News

May 18, 2009

Allied Gold Starts To Prepare For Additional Production From Sulphide Ore

Charles Wyatt

Mark Caruso, chairman and chief executive of Allied Gold was at Indaba earlier this year when we last made contact. Everything was very much alright with the world and he was rushing off to lunch as the presentations had finished. His only problem at the time was that he could not find a cab. Allied had been producing gold from its Simberi open pit mine on the Tabar islands of Papua New Guinea since February 2008 and during that time debt had been reduced to a low level and his company had easily kept to its hedging agreements. The costs at Simberi were mostly in Aussie dollars so he described the situation as a ‘perfect storm’ as the gold price was up and the Aussie dollar down to US$0.66. The result was that gold in Australia was worth a near record of A$1,450/oz.

That was then and now is now. A look at the share price chart of Allied Gold shows that it topped A50 cents  at the end of March and is now down to A36 cents. So why, if everything was going so well is the share price moving in the wrong direction. The answer, as often in mining, is that a problem was encountered which could not be anticipated or avoided. In a word  - rain. Rain like you would not believe. In the March quarter rainfall at Sorowar, which  is the deposit which...