PNG gold miner posts $10M profit

PAPUA New Guinea gold producer Allied Gold has turned around a loss-making performance last year to post a net profit of $A10.2 million for 2009-2010 from revenues of $67.5 million.
PNG gold miner posts $10M profit PNG gold miner posts $10M profit PNG gold miner posts $10M profit PNG gold miner posts $10M profit PNG gold miner posts $10M profit

Its $7 million loss for the previous year was due to changes in accounting policy in relation to cash flow hedges.

The company, which is also listed on the Toronto Stock Exchange and London's Alternative Investment Market, operates the Simberi gold project in PNG and the developing Gold Ridge property in the Solomon Islands after acquiring Australian Solomons Gold last year.

Production for the year came in at 64,327 ounces, an 18% reduction compared to 2008-09 when 72,609oz was produced, thanks to 13 days of lost production from its Simberi operation and unseasonal weather.

The result did impact cash costs which increased to $791/oz for the year versus $651/oz previously.

Gold sales for the period reached 63,980oz at an average realised price of $1136/oz before hedge-related accounting adjustments, and represented a decrease of about 8% from gold sales of 69,886oz the previous year.

Whilst mining and processing volumes for the year exceeded the volumes achieved in the previous year, lower mine head grade of 1.18 grams per tonne compared to 1.64gpt in 2008-09.

The improved mining and processing throughput was principally as a result of Allied Gold's ongoing debottlenecking and optimisation initiatives.

A total of 1.94 million tonnes of material was processed for the year, compared to 1.65Mt previously with recoveries of 87.9% versus the previous rate of 83.2%.

June quarter production came in at 18,109oz, an 8% increase compared to the previous quarter's result of 16,739oz, with sales of 16,526oz at an average price of $1346/oz before hedge-related accounting adjustments.

At the end of June, the company had $85.5 million in cash and cash equivalents and had $65.7 million committed for the Gold Ridge project development in the Solomon Islands, $232,388 earmarked for the Simberi expansion and debottlenecking projects, and $153,090 for the Simberi sulfide prefeasibility study.

The Simberi operation comprises seven separate prospects on the eastern portion of Simberi Island - Sorowar, Samat North, Samat South, Samat East, Pigiput, Pigibo and Botlu South.

Gold Ridge, which comprises a 2Mtpa open cut mine, was closed in June 2000 due to escalating civil unrest.

Allied Gold has approved a $150 million refurbishment and development program to bring the 120,000ozpa Gold Ridge mine back into production by March next year based on a nine-year life.

Meanwhile, work continues on the Simberi sulfide prefeasibility study and expansion options, with results due out next month.


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