Adelaide, Mar 30, 2006 (ABN Newswire) - New drilling results have provided further encouragement for the discovery of significant additional oxide gold resources outside of the main Sorowar gold oxide deposit to be mined next year at Simberi Island off Papua New Guinea, by listed Australian explorer, Allied Gold Limited (ASX: ALD).

Drilling was carried out to the east and west of the main Sorowar pit which will commence as an open-cut mining operation in the first half of next year.

Included in the latest results are promising intersections at the Pigiput deposit, just 1.5 kilometres to the south of Sorowar, 60 kilometres north of Lihir Island. Significant gold intercepts include:

Sorowar Area

- 80m at 2.72g/t gold from 26m in RC1193.

- 44m at 1.17g/t gold from 12m in RC1189.

- 18m at 1.25g/t gold from 31m in RC1192.

Pigiput Area

- 31m at 1.20g/t gold from 19m, 20m at 1.65g/t gold from 65m, 6m at 10.5g/t gold from 101m and 11m at 2.03g/t gold from 155m (ending in mineralisation above the geophysical target) in RC 1195/1195DD.

"These positive results follow closely the favourable optimisation study outcomes for Simberi and add to the robustness of the project ahead of our proposed 2007 mining start," Allied Gold's Managing Director, Mr Wayne Loxton, said today.

"With drilling and sampling continuing at the higher grade areas of Sorowar and Pigiput, and about to commence further south from Pigiput at the lightly drilled Bekou Creek, we are confident of further extending the mineralisation while increasing the grade of ore available for treatment in the early years of operation," Mr Loxton said.

"Bekou is an area that we are particular interested in.

"The prospect which was drilled during the 1990's, has an Inferred Resource of 60,000 tonnes at 4 g/t. The mineralisation is open in all directions and only 20 reverse circulation and 3 diamond holes have been drilled.

"The location of Bekou Creek is adjacent to Samat and therefore the same haul road can be used to transport ore to the proposed treatment facility on the coast."

The optimisation study supported lifting the project's planned production rate to two million tonnes per annum (mtpa) instead of the current 1.65 million tonnes.

It also favoured using a 4 mtpa aerial conveyor rather than a slurry pipe system to convey the ore from the mine's ridge-top location to the coastal plant site.

Assigning those rates, a gold price of US$550 per ounce and an exchange rate of A$1 = US$0.77, the Simberi mine's economic profile is:

- Life of mine - 7.8 years

- Average mining rate - 2.0 mtpa at 1.35 g/t gold (85,000 oz)

- Annual gold production - 75,000 oz

- Estimated operating cash cost - US$256 per oz

- Estimated capital cost - US$43.7 million

Further resource drilling is scheduled from April at Sorowar, and other oxide gold deposits on Simberi and the nearby Tatau Islands.

Allied Gold's total resources at Simberi Island currently comprise 46.8 million tonnes at 1.51 g/t gold for 2.27 million ounces including at Sorowar, the largest pit scheduled for mining, current defined reserves and resources within the designed pit of 13.5 million tonnes at 1.22 g/t gold for 530,000 ounces.