ALLIED GOLD LIMITED – QUARTERLY REPORT FOR THE PERIOD ENDED 31 MARCH 2009
QUARTERLY REPORT FOR THE PERIOD ENDED 31 MARCH 2009
As required by the rules of the ASX, the Company has announced its quarterly report for the period ended 31 March 2009.
Highlights
• Record gold sales of 23,391oz for the quarter.
• Despite record rain fall during the quarter, gold produced was 17,510oz down 16% for the quarter.
• Cash costs increase of 8% to A$644 (US$428)/oz due to lower production.
• USD$25M project financing facility retired 21 months ahead of schedule.
• Hedge book restructured to reduce duration by approximately 12 months.
• Successful capital raising of A$30.7M adding additional quality institutional investors to share register.
• New Independent Non Executive Director appointed to the Board.
• Formal Sulphide pre-feasibility commenced to assess potential to double exiting production levels to around 160,000oz to 200,000oz by December 2011.
• Exploration program to be accelerated on Simberi Island throughout calendar 2009.
• Updated reserve estimate for Pigiput resources scheduled for June.
• Barrick currently has two diamond drills working at the Banasa copper-gold prospect.
• Simberi Gold Project (ALD 100%) offshore Papua New Guinea
SIMBERI OXIDE GOLD PROJECT – OPERATIONS
During the March 2009 quarter management was primarily focussed on two key aspects of the gold operations. The first was to reduce the Gold in Circuit (GIC) from the approximately 8,500oz that resided at 31 December 2008 to a targeted level of below 4,000oz. This process continues and required a conscious slowing down of the processing plant to ensure the applicable levels of extraction were achieved.
The second area of focus was to ensure a consistent production profile which would be further analysed to assess mine planning initiatives as well as identify the capital expenditure priorities over the coming months to ensure continuing improvements in production.
Despite the excessive levels of rainfall experienced during the quarter and the operational challenges this provided, Allied Gold managed to sustain a base line level of gold production of 17,510z for the March quarter.
The conscious approach to reducing the GIC resulted in a record for gold sales for the quarter with 23,391oz sold at an average price of A$1,253 p/oz. Group cash flow from operations resulting from this successful operational initiative was in excess of A$9.5M for the quarter.
Therefore for the March 2009 quarter mining volumes decreased by around 20%. At the start of the March quarter the Company had in excess of 70,000 tonnes of ROM ore stockpiled at the Pigiput processing facility to mitigate the traditional wet season. During the quarter the stock pile was drawn on to ensure consistent production continued.
Cash costs increased slightly during the quarter as a direct result of the lower production volumes. The overall impact of the lost production in tonnage over the quarter resulting from rainfall was approximately 80,000 tonnes. This equates to approximately 3,210oz for the quarter.
Over the course of the year Allied Gold has experienced a significant strengthening of the AUD/PGK currency which has impacted the year to date cash cost budgeted targets. With now approximately 40% of costs being denominated in PGK including fuel the currency impact is becoming a greater concern and Management is in the process of assessing a number of FX hedging strategies to ensure the PGK cost base is appropriately managed.
Processing plant performance was fundamentally in line with the previous quarter’s performance however the excessive rainfall during the quarter inhibited the plants ability to steadily increase its processing volumes as initially scheduled.