Companies: AGLD   

Western Australia-based Allied, headed by enthusiastic antipodean Mark Caruso, has set itself a target of establishing reserves of one million oz of gold in the near-surface oxide deposit at Simberi. The AIM-quoted company anticipates annual production starting at 100,000 oz and averaging 84,500 oz annually for a little longer than eight years, with a low average grade of 1.4 grammes of gold per tonne of ore and estimated cash costs of £306 an ounce, before capital expenses, against a current price of $359.

However, Caruso argues the £33 million project is a precursor to a larger venture, which could become a reality if planned exploration of the deeper sulphide reserves bears fruit. Exploration by the Kernnecott group in the early 1990s is understood to have much higher-grade intersections.

Allied is also looking at several other potentially attractive deposits in Papua New Guinea, which could enhance longer term prospects. Floated last year at 26.25p, the shares now trade at a depressed 14.25p but could rally strongly if Caruso's sulphide hunch proves correct.