Currency switch hits Allied Gold

Foreign exchange movements were especially unfriendly to Allied Gold in 2011 as the company plunged into the red.

The group announced a loss before tax of $5.97m for 2011 versus a profit of $5.77m the year before, with foreign exchange losses of $4.06m contributing massively to the scale of the loss. In 2010, currency movements had worked in the company's favour and boosted profits by $1.69m. The group switched from reporting its results in Australian dollars to US dollars in June 2011.

The previous year's profits had also been boosted by a $4.30m gain on settlement of a financial liability.

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The gold miner's revenue went through the roof, however, rising to $146.4m from $80.95m in 2010, as the price of gold soared and the company upped its production levels.

The group produced 108,338 ounces of gold in 2011, which was up 55% compared with the prior year. The increase was primarily due to the inclusion of production from the Gold Ridge project, which was acquired in March 2010, and which resumed operations in March 2011 following an extensive refurbishment programme. Gold Ridge contributed 51,054 ounces of production with the remainder coming from the Simberi asset.

Management was clearly not satisfied with the increase in production, however, grumbling about mechanical issues and wet weather at Simberi and restricted access to high grade ore at Gold Ridge. Production at Simberi was 57,284 ounces, which was down from 69,974 in the prior year.

The average realised gold price for Simberi's output in 2011 was $1,571 an ounce, versus a cost per ounce of digging the stuff out of $1,021.

The average realised gold price for the Gold Ridge project's output was higher, at $1,689 per ounce, but so was the net cash cost per ounce, at $1,274.

Cash and cash equivalents at end of 2011 had fallen to $21.53m from $39.19m at the end of 2010.

Net tangible asset backing per ordinary security rose to $3.04 at the end of 2011 from $2.88 at the end of 2010.

The company does not pay dividends.

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