Allied Gold Limited – Successful Placement To raise $30.75m
Highlights
• Oversubscribed placement of 61.5 million shares to raise $30.75 million
• Funds to be used for early debt retirement of original Simberi Project Financing
• Engineering firm to start 100,000ozpa Sulphide Expansion feasibility study
• Fast tracking of Oxide Plant optimisations to further reduce costs and enhance throughput
• Simberi exploration program to be accelerated
• Operations continue to meet management forecasts with record monthly gold sales in January
The Board of Allied Gold is pleased to advise that it is finalising placement of approximately 61.5M new Ordinary Shares at $0.50 to raise approximately AUD$30.75M. The placement, representing approximately 15%of the Company’s shares on issue prior to the placement will be made to sophisticated investors. The placement falls within the company’s 15% placement capacity as set out in ASX Listing Rule 7.1
Subscribers to the placement include many existing institutional shareholders predominately based in the UK and two global institutional gold funds who are new to the Allied Gold share register. Allied Gold continues to attract on its share register a calibre of institutional investors which reflects continued confidence in the quality of the underlying assets and management of the company.
The placement was managed by Allied Gold in conjunction with Mirabaud Securities in the UK and Evans and Partners in Australia. The placement was significantly over subscribed, reflecting strong investor confidence in Allied Gold’s Simberi Gold Project and the positive outlook for the gold sector.
The proceeds of the placing will be used to fund several initiatives at Simberi, as detailed in the December 2008 quarterly activities report, namely to:
• Early retirement of the original Simberi Oxide project financing debt facility.
• Accelerate the feasibility study for the Simberi Island sulphide expansion initiative being considered by Allied Gold.
• Continue to accelerate the drilling program relating to the sulphide expansion feasibility as well as other existing exploration programs with the purchase of additional drilling rig equipment.
• Commence capital initiatives to optimise the gold production process and throughput and reduce the operating costs of the operation.
Update on Operating Activities
Over the months of January and February Allied Gold has continued to produce gold in line with the expected production profile. Gold sales in January achieved a company record of 8,670oz sold during the month. All sales for January were sold into the spot market realising in excess of A$1,200/oz.
Despite higher than average rain fall over the recent months, Allied Gold continues to achieve targeted mining and processing volumes, and as at 24 February 2009 remains on track to achieve the projected production target of 20,000oz for the March 2009 quarter. Cash cost projections for the current quarter also remain in line with management’s expectations, as reflected in the December 2008 activity report.
Exploration updates are scheduled to occur during the March 2009 quarter. The company is expected to release its 31 December 2008 half year results by no later than 13 March 2009.
The strengthening of the company’s balance sheet by this capital raising combined with a more consistent production base and near term organic growth profile ideally positions the company to participate and grow through a variety of avenues within the global gold sector.
Sulphide Feasibility Study:
Allied Gold is pleased to announce the appointment of GR Engineering Services to undertake a feasibility study for the Simberi Sulphide Resource. Total Simberi sulphide resources currently stand at more than 1.8M oz (Inferred, Indicated and Measured).
The study will initially focus on developing high grade resources at Pigiput Ridge. These resources, currently estimated at approximately at 485,000oz of sulphide Inferred Resource ounces and 294,000oz of Oxide (Inferred and Indicated) resource ounces are the highest grade sulphide resources identified at the Project to date. Drilling is currently underway on this prospect with 2 drill rigs with the aim of increasing the resource.
The aim of the study is to deliver sulphide production of around 100,000oz per annum. Pending a successful feasibility study outcome, Allied Gold aims to commence gold production from the Simberi Sulphide Resource by December 2011.
Combining the existing Oxide production profile of 80,000oz – 100,000oz p.a. with the proposed Sulphide production profile would organically generate annual production of around 180,000oz – 200,000oz p.a.
Management believes that leveraging off its existing Simberi infrastructure, combined with its proven operational experience to date, significantly de-risks of its expansion initiatives.