investors chronicle 5 Dec 2008 00:10
we can’t stop finding gold,’ says executive chairman Mark Caruso. It is a nice position to be in and a key attribute that sets Allied Gold apart from most Aim-quoted gold players. The company has been in production since February at the Simberi oxide gold project in Papua New Guinea and should produce around 85,000 ounces this year. It is 60 kilometres away from the famous Lihir project, which hosts over 40 million ounces of gold. Allied Gold has so far found three million ounces of the precious metal at Simberi. Nearby on the Tatau and Big Tabar islands, gold major Barrick is spending $20 million on exploration to buy into Allied Gold properties. The junior has been paying off borrowings early, with cashflow from Simberi, leaving it with debts of just $3.3 million, with the balance not due until June next year. Around 35% of costs are in Australian dollars. The currency has weakened, bringing down Allied’s costs, which were US$390 an ounce in the third quarter of this year. The falling oil price will also work in the company’s favour, making it one of the lower-cost producers. Sentiment toward the company is improving as mining and milling rates improve and exploration work continues. The shares had fallen from 44p in January to 10p amid investors’ sell-off of mining stocks. A solid outlook suggests the oversold stock is due a recovery. The world’s largest gold producer, Barrick, owns 4.7% of Allied Gold.