ALD17 May 2012 14:28
CONT
Gold production at Allied Gold is climbing quickly and last year rose by 55% to 108,338 ounces. This rise was mainly due to the inclusion of production from the Gold Ridge Project – acquired in March 2010 – and where production was resumed in March 2011. Of the total, Gold Ridge contributed 51,054 ounces and the Simberi Gold Project produced 57,824 ounces. Revenue increased by 81% to $146.4 million for the year on the back of higher production coupled with a 33% rise in the average realised gold price to $1,620 per ounce. This came despite the company suffering from mechanical issues and wet weather at Simberi, along with being unable to access the high grade ore at Gold Ridge. Together with rising input costs this meant that production costs stayed higher than had been hoped. The cost of sales increased by 87% to $130.1 million leaving a gross profit of $16.3 million, 43% higher than the previous comparable period. After corporate expenses, increased foreign exchange losses and reduced gains on financial transactions the company made a loss of $5.97 million in 2011 against a profit of $5.77 million in 2010. Foreign exchange movements have masked the underlying performance as in June 2011 the company had switched from reporting its results in Australian dollars to US dollars. Last year there were $4.06 million of foreign exchange losses, whereas 2010 profits were flattered to the tune of $1.69 million in currency movements, plus there was a $4.3 million gain on settling a financial liability.
At Simberi production in the March quarter increased by 21.5% to 15,051 ounces and gross cash costs were reduced by 4% to US$1,067 per ounces. At Gold Ridge production in the same three month period increased by 1.4% to 19,056 ounces and cash costs reduced by 14.8% to US$1,124 per ounce. The March 2012 quarter saw the board targeting 16,000 -18,000 ounces from Simberi and 23,000 – 25,000 ounces from Gold Ridge; and even though these targets were unfulfilled the Directors have maintained their current year targets of 75,000 ounces and 105,000 ounces for Simberi and Gold Ridge respectively for 2012. The company’s US$850 per ounce cash cost target looks to be attainable as Gold Ridge is well on its way to the targeted 100,000 ounce per annum, coupled with more normal conditions at Simberi and the switch to cheaper heavy fuel oil to power that mine. Attention will now be focused on the expansion at Simberi where the plan is to prove up more sulphides to underpin the feasibility study and truly demonstrate the potential to grow to becoming a substantially larger gold producer in the medium term. Moving ahead, the 180,000 ounce target for 2012 could just be the start as the board has a well-developed strategy to boost annual production to 300,000 ounces and beyond in the coming years. Allied Gold is targeting a combined 200,000 ounces of gold per annum with a 10-15 year minimum life from its two 100%-owned gold mines.
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