Allied Gold accelerates debt reduction

Allied Gold has today announced a further USD$3.3M reduction in its corporate debt position. The reduction is a direct result of the Company proactively managing its hedge book in light of its ongoing financial risk management as outlined in previous quarterly reports.

Initially, the hedge book was constructed to accommodate a USD$25M debt facility. This facility was only drawn to USD$19.3M. The Company was of the view that it had surplus hedging capacity as a result of the reduced draw down amount and decided to reduce its hedge book exposure under the appropriate circumstances.

Total debt repaid over the period from June 2008 - October 2008 is now USD$10.6M with the residual debt position remaining at USD$3.4M.  As a result of the completed transaction, the next scheduled debt repayment is not due until June 2009.

A summary of the remaining hedge book profile is included below:

Of the estimated annual production of approximately 84,000 pa currently scheduled over the remaining life of the hedge book, approximately 75% will participate at USD$700p/oz or higher where the USD gold price exceeds USD$700p/oz. At a USD Gold price of less that USD$700p/oz approximately 35% of the production is guaranteed at least USD$700p/oz.  

As am emerging gold producer Allied Gold will continue to proactively manage both its capital structure and underlying financial risks to ensure maximum value is achieved.

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Background

Allied Gold is a gold production company having commissioned its 100 percent owned Simberi Oxide Gold Project in February 2008. The project is situated on the northern most island of the Tabar Islands Group, located in the New Ireland Province of eastern Papua New Guinea some 60 kilometres north-west of the Lihir Gold Project, which hosts a plus 40 million ounce gold resource.

Simberi contains measured, indicated and inferred mineral resources of approximately 3.0 million ounces of gold and proven and probable ore reserves of 674,000 ounces of gold.

Allied's strategy is to add to the gold inventory on Simberi Island. This will be achieved by defining additional oxide resources and conversion of these and known resources into reserves with a view to expanding annualised gold production from current levels of 84,000 ounces, and to generate and drill test gold and base metals targets identified on the nearby Tatau and Big Tabar islands. As at June 2008, exploration on Tatau and Big Tabar Islands is being undertaken by Barrick Gold as part of a JV arrangement with Allied.