Allied Gold agrees gold loan

Allied Gold, the Pacific Rim-focused gold producer, has agreed a new three-year $80m gold loan with RK Mine Finance.

The agreement means Allied must pay back the $80m in physical gold.

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For accounting purposes Allied says the effective interest rate will be recorded as 12%.

The new agreement will mean the company is able to pay back its existing borrowings of $55m.

The company says the "loan has been fully drawn down, and the company's net cash and liquidity position (unaudited) in January 2012 is approximately US$68 million."

Allied's Chief Executive Frank Terranova commented: "The gold loan lowers our overall funding costs and improves flexibility in allowing transferability of cash flows throughout the group."

He added: ""We have seen major gold companies link their dividend policies to prevailing gold prices, therefore it makes sense for emerging companies like Allied Gold to link their cost of funds to the prevailing gold price."

Allied Gold shares have fallen 40% in the last 12 months.

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