QUEENSLAND, AUSTRALIA--(Marketwire - Apr 30, 2012) -
THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR
PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR
INTO THE UNITED STATES OR ANY JURISDICTION IN WHICH SUCH PUBLICATION
RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL
Allied Gold Mining PLC ("Allied Gold" or "the Company")
30 April 2012
ACTIVITIES REPORT FOR MARCH QUARTER (Q1) 2012
34,107 ounces produced in the March quarter, up 9.4% from the December
quarter
Gross cash costs reduced 11% to $1099/oz
2012 production target of 180,000 ounces reaffirmed
Gross cash cost target of $850/oz run rate by year end reaffirmed
Allied Gold Mining Plc provides the following summary and overview of
its activities for the quarter ended 31 March 2012.
Simberi, Papua New Guinea
* Production for the 3 months increased 21.5% to 15,051oz
* Gross cash costs reduced 4% to US$1067/oz
* 2012 target of 75,000oz maintained
Gold Ridge, Solomon Islands
* Production for the 3 months increased 1.4% to 19,056 oz
* Gross cash costs reduced 14.8% to US$1124/oz
* 2012 target of 105,000oz maintained
Financial Highlights
* Average realized gold price of US$1691/oz, steady on
December quarter
* Cash at bank of US$28.2 million plus gold in hand of $9.6
million at March 31
* On 5 January 2012, US$80 million gold loan used to repay
US$55m in borrowings
Operational Highlights
* Completion of major haul road into new pits at Gold Ridge,
ensuring multiple sources of ore from Q2 onwards
* Major planned maintenance to ore conveyor system completed
successfully at Simberi
* Management changes consolidated. New team in place at Gold
Ridge driving improved performance
* Production expansion at Simberi on track for completion in
December quarter, 2012
* Heavy Fuel Oil power conversion on track for installation in
June/July
Frank Terranova, Managing Director and Chief Executive Officer, said
the company continued to make excellent progress. "An improvement in
operational performance was achieved in the first quarter, resulting in
a solid increase in production, and a healthy decline in cash costs.
Production in the quarter was the second highest on record and the
Company remains on track to achieve full year output of 180,000
ounces. That compares with 108,000 ounces in 2011, and confirms that
Allied Gold is moving firmly in the right direction, with strong
production growth leading to a reducing cost profile. The remainder of
2012 will be an exciting period for Allied as we put in place the
various expansion programs and cost reduction initiatives that will
boost margins, and lift profitability. With over 3.0M oz of reserves
and 8.0Moz of resources, Allied Gold continues to provide the market
with an attractive opportunity to invest in a rapidly growing mid-tier
gold producer with declining costs and expanding margins," Mr Terranova
said.
The Activities Report Presentation is available on the Allied Gold
website at www.alliedgold.com.au , or at the following links:
Presentation:
http://www.alliedgold.com.au/IRM/Company/ShowPage.aspx?CPID=2198&EID=94825688
For further information please contact:
Allied Gold Mining Plc (Investor and Media) - Joe Dowling, GM Investor
Relations and Communications +61 403 369 232
RBC Capital Markets (Corporate Broker) - Stephen Foss / Matthew Coakes
/ Daniel Conti
+44 207 653 4000
Buchanan (Financial PR Advisor) - Bobby Morse / James Strong / Cornelia
Browne +44 207 466 5000
ABOUT ALLIED GOLD MINING PLC
Allied Gold is a Pacific Rim gold producer, developer and exploration
company listed on the London Stock Exchange, Toronto Stock Exchange and
the Australian Securities Exchange (code: ALD). The Company has two
gold mines in production - the Simberi gold project, located on Simberi
Island in the New Ireland Province of PNG, and the Gold Ridge gold
project, located on Guadalcanal in the Solomon Islands. Allied Gold is
lifting production to approximately 180,000 ounces in 2012, rising to
more than 200,000 ounces in 2013.
Conference call - 9am London, UK Time
Allied Gold will host a conference call on Tuesday, 1 May 2012, to
update investors and analysts on its quarterly results. The powerpoint
presentation to be given during the call is available to be downloaded
at www.alliedgold.com.au .
Participants may join the call by dialling one of the following
numbers, approximately 10 minutes before the start of the call.
From UK: (toll free) 0800 368 1895
From Australia: (toll free) 1800 190 490
From US: (toll free) 1866 928 6049
From Canada: (toll free) 1866 561 8617
From rest of world: + 44 20 3140 0693
Participant passcode: 808428#
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.
Competent Person
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.
Reporting Periods and Reporting Currency
As part of the Company's admission in July 2011 to the LSE's Main
Market, Allied Gold's annual balance date is 31 December, hence the
December quarter is its fourth quarter results. The functional
currency of the Company is United States dollars ("US$") and results in
this report are presented in United States dollars ("US$") unless
stated otherwise.
The Company has classified itself as a designated foreign issuer for
Canadian reporting purposes .
GROUP OPERATIONS SUMMARY
Review of Group operations
Mar Q Jun Q Sep Q Dec Q Mar Q %change
2011 2011 2011 2011 2012
Gold Production (Oz) 12,728 28,344 36,085 31,181 34,107 9.4
Gold Sales (Oz) 16,034 21,281 31,034 25,927 39,914 53.9
Gross Cash Costs (US$/oz) 969 822 1,104 1,235 1,099 -11.0
Total Cash Costs (US$/oz) 1,353 1,130 1,451 1,634 1,461 -10.6
Average Realised Gold Price -0.2
(US$/oz) 1,381 1,518 1,751 1,695 1,691
Mar Q Jun Q Sep Q Dec Q Mar Q % change
Unaudited in 2011 2011 2011 2011 2012
US$000's
Capital expenditure (24,674) (35,470) (36,066) (27,508) (25,876) -5.9
Cash and cash 31.2
equivalents 17,513 83,076 48,548 21,531 28,244
Gold on hand at -45.7
period end 1,766 2,835 11,169 17,734 9,624
* Cash costs, capital expenditure and gold on hand at end of period
are not EU-IFRS terms. Please refer definition of Non EU-IFRS
financial measures at the end of this report for details on the
computation of these measures.
* Figures for March and June quarters of 2011 relate only to Simberi
as the Gold Ridge operations were in the development phase during those
quarters and all revenues and costs were capitalized.
Gold production for the quarter ended 31 March 2012, at 34,107 ozs, was
up 9.4% on the prior December quarter and was the second highest on
record for the Company. The increase in production reflected
significant improvements in operational performance at both sites, and
confirmed the benefits of fundamental improvements implemented which
have created solid platforms for consistent production increases and
reducing costs over the remainder of the year. The Company's full year
production guidance of 180,000 ounces remains on track.
A number of milestones were achieved in the quarter:
1. At Gold Ridge mine in the Solomon Islands, the major haul road
which enables access to important new sources of ore over the next few
years was completed ahead of schedule.
2. The new management team was embedded at Gold Ridge, providing
improved technical skills and driving a culture of performance.
3. At Simberi, major scheduled maintenance of the key ore transport
conveyor system was completed successfully, ensuring consistent ore
delivery to the mill in the future.
4. Good progress was achieved in the expansion of the process plant
at Simberi and the installation of Heavy Fuel Oil power generation.
The Company achieved higher quarterly production in spite of
unfavourable weather conditions and a series of minor mechanical
failures at both sites late in the quarter, which restrained output in
March.
Gross cash costs for the quarter were reduced 11% to $1099/oz as a
result of various operating efficiencies implemented, and because of
the impact of the higher output, which allowed for the largely fixed
costs at both Simberi and Gold Ridge being spread over increased ounces
of production.
Aggregate gross cash costs reduced approximately 3% to $37.5 million,
with savings achieved in salaries, camp costs, warehouse costs,
consumables and maintenance, offset by increases in fuel, grinding
media and other costs. Costs also benefited from the valuation of low
grade stockpiles at Gold Ridge, following their inclusion in the
production schedule, leading to some costs being transferred to
inventory.
Gold sales in the quarter totaled 39,914 ounces, which was up sharply
on the prior quarter due to the impact of higher production in the
March quarter and a decrease of approximately 4039 ounces in gold in
transit or at refinery during the quarter. The average realized gold
price, at $1691/oz, was down slightly on the December quarter, but cash
margins increased to $592/oz, from $460/oz previously, driven by the
reduction in cash costs.
The Company made good progress in various expansion projects at Simberi
and Gold Ridge, resulting in capital expenditure for the quarter of
$25.9 million. This was funded primarily through a drawdown of $32
million in debt provided through the gold loan facility established in
December last year. The Company held cash of $28.2 million at the end
of March, plus gold in hand of $9.6 million. Supplemented with
anticipated cashflows and funding sources, this is expected to provide
sufficient cash resources to meet capital expenditure requirements.
MINE SITE SUMMARY
Simberi (Papua New Guinea)
Production Metrics Quarterly Performance
Mar Q Jun Q Sep Q Dec Q Mar Q % change
2011 2011 2011 2011 2012
Ore t 423,513 605,366 569,049 513,805 518,966 1
Waste t 568,001 402,130 318,172 596,313 483,623 -18.9
Total Mined t 991,514 1,007,497 887,221 1,110,118 1,002,589 -9.7
Milled t 368,791 563,331 528,702 420,883 509,209 21.0
Grade g/t 1.03 1.14 1.07 1.06 1.06 0
Recovery % 89.4 87.5 87.2 86.7 86.4 -0.3
Gold 21.5
Produced oz 10,867 18,131 15,899 12,387 15,051
Gold Sold oz 16,034 15,005 15,337 8,841 18,132 105.1
Cost Metrics Quarterly Performance (US$/ounce)
Mar Q Jun Q Sep Q Dec Q Mar Q % change
2011 2011 2011 2011 2012
Mining 283 214 283 396 286 -28
Milling 504 379 468 523 481 -8
Administration 359 253 333 420 287 -32
Inventory (176) (24) (20) (231) 13 n/a
Gross Cash Cost 969 822 1,065 1,108 1,067 -4
Royalties 45 28 37 28 43 54
Refining & Transport 6 10 4 10 8 -20
Net Cash Cost 1,020 860 1,106 1,146 1,119 -2
Depreciation & amortisation 332 270 319 377 327 -13
Total Cash Cost 1,353 1,130 1,425 1,523 1,446 -5
SIMBERI (Papua New Guinea) - March 2012 quarterly commentary
Simberi March quarter performance - Simberi produced 15,051 ounces for
the March quarter which was 21.5% higher than the previous quarter and
close to the anticipated production result. The increase was primarily
due to sharply increased mill throughputs compared with the three
months to December, which had been impacted by a ball mill failure that
caused the loss of 25 production days.
Mining performance in the quarter was satisfactory, with just over 1
million tonnes mined, including 519,000 tonnes of ore, sourced mainly
from the Samat and Sorowar pits.
The main conveyor system (Rope Conveyor), providing ore to the Pigiput
mill from the Sorowar feeder, underwent scheduled maintenance in the
quarter, taking 20 days. During this period, ore was sourced from the
Samat pit, which is lower grade, and was transported by truck over the
6km distance to the mill, which led to reduced material movements in
the quarter. Mine performance also was impacted late in the period by
torrential rainfall associated with the weather system that caused
flooding in Fiji. The combination of these factors meant that some
mill feed was drawn from low grade stockpiles towards the end of the
quarter, leaving overall mill head grade steady at 1.06 g/t.
Mill throughputs, while recovering strongly from the prior period, were
affected by the processing of harder ore from the Samat pit. High
rainfall also required throughputs to be slowed to deal with wet ore
feed at the end of the quarter.
Gross cash costs for the three months to March fell 4% to US$1067/oz,
with significant reductions seen in base mining, milling and
administration costs, offset by the impact of the higher cost of ounces
produced in the December quarter that were sold in the March quarter.
The trend towards lower costs is expected to continue into the June
quarter and over the remainder of the year. Together with increased
production rates and reductions in energy costs flowing from the
transition to heavy fuel oil in the second half, cash costs are
expected to fall towards a run rate of $850/oz by the end of the year.
Projects - Simberi Oxide Expansion
Construction for the expansion of the Simberi oxide processing circuit
from 2.0 Mtpa to 3.5 Mtpa advanced during the quarter, with new leach
tanks nearing completion and installation of the SAG mill progressing
on schedule. The final major piece of equipment, the Apron feeder, is
scheduled for delivery to site in June. The expansion continues to be
forecast for commissioning in the September quarter, with permitting
being progressed with government authorities.
As at 31 March, total capex of $26.1 million had been incurred on the
expansion project, which remains on track for a total budget of $42
million.
Power Generation Conversion
The conversion of the power plant at Simberi from high cost diesel to
lower cost heavy fuel oil is scheduled for completion in late June or
early July. Foundations are in place and the HFO storage tanks under
construction, with the 7 generator sets being shipped to PNG for
arrival in May. The first four generator sets will be installed in
June, and the final three in September after the existing diesel
generators are decommissioned. The completed power facility will
supply 10.5 MW of power to the expanded process plant, at a unit cost
approximately $30-50 per ounce less than conventional diesel fired
power supply.
Installing HFO at Simberi is estimated to cost approximately US$20
million, and at the end of March approximately $13 million had been
committed.
Projects - Simberi Sulphide Study
The Bankable Feasibility Study considering a further expansion of the
process plant to enable processing of sulphide ore at Simberi remains
due for completion by year end.
The Company already has in excess of one million ounces of sulphides in
reserves at Simberi. One of the key objectives of the BFS is to
ensure the technical parameters of the probable roaster technology are
fully understood and that the associated capital costs are confirmed.
It is anticipated that the BFS will conclude with a scope for a 2.5
Mtpa roaster producing 130,000-150,000ozpa over a 7-10 year period.
The possible sulphide development would occur mid-decade once
sufficient volumes of the oxide cap at Simberi have been processed.
Outlook for Simberi
Simberi remains on track to achieve full year production of
approximately 75,000 ounces. With the successful completion of
maintenance on the Rope Conveyor, there are no major maintenance tasks
scheduled for the current quarter.
Gold Ridge (Solomon Islands)
Production Metrics Quarterly Performance
Mar Q Jun Q Sep Q Dec Q Mar Q %change
2011 2011 2011 2011 2012
Ore t 166,737 293,584 566,829 453,125 493,309 8.9
Waste t 586,784 1,069,133 801,430 838,554 911,422 8.7
Total Mined t 753,521 1,362,717 1,368,259 1,291,679 1,404,731 8.8
Milled t 54,982 416,694 459,990 446,204 538,609 20.7
Grade g/ -14.9
t 1.32 1.19 1.98 1.81 1.54
Recovery % 69.8 63.9 69.7 72.0 71.6 -0.6
Gold 1.4
Produced oz 1,861 10,213 20,186 18,794 19,056
Gold Sold oz - 6,276 15,698 17,086 21,782 27.5
Cost Metrics Quarterly Performance (US$/ounce)
Jun Q Sep Q Dec Q Mar Q % change
2011 2011 2011 2012
Mining - 244 328 308 -6.1
Milling - 541 644 563 -12.6
Administration - 269 424 352 -17
Inventory - 81 (77) (99) n/a
Gross Cash Cost - 1,135 1,319 1,124 -14.8
Royalties - 22 25 33 32.0
Refining & Transport - 25 29 6 -79.3
Net Cash Cost - 1,182 1,373 1,163 -15.3
Depreciation & Amortisation - 290 334 309 -7.5
Total Cash Cost - 1,472 1,707 1,472 -13.8
GOLD RIDGE (Solomon Islands)- March 2012 quarterly commentary
Gold Ridge March quarter performance - Strong progress was achieved at
Gold Ridge in the quarter, with the new management team installed at
the mine site driving a culture of performance and applying improved
technical skills. A highlight of the quarter was the development of a
major haul road securing future ore supplies from the Kupers and
Dawsons deposits at the southern end of the mine site. Completion of
the haul road will provide access to softer oxide ores from the new
pits for blending with harder ores from the established pits at
Valahaichichi and Namachamata, lifting recovery rates through the mill
and boosting output.
While the focus of development work at the site was on the haul road,
mining continued steadily in the Namachamata pit. Production for the
March quarter was 19,056 ounces, up from 18,794 ounces in the prior
quarter.
Mining tonnages increased 8.6% during the quarter to a record 1.4
million tonnes, despite high rainfall which causes mine production to
pause to prevent damage to road surfaces. The quarter saw significant
increases in ore mined, primarily from Namachamata, as well as
development work related to the haul road and the new pits.
Mill throughput rose by 21% as the new management team implemented a
series of optimisations and refinements to the process plant, and
despite harder ores being supplied from Namachamata. Mill head grade
reduced as ore was fed from lower grade stockpiles while the new pits
were being developed, and the combination of harder ores and lower
grade feed left recovery rates at 72%. Recoveries are expected to
increase into the mid-80s as softer ores are fed to the mill from the
new pits.
Gross cash costs reduced by 14.8% to $1124/oz in the March quarter,
with reductions evident in mining, milling and administration. Mining
costs benefited from the establishment of a second waste dump, with
shorter haul distances, and improved haul road conditions. Milling
costs fell due to reductions in reagent consumption and lower power
costs. Utilisation of the Knelson gravity system, which had been
operating at half its design capacity, has been lifted through
improvements to its feed system, resulting in increased gravity gold
recovery and reduced operating costs. Scheduled maintenance of the
oxygen plants has lifted oxygen dissolution in the leach tanks with an
additional reduction in chemicals.
Overall labour costs fell in the quarter, with staff numbers being
lowered and expatriate numbers reduced. An on-going review of staffing
levels is expected to lead to further efficiencies and reductions in
staff numbers. The inclusion of low grade stockpiles in the production
plan enabled the stockpiles to be valued, resulting in a $99/oz
favourable inventory adjustment in reported cash costs. Aggregate
gross cash costs fell to $21.4 million in the quarter, from $24.8
million previously.
Outlook for Gold Ridge
The successful development of the haul road into the new pits at Gold
Ridge has enabled work to commence on the stripping of the Kupers pit.
Softer oxide ore from Kupers will be blended with harder Namachamata
ore in the current quarter, providing more consistent feed to the mill
and higher rates of gold recovery. This should see further progressive
improvements in production over the remainder of the year, with full
year output expected to be approximately 105,000oz. Achievement of
these production rates will in turn lead to progressive reductions in
unit costs, which are anticipated to be approaching a run rate of $850/
oz by the end of the year.
EXPLORATION
Simberi, PNG
While exploration work at Simberi in 2011 was focused on proving up
sulphide resources to support the potential installation of sulphide
processing capacity, efforts in 2012 have shifted to identification of
new oxide and sulphide deposits within the Mining Lease. New targets
have been generated through reprocessing of earlier IP data and testing
of these targets has started through soil sampling and diamond core
drilling. Five holes were drilled in the quarter at depths ranging from
150 metres to 400 metres, providing greater understanding of the
geological structures and the extremities of the ore bodies. Additional
targets are to be tested in the current quarter.
A renewal application for Exploration Lease 609, which covers all of
the Tabar Islands outside of the Simberi Mining Lease, has been
submitted, with a decision expected in due course.
Gold Ridge, Solomon Islands
Exploration core drilling continued through the March quarter,
targeting extensions of the existing known ore bodies. Four holes were
completed in the quarter, with a fifth in progress at the end of March.
Avu Avu, Solomon Islands
Negotiations with local landowners in the 122 sq. km Avu Avu
Prospecting Licence area on the central southern coast of Guadalcanal
are continuing and expected to lead to a Surface Access Agreement and
granting of full exploration rights.
The Avu Avu Prospecting Licence application is based on a review of
historical exploration records that report anomalous copper values in
surface samples. Once access is granted, Allied plans to undertake
grass roots surface exploration to confirm and subsequently delimit
areas of copper anomalism. Applications have also been submitted for
territory totalling some 560 square kms in highly prospective areas of
the Solomon Islands.
Resource and Reserve Update
Extensive drilling has been undertaken at Simberi in recent years with
a view to identifying additional sulphide resources to underpin the
expansion of the process plant to enable processing of sulphide ores.
The results of that drilling are in the process of being analysed, and
are expected to lead to an update of the Simberi resource and reserve
numbers in the June quarter.
CORPORATE UPDATE
Financing
Included in gold sold for the March quarter were 2,700 ounces of gold
provided as repayments under the Company's Gold Prepayment Facility,
which were included in revenue at the spot gold price.
Ounces to be provided as gold loan repayments over the remaining term
of the Gold Prepayment facility range between a minimum of 56,304 oz
and a maximum 76,176 oz depending on the gold price.
Annual General Meeting
The Company's Annual General Meeting will be held in Perth on 20 June
2012 with a simultaneous video link to London. Non-Executive
Directors will be present at both locations providing them the
opportunity to meet with shareholders.
Non-IFRS measures
The Company has identified certain measures in this report that are not
measures defined under EU-IFRS. Non EU-IFRS financial measures
disclosed by management are provided as additional information to
investors in order to provide them with an alternative method for
assessing the Company's financial condition and operating results.
These measures are not in accordance with, or a substitute for, IFRS,
and may be different from or inconsistent with non-IFRS financial
measures used by other companies. These measures are explained further
below.
Cash costs per ounce produced is a non-IFRS financial measure. Cash
costs include all costs absorbed into inventory, as well as royalties,
co-product credits, and production taxes, and exclude capitalised
production stripping costs, inventory purchase accounting adjustments,
unrealised gains/losses from non-hedge currency and commodity
contracts, depreciation and amortisation and social development costs.
Cash cost is calculated net of by-product revenue. The change in the
cash cost measurement to include by-product revenue follows the
decision by management to present the sale of silver as by-product
revenue and part of total revenue. Cash costs per ounce produced are
calculated by dividing the aggregate of these costs by gold ounces
produced.
EBITDA is a non-IFRS financial measure. The Company calculates EBITDA
as net profit or loss for the period excluding:
- Income tax expense;
- Finance expense;
- Finance income; and
- Depreciation and amortisation.
EBITDA is intended to provide additional information to investors and
analysts. It does not have any standardised meaning prescribed by IFRS
and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with IFRS. EBITDA
excludes the impact of cash costs of financing activities and taxes,
and the effects of changes in operating working capital balances, and
therefore is not necessarily indicative of operating profit or cash
flow from operations as determined under IFRS. Other companies may
calculate EBITDA differently.
Depreciation and amortisation per ounce produced is a non-IFRS
financial measure. Amortisation and other costs include amortisation
and depreciation expenses and the inventory purchase accounting
adjustments at the Company's producing mines. Amortisation and other
costs per ounce produced are calculated by dividing the aggregate of
these costs by ounces of gold produced.
This information is provided by RNS
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