Perth, June 28, 2006 (ABN Newswire) - Allied Gold Limited (ASX: ALD) announced today it had commenced an initial 10-hole reconnaissance diamond and RC drill program at the Talik Prospect on Tatau Island.

Allied has expanded its gold exploration in offshore PNG with a decision to commence drilling a second island in the Tabar group.

First results are expected by July.

The drill start signals an expansion by Allied Gold of its PNG exploration.

The Tabar group consists of the Simberi, Tatau and Big Tabar Islands. In addition to the near-term development of its key asset, the 100% owned Simberi Oxide Gold Project, Allied Gold has also identified gold and copper exploration targets on both Tatau and Big Tabar.

Today's Tatau announcement coincided with an upgrade by Allied of its gold potential on Simberi, with the main Sorowar deposit resource being increased by 33,000 ounces over the June 2005 estimate, for a new total Measured, Indicated and Inferred inventory of 1.255 million ounces of gold.

"The resource update, by Golder Associates, uses data from an additional 42 drillholes accounting for more than 4,100 metres of new drilling," Allied Gold's Managing Director, Mr Wayne Loxton, said today.

"The update focussed on testing oxide gold mineralisation at Sorowar Camp to the immediate west of the Sorowar pit design; at East Sorowar several hundred metres to the east of the pit design, and various Induced Polarisation geophysical anomalies peripheral to the main pit," Mr Loxton said.

"In Simberi's Measured, Indicated and Inferred Oxide Resource inventory, at a 0.5g/t Au cutoff, the update has added 0.25Mt of Resource for an additional 9,000 ounces of gold but importantly has moved 0.76Mt of Inferred Resource into the higher confidence level Indicated category.

"In addition, 24,000 ounces of gold have been added to the Sulphide Resource. The Sorowar drilling campaign is ongoing and has proved very successful to date.

"Drilling programs over the past 12 months have identified approximately 8 ounces of gold mineralisation per metre drilled."

Allied Gold - which listed this year on London's Alternative Investment Market - is currently working with its design engineer, Intermet Engineering Ltd, to complete an updated capital and operating cost estimate for the Simberi Oxide Gold Project.

Two options are being canvassed - an aerial rope conveyor system for ore delivery to the plant and a 2.0Mtpa throughput, or piping it in slurry form. The ongoing drill results are also being employed to finesse cost estimates and mine design/schedules.

Earthworks for the mine have commenced and detailed engineering of the treatment facility and infrastructure is advanced.

Source:
Kevin Skinner
Senior Consultant
FIELD PUBLIC RELATIONS

231 South Road
MILE END SA 5031
Tel: (08) 8234 9555
Fax: (08) 8234 9566
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kevin@fieldpr.com.au