years.
Each option is convertible into one ordinary share in the
company when exercised. Options do not participate in dividends and
do not give holders voting rights
The above table does not include the options for Mr Harvey
referred to above as the issue of those of those options is subject
to shareholder approval.
EXPLORATION - COMMENTARY
Simberi - Highlights included testing extensions of gold
mineralisation into Sulphide below Sorowar pit, 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 the full
release which can be viwed along with the presentation on the
Company's website www.alliedgold.com.au and as a link to this
announcement.
Click on, or paste the following link into your web browser, to
view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/3468A_1-2011-1-31.pdf
For further information, contact:
Simon Jemison Investor Relations & Media + 61 0418 853 922
Rebecca Greco Investor Relations, North America +1 416 839 8610
David Simonson c/. Merlin PR +44 20 7726 8400
Beaumont Cornish Limited
Roland Cornish
Beaumont Cornish Limited
T: +44 (0) 20 7628 3396
Competent Persons
The information in this Stock Exchange Announcement that relates
to Mineral Exploration results and Mineral Resources, together with
any related assessments and interpretations, have been verified by
and approved for release by Mr P R Davies, MSc, BSc, M.Aus.I.M.M.,
a qualified geologist and full-time employee of the Company. Mr
Davies 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 Davies consents to the inclusion of the information
contained in this ASX release in the form and context in which it
appears. Mr. Davies is also a Qualified Person as defined by
Canadian National Instrument 43-101.
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).
Allied owns 100% of the Simberi Island and Gold Ridge gold
projects.
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 <0.01 g/t. Au assays are determined by a
50gm fire assay and an AAS (Atomic Adsorption Spectrometry) finish.
Any interval recorded as being below detection has been recorded in
the database as having a grade of half the detection limit, which
in this case is 0.005 g/t. The Ag detection limit is 0.2g/t, and is
derived from a 0.5g charge Aquaregia digest, with assay via ICP
(Induced Coupled Plasma) AES.
Mineralisation types are:
o Oxide - extremely weathered material (cyanide leach recoveries
> 90%), 0.5 g/t Au cutoff
o Transitional - distinctly weathered material (cyanide leach
recoveries 50-90%), 0.5 g/t Au cutoff
o Sulphide - Slightly weathered to fresh material (cyanide leach
recoveries generally <50%), 0.5 or 1.0 g/t Au cutoff
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.
Tuff - A rock composed of pyroclastic materials that have been
ejected from a volcano. In many instances these fragments are still
hot when they land, producing a "welded" rock mass.
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.
Mt - Million Tonnes
Moz - Million Ounces
Andesite - A fine-grained, extrusive igneous rock composed
mainly of plagioclase with other minerals such as hornblende,
pyroxene and biotite.
Ordinary kriging (OK) - is a geostatistical approach to
modeling. Instead of weighting nearby data points by some power of
their inverted distance, OK relies on the spatial correlation
structure of the data to determine the weighting values. This is a
more rigorous approach to modeling, as correlation between data
points determines the estimated value at an unsampled point.
Authorised for release
31 January 2011
Peter Torre
Company Secretary
This information is provided by RNS
The company news service from the London Stock Exchange
END
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