Allied Nevada Doubles Hycroft Combined Mineral Reserves and Resources to 16.1 Million Ounces of Gold and 598.1 Million Ounces of Silver (26.6 Million Ounces AuEq) Updated Mill Scoping Study Indicates Average Annual Production of 556,200 Ounces of Gol
Updated Mill Scoping Study Indicates Average Annual Production of 556,200 Ounces of Gold and 27.0 Million Ounces of Silver at an Annual Cost of $304 per Gold Ounce and an Initial Capital Cost of $894 Million
RENO, NEVADA -- (Marketwire) -- 03/31/11 -- Allied Nevada Gold Corp. ('Allied Nevada', 'ANV' or the 'Company') (TSX: ANV)(NYSE Amex: ANV)is pleased to announce the following updates with respect to its wholly owned Hycroft Mine located near Winnemucca, Nevada:
-- Measured and Indicated Mineral Resources, when combined with Mineral
Reserves, increased 101% to 16.1 million ounces of gold and 131% to
598.1 million ounces of silver, totaling 26.6 million ounces of gold
equivalent (1.5 billion tons grading 0.011 opt gold, 0.39 opt silver, or
0.017 opt gold equivalent).
-- Proven and Probable gold and silver Reserves increased 7% to 2.6
million ounces of gold and 27% to 49.3 million ounces of silver (196
million tons grading 0.013 opt gold, 0.25 opt silver and 0.017 opt
gold equivalent), compared to the August 2010 Mineral Reserve
update.
-- Updated Mill Scoping Study indicates average annual production of
556,200 ounces of gold and 27.0 million ounces of silver at a cost of
sales of $304 per gold ounce throughout the initial 10 year concurrent
operation of the heap leach and mill, with:
-- An improved milling process flowsheet
-- An initial capital cost of $894 million, which includes mill
construction, mobile equipment purchases and general infrastructure
Hycroft Mineral Resource Update
Allied Nevada released its December 31, 2010, Mineral Reserve estimate of 2.6 million ounces of gold and 49.3 million ounces of silver (196 million tons grading 0.013 opt gold and 0.25 opt silver) in its annual report on Form 10-K filed with the Securities and Exchange Commission on February 28, 2010. This reflects a 7% increase to total gold and 27% increase to total silver reserves, compared with the previous estimate.
The Company has presented its Mineral Reserves and Mineral Resources to match the ultimate operating strategy for Hycroft, a heap leach and milling operation. Measured and Indicated Heap Leach mineralization (lower grade oxide and transitional material) is estimated to contain 4.8 million ounces of gold and 109.8 million ounces of silver (720 million tons grading 0.007 opt gold and 0.15 opt silver) and would be processed via the current heap leach process. Measured and Indicated Mill mineralization, which includes higher grade oxide, transitional and sulfide material, is estimated to contain 8.8 million ounces of gold and 439.0 million ounces of silver (620 million tons grading 0.014 opt gold and 0.71 opt silver) and would be processed through the proposed mill.
'This Resource update provides strong support for the Hycroft Mill Scoping Study and upcoming initial feasibility study and sustains the Company's confidence in Hycroft as having significant potential for a long-term mine life,' comments Scott Caldwell, President & CEO. 'We believe that the completion of the initial feasibility study will result in the conversion of a majority of these Measured and Indicated Mineral Resources to the Proven and Probable categories.'
December 31, 2010, Summarized Mineral Reserves and Resources
Tons Grade (opt)
(000s) Au Ag AuEq
Proven & Probable Heap Leach Reserves (COG -
0.005 opt AuEq)
Total Proven & Probable Heap Leach Reserves 196,000 0.013 0.25 0.017
Measured & Indicated Heap Leach Resources
(COG - 0.005 opt AuEq)
Oxide 82,000 0.007 0.16 0.010
Transitional 638,000 0.007 0.15 0.009
Total M&I Heap Leach Resources 720,000 0.007 0.15 0.009
Measured & Indicated Mill Resources (COG -
0.014 opt AuEq)
Oxide 33,000 0.013 0.68 0.025
Transitional 133,000 0.014 0.92 0.030
Sulfide 454,000 0.014 0.65 0.026
Total Mill M&I Resources 620,000 0.014 0.71 0.027
Total Measured & Indicated Resources 1,340,000 0.010 0.41 0.017
TOTAL RESOURCES (INCLUDING RESERVES) 1,536,000 0.011 0.39 0.017
Contained Ounces (000s)
Au Ag AuEq
Proven & Probable Heap Leach Reserves (COG -
0.005 opt AuEq)
Total Proven & Probable Heap Leach Reserves 2,558 49,289 3,421
Measured & Indicated Heap Leach Resources
(COG - 0.005 opt AuEq)
Oxide 602 13,276 834
Transitional 4,174 96,497 5,863
Total M&I Heap Leach Resources 4,776 109,773 6,697
Measured & Indicated Mill Resources (COG -
0.014 opt AuEq)
Oxide 436 22,594 831
Transitional 1,798 122,165 3,936
Sulfide 6,567 294,258 11,717
Total Mill M&I Resources 8,801 439,017 16,484
Total Measured & Indicated Resources 13,577 548,790 23,181
TOTAL RESOURCES (INCLUDING RESERVES) 16,135 598,079 26,602
Inferred Mill Resources (COG - 0.014 opt AuEq)
Tons Grade (opt)
(000s) Au Ag AuEq
Oxide 4,000 0.014 0.60 0.024
Transition 28,000 0.015 0.82 0.029
Sulfide 149,000 0.015 0.52 0.024
Total Inferred Resources 181,000 0.015 0.56 0.025
The current Mineral Resource, when combined with the Proven and Probable Mineral Reserves, increased 101% for gold and 131% for silver, when compared with the Measured and Indicated Mineral Resource update (inclusive of Reserves) issued in August 2010. The cutoff grade ('COG') strategy applied to the current Resource calculation reflects the long-term operating assumptions for the oxide, transitional and sulfide mineralization.
The mineral resources were estimated using a gold price of $800 per ounce and a silver price of $14 per ounce. A gold equivalent cutoff grade of 0.005 opt was applied to lower grade heap leach mineralization, and a gold equivalent cutoff grade of 0.014 opt was applied to material which would be processed through the mill.
Applying the same cutoff grades and presentation to this current Mineral Resource as were used in the August 2010 Resource update, the comparative Measured and Indicated Mineral Resource, when combined with the Mineral Reserves, would show increases of 37% to 11.0 million gold ounces and 80% to 467.5 million ounces of silver. The average gold grade would remain at 0.014 opt, while the silver grade would increase 29% to 0.58 opt.
Inferred Resources total 181 million tons grading 0.015 opt gold and 0.56 opt silver (0.025 opt gold equivalent). Allied Nevada began a step-out drill campaign in March 2011, following the completion of the infill program to support the initial milling feasibility study, with a goal of expanding the overall resource base. Management is confident that this step-out program will continue to identify additional resources.
Updated Hycroft Mill Scoping Study(1)
Allied Nevada is also pleased to provide an update to its Hycroft Mill Scoping Study ('Mill Scoping Study'). This update reflects changes to the milling process, processing of concentrates, and updated capital and operating costs. For the initial ten years when the heap leach and mill are projected to operate concurrently (2015-2024), the updated Mill Scoping Study indicates that annual production will average approximately 556,200 ounces of gold and 27.0 million ounces of silver per year at an average cost of sales of $304 per ounce of gold sold (assuming silver as a byproduct credit). This equates to an average of 1,029,500 gold equivalent ounces at a cost of sales of $532 per gold equivalent ounce.
'We believe this revised milling plan represents a significant improvement to the scoping study we presented in September 2010. This mill plan presents a much simpler, staged approach to the ramp-up in production,' commented Scott Caldwell, President and CEO of Allied Nevada. 'We have completed a significant amount of metallurgical work, which resulted in an improved process flow sheet with the flexibility to manage the large resource base. With this plan in place, we believe Hycroft is in a position to quadruple 2011 annual gold production and has the potential to become one of the largest silver producing mines in the world.'
Assuming an $800 per ounce selling price for gold and $14 per ounce for silver, the combined Accelerated Heap Leach and Milling Project shows a 5% Net Present Value ('NPV') of $495 million and an Internal Rate of Return ('IRR') of 15.3% and pays back the initial capital cost of $894 million in 4.2 years. A sensitivity analysis of changes in gold and silver selling prices, assuming a constant silver price to gold price ratio of 57.14:1, is shown in the following table:
----------------------------------------------------------------------------
After Tax Average Annual LOM
Metal Prices NPV @ 0% NPV @ 5% IRR Cash Cost/oz
----------------------------------------------------------------------------
Gold Silver $ Millions $ Millions % $/ounce
----------------------------------------------------------------------------
$ 681 $ 12 169 (223) 0.0 413.17
$ 800 $ 14 105 495 15.3 341.80
$ 1,000 $ 18 2,874 1,640 44.3 219.12
$ 1,200 $ 21 4,507 2,699 79.2 96.46
$ 1,400 $ 25 6,106 3,737 185.4 (26.18)
----------------------------------------------------------------------------
The updated Mill Scoping Study envisions that the accelerated heap leach and mill will operate concurrently via large-scale, bulk tonnage, open pit mining methods at a combined mining rate of approximately 150 million tons per year of ore and waste. The mining rate peaks at 190 million tons per year throughout 2015 to 2019. The average waste to ore ratio (strip ratio) is approximately 1.2:1.
The initial capital cost for this project is estimated to be $894 million(2) and is based on a 120,000 tpd process plant, paste tails disposal facility, mobile mine equipment, and other ancillary infrastructure. The 120,000-tpd plant consists of two identical processing lines, each processing 60,000 tpd, with one line processing oxide/transitional material and the second line processing sulfide material. The lines will consist of milling and flotation circuits, fine grinding, intensive cyanidation of the concentrates, and a refinery. The tailings from the oxide/transitional circuit will be leached and then impounded in the paste tailings facility. For the years 2015-2017, the sulfide concentrate from the flotation process will be leached directly and then sold to third parties for the fuel value and to recover any additional gold. The Company has received indication from third parties of their interest to purchase the leached concentrate; however, if it cannot be sold for any reason, it would be stored for future processing onsite. Each line will have the flexibility to process oxide/transitional material or sulfide material, depending on availability.
The mill will operate as a simple grind-float-leach facility for three years. The scoping study indicates that the addition of a 2,500 tpd pressure oxidation vessel ('POX') to treat the sulfide concentrate is warranted at an expected capital cost of $200 million. The scoping study assumes construction of the POX plant beginning in 2016, and that it will be fully operational by 2018.
Current metallurgical testing shows that overall gold recoveries from the mill of 76.0% for oxide, 70.4% for transitional, and 61.8% for sulfides can be achieved, assuming the sale of 100% of the sulfide stream concentrate in the first three years of operation. The metallurgical test work also indicates overall silver recoveries of 78.0% for oxides, 77.5% for transitional and 70.2% for sulfides in the first three years, assuming no additional recovery of silver from the sale of the sulfide concentrate. The addition of the POX circuit in 2018 is expected to increase the overall sulfide recoveries to 76.1% for gold and 79.5% for silver.
Mill Project Financing
The Company is considering potential financing options for the proposed mill expansion. The Company expects to be able to fund most of the project capital requirements through cash balances, operating cash flow, and equipment leases. Management believes that, if required, other financing options would be available to fund any remaining portion of the capital requirements, including bank debt.
Assuming gold and silver selling prices of $800 per ounce and $14 per ounce, respectively, the Accelerated Heap Leach Plan base case is expected to generate operating cash flow of $105 million through 2015. This cash flow, in addition to current cash balances, should provide the Company with $450 million in cash to fund the initial capital cost of $894 million. At nearer-to-current gold and silver market prices ($1,400 per ounce of gold and $25 per ounce of silver), the Accelerated Heap Leach Mine Plan is expected to generate an additional $580 million of after tax cash flows above the base case, increasing available cash to approximately $930 million.
Mill Project - Next Steps
Jacobs Engineering Group Inc. (previously known as Akers Solutions) is to completing an Initial Milling Feasibility Study, expected to be completed in the third quarter of 2011. The Initial Milling Feasibility Study will be completed to an accuracy of /- 25% on an operating and capital cost basis. Upon approval of the study by Allied Nevada's Board of Directors, the Company intends to award the detailed engineering contract to a qualified engineering firm and move directly into detailed engineering and begin ordering long lead time/critical path equipment such as mills, electrical switch gear and mining equipment.
The current scoping study is based on the Measured and Indicated Heap Leach and Mill Resources noted in the 'Hycroft Mineral Resource Update' section of this news release.
The project described in the Mill Scoping Study will require extensive federal and state environmental permits in order to be constructed and operated including a site-wide Environmental Impact Statement ('EIS'). Preliminary work required for the EIS, such as base line water sampling and archaeology surveys, began in late 2009. The scoping study assumes receipt of all required state and federal permits to construct and operate the mill in 2013 with construction of the POX plant assumed to begin in late 2016 and be fully operational in the first quarter of 2018.
Mineral Reserve and Resource Statements at December 31, 2010
----------------------------------------------------------------------------
December 31, 2010 Proven & Probable Mineral Reserves
----------------------------------------------------------------------------
Contained Ounces
Grades (opt) (000s)
----------------------------------------------------------------------------
Heap Leach, COG of 0.005 Tons
opt AuEq (000s) Au Ag AuEq Au Ag AuEq
----------------------------------------------------------------------------
Proven Heap Leach 162,000 0.013 0.26 0.018 2,160 42,308 2,900
Probable Heap Leach 34,000 0.012 0.21 0.015 398 6,981 520
----------------------------------------------------------------------------
Total Proven &
Probable Heap Leach 196,000 0.013 0.25 0.017 2,558 49,289 3,421
----------------------------------------------------------------------------
----------------------------------------------------------------------------
December 31, 2010 Measured and Indicated Resources (exclusive of Reserves)
----------------------------------------------------------------------------
Contained Ounces
Grades (opt) (000s)
-------------------------------------------
Tons
(000s) Au Ag AuEq Au Ag AuEq
----------------------------------------------------------------------------
Heap Leach, COG of
0.005 opt AuEq
----------------------------------------------------------------------------
Measured Resources
Oxide 54,000 0.008 0.17 0.010 408 8,982 565
Transition 410,000 0.006 0.16 0.009 2,656 64,985 3,793
Total Measured Heap
Leach Resources 464,000 0.007 0.16 0.009 3,064 73,967 4,358
----------------------------------------------------------------------------
Indicated Resources
Oxide 28,000 0.007 0.15 0.010 194 4,294 269
Transition 228,000 0.007 0.14 0.009 1,518 31,512 2,069
Total Indicated Heap
Leach Resources 256,000 0.007 0.14 0.009 1,712 35,806 2,339
----------------------------------------------------------------------------
Total Measured &
Indicated Heap Leach 720,000 0.007 0.15 0.009 4,776 109,773 6,697
----------------------------------------------------------------------------
Mill, COG of 0.014 opt
AuEq
----------------------------------------------------------------------------
Measured Resources
Oxide 25,000 0.014 0.69 0.026 339 17,355 643
Transition 96,000 0.014 0.98 0.031 1,327 93,940 2,971
Sulfide 286,000 0.014 0.74 0.027 4,039 213,038 7,767
Total Measured Mill
Resources 407,000 0.014 0.80 0.028 5,705 324,333 11,381
----------------------------------------------------------------------------
Indicated Resources
Oxide 8,000 0.012 0.65 0.024 97 5,239 189
Transition 37,000 0.013 0.76 0.026 471 28,225 965
Sulfide 138,000 0.014 0.49 0.023 1,928 68,020 3,118
Sulfide Stockpile 30,000 0.020 0.44 0.028 600 13,200 831
Total Indicated Mill
Resources 213,000 0.015 0.54 0.024 3,096 114,684 5,103
----------------------------------------------------------------------------
Total Measured &
Indicated Mill
Resources 620,000 0.014 0.71 0.027 8,801 439,017 16,484
----------------------------------------------------------------------------
Total Combined Measured
& Indicated Resources 1,340,000 0.010 0.41 0.017 13,577 548,790 23,181
----------------------------------------------------------------------------
----------------------------------------------------------------------------
December 31, 2010 Inferred Resources, COG of 0.014 opt AuEq
----------------------------------------------------------------------------
Grades (opt)
------------------------------------------------
Tons (000s) Au Ag AuEq
----------------------------------------------------------------------------
Oxide 4,000 0.014 0.60 0.024
Transition 28,000 0.015 0.82 0.029
Sulfide 149,000 0.015 0.52 0.024
Total Inferred 181,000 0.015 0.56 0.025
----------------------------------------------------------------------------
NOTES TO THE DECEMBER 31, 2010, MINERAL RESERVE AND RESOURCE ESTIMATE
1. Scott Wilson of Scott E. Wilson Consulting, Inc. is a Certified
Professional Geologist and member of the American Institute of
Professional Geologists in Denver, Colorado, and is a Qualified Person
as defined by NI 43-101. Mr. Wilson is the independent resource estimate
consultant for Allied Nevada Gold Corp. and has supervised the
preparation of the technical information contained in this press
release.
2. Scott E. Wilson Consulting, Inc. has recommended an ordinary kriging
estimate as the preferred method of determining the Resource estimate.
Inferred Mineral Resource calculations are based on 25 foot drill hole
composites of 5 foot sample intervals. All estimates are based on a
block dimension of 50 feet long x 50 feet wide x 25 feet tall with the
estimation parameters determined by variography.
3. Mineral Resources that are not Mineral Reserves do not have demonstrated
economic viability. The estimate of Mineral Resources may be materially
affected by the inability to obtain required environmental and other
regulatory approval, environmental or operating permits. The estimate
may also be materially affected by global economic conditions such as
the price of gold and silver, the price of oil and other commodities
utilized in the production of gold and silver. Unknown geologic or
hydrologic conditions or other unknown factors may materially affect the
resource estimates.
4. A different processing method and plant, and all associated regulatory
approvals, are required to recover gold and silver from sulfide
mineralization.
5. Gold equivalent cutoff grades were calculated using a gold price of $800
per ounce and a silver price of $14.00 per ounce for a gold to silver
ratio of 57.14:1.
6. Estimates of Mineral Reserves and Resources may be materially affected
by environmental permitting, legal and other relevant issues.
Comparative December 31, 2010, Mineral Resources Demonstrated Utilizing the August 2010, Reporting Metrics
Utilizing the gold equivalent cutoff grades of 0.009 for oxide material and 0.018 opt for sulfide material and the methodologies from resource estimate issued in August 2010, and applying them to the current resource for comparative purposes only, the Measured and Indicated Mineral Resource (inclusive of reserves) would be as follows:
December 31, 2010 Measured & Indicated Mineral Resources Estimated Using the
August 2010 Cutoff Grades and Methods
(Cutoff grades: oxide - 0.009 opt AuEq, sulfide - 0.018 opt AuEq)
----------------------------------------------------------------------------
Tons Contained Ounces
(000s) Grade (opt) (000s)
----------------------------------------
Au Ag Au Ag
----------------------------------------------------------------------------
Total Proven & Probable
Reserves 196,000 0.013 0.25 2,558 49,289
----------------------------------------------------------------------------
Measured Resources
Oxide/Transitional 236,000 0.012 0.56 2,778 132,216
Sulfide 168,000 0.016 1.06 2,746 178,207
--------------------------------------------------
Total 404,000 0.014 0.77 5,524 310,423
----------------------------------------------------------------------------
Indicated Resources
Oxide/Transitional 112,000 0.011 0.39 1,218 44,076
Sulfide 99,000 0.017 0.64 1,703 63,719
--------------------------------------------------
Total 211,000 0.014 0.51 2,921 107,795
----------------------------------------------------------------------------
Measured & Indicated
Resources
Oxide/Transitional 348,000 0.011 0.51 3,996 176,292
Sulfide 267,000 0.017 0.91 4,449 241,926
--------------------------------------------------
Total Measured & Indicated
(exclusive of Reserves) 615,000 0.014 0.68 8,445 418,218
----------------------------------------------------------------------------
Total Measured &
Indicated (including
Reserves) 811,000 0.014 0.58 11,033 467,507
----------------------------------------------------------------------------
Measured & Indicated Mineral Resources (including Reserves) as Reported in
August 2010
(Cutoff grades: oxide - 0.009 opt AuEq, sulfide - 0.018 opt AuEq)
----------------------------------------------------------------------------
Tons Contained Ounces
(000s) Grades (opt) (000s)
----------------------------------------
Au Ag Au Ag
----------------------------------------------------------------------------
Measured Resources
Oxide 170,000 0.013 0.30 2,275 50,925
Sulfide 80,000 0.018 0.72 1,402 57,882
--------------------------------------------------
Total Measured Resources 250,000 0.015 0.44 3,677 108,807
----------------------------------------------------------------------------
Indicated Resources
Oxide 226,000 0.012 0.34 2,629 76,861
Sulfide 97,000 0.018 0.73 1,702 73,540
Total Indicated Resources 323,000 0.013 0.46 4,331 150,401
----------------------------------------------------------------------------
Total Measured &
Indicated (including
Reserves) 573,000 0.014 0.45 8,008 259,208
----------------------------------------------------------------------------
Combined Milling and Heap Leach Operating Parameters
----------------------------------------------------------------------------
----------------------------------------------------------------------------
LOM production (2011-2026)
----------------------------------------------------------------------------
Ore Tons Mined - Heap Leach (000s) 452,951
----------------------------------------------------------------------------
Ore Tons Mined - Mill (000s) 455,690
----------------------------------------------------------------------------
Total Waste Tons Mined (000s) 1,091,137
----------------------------------------------------------------------------
Total Tons Mined (000s) 1,999,778
----------------------------------------------------------------------------
Waste to Ore Strip Ratio 1.2:1
----------------------------------------------------------------------------
Contained gold ounces, Heap Leach 4,270,938
----------------------------------------------------------------------------
Contained gold ounces, mill 6,225,000
----------------------------------------------------------------------------
Contained silver ounces, Heap Leach 82,418,673
----------------------------------------------------------------------------
Contained silver ounces, mill 346,043,950
----------------------------------------------------------------------------
Total gold equivalent contained ounces 17,994,409
----------------------------------------------------------------------------
Total gold ounces sold 7,120,990
----------------------------------------------------------------------------
Total silver ounces sold 283,423,415
----------------------------------------------------------------------------
Average Annual Production (2015-2024)
----------------------------------------------------------------------------
Ore Tons mined/processed, Heap Leach (000s) 32,025
----------------------------------------------------------------------------
Ore Tons mined/processed, Mill (000s) 42,000
----------------------------------------------------------------------------
Waste Tons Mined (000s) 89,129
----------------------------------------------------------------------------
Total Tons Mined 163,154
----------------------------------------------------------------------------
Mining Rate, tpd 466,154
----------------------------------------------------------------------------
Operating days/year 350
----------------------------------------------------------------------------
Average Annual Recovered Ounces Au (2015-2024) 556,200
----------------------------------------------------------------------------
Average Annual Recovered Ounces Ag (2015-2024) 27,047,000
----------------------------------------------------------------------------
Average Annual Recovered Ounces AuEq (2015-2024) 1,029,546
----------------------------------------------------------------------------
10-yr Average cost of sales per ounce of gold sold (after
silver byproduct credit) $304.34
----------------------------------------------------------------------------
Initial Capital Cost For Mill (2013-2015) & POX (2016)
(millions)
----------------------------------------------------------------------------
Mill, Paste Tailings Facility and Leach Pads $720.6
----------------------------------------------------------------------------
Additional Mine Equipment $105.5
----------------------------------------------------------------------------
Power line and Other Infrastructure $67.7
----------------------------------------------------------------------------
Total Initial Capital (2013-2015) $893.8
----------------------------------------------------------------------------
Autoclave (POX) Circuit (2016) $200.0
----------------------------------------------------------------------------
Operating Costs (LOM: 2011-2026)
----------------------------------------------------------------------------
Mining Cost per Ton of Material $1.13
----------------------------------------------------------------------------
Milling Cost per Ton of Ore Milled $6.98
----------------------------------------------------------------------------
Concentrate Ratio 25.4:1
----------------------------------------------------------------------------
Heap Leach Cost per Ton of Ore Processed (Heap Leach) $1.56
----------------------------------------------------------------------------
G&A Cost per Ton of Ore Processed (Heap Leach & Mill) $0.19
----------------------------------------------------------------------------
Mill Au Grade (opt) 0.014
----------------------------------------------------------------------------
Mill Ag Grade (opt) 0.76
----------------------------------------------------------------------------
Mill Au Recovery 73.5%
----------------------------------------------------------------------------
Mill Ag Recovery 78.5%
----------------------------------------------------------------------------
Heap Leach Au Grade (opt) 0.007
----------------------------------------------------------------------------
Heap Leach Ag Grade (opt) 0.12
----------------------------------------------------------------------------
Heap Leach Au Recovery 57.5%
----------------------------------------------------------------------------
Heap Leach Ag Recovery 14.0%
----------------------------------------------------------------------------
LOM average cost of sales per ounce of gold sold (after
silver byproduct credit) $341.80
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cautionary Statement Regarding Forward Looking Information
This press release contains forward-looking statements within the meaning of the U.S. Securities Act of 1933 and the U.S. Securities Exchange Act of 1934 (and the equivalent under Canadian securities laws), that are intended to be covered by the safe harbor created by such sections. Such forward-looking statements include, without limitation, statements regarding the Company's expectation of the projected timing and outcome of engineering studies; expectations regarding the receipt of all necessary permits and approvals to implement the expanded mining plan at Hycroft; the potential for confirming, upgrading and expanding oxide gold and silver mineralized material at Hycroft; reserve and resource estimates; operating cost estimates; estimates of gold and silver grades; estimates of recovery rates; expectations regarding the benefits from the addition of the POX circuit; expectations regarding the cash flow generated by the property; and other statements that are not historical facts. Forward-looking statements address activities, events or developments that Allied Nevada expects or anticipates will or may occur in the future, and are based on current expectations and assumptions. Although Allied Nevada management believes that its expectations are based on reasonable assumptions, it can give no assurance that these expectations will prove correct. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, among others, risks relating to risks that Allied Nevada's acquisition, exploration and property advancement efforts will not be successful; risks relating to fluctuations in the price of gold and silver; the inherently hazardous nature of mining-related activities; uncertainties concerning reserve and resource estimates; availability of outside contractors in connection with Hycroft and other activities; uncertainties relating to obtaining approvals and permits from governmental regulatory authorities; and availability and timing of capital for financing the Company's exploration and development activities, including uncertainty of being able to raise capital on favorable terms or at all; as well as those factors discussed in Allied Nevada's filings with the U.S. Securities and Exchange Commission (the 'SEC') including Allied Nevada's latest Annual Report on Form 10-K and its other SEC filings (and Canadian filings) including, without limitation, its latest Quarterly Report on Form 10-Q. The Company does not intend to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities laws.
Cautionary Note to U.S. Investors Regarding Estimates of Measured, Indicated and Inferred Resources
This press release uses the terms 'measured', 'indicated' and 'inferred' 'resources.' We advise U.S. investors that while these terms are recognized and required by Canadian regulations, the SEC does not recognize them. 'Inferred resources' have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an 'inferred mineral resource' will ever be upgraded to a higher category. Under Canadian rules, estimates of 'inferred mineral resources' may not form the basis of a feasibility study or prefeasibility studies, except in rare cases. The SEC normally only permits issuers to report mineralization that does not constitute 'reserves' as in-place tonnage and grade without reference to unit measures. The term 'contained gold ounces' used in this press release is not permitted under the rules of the SEC. U.S. investors are cautioned not to assume that any part or all of a measured, indicated or inferred resource exists or is economically or legally mineable.
Non-GAAP Measures
Allied Nevada provided the non-GAAP measures of 'cost of sales...per ounce of gold sold' and 'cost of sales...per ounce of gold sold (assuming silver as a byproduct credit)' in this document. The Company believes that, in addition to conventional measures prepared in accordance with United States generally accepted accounting principles (U.S. 'GAAP'), stakeholders use these non-GAAP measures to evaluate the Company's performance and its ability to generate cash flow. The above non-GAAP measures do not have any standardized meaning prescribed by GAAP and, therefore, may not be comparable to similar measures presented by other companies. Accordingly, the above measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.
Mr. Scott E. Wilson, AIPG Certified Professional Geologist #10965, is Allied Nevada's Independent Qualified Person as defined under National Instrument 43-101. He has supervised the preparation of the technical information and has reviewed and approved the contents of this news release. Allied Nevada will file on www.sedar.com a National Instrument 43-101 a compliant technical report entitled 'Technical Report Allied Nevada Gold Corp. Hycroft Mine, Winnemucca, Nevada USA', dated on or about March 24, 2011, encompassing the mineral reserve and resource discussed herein, which will include further details with respect to the scoping study, including risks and uncertainties associated with therewith.
(1) The Hycroft Mill Scoping Study relates to the economic potential of the
Measured and Indicated Mineral Resources and is preliminary in nature,
and accordingly subject to a high degree of uncertainty. The Hycroft
Mill Scoping Study does not form part of, and should be distinguished
from, the current mining operation.
(2) The capital cost estimate was based upon engineered estimates, direct
quotations, when available, and industry guidelines. Operating costs
were developed using current labor and commodity pricing in effect at
Hycroft at the time of the study. Freight costs associated with
transportation of bulk commodities (fuel and lime) reflect the
anticipated cost savings resulting from transport by rail. In the case
of electrical power, the current rate for large users in the state was
provided by the local electrical utility company. The capital cost of
$894 million does not reflect the capital associated with the
accelerated heap leach plan of approximately $150 million that is common
to both the mill and heap leach plans, such as mining equipment and rail
spur.
Suppliers of major commodities and consumables (fuel, lime, cyanide,
heavy equipment tires etc.) and electrical power have represented Allied
Nevada management such suppliers they can provide the materials and
power required by the oxide/sulfide mill. Suppliers of major fixed
equipment (crusher, SAG Mills, electrical switch gear, etc.) have
provided delivery estimates, which are reflected in the study.
Contacts:
Allied Nevada Gold Corp.
Tracey Thom
Vice President, Investor Relations
(775) 789-0119
Allied Nevada Gold Corp.
Alicia Gardner
Investor Relations Associate
(775) 789-0144
www.alliednevada.com