The company has decided on an expansion to 3.5 million tonnes per annum from the current rate of 2.3Mtpa, with a further expansion to 5Mtpa in the future not being ruled out.

The fully-funded oxide expansion will see production increased to 100,000 ounces per annum.

Simberi produced 64,327oz in the 2010 financial year and 72,609oz in the 2009 financial year.

The expansion will occur over the next year and the mine is expected to produce 73,000oz at cash costs of $700 per ounce.

The 3.5Mtpa oxide circuit will treat ore grading 1.02 grams per tonne with recoveries of around 90% expected.

Cash costs are expected to lower to $600/oz, generating around $50 million per annum of free cash flow at current gold prices.

Allied Gold is well-placed with $76 million cash at bank.

The company is also completing a prefeasibility study on the sulfide resources at Simberi.

Preliminary results indicate capital costs of $200 million for a 1.5Mtpa single stage roaster.

The treating of sulfide ore at 2.4gpt gold would boost production to 200,000ozpa.

A bankable feasibility study is due to begin in 2012.

Allied Gold's second mine, Gold Ridge in the Solomon Islands, is set for first production in March next year.

The $135 million project is fully-funded and will produce 120,000ozpa.