Allied Gold adds to PNG resources (April 12, 2010)

Allied Gold (ALG-T, ALD-A) has increased measured and indicated resources by 170% at its Simberi open-pit oxide gold project in Papua New Guinea.

The Pigibo and Pigiput deposits now contain measured and indicated resources of 48.1 million tonnes grading 1.38 grams gold per tonne for a total of 2.08 million oz. gold. A cutoff grade of 0.5 gram gold was used. Most of these ounces come from the Pigiput deposit which has 1.82 million oz. gold.

There are also substantial inferred resources totaling 38.5 million tonnes of 1 gram gold for 1.24 million oz. gold and 86.6 million tonnes of 3.7 grams silver for 10.3 million oz. silver.

The resource figures are based on nearly 52,000 metres of drilling.

Allied Gold built a 2.2 million tonne-per-year processing plant at the Simberi project and poured its first gold in early 2008. The company currently produces about 80,000 oz. gold per year but expects to add another 20,000 oz. of annual production by expanding the Simberi oxide plant to an annual capacity of 3 million tonnes by years end.

Of the 48.1-million-tonne resource, sulphide ore amounts to 33.8 million tonnes grading 1.49 grams gold for 1.62 million oz. gold.

Because much of Allied’s resources are within sulphide ore, the company is now working on a study to build a sulphide plant. The company says production could increase by another 100,000 oz. gold per year by 2012.

Allied Gold is currently drilling to test the dip at Pigibo and the open northeastern side of Pigiput. The company has drilled about 4,300 metres since the resource estimate was completed.

The company also recently acquired Australian Solomons Gold and its Gold Ridge project in the Solomon Islands.

Allied Gold aims to take this project online by 2012, bringing production up to 300,000 oz. gold per year.