you might find this interesting

I spotted this on the UK TMF BB and thought it might be of interest.It was originally posted by "beans4tea" and any credit is his.

"3/2/09
Allied Gold (AGLD)

Mkt cap £68m
At 16.5p
AIM and ASX listed

Allied gold operates a gold mine in the Tabar islands, Papua New Guinea.

The latest quarterly update shows the Simberi pit produced 20,989oz gold for the December quarter. They expect to produce at that rate or better for a total of 84,000oz in the coming calendar year.

http://www.asx.com.au/asxpdf/20090128/pdf/31fqw824fr6256.pdf...

Average cost for the quarter was A$597oz

The average sale price was A$1,160oz

There is a hedge in place for some production at US$700 but Allied get price participation after a certain level. Potential investors should check out the details before investing. It’s a fairly complicated hedge but they only need to deliver 13,010ozs into it before the end of June, Either way they are printing money at the moment. (details on page 15 of the above report)

The current gold price in A$ is over 1,400 and costs are continuing to fall as input costs are reduced.

The latest resource statement for Simberi is 3,204,000ozs at 1.17g/t with 482,000 at 1.3g/t in the measured category.

Ahh but I’ve heard about these gold miners they have mountains of debt

Nope. Not this one. At the end of December they had just A$5m in debt and the next official payment isn’t until June. They have been retiring debt voluntarily and did A$5m in the December quarter. I expect there to be no debt by the end of March.

Not too bad then. They should be making about A$10m a quarter on a market cap of A$150m. So about A$40m a year. Nice work if you can get it.

However, this is only part of the story. Allied have a series of small resources which they are planning to bring into production. This will involve further capex but the aim is to reach 200,000ozs a year. All these prospects are close together on the same island (Simberi).

Allied’s tenement is not limited to Simberi island. Simberi is the smallest of the three main Tabar islands. The other two, Tatau and Big Tabar are both highly prospective. Exploration of these islands is underway.

In March 2008 Barrick Gold entered into a JV with Allied to explore the two big Islands. This was a fairly major vote of confidence. Rightly so as Barrick will be all too well aware that the Tabar Islands are in one of the worlds most prospective areas. If you stand on Big Tabar and look south west the next Island is Lihir, home to the Lihir mine, one of the worlds largest gold mines. This 45moz resource produces some 600,000ozs a year. The Tabar Islands are on trend with Lihir and could be just as rich in gold. Newmont are also aware of this as followers of Soloman gold will know. The Soloman Islands are further south along the same trend and Newmont have just JVd into the tenements there.

Barrick are currently drilling on Big Tabar. Under the terms of the JV They can earn up to a 70% interest in the two islands. It’s highly unlikely to happen in that way. If Barrick hit paydirt they will just buy the Allied out from petty cash. Barrick have been making a lot of noises about acquisitions in the last few months and just about every small miner on the planet has been the subject of a Barrick rumour.

And that’s the reason Allied will win me the sharecomp. Barrick will hit something big and buy the whole lot for about £1 a share.

That’s the plan anyway. :-)

In the meantime it’s still a very cheap gold mining business.

The most recent investor presentation is here.

http://www.asx.com.au/asxpdf/20081103/pdf/31dd3ctj5gpx8d.pdf...

B4T

I hold Allied shares for real…"