Production continues to ramp up at Allied Gold’s Simberi Oxide Gold Project in PNG, which has produced 18,894oz of gold since it started production on February 1.
Gold pour at Simberi
Drilling at Allied Gold's Simberi gold project in Papua New Guinea
At this rate the Perth-based miner, which owns 100% of the PNG mine, is on track to reach its planned initial production goal of 84,000-135,000oz per annum.
Mining has been centred on the South Samat and East Samat pits, with South Samat yielding good grade material that offset the late commissioning of the processing plant.
In other developments, Barrick Gold has backed its committed minimum expenditure of $A2 (K5.06) million in two years by budgeting to spend $US2.1 million in year one.
The expenditure is in accordance with the conditions of a signed Letter of Intent with Allied in order to gain a 70% stake in the nearby exploration licence 609 of the Big Tabar and Tatau Islands.
Under the Farm-in and Joint Venture deal, Barrick must fund $A8 million in exploration inside four years to gain a 51% interest and another $A12 million over the next four-year period to gain a 70% stake in the EL.
Should Barrick decided to withdraw from the arrangement before gaining a 51% interest, it will fail to retain any interest in the EL.
According to Allied’s recently released first quarter results, the company has outstanding hedging commitments of 153,630oz at an effective price of $US700/oz for delivery between June 2008 and December 2011.
However, the company entered into a Participating Gold Forward Option that can allow the miner to gain from upside in the gold price for 40% of this amount, representing 61,452oz.
For the first quarter the vast majority of gold was sold at the $US700/oz level, with the average gold price received at $A762/oz – still more than double the cash cost production of $A363/oz.
Meanwhile, exploration at Allied's Sorowar prospect will receive a boost once construction of a new assay laboratory and sample preparation shed is completed.
Allied’s Simberi mine in the Tabar Islands of PNG has current reserves and in-pit resources of 17.7 million tonnes of ore grading on average 1.37 grams per tonne gold, for a contained 785,000oz.
It has a mine life of more than eight years for an initial recovery of some 692,000oz.
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