Allied Gold Mining

MERRILL CORPORATION PHARDIM//16-JUN-11 04:28 DISK106:[11ZBG1.11ZBG11601]BE11601A.;21 mrll_0909.fmt Free: 150DM/0D Foot: 0D/ 0D VJ RSeq: 1 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 60773

This document comprises a Prospectus relating to Allied Gold Mining PLC (the Company) and has been prepared in accordance with the Prospectus Rules of the Financial Services Authority (FSA) made under section 73A of FSMA, has been filed with the FSA and has been made available to the public as required by the Prospectus Rules. This Prospectus is being made available to Shareholders for information purposes only and does not require any action to be taken by Shareholders of the Company. This Prospectus does not constitute an offer or invitation to any person to subscribe for or purchase any securities in the Company or any other entity. Application has been made to (i) the FSA for all of the Ordinary Shares to be admitted to the premium segment of the Official List of the FSA (Official List) and (ii) the London Stock Exchange plc (London Stock Exchange) for the Ordinary Shares to be admitted to trading on its main market for listed securities (together, Admission). Admission to trading on the London Stock Exchange constitutes admission to trading on a regulated market. It is expected that Admission of the Ordinary Shares will become effective and that dealings will commence in the Ordinary Shares on the London Stock Exchange, at 8.00 a.m. (London time) on 30 June 2011. The Company and its Directors (whose names appear on page 30 of this Prospectus) accept responsibility for the information contained in this Prospectus. To the best of the knowledge of the Company and the Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this Prospectus is in accordance with the facts and contains no omission likely to affect its import. Your attention is drawn to the risk factors in relation to the Group on pages 12 to 29 of this Prospectus.

ALLIED GOLD MINING PLC (Incorporated in England and Wales with Registered Number 7553802)

Prospectus

Admission to the premium segment of the Official List and to trading on the Main Market of the London Stock Exchange

Expected share capital immediately following Admission Ordinary Shares of 10p each Issued and fully paid

Number Amount (£) 199,756,259† 19,975,626

† Subject to adjustments for fractional entitlements.

On Admission, all the Ordinary Shares in issue will rank pari passu in all respects including for all dividends and other distributions declared, made or paid. In the United States, this Prospectus is being made available only to Shareholders for information purposes only. This Prospectus does not constitute an offer to any other person or to the public generally to subscribe for or otherwise acquire Ordinary Shares. The Ordinary Shares will not be, and are not required to be, registered under the US Securities Act of 1933, as amended (the Securities Act), in reliance upon the exemption from registration provided by Section 3(a)(10) thereof. The Ordinary Shares will not be registered under any securities laws of any state or other jurisdiction of the United States and may not be offered, sold, resold, transferred or delivered, directly or indirectly, within the United States by persons deemed to be ‘‘affiliates’’ of the Company under the rules of the Securities Act except pursuant to an applicable exemption from the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. Neither the US Securities and Exchange Commission nor any other US federal or state securities commission or regulatory authority has approved or disapproved the Ordinary Shares or passed an opinion on the adequacy of this Prospectus. Any representation to the contrary is a criminal offence in the United States. RBC Capital Markets is acting as financial adviser and sponsor for the Company and no-one else in connection with Admission and will not be responsible to anyone other than the Company for providing the protections afforded to clients of RBC Capital Markets or providing advice in relation to Admission or any other matters described in this Prospectus. Apart from responsibilities and liabilities, if any, which may be imposed on RBC Capital Markets by FSMA or the regulatory regime established thereunder, RBC Capital Markets does not accept any responsibility whatsoever, and makes no representation or warranty express or implied, for the contents of this document, including its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company, the Ordinary Shares or Admission. RBC Capital Markets accordingly disclaims to the fullest extent permitted by law all and any responsibility and liability whether arising in tort, contract or otherwise (save as referred to above) which it might otherwise have in respect of this document or any such statement. The contents of this Prospectus are not to be construed as legal, financial or tax advice. Each prospective investor should consult their own solicitor, independent financial adviser or tax adviser for legal, financial or tax advice.

Papua New Guinea This document is not a prospectus in Papua New Guinea and has not been lodged with the Papua New Guinea Registrar of Companies. The Shares cannot be offered for subscription or purchase to the public in Papua New Guinea, but an offer or invitation to any person where the amount payable by that person is at least PGK500,000 will not constitute an offer of the Shares to the public.

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 40. X 64. File: BE11601A.;21 MERRILL CORPORATION PHARDIM//16-JUN-11 04:28 DISK106:[11ZBG1.11ZBG11601]BG11601A.;16 mrll_0909.fmt Free: 1320DM/0D Foot: 0D/ 0D VJ RSeq: 1 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 59076

CONTENTS Page SUMMARY ...... 1 RISK FACTORS ...... 12 DIRECTORS, SECRETARY, REGISTERED OFFICE AND ADVISERS ...... 30 EXPECTED TIMETABLE OF PRINCIPAL EVENTS ...... 32 IMPORTANT INFORMATION ...... 33 PART I—INFORMATION ON THE GROUP ...... 37 PART II—MANAGEMENT, CORPORATE GOVERNANCE AND EMPLOYEES ...... 54 PART III—PAPUA NEW GUINEA ...... 61 SECTION A—GENERAL INFORMATION ...... 61 SECTION B—THE GROUP’S LICENCES ...... 65 PART IV—SOLOMON ISLANDS ...... 69 SECTION A—GENERAL INFORMATION ...... 69 SECTION B—LICENSING REGIME & THE GROUP’S LICENCES ...... 72 PART V—MARKET AND INDUSTRY OVERVIEW ...... 75 PART VI—SELECTED FINANCIAL INFORMATION ...... 77 PART VII—OPERATING AND FINANCIAL REVIEW ...... 79 PART VIII—CAPITALISATION AND INDEBTEDNESS STATEMENT ...... 108 PART IX—HISTORICAL FINANCIAL INFORMATION ...... 109 SECTION A—FINANCIAL STATEMENTS FOR YEARS ENDED 30 JUNE 2010, 2009 AND 2008 ...... 109 SECTION B—FINANCIAL STATEMENTS FOR SIX MONTHS ENDED 31 DECEMBER 2010 . . 173 PART X—ADMISSION ...... 231 PART XI—TAXATION ...... 232 PART XII—ADDITIONAL INFORMATION ...... 236 PART XIII—INTERPRETATION ...... 265 SECTION A—DEFINITIONS ...... 265 SECTION B—GLOSSARY OF TECHNICAL TERMS ...... 270 PART XIV—COMPETENT PERSON’S REPORTS ...... 274 SECTION A—SUMMARY ...... 275 SECTION B—SIMBERI PROJECT COMPETENT PERSON’S REPORT ...... 290 SECTION C—GOLD RIDGE PROJECT COMPETENT PERSON’S REPORT ...... 476

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: BG11601A.;16 MERRILL CORPORATION JDICKSO//17-JUN-11 02:56 DISK106:[11ZBG1.11ZBG11601]CA11601A.;27 mrll_0909.fmt Free: 80D*/300D Foot: 0D/ 0D VJ RSeq: 1 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 52103

SUMMARY This summary should be read as an introduction to the Prospectus. Investors should read the whole of this Prospectus and not just rely upon key or summarised information. Any decision to invest in the Company should be based on the consideration of this Prospectus as a whole by the investor and not just this summary. Where a claim relating to the information contained in this Prospectus is brought before a court, the investor bringing the claim might, under the national legislation of the EEA States, have to bear the costs of translating the Prospectus before the legal proceedings are initiated. Civil liability attaches to those persons who are responsible for the summary including any translations of the summary, but only if the summary is misleading, inaccurate or inconsistent when read together with other parts of the Prospectus.

1 Overview Allied Gold Mining PLC is an emerging Pacific Rim gold producer with two producing gold mines in Papua New Guinea (PNG) and the Solomon Islands, with near-term expansion plans and near mine and regional exploration potential. The Group’s projects contain current reserves and resources of 3.39Moz and 8.65Moz respectively in PNG and the Solomon Islands as at 1 January 2011. The Group’s major assets are its 100 per cent-owned Simberi mine (Simberi), located on Simberi Island, the northernmost island of the Tabar Islands Group, in the New Ireland Province of Eastern PNG, and its 100 per cent-owned Gold Ridge mine (Gold Ridge) on Guadalcanal Island in the Solomon Islands. The Group also controls 100 per cent of the 260km2 Tabar-Tatau exploration licenses which includes all of the Tabar Islands group not covered by the mining lease for Simberi. Historically, the operations of the Group companies comprised the gold mining business of Allied Gold Limited, incorporated and registered in Australia, and its subsidiaries. The Group companies will be reorganised into a new corporate group and the Company will acquire its shareholding in Allied Gold pursuant to the Pre-IPO Reorganisation, which will be affected by way of a scheme of arrangement conducted pursuant to Australian law. Allied Gold Limited (Allied Gold), which until successful completion of the Pre-IPO Reorganisation, is the holding company for the Group’s businesses, has been publicly traded on the Australian Securities Exchange (ASX) since December 2003 (symbol: ALD), the London Stock Exchange’s AIM market (AIM) since March 2006 (symbol: AGLD) and on the Toronto Stock Exchange (TSX) since November 2009 (symbol: ALG). Post completion of the Pre-IPO Reorganisation, the Group’s ticker symbol will change to ‘‘ALD’’ on all three exchanges. As at 15 June 2011, the Group’s market capitalisation is more than A$650 million.

2 Key assets Simberi (PNG) Simberi is an open-pit mining operation, with an associated 2.0Mtpa CIL plant for processing oxide ore. The mine is located within the 2560ha Mining Lease ML136 on the eastern side of Simberi Island. The Group is currently expanding gold production at Simberi from a current run rate of 70Koz per annum to 100Koz gold per annum by late 2011, through the expansion and optimisation of the existing oxide plant to increase capacity to 3.5Mtpa of ore. Further expansion of operations and production at Simberi is currently under review. Further potential has been identified around the existing Simberi pits. A near-mine exploration programme on the western side of Simberi Island will be conducted over the next 12 to 18 months with the aim of identifying additional oxide material. As at 1 January 2011, Simberi has total Measured, Indicated and Inferred gold resources of 169.17Mt at 1.10g/t of gold (6.01Moz Au). Simberi has total reserves of 44.84Mt at 1.46g/t Au (2.11Moz Au).

Gold Ridge (Solomon Islands) Allied Gold acquired Gold Ridge in 2009 through its acquisition of ASG. The Group has recently completed an A$150 million refurbishment and expansion of the existing plant at Gold Ridge to increase capacity from 2.0Mtpa to 2.5Mtpa. First gold was produced from the refurbished Gold Ridge plant in March 2011.

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: CA11601A.;27 MERRILL CORPORATION JDICKSO//17-JUN-11 02:56 DISK106:[11ZBG1.11ZBG11601]CA11601A.;27 mrll_0909.fmt Free: 625D*/1155D Foot: 0D/ 0D VJ RSeq: 2 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 5267

The Group is targeting initial gold production at an average rate of 120Koz per annum for the first three years of operation, based on reserves of 1.28Moz. The Company is also conducting an A$5m near-mine exploration programme in 2011, focused on defining additional resources and reserves around Gold Ridge. As at 1 January 2011, Gold Ridge has total Measured, Indicated and Inferred gold resources of 64.17Mt at 1.28g/t Au (2.64Moz Au). Gold Ridge has total reserves of 23.2Mt at 1.71g/t Au (1.28Moz Au).

Tabar-Tatau (PNG) The Tabar-Tatau exploration licenses covering 260km2 which includes all of the Tabar Islands group not covered by the mining lease for Simberi. The main focus of the exploration programme is to target epithermal gold and copper-gold porphyry mineralisation. Initial drilling is currently underway at the Mount Letam and Talik targets.

3 Key strengths The Directors believe that the key strengths of the Group are: • A diversified portfolio of assets, spanning the development cycle • Growing production, significant reserve and resource base and unhedged gold price exposure • Expertise in gold mining through an experienced management team • Proven ability to develop and implement projects, and a developed infrastructure • Attractive cash costs with high operating margins • Financially sound capital structure • The Group’s potential for value creation and pipeline of investment opportunities

4 Strategy The Group’s core strategy is to achieve profitable growth and increase volume from current mining assets, with a particular focus on assets in Melanesia with favourable capital intensity. The central driver of this strategy is securing the Group’s supply of gold, which it intends to achieve through the development and expansion of existing mining assets. The Group’s aim is to keep growing its critical mass in terms of resources, reserves and production capacity through exploration around its existing assets. The Group is investing in excess of A$10 million annually into exploration, with programmes around all of its producing assets and at greenfield projects in PNG and the Solomon Islands, as the Directors seek to build on the position of the Group as a prominent gold producer and explorer in the region. The Group is also focused on the organic development of in-house projects and regional acquisitions of production or near-term production assets.

5 Reserves and resources Based on current reserves and existing production capacity, Simberi has a mine life of 13 years and Gold Ridge has a mine life of 9 years. The table below sets out the reserves at each of the operating mines:

As at 1 January 2011(1) Mt AU g/t Koz Simberi Proven ...... 11.64 1.06 395 Probable ...... 33.20 1.61 1,716 Proven & Probable ...... 44.84 1.46 2,112

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: CA11601A.;27 MERRILL CORPORATION JDICKSO//17-JUN-11 02:56 DISK106:[11ZBG1.11ZBG11601]CA11601A.;27 mrll_0909.fmt Free: 2715DM/0D Foot: 0D/ 0D VJ RSeq: 3 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 48120

As at 1 January 2011(1) Mt AU g/t Koz Gold Ridge(2) Proven ...... ——— Probable ...... 23.2 1.71 1,275 Probable ...... 23.2 1.71 1,275

Notes: (1) Being the last practicable date prior to the publication of this Prospectus. (2) Based on a US$850 per oz gold price. Table shows rounded estimates. This rounding may cause some apparent computational discrepancies.

The table below sets out the resources at each of the operating mines, at a cut off grade of 0.5 g/t Au:

As at 1 January 2011(1) Mt AU g/t Koz Simberi Measured ...... 11.56 1.13 418 Indicated ...... 70.17 1.28 2,891 Measured & Indicated ...... 81.73 1.26 3,309 Inferred ...... 87.44 0.96 2,701

As at 1 January 2011(1) Mt AU g/t Koz Gold Ridge Measured ...... 8.24 1.53 405 Indicated ...... 40.89 1.23 1,617 Measured & Indicated ...... 49.13 1.28 2,022 Inferred ...... 15.03 1.27 614

Note: (1) Being the last practicable date prior to the publication of this Prospectus. Table shows rounded estimates. Rounding may cause numerical discrepancies.

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: CA11601A.;27 MERRILL CORPORATION JDICKSO//17-JUN-11 02:56 DISK106:[11ZBG1.11ZBG11601]CA11601A.;27 mrll_0909.fmt Free: 2165D*/4970D Foot: 0D/ 0D VJ RSeq: 4 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 16987

6 Summary financial information for the years ended 30 June 2010, 2009 and 2008 Consolidated Statement of Comprehensive Income for the years ended 30 June 2010, 2009 and 2008

2010 2009 2008 A$ A$ A$ Revenue ...... 67,555,369 77,467,668 23,393,798 Cost of sales ...... (70,289,540) (66,436,649) (20,264,174) Gross profit/(loss) ...... (2,734,171) 11,031,019 3,129,624 Gains/(losses) on derivatives ...... (176,084) 1,133,187 (2,685,864) Corporate expenses ...... (14,773,680) (7,545,907) (4,404,307) Share based remuneration ...... (6,828,559) (4,130,120) (3,590,530) Impairment of available for sale assets ...... (7,740) (1,214,402) — Gain on acquisition of subsidiary ...... 36,666,786 — — Other expenses ...... — (3,426,778) (4,049,118) Other income ...... 2,243,413 149,937 31,688 Financial income ...... 1,834,972 327,760 533,365 Financial expenses ...... (5,996,122) (3,396,347) (1,189,685) Profit/(loss) before tax ...... 10,228,815 (7,071,651) (12,224,827) Income tax benefit/(expense) ...... ——— Profit/(loss) after tax attributable to owners of Allied Gold Limited ...... 10,228,815 (7,071,651) (12,224,827) Foreign currency translation differences ...... 6,072,425 (252,552) (414,648) Effective portion of changes in fair value of cash flow hedges, net of tax ...... (6,479,724) 6,520,145 (23,225,075) Net change in fair value of cash flow hedges transferred to profit or loss, net of tax ...... 10,745,465 7,484,731 1,151,561 Restatement of fair value of cash flow hedges ..... — (4,320,305) 2,685,864 Net change in fair value for available for sale financial assets, net of tax ...... 1,373,921 129,843 (751,544) Net change in fair value of available for sale financial assets transferred to profit, net of tax . . . (1,006,313) — — Total comprehensive income for the year attributable to the owners of Allied Gold Limited ...... 20,934,589 2,490,211 (32,778,669) Profit/(loss) per share for loss attributable to the ordinary equity holders of Allied Gold Limited Basic earnings/(loss) per share (cents) ...... 1.31 (1.65) (3.46) Diluted earnings/(loss) per share (cents) ...... 1.31 (1.65) (3.46)

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: CA11601A.;27 MERRILL CORPORATION JDICKSO//17-JUN-11 02:56 DISK106:[11ZBG1.11ZBG11601]CA11601A.;27 mrll_0909.fmt Free: 2250D*/4755D Foot: 0D/ 0D VJ RSeq: 5 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 4250

Consolidated Statement of Financial Position as at 30 June 2010, 2009 and 2008

2010 2009 2008 A$ A$ A$ CURRENT ASSETS Cash and cash equivalents ...... 85,525,391 20,529,979 154,180 Trade and other receivables ...... 4,160,718 800,494 1,758,073 Inventories ...... 11,795,370 14,269,497 7,401,734 Derivative financial instruments ...... — 2,509,294 314,212 Other assets ...... 3,066,675 246,792 531,032 Total Current Assets ...... 104,548,154 38,356,056 10,159,231 NON-CURRENT ASSETS Derivative financial instruments ...... — 851,002 3,495,855 Available for sale financial assets ...... 524,230 348,974 1,185,074 Property, plant and equipment ...... 302,874,641 145,861,709 130,034,534 Exploration and evaluation expenditure ...... 23,711,261 11,115,743 10,406,786 Total Non-Current Assets ...... 327,110,132 158,177,428 145,122,249 Total Assets ...... 431,658,286 196,533,484 155,281,480 CURRENT LIABILITIES Trade and other payables ...... 44,032,012 20,683,026 14,446,386 Borrowings ...... 4,481,970 2,094,483 8,561,286 Derivative financial instruments ...... — 12,636,875 6,972,407 Provisions ...... 1,008,116 491,709 365,819 Total Current Liabilities ...... 49,522,098 35,906,093 30,345,898 NON-CURRENT LIABILITIES Borrowings ...... 1,755,820 3,845,885 2,739,755 Derivative financial instruments ...... — 7,123,887 18,911,174 Provisions ...... 9,315,217 2,782,426 2,584,870 Total Non-Current Liabilities ...... 11,071,037 13,752,198 24,235,799 Total Liabilities ...... 60,593,135 49,658,291 54,581,697 NET ASSETS ...... 371,065,151 146,875,193 100,699,783 EQUITY Contributed equity ...... 369,525,183 173,098,363 133,686,704 Reserves ...... 17,099,422 (434,901) (14,270,303) Accumulated losses ...... (15,559,454) (25,788,269) (18,716,618) TOTAL EQUITY ...... 371,065,151 146,875,193 100,699,783

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: CA11601A.;27 MERRILL CORPORATION JDICKSO//17-JUN-11 02:56 DISK106:[11ZBG1.11ZBG11601]CA11601A.;27 mrll_0909.fmt Free: 2465DM/0D Foot: 0D/ 0D VJ RSeq: 6 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 1037

Consolidated Statements of Cash Flows for the years ended 30 June 2010, 2009 and 2008

Group 2010 2009 2008 A$ A$ A$ CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers ...... 67,593,909 78,160,874 21,748,690 Payments to suppliers & employees ...... (70,897,182) (61,115,934) (21,374,990) (Payments)/proceeds from settlement of derivatives . (17,826,546) 5,122,882 — Interest received ...... 1,590,685 327,760 533,365 Interest paid ...... (970,264) (932,382) (1,189,685) Net cash generated by/(used in) operating activities ...... (20,509,398) 21,563,200 (282,620) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of equity investments ...... (15,075) (241,200) (14,999) Proceeds from sale of available for sale financial assets ...... 1,206,000 — — Purchase of plant & equipment ...... (52,105,472) (16,246,475) (40,223,122) Development expenditure ...... (6,915,672) (7,205,878) — Exploration and evaluation expenditure ...... (9,544,311) (708,957) (13,075,876) Cash acquired on acquisition of subsidiary ...... 3,573,926 — — Net cash used in investing activities ...... (63,800,604) (24,402,510) (53,313,997) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the issue of securities ...... 159,545,451 41,575,365 26,891,855 Costs of raising equity capital ...... (9,935,846) (1,766,744) (256,773) Proceeds from borrowings ...... 5,205,282 2,900,000 23,393,561 Finance lease payments ...... (5,411,333) (3,337,264) — Repayments of borrowings ...... (726,497) (16,407,977) (8,935,838) Net cash generated by financing activities ...... 148,677,057 22,963,380 41,092,805 Net increase in cash and cash equivalents ...... 64,367,055 20,124,070 (12,503,812) Cash and cash equivalents at beginning of financial year ...... 20,529,979 154,180 12,657,949 Effects of exchange rate changes on the balance of cash and cash equivalents ...... 628,357 251,729 43 Cash and cash equivalents at end of financial year ...... 85,525,391 20,529,979 154,180

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: CA11601A.;27 MERRILL CORPORATION PHARDIM//16-JUN-11 04:28 DISK106:[11ZBG1.11ZBG11601]CB11601A.;23 mrll_0909.fmt Free: 1935D*/5225D Foot: 0D/ 0D VJ RSeq: 1 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 43165

7 Summary financial information for the half-year ended 31 December 2010 Consolidated Statement of Comprehensive Income for the half-year ended 31 December 2010

Half-Year Half-Year Ended Ended 31 December, 31 December, 2010 2009 (unaudited) Revenue ...... 40,942,585 33,141,171 Cost of sales ...... (32,574,869) (38,150,819) Gross profit/(loss) ...... 8,367,716 (5,009,648) Unrealised losses on derivatives ...... — (812,476) Corporate expenses ...... (4,950,553) (8,002,387) Share based remuneration ...... 1,252,500 (6,819,755) Foreign exchange gain/(loss) ...... 444,063 (112,698) Financial income ...... 4,776,722 180,483 Financial costs ...... (501,456) (1,839,198) Profit/(loss) before tax ...... 9,388,992 (22,415,679) Income tax benefit/(expense) ...... — — Profit/(loss) after tax attributable to owners of Allied Gold Limited . 9,388,992 (22,415,679) Other comprehensive income/(loss) Changes in the fair value of available for sale financial assets ...... 543,795 250,914 Changes in the fair value of cash flow hedges—gross ...... — (5,774,881) Transfers to income statement from cash flow hedging reserve—gross 5,437,338 4,917,149 Exchange differences on translation of foreign operations ...... — 1,141,391 Other comprehensive income/(loss) for the half-year ...... 5,981,133 534,573 Total comprehensive income/(loss) for the half-year ...... 15,370,125 (21,881,106) Profit/(loss) for the half-year is attributable to: Owners of Allied Gold Limited ...... 9,388,992 (22,402,708) Non-controlling interest ...... — (12,971) 9,388,992 (22,415,679) Total comprehensive income/(loss) for the half-year is attributable to: Owners of Allied Gold Limited ...... 15,370,125 (21,829,665) Non-controlling interest ...... — (51,441) 15,370,125 (21,881,106) Profit/(loss) per share for loss attributable to the ordinary equity holders of Allied Gold Limited Basic earnings per share (cents) ...... 0.90 (4.24) Diluted earnings per share (cents) ...... 0.89 (4.24)

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: CB11601A.;23 MERRILL CORPORATION PHARDIM//16-JUN-11 04:28 DISK106:[11ZBG1.11ZBG11601]CB11601A.;23 mrll_0909.fmt Free: 1995D*/4155D Foot: 0D/ 0D VJ RSeq: 2 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 65311

Consolidated Statement of Financial Position as at 31 December 2010

31 December 31 December 2010 2009 (unaudited) CURRENT ASSETS Cash and cash equivalents ...... 36,486,444 157,241,528 Trade and other receivables ...... 4,099,013 1,714,620 Derivative financial instruments ...... — 814,922 Inventories ...... 21,328,397 11,342,679 Other assets ...... 1,492,322 779,193 Total Current Assets ...... 63,406,176 171,892,942 NON-CURRENT ASSETS Available for sale financial assets ...... 1,068,024 599,888 Property, plant and equipment ...... 375,679,424 152,474,075 Exploration and evaluation expenditure ...... 25,421,216 59,914,705 Total Non-Current Assets ...... 402,168,664 212,988,668 Total Assets ...... 465,574,840 384,881,610 CURRENT LIABILITIES Trade and other payables ...... 14,379,497 19,322,670 Borrowings ...... 11,517,869 3,500,278 Derivative financial instruments ...... — 15,720,395 Provisions ...... 1,170,332 868,260 Total Current Liabilities ...... 27,067,698 39,411,603 NON-CURRENT LIABILITIES Borrowings ...... 42,866,750 4,503,354 Provisions ...... 9,799,544 7,776,299 Total Non-Current Liabilities ...... 52,666,294 12,279,653 Total Liabilities ...... 79,733,992 51,691,256 NET ASSETS ...... 385,840,848 333,190,354 EQUITY Issued capital ...... 370,183,255 369,910,902 Reserves ...... 21,828,055 8,526,171 Accumulated losses ...... (6,170,462) (46,673,099) Total equity ...... 385,840,848 331,763,974 Non controlling interests ...... — 1,426,380 TOTAL EQUITY ATTRIBUTABLE TO OWNERS OF ALLIED GOLD LIMITED ...... 385,840,848 333,190,354

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: CB11601A.;23 MERRILL CORPORATION PHARDIM//16-JUN-11 04:28 DISK106:[11ZBG1.11ZBG11601]CB11601A.;23 mrll_0909.fmt Free: 125D*/300D Foot: 0D/ 0D VJ RSeq: 3 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 61860

Consolidated Statement of Cash Flows for the half-year ended 31 December 2010

Half-Year Half-Year Ended Ended 31 December 31 December 2010 2009 (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers ...... 46,524,256 33,166,504 Payments to suppliers & employees ...... (36,142,541) (42,260,483) Interest received ...... 694,094 178,099 Interest paid ...... (3,219,275) (17,351) Net cash from/(used in) operating activities ...... 7,856,534 (8,933,231) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of plant & equipment ...... (98,088,171) (7,201,607) Development expenditure ...... (3,520,723) (2,014,792) Exploration and evaluation expenditure ...... (1,709,955) (950,364) Cash acquired on acquisition of controlled entity ...... — 3,573,927 Net cash used in investing activities ...... (103,318,849) (6,592,836) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from equity placements ...... — 159,545,451 Costs of issuing securities ...... — (9,251,893) Proceeds from exercising options ...... 658,072 — Finance lease payments ...... (948,576) (2,534,784) Proceeds from borrowings ...... 53,772,845 3,332,823 Repayments of borrowings ...... (7,045,139) — Net cash from financing activities ...... 46,437,202 151,091,597 Net (decrease)/increase in cash held ...... (49,025,113) 135,565,530 Cash at beginning of the half-year ...... 85,525,391 20,529,979 Effects of exchange rate changes on the balance of cash and cash equivalents ...... (13,834) 1,146,019 Cash and cash equivalents at end of the half-year ...... 36,486,444 157,241,528

8 Risk factors Risks relating to the Group’s operations • The Group currently operates only two mines, which account for all of the Group’s mineral resources and reserves • The Group’s mining operations have a limited operating history • The Group depends on its key personnel. If the Group is unable to attract and retain key personnel, its business may be materially adversely affected • Currency fluctuations may affect the costs that the Group incurs in its operations and may also impact on the Group’s revenue • The Group has a history of operating losses and there can be no assurance that the Group will be profitable in future • Insofar as certain Directors hold similar positions with other mineral resource companies, conflicts may arise between the obligations of these Directors to the Group and to such other mineral resource companies • Actual capital costs, operating costs and economic returns for Simberi and Gold Ridge may differ significantly from those that the Group has anticipated and there are no assurances that any future development activities will result in profitable mining operations • Power stoppages and fluctuations and disruptions in electrical power could adversely affect the Group’s results of operations and its financial condition

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• The cost of electricity, particularly self-generated, can be unstable. An increase in power costs will make production more costly and alternative power sources may not be available • The profitability of operations and the cash flows generated by these operations are significantly affected by the fluctuations in the price, cost and supply of inputs • The Group’s success may depend on its social and environmental performance • The Company’s financial condition may be adversely affected by any changes in its tax residence position and the application of the UK CFC regime, or any changes to it • The Group’s business depends on good relations with its employees. A breakdown in these relations and/or restrictive labour and employment laws could have a material adverse impact on the Group • The Group depends on a variety of information technology systems • The Group’s current strategy may not develop as anticipated • The relocation of local people from housing near to the Group’s mining operations may affect gold production

Risks relating to the gold mining industry generally • The business of mining metals involves a number of risks and hazards, many of which are outside the Group’s control • The Group’s mineral resources and reserves are only estimates • Inferred mineral resources are uncertain and their economic viability cannot be assured • The Group may not achieve its production estimates • If the Group fails to acquire or find and develop additional reserves, its reserves and production will decline from their current levels over time • The Group may experience delays in receiving permits, licences, consents or other regulatory approval • The Group’s leases may not be renewed at all or may be renewed only on terms and/or conditions which are unacceptable or impractical to the Group • The Group’s properties are subject to environmental risks • The Group is subject to significant environmental regulations • The Group’s insurance coverage does not cover all of its potential losses, liabilities and damages related to its business and certain risks are uninsured or uninsurable • The development of the Group’s business may require substantial capital expenditure and lead times to operation which in the longer term may require external financing that may not be available • Increased competition could adversely affect the Group’s ability to attract necessary capital funding or acquire suitable producing properties or prospects for mineral exploration in the future • Precious metal exploration projects may not be successful and are highly speculative in nature • Land reclamation requirements for exploration properties may be burdensome and may divert funds from the Group’s exploration programs • Gold price volatility may affect the future production, profitability, financial position and financial condition of the Group • The Group’s operations are subject to extensive governmental and environmental regulations, which could cause it to incur costs that adversely affect its results of operations. • The Group is subject to extensive licensing and other legal and regulatory requirements, non-compliance with which may result in material adverse consequences for the Group • The Group may face the risk of litigation in connection with its business and/or other activities • Global economic conditions could adversely affect the profitability of the Group’s operations

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: CB11601A.;23 MERRILL CORPORATION PHARDIM//16-JUN-11 04:28 DISK106:[11ZBG1.11ZBG11601]CB11601A.;23 mrll_0909.fmt Free: 1100DM/0D Foot: 0D/ 0D VJ RSeq: 5 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 37049

• Adverse publicity from consumer and environmental groups could have an adverse effect on the reputation and financial position of the Group

Risks relating to the territories in which the Group operates • Emerging markets such as those in which the Group currently operates are subject to greater risks than more developed markets and any material adverse effect on the economies of such markets could disrupt the Group’s business • The Group’s current and proposed exploration and mining activities are in PNG and the Solomon Islands. Investments and operations in PNG and the Solomon Islands are subject to numerous risks associated with operating in those jurisdictions • The successful development and operation of the Group’s assets depends on adequate infrastructure • Operational failures, the impact of climatic conditions and other unscheduled interruptions could have a material adverse impact on the financial performance of the Group’s operations • External perceptions of PNG and the Solomon Islands may adversely affect the market price of securities of companies operating in PNG and the Solomon Islands, including the Ordinary Shares, and increase the Group’s cost of capital • Dispute resolution may be less efficient than in the United Kingdom • Civil unrest in PNG and/or the Solomon Islands may disrupt the Group’s operations in those territories • Political instability in PNG and/or the Solomon Islands may disrupt the Group’s operations in those territories • Land ownership disputes in PNG and/or the Solomon Islands may disrupt the Group’s operations in those territories

Risks relating to the Ordinary Shares • The Ordinary Shares are publicly traded and are subject to various factors that may contribute to volatility in their price • The Company has no dividend payment policy and does not intend to pay any cash dividends in the foreseeable future • The Company may be considered a ‘‘foreign investment entity’’ which may have adverse Canadian tax consequences for Canadian investors • The Company may be considered a ‘‘passive foreign investment company’’, which may have adverse US tax consequences for US Holders • Further issuance of Ordinary Shares may be dilutive to Shareholders • Holders of Ordinary Shares outside the United Kingdom may not be able to exercise their pre-emption rights • The Company has applied for the Ordinary Shares to be admitted to trading on the Main Market and on the TSX, and for the CHESS Depositary Interests to be admitted to the official list of the ASX and to be quoted on the stock market conducted by the ASX. The Company has received conditional approval for the listing of the Ordinary Shares on the TSX conditional on the Company fulfilling all the listing requirements

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: CB11601A.;23 MERRILL CORPORATION PHARDIM//16-JUN-11 04:28 DISK106:[11ZBG1.11ZBG11601]CD11601A.;33 mrll_0909.fmt Free: 120D*/240D Foot: 0D/ 0D VJ RSeq: 1 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 53777

RISK FACTORS The exploration for and development of metals and mineral resources is a speculative activity that involves a high degree of risk. The Directors believe that, in particular, prospective investors should carefully consider the following risks which represent the material risks known to the Directors as at the date of this Prospectus relating to the Group and to an investment in the Ordinary Shares. If any of these risks, which the Directors consider to be the material risks as at the date of this Prospectus, together with possible additional risks of which the Directors are currently unaware or which they consider not to be material in relation to the Company’s business, actually occur, the Company’s business, financial position or operating results could be materially and adversely affected. It should be noted that this list is not exhaustive and that certain other risk factors of which the Directors are not currently aware may apply. The Ordinary Shares carry no guarantee in respect of profitability, dividends, return of capital or the price at which they may trade.

RISKS RELATING TO THE GROUP’S OPERATIONS The Group currently operates only two mines, which account for all of the Group’s mineral resources and reserves The Group currently has only two operating gold mines, Simberi and Gold Ridge. Any event leading to a reduction in production or closure of either mine may have a material adverse effect on the Company’s financial performance and results of operations. Simberi and Gold Ridge account for all of the Group’s mineral resources and reserves and the potential for the future generation of revenue. Any adverse development affecting the progress of Simberi or Gold Ridge may have a material adverse effect on the Group’s financial performance and results of operations. These developments include, but are not limited to, unusual and unexpected geologic formations, seismic activity, rock bursts, cave-ins, flooding and other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction of, mines and other producing facilities, damage to life or property, environmental damage, hiring suitable personnel and engineering contractors, or securing supply agreements on commercially suitable terms.

The Group’s mining operations have a limited operating history The Group has a limited history of mining operations on which to base assessment of its future expected performance, and there can be no assurance that the Group will earn significant revenues or achieve significant profitability. The costs, timing and complexities of mine construction and development are increased by the remote location of the Group’s mining properties. It is common in new mining operations to experience unexpected problems and delays during construction, development, and mine start-up. In addition, delays in the commencement of mineral production often occur. Accordingly, the actual results of the Group may be subject to greater variability than would be the case for a Group with a longer history of mining operations and it could be more difficult to predict the Group’s future operating costs and results of operations accurately. Other factors mentioned in this section entitled ‘‘Risk Factors’’ may also prevent the Group from successfully operating its mining projects.

The Group depends on its key personnel. If the Group is unable to attract and retain key personnel, its business may be materially adversely affected The success of the operations and activities of the Group is dependent to a significant extent upon the contributions of a number of the Group’s management and its highly skilled team of contractors. There can be no certainty that the services of such key personnel will continue to be available to the Group. Factors critical to retaining the Group’s present staff and attracting and recruiting additionally highly qualified personnel include, inter alia, the Group’s ability to provide competitive compensation arrangements. If the Group is not successful in retaining or attracting highly qualified individuals in key management positions or highly skilled contractors, its business may be materially adversely affected. Investors must be willing to rely to a significant extent on management’s discretion and judgment, as well as the expertise and competence of outside contractors. The Group does not have in place formal programs for succession of management and training of management, nor does it hold key person insurance on these individuals. Furthermore, as a result of the shortage of higher education in certain of the jurisdictions in which the Group operates, the Group may find it difficult to acquire the qualified or trained and skilled labour upon which it is dependent. To the extent that the Group is unable to recruit and retain such skilled labour this

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could result in a decrease in the Group’s production or delays in the development of projects, which in turn could have a material adverse effect on the Group’s results of operations and financial condition. The Group is reliant on a certain level of expatriate expertise to ensure efficient operations and management. The Group depends on Government approval of work permits for expatriate positions and if this were to be refused, the Group’s management and operations would be adversely affected. The Directors consider that whilst the number of approved positions for expatriate personnel may diminish as nationals become more able to fill such positions, approval is not expected to be denied or withdrawn while the Group continues to fulfil various governmental agency requirements.

Currency fluctuations may affect the costs that the Group incurs in its operations and may also impact on the Group’s revenue The Group’s revenue from gold sales is received in US dollars while a significant portion of its operating expenses will be incurred in Australian dollars, PNG Kina and other foreign currencies. From time to time, the Group will borrow funds and will incur capital expenditures that are denominated in foreign currencies. The appreciation of non-Australian dollar currencies in those countries where the Group has mining and exploration operations against the Australian dollar would increase capital, exploration and production costs at such operations which could materially and adversely affect the Group’s profitability, results of operation and financial position. As the Group generates revenues and incurs operating expenses, it will be exposed to currency translation risk on those revenues to the extent not mitigated by costs based on US dollars and to the extent the Group does not seek to hedge its currency exposure in the financial markets.

The Group has a history of operating losses and there can be no assurance that the Group will be profitable in future The Group’s operations have only recently generated an operating profit after tax. There can be no assurance, however, that the Group will continue to be profitable. Please refer to ‘‘Part IX—Historical Financial Information’’ for further information.

Insofar as certain Directors hold similar positions with other mineral resource companies, conflicts may arise between the obligations of these Directors to the Group and to such other mineral resource companies Certain Directors are, and may continue to be, involved in the mining and mineral exploration industry through their direct and indirect participation in corporations, partnerships or joint ventures which are potential competitors of the Group. Situations may arise in connection with potential acquisitions in investments where the other interests of these directors and officers may conflict with the interests of the Group. Directors with conflicts of interest will be subject to and will follow the procedures set out in applicable corporate and securities legislation, regulations, rules and policies. For a list of the positions that each of the Directors holds with other companies and partnerships, please refer to paragraph 7.3 in ‘‘Part XII—Additional Information’’.

Actual capital costs, operating costs and economic returns for Simberi and Gold Ridge may differ significantly from those that the Group has anticipated and there are no assurances that any future development activities will result in profitable mining operations The capital costs for Simberi and Gold Ridge may be significantly higher than anticipated. Gold Ridge does not have an extensive operating history upon which the Company can base estimates of future operating costs. Decisions about the development of this and other mineral properties will ultimately be based upon feasibility studies. Feasibility studies derive estimates of cash operating costs based upon, among other things: • anticipated tonnage, grades and metallurgical characteristics of the ore to be mined and processed; • anticipated recovery rates of gold and other metals from the ore; • cash operating costs of comparable facilities and equipment; and • anticipated climatic conditions. Cash operating costs, production and economic returns, and other estimates contained in studies or estimates prepared by or for the Group may differ significantly from those anticipated by the Group’s

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current studies and estimates, and there can be no assurance that the Group’s actual operating costs will not be higher than currently anticipated.

Power stoppages and fluctuations and disruptions in electrical power could adversely affect the Group’s results of operations and its financial condition An interruption in the Group’s electricity supplies could have a significant effect on its business and results of operations. In the event of a failure in the electricity supply, gold production could continue for only a limited time, if at all.

The cost of electricity, particularly self-generated, can be unstable. An increase in power costs will make production more costly and alternative power sources may not be available Both Simberi and Gold Ridge rely on self-generation by diesel power generators located on site. The self-generation of electricity by diesel power generators is expensive, and the cost of such self-generation can fluctuate rapidly and significantly depending on the market price of diesel fuel. The Group is currently planning to convert the electricity generation system at Simberi to operate on HFO, with the aim of reducing power generation costs. As with other mining sector inputs, the Group has historically been exposed to energy cost inflation. Any renewed increases in energy costs will adversely affect the results of operations or financial condition of the Group.

The profitability of operations and the cash flows generated by these operations are significantly affected by the fluctuations in the price, cost and supply of inputs Fuel, power and consumables, including diesel, steel, chemical reagents, explosives and tires, form a relatively large part of the Group’s operating costs. The cost of these consumables is impacted to varying degrees by fluctuations in the price of oil, exchange rates and the availability of supplies. Such fluctuations have a significant impact upon the Group’s operating costs and capital expenditure estimates and, in the absence of other economic fluctuations, could result in significant changes in the total expenditure estimates for mining projects, new and existing, and could even render certain projects non-viable.

The Group’s success may depend on its social and environmental performance The Group’s ability to operate successfully in communities will likely depend on its ability to develop, operate and close mines in a manner that is consistent with the health, safety and well being of the Group’s employees, the protection of the environment, and the creation of long term economic and social opportunities in the communities in which the Group operates. The Group seeks to promote improvements in health and safety, environmental performance and community relations. However, the Group’s ability to operate could be adversely impacted by accidents or events detrimental (or perceived to be detrimental) to the health, safety and well being of the Company’s employees, the environment or the communities in which it operates.

The Company’s financial condition may be adversely affected by any changes in its tax residence position and the application of the UK CFC regime, or any changes to it Tax Residence The Directors intend to conduct the affairs of the Company so as to ensure that it is centrally managed and controlled in Australia such that under Australian tax law and the practice of the Australian Tax office it is regarded as resident for tax purposes. In addition the Directors intend that the Company should be regarded as resident in Australia for the purposes of the Australia/UK Double Taxation Convention in Australia. Since the Company is incorporated in the UK, the starting point is that it would be tax resident in the UK. However, the UK HM Revenue and Customs (HMRC) has confirmed that assuming the Company is treated as Australian tax resident, then based on the proposed location and structure of management as described to it by the Directors, and assuming that the structure is operated as described to it, it appears the residence tie-breaker provision in the UK—Australia Double Taxation Convention will operate in favour of Australia and the Company’s place of effective management will not be in the UK.

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: CD11601A.;33 MERRILL CORPORATION PHARDIM//16-JUN-11 04:28 DISK106:[11ZBG1.11ZBG11601]CD11601A.;33 mrll_0909.fmt Free: 150D*/290D Foot: 0D/ 0D VJ RSeq: 4 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 14032

Therefore assuming the affairs of the Company are conducted as the Directors intend and in the light of the confirmation from HMRC, it is likely that the Company should be treated as not resident for tax purposes in the UK and solely resident for tax purposes in Australia. It is possible that, including as a result of change in law or the practice of any relevant tax authority or the renegotiation of the Australia/UK Double Taxation Convention, or as a result of any change in the management or conduct of the Company’s affairs, the Company could become, or be regarded as having been resident in the United Kingdom and therefore become subject to the UK tax regime. Depending on facts and circumstances, this could materially adversely affect the results of the Group.

Controlled Foreign Company Rules Even assuming that the Company is solely tax resident in Australia, on the basis that it is incorporated in England and Wales, the Company is technically subject to the UK controlled foreign company rules (the CFC Rules), which can operate to apportion the profits of non-UK subsidiaries to the UK parent company which will be subject to UK corporation tax on those amounts (subject to certain deductions). However, the Company has obtained confirmation from HMRC in the United Kingdom that, provided that there is no material change in the facts and circumstances of the Group as summarised in the application letter of 13 April 2011 and in previous discussions with HMRC, the motive test exemption applies so that the Company will not be subject to the operation of the CFC Rules (with the exception that the Company will still have to comply with certain administrative procedures set out under these rules). The confirmation only applies to those companies that form part of the Group as described to HMRC in the application letter which the Company has been advised includes all companies currently forming part of the Group and if new companies are added to the Group, the Company will need to apply for the clearance to be extended to cover those companies. There is no guarantee that such an application will be successful and any such failure could adversely affect the financial results of the Group. This confirmation from HMRC is stated to last for a period of two years after the end of the accounting period in which the Pre-IPO Reorganisation is implemented, being until 30 June 2013. The confirmation is also subject to any relevant change of law, including any removal or amendment of the motive test exemption as part of the anticipated reform of the CFC Rules. This reform is on-going and there can be no certainty as to whether it will be enacted, and in what form. Current expectations are for the reform to take place in 2012. Although the Directors consider that HMRC’s objectives in reforming the UK tax system should not lead to the Company being disadvantaged, the final position cannot be known until any new legislation is published and enacted. If the proposed changes to the UK’s CFC Rules result in the profits of certain non-UK resident companies in the Group being subject to UK corporation tax, this may result in a substantial increase in the tax costs or effective tax rates of the Group which in turn could have a material adverse effect on the after-tax results of operations and financial condition of the Group.

The Group’s business depends on good relations with its employees. A breakdown in these restrictions and/or restrictive labour and employment laws could have a material adverse impact on the Group Although management believes that labour relations with the Group’s employees are good, there can be no assurance that a work slowdown or a work stoppage will not occur at any of the Group’s operating units or exploration prospects. Future work slowdowns, stoppages, disputes with employee unions, or other labour-related developments or disputes could result in a decrease in the Group’s production levels and adverse publicity and/or increased costs, which could have a material adverse effect on the Group’s business, results of operations and financial condition. To assist with labour relations in the Solomon Islands, the Group has in place a collective labour agreement covering approximately 35 per cent of its workforce in that jurisdiction.

The Group depends on a variety of information technology systems The Group depends on a variety of information technology and software systems for its operations, including management reporting and accounting systems. Failures or significant disruptions to the Group’s information technology systems could prevent the Group from conducting its operations efficiently. Were the Group to experience a significant security breakdown or other disruption to its information technology systems, sensitive information could be compromised and the Group’s operations could be disrupted, which could harm the Group’s relationship with its suppliers or customers, or otherwise have a material adverse effect on the Group’s business, revenues, financial condition, results of operations or prospects or the trading price of the Ordinary Shares.

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: CD11601A.;33 MERRILL CORPORATION PHARDIM//16-JUN-11 04:28 DISK106:[11ZBG1.11ZBG11601]CD11601A.;33 mrll_0909.fmt Free: 690D*/810D Foot: 0D/ 0D VJ RSeq: 5 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 12317

In addition, the Group’s ability to operate its business depends on its ability to protect the information technology systems that the Group operates from the intrusion of third parties who may attempt to enter the Group’s systems through the internet or otherwise. Third parties may attempt to gain access to the Group’s systems and the Group cannot be certain that it will be able to protect its systems from such attacks. If such attacks occur, some of the problems the Group may encounter include theft or destruction of the Group’s data, including commercial, financial and product information. In addition, disgruntled employees may cause similar damage to, or take similar actions with respect to, the Group’s information technology systems to which they have authorised or unauthorised access. If such an attack occurs or damage is inflicted, it could have a material adverse effect on the Group’s business, revenues, financial condition, results of operations or prospects or the trading price of the Company’s Shares.

The Group’s current strategy may not develop as anticipated The Group regularly monitors potential investment opportunities in the gold mining industry. If the Group does not acquire and successfully integrate additional gold mining operations, it may not be able to maintain its production levels. If the Group does acquire additional gold mining operations, the acquisition and integration of new businesses will pose significant risks to its operations. These risks include the difficulty of integrating the operations and personnel of the acquired business, problems with minority shareholders in acquired companies and their material subsidiaries, the potential disruption of current business, the assumption of liabilities, including in relation to tax and environmental matters, relating to the acquired assets or businesses, the possibility that warranty protection from, or indemnification agreements with, the sellers of those assets may be unenforceable or insufficient to cover potential tax or other liabilities, the difficulty of implementing effective management, financial and accounting systems and controls over acquired businesses, the imposition and maintenance of common standards, controls, procedures and policies, and the impairment of relationships with employees and counterparties as a result of difficulties arising out of integration. Furthermore, even if the Group successfully integrates new businesses, expected synergies and cost savings may not materialise, resulting in lower than expected profit margins. The value of any business that the Group acquires or invests in may be less than the amount that the Group pays for it if, for example, there is a decline in the price of gold or reserves and resources estimates. The Group may also become responsible for additional liabilities or obligations not foreseen at the time of an acquisition. As a result, unforeseen expenditures may arise which may have a material adverse effect on the Group’s business, revenues, financial condition, results of operations or prospects or the trading price of the Ordinary Shares.

The relocation of local people from housing near to the Group’s mining operations may affect gold production The Group is currently in the process of relocating up to 2000 local people who have settled within the location of Gold Ridge following closure of the mine in 2000. Despite the fact that competitive compensation agreements have been agreed to between the local people and the Group, there remains a risk that some villagers will be slow to relocate or resist moving altogether. Those local people that are not entitled to full compensation packages may be most likely to resist moving or relocating. This has the potential to adversely affect gold production and have a material adverse affect on the Group’s business, result of operations and/or financial condition. The Group’s relocation package includes the provision of newly built homes for local people. The Group has also provided funding for schools and to improve the local infrastructure. Not all the people living within the confines of Gold Ridge are entitled to new housing however, but will still be required to leave their current accommodation. It is currently intended that the Valehaichichi pit in the Solomon Islands, which a number of local people live in close proximity to, will be the first pit to be mined. If the Group’s relocation efforts are delayed due to concerns raised by local people, there could be a delay to initial production. The Group has however made a concerted attempt to keep local people informed as to when ore exploration will begin, and so the risk to production may be viewed as small.

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RISKS RELATING TO THE GOLD MINING INDUSTRY GENERALLY The business of mining metals involves a number of risks and hazards, many of which are outside the Group’s control To maintain future gold production beyond the life of the current reserves or to increase production materially through mining new deposits, the Group needs to extend its mineral base through geological exploration, which may result in adverse environmental consequences for the Group’s operations. The Group’s mining operations are subject to all the hazards and risks normally encountered in the exploration for and development and production of precious metals, including unusual and unexpected geologic formations, seismic activity, rock bursts, cave-ins, flooding, variations in grade, deposit size, density and other geological problems, hydrological conditions, metallurgical and other processing problems, mechanical equipment performance problems, the unavailability of materials and equipment including fuel, labour force disruptions, unanticipated transportation costs, unanticipated regulatory changes, unanticipated or significant changes in the costs of supplies including, but not limited to, petroleum, and adverse weather conditions and other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction of, mines and other producing facilities, damage to life or property, environmental damage, business interruption and delays in mining, asset write-downs, monetary losses, and possible legal liability, and may result in actual production differing, potentially materially, from estimates of production, including those contained in this Prospectus, whether expressly or by implication. Should any of these risks and hazards affect any of the Group’s proposed mining operations, it may cause the cost of production to increase to a point where it would no longer be economic to produce gold from the Group’s mineral reserves, which would have a material and adverse affect on the financial condition, results of operation, and cash flows of the Company.

The Group’s mineral resources and reserves are only estimates

Like any mining company, the financial condition of the Group depends on its resources and reserves. Ore reserves and mineral resources estimates of mining companies are inherently imprecise and depend to some extent on statistical inferences drawn from limited drilling and other testing, which may ultimately prove unreliable. The resource and reserve estimates contained in this Prospectus are estimates of the resources and reserves in the ground. Such estimates should not be interpreted as an assurance of the profitability of the Group’s operations in the future. There is no certainty that the mineral resources, or any future mineral reserve, attributable to the Group will be realised. Until mineral reserves or mineral resources are actually mined and processed, the quantity of mineral resources and mineral reserve grades must be considered as estimates only. In addition, the quantity of mineral reserves and mineral resources may vary depending on, among other things, metal prices and currency exchange rates. Any material change in the quantity of mineral reserves, mineral resources, grade or stripping ratio may affect the economic viability of the properties. Declines in market prices of gold could render the mining of the Group’s deposits uneconomic. In addition, there can be no assurance that gold recoveries or other metal recoveries in small scale laboratory tests will be duplicated in larger scale tests under on-site conditions or during production. Results of drilling, metallurgical testing and production and the evaluation of mine plans subsequent to the date of any estimate may require revision of such estimate. The volume and grade of reserves mined and processed and recovery rates may not be the same as currently anticipated. Any material reductions in estimates of mineral reserves and mineral resources, or of the Group’s ability to extract these mineral reserves, could have a material adverse effect on the Group’s results of operations and financial condition. Also, a reduction in estimated reserves could require material write-downs in investment in the affected mining property and increased amortisation, reclamation and closure charges. Alternatively, if the Group’s ore and mineral reserves exceed current forecasts, it cannot be assured that it will be able to develop the production capacity to exploit commercially those reserves.

Inferred mineral resources are uncertain and their economic viability cannot be assured Inferred mineral resources cannot be converted into mineral reserves as there is not sufficient information to assess that the geological continuity of the ore body is economically viable. Due to the uncertain nature of inferred mineral resources, there is no assurance that inferred mineral resources will be upgraded to resources with sufficient geological continuity to constitute proven and probable mineral reserves as a result of continued exploration.

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The Group may not achieve its production estimates The Group prepares estimates of future production for particular operations. No assurance can be given that future estimates will be achieved. The Group’s production may vary from estimates for a variety of reasons, including actual ore mined varying from estimates of grade, tonnage and other characteristics. Short-term operating factors may also be relevant such as those relating to the ore reserves, revisions to mine plans and risks associated with mining, such as inclement weather conditions, water availability and unexpected labour shortages or strikes.

If the Group fails to acquire or find and develop additional reserves, its reserves and production will decline from their current levels over time Except to the extent that the Group conducts successful exploration and development activities or acquires further properties/licences containing reserves or both, the Group’s reserves will decline as gold is produced. The life-of-mine estimates included in this Prospectus in respect of Simberi and Gold Ridge may not be achieved. The Group’s ability to maintain or increase its annual production of gold in the future will be dependent in significant part on its ability to bring new mines into production and to expand mineral reserves at existing mines. Simberi has a remaining life of over 13 years based only on proven and probable mineral reserves, and Gold Ridge has a remaining life of over 9 years based only on proven and probable mineral reserves. Feasibility studies may be used to determine the economic viability of a deposit. Many factors are involved in the determination of the economic viability of a deposit including the achievement of satisfactory mineral reserve estimates, the level of estimated metallurgical recoveries, capital and operating cost estimates and the estimate of future gold prices. Capital and operating cost estimates are based upon many factors, including anticipated tonnage and grades of ore to be mined and processed, the configuration of the ore body, ground and mining conditions, expected recovery rates of the gold from the ore, anticipated environmental and regulatory compliance costs and mining consumables and capital equipment costs. Each of these factors involves uncertainties and as a result the Group cannot give assurance that its development or exploration projects will become operating mines. If a mine is developed, actual operating results may differ from those anticipated, thereby impacting on the economic viability of the project.

The Group may experience delays in receiving permits, licences, consents or other regulatory approval The Group’s business depends on the continuing validity of some of its licences, the renewal of its licences and the Group’s compliance with the terms of its licences. The legal and regulatory basis for the licensing requirements is subject to frequent change, which increases the risk that the Group may be found non-compliant. The business of mineral exploration, project development, mining and processing is subject to various national and local laws and plans relating to: permitting and maintenance of title; environmental consents; taxation; employee relations; heritage/historic matters; health and safety; royalties; land acquisition; and other matters. There is a risk that the necessary permits, consents, authorisations and agreements to implement planned exploration, project development, or mining may not be obtained under conditions or within time frames that make such plans economic, that applicable laws, regulations or the governing authorities will change or that such changes will result in additional material expenditures or time delays.

The Group’s leases may not be renewed at all or may be renewed only on terms and/or conditions which are unacceptable or impractical to the Group The Group’s leases are due to expire on the following dates: • ML136 (Simberi), 2 December 2018; • GRML Mining Lease (Gold Ridge), 11 March 2022; and • SPL 194 is an exclusive prospecting licence which has no fixed expiry date, but which will expire upon the ‘‘commencement of preliminary works’’ as defined in the assignment agreement dated 12 May 2005 pursuant to which the licence was granted to the Group. Please refer to paragraph 2 of Section B of ‘‘Part IV—Solomon Islands’’ for further information.

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Renewal of these licences is outside of the group’s control, and such renewal cannot be guaranteed. Further, renewal may only be granted on terms or subject to conditions that are commercially or operationally unacceptable or impractical to the Group. Should this occur, this could have a material adverse effect on the Group’s business, prospects, financial condition and results of operations. Further, EL 609 held by the Group in relation to Simberi expired on 5 May 2011 and is currently the subject of an application for renewal for an additional two year term which has not yet been processed, failing which the Group’s rights to EL 609 may be forfeited. Although the Group has no reason to believe that EL 609 will not be renewed for an additional two year term, there can be no assurance that this will be the case. Any failure to renew EL 609 may have a material adverse effect on the market price of the Ordinary Shares due to the loss of any perceived exploration upside, but will have no effect on current production or operations of the Group. In any event, pending its renewal, EL 609 is held over on a statutory basis in favour of the licence holder, Nord Australex Nominees (PNG) Ltd and the Group can seek a judicial review of any decision not to renew EL 609. Detailed descriptions of the Group’s mining and exploration leases and licences can be found in Section B of ‘‘Part III—Papua New Guinea’’ and Section B of ‘‘Part IV—Solomon Islands’’ in this Prospectus.

The Group’s properties are subject to environmental risks Mining operations have inherent risks and liabilities associated with pollution of the environment and the disposal of waste products occurring as a result of mineral exploration and production. Environmental hazards may exist on the properties on which the Group holds interests which are unknown to the Group at present and which may have been caused by previous or existing owners or operators of the properties. Reclamation costs are uncertain and planned expenditures may differ from the actual expenditures required.

The Group is subject to significant environmental regulations The Group’s operations involve the use of environmentally hazardous materials as well as the discharge of materials and contaminants into the environment, disturbance of land, and other environmental concerns. The activities of the Group are subject to significant environmental regulations promulgated by relevant governmental authorities and other agencies periodically. Environmental legislation generally provides for the remediation of mining sites which may require significant capital expenditure. These laws and regulations, as interpreted by relevant agencies and courts, impose increasingly stringent environmental protection standards regarding, among other things, air emissions, wastewater storage, treatment and discharges, the use and handling of hazardous or toxic materials, waste disposal practices and remediation of environmental contamination. The costs of complying with these laws and regulations, including participation in assessments and remediation of sites, could be significant. In addition, these standards can create the risk of substantial environmental liabilities, including liabilities associated with divested assets and past activities. Environmental matters cannot be predicted with certainty, and amounts required to establish and maintain adequate provision for environmental liabilities may be significant, especially in light of potential changes in environmental conditions or the discovery of previously unknown environmental conditions, the risk of governmental orders to carry out compliance on certain sites not initially included in remediation in progress, and the potential liability of the Group to remediate sites for which provisions have not been previously established. Such future developments could result in increased environmental costs and liabilities that could have a material adverse effect on the Group’s business, assets, financial position and results of operations.

The Group’s insurance coverage does not cover all of its potential losses, liabilities and damages related to its business and certain risks are uninsured or uninsurable The Group’s business is subject to a number of risks and hazards generally, including adverse environmental conditions, industrial accidents, labour disputes or slowdowns, unusual or unexpected geological conditions, ground or slope failures, cave-ins, changes in the regulatory environment or laws, and natural phenomena such as inclement weather conditions, floods and earthquakes. Such occurrences could result in damage to mineral properties or production facilities, personal injury or death, environmental damage to the Group’s properties or the properties of others, delays in development or mining, monetary losses and possible legal liability.

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Although the Group maintains insurance to protect against certain risks in such amounts as it considers to be reasonable, its insurance will not cover all the potential risks associated with its operations. The Group may also be unable to maintain insurance to cover these risks at economically feasible premiums. Insurance coverage may not continue to be available or may not be adequate to cover any resulting liability. Moreover, insurance against risks such as environmental pollution or other hazards as a result of exploration and production is not generally available to the Group or to other companies in the mining industry on acceptable terms. The Group might also become subject to liability for pollution or other hazards which may not be insured against or which the Group may elect not to insure against because of premium costs or other reasons. Losses from these events may cause the Group to incur significant costs that could have a material adverse effect upon its financial performance and results of operations.

The development of the Group’s business may require substantial capital expenditure and lead times to operation which in the longer term may require external financing that may not be available The mining business is capital intensive and the development and exploration of gold and the acquisition of the related machinery and equipment require substantial capital expenditure and lead times until such machinery and equipment is operational. Further exploration and development over the longer term may be dependent upon the Group’s ability to obtain financing through the raising of additional equity or debt financing or other means. The Group’s net cash reserves are sufficient to fund current and anticipated capital expenditure requirements until the beginning of 2013. However, the Group’s implementation of projects requiring such capital expenditure involves risks associated with such projects such as cost over-runs, delays in implementation, technical and economic viability risks and changes in market conditions. Accordingly, the Group in the longer term may elect to raise funds through the issuance of equity securities or the issuance of debt instruments or other securities convertible into Ordinary Shares. Any such additional equity financing may be dilutive to Shareholders, and debt financing, if available, may involve restrictions on financing and operating activities. There can be no assurance that additional funding required by the Group will be made available to it and, if such funding is available, that it will be offered on reasonable terms. If the Group is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations or anticipated expansion, which may have a material adverse effect on the Group’s business, revenues, financial condition, results of operations or prospects or the trading price of the Ordinary Shares. The Group cannot predict the size of future issuances of equity securities or the issuance of debt instruments or other securities convertible into shares or the effect, if any, that future issuances and sales of the Group’s securities will have on the market price of the Group’s ordinary shares.

Increased competition could adversely affect the Group’s ability to acquire suitable producing properties or prospects for mineral exploration in the future Increased competition in the gold exploration, mining and production business could adversely affect the Group’s ability to develop its properties. The Group competes with numerous individuals and companies, including major mining companies, many of which have greater financial and operational resources than the Group. There is a high degree of competition for the discovery and acquisition of properties considered to have commercial potential. The Group competes with other mining companies for the acquisition of mineral claims, leases and other mineral interests as well as for the recruitment and retention of qualified employees and other personnel. The intensity of competition, combined with the cyclicality and unpredictability of the gold market, results in significant variations in economic performance, which may lead to a change in the Group’s strategy. Further, the recent marked increase in activity in the global mining industry has lead to excess demand for key production inputs, such as heavy vehicles, chemicals and specialist contractors, resulting in unavailability of, or long lead times for, plant, equipment and services and/or material increases in the prices at which such inputs can be obtained. The Group does not have in place long term supply contracts for its raw materials. As a result, the Group may be unable to continue to source such inputs on commercially acceptable terms, or at all, or may experience significant delays in doing so, any of which could have a material adverse effect on the Group’s ability to develop Simberi and/or Gold Ridge on schedule, within budget, or at all, and on the Group’s business, costs, results of operations and overall financial condition.

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The Group has sought to establish supplies of, and relationships with suppliers of, all the materials required to continue its operations, but there can be no guarantee that these supplies or relationships will continue. Furthermore, competitors with greater financial resources and larger order books may be favoured by suppliers where materials are in relatively short supply. Any lack in or delay of the supply of these materials could materially reduce production levels or delay the development of the Group’s projects and prospects and thereby negatively and materially affect its results of operations. If the Group is forced to change a supplier of such materials, there is no guarantee that this would not result in the Group experiencing additional costs or interruptions to supply continuity. There is also no guarantee that the Group will be able to find adequate replacement materials or services on a timely basis or at all.

Precious metal exploration projects may not be successful and are highly speculative in nature The exploration for, and development of, precious metals involves significant risks which even a combination of careful evaluation, experience and knowledge cannot eliminate. While the discovery of a precious metal deposit may result in substantial rewards, few properties which are explored are ultimately profitable. Major expenses may be required to locate and establish mineral reserves, to develop metallurgical processes and to construct mining and processing facilities at a particular site. Whether a precious metal deposit will be commercially viable depends on a number of factors, some of which are: the particular attributes of the deposit, such as size, grade and proximity to infrastructure; metal prices which are highly cyclical; and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of precious metals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in the Group not receiving an adequate return on invested capital. There is no certainty that the expenditures made by the Group towards the search and evaluation of precious metal deposits will result in discoveries of commercial quantities of such metals.

Land reclamation requirements for exploration properties may be burdensome and may divert funds from the Group’s exploration programs Although variable, depending on location and the governing authority, land reclamation requirements are generally imposed on mineral exploration companies, as well as companies with mining operations, in order to minimise long term effects of land disturbance. Reclamation may include requirements to control dispersion of potentially deleterious effluents and to reasonably re-establish pre-disturbance land forms and vegetation. In order to carry out reclamation obligations imposed on the Group in connection with its mineral exploration, the Group must allocate financial resources that might otherwise be spent on further exploration programs.

Gold price volatility may affect the future production, profitability, financial position and financial condition of the Group The Group derives substantially all of its revenues from the sale of gold. The Group generally sells its products on the spot market at market prices. Accordingly, the Group’s financial results largely depend on the price of gold. The gold market is cyclical and sensitive to changes in general economic conditions, and may be subject to significant volatility. The development and success of Simberi and Gold Ridge will be primarily dependent on the future price of gold. Gold prices are subject to significant fluctuation and are affected by a number of factors which are beyond the control of the Group. Such factors include, but are not limited to, interest rates, exchange rates, inflation or deflation, fluctuation in the value of the United States dollar and foreign currencies, global and regional supply and demand, and the political and economic conditions of major gold-producing countries throughout the world. The price of gold and other base and precious metals has fluctuated widely in recent years, and future serious price declines could cause continued development of, and commercial production from, the Group’s properties to be impracticable or uneconomic. A significant drop in the gold price, by more than 50 per cent. from its current level, may render projected cash flow from planned mining operations insufficient and the Group could be forced to discontinue production or future development. Please refer to paragraph 5 of ‘‘Part V—Market and Industry Overview’’ for consideration of gold price trends. Future production from the Group’s mining properties is dependent on gold prices that are adequate to make these properties economically viable. Furthermore, reserve calculations and life-of-mine plans using significantly lower gold prices could result in material write-downs of the Group’s investment in mining properties and increased amortisation, reclamation and closure charges. In addition to adversely

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affecting the Group’s mineral reserve estimates and its financial condition, declining commodity prices can impact operations by requiring a reassessment of the feasibility of a particular project. Such a reassessment may be the result of a management decision or may be required under financing arrangements related to a particular project. Even if the project is ultimately determined to be economically viable, the need to conduct such a reassessment may cause substantial delays or may interrupt operations until the reassessment can be completed.

The Group’s operations are subject to extensive governmental and environmental regulations, which could cause it to incur costs that adversely affect its results of operations The Group’s mining facilities and operations are subject to a significant number of laws and government regulations, concerning taxation, the employment of expatriates, labour standards, mine safety, land use, environmental protection and historic and cultural preservation. The Group must comply with requirements regarding exploration operations, public safety, employee health and safety, use of explosives and other hazardous materials, air quality, water pollution, noxious odour, noise and dust controls, reclamation, solid waste, hazardous waste and wildlife as well as laws protecting the rights of other property owners and the public. Any failure on the Group’s part to comply with these laws, regulations, and requirements with respect to its properties and/or its operations could result in the Group being subject to substantial penalties, fees and expenses, significant delays in its operations or even the complete shutdown of its operations. Contravention of these laws and regulations could also lead to the imposition of criminal sanctions. The costs associated with compliance with government regulations may ultimately be material and adversely affect the Group’s results of operations and financial condition.

The Group is subject to extensive licensing and other legal and regulatory requirements, non-compliance with which may result in material adverse consequences for the Group The Group’s current and future operations are subject to exploration, development, exploitation and mining licences, leases, licences, concessions and regulatory consents and approvals (collectively, Authorisations) from the government and regulatory authorities in the territories in which it operates. Whilst the Directors believe that the Group has obtained all Authorisations that are material in the context of the Group’s business as it is now conducted, there can be no assurance that it has every necessary or desirable Authorisation, that the Authorisations required to carry on the Group’s operations will not change or that the Group will be able to successfully enforce its current Authorisations, or that it will obtain any additional Authorisations that may be required in the future. Certain Authorisations may, or may in the future, contain onerous conditions with which the Group may not be able to comply or on terms which include PNG or Solomon Islands government participation, which may impact on the results, operations or financial conditions or prospects of the Group. A failure to comply with an obligation in an Authorisation may result in adverse consequences for the Group, including the termination of that Authorisation. There can also be no assurance that any existing or future Authorisations will be renewed following their expiry or that the terms of any such renewed Authorisations will be renewed following their expiry or that the terms of any such renewed Authorisations will be commercially acceptable. Obtaining new permits and rights or renewals of existing permits and rights can be a complex and time-consuming process and the Group cannot guarantee whether any necessary permits or rights will be obtained on acceptable terms, in a timely manner, or at all. The costs and delays associated with obtaining necessary permits or rights (or renewals thereof) could stop, delay or restrict the Group’s operations and any planned development. Conditions may be imposed on such Authorisations that may affect the viability of operations at Simberi or Gold Ridge, including payment and any other obligations. Failure to obtain, renew, enforce or comply with one or more Authorisations could have a material adverse effect on the Group’s prospects, business, results of operations and prospects.

The Group may face the risk of litigation in connection with its business and/or other activities The Group may from time to time face the risk of litigation in connection with its business and/or other activities. Recovery may be sought against the Group for large and/or indeterminate amounts and the existence and scope of liabilities may remain unknown for substantial periods of time. A substantial legal liability and/or an adverse ruling could have a material adverse affect on the Group’s business, results of operation and/or financial condition.

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Global economic conditions could adversely affect the profitability of the Group’s operations The Group’s operations and performance depend significantly on worldwide economic conditions. The current turmoil affecting the banking system and financial markets has resulted in major financial institutions consolidating or going out of business, the tightening of credit markets, significantly lower liquidity in most financial markets, and extreme volatility in fixed income, credit, currency, commodities and equity markets. In addition, general economic indicators have deteriorated, including declining consumer sentiment, increased unemployment and declining or negative economic growth and uncertainty regarding corporate earnings. These disruptions in the financial markets and the global economic downturn may have follow-on material adverse effects on the Group’s business, results of operations and financial condition. For example: • the insolvency of key suppliers could result in a supply chain break-down; • the reduced creditworthiness and possible insolvency of key customers for concentrate could result in lower sales and revenue; • the absence of available credit may make it more difficult for the Group to obtain, or may increase the cost of obtaining, financing for the Group’s operations and capital expenditures were the Group to elect to raise such financing in the future; and • the market value of the Ordinary Shares may become volatile.

Adverse publicity from consumer and environmental groups could have an adverse effect on the reputation and financial position of the Group There is an increasing level of consumer awareness relating to the effect of mining exploration and production on its surroundings, communities and the environment. Consumer and environmental groups therefore exist to encourage participants in the mining industry to employ practices which minimise any adverse impact that mining may have on communities, workers and the environment and also to lobby governments for the introduction of additional environmental and social policies, regulation and legislation. Whilst the Group seeks to operate in a socially responsible manner, changes to governmental policy and adverse publicity generated by such consumer groups which either relates to the gold mining industry as a whole or to the Group in particular, could have an adverse effect on the reputation and financial position of the Group. For example, the Group has recently received a degree of negative media coverage in relation to the leak from the tailings and mixing tank in March 2011 (for further details please refer to paragraph 6 of ‘‘Part I—Information on the Group’’).

RISKS RELATING TO THE TERRITORIES IN WHICH THE GROUP OPERATES Emerging markets such as those in which the Group currently operates are subject to greater risks than more developed markets and any material adverse effect on the economies of such markets could disrupt the Group’s business Generally, investment in companies with a significant proportion of their assets located in emerging markets is only suitable for sophisticated investors who fully appreciate the significance of the risks involved in, and are familiar with, investing in such companies. Emerging markets such as those in which the Group currently operates are subject to rapid change. Moreover, financial turmoil in any emerging market country tends to adversely affect prices in equity markets of all emerging market countries as investors move their money to more stable, developed markets. In the event that there is an economic crisis in any of the jurisdictions in which the Group operates, the Group may face severe difficulties in the operation of its business and the value of its assets in such jurisdictions may decrease, resulting in a material adverse effect on the financial condition of the Group. The group currently has in place approvals that permit the Group to operate foreign currency bank accounts and hold and exchange currencies in accordance with its business and liquidity requirements. Should the central bank in either PNG or the Solomon Islands alter the Group’s existing foreign exchange approvals, there is a risk that the Group may be forced to hold PGK or SBD and that it may not be able convert these funds into foreign currency when required to pay dividends to Shareholders outside PNG or the Solomon Islands without the appropriate authority’s prior approval.

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The Group’s current and proposed exploration and mining activities are in PNG and the Solomon Islands. Investments and operations in PNG and the Solomon Islands are subject to numerous risks associated with operating in those jurisdictions The Group is conducting its exploration and development activities predominantly in PNG and the Solomon Islands, and as such the Group’s foreign mining investments are subject to the risks normally associated with the conduct of business in foreign countries. The occurrence of one or more of these risks could have a material adverse effect on the Group’s profitability or the viability of its affected foreign operations, which could have a material adverse effect on the Group’s future cash flows, earnings, results of operations and financial condition. Risks may include, among others, labour disputes, invalidation of governmental orders and permits, uncertain political and economic environments, sovereign risk, war (including in neighbouring states), civil disturbances and terrorist actions, arbitrary changes in laws or policies of particular countries, the failure of foreign parties to honour contractual relations, corruption, foreign taxation, delays in obtaining or the inability to obtain necessary governmental permits, opposition to mining from environmental or other non-governmental organisations, limitations on foreign ownership, limitations on the repatriation of earnings, limitations on gold exports, instability due to economic under-development, inadequate infrastructure and increased financing costs. In addition, the enforcement by the Group of its legal rights to exploit its properties may not be recognised by the governments of PNG or the Solomon Islands or by the court systems in those jurisdictions. These risks may limit or disrupt the Group’s operations, restrict the movement of funds or result in the deprivation of contractual rights or the taking of property by nationalisation or expropriation without fair compensation. The economies and political systems of PNG and the Solomon Islands should be considered by investors to be less predictable than those in countries in which the majority of Shareholders are likely to be resident. The possibility that the current, or future, governments of PNG or the Solomon Islands may adopt substantially different policies in respect of foreign development and ownership of mineral resources, take arbitrary action which might halt production, extend to the re-nationalisation of private assets or the cancellation of contracts, the cancellation of mining and exploration rights and/or changes in taxation treatment cannot be ruled out, the happening of any of which could result in a material and adverse effect on the Group’s results of operations and financial condition. Please refer to ‘‘Part III—Papua New Guinea’’ and ‘‘Part IV—Solomon Islands’’ for detailed consideration of the economies of those jurisdictions in which the Group operates.

The successful development and operation of the Group’s assets depends on adequate infrastructure The Group’s principal operations are located in remote areas which are difficult to access, some of which have harsh climates, resulting in technical challenges and logistical challenges for conducting both geological exploration and mining. Reliable roads, bridges, power sources and water supplies are important determinants which affect capital and operating costs and the Group’s ability to maintain expected levels of progress with its exploration activities. Unusual weather or other natural phenomena, sabotage or government or other interference in the maintenance or provision of such infrastructure could impact on the development of the Group’s projects and effective supply chain management, increase exploration costs or delay the transportation of supplies, equipment or machinery to the Group’s projects. Any such issues in respect of the Group’s supply chain and/or infrastructure supporting the Group’s projects could materially and adversely affect the Group’s business, results of operations, financial condition and prospects. Communications infrastructure at the Group’s projects is primarily comprised of satellite links provided by a third party service provider, Pactel International Pty Ltd. Communication by means of satellite link is subject to service interruptions caused by, among other factors, climatic conditions, solar activity and equipment failure. Such communications outages can, in certain cases, be predicted but can also happen without warning. Prolonged communications black-outs may disrupt the Group’s operations at Simberi and Gold Ridge and affect the Group’s ability to continue to efficiently explore and develop those properties. There is a possibility of shipping delays and storage capacity problems at Port Moresby, Lae and other wharves through which Simberi Gold may need to ship goods. There are presently problems with port congestion in Port Moresby and delays could have a material effect on the operations and the financial performance of the Group. However, to date the Group has not experienced any material problems. The Group mitigates against shipping delays by maintaining inventory stocks sufficient to withstand

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shortage as a result of shipping delays, by having its own small ship and voyage chartering vessels for specific larger cargoes. Simberi Gold is heavily dependent on air transport for personnel, smaller freight and gold dore. Simberi Gold has sought to ensure reliance in air transport services by contracting an air transport provider with a substantial fleet of common aircraft of mature design. A risk remains that if this service provider did not operate for any reason, due to a limited number of alternative providers, air transport disruptions may occur.

Operational failures, the impact of climatic conditions and other unscheduled interruptions could have a material adverse impact on the financial performance of the Group’s operations The achievement of the Group’s operational targets will be subject to the completion of planned operational goals on time and according to budget, and will be dependent on the effective support of the Group’s personnel, systems, procedures and controls. Any failure of these may result in delays in the achievement of operational targets with a consequent material adverse impact on the business, operations and financial performance of the Group. The location of the Group’s assets means that geological activity and climatic conditions may have an impact on operations and, in particular, severe weather could disrupt operations, including the delivery of supplies, equipment and fuel. Both PNG and the Solomon Islands experience severe volcanic activity and frequent seismological activity, such as earthquakes, tremors and tsunamis. It is, therefore, possible that exploration and extraction activity levels may fall or cease completely as a result of such meteorological and/or geological factors. The countries in which the Group operates are susceptible to seasonal rains and rainfall caused by tropical cyclones. Such rains, if heavy and sustained, could limit the Group’s mining operations and further hinder the supply of resources to such assets resulting in a material adverse effect on gold exploration during such periods. Unscheduled interruptions in the Group’s operations due to mechanical or other failures or industrial relations related issues or problems or issues with the supply of goods or services may occur and could have a material adverse impact on the financial performance of those operations.

External perceptions of PNG and the Solomon Islands may adversely affect the market price of securities of companies operating in PNG and the Solomon Islands, including the Ordinary Shares, and increase the Group’s cost of capital External perceptions of PNG and the Solomon Islands with respect to political and economic instability and civil unrest may have an adverse effect on the market value of securities of issuers operating in PNG and the Solomon Islands, including the Ordinary Shares. This could adversely affect the market price of the Ordinary Shares, and could also make it more difficult for the Group to gain access to the capital markets and finance its operations in the future on acceptable terms or at all and otherwise have a material adverse effect on its business.

Dispute resolution may be less efficient than in the United Kingdom The Group may face greater difficulty in securing legal redress through legal dispute resolution mechanisms than would be encountered if the operations were entirely within the United Kingdom, and access to the courts and other dispute resolution processes may be delayed or be more difficult obtain. This may be caused by: (i) practical difficulties in obtaining access to legal redress otherwise available in the courts of PNG and/or the Solomon Islands, whether in respect of a breach of law or regulation, or in an ownership dispute; (ii) less disciplined exercise of statutory discretions on the part of discretion holders; (iii) the lack of administrative guidance on interpreting applicable rules and regulations; or (iv) inconsistencies or conflicts between and within various laws, regulations, decrees, orders and resolutions. The commitments of local business people, government officials and agencies and the judicial system to abide by legal requirements and negotiated agreements may be more uncertain, creating particular

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concerns with respect to licences and agreements for business. These may be susceptible to revision or cancellation and legal redress may be uncertain or delayed.

Civil unrest in PNG and/or the Solomon Islands may disrupt the Group’s operations in those territories There have been instances of civil unrest and insurrection within PNG and the Solomon Islands in the past. Although the Directors believe that the risk of future civil insurrection on Simberi Island, the Tabar Islands in general or on Guadalcanal Island is unlikely, there can be no assurance that the people of those regions will not disrupt operations at the Group’s mine sites in the future. Sporadic outbreaks of tribal fighting in PNG are a normal occurrence, especially near Port Moresby and in the Highlands Provinces (particularly the Southern and Western Highlands and Enga Provinces) with the most recent being in January 2011 in and around the settlements of Port Moresby. Recently there have also been outbreaks of violence and looting against local Asian-owned businesses in Port Moresby, Mount Hagen and several other population centres across PNG. In late 1998, the Solomon Islands entered into a period of prolonged ethnic tension (known as the ‘‘tensions’’). The tensions included a paramilitary coup in June 2000 and a change of government. Peace was brokered through what is known as the Townsville Peace Accord in October 2000. However, following the signing of the Peace Accord there was a breakdown in law and order accompanied by a severe economic recession. During this period many overseas investors withdrew from the Solomon Islands. In July 2003, the Regional Assistance Mission to the Solomon Islands (RAMSI), at the invitation of the Solomon Islands government, intervened in the continuing tensions. RAMSI is led by Australia but has components from PNG and other pacific nations. The Directors believe that, since intervention by RAMSI, there has been a considerable improvement in security in the Solomon Islands and the investment climate is such that investors have returned. Nevertheless, there is a risk that there may be a return to the period of ethnic conflict, although the presence of RAMSI should help to reduce the risk. The Directors understand that RAMSI is likely to remain in the Solomon Islands until around 2013. Following the withdrawal of RAMSI there is a risk that the Solomon Islands could experience a renewed outbreak of ethnic violence and widespread lawlessness. If this were to happen, the Group’s operations at Gold Ridge may be disrupted. The Group mitigates against civil unrest and disorder by having a community relations department which interacts with the communities in which the Group operates.

Political instability in PNG and/or the Solomon Islands may disrupt the Group’s operations in those territories The Group’s mining operations are subject to political, economic and other uncertainties, including the risk of civil rebellion, expropriation, nationalisation, renegotiation or nullification of existing contracts, mining licenses and permits or other agreements, changes in laws or taxation policies, currency exchange restrictions, changing political conditions and international monetary fluctuations. Future PNG or Solomons Islands government actions concerning the economy or the operation and regulation of nationally important facilities such as mines could have a significant effect on the company. No assurances can be given that the Group’s operation will not be adversely affected by future developments in PNG or the Solomon Islands. Fiscal and tax policy in PNG can be uncertain and subject to sudden changes. For example, the PNG government imposed and later replaced a 4 per cent mining levy and 15 per cent withholding tax on interest in 1998 and 1999. In addition to the PNG national government, PNG has a system of 19 provincial level governments, which are funded almost entirely by direct grants from the PNG national government. In the past, there have been disagreements between the PNG national government and the provincial level governments of PNG, primarily in relation to power sharing and revenue arrangements.

Land ownership disputes in PNG and/or the Solomon Islands may disrupt the Group’s operations in those territories Since 1978, the PNG government has maintained a policy of holding an equity participation option of up to 30 per cent in mining projects located in PNG. This equity has been purchased on a historical or sunk cost basis. In 1992, the previous PNG government announced a decision to increase the PNG government’s equity interest in an existing gold project at Porgera and renegotiated that interest from

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10 per cent to 25 per cent. Although the other joint venture partners in the Porgera project resisted this move, a price was ultimately negotiated and accepted by all parties. The Group is not aware of any current intention on the part of the PNG government to seek equity participation in its PNG projects. No assurance can be given that the PNG government will not seek to acquire equity in the Simberi or other Tabar Islands properties in the future. In the past the PNG government has taken equity only in major mining projects of national significance. Approximately 97 per cent of land in PNG is held under a land tenure system, the nature and terms of which vary considerably throughout the country. In general, land held under such tenure is almost entirely communally owned and cannot be alienated other than through being acquired by the State. The extent of land which has been acquired by the State is quite limited. Simberi Gold and Nord Australex Nominees (PNG) Limited hold two State Leases, a Mining Lease and an Exploration licence. The land comprised in the State Leases has been acquired in the past by the State (or its predecessors) from the customary owners. Once the State has acquired land, the original customary ‘traditional’ landowners should have no further claims in respect of it and leases from the State over such land should be inviolable. However, at various times ‘traditional’ landowners have exercised considerable pressure by way of demands for additional compensation for land previously acquired by the State and legal challenges against the acquisition process. There have been isolated instances of threatened violence against holders of State leases. In 1993, the settlers growing oil palm on the Kavugara Land Settlement Scheme, which is about 40 km from Kimbe on the Talasea Peninsula, were evacuated under threats of violence from the ‘‘traditional’’ landowners and most of the settlers left the area. Title to most land in PNG has not been recorded or registered and there has been little surveying. As a result, title to land (in Western legal terms) is often unclear. Disputes over land ownership are common, especially in the context of resource developments. Identifying all the affected landowners, and structuring compensation arrangements that are both fair and acceptable to all of them, can be difficult. The Group believes that the satisfactory resolution of local landowner concerns is essential to the development and operation of a mine in PNG and believes that it enjoys sound relationships with the affected landowners. The Group has always been committed to spending considerable time, effort and expense in order to resolve landowner issues relating to the Simberi operation, but there can be no assurance that disruptions arising out of landowner dissatisfaction will not occur. As is the case in the UK, the PNG Government has limited powers under various statutes to acquire private property compulsorily if it is required for public purposes. Furthermore, the PNG National Parliament, in exercise of its sovereign power, could enact legislation to expropriate specific private property. While there are constitutional protections against the unjust acquisition of property owned by PNG citizens, no such protection is afforded to foreign enterprises. The Directors are not aware of any specific issues that might lead to the expropriation of the Group’s assets in PNG or in the Solomon Islands, and do not know of any case where this power has been exercised where companies are being properly managed and operating within their licences. However, the risk remains that this power could be exercised against the Group and there can be no assurance that any compensation would reflect what the Group considered to be the market value of the relevant assets. As is the case in PNG, the vast majority of land in the Solomon Islands is held by tribal communities under various customary land tenure systems that can vary from province to province. Customary land disputes are common particularly where logging and other commercial operations are concerned. The land contained within the Gold Ridge Mining Lease is registered under the Land and Titles Act and, as a result, the owners of the registered interests or estates in the land have the protection afforded to them by the Land and Titles Act. However, no assurance can be given that complaints from landowners will not occur but, as stated above, the Group recognizes the importance to the operation of maintaining good relationships with the affected landowners and of resolving issues that may, from time to time, arise.

RISKS RELATING TO THE ORDINARY SHARES The Ordinary Shares are publicly traded and are subject to various factors that may contribute to volatility in their price The market price of the Ordinary Shares could fluctuate significantly based on a number of factors in addition to those listed in this Prospectus, including: • the Company’s operating performance and the performance of competitors and other similar companies;

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• the public’s reaction to the Company’s press releases, other public announcements and the Company’s filings with various securities regulatory authorities; • changes in earnings estimates or recommendations by research analysts who track the Ordinary Shares or the shares of other companies in the resource sector; • changes in general economic conditions; • the number of Ordinary Shares publicly traded; • the arrival or departure of key personnel; • acquisitions, strategic alliances or joint ventures involving the Company or its competitors; and • the factors listed under the heading ‘‘Forward-Looking Statements’’ in the ‘‘Important Information’’ section of this Prospectus. In addition, the market price of the Ordinary Shares is affected by many variables not directly related to the Company’s success and are therefore not within the Company’s control, including other developments that affect the market for all resource sector shares, the breadth of the public market for the Ordinary Shares, and the attractiveness of alternative investments.

The Company has no dividend payment policy and does not intend to pay any cash dividends in the foreseeable future The Company has not declared or paid any dividends on the Ordinary Shares and does not currently have a policy on the payment of dividends. For the foreseeable future, the Company anticipates that it will retain future earnings and other cash resources for the operation and developments of its business. The payment of any future dividends will depend upon earnings and the Company’s financial condition, current and anticipated cash needs and such other factors as the Directors consider appropriate.

The Company may be considered a ‘‘passive foreign investment company’’, which may have adverse US tax consequences for US Holders The Company has not made a determination as to whether it is a PFIC for US federal income tax purposes, it is possible that the Company will be classified as a PFIC for US federal income tax purposes. PFIC status is fundamentally factual in nature, generally cannot be determined until the close of the taxable year in question and is determined annually. An investment in a PFIC may have materially adverse US federal income tax consequences to a US Holder, including subjecting the US Holder to a greater tax liability than may otherwise apply. If a US Holder holding Ordinary Shares is treated as owning stock of a PFIC, any gain recognised by such person upon a sale or other disposal of Ordinary Shares generally will be treated as ordinary income (rather than capital gain), and any resulting US federal income tax may be increased by an interest charge on taxes that are considered deferred. Rules similar to those applicable to disposals generally will apply to certain excess distributions in respect of an Ordinary Share. A US Holder generally may avoid some of these unfavourable US federal income tax consequences by making a QEF election, or alternatively, making a mark-to-market election, with respect to an investment in certain PFICs. The Company does not expect to provide information necessary for a US Holder to make a QEF election. In addition, if the Company is a PFIC and, at any time, has a non-US subsidiary that is classified as a PFIC, US Holders of Ordinary Shares generally would be deemed to own, and also would be subject to the PFIC rules with respect to, their indirect ownership interests in that lower-tier PFIC. If the Company is a PFIC, the US Holder could incur liability for the deferred tax and interest charge described above if either (1) the Company receives a distribution from, or disposes of all or part of its interest in, the lower-tier PFIC or (2) the US Holder disposes of all or part of its Ordinary Shares. A mark-to-market election under the PFIC rules with respect to Ordinary Shares would not apply to a lower tier PFIC, and a US Holder would not be able to make such a mark-to-market election in respect of its indirect ownership interest in that lower-tier PFIC. Consequently, US Holders of Ordinary Shares could be subject to the PFIC rules with respect to income of the lower-tier PFIC the value of which already had been taken into account indirectly via mark-to-market adjustments. Prospective investors should consult with their legal advisers regarding PFIC issues before investing in the Ordinary Shares.

Further issuances of the Company’s Ordinary Shares may be dilutive to Shareholders It is possible that the Company may decide to offer additional new Ordinary Shares in the longer term either to raise capital or for other purposes. If Shareholders did not take up such an offer of Ordinary

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Shares, their proportionate ownership and voting interests in the Company would be reduced and the percentage that their Ordinary Shares would represent of the total share capital of the Company would be reduced accordingly. An additional offering could have a material adverse effect on the market price of the Company’s Ordinary Shares as a whole.

Holders of Ordinary Shares outside the United Kingdom may not be able to exercise their pre-emption rights In the case of an allotment of Ordinary Shares for cash, existing Shareholders are entitled to pre-emption rights unless waived by a resolution of the Shareholders at a general meeting or in certain circumstances as stated in the Articles. If the Company allots Ordinary Shares for cash in the future and pre-emption rights are not waived, Shareholders outside the United Kingdom may not be able to exercise their pre-emption rights for Ordinary Shares unless the Company decides to comply with applicable local laws and regulations and, in the case of holders of Ordinary Shares in the United States, a registration statement under the Securities Act is effective with respect to such rights and Ordinary Shares, or an exemption from the registration requirements of the Securities Act is available. The Company intends to evaluate at the time of any rights or similar offering the costs and potential liabilities associated with any such registration statement or an exemption from registration, as well as the indirect benefits of enabling holders of the Ordinary Shares in the United States to exercise any pre-emptive rights for Ordinary Shares and any other factors considered appropriate at the time, and then to make a decision as to how to proceed. The Company will make a similar evaluation in relation to Shareholders resident in other jurisdictions outside the United Kingdom. The Company cannot assure its Shareholders outside the United Kingdom that steps will be taken to enable them to exercise their pre-emption rights, or to permit them to receive any proceeds or other amounts relating to their pre-emption rights.

The Company has applied for the Ordinary Shares to be admitted to trading on the Main Market and on the TSX, and for the CHESS Depositary Interests to be admitted to the official list of the ASX and to be quoted on the stockmarket conducted by the ASX. The Company has received conditional approval for the listing of the Ordinary Shares on the TSX conditional on the Company fulfilling all the listing requirements The Company has applied for the Ordinary Shares to be admitted to trading on the Main Market and on the TSX, and for the CDIs to be admitted to the official list of the ASX and to be quoted on the stock market conducted by the ASX. The Company has received approval for the listing of the Ordinary Shares on the TSX. The ultimate listing of the Ordinary Shares on the TSX is subject to the company satisfying the requirements of the TSX, including filing with the TSX (i) a notarial or certified copy of the court order approving the scheme, (ii) an opinion of counsel that all the necessary steps have been taken to validly effect the Scheme, (iii) a written notice from CDS disclosing the CUSIP number associated with the Ordinary Shares, (iv) the substitutional listing fee and (v) a copy of the Letters of Transmittal. Should the Ordinary Shares be listed on the TSX, the TSX may de-list the Ordinary Shares if it determines that the public distribution, price, or trading activity of the Ordinary Shares has been so reduced as to make further dealings in the securities on TSX unwarranted. If the Ordinary Shares are de-listed from the TSX, this may lead to reputational harm to the Company or the Group, and a lack of liquidity for those Ordinary Shares traded on the TSX.

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DIRECTORS, SECRETARY, REGISTERED OFFICE AND ADVISERS Directors Mark Caruso Executive Chairman Frank Terranova Executive Director Sean Harvey Non Executive Director Monty House Non Executive Director Anthony Lowrie Non Executive Director Gregory H Steemson Non Executive Director all of: 3 More London Riverside London SE1 2AQ United Kingdom

Company Secretary Peter Torre

Registered Office 3 More London Riverside London SE1 2AQ United Kingdom

Financial Adviser and Sponsor RBC Capital Markets 71 Queen Victoria Street London EC4V 4DE United Kingdom

Legal adviser to the Company Norton Rose LLP as to English and US law 3 More London Riverside London SE1 2AQ United Kingdom

Legal adviser to the Company Norton Rose Australia as to Australian law GPO Box 407 Brisbane QLD 4001 Australia

Legal adviser to the Company Norton Rose OR LLP as to Canadian law Suite 3800 Royal Bank Plaza, South Tower 200 Bay Street P.O. Box 84 Toronto, Ontario M5J 2Z4 Canada

Legal adviser to the Company O’Briens Lawyers as to PNG law Level 5, Defens Haus Cnr Champion Pde & Hunter St P.O. Box 389 Port Moresby Papua New Guinea

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Legal adviser to the Company Andrew Radclyffe as to Solomons Islands law Barrister and Solicitor First Floor Centrepoint Building Mendana Avenue PO Box 729 Honiara Solomon Islands

Legal adviser to the Allen & Overy LLP Financial Adviser and Sponsor One Bishops Square London E1 6AD United Kingdom

Auditors and Reporting BDO LLP Accountants 55 Baker Street London W1U 7EU United Kingdom

Mineral Experts Golder Associates Pty Ltd Level 2, Havelock Street West Perth, WA 6005 Australia BatteryLimits Pty Ltd Suite 5/162 Colin St West Perth, WA 6005 Australia

Registrar Computershare Investor Services PLC The Pavillions Bridgwater Road Bristol BS99 6ZY United Kingdom

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EXPECTED TIMETABLE OF PRINCIPAL EVENTS 2011 Publication of this document 17 June Court hearing to approve the Schemes 1.00 a.m. on 20 June Delivery of court order approving the Schemes 3.00 a.m. on 20 June Lodgement of court order approving the Schemes with ASIC 5.00 a.m. on 20 June Trading in Allied Gold shares on ASX suspended 7.00 a.m. on 20 June CDIs commence trading on ASX on a deferred settlement basis 10.00 p.m. on 20 June Schemes record date 27 June Allied Gold shares de-listed from TSX 9.00 p.m. on 29 June Trading in Allied Gold shares on AIM cancelled 8.00 a.m. on 30 June Implementation date for the Schemes 8.00 a.m. on 30 June Admission and commencement of dealings in Ordinary Shares on the 8.00 a.m. on 30 June London Stock Exchange Admission and commencement of dealings in Ordinary Shares on 2.30 p.m. on 30 June the TSX Allied Gold shares de-listed from trading on ASX 30 June Normal trading commences in CDIs on ASX 4 July

Each of the times and dates in the above timetable is subject to change without further notice. References to times are to London time unless otherwise stated.

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IMPORTANT INFORMATION General No person has been authorised to give any information or to make any representation other than those contained in this Prospectus and, if given or made, such information or representation must not be relied upon as having been authorised by or on behalf of the Company or the Directors. Without prejudice to any obligation of the Company to publish a supplementary prospectus pursuant to section 87G of the FSMA and PR 3.4.1 of the Prospectus Rules, the publication of this Prospectus shall not, under any circumstances, create any implication that there has been no change in the business or affairs of the Group since the date hereof. The contents of this Prospectus are not to be construed as legal, financial or tax advice. Each prospective investor should consult his or her own lawyer, financial adviser or tax adviser for legal, financial or tax advice.

The Group and the Pre-IPO Reorganisation Historically, the operations of the Group comprised the gold mining business of Allied Gold Limited and its subsidiaries. Allied Gold was incorporated under the Corporations Act 2001 (Commonwealth of Australia) (the Australian Corporations Act) as a public company limited by shares on 26 May 2003. Allied Gold listed on the ASX on 8 December 2003, was admitted to trading on AIM on 2 May 2006 and was admitted for trading on the TSX on 17 November 2009. Allied Gold’s registered office is located at Unit B9, 431 Roberts Road, Subiaco, Western Australia, 6008, Australia, and its head office is located at Building 23, Garden City Office Park, 2404 Logan Road, Eight Mile Plains, Queensland, 4113 Australia. Allied Gold also maintains offices in PNG and the Solomon Islands. The Group companies will be reorganised into a new corporate group and the Company will acquire its shareholding in Allied Gold pursuant to the Pre-IPO Reorganisation, which will be affected by way of a scheme of arrangement conducted pursuant to Australian law. The Company was incorporated in the United Kingdom on 7 March 2011. On 20 June 2011, Allied Gold and the Company will enter into the Share Scheme and Option Scheme pursuant to which (i) each Allied Gold shareholder will receive Ordinary Shares (and no other consideration) in return for their Allied shares; (ii) each Allied Gold Optionholder will receive Allied Gold Mining Options in return for their Allied Gold Options; and (iii) Allied Gold will issue a new series of shares to the Company and become a wholly-owned subsidiary of the Company. Following approval of the Share Scheme and Option Scheme by Allied Gold shareholders, and Court approval by the Australian court, Allied Gold will cease trading on AIM, TSX and ASX. It is intended that the Ordinary Shares will instead be traded on the Main Market and the TSX, with CDIs being traded on the ASX. Admission will not occur unless the Pre-IPO Reorganisation is successfully completed.

TSX The TSX has conditionally approved the listing of the Ordinary Shares following the completion of the Scheme of Arrangement, subject to the Company satisfying the requirements of the TSX. After giving effect to the Scheme of Arrangement, holders of Allied Gold shares will have exchanged their shares for shares in the Company. Like Allied Gold, the Company will be a reporting issuer in each of the Canadian provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and Nova Scotia, and therefore will be subject to the securities laws therein.

Presentation of financial information Unless otherwise indicated, financial information in this Prospectus has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS). The underlying financial information stated in local currency has been translated into Australian dollars on the basis set out in ‘‘Currencies’’ below. The financial information contained in ‘‘Part IX—Historical Financial Information’’ for the years ended 30 June 2008, 30 June 2009, 30 June 2010 and the six months ended 31 December 2010 has been audited.

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Rounding Percentages and certain amounts included in this Prospectus have been rounded for ease of presentation. Accordingly, figures shown as totals in certain tables may not be the precise sum of the figures that precede them.

Currencies In this Prospectus, references to ‘‘Papua New Guinean Kina’’ or to ‘‘PGK’’ are to the lawful currency of PNG; references to ‘‘Solomon Islands Dollar’’ or ‘‘SBD’’ are to the lawful currency of the Solomon Islands; references to ‘‘Canadian dollars’’, ‘‘CAD’’ or ‘‘C$’’ are to the lawful currency of Canada; references to ‘‘GBP’’, ‘‘pounds sterling’’, ‘‘£’’, ‘‘pence’’ or ‘‘p’’ are to the lawful currency of the United Kingdom; references to ‘‘US dollars’’, ‘‘dollars’’, ‘‘US$’’ or ‘‘USD’’ are to the lawful currency of the United States and references to ‘‘Australian dollar’’, ‘‘AUD’’ or ‘‘A$’’ are to the lawful currency of Australia. Unless otherwise indicated, the financial information contained in this Prospectus has been expressed in Australian dollars. Indicative exchange rates of the Australian dollar against GBP, USD, PGK, SBD and CAD, comprising the average rate used for income statement information and the period end rate used for balance sheet information, are shown below: Ave. Ave. Ave. Ave. Year Year Year six months As at ended As at ended As at ended As at ended As at 30.06.08 30.06.08 30.06.09 30.0609 30.06.10 30.06.10 31.12.10 31.06.10 15.06.11(1) GBP:AUD . . . 2.07428 2.2403 2.0412 2.1679 1.77840 1.7971 1.5251 1.6593 1.5219 USD:AUD . . . 1.04410 1.1177 1.23920 1.3593 1.18990 1.1359 0.97730 1.0607 1.0684 PGK:AUD . . . 0.41250 0.3944 0.49450 0.5012 0.44720 0.419 0.40360 0.3973 0.4225 SBD:AUD . . . 0.13625 0.1464 0.16278 0.1781 0.15870 0.136 0.13210 0.1284 0.1348 CAD:AUD . . . 1.0293 1.1061 1.06600 1.1628 1.11790 1.0745 0.98000 1.0325 1.0365

Note: (1) Being the last practicable date prior to the publication of this Prospectus.

Mineral reserve and mineral resource reporting Stephen Godfrey and John Battista, both of Golder Associates, and Tony Showell, of BatteryLimits, have reviewed the mineral reserves and mineral resources statements compiled by the Company and have stated the mineral reserves and mineral resources as set out in the Competent Person’s Reports relating to Simberi and Gold Ridge included in ‘‘Part XIV—Competent Person’s Report’’ to be in compliance with the Prospectus Rules and the European Securities and Markets Authority (ESMA) recommendations. In this Prospectus, all mineral reserve and mineral resource estimates initially prepared by the Group have been substantiated by evidence obtained from Golder Associates’ and BatteryLimits’ site visits and observation and are supported by details of drilling results, analyses and other evidence and take into account all relevant information supplied by the Group’s management and the Directors. Unless otherwise indicated, all resource and reserve estimates included in this Prospectus have been prepared in accordance with the Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC). The resources have been classified as measured, indicated and inferred. The JORC classification is comparable to the definitions contained in Canadian National Instrument 43-101 (NI 43-101) and used by the Canadian Institute of Mining and Metallurgy Classification System (CIMM), under which the Group is also required to report its resource and reserve estimates. The JORC Code differs in several significant respects from SEC Industry Guide 7, which governs disclosures of mineral reserves in registration statements and reports filed with the SEC. In particular, Industry Guide 7 does not recognise classifications other than proven and probable reserves, and the SEC does not permit mining companies to disclose mineral resources in SEC filings. In addition, the SEC does not permit mining companies in their filings with the SEC to disclose estimates other than mineral reserves. However, this Prospectus contains resource estimates, which are required by NI 43-101. NI 43-101 differs significantly from the requirements of the SEC, and mineral resource information contained herein is not comparable to similar information regarding mineral reserves disclosed in accordance with the requirements of the SEC.

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For the JORC Code (2004) resources, mineral resources are based on mineral occurrences quantified on the basis of geological data and an assumed cut-off grade, and are divided into measured, indicated and inferred categories reflecting decreasing confidence in geological and/or grade continuity. No allowances are included for dilution and losses during mining, but the reporting of resource estimates carries the implication that there are reasonable prospects for eventual economic exploitation. Resources may therefore be viewed as the estimation stage prior to the application of more stringent economic criteria for reserve definition, such as a rigorously defined cut-off grade and mine design outlines, along with allowances for dilution and losses during mining. Ore reserves as defined by the JORC Code (2004) are designated as proved and probable and are derived from the corresponding measured and indicated resource estimates by including allowances for dilution and losses during mining. The measured and indicated mineral resources can be reported as either being inclusive of those mineral resources modified to produce the ore reserves or additional to the ore reserves. The JORC Code (2004) reserve and resource estimates provided in this Prospectus comply with the reserve and resource definitions in the JORC Code (2004). In accordance with NI 43-101, the terms ‘‘mineral reserve’’, ‘‘proven mineral reserve’’, ‘‘probable mineral reserve’’, ‘‘mineral resource’’, ‘‘measured mineral resource’’, ‘‘indicated mineral resource’’ and ‘‘inferred mineral resource’’ used in this Prospectus are defined in the CIMM. The terms ‘‘mineral resource’’, ‘‘measured mineral resource’’, ‘‘indicated mineral resource’’ and ‘‘inferred mineral resource’’ are recognised and required by NI 43-101. Prospective investors are cautioned that, except for that portion of mineral resources classified as mineral reserves, mineral resources do not have demonstrated economic value. Inferred mineral resources have a high degree of uncertainty as to their existence and as to whether they can be economically or legally mined. Under NI 43-101, estimates of inferred mineral resources may not form the basis of an economic analysis. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Therefore, prospective investors are cautioned not to assume that all or any part of an inferred mineral resource exists, that it can be economically or legally mined, or that it will ever be upgraded to a higher category. Likewise, prospective investors are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be upgraded into mineral reserves. The resource and reserve estimates provided in this document have been extracted from the Competent Person’s Report in Part XIV—Competent Person’s Report and must be read in conjunction with the Competent Person’s Report.

Forward-looking statements Certain information contained or incorporated by reference in this Prospectus including any information as to the Group’s strategy, plans or future financial or operating performance constitutes ‘‘forward- looking statements’’. All statements, other than statements of historical fact, are forward-looking statements. The words ‘‘believe’’, ‘‘expect’’, ‘‘anticipate’’, ‘‘contemplate’’, ‘‘target’’, ‘‘plan’’, ‘‘intend’’, ‘‘continue’’, ‘‘budget’’, ‘‘estimate’’, ‘‘may’’, ‘‘will’’, ‘‘schedule’’ and similar expressions identify forward- looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Group, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to the impact of global economic conditions and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future cash flows; fluctuations in the currency markets (such as the PGK or the SBD against the US dollar); fluctuations in the spot and forward price of gold, or certain other commodities (such as diesel fuel and electricity); changes in national and local government legislation, taxation, controls, regulations and political or economic developments in PNG or the Solomon Islands, or other countries in which the Group may carry on business in the future; business opportunities that may be presented to, or pursued by, the Group; the Group’s ability to successfully integrate future acquisitions; operating or technical difficulties in connection with mining or development activities; employee relations; availability and costs associated with mining inputs and labour; litigation; the speculative nature of mineral exploration and development, including the risks of obtaining necessary licences and permits; diminishing quantities or grades of reserves; adverse changes in the Group’s credit rating; contests over title to properties, particularly title to undeveloped properties; and risk of trespass, theft and vandalism.

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In addition, there are risks and hazards associated with the business of mineral exploration, development and mining, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion losses (and the risk of inadequate insurance, or inability to obtain insurance, to cover these risks). Many of these uncertainties and contingencies can affect the Group’s actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, the Group. Investors are cautioned that forward-looking statements are not guarantees of future performance. Forward looking statements may, and often do, differ materially from actual results. Any forward-looking statements in this Prospectus speak only as of the date of this Prospectus, reflect the Group’s current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Group’s operations, results of operations and growth strategy. Investors should specifically consider the factors identified in this Prospectus which could cause actual results to differ before making an investment decision. All of the forward-looking statements made in this Prospectus are qualified by these cautionary statements. Specific reference is made to ‘‘Risk Factors’’, ‘‘Part I—Information on the Group’’ and ‘‘Part VII—Operating and Financial Review’’. Subject to the requirements of the Prospectus Rules, the Disclosure and Transparency Rules and the Listing Rules or applicable law, the Company explicitly disclaims any intention or obligation or undertaking publicly to release the result of any revisions to any forward-looking statements in this Prospectus that may occur due to any change in the Company’s expectations or to reflect events or circumstances after the date of this Prospectus. Shareholders should note that the content of these paragraphs relating to forward-looking statements are not intended to qualify the statement relating to the sufficiency of working capital in this document.

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PART I—INFORMATION ON THE GROUP 1 Overview A year ago the Group was a single mine gold producer, with Simberi producing 70Koz per annum. The Group is currently forecasting annual production in excess of 200Koz of gold, on an annualised run rate basis, from both Simberi and Gold Ridge which is expected to be 220Koz per annum by the end of 2011. The acquisition of Gold Ridge, an associated A$160 million capital raising and listing on the TSX have strengthened the Group’s portfolio of assets and transformed the Group. The TSX capital raising allowed the Group to fully unwind the Simberi hedge book in February 2010, giving the Group full price participation in production from its assets (receiving gold sales revenue at spot price as opposed to the US$700/oz that it was receiving under the hedging program) for the period between February 2010 and December 2010 (when the hedging was due to fall away). Removing the hedge book increased investor interest as many investors are seeking exposure to unhedged mid tier gold producers with strong growth profiles. The Company’s subsidiary, Allied Gold, is currently listed on three stock exchanges: the ASX, TSX and AIM. The Company is seeking Admission in order to further broaden the Group’s investor appeal and the Board anticipates that trading on the Main Market will provide enhanced market exposure befitting to the Company’s increase profile.

2 History of the Group The Group first acquired an interest in Simberi in October 2004 through the acquisition of Nord Pacific. Nord Pacific’s principal assets were a 50 per cent interest in the SMJV and a 99 per cent interest in the Tabar Exploration Joint Venture (TEJV); each of these joint ventures had been established with Simberi Gold Company Limited (Simberi Gold), a company then listed on the TSX, to pursue exploration and development of gold prospects in the Tabar Islands Group in the New Ireland Archipelago in eastern PNG. SMJV held the 2560ha PNG Mining Lease 136 (ML136), which covers the central and eastern portion of Simberi Island. TEJV held the 69 sub-block/233km2 PNG Exploration Licence 609 (EL609), which covers all of the Tabar Islands Group outside of ML136. The Group acquired Nord Pacific’s interests in the SMJV and the TEJV when Nord Pacific became a wholly-owned subsidiary of Allied Gold. In November 2004, Allied Gold entered into an agreement with Simberi Gold to acquire a further 37.5 per cent interest in the SMJV and the remaining 1 per cent of the TEJV. This transaction closed in April 2005, at which point both the SMJV and the TEJV were formally terminated and Simberi Gold continued with a 12.5 per cent free carried interest in Simberi until October 2005. As a result of successful drilling programs in 2004 and 2005 that delineated broad areas of previously unknown mineralisation outside and below a pit design for Simberi that had been completed in 2003, the Group engaged Golder Associates Pty Ltd (Golder Associates) in mid-2005 to construct an updated resource block model and carry out a resource estimate incorporating all of the new drilling data. Golder Associates then used the resource block model for open-pit optimisation and reserve estimates, as well as preparation of the mining section for an October 2005 update to a 2003 feasibility study on the Simberi site, to include higher reserves and to investigate a higher processing plant throughput. The updated study, known as the Optimised Feasibility Study (OFS), resulted in a project that was expected to mine and process 15.4 million tones (Mt) of ore over a ten year mine life and recover an estimated 585Koz of gold. The OFS investigated the development of a 1.65Mt per annum (Mtpa) mining and processing operation, along with an ore delivery system consisting of screening and slurrying of ore from the deposits located in the hills surrounding the central processing plant, which would be located on the coast of Simberi Island. The results of the study indicated that the development of a gold mine at the Simberi project site was both technically feasible and economically viable. The Group commissioned a study by Intermet Engineers (Pty) Ltd (Intermet) to investigate a larger processing plant and mine plan that would be expected to process 2.2Mtpa at the start of 2006. As part of this study, the ore delivery system was also re-evaluated. This focused on an aerial conveying system that would have the feed end located at the largest deposit (Sorowar), and the discharge end near the processing plant (Pigiput Plantation). The study, known as the Amendment to the OFS (AOFS), showed that a larger processing plant (with a 2.0Mtpa nameplate capacity) and ore delivery by way of such an aerial conveying system, known as Ropecon, was technically and economically feasible. The study was

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presented to the PNG Department of Mining and applications were made for a variation of the project scope. Simultaneously, amendments to the Group’s environment permits were made through, and approved by, the PNG Department of Environment and Conservation to accommodate a higher process rate. Capital and operating costs were re-estimated as part of the AOFS and indicated a total capital cost of US$60 million and a cash operating cost of US$306/oz. In July 2006, the Group received updated reserves and in-pit resource estimates from Golder Associates which indicated that the Simberi project contained 17.7Mt of ore grading 1.37 grams per tonne (g/t) gold (Au) and containing approximately 785Koz gold. With the OFS and the AOFS confirming that an economic and technically viable gold oxide mining project could be developed on Simberi Island, the Group decided to proceed with mine development in 2006 and awarded contracts for the design and construction of a processing plant capable of processing 2.2 Mtpa, with associated ancillaries including power, water, tailings disposal and infrastructure including a wharf and a camp. In 2006, the Group concluded an agreement with Simberi Gold pursuant to which it purchased Simberi Gold’s outstanding 12.5 per cent free carried interest in the Simberi Project. In March 2006, Allied Gold listed on the London Stock Exchange’s AIM market. In March 2007, the Group commenced the operation of its landing barge ‘‘LCT Lady Geraldine’’ to reduce delivery times for the delivery of materials to Simberi Island. In May 2007, the Group received approval from the PNG Mineral Resources Authority (the MRA) to extend the term of ML136 for a further ten years ending on 2 December 2018. Dry commissioning activities of the processing plant commenced in December 2007. Simberi commenced production in February 2008. In March 2008, Allied Gold bought out the option held by Kennecott and Niuginin Mining, to acquire an interest in EL609 and signed a letter of intent to enter into a A$20 million farm-in agreement with Barrick (PNG) Exploration Ltd, a subsidiary of Barrick, with respect to the Group’s exploration licence on Tatau and Big Tabar Islands. Barrick commenced exploration activities there in August 2008. In May 2008, the Group successfully commissioned its state-of-the art Ropecon aerial rope conveyor at Simberi. In 2009, the Group commissioned a study to evaluate the process engineering options for the expansion of the existing Simberi oxide ore processing plant to a capacity of 3.0Mtpa, to increase production to 100Koz per annum, and also commenced a PFS in relation to the sulphide resources with a view to supporting a further expansion of its production profile by up to an additional 100Koz per annum by December 2011. In June 2009, the Group produced its 100,000th ounce of gold at Simberi. In November 2009, the Group acquired control of ASG, an Australian-based mineral resource exploration company. The general development of the business of ASG had focused entirely on the Gold Ridge project. ASG had acquired the Gold Ridge project in May 2005, and held the project through various wholly-owned Australian and Solomon Islands subsidiaries. Allied Gold also listed on the TSX in November 2009. Gold Ridge consists of a mining lease that covers an area of 30km2 and a prospecting licence in the area surrounding the mining lease that covers an area of 130km2. The mining lease is governed by the terms of a mining agreement between ASG and the Solomon Islands government. Prior to ASG acquiring the Gold Ridge project, previous owners of the project had constructed a 2.0Mtpa open cut mine (commencing construction in 1997) and mined the Valehaichichi deposit from August 1998. The Gold Ridge project was shut down and put on ‘‘care and maintenance’’ in June 2000 as a result of escalating civil unrest in the Solomon Islands. During the 22 months that the Gold Ridge mine was previously operating, the total gold production for the period was 210Koz. The Gold Ridge project had considerable infrastructure remaining from the previous operations, although major refurbishment was required to most of the plant and equipment at the site. Mine site infrastructure includes workshops and a warehouse, water supply, power generators and building, road access, tailings storage facility, and an on-site camp for 150 people which has recently been refurbished. During 2009, Barrick completed four diamond drill holes totalling 1927m at the Tupinda prospect, Big Tabar Island, completed planned drilling at the Banesa prospect, Big Tabar Island of six holes totalling 2625m, and reconnaissance mapping and rock-chip sampling over Tatau Island.

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In 2009, the Group announced a 45 per cent increase in total Simberi Island Measured, Indicated and Inferred Resources to 4.7Moz of gold and 10.0Moz of silver, comprising oxide gold resources of 1.4Moz and sulphide gold resources of 3.3Moz, as well as an extension of 437Koz to its ore reserve, extending the remaining mine life to over ten years. In March 2010, the Group negotiated the buyback of its joint venture arrangement with Barrick, restoring to the Group 100 per cent ownership of all exploration tenure in the Tabar Islands. A PFS in relation to the sulphide resources was completed at Simberi in November 2010, demonstrating that the development of sulphide resources at the site is technically feasible and economically viable. The PFS also indicated that a larger treatment plant (2.5Mtpa) may be also appropriate given additional sulphide resources that may be discovered and to allow the Group leverage and exposure to future gold price movements. A BFS has commenced at Simberi to assess an increased sulphide throughput option from 1.5Mtpa to 2.5Mtpa. The Company was incorporated in the United Kingdom on 7 March 2011. The Group companies were reorganised into a corporate group as part of the Pre-IPO Reorganisation and the Company acquired its shareholding in the Group pursuant to the Pre-IPO Reorganisation. Prior to the Pre-IPO Reorganisation, Allied Gold was the holding company of the Group. Gold Ridge recommenced production in March 2011. The official re-opening ceremony was held on 23 March 2011, with local political, community and landowner leaders in attendance.

3 Simberi, PNG Simberi, the Group’s major asset, is located in the Tabar Islands Group in the New Ireland Province of PNG. The four sparsely inhabited islands comprising the Tabar Islands Group are located 130km east of the capital city of New Ireland Province, Kavieng, and 60km north-west of the Lihir Island site of the world class Lihir Gold Mine. The southern-most island in the group, Tabar Island, lies approximately 30km north of mainland New Ireland. Simberi Island is the northern-most island of the Tabar Group and measures approximately 10km east to west and 8km north to south. Simberi is wholly-owned and operated by the Group, through its wholly-owned subsidiaries, Nord Pacific and Simberi Gold. ML136 was granted to Simberi Gold on 3 December 1996 for a term of 12 years by the MRA. On 4 May 2007, the MRA granted Simberi Gold an extension on ML136 for an initial term of ten years commencing on 3 December 2008 and ending on 2 December 2018. During the six months to December 2010, Simberi produced 37,127oz at a total cash cost of A$693/oz. During the March Quarter 2011, Simberi produced approximately 11Koz. The Group is targeting total gold production at Simberi in the range of 65Koz to 70Koz in 2011, with production expected to ramp up to a run rate of 100Koz per annum by the end of the year. Simberi comprises an open-pit mining operation with an associated gold processing plant, located within ML136 on the eastern side of Simberi Island, and EL609 covering the remainder of Simberi Island and most of the adjacent Tatau and Big Tabar Islands to the south. Mining operations at Simberi are focused on seven separate deposits on the eastern portion of Simberi Island (Sorowar, Samat North, Samat South, Samat East, Pigiput, Pigibo and Botlu South). Sorowar in the north is by far the largest deposit. Samat North, South and East lie to the south and, while relatively small, are also high grade. Pigiput, Pigibo and Botlu South lie between the Sorowar and Samat areas and are of intermediate tonnage but at a grade similar to Sorowar. All prospects lie within 2 to 3km of each other. The project area also includes other less well-defined prospects and anomalies.

Process The Samat oxide pits have been largely depleted, and ore is currently being extracted from the Sorowar pit. The Sorowar deposit is the largest resource at Simberi; ore from Sorowar is delivered via the aerial conveyor system to the processing plant, which is a conventional CIL gold processing plant currently capable of treating 2.0Mtpa. It is located on the eastern coast of Simberi Island near Pigiput Bay. Ore from deposits other than Sorowar is delivered to the processing plant by haul truck. Ore fed into the processing plant passes through a sizer to bring it down to less than 100mm in size before being passed through a scrubber. Oversize discharge from the scrubber (greater than 12mm) goes to the single ball mill for grinding. The discharge from the single ball mill passes with the minus

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12mm discharge from the scrubber into the cyclones for classification. Material less than 300 microns passes to the leach circuit with coarser material returning to the ball mill for additional grinding. Cyanide and lime are added to the leach tank and ore as a slurry passes from the leach tank to five carbon recovery tanks. The loaded carbon is stripped of gold in an elution circuit and smelted to form gold dore´ bars. The plant uses what is known as a Deep Sea Tailings Placement tailing management method. Under this method spent ore or tailings is pumped to a mixing tank located on the shore of Pigiput Bay where it is mixed in a ratio of 1 part tailings to 8 parts seawater before being discharged via pipeline at a depth of 115m below sea level. When discharged from the pipeline, the tailings flow down a steep submarine slope and are deposited at a depth of more then 3000m. In 2010, the Group completed the majority of a significant optimization and de-bottlenecking programme to the Simberi processing plant which increased operating efficiency and is expected to result in the plant exceeding its nameplate capacity. Further proposed plant expansion in 2011 to 3.5Mtpa should increase production to approximately 100Koz per annum. Further expansion of the existing plant to 5Mtpa of oxide ore is currently under review.

Infrastructure Associated site infrastructure includes a modern accommodation centre, a 1200m long gravel sheeted airstrip located approximately 3km south of the accommodation camp, a wharf, fresh and sea water supplies, power generation with an installed capacity of 6MW using diesel powered generators, island and pit access roads and telecommunications facilities. The wharf, processing plant, offices and camp accommodation are located at Pigiput Bay on Simberi Island. Site personnel work rotating rosters and, as Simberi is not serviced by regular passenger services, charter flights are used to transport company personnel from various locations in PNG, including Port Moresby, Rabaul and Kavieng. The company-built airstrip can accommodate aircraft up to the size of a Bombardier Dash 8 (18.6t, 56 seat twin turboprop). The company also operates a loading barge, the Lady Geraldine, ferrying bulk supplies to the island on a regular schedule from the mainland towns of Lae in Morobe Province and Rabaul in the New Britain Province. The Lady Geraldine’s capacity is supplemented, as required, by privately owned barges chartered from Lae and Rabaul. Material is brought to the processing plant by either 40t articulated dump trucks along the haul road or a suspended aerial conveying system. An island ring road provides access to all parts of the island and the many hamlets inhabited by the islanders along the coast. Further detail regarding the infrastructure at Simberi can be found at section 19.2 of the Simberi Gold Project Competent Person’s Report at ‘‘Part XIV—Competent Person’s Reports’’ of this Prospectus.

Exploration Exploration in ML136 is focused around the identified deposits of Sorowar, Pigiput, Pigibo, Botlu, Pigicow, Bekou and Samat. In addition to these, there are a number of smaller prospects that have yet to be properly defined. The Group also holds EL609 covering most of the rest of the Tabar Island group. EL609 is also being actively explored. Exploration activities continue to grow the JORC-compliant gold reserve/resource, with an additional 1.3Moz of proven and probable reserves added in 2010. Simberi’s proven and probable reserves now stand at 2.11Moz whilst its measured, indicated and inferred resources stand at 6.01Moz. As at 1 January 2011, Simberi has total Measured, Indicated and Inferred Resources of 169.17Mt at 1.10g/t of gold (6.01Moz Au). Simberi has total Reserves of 44.84Mt at 1.46g/t Au (2.11Moz Au). Encouragingly, the sulphide and oxide geology at Simberi remains open, with additional multiple targets and mineralisation around existing mining pits. These significant gold deposits provide an opportunity to increase combined oxide and sulphide gold production to over 200Koz per annum for a minimum of ten years.

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2010 year in review Initiatives to debottleneck the Simberi plant were successfully delivered during 2010 to increase mill throughput. This included an increase in the capacity of the rope conveyor delivery system to 600tph. The CIL intertank screens were replaced with new larger capacity screens and a degritting spiral was installed. Despite the increase in processing capacity, a combination of unseasonally heavy rainfall, 13 days lost production in December 2009 and January 2010 due to an illegal cease work order and a cultural gorgor, and eight days lost during a scrubber trommel mechanical failure had the combined effect of curtailing gold output for the year to 64,327oz.

Oxide expansion In 2011, the Group will undertake incremental expansion of the plant to lift processing capacity to 3.5Mtpa, which should increase gold production to approximately 100Koz per annum. An additional SAG Mill has been ordered and is being shipped to the Simberi site. Contracts for two additional leach tanks have been awarded and a tendering process for a tailings thickener has been completed. At 3.5Mtpa the Simberi oxide circuit is forecast to treat 34.5Mt at a grade of 1.02g/t with a process recovery of approximately 90 per cent, producing 1Moz of gold over approximately ten years. Further potential for significant oxide tonnages have been identified around the existing Sorowar and Pigibo deposits. Over the next 12 to 18 months the western side of Simberi island will also undergo exploration for suspected covered (ash) gold mineralised targets. The Group has made design allowance for future expansion of the oxide plant to 5Mtpa.

Sulphide pre-feasibility The longer term expansion of the Simberi operation is focused on the development of the sulphide resources. A PFS has been completed and a BFS is currently underway to construct a 2.5Mtpa sulphide processing plant which would produce an additional 100Koz gold per annum from 2015. The indicative capital cost (including contingency) of a 1.5 Mtpa sulphide circuit is US$160-240 million with a single stage roaster treating 1.5Mtpa at an ore grade of 2.4g/t Au. A formal investment decision will be subject to a BFS due in 2012, followed by a two-year development timeframe, taking into account a minimum three to five years to process the significant existing Pigiput oxide cap before accessing the first tonnages of sulphide ores and allowing 12 to 18 months of exploration at the Sorowar, Samat and Botlu oxide pits, which have not yet been subject to intense drilling for sulphide material. Identification of additional resources provides an opportunity to optimise the sulphide roaster and oxide processing plant and correctly scale throughput for the next ten to 15 years. The investment decision scheduled for 2012 may be brought forward if gold prices continue to rise.

BSP Funding In November 2010, the Group obtained funding from BSP of approximately PGK 52 million. The loan by BSP to Simberi Gold is guaranteed by Allied Gold and, following the Company becoming the parent company of Allied Gold, will also be guaranteed by the Company. The funding is secured by fixed and floating charges over the assets and undertakings of the Simberi project.

Environmental considerations Historically, there has been no large scale mining at Simberi and the previous alluvial workings have had no significant impact. There are no pre-existing environmental liabilities. Prior to construction Simberi Gold was required to implement an Environmental Management and Monitoring Program (EMMP). Nord submitted a draft EMMP in May 1999 and an amendment to the EMMP (now known as the EMP) addressing changes to the previous scope, prepared by Nord’s consultants, was submitted in July 2003. Currently, the Group is permitted to mine and process oxide ore at a nameplate capacity of 2.0Mtpa with a nominal production capacity of 84Koz per annum.

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A baseline environmental survey was undertaken in June 2003 and two further supplementary environmental baseline studies were completed in March 2004 and December 2004. During the environmental baseline studies a network of monitoring stations was established to support the ongoing collection of data. The 2005 feasibility study conducted at Simberi addressed the environmental impacts associated with: • open cut mining operations and haul roads; • ore processing operations; • pipeline and power line corridors; • deep sea tailings placement; and • project infrastructure. The project has the following objectives with respect to the environment: • elimination of all waste dumps through adoption of bulk mining techniques at the Samat, Botlu and Pigiput deposits. Waste generation at the Sorowar and Pigibo deposits will be placed within the mining voids. The recent reserve increase has increased future waste tonnages and this additional waste will be stored in land-sited waste repositories; • progressive rehabilitation of the pits to minimise soil erosion and complete re-vegetation; • provision of engineering safeguards in the design of pipelines; • minimisation of soil erosion and dust generation by access/haul roads; • minimisation of dust generation from crusher and conveyors, containment of chemicals and reagents, comply with air quality and water quality regulations; • storm water management of open pits, mine infrastructure and processing plant, minimisation of soil erosion, collection of runoff for use in processing in preference to other supplies, installation of silt curtains at mouth of streams most likely to be affected by the project where practical installation and operation can be obtained; and • provision of a proven and accepted tailings disposal method, conservative design parameters and compliance with environmental permit conditions. A letter on the 24 February 2004 from the Acting Secretary for the Department of Environment & Conservation confirms that the Environmental Plan Approval for the Simberi Oxide Gold Project that was issued on 30 December 1996 under the Environmental Planning Act 1978 is valid and deemed to be an Environmental (Waste Discharge) Permit for the purposes of the Environment Act 2000. It also notes that the Department of Environment and Conservation is processing the amendment application which was submitted due to the changes in the mine plan and engineering concept. A further update to the EMP has been submitted in conjunction with the Optimised Feasibility Study and is under consideration by the Department of Environment and Conservation. In 2008, Coffey Natural Systems (Coffey) undertook a compliance monitoring audit. This report showed compliance in most areas, with any impacts consistent with predictions made in the Environmental Plan submitted with Simberi Gold’s original mining lease application. Coffey recommended focusing attention on controlling erosion and sedimentation upstream in order to reduce the impacts on the nearshore fringing coral reef and on the streams and rivers around Simberi Island.

4 Gold Ridge, Guadalcanal Gold Ridge is located on the island of Guadalcanal, the central island of the Solomon Islands, approximately 30 km south-east of the capital city Honiara. The project is accessed from Honiara by approximately 40 km of road. The mine area is located on the lower northern slopes of Mount Chaunapaho in the central ranges of Guadalcanal Island. Gold Ridge consists of a mining lease granted on 12 March 1997 (No 1/1997) that covers an area of 30km2 and a special prospecting licence (SPL194) that covers an area of 130km2. Operations are focused on four mineralised zones which lie within a diamond shaped zone 2.5km long and 1.4km wide. The four separate gold deposits are called, from north to south, Valehaichichi, Namachamata, Kupers

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and Dawsons. Mining operations at Gold Ridge were previously carried out by Ross Mining and Delta Gold and, more recently, Gold Ridge was owned by TSX-listed ASG. To date only Valehaichichi has seen any significant mining. Access and earthworks have commenced at Namachamata. Numerous artisanal workings can be found throughout the mining lease area, in and around the creeks, rivers and mine workings. Under the Solomons Island mining legislation, in areas subject to a prospecting licence or mining lease, alluvial mining is not permitted without the consent in writing of the holder of the prospecting licence or mining lease, as the case may be. As such, mining in and around the pit areas would pose a significant safety issue so the artisan miners have been denied access. Gold was first reported in the region in 1568 by a Spanish explorer near the mouth of the Matepono River, which flows from the Gold Ridge site. Active prospecting began in 1931 when an Australian botanist found alluvial gold at a site nearby and traced it upstream to Gold Ridge. The Solomon Islands government put Gold Ridge to tender in 1994 to ten international companies. The successful bidder was Saracen Minerals Pty Limited (Saracen), a subsidiary of the Australian oil and coal mining company, Crusader Limited. In March 1995 Ross Mining NL purchased Saracen’s gold project interests and commenced a new feasibility study for the development of Gold Ridge. On 1 May 2000 Delta Gold Ltd purchased the whole of the share capital of Ross Mining and became the owner of Gold Ridge. Delta Gold abandoned the mine in June 2000 because of civil unrest in Guadalcanal, and in January 2002, Delta Gold merged with Goldfields to form Aurion Gold, which was subsequently taken over by Placer Dome Inc. Between the commencement of commercial production at Gold Ridge in August 1998 and the closure of the mine in June 2000 during eight weeks of civil unrest, Gold Ridge produced approximately 210Koz of gold. At the time of the June 2000 closure there were mineral resources remaining in all four of the mined pits (Valehaichichi, Kupers, Namachamata and Dawsons), and these form the basis of the Group’s current 120Koz per annum mine plan for Gold Ridge. In December 2002, insurers paid out under a political risk insurance policy to Delta Gold and, in return, took ownership of the mine through a new holding company, JV Mine. An international bidding process saw ASG acquire Gold Ridge in 2005. The Group acquired ASG in November 2009. March 2010 was a significant date for the Group and the people of the Solomon Islands, with a reconciliation ceremony that marked the start of work to redevelop Gold Ridge. As at 1 January 2011, Gold Ridge has total Measured, Indicated and Inferred Resources of 64.17Mt at 1.28g/t Au (2.64Moz Au). Gold Ridge has total reserves of 23.2Mt at 1.71g/t Au (1.28Moz Au).

Project development GR Engineering Services (GRES) was awarded a A$64.3 million engineering, procurement and construction contract, and mobilised to site in April 2010. Any remaining capital expenditure is the responsibility of the Group and includes cost for buying a mining fleet, camp construction, first fills and pre-operation manning and resettlement housing. GRES has removed old process equipment such as pumps, motors and gear boxes for repair, refurbishment or exchange, and also refurbished major components such as the crusher, grinding mill and gold recovery equipment. Three new additional leach tanks and a 29m diameter thickener will be added by the end of October 2011. Construction equipment including cranes and mining fleet consisting of haul trucks, excavators, dozers and other road maintenance and heavy vehicle support arrived on site in May 2010. Further details of the infrastructure at Gold Ridge can be found at sections 5.4 and 19.1 of the Gold Ridge Gold Project Competent Person’s Report in ‘‘Part XIV—Competent Person’s Reports’’ of this Prospectus. The project is powered by way of a 14MW ‘‘build-own-operate-contract’’, which was delivered by Aggreko in December 2010. Dewatering of the tailings storage facility was completed by November 2010, some three to six months ahead of expected plant commissioning. First deliveries of ore to the ROM stockpile were in place by Q4 2010, and first gold was produced in March 2011.

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The A$150 million refurbishment and redevelopment of Gold Ridge was delivered within 12 months of its official commencement, with first gold produced in March 2011.

Operational readiness A site leadership team and general manager were appointed at Gold Ridge in June 2010. Pre-operational recruitment for selected positions was undertaken, with a strong focus on employment and training of people from the local area. Civil construction and related earthworks, such as ROM pad construction and haul road re-establishment have provided an opportunity for operator training well in advance of mining and ore haulage. Operations at Gold Ridge are supported by a mine warehouse building, an administration office and camp accommodation for 200 people.

Village resettlement A landowner resettlement program is well advanced, in line with plans to gradually resettle 1900 residents from the mine lease area. The resettlement has been the subject of intensive negotiation and planning over the past three years, and has been led by the Gold Ridge Community and Landowners Council (GRCLC). Of the 300 resettlement houses to be built—at a projected rate of 30 a month—95 resettlement houses have been completed and a total of 329 people have been relocated from the mine area. Resettlement is expected to be completed in the September quarter of the 2011-2012 financial year.

IFC Loan In June 2010, the Group obtained a US$35 million loan with the International Finance Corporation (IFC) for the purpose of redeveloping Gold Ridge. The IFC’s involvement will provide a further level of environmental and community oversight and confidence in the rebuilding of the Solomon Islands’ economy.

Environmental considerations Before the development of Gold Ridge, the mine area had been extensively disturbed by humans through subsistence gardening, logging, gold panning and settlement. Heavy logging in the Chovohio River catchment occurred in 1974 and again during the last few years up to 1997, in addition to the impact mining operations conducted by Ross Mining. The tailings storage facility which had been abandoned in 2000 has been rehabilitated and the structure confirmed as sound and useable. All collected water has been treated and discharged to the local river systems to lower the water in the dam as part of this work. GRML conducts ongoing monitoring of contaminants in the dam and discharge waters. Two minor breaches were recorded during the treatment/drainage process however no recent sampling has shown any problems. An Environmental and Social Review Summary (ESRS) report for the project was prepared by the IFC as part of its environmental and social due diligence ahead of its investment as part of the project financing arrangements being originally made by ASG. The IFC’s involvement requires post-finance project assurance related to the Social, Environmental, and Health and Safety IFC Safeguard Policies relevant to the project. As part of the financing agreement, the IFC requires frequent monitoring of compliance with the IFC Performance Standards along with the previously disclosed GRML Economic and Social Action Plans on an ongoing basis. GRML has committed to external/independent environmental, and health and safety compliance monitoring and reporting, including to IFC Performance Standards, in order to provide an additional level of transparency to the implementation of environmental and health and safety management programs at Gold Ridge. Further details can be found at section 19.2 of the Gold Ridge Gold Project Competent Person’s Report in Part XIV—Competent Person’s Reports of this Prospectus.

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5 Tabar and Tatau Island In March 2008, the Group signed a letter of intent (the Barrick LOI) with Barrick (PNG) Exploration Ltd (Barrick PNG), a subsidiary of Barrick Gold Corporation, to enter into a A$20 million farm-in agreement with respect to Allied Gold’s exploration licence on Tatau and Big Tabar Islands. At the time of entering into the Barrick LOI, Barrick subscribed for and purchased A$15 million of fully paid ordinary shares in Allied Gold at a price of A$0.85 per share. In March 2010, Allied acquired Barrick’s interest in the joint venture agreement over Tatau and Big Tabar Islands and consequently reassumed management of exploration in the entire area of permit EL609. Allied made an immediate A$2.5 million payment to Barrick PNG with a further A$3 million to be paid as either cash or Allied Gold shares. Barrick agreed to place its holding of Allied Gold shares in escrow until 2012. The Group’s buyback of the joint venture arrangement with Barrick on these terms represent a significant discount to the A$12 million capital expenditure already incurred by Barrick. This restores to the Group 100 per cent ownership to all exploration tenure in the Tabar Islands. Significant baseline geological work was undertaken by Barrick on Tabar and Tatau Island, with drilling on Tabar identifying large copper porphyry style mineralisation at the Banesa deposit. The Group is mobilising to recommence drilling on Tatau Island to test further gold and copper targets.

6 Recent Developments Production recommences at the Gold Ridge project, March 2011 On 9 March 2011 it was announced that Gold Ridge had poured its first gold under Group ownership. This was achieved within a year of the commencement of the redevelopment of the project and following the investment of A$150 million into the redevelopment and refurbishment of the mine.

Repair to tailings mixing tank, March 2011 Milling and processing at Simberi was suspended for four weeks from 4 March 2011 to 7 April 2011 to repair a valve and onshore piping to the tailings mixing tank. A minor leak in the tailings and mixing tank was caused by valve wear and tear. The leak was detected within hours of its occurrence, and was repaired within three days. The leak was reported to the PNG Department of Environment & Conservation (DEC). The DEC issued an Environmental Protection Order (EPO) requesting that the tank be repaired and that operations cease until such repair was completed. Though not considered major, the repair work was below the water table and required continuous de-watering to provide access. Following the repair of the tank, the DEC did not immediately lift the EPO and therefore Simberi Gold applied and obtained a Court Order from the PNG National Court to allow milling and processing at Simberi to recommence. As part of this process, an independent inspection and review of the repairs to the tailings facility and operating procedures at Simberi was commissioned by the DEC. The EPO has since been formally discharged by the PNG Environment Council pursuant to PNG environmental legislation. The interruption caused by the repair work curtailed production in the 2011 March quarter at Simberi by more than one-third to 10,867oz. During the suspension of processing activity, however, the Group took the opportunity to advance a number of planned maintenance activities, and mining operations were continued. The run of mine (ROM) stock pile was built to 90,000 tonnes with 75,000 tonnes at Pigiput and 15,000 tonnes at the Sorowar pit. Additionally a significant amount of waste was pre-stripped in all pits. Simberi quickly returned to steady state production with an effective monthly run rate of 6,000oz produced in the month of April.

Equity fundraising, April 2011 In April 2011, Allied Gold successfully completed an equity fundraising, raising gross proceeds of A$93.8 million. The net proceeds from the fundraising will be applied by Allied Gold to: • retire approximately A$50 million of Allied Gold’s existing debt facilities thus strengthening Allied Gold’s balance sheet; • replace diesel fuel electricity generation at Simberi with heavy fuel oil at a cost of approximately A$15 million to reduce Simberi’s electricity generation costs by approximately 25 per cent; • provide the balance of funding required to expand Simberi from 2.4Mtpa to 3.5Mtpa, to lift gold production from 70Koz per annum to 100Koz per annum; and • provide working capital for exploration and other corporate purposes.

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7 Key Strengths The Directors believe that the key strengths of the Group are:

A diversified portfolio of assets, spanning the development cycle The Group has acquired a diverse portfolio of exploration, production and mining assets in Melanesia. The Group’s assets span the developmental lifecycle, from exploration stage opportunities through to prefeasibility stage projects and producing assets.

Growing production, significant reserve and resource base and unhedged gold price exposure • Run rate production of 220Koz per annum forecast by the end of 2011 • Targeting longer term production of over 300Koz per annum by 2015 • Reserves and resources of 3.39Moz and 8.65Moz respectively • 100 per cent unhedged, giving the Group full gold price participation in production from its assets

Expertise in gold mining through an experienced management team The Group is a gold producer with technical and management teams experienced in finding, financing, developing and operating mines in the Pacific Rim. The Group’s senior management team is made up of experienced individuals with diverse backgrounds and skills, all of whom have substantial experience in the mining industry. The Company believes that the track-record and expertise of the Group’s senior management team, ranging from all stages of exploration to mine construction and operation, positions the Group to maximise the efficiency of existing operations and to deliver future growth.

Proven ability to develop and implement projects, and a developed infrastructure • The redevelopment of Gold Ridge has been completed, and the production of gold recommenced in March 2011 • Forecast gold production of 200Koz from Simberi and Gold Ridge

Attractive cash costs with high operating margins • Cash costs at Simberi and Gold Ridge expect to average $650/oz in the year to 30 June 2011. Both operations are achieving high operating margins at current gold prices • Further scope to reduce cash costs at Simberi through the construction of a heavy fuel oil power generation plant

Financially sound capital structure

• The Group is the sole owner of Simberi and Gold Ridge • Following its April 2011 equity placement, the Group has gross cash balances of A$91.8 million and net cash reserves (cash balances less interest bearing debt) of A$36.4 million • Net cash reserves following the April 2011 equity fundraising are sufficient to fund current and anticipated capital expenditure requirements, including the balance of the Simberi oxide expansion project and the heavy fuel oil conversion project • The Group has no committed gold hedging in place and has full price participation in production from both Simberi and Gold Ridge

The Group’s potential for value creation and pipeline of investment opportunities • Forecast annual gold production of 200Koz from Simberi and Gold Ridge • Simberi Oxide expansion expected to add approximately 30Koz to annual production • Simberi Sulphide resources provide the potential to add a further 100Koz ounces of production by the end of calendar year 2013 • Targeting production of 300Koz per annum through organic growth and acquisitions

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8 Market position The Group sells the gold it produces in the international commodities markets. Prior to 26 February 2010, gold available for sale was sold predominantly through either the Group’s existing hedge book at a fixed price of US$700 per oz or at the prevailing spot price denominated in US dollars. On 26 February 2010 the Group terminated its hedge book through the predelivery of physical gold into the outstanding hedge book. Subsequent to 26 February 2010, all gold sales are made at the prevailing spot price. The Directors anticipate competition for exploration and development opportunities in the Pacific Rim from both local and international gold mining and exploration companies. The Group will continue to face competition for capital, experienced workforce and, particularly in respect of gold assets, exploration and development opportunities from other regional mining companies as well as international competitors.

9 Strategy The Group’s core strategy is to achieve profitable growth and increase volume from current mining assets. The Group anticipates that this will be achieved through a combination of organic growth through its existing Melanesian assets and through the acquisition of additional assets, including assets located in other regions. The Group continually reviews and assesses potential acquisitions throughout the world. The central driver of this strategy is securing the Group’s future production, which it intends to achieve through the development and expansion of existing mining assets. The Group is currently forecasting gold production at a run rate of in excess of 200,000ozpa from its combined Simberi and Gold Ridge operations. Now that gold production at Gold Ridge has commenced, the Group can also look to harness the potential of the under-explored region around Simberi. There is significant further potential to increase production at Simberi through expansion of the oxide processing plant and developing a processing plant for the sulphide resources. The Group’s aim is to keep growing its critical mass in terms of resources, reserves and production capacity through exploration. The Group is investing in excess of A$10 million annually into exploration, with programmes around all of its producing assets and at greenfield projects in PNG and the Solomon Islands, as the Directors seek to build on the position of the Group as a prominent gold producer and explorer in the region. The Group is also focused on the organic development of in-house projects and regional acquisitions of production or near-term production assets.

Simberi 2010-2011 The Group’s strategy is to add to the gold inventory on Simberi Island by defining additional resources and converting these and other known resources into reserves with a view to expanding annualised gold production. Plans are now underway to incrementally expand the Simberi oxide circuit to produce 100Koz per annum by the end of December 2011. This will be by way of an increase in the nameplate capacity of the plant from 2.4Mtpa to 3.5Mtpa to take advantage of the increasing oxide reserve and resource base. Whilst the Directors believe that the Group has sufficient oxides for the next decade, opportunities remain to lift both the oxide and sulphide inventory. In the year ahead, the Group will target pit edge oxides at the Sorowar deposit. The Group will also target underlying sulphide mineralisation at Pigiput, Pigibo and Sorowar as well as testing the possible link between the Samat North and Samat East deposits. A decision on the sulphide development is expected in 2012 after the completion of further exploration drilling and a BFS on the sulphide reserves at Simberi. The Group has budgeted A$8 million for the year to December 2011 to undertake 20,000m of diamond core and 40,000m of RC drilling at Simberi.

Gold Ridge 2010-2011 Production commenced at Gold Ridge in March 2011. The Group is targeting an increase of throughput to 2.5Mtpa producing on average 120Koz per annum of gold for the first three years of operation. A review of a possible further increase in throughput will be ongoing as more exploration data

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progressively becomes available, although such an increase would not be likely to affect the initial development throughput design. The Group plans to commit approximately A$5 million to near-mine and regional exploration activity. Drilling with a Group-owned reverse circulation rig commenced in July 2010 at Namachamata. An extensive IP geophysical survey, covering all the known deposits and their possible extensions and parallel zones, is also underway. Preliminary results indicate the known deposits respond to the geophysical survey offering the potential for new discoveries. The Directors believe that the region has great exploration potential, and the Group has applied for a significant regional exploration tenement package of 129km2 in readiness for future aggressive exploration campaigns. With Gold Ridge in operation, total Group gold production is currently projected to run at over 200Koz per annum and group operating cash flow at approximately US$100 million per annum. This will help support further growth initiatives and exploration activity in PNG and the Solomon Islands, where operations have lain dormant for almost a decade.

Tabar and Tatau exploration Tatau is the closest island to Simberi, some 20km away. Work by Kennecott in the 1970s produced encouraging results. The Group now plans to apply modern exploration methods to the area. A number of areas have been highlighted for exploration in 2011 including Mount Letam, Mount Tiro, Siro, Pepewo and Talik. At Mount Letam, drilling commenced in Q4 2010. Big Tabar Island gives its name to the chain of islands which include Tatau, Mapua and Simberi. During its 21 month tenure as JV manager, Barrick drilled ten diamond core holes at the Tupinda and Banesa prospects. Potentially economic grades of alkaline porphyry style copper gold mineralisation were encountered. However, the Banesa prospect remains under-explored and an IP geophysical survey is planned to help determine the next round of targets.

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10 Organisational structure of the Group The Company is the holding company of the Group. The company controls, directly or indirectly, 100 per cent of the shares and the voting capital of all entities presented in the diagram below. The current organisational structure of the Group is as follows:

16JUN201103390414

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11 Reserves and resources of the Group Simberi The focus for much of the past 12 to 18 months has been drilling associated with defining reserves for the Simberi sulphide PFS. A total of 86 diamond drill holes for 21,100m and 29 reverse circulation holes for 5000m were drilled during 2009 and 2010. Most of the activity was focused at Pigiput/Pigibo, where 65 holes were drilled predominantly in sets of multiple radiating holes due to topographical constraints. In September 2010, the Group announced a 155 per cent increase in Proven and Probable Reserves at Simberi to 2.13Moz; of this, the gold contained in oxide/transitional ores and sulphide ore is almost evenly split. Reserves and Resources at Simberi are as follows:

Simberi Reserves and Resources Mt AU g/t Koz Proven ...... 11.64 1.06 395 Probable ...... 33.20 1.61 1,716 Total reserves ...... 44.84 1.46 2,112 Measured ...... 11.56 1.13 418 Indicated ...... 70.17 1.28 2,891 Total resources ...... 169.17 1.10 6,010 Inferred ...... 87.44 0.96 2,701

Resources are inclusive of Reserves and are reported at a cut-off grade of 0.5 g/t. Table shows rounded estimates. This rounding may cause some apparent computational discrepancies. By material types, Reserves at Simberi are as follows:

Simberi mineral reserves Mt AU g/t Koz Oxides ...... 25.28 1.03 836 Transitional ...... 4.49 1.11 160 Sulphides ...... 15.07 2.30 1,116 Total reserves ...... 44.84 1.46 2,112

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Simberi reserves break down by prospect as follows:

Proven Probable Total Ore Pit Mt Au g/t koz Mt Au g/t koz Mt Au g/t koz Sorowar Oxide ...... 6.03 1.23 238 5.40 1.18 205 11.43 1.21 443 Transition ...... 0.55 1.08 19 0.52 1.29 22 1.07 1.18 41 Sulphide ...... 0.38 1.10 13 0.74 1.49 35 1.12 1.36 49 Sorowar Total ...... 6.96 1.21 271 6.66 1.22 262 13.62 1.22 533 Pigiput Oxide ...... 3.94 0.73 92 5.35 0.82 141 9.29 0.78 233 Transition ...... 1.67 0.86 46 1.67 0.86 46 Sulphide ...... 12.51 2.39 961 12.51 2.39 961 Pigiput Total ...... 3.94 0.73 92 19.53 1.83 1148 23.47 1.64 1241 Pigibo Oxide ...... 3.43 1.00 110 3.43 1.00 110 Transition ...... 1.65 1.21 64 1.65 1.21 64 Sulphide ...... 0.43 2.04 28 0.43 2.04 28 Pigibo Total ...... 5.51 1.14 203 5.51 1.14 203 Samat North A Oxide ...... 0.70 0.70 2 0.07 0.70 2 Transition ...... Sulphide ...... Samat North A Total ... 0.70 0.70 2 0.07 0.70 2 Samat North B Oxide ...... 0.12 0.79 3 0.12 0.79 3 Transition ...... 0.05 3.61 6 0.05 3.61 6 Sulphide ...... 0.33 2.28 24 0.33 2.28 24 Samat North B Total ... 0.50 2.06 33 0.50 2.06 33 Samat South Oxide ...... 0.08 2.37 6 0.08 2.37 6 Transition ...... 0.05 2.16 3 0.05 2.16 3 Sulphide ...... 0.68 2.43 53 0.68 2.43 53 Samat South Total .... 0.81 2.41 62 0.81 2.41 62 Botlu South Oxide ...... 0.74 1.35 32 0.12 1.61 6 0.86 1.39 38 Transition ...... Sulphide ...... Botlu South Total ..... 0.74 1.35 32 0.12 1.61 6 0.86 1.39 38 Total All Pits Oxide ...... 10.71 1.05 363 14.57 1.01 473 25.28 1.03 836 Transition ...... 0.55 1.08 19 3.94 1.11 141 4.49 1.11 160 Sulphide ...... 0.38 1.10 13 14.69 2.33 1102 15.07 2.30 1116 Total All Pits ...... 11.64 1.06 395 33.20 1.61 1716 44.84 1.46 2112

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The resources are comprised of the following material types:

Measured Indicated Inferred Deposit Material Mt Au g/t Koz Mt Au g/t Koz Mt Au g/t Koz Bekou ...... Oxide 0.04 1.74 2 0.06 1.14 2 Transitional 0.01 1.17 0 0.05 1.16 2 Sulphide 0.02 1.93 2 0.92 1.38 41 Bekou Total ...... 0.07 1.71 4 1.03 1.36 45 Botlu ...... Oxide 1.22 1.14 44 0.45 1.23 18 0.31 1.16 11 Transitional 1.45 1.81 84 Botlu Total ...... 1.22 1.14 44 0.45 1.23 18 1.76 1.70 95 Pigibo ...... Oxide 2.96 1.11 106 0.60 0.89 17 Transitional 2.19 1.19 84 0.51 0.92 15 Sulphide 3.86 1.11 137 6.22 0.94 188 Pigibo Total ...... 9.01 1.13 327 7.33 0.93 220 Pigicow ...... Oxide 0.15 1.65 8 0.29 1.30 12 Transitional 0.11 1.29 4 Sulphide 2.00 1.26 81 Pigicow Total ...... 0.15 1.65 8 2.40 1.29 97 Pigiput ...... Oxide 2.89 0.86 80 4.60 0.92 137 2.01 0.79 51 Transitional 1.95 0.89 56 0.77 0.83 21 Sulphide 32.56 1.51 1,583 32.25 1.00 1,042 Pigiput Total ...... 2.89 0.86 80 39.11 1.41 1,776 35.03 0.98 1,114 Samat East ...... Oxide 0.40 1.13 14 Transitional 0.08 0.78 2 Sulphide 3.50 0.78 88 Samat East Total .... 3.98 0.82 104 Samat North A ...... Oxide 0.11 0.78 3 0.11 0.84 3 Transitional 0.04 1.29 2 0.01 1.26 0 Sulphide 0.36 0.81 9 1.08 0.86 30 Samat North A Total .. 0.51 0.84 14 1.20 0.86 33 Samat North B ...... Oxide 0.12 0.86 3 0.12 0.75 3 Transitional 0.05 2.86 5 0.02 0.78 1 Sulphide 1.90 1.22 74 1.05 0.73 25 Samat North B Total .. 2.07 1.24 82 1.19 0.73 29 Samat South A ...... Oxide 0.02 1.96 1 0.16 1.28 7 Transitional 0.01 0.98 0 0.01 0.77 0 Sulphide 0.02 1.01 1 1.73 0.97 54 Samat South A Total .. 0.05 1.38 2 1.90 1.00 61 Samat South B ...... Oxide 0.05 2.94 5 0.17 1.51 8 Transitional 0.05 2.03 3 0.02 0.99 1 Sulphide 1.70 1.76 96 3.36 1.07 115 Samat South B Total .. 1.80 1.80 104 3.55 1.09 124 Sorowar ...... Oxide 5.61 1.30 235 8.56 1.08 298 2.40 1.09 84 Transitional 0.54 1.17 20 1.46 1.14 53 0.29 0.83 8 Sulphide 1.30 0.93 39 6.93 0.92 205 19.03 0.90 549 Sorowar Total ...... 7.45 1.23 294 16.95 1.02 556 21.72 0.92 641 Sorowar South ...... Oxide 0.68 0.82 18 Transitional 0.28 0.68 6 Sulphide 5.39 0.66 114 Sorowar South Total .. 6.35 0.68 138 Grand Total ...... 11.56 1.13 418 70.17 1.28 2,891 87.44 0.96 2,701

The reserve position underpins the expansion of the oxide plant to 100Koz per annum and the sulphide BFS.

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The Measured Indicated and Inferred Resource endowment at Simberi stands at 6.01Moz. The sulphides represent approximately three-quarters of the tonnage and the contained ounces in the Measured Indicated and Inferred category.

Gold Ridge In July 2010 the Group announced a 135Koz increase in Gold Ridge reserves extending the life of the mine by at least a year, to a minimum of nine years. These additional reserves resulted from the application of a higher gold price and refinement of the resource model. Accordingly, the new ore reserves stand at 1.28Moz (23.2Mt at 1.71g/t). The Gold Ridge deposits are typical low sulphidation epithermal gold in style. The four currently defined deposits from south to north (Dawsons, Kupers, Namachamata and Valehaichichi)—stretch over approximately 5km2 astride the north-northeast to northeast trending Melango Fault. A substantial part of the resource at Gold Ridge occurs within the supergene zone of the deposit. Higher grade gold mineralisation is directly related to quartz-carbonate vein in-fill and associated clay-pyrite- silica alteration. Silicification intensity at Gold Ridge is weak and is associated with only minor quartz veining. The deposits are open at depth and potential exists for copper-gold porphyry style mineralisation below epithermal deposits.

Gold Ridge Reserves and Resources Mt AU g/t Koz Proven ...... ——— Probable ...... 23.2 1.71 1,275 Total reserves ...... 23.2 1.71 1,275 Measured ...... 8.24 1.53 405 Indicated ...... 40.89 1.23 1,617 Total resources ...... 49.13 1.28 2,022

Resources are reported at a cut-off grade of 0.5 g/t. Table shows rounded estimates. This rounding may cause some apparent computational discrepancies.

Gold Ridge resource estimates break down by prospect as follows:

Measured Indicated Inferred Meas & Ind Total Deposit Mt grade Mt grade Mt grade Mt grade Mt grade Valehaichichi .... 2.04 1.38 10.56 1.14 4.83 1.21 12.60 1.18 17.43 1.19 Namachamata . . . 1.15 1.92 1.46 1.43 0.43 1.28 2.61 1.64 3.04 1.59 Kupers ...... 3.95 1.54 10.97 1.23 4.30 1.26 14.92 1.31 19.22 1.30 Dawsons ...... 1.09 1.40 17.91 1.27 5.47 1.34 19.00 1.28 24.48 1.29 Total Resources .. 8.24 1.53 40.89 1.23 15.03 1.27 49.13 1.28 64.17 1.28

Resources are reported at a cut-off grade of 0.5 g/t. Table shows rounded estimates. This rounding may cause some apparent computational discrepancies.

12 Dividend policy Neither Allied Gold nor the Company have historically paid any dividends. The Directors do not intend to declare or pay a dividend in relation to the Company in the foreseeable future but, subject to the availability of sufficient distributable profits, the Directors do intend to commence the payment of dividends when it becomes commercially prudent to do so and to adopt a progressive dividend policy thereafter.

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PART II—MANAGEMENT, CORPORATE GOVERNANCE AND EMPLOYEES 1 Directors The Directors are as follows:

Name Position Mark Caruso ...... Executive Chairman Frank Terranova ...... Executive Director and Chief Financial Officer Sean Harvey ...... Non Executive Director Monty House ...... Non Executive Director Anthony Lowrie ...... Non Executive Director Gregory H Steemson ...... Non Executive Director

Mark V. Caruso, Executive Chairman Mr Caruso is a director of Simto Pty Ltd which is involved in mining, earthmoving and civil engineering construction earthworks. He has also been a director of Mineral Commodities Limited since September 2000. Mr. Caruso has also served as Managing Director of the Mine Site Construction Services business since February 1991 and served as Chief Executive Officer of the ASX-listed Mineral Commodities Limited between September 2000 and May 2009.

Frank Terranova, Executive Director and Chief Financial Officer Mr. Terranova was appointed Chief Financial Officer of Allied Gold in May 2008. He is a chartered accountant and member of the Finance and Treasury Association of Australia with extensive experience in corporate finance and financial risk management predominantly within the mining and manufacturing industries. He has held many positions with various ASX-listed corporations. From November 2007 until April 2008, Mr. Terranova was a self-employed finance consultant. He served as Chief Financial Officer of Queensland Cotton Limited from December 2004 until October 2007. From October 2002 until December 2004, Mr. Terranova served as a consultant to Novabank Pty Ltd., and prior thereto he was treasurer of Normandy Mining/Newmont (Australia) from April 2000 until October 2002.

Sean Harvey, Non Executive Director Mr. Harvey has more than ten years’ investment banking and merchant banking experience. He is currently Non-Executive Chairman of Andina Minerals Inc and Victoria Gold Corporation and Non-Executive Director of Perseus Mining Limited and Polaris Geothermal Inc. Mr. Harvey has consecutively held positions as President and CEO of Atlantico Gold, TVX Gold and Orvana Minerals Corp, and he also currently sits on several other mining company boards. Mr. Harvey is chairman of the Audit, Risk and Compliance Committee. Following the expiry of his options on 31 December 2011, Mr. Harvey will become the senior independent director.

Montague House, Non Executive Director Mr. House is a member of the Australian Institute of Company Directors and was previously a Member of Parliament in Western Australia from February 1986 until February 2005. Mr. House served as Minister for Primary Industry and Fisheries as well as Deputy Leader of the National Party (elected in 1988). He is also chairman of Landcorp Western Australia and external affairs director of Latent Petroleum. Mr. House was the immediate past Chair of Landgate Western Australia. Mr. House is a member of the Audit, Risk and Compliance Committee and a member of the Remuneration and Nomination Committee.

Anthony Lowrie, Non Executive Director Mr. Lowrie has considerable corporate and finance experience, encompassing over 35 year’s association with the equities business. He was a partner with Hoare Govett London from 1976 until 1986 when it was sold to Security Pacific. He then became a member of the main board of Security Pacific Hoare Govett for a period from 1986 to 1991. He led a management buyout of Asian Equities in 1991 and became chairman of HG Asia Securities in 1991. He held this position until HG Asia Securities was sold to ABN AMRO Bank in 1996 at which point he assumed the role of chairman for ABN AMRO Asia Securities until 2004. He was formerly also a managing director of ABN AMRO Bank. He has served as a non-executive director in several quoted Asian closed end funds. He is a director of the Edinburgh Dragon Fund and Allied Gold Limited. He has been a non-executive director of Dragon Oil plc, and had,

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for 18 years, been a non-executive director of J. D. Wetherspoon plc. Mr. Lowrie is a member of the Remuneration and Nomination Committee.

Gregory H. Steemson, Non Executive Director Mr. Steemson, FAusImm, is a qualified geologist and geophysicist with an extensive background in exploration and the development and management of mining projects. Mr. Steemson is currently a director of Court Resources Pty Ltd, and has previously served as chief executive officer of Mineral Commodities Limited, director of Carbine Resources Limited and managing director of Sandfire Resources NL (a public listed company). Mr. Steemson is a member of the Audit, Risk and Compliance Committee and the Remuneration and Nomination Committee.

2 Senior Management Peter Torre (Company Secretary) Mr. Torre is the principal of the corporate advisory firm Torre Corporate which provides corporate secretarial services to a range of listed companies. Prior to establishing Torre Corporate, Mr Torre was a partner and Chairman of the National Corporate Services Committee of an internationally affiliated firm of Chartered Accountants working within its corporate services division for over nine years. Mr. Torre is the company secretary of several ASX-listed companies, a director of Neo Resources Limited, Mission New Energy Limited and Mineral Commodities Limited and is one of the founding Directors of the charity organisation, ‘‘A Better Life Foundation WA’’. Mr Torre was also formerly a Director of Carbine Resources Limited and CI Resources Limited. Mr Torre holds a Bachelor of Business, is a Chartered Accountant, a Chartered Secretary and is a member of the Institute of Company Directors.

Peter Williams, Chief Operations Officer Peter started his mining career with Bougainville Copper in 1971. He has experience mining a variety of minerals including copper, iron ore, salt, mineral sands and gold. He has established and managed a number of projects including Peak Hill for North, the Jubilee mine for New Hampton, Bullabulling for Resolute, Hawks Nest for Mineral Deposits and most recently, as Managing Director and Chief Operating Officer, has overseen the growth of Focus Minerals from a junior explorer to a mid tier miner with its own processing plant and two operating underground mines.

Ross Hastings, Manager Resource and Development Mr. Hastings is a geologist with over 20 years international experience working in the minerals industry with a majority of that time working in PNG at Ok Tedi copper mine in the roles of Geotechnical Superintendent and Manager of Mining, and at the Misima gold mine as Chief Geologist. Since 1996, Mr. Hastings has been involved with Simberi where his roles have included management of exploration and the feasibility and pre-development studies for mine construction.

Peter DuPlessis, Manager Simberi Operations Mr. DuPlessis is a qualified Mine Surveyor and Mine Manager with over 35 years experience in deep and shallow mining. Mr. DuPlessis has held senior management positions at a number of mining companies.

Drew Anwyll, General Manager—Operations, Gold Ridge Mine Mr. Anwyll is a Canadian Mining Engineer with more than 18 years of experience in gold mining. He holds a Masters in Engineering from McGill University in Canada and has worked around the world including in locations across Canada, South Africa, PNG and the Solomon Islands. He has worked for Placer Dome Inc. and Barrick and has experience in construction and project management, and both open pit and underground production. Prior to joining Allied Gold as General Manager—Operations at Gold Ridge, he was based at the Porgera Mine in the highlands of PNG.

Phil Davies, Group Exploration Manager After graduating from the University of New South Wales, Phil Davies explored for diamonds in western and central southern Australia. He furthered his academic education at RSM, Imperial College London, before returning to Australia to explore for orogenic gold. Over a ten year period his work was concentrated in the Eastern Goldfields of Western Australia. Phil then departed for West Africa where he

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discovered and defined the multi-Moz laterite hosted gold deposits at Siguiri, Guinee, leading to its acquisition and successful development by Ashanti Goldfields. Phil led Ashanti Goldfield’s West Africa Exploration group for ten years prior to its acquisition by AngloGold. After a further two years with Anglogold Ashanti he returned to the field with Gold Fields to successfully complete a BFS at its joint ventured Essakane deposit in Burkina Faso. Following the deposit’s sale, Phil returned to Australia to join Allied Gold and lead its geological team first at Simberi then at Group level.

3 Corporate governance Historically, before Pre-IPO Reorganisation, the Group adhered to the best practice recommendations of the ASX Corporate Governance Council, and the best practice recommendations of the TSX and those prescribed under National Policy 58-201—Corporate Governance Guidelines. Where there was any variation from those recommendations, those practices were the subject of the scrutiny of the full Board of the Group’s then holding company, Allied Gold, having regard to the nature and size of Allied Gold’s business. There have been two such instances of non-compliance by Allied Gold, as follows: • the roles of chairman and chief executive officer were not separated; and • the board of Allied Gold has not appointed a senior independent director. Following Admission, the Company will be required to comply with corporate governance policies and practices consistent with the Financial Reporting Council’s Corporate Governance Code (Corporate Governance Code) or otherwise explain why it has not complied in its annual report and accounts. The Company is in compliance with the Corporate Governance Code as at the date of Admission, except as set out below: • Mr. Mark Caruso acts as both the Chairman and Chief Executive and is not independent within the meaning of the Corporate Governance Code. The Board considers that Mr. Mark Caruso’s relationship with the Group and his importance to it mean that his presence as Executive Chairman is in the best interests of Shareholders, notwithstanding that he is not independent within the meaning of the Corporate Governance Code. • Under the independence criteria set out in the Corporate Governance Code, as at Admission none of the Non-Executive Directors will be considered to be independent as a result of the Allied Gold Mining Options held by them—however, these interests will expire on or before 31 December 2011, at which point it is expected that each of the Non-Executive Directors will meet the independence criteria as set out in the Corporate Governance Code. • The Board does not have a senior independent director because, as explained above, none of the Directors will be considered independent on Admission. • The Company has two committees, the Audit, Risk and Compliance Committee and the Remuneration and Nomination Committee. The Company does not have a separate audit committee, remuneration committee and nomination committee. Given the size of the Company, the Board feels that it is appropriate for the remuneration and nomination committees to be combined. • At each annual general meeting of the Company, only one third of the Directors or, if their number is not three or a multiple of three, the number nearest to but not exceeding one-third shall retire from office by rotation. Over time, the Company intends to comply fully with the Corporate Governance Code.

Transition of Executive Chairman to Non Executive Chairman To ensure the positive attributes of continuity of expertise within the Group the Board of Allied Gold has resolved to undertake a restructure of its executive management. In this regard, the Board has resolved to appoint Mr. Frank Terranova as Chief Executive Officer and Managing Director. Mr Terranova is the existing Chief Financial Officer and is an Executive Director of the Group. The appointment is taking place pursuant to a transition process currently underway which will result in the current Executive Chairman, Mr. Mark Caruso, moving into the role of Non-Executive Chairman. The transition process is being implemented to ensure that the Company’s operations, in particular the recently commissioned Gold Ridge project, reach steady state production under the guidance of the existing Executive Chairman. On 1 July 2011, Mr Caruso will assume the role of Non-Executive Chairman

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and Mr Terranova will assume the role of Chief Executive Officer and Managing Director There will be a transition period of approximately 6 months to 31 December 2011. The Board believes there are significant merits in retaining the key executives within the Group and the involvement of Mr Caruso in the transition process will ensure a seamless hand over of the Chief Executive Officer role to Mr. Terranova. In addition, Mr Terranova, as the newly appointed Chief Executive Officer, will be able to continually draw upon the knowledge of the Non-Executive Chairman given the instrumental role Mr. Caruso played in the development of the Group’s operations. A formal Transition Committee which includes the Chairman of the Audit, Risk and Compliance Committee, the Chairman, the Chief Executive Officer and the Company Secretary has been created by the Board to oversee the transition process on behalf of the Board. As part of the transition process, Stephen Kelly will be appointed to the role of Chief Financial Officer, further strengthening the broader transition philosophy of ensuring continuity of expertise within the group. Mr Kelly commenced employment with Allied Gold Limited in July 2008 and since that time has served as the Group Financial Controller and Group Finance Manager before recently taking on responsibility for the management of a number of significant corporate projects. Mr Kelly is a Chartered Accountant with over 25 years of international experience in the areas of external and internal audit, risk management and compliance, treasury and corporate finance. This experience has been gained across a range of industry sectors including mining, infrastructure, property development and banking and finance.

Board structure and composition The Board currently comprises six Directors. According to ASX requirements, all Directors except the Executive Directors are deemed to be independent. Independence, in this context, is defined to mean a Non Executive Director who is not a member of management and who is free from any interest and any business or other relationship that could, or could reasonably be perceived to, materially interfere with the independent exercise of their judgment. Under the independence criteria set out in the Corporate Governance Code, as at Admission none of the Non-Executive Directors will be considered to be independent as a result of the Allied Gold Mining Options held by them—however, these interests will expire on or before 31 December 2011, at which point it is expected that each of the Non-Executive Directors will meet the independence criteria as set out in the Corporate Governance Code. The Board is fully committed to adhering to the good principles of corporate governance enshrined in the Corporate Governance Code, and as such is currently assessing its composition with respect to the provisions of the Corporate Governance Code. Details of each Director’s skill, expertise and background, external directorships and shareholding will be contained within the Directors’ report included with the Company’s annual financial statements going forward. Each Director’s term of office expires at the later of the third annual general meeting of Shareholders of the Company or three years following that Director’s last election or appointment. One third of the Directors must retire at each annual general meeting. Retiring Directors are eligible for re-election. The Company intends to implement, on or prior to Admission, formal written position descriptions for the Chairman, the chairman of each Board committee and the Chief Executive Officer. Currently the role of Chief Executive Officer is set out in the executive service agreement entered into by the executive Chairman. The Directors have established an Audit, Risk and Compliance Committee and a Remuneration and Nomination Committee.

Matters reserved to the Board The role of the Board is to provide leadership of the Group within a framework of prudent and effective controls which enables risk to be assessed and managed, to set the strategic aims and direction of the Group, to secure the effective management of relationships with the Group’s stakeholders and to ensure that an effective system of internal control is established and maintained for the Group. The Board has adopted a formal schedule of matters reserved for its collective decision. The Board is responsible, among other things, for the determination and monitoring of the Group’s strategic aims and long term objectives, operating and capital expenditure budgets and senior appointments, oversight of the Group’s operations and the management of the corporate structure of the Group.

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Audit, Risk and Compliance Committee The Audit, Risk and Compliance Committee is chaired by Sean Harvey and its other members are Montague House and Gregory H Steemson. Members of the Audit, Risk and Compliance Committee are appointed by the Board from amongst the Non-Executive Directors on the recommendation of the Remuneration and Nomination Committee and in consultation with the chairman of the Audit, Risk and Compliance Committee. The members of the Audit, Risk and Compliance Committee will comprise at least three Non-Executive Directors with, where possible, two Directors who are assessed to be independent. The Audit, Risk and Compliance Committee has defined terms of reference. The terms of reference provide that at least one member of the Audit, Risk and Compliance Committee will have accounting and/or related financial management expertise as determined by the Board. The Board considers that Sean Harvey has the requisite recent and relevant financial experience for these purposes. The Audit Committee meets at least four times per year. The Audit, Risk and Compliance Committee’s terms of reference include certain of the matters indicated by the Corporate Governance Code. The Audit, Risk and Compliance Committee has responsibility for, among other things, monitoring the integrity of the Group’s financial statements and reviewing its summary financial statements, overseeing the Group’s relationship with its external auditors and reviewing the effectiveness of the external audit process and reviewing the effectiveness of the Group’s system of internal controls and risk management systems. The Audit, Risk and Compliance Committee is required by its terms of reference to give due consideration to relevant laws and regulations, the provisions of the Corporate Governance Code and the requirements of the Listing Rules as provided in its terms of reference. The Audit, Risk and Compliance Committee is required to report its findings to the Board, and make recommendations in respect of any area within its remit where action or improvement is needed.

Remuneration and Nomination Committee The Remuneration and Nomination Committee is chaired by Montague House and its other members are Anthony Lowrie and Gregory H Steemson. Members of the Remuneration and Nomination Committee are appointed by the Board from amongst the Non-Executive Directors. The Remuneration and Nomination Committee has defined terms of reference. The Remuneration and Nomination Committee meets at least twice per year. The Remuneration and Nomination Committee is responsible for determining and agreeing with the Board the framework for the remuneration of the Chief Executive, the chairman of the Board (if the chairman is an executive director), the executive directors, the company secretary, and such other members of the executive management within the remit of the Remuneration and Nomination Committee, with the objective of ensuring that members of the executive management of the Group are provided with appropriate incentives to encourage enhanced performance and are, in a fair and responsible manner, rewarded for their individual contributions to the success of the Group. The Remuneration and Nomination Committee is also responsible for determining, within the terms of the agreed policy and in consultation with the chairman of the Board and/or the Chief Executive as appropriate, the total individual remuneration package of the Chairman, each executive Director, the company secretary and other designated senior executives including bonuses, incentive payments and share options or other share awards. The Remuneration and Nomination Committee is also responsible for approving the design of, and determining targets for, any performance related pay schemes operated by the Group and approving the total annual payments made under such schemes, reviewing the design of all share incentive plans for approval by the Board and shareholders, and determining the policy for, and scope of, pension arrangements for each executive Director and other designated senior executives. The Remuneration and Nomination Committee does not decide upon the remuneration of the Non Executive Directors, which is decided by the Board in accordance with the limits set out in the Company’s constitutional documents. The Remuneration and Nomination Committee reviews the procedure for the appointment of new directors and evaluates structure, size and composition as well as the balance of skills, knowledge and experience of the Board and makes any recommendations to the Board where necessary. The Remuneration and Nomination Committee is responsible for the succession planning of directors and for the identification and nomination of candidates to fill vacancies where necessary.

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Given the size of the Company, the Board feels that it is appropriate for the remuneration and nomination sub-committees of the Board to be combined. The Remuneration and Nomination Committee is required to report its findings to the Board, and make recommendations in respect of any area within its remit where action or improvement is needed.

4 Corporate social responsibility The environment, health and safety management system (EHSMS) The Directors recognise the importance of environmental and occupational health and safety (OH&S) issues and is committed to the highest levels of performance. To help meet this objective the EHSMS was established to facilitate the systematic identification of environmental and OH&S issues and to ensure they are managed in a structured manner. This system allows the company to: • monitor its compliance with all relevant legislation; • continually assess and improve the impact of its operations on the environment and encourage employees to actively participate in the management of environmental and OH&S issues; and • work with trade associations representing the Group’s businesses to raise standards, use energy and other resources efficiently, and encourage the adoption of similar standards by the Group’s principal suppliers, contractors and distributors.

Environmental matters The Group’s environment team actively monitors and manages the Group’s environmental practices, hazards and risks. The environment team works in partnership with Community Relations to actively engage the wider community. Quality assurance is maintained by regular auditing. At Simberi the environment monitoring program encompasses activities such as meteorology, hydrology, terrestrial water and sediment chemistry, tailing stream chemistry, near shore sedimentation rates, rehabilitation, coral transects, deep ocean sedimentation, up-welling, marine fisheries, waste (mine and domestic) management and compliance monitoring. At Gold Ridge, GRML has committed to external/independent environmental, and health and safety compliance monitoring and reporting, including to IFC Performance Standards, in order to provide an additional level of transparency to the implementation of environmental and health and safety management programs at Gold Ridge. Further details can be found at section 19.2 of the Gold Ridge Gold Project Competent Person’s Report in ‘‘Part XIV—Competent Person’s Reports’’ of this Prospectus.

Social responsibility At Gold Ridge, the Group is diligent in maintaining its social licence to operate through social inclusion to build skills and opportunities in the local economy. The GRCLC is a key stakeholder in the redevelopment of the mine and has been the driving force behind community consultation forums and negotiations. The Company has inherited a well established indigenous community relations team (CR team) that works with the local villages and organizations. The community relations team monitors social outcomes against IFC standards, as well as standing agreements between the Group and local landowners. The Group recognises that priority areas for making the community stronger encompass education & training, culture, health and sports, food security and self sufficiency, income security and business development. In addition to providing training and employment opportunities supporting the community in developing food and income security and business plans is a priority. Current projects underway and in development include vegetable gardens and food growing, a women’s market (food and craft), local shop and food distribution and transport services. At Simberi, the Group and the landowner representative body (the SMAA) representing seven village planning committees and provincial stakeholders are implementing a community development plan with education, health, community infrastructure and business development as its priorities. Management of community relations and compliance department has been localised and restructured.

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A formalised business development plan is being developed and local contracts have been issued for road maintenance, bridge refurbishment, airport grounds maintenance, camp grass cutting and timber milling. Plans are also under way for the establishment of small scale commercial fishing. Community development projects at Simberi include: • upgraded village water storage and reticulation to additional villages; • refurbishment of the Simberi Community School buildings and an additional two storey classroom; and • additional staffing and improved community access to the Maragon Clinic. Plans are already in progress for the establishment of an incorporated association under which a Flexible, Open and Distance Education (FODE) Registered Study Centre will be established. A building has been allocated to act as a study centre and funding is being sourced for computers, teaching and administration staff. This will provide opportunities for nearby students to complete their grade 10 education. Thirty local students are listed for enrolment in 2011. FODE graduates will be encouraged to apply for work with the mine as well as seek opportunities further afield, including higher education. The Group also plans to facilitate greater levels of trading in fish, meat, fruits and vegetables to improve local diet and make better use of the cash income that mine employment offers the local workforce. This will be facilitated by a market place and better transportation around the island. As educational levels on the island improve, it is expected that participation in local business will increase.

5 Employees The following table includes details of the Group’s employees as at the end of the period or the average for each financial year for the period covered by the historical financial information up to the date of this Prospectus, and a breakdown of the Group’s employees by main category of activity and geographic location:

Number of employees as at 30 June 30 June 30 June 31 December 2008 2009 2010 2010 Australia Corporate office ...... 16 16 28 40 PNG Mining ...... 91 121 145 108 Processing ...... 83 110 110 168 Administration ...... 93 156 361 306 Exploration ...... 70 83 85 115 Solomon Islands Mining ...... — — 21 103 Processing ...... — — 17 9 Administration ...... — — 210 465 Exploration ...... — — 5 28 Total ...... 353 486 982 1,339

The Company has no temporary or permanent employees. To assist with labour relations in the Solomon Islands, the Group has in place a collective labour agreement covering approximately 35 per cent of its workforce in that jurisdiction.

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PART III—PAPUA NEW GUINEA SECTION A—GENERAL INFORMATION 1 Introduction The Independent State of Papua New Guinea is located in Oceania, occupying the eastern half of the island of New Guinea between the Coral Sea and the South Pacific Ocean, east of Indonesia.

2 Geography and demography PNG has a surface area of some 462,840km2 (making it slightly larger than the state of California). The country’s capital is Port Moresby (population 254,158). Other major population centres are Lae (78,038) and Mt. Hagen (27,789). The terrain is mostly mountainous with coastal lowlands and rolling foothills. PNG has a tropical climate, experiencing monsoons in December to March (northwest) and May to October (southeast). The population of PNG stands at just over 6 million, with an annual population growth rate of 2 per cent and an annual rate of urbanisation of 1.9 per cent PNG’s. The overall population density is low, although pockets of overpopulation exist. Some 80 per cent of PNG’s people live in rural areas with few or no facilities of modern life. Many tribal communities in the isolated mountainous interior have little contact with one another, let alone with the outside world, and live within a non-monetarised economy dependent on subsistence agriculture. A considerable urban drift toward Port Moresby and other major centres has occurred in recent years. The trend toward urbanization accelerated in the 1990s, bringing in its wake squatter settlements, ethnic disputes, unemployment, public utilities pressure, and attendant social problems, especially violent crime. PNG has three official languages (English, Tok Pisin and Motu). Linguistically, however, PNG is the world’s most diverse country with approximately 860 native tongues, many of which are extremely grammatically complex. Melanesian Pidgin serves as the lingua franca. English is spoken by educated people and in Milne Bay Province. The indigenous population of PNG is one of the most heterogeneous in the world. PNG has several thousand separate communities, most with only a few hundred people. Divided by language, customs, and tradition, some of these communities have engaged in low-scale tribal conflict with their neighbours for millennia. The advent of modern weapons and modern migration into urban areas has greatly magnified the impact of this lawlessness. The isolation created by the mountainous terrain is so great that some groups, until recently, were unaware of the existence of neighbouring groups only a few km away. This diversity, reflected in a folk saying, ‘‘For each village, a different culture,’’ is perhaps best demonstrated by the considerable linguistic diversity. Approximately 96 per cent of the population is Christian. The churches with the largest number of members are the Roman Catholic Church, the Evangelical Lutheran Church, the United Church, and the Seventh Day Adventist church. Although the major churches are under indigenous leadership, a large number of missionaries remain in the country. The non-Christian portion of the indigenous population, as well as a portion of the nominal Christians, practices a wide variety of religions that are an integral part of traditional culture, mainly animism (spirit worship) and ancestor cults. Foreign residents comprise about 1 per cent of the population. More than half are Australian; others are from China, the United Kingdom, New Zealand, the Philippines, India, and the United States. Most foreign residents are missionaries. Since independence, about 900 foreigners have become naturalized citizens.

3 Civil unrest PNG had to deal with separatist forces of its own on the island of Bougainville in the 1990s. Up to 20,000 people were killed in the nine-year conflict which ended in 1997. A peace agreement between the Government and the separatists signed in August 2001 provided the framework for the election in 2005 of an autonomous Bougainville Government. A referendum was tentatively agreed to be held between 2015 and 2020, ten to 15 years following formation of the ABG. Progress has been slow, with the ABG initially focusing on disarmament, peace, and reconciliation. A small percentage of former separatist combatants have created illegal ‘‘no go zones,’’ particularly in the Central and South Bougainville.

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Most recently, in January 2011, there were outbreaks of tribal fighting in and around the settlements of Port Moresby. There have also been recent outbreaks of violence and looting directed against local Asian-owned businesses in Port Moresby, Mount Hagen and several other centres across PNG.

4 Natural hazards PNG experiences severe volcanic activity; Ulawun (elev. 7657 ft), one of PNG’s most dangerous volcanoes, has been deemed a ‘‘Decade Volcano’’ by the International Association of Volcanology and Chemistry of the Earth’s Interior, and worthy of study due to its explosive history and close proximity to human populations; Rabaul (elev. 2257 ft) destroyed the city of Rabaul in 1937 and 1994; Lamington erupted in 1951, taking 3000 lives; Manam’s 2004 eruption forced the island’s abandonment; other historically active volcanoes include Bam, Bagana, Garbuna, Karkar, Langila, Lolobau, Long Island, Pago, St. Andrew Strait, Victory, and Waiowa.

5 System of Government PNG is a Commonwealth country which gained independence from Australia in 1975 and maintained the head of state as Queen Elizabeth II. PNG has been a democratic country since independence and has followed Westminster doctrines providing for the separation of powers between the legislature, the bureaucracy and the judiciary. It has a system of National and Provincial Government with constitutional provisions for the division of legislative powers between both. The National Parliament is unicameral and elections conducted on the basis of limited preferential voting occur every five years. Unless called early, the next general elections will occur during the third quarter of 2012. The Constitution guarantees to all persons basic freedoms in terms similar to the United Nations Convention on human rights and further confers to citizens additional legal protections including protections against expropriation of property without compensation.

6 International Engagement PNG has made itself subject to a number of international treaties and engages with the International Community at a number of official and unofficial levels. It is a member of the International Monetary Fund, and both the World Bank, the International Finance Corporation. PNG has provided by legislation universal state consent for the purposes of MIGA to all foreign investments approved under the Investment Promotion Act. PNG is a signatory to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. As a member of the Commonwealth, the country is active and engaged in Commonwealth activities. Australia and PNG have a number of bi-lateral treaties and co-operation agreements including for foreign aid, investment protection and defence co-operation. Whilst having developed its own awards system, the country still participates in the British awards system.

7 Legal System PNG has adopted the common law and rules of equity in force in England as at 1975 in addition to the statute laws passed by the Parliament. The judiciary have demonstrated independence from government and has entertained and decided cases dealing with difficult topics such as, for example, the election of a Prime Minister, the appointment of a Governor General, police powers, the validity of major taxation legislation and the validity of certain treaties and international agreements. The executive arm of government has demonstrated that it is capable of substantial legislative reform and has in the past conducted major overhauls of corporate and securities law, oil and gas laws, mining laws, domestic fiscal laws, consumption taxes, banking and superannuation supervision laws, environmental laws and competition laws. In PNG, company and securities laws are reasonably well-developed. The PNG Companies Act 1997 was based closely on the New Zealand Companies Act and the PNG Securities Act 1997 has drawn heavily on securities legislation in Australia and New Zealand. Many of the underlying principles and rights are derived from English and Australian company law. The Port Moresby Stock Exchange has adopted listing and business rules similar to the Australian Stock Exchange which facilitates easy dual listing compliance for Australian and PNG corporations.

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8 Economic overview PNG is rich in natural resources, including minerals, oil, gas, timber and fish, and produces a variety of commercial agricultural products. The economy can generally be separated into subsistence and market sectors, although the distinction is blurred by smallholder cash cropping of coffee, cocoa, and copra. Approximately 75 per cent of the country’s population relies primarily on the subsistence economy. The minerals, timber, and fish sectors are dominated by foreign investors.

Mineral and oil resources PNG is richly endowed with gold, copper, oil, natural gas and other minerals. However, the difficult terrain and poor infrastructure make exploitation slow. In 2006 minerals and oil export receipts accounted for 82 per cent of GDP. Government revenues and foreign exchange earnings depend heavily on mineral and oil exports. Indigenous landowners in areas affected by minerals projects also receive royalties from those operations. Copper and gold mines are currently in production at Porgera, Ok Tedi, Misima, and Lihir. A consortium led by Exxon/Mobil signed a final investment decision in December 2009 to begin the commercialization of the country’s estimated 22.5 trillion cubic feet of natural gas reserves through the construction of a liquefied natural gas (LNG) production facility. Interoil, an American-owned firm, opened PNG first oil refinery in 2004 and is also building a second LNG production facility with production capacity of 32,500 barrels of product per day which it aims to complete by 2012.

Agriculture, timber and fish PNG also produces and exports valuable agricultural, timber, and marine products. Agriculture currently accounts for 13 per cent of GDP and supports more than 75 per cent of the population. Cash crops ranked by value are coffee, oil, cocoa, copra, tea, rubber, and sugar. About 40 per cent of the country is covered with exploitable trees, but a domestic woodworking industry has been slow to develop. A number of Southeast Asian companies are active in the timber industry, but World Bank and other donors have withdrawn support from the sector over concern for unregulated deforestation and environmental damage. PNG has an active tuna industry, but much of the catch is made by other nations fishing in PNG waters under license. Locally produced fish exports are confined primarily to shrimp.

Industry In general, the PNG economy is highly dependent on imports for manufactured goods. Its industrial sector—(exclusive of mining)—accounts for only 9 per cent of GDP and contributes little to exports. Small-scale industries produce beer, soap, concrete products, clothing, paper products, matches, ice cream, canned meat, fruit juices, furniture, plywood, and paint. The small domestic market, relatively high wages, and high transport costs are constraints to industrial development.

Trade and investment Australia, Singapore, and Japan are the principal exporters to PNG. Petroleum and mining machinery and aircraft have been the strongest U.S. exports to PNG. Australia is PNG’s most important export market, followed by Japan and the European Union. The U.S. imports modest amounts of gold, copper ore, cocoa, coffee, and other agricultural products from PNG. Most of those exports take place through third countries. With the 2003 withdrawal of Chevron/Texaco, Australian companies are the most active in developing PNG’s mining and petroleum sectors. Exxon/Mobil retains a major share of natural gas reserves and is constructing a liquefied natural gas processing facility. Interoil, backed by an Overseas Private Investment Corporation loan, operates an oil refinery in Port Moresby and in September 2010 signed an agreement with Energy World Corporation to complete front-end engineering and design and a final investment decision to establish the second LNG project in the country. China is increasing its investment in PNG, including development of the $1 billion Ramu nickel mine. PNG became a participating economy in the Asia-Pacific Economic Cooperation Forum in 1993. It joined the World Trade Organization in 1996. It is an observer at ASEAN and a member of the ASEAN Regional Forum. It has preferential tariff agreements with the markets of Melanesian and Pacific Island neighbors through the Melanesian Spearhead Group Trade Agreement and the Pacific Islands Countries Trade Agreement.

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Development programs and aid Australia is by far the largest bilateral aid donor to PNG, offering about $355 million in assistance annually. Budgetary support, which has been provided in decreasing amounts since independence, was phased out in 2000 with aid concentrated instead on project development. In 2004, Australia and PNG embarked on the Enhanced Cooperation Program, under which Australia agreed to provide direct assistance, including 210 line police officers, to the PNG constabulary. The ECP met with initial success, but was abruptly ended when PNG’s Supreme Court stripped Australian police officers of immunity in May 2005. Virtually all ECP personnel left PNG following the court’s decision. The governments of PNG and Australia are now involved in protracted negotiations on a scaled-down version of the ECP. Other major sources of aid to PNG are Japan, the European Union, the People’s Republic of China, Taiwan, the United Nations, the Asian Development Bank, the International Monetary Fund, and the World Bank. Volunteers from a number of countries and mission church workers also provide education, health, and development assistance throughout the country. Foreign assistance to PNG is approximately US$46 per capita. The US funds a US$1.5 million-per-year HIV/AIDS project in PNG.

Current economic conditions After years of decline and government deficit, PNG was bolstered in recent years by a general rise in commodity prices and by government steps toward spending control. The economy continues to grow modestly and the government recorded a modest surplus in 2007. However, the economic improvements are based almost entirely on high commodity prices and the nation continues to have serious problems of corruption, a lack of law and order, land tenure concerns stifling investment, political interference in business, and a lack of political will to adopt much-needed reform.

9 Fiscal Arrangements The country issues its own currency, the Kina, and the Treasury maintains a limited domestic debt program. The currency has been stable and trading in substantially in the PGK1.00:USD0.30-0.35 range over the last six years. The Treasury has not undertaken any external international borrowings for a considerable number of years and international debt has reduced significantly. The Bank of PNG is a modern style of regulator setting monetary policy independently of the treasury and also conducting financial supervision. Both the banking and insurance sectors use risk based capital methods to determine capital adequacy. A confluence of factors limited PNG’s banks from participating in the US sub-prime market and the PNG banking system has been unaffected by the toxic debt problems elsewhere which contributed to the Global Financial Crisis. By legislation the Bank of PNG is required to publish its monetary policy determinations which it does each six months. In September 2007, Standard & Poor’s Ratings Services upgraded PNG’s long term foreign currency rating to ‘B+’ with a stable outlook, citing the improvement in the country’s fiscal and external balance sheets and in its political environment. The rating agency also raised PNG’s long term local currency rating to ‘BB-’, citing high commodity prices which have boosted investment and economic growth in the country. In 2011 Standard & Poor’s Transfer and Convertibility Rating for PNG was BB and its long term foreign currency rating remained B+ with stable outlook. Each year the Parliament is called by the Government to pass a budget and appropriation bill for the following fiscal year. The PNG treasury and the Bank of PNG have predicted in the period immediately following 2014 that the State will have large surpluses from taxation on petroleum and mineral exports and to mitigate against adverse effects on other sectors of the economy and better manage government revenue that an internationally domiciled Sovereign Wealth Fund is to be established.

10 Developing Country PNG remains however a developing country with its challenges. Significant portions of the population remain subsistence farmers in the informal sector with limited ability to participate in the growing formal sector. Health and education remain areas requiring development and for which PNG remains a significant recipient of aid donor money.

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SECTION B—THE GROUP’S LICENCES 1 PNG licensing regime and the Group’s licences 1.1 Papua New Guinea has a number of land tenure and mining laws. 1.2 The Simberi Operations on the Tabar Islands are conducted on several land use entitlements which comprise: (a) an Agricultural Plantation Lease over 346 acres 1 rood 20 perchs known as Pikung granted under the Land Act 1996 (the Pikung Lease); (b) a Freehold Substitute Lease over Portion 168 known as Pigibut granted under the Land Act 1996 (the Pigibut Lease); (c) Mining Lease 136 granted under the Mining Act 1992; and (d) Exploration Licence 609 granted under the Mining Act 1992. 1.3 Both the Pikung Lease and Pigibut Lease are situated within that part of modern Papua New Guinea which was formerly the German colony of New Guinea. As a result of the Treaty of Versailles, that former possession of imperial Germany was transferred to the Commonwealth of Australia to administer under League of Nations mandate. 1.4 On 1 January 1938, the Commonwealth Administrator of the territory of New Guinea granted the Pikung Lease for 99 years to expire on 31 December 2036. During the war between Australia and Japan, the Commonwealth of Australia enacted the National Security (External Territories) Regulation which had the effect of stopping time running on the lease during the period of the war and immediate post war period which by statute is between 11 February 1942 and 10 February 1947. This regulation has the effect of extending the term of the Pikung Lease by five years to 31 December 2041. 1.5 The Pikung Lease conveys a leasehold entitlement to occupy and use the land during the term on payment of the annual rental. At the expiry date on in 2041, Simberi Gold has no guaranteed right of renewal, however the Land Act requires the State to purchase the Group’s improvements constructed on or made to the land comprised in these leases if renewal is not granted. 1.6 The Pigibut Plantation was freehold land and under a law which allowed holders of freehold land to return their freehold to the State in exchange for a substitute freehold lease, a Lease was granted on 13 June 1976. This lease granted under the Land (Ownership of Freeholds) Act 1978 is for a term of 99 years and does not require the payment of any rent to the State. 1.7 Simberi Gold is now the registered proprietor of each of the Pikung Lease and the Pigibut Lease by registered Transfer. The leases reserve to the State the minerals and do not of themselves give any rights to the minerals. 1.8 The rights to the minerals on the leases and elsewhere on the customary land subject to the lifetime usufructory use entitlements of the traditional people which surround the leases are derived from Mining Lease 136 and Exploration Licence 609. 1.9 The Mining Lease is granted under Section 38 of the Mining Act and the Exploration Licence is granted under Section 21 of the Mining Act. 1.10 Mining Lease 136 was originally granted on 3 December 1996 for a term of 12 years which expired on 2 December 2008. On 4 May 2007, the Minister approved the further issue of a lease for ten years and issued a replacement lease to commence on 3 December 2008 and terminate on 2 December 2018. 1.11 Pursuant to the provisions of Section 41 of the Mining Act, this lease confers on Simberi Gold the right to: ‘‘(1) A mining lease authorizes the holder, in accordance with the Mining (Safety) Act (Chapter 195A) and any conditions to which the mining lease is subject, to— (a) enter and occupy the land over which the mining lease was granted for the purpose of mining the minerals on that land and carry on such operations and undertake such works as may be necessary or expedient for that purpose; and

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(b) construct a treatment plant on that land and treat any mineral derived from mining operations, whether on that land or elsewhere, and construct any other facilities required for treatment including waste dumps and tailings dams; and (c) take and remove rock, earth, soil and minerals from the land, with or without treatment; and (d) take and divert water situated on or flowing through such land and use it for any purpose necessary for his mining or treatment operations subject to and in accordance with the Water Resources Act; and (e) do all other things necessary or expedient for the undertaking of mining or treatment operations on that land. (2) Subject to the Mining Act, the holder of a mining lease— (a) is entitled to the exclusive occupancy for mining and mining purposes of the land in respect of which the mining lease was granted; and (b) owns all minerals lawfully mined from that land.’’ 1.12 Pursuant to Section 46 of the Mining Act, a power exists for the Minister on application by the holder to extend the term of the lease. 1.13 The specific conditions on which Mining Lease 136 is granted are: ‘‘(1) The Lessee shall comply with the approved proposal [for mining] as may be varied from time to time. (2) The Lessee shall comply with the Provisions of the Mining (Safety) Act ... and facilitate the Mineral Resources Authority official conducting inspection under the terms of the Act. (3) The Lessee shall comply with the conditions imposed by the Mineral Resources Authority, and the Department of Environment and Conservation. (4) That the Lessee shall provide the Mineral Resources Authority with yearly reports on any exploration for gold, and any other mineral, carried out on the land. The lessee shall further furnish the said Authority with monthly production figures gained as a result of this Lease. (5) That the Lessee shall not use the land, without the consent of the State, whose consent shall not be unreasonably withhold for any purpose other than for which it was granted pursuant to the Mining Act and the Approved Proposals for Development. (6) The Lessee shall not interfere, without the consent of the State, with the cultural use of the land, and shall use its best efforts to accommodate traditional land users, compatible with the obligations under the Approved Proposal for Development. (7) Without limiting the obligations imposed on the lessee by the Act, the Lessee shall compensate the owners of private land which is located within the boundaries of this Mining Lease in accordance with the Act and any agreement between the Lessee and the owners of such, as the case may be. (8) The Lessee shall provide the Mineral Resources Authority with a Conceptual Mine Closure Plan twelve month from the issuing of the extension and submit a Mine Closure Plan and Schedule, at lease on year prior to the intended cessation of operations, notwithstanding parameters that justify premature closure of operations. (9) The Lessee shall make provision and be responsible, to the reasonable satisfaction of the State, for the maintenance, and safety, of any tailings catchment dam, for a period of 5 years after the mine has closed. (10) The Lessee shall stockpile all topsoil removed from the site of the open pits, not regarded as ore and use such topsoil for re-vegetation purpose on or before the cessation of mining operations. (11) The Lessee shall submit the open pit mining plan, to the Chief Inspector of Mines, six (6) weeks prior to commencement of mining operations.

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(12) The Lessee shall furnish to the Chief Inspector of Mines all mine plant plans and details, for the mine construction phase and thereafter.’’ 1.14 The Exploration Licence was granted for an initial term of two years. The term of Exploration Licence 609 expired on 5 May 2011 and an application for renewal for an additional two year term was lodged on 1 February 2011. Pending its renewal, Exploration Licence 609 is held over on a statutory basis in favour of Nord Australex Nominees (PNG) Limited. Pursuant to the provisions of Section 23 of the Mining Act, this lease confers on Nord Australex Nominees (PNG) Limited the right in accordance with any conditions to which it may be subject, to: ‘‘(1) (a) enter and occupy the land which comprises the exploration licence for the purpose of carrying out exploration for minerals on that land; (b) subject to Section 162, extract, remove and dispose of such quantity of rock, earth, soil or minerals as may be permitted by the approved programme; (c) take and divert water situated on or flowing through such land and use it for any purpose necessary for his exploration activities subject to and in accordance with the provisions of the Water Resources Act (Chapter 205); and (d) do all other things necessary or expedient for the undertaking of exploration on the land. (2) Subject to the Mining Act, the holder of an exploration licence is entitled to the exclusive occupancy for exploration purposes of the land in respect of which the exploration licence was granted.’’ 1.15 Exploration Licences are subject pursuant to Section 22 of the Mining Act to mandatory surrender provisions requiring 50 per cent of the licence area to be handed back on each renewal unless a Mining Lease or Special Mining Lease is applied for in respect to a discovery of minerals. The State policy is to free up land for future exploration and speculating on exploration acreage is discouraged. The Mineral Resources Authority requires work programs and budgets to be set out on application and renewal and on each renewal examines actual performance during the expiring term against the programmes and budgets submitted at the beginning before determining whether to recommend renewal to the Minister. 1.16 Papua New Guinea has a policy of reserving to the State an option to acquire a participating interest in both mining and petroleum tenements. In the case of petroleum tenements the state entities can back into a petroleum project at sunk cost for up to 22.5 per cent of the project and this entitlement is clearly defined in the petroleum legislation. In the case of mining projects, the legislation does not clearly define the right or extent of participation and that is left to policy at the time of grant. Any back in rights will be defined in the Mining Lease itself. There have been variations in the policy of the State on the extent of mining participation over the years and the percentage has varied from nil to 30 per cent and in the case of the Lihir gold mine it was converted to an equity participation in the shares of the tenement holder. 1.17 In the case of Simberi, neither the State nor the landowners have an equity participation or any option of equity participation as that was the State’s policy for the Mining Lease type of tenement at the time of its grant. In one other case in Papua New Guinea, the State asked a tenement holder to voluntarily allow the State to increase its participation from 5 per cent to 20 per cent and the holders of that tenement agreed by private commercial agreement to sell a 15 per cent portion to the State at unrecouped sunk cost on a carried basis. The directors have not received any indication from the State that its position would change in the case of Simberi or that the State would want to acquire a producing interest. 1.18 Simberi Gold entered into a Memorandum of Agreement Relating to the Simberi Mining Project dated 21 November 1996 between itself and the Independent State of Papua New Guinea, the New Ireland Interim Provincial Government, the Simberi Landowners Association and the Tabar Community Government. Among other documents, this Memorandum of Agreement outlines the agreement between Simberi Gold and the community in which it operates and it deals with issues such as: (a) the payment of royalties to the traditional land owners and the Tabar Community Government;

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(b) the payment of Special Support Grants by the National Government of Papua New Guinea to the New Ireland Provincial Government to facilitate additional infrastructure work in the province; (c) the means for establishing the Environmental Plan under which the mine will operate; (d) the obligations of Simberi Gold and National Government for workplace training and the opportunity to enable the community businesses to develop and participate in support activities to the mining enterprise; (e) the undertaking by Simberi Gold to improve certain public roads and to construct for use by Simberi Gold in common with the public an airport and a wharf; (f) an obligation by Simberi Gold to maintain that village people have safe drinking water and access to the Simberi Gold company health clinic; and (g) requirements for consultation and dispute resolution. 1.19 Operations at the Simberi Mine are required to be conducted in accordance with the Mining (Safety) Act and regulations made under that Act. This legislation sets out a series of regulations for the safety of workers, machinery and mine workings. 1.20 Simberi Gold is required by law to take out mandatory accident insurance covering medical costs and wages of workers afflicted by industrial illness or workplace accidents at the mine. 1.21 The mine has an environmental plan and certain environmental permits which enable it to conduct the mine workings, to take water from streams for use at the mine and to discharge waste water and to discharge tailings. Without these permits operations at the mine would not be permitted to continue. 1.22 Further details of the Group’s licences in relation to Simberi are set out in section 4 of the Simberi Project Competent Person’s Report in Section B of ‘‘Part XIV—Competent Person’s Reports’’ of this Prospectus.

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PART IV—SOLOMON ISLANDS SECTION A—GENERAL INFORMATION 1 Introduction The Solomon Islands chain consists of several large volcanic islands to the south-east of PNG, as well as outlying islands and atolls. The terrain is mountainous and heavily forested. The United Kingdom established a protectorate over the Solomon Islands in the 1890s. Self-government was achieved in 1976 and independence two years later. During World War II the island of Guadalcanal saw some of the fiercest fighting in the Pacific theatre as the United States battled for control of the territory from Japanese occupiers.

2 Geography and demography The Solomon Islands form an archipelago in the Southwest Pacific about 1,900 km to the northeast of Australia. With terrain ranging from ruggedly mountainous islands to low-lying coral atolls, the Solomon Islands stretch in a 1450 km chain southeast from PNG across the Coral Sea to Vanuatu. The main islands of Choiseul, New Georgia, Santa Isabel, Guadalcanal, Malaita, and Makira have rainforested mountain ranges of mainly volcanic origin, deep narrow valleys, and coastal belts lined with coconut palms and ringed by reefs. The smaller islands are atolls and raised coral reefs, and are often spectacularly beautiful. The Solomon Islands region is geologically active, and earth tremors are frequent. The islands’ ocean-equatorial climate is extremely humid throughout the year, with an average temperature of 27⍭C (80⍭F) and few extremes of temperature or weather. June through August is the cooler period. Though seasons are not pronounced, the northwesterly winds of November through April bring more frequent rainfall and occasional squalls or cyclones. Annual rainfall is approximately 305 cm. More than 90 per cent of the islands traditionally were forested, but this has come under severe pressure from current logging operations. The coastal strips are sheltered by mangrove and coconut trees. Luxuriant rainforest covers the interiors of the large islands. Soil quality ranges from extremely rich volcanic to relatively infertile limestone. The archipelago is home to more than 230 varieties of orchids and other tropical flowers. The Solomon Islanders are comprised of diverse cultures, languages, and customs—93 per cent are Melanesian, 4 per cent Polynesian and 1.5 per cent Micronesian. In addition, small numbers of Europeans and Chinese are registered. About 120 vernacular languages are spoken. Most people reside in small, widely dispersed settlements along the coasts. Sixty percent live in localities with fewer than 200 persons, and only 17 per cent reside in urban areas. The capital city of Honiara, situated on Guadalcanal, the largest island, has 66,000 inhabitants. The other principal towns are Gizo, Auki, and Kirakira. Most Solomon Islanders are Christian, with the Anglican, Roman Catholic, South Seas Evangelical, and Seventh-day Adventist faiths predominating. About 5 per cent of the population maintains traditional beliefs.

3 Civil unrest Fighting broke out in 1998 when the Isatabu Freedom Movement began to force Malaitans out, accusing them of taking land and jobs. Around 20,000 people abandoned their homes, with many subsequently leaving Guadalcanal. A rival militia group, the Malaitan Eagle Force, staged a coup in June 2000 and forced the then prime minister to resign, saying he had failed to deal with the crisis which had left up to 100 dead. An Australian-brokered peace deal was signed in October 2000. But lawlessness continued and an Australian-led peacekeeping force arrived in July 2003. The force arrested many rebel commanders, collected thousands of illegally-held weapons and oversaw a slow return to order. The Australian intervention also provided for the appointment of foreign nationals to government posts and included financial assistance; Canberra has stated that it aims to make the country self-sustaining.

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Civil war left the country almost bankrupt, and post-election riots in April 2006 destroyed advances made since 2003.

4 Natural hazards The Solomon Islands experience typhoons, but these are rarely destructive. The region is geologically active, with frequent earthquakes, tremors, volcanic activity and tsunamis. The Solomon Islands experience significant volcanic activity; Tinakula (elev. 2792 ft) erupts frequently, while an eruption of Savo (elev. 1591 ft) could affect the capital Honiara on nearby Guadalcanal.

5 Government The Solomon Islands is a functioning parliamentary democracy within the Commonwealth, with a unicameral Parliament and a ministerial system of government. Queen Elizabeth II is represented by a governor general, chosen by the Parliament for a five year term. The national Parliament has 50 members, elected for five year terms. However, Parliament may be dissolved by majority vote of its members before the completion of its term. Parliamentary representation is based on single-member constituencies. Suffrage is universal for citizens over 18 years of age. The prime minister, elected by Parliament, chooses the other members of the cabinet. Each ministry is headed by a cabinet member, who is assisted by a permanent secretary, a career public servant, who directs the staff of the ministry. For local government, the country is divided into ten administrative areas, of which nine are provinces administered by elected provincial assemblies, and the tenth is the town of Honiara, administered by the Honiara Town Council. Land ownership is reserved for Solomon Islanders. At the time of independence, citizenship was granted to all persons whose parents are or were both British protected persons and members of a group, tribe, or line indigenous to the Solomon Islands. The law provides that resident expatriates, such as the Chinese and Kiribati, may obtain citizenship through naturalisation. Land generally is still held on a family or village basis and may be handed down from mother or father according to local custom. The islanders are reluctant to provide land for non-traditional economic undertakings, and this has resulted in continual disputes over land ownership. No military forces are maintained by the Solomon Islands, although the police force of 1059 includes a border protection element. The police also have responsibility for fire service, disaster relief, and maritime surveillance. The police force is headed by a commissioner, appointed by the governor general and responsible to the prime minister. Peter Marshall, a New Zealander, who was appointed as police commissioner in May 2008, has recently resigned with his successor yet to be nominated.

6 Legal framework The Solomon Islands legal system is based on English common law. The Solomon Islands have not yet accepted compulsory ICJ jurisdiction. The highest court in the judiciary is the Court of Appeal.

7 Economic overview The global financial crisis had a big impact on the Solomon Islands, with economic conditions deteriorating in 2009. The economy contracted by 2.2 per cent in 2009, compared to 7.3 per cent growth in 2008. This was largely due to a reduction in log exports (by 31 per cent), fish catch (by 24 per cent), manufacturing (by 1.8 per cent), and electricity and water generation (by 2.8 per cent). More than 75 per cent of the Solomon Islands labour force engages in subsistence farming and fishing. Until 1998, when world prices for tropical timber fell steeply, timber was Solomon Islands’ main export product, and, in recent years, the Solomon Islands forests were dangerously overexploited. The government has said it will reform timber harvesting policies with the aim of carrying out logging on a more sustainable basis. Other important cash crops and exports include copra and palm oil. In 1998 Ross Mining of Australia began producing gold at Gold Ridge, now owned and operated by the Group, and other areas have seen minerals exploration. In the wake of the June 2000 ethnic violence, exports of palm oil and gold ceased and exports of timber fell. The Solomon Islands had been particularly hard hit by the Asian economic crisis even before the ethnic violence of June 2000. The Asian Development Bank estimates that the crash of the market for tropical timber reduced the Solomon Island’s GDP by between 15 per cent and 25 per cent. About

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one-half of all jobs in the timber industry were lost. An upward trend in log exports began in 2001 but ended in 2009 as international demand and particularly Asian market demand fell due to the effects of the global financial crisis. The Solomon Islands Government was insolvent by 2002. Following the Regional Assistance Mission to the Solomon Islands (RAMSI) intervention in 2003, the government recast its budget and examined strategic priorities. It consolidated and renegotiated its domestic debt and with Australian backing has sought to renegotiate its foreign obligations. Much work remains to be done. Political instability has negatively impacted economic development. Exploitation of the Solomon Islands’ rich fisheries offers good prospects for further export and domestic economic expansion. A Japanese joint venture, Solomon Taiyo Ltd, which operated the only fish cannery in the country, closed in mid-2000 as a result of the ethnic disturbances. The plant has reopened under local management, and the export of tuna has resumed. Small-scale production by landowners in the Gold Ridge mining area resulted in the production and export of 130.4 kilograms of alluvial gold in 2009. Tourism, particularly scuba diving, is an important service industry for Solomon Islands. Growth in that industry is hampered, however, by political instability, security issues, lack of infrastructure, and transportation limitations. Principal aid donors are Australia, New Zealand, the European Union, Japan, and the Republic of China.

8 Foreign relations Countries with diplomatic missions in the Solomon Islands are Australia, United Kingdom, New Zealand, PNG, and Japan. The Solomon Islands also have diplomatic relations with the Republic of China, which has a resident representative in Honiara. On May 5, 2010, the Solomon Islands and Cyprus signed an agreement to establish formal diplomatic relations. The US Ambassador resident in Port Moresby, PNG is accredited to the Solomon Islands. The Solomon Islands’ Permanent Representative to the United Nations also is accredited as its ambassador to the United States and Canada. Relations with PNG, which had become strained because of an influx of refugees from the Bougainville rebellion and attacks on the northern islands of the Solomon Islands by elements pursuing Bougainvillean rebels, have been repaired. A peace accord on Bougainville confirmed in 1998 has removed the armed threat, and the two nations regularised border operations in a 2004 agreement. On May 21, 2010 Solomon Islands officially opened its first permanent overseas chancery in PNG.

9 RAMSI The Regional Assistance Mission to Solomon Islands was created in 2003 in response to a request for international aid by the Governor-General of the Solomon Islands. RAMSI is a partnership between the people and Government of Solomon Islands and fifteen contributing countries of the Pacific region. RAMSI is helping the Solomon Islands to lay the foundations for long-term stability, security and prosperity through support for improved law, justice and security; for more effective, accountable and democratic government; for stronger, broad-based economic growth; and for enhanced service delivery. The Australian government continues to support RAMSI, contributing in excess of $200 million per annum for various development and support initiatives.

10 Membership of International Organisations The Solomon Islands is a member of the United Nations, Commonwealth, Pacific Community, Pacific Islands Forum (PIF), the MSG, and International Monetary Fund. It is also party to the partnership agreement between the European Union and the African, Caribbean, and Pacific Group of States (Cotonou Agreement).

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SECTION B—THE GROUP’S LICENCES 1 Overview of the Solomons Islands licensing regime Pursuant to the Mines and Minerals Act (Cap 42) of Solomon Islands, the ownership of all minerals in the Solomon Islands is vested in the people and the government of Solomon Islands.

Prospecting licence 1.1 Exploration activities may be carried out under a prospecting licence granted by the applicable governmental authority, which is valid for an initial period of three years. Applicants for a prospecting licence receive a letter of intent to issue from the license from the Ministry of Mines and then have a two year period in which to negotiate surface access rights with local land owners during which time the tenement area is secure. Once documentation of the granted access is submitted to the Ministry of Mines the prospecting licence proper is granted. The holder is also required to reach surface access agreements with landowners within the area of the prospecting licence application before it can be granted. 1.2 Under The Mines and Minerals Act (1990) each application for a prospecting licence shall be made to the Director (Ministry of Mines) in the prescribed form and shall state: (a) a proposed programme for the acquisition of surface access rights and the names of the individuals to be in charge thereof; and (b) the applicant’s intentions regarding environmental protection. 1.3 Subject to the provisions of any other law relating to buildings, drainage, aviation, land, protection of the natural environment and to control of natural water supplies, including river water, the holder of a prospecting licence has the exclusive right to enter any land in the prospecting area and carry out prospecting which include any or all of the following activities: (a) drill, trench, pit and make excavations; (b) build roads, helicopter pads, erect camps and construct temporary buildings; (c) install or fix machinery; and (d) take or direct any public water from any lake, river or water course. 1.4 The area of a prospecting licence cannot exceed an aggregate of 600km2 its initial period. Each prospecting licence may be renewed twice by the holder, in each case for a further period of two years. Such renewal is accompanied by a 50 per cent reduction in the area covered by the prospecting licence. Alternatively, and with the approval of the Minerals Board of the Solomon Islands, it is possible to renew a prospecting licence without such a reduction in licence area if it can be demonstrated that such renewal is in the ‘‘national interest’’.

Mining lease 1.5 If a commercial discovery is made, a prospecting licence holder may apply for a mining lease. A mining lease is valid for an initial period of 25 years and can be renewed for a further ten year period. 1.6 A commercial discovery is defined as the discovery of a mineral deposit potentially capable of being mined commercially at a profit. The Prospecting Licence holder must apply for a Mining Lease before commercial exploitation can be carried out. 1.7 Mining lease applicants may ask the Minister for Mines to facilitate negotiations on matters relating to the proposed mining lease. 1.8 Applicants for a mining lease must secure land access rights in a similar manner to that for a prospecting licence. The Director (Ministry of Mines) may, in consultation with the applicant, enter into negotiations with the landowners or any person or groups of persons having an interest in the land to acquire surface access rights for mining and make arrangements for the payment by the applicant to the landowners of: (a) a surface rental, and (b) compensation for any damage caused by the mining to any live or dead stock, crops, trees, buildings, works or tambu sites.

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Where an agreement with landowners is not forthcoming and it is deemed in the best interest of the country, the Mines and Minerals Act (1990) provides for compulsory acquisition of land if required. 1.9 Before making any such application, the holder of a prospecting licence is required to establish a new company under its control or under common control with the holder to carry out the mining work. An application for a mining lease must be made to the Director (Ministry of Mines) not less than 90 days prior to the expiry of the relevant prospecting licence and must also specify various technical, financial, environmental and other matters that the Director (Ministry of Mines) may deem necessary. There are no restrictions as to the area of a mining lease within the limits defined by the prospecting licence at the time of the application for the mining lease. 1.10 Subject to any other law relating to buildings, drainage, land, protection of the natural environment and the control of natural water supplies, including river waters, the mining company may, in the exercise of its rights under a mining lease, enter upon the mining area to carry out mining, including the right to: (a) make all necessary excavations to mine the mineral deposit or deposits in the mining area and to re-work mine tailings and dumped materials; (b) erect, construct and maintain in the mining area such machinery and buildings, workshops and other production facilities as may be necessary or convenient for the purpose of mining, storing, transporting; (c) dressing, treating, smelting or refining the mineral recovered in the course of mining; (d) stack products or dump any waste products of mining or mineral processing; (e) erect, construct and maintain houses and buildings for the use of the mining lease holder, its contractors, agents and their employees and their immediate families; (f) lay pipes, make water races, ponds, dams and reservoirs and divert and use any water necessary, provided that the needs of users of river water downstream of the mining area, are taken into account; (g) construct and maintain all such passageways, communications facilities and conveniences as may be; (h) necessary for carrying out mining operations; and (i) engage in all such other activities as may be reasonably necessary for carrying out mining operations.

2 The Group’s licences 2.1 The Gold Ridge project is managed by GRML, a wholly owned subsidiary of the Company. The property consists of Special Prospecting License SPL194 covering an area of 130km2 which surrounds a 30 km2 Mining Lease (No 1/1997). 2.2 SPL194 was initially granted on 21 September 1995 for a period of three years, which period expired on 21 September 1998. 2.3 SPL194 was subsequently renewed for 2 years with minor relinquishments and would have expired by 21 September 2000. The civil unrest or tensions commencing 5 June 2000 constituted a force majeure causing all leases and agreements to be suspended on 5 July 2000. 2.4 The Solomon Islands Ministry of Mines approved an application for a 12 month extension of the Mt Vunusa (SPL194) LOI on 25 November 2010 to allow GRML to start negotiations with the landowners for surface access rights. 2.5 The Mining Group (the Mining Group) as defined in the Assignment Agreement for Gold Ridge Mining Agreement dated 12 May 2005 (the Assignment Agreement) owns an exclusive right to SPL194, being a right to prospect for all minerals in the area comprising SPL194. That grant was given to the Mining Group under the Assignment Agreement. All members of the Mining Group are wholly owned subsidiaries of Allied Gold. The grant does not fully crystallise until the Mining Group enters into an ‘access rights agreement’ with the landowners of the land the subject of SPL194 pursuant to the Mines and Minerals Act (SI) 1996. That agreement is in an advanced state of negotiations and is expected to be finalised in 2011. Once that agreement is executed, the current

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Letter of Intent issued to the Mining Group under the Act converts to a formal grant of SPL194. Most importantly, the covenants in the Assignment Agreement exclude all others from applying or being granted mineral rights to SPL194 and the Mining Group holds an exclusive prospecting right to that area. 2.6 The Mining Lease No 1/1997 was granted 12 March 1997 and is valid for a period of 25 years with a 10 year renewal option.

Property boundaries 2.7 The property boundaries are described in detail in the SPL and Mining Lease documentation. The original property survey included wooden and steel pegs marking the lease corners, however over time these have disappeared. Currently the site surveyors use a Real Time Kinematic Global Positioning System (RTK-GPS) which provides centimetre level accuracy in locating points on the ground.

Royalties and encumbrances 2.8 The Gold Ridge Mining Agreement provides for the following royalties and taxes: (a) gross royalty payment of 1.5 per cent on all production, of which 1.2 per cent is held by the landowners and 0.3 per cent is held by the Guadalcanal provincial government; (b) export duty of 1.5 per cent of gross value of all production payable to the Solomon Islands government; (c) corporate income tax, not to exceed 35 per cent. Standard deductions apply; and (d) additional profits tax of 30 per cent on net cash receipts (gross income less income tax and exploration, development, and production expenses) which are greater than a 25 per cent rate of return.

Required permits 2.9 In addition to the prospecting licence and mining lease, GRML hold permits for timber removal, use and storage of explosives, tailings storage facility dewatering and electricity generation on site (among others). 2.10In addition to the regulatory agreements numerous memorandums of understanding and agreements exist between GRML and individuals or groups with respect to things such as use of the land, relocation and provision of services. 2.11 GRML is in the negotiation process for access to the prospecting licence at present. By 25 November 2011, where there is no dispute and agreement is reached with the landowners, the agreement will be documented including: (a) the names of the landowners or land holding groups having rights over the land in the prospecting area; and (b) the amount of surface access fees or compensation for damage. 2.12 The agreed surface access fees are to be paid into a trust account for the benefit of landowners in the prospecting area. The holder of a prospecting licence shall pay, in addition to surface access fees, compensation for any damage caused by him as a result of prospecting, to any live or dead stock, crops, trees, buildings, works, water supplies or tambu places at such rates as may have been agreed. 2.13 Further details of the Group’s licences in relation to Gold Ridge are set out in section 4 of the Gold Ridge Project Competent Person’s Report in Section C of ‘‘Part XIV—Competent Persons’ Reports’’ of this Prospectus.

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PART V—MARKET AND INDUSTRY OVERVIEW 1 Background Gold maintains a role as an alternative asset as it tends to be inversely correlated to the US Dollar, thereby providing portfolio diversification for investors. Historically when the US Dollar is weak gold prices are typically higher because it makes gold cheaper to purchase in other currencies. Gold is also held by investors as a store of value and hedge against inflation which is widely expected to increase globally following quantitative easing measures which have resulted in an increase in the supply of fiat currencies. As a result of the global financial crisis, triggered by the US sub-prime crisis, a new investment-driven phase has emerged under a favourable macro environment, the key features of which have been volatility on the financial markets, increased risk aversion, inflation concerns, the weakening of the US Dollar and a general fear of a prolonged global recession. Since the lows of November 2008, gold prices have rebounded to a record high of US$1563/oz in May 2011(1). A change in attitude to commodities as an investment class has also contributed to gold’s rising price. The development of the gold Exchange Traded Funds (ETFs) in the Australian, UK, South African and US markets has helped to broaden the access to gold for retail and professional investors who do not want to incur the storage and insurance costs associated with a physical gold holding, but do want a gold asset in a physical form which is easily traded. The ETFs have therefore opened up a new avenue for gold investment—physical investment traded on a stock exchange. Generally holdings show a gradual increase over time, an indication that investors in the product are not engaged merely in short-term speculation, but are looking for a longer term investment.

2 Supply Gold is produced from mines on every continent except Antarctica, where mining is forbidden. According to recent figures, there are around 400 operating gold mines worldwide. Global gold supply is made up of three components; mine supply, recycled or scrap supply and net supply from the official sector/central banks. With new mines often taking up to 10 years to progress from exploration stage into production, mining output is unable to react quickly to a change in price outlook. However, over the longer term sustained high gold prices will result in an increase in global gold exploration and future supply. The increasing mining depths and operational challenges facing a number of older operations has lead to a decline in production in some countries such as South Africa. According to 2010 figures, the top three gold producers are now China, Australia and the USA. Recycled gold or scrap supplies ensure there is easily traded supply when needed, and this helps to stabilise the gold price. The value of gold means that it is economically viable to recover it from most of its uses, where it is capable of being melted down, re-refined and reused, thus the majority of gold mined historically is still accounted for above ground. Central banks and official international institutions currently hold just under one-fifth of global above- ground stocks of gold as reserve assets. In 2010, the official sector shifted to the demand side of the market, a case last seen in 1988. The official sector was a consistent seller of bullion from 1989 to 2009. Since 1999, the bulk of these sales have been regulated by the Central Bank Gold Agreement (CBGA) (which stabilises sales from 15 of the world’s biggest holders of gold). In 2009, the IMF also confirmed its intention to sell a proportion of its reserves over a five year period. However, given the steady rise in gold prices over the last ten years and the heightened volatility of other asset classes, there has been a reduction in central bank sales under CBGA and increase in central bank demand especially from emerging economies such as China and India which has had a positive impact on the gold price.

3 Demand Gold is fabricated for various markets such as jewellery, medical uses, electronics, dentistry and environmental uses. In the current global economic climate, demand has principally been driven by a strong increase in investment demand. Investment demand is not easily measurable because a significant portion of investment demand is transacted in the over-the-counter market. However, there is no doubt that identifiable investment demand in gold has increased considerably in recent years. ETFs are typically 100 per cent backed by physical gold and provide a new and easy way to access the gold market. Since their launch in 2003, gold ETFs have attracted a significant amount of tonnage: for

(1) Bloomberg, 19 April 2011

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example, gold ETFs are currently estimated to account for approximately 70Moz of gold, with a market value of around US$96 billion at 31 December 2010. The global hedgebook held by gold producers peaked in 1999 when the gold price was

4 Pricing and costs London is the world’s largest gold trading market with trading conducted via an over-the-counter type format in 400-ounce gold bars with a purity of 9950 or higher. The gold price is fixed twice daily in London (at 10:30 and 15:00) by prices derived from the five fixing members of the London Bullion Market Association (LBMA), which together represent a comprehensive global sales network. The fixing members, all of whom are market making members of the LBMA, are Scotia Mocatta, Barclays Capital, Deutsche Bank, HSBC and Societ´ e´ Gen´ erale.´ These price fixings are used as a key indicator for gold market participants around the world. Leading futures markets are COMEX in New York and TOCOM in Tokyo.

5 Markets and outlook The gold price has seen a steady rise over the past few years and reached a record high of over US$1563/oz in May 2011; with the gold price trading just either side of US$1400/oz in February and March 2011. Gold prices referred to above are based on the London Bullion Market Association AM spot fixing price. The gold price has been positively affected by the US economic downturn, as this has been accompanied by a rise in inflation and a falling US Dollar, which has boosted demand for gold as a US Dollar and inflation hedge. While global markets’ future performance will be highly dependent on the resilience of western economies and central banks’ abilities to handle liquidity-induced crisis and stabilise financial sectors via aggressive monetary easing, to date investors’ risk aversion seems to be relatively high, highlighting the appropriateness of having some assets in gold as a safe-haven. The most recent data from the World Gold Council (the lobby group funded by the mining sector) shows that the focus of the market is shifting to the east. Last year, China overtook the US and Germany to become the second largest gold investment market after India. China and India accounted for over 50 per cent of global gold demand (excluding industrial consumption), an increase of 42 per cent in 2009 and 31 per cent five years ago.

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PART VI—SELECTED FINANCIAL INFORMATION

For the six months ended 31 December For the year ended 30 June 2010 2009 2010 2009 2008 (audited) (unaudited) (audited) (audited) (audited) (A$) Income Statement Data Revenue ...... 40,942,585 33,141,171 67,555,369 77,467,668 23,393,798 Cost of sales ...... (32,574,869) (38,150,819) (70,289,540) (66,436,649) (20,264,174) Gross profit/(loss) ...... 8,367,716 (5,009,648) (2,734,171) 11,031,019 3,129,624 Gains/(loses) on derivatives . . — (812,476) (176,084) 1,133,187 (2,685,864) Corporate expenses ...... (4,950,553) (8,002,387) (14,773,680) (7,545,907) (4,404,307) Share based remuneration . . . 1,252,500 (6,819,755) (6,828,559) (4,130,120) (3,590,530) Impairment of available for sale assets ...... — — (7,740) (1,214,402) — Gain on acquisition of subsidiary ...... — — 36,666,786 — — Other income ...... — — 2,243,413 149,937 31,688 Other expenses ...... ———(3,426,778) (4,049,118) Foreign exchange gain/(loss) . 444,063 (112,698) — — — Financial Income ...... 4,776,722 180,483 1,834,972 327,760 533,365 Financial costs ...... (501,456) (1,839,198) (5,996,122) (3,396,347) (1,189,685) Profit/(loss) before tax ..... 9,388,992 (22,415,679) 10,228,815 (7,071,651) (12,224,827) Income tax benefit/(expense) . ————— Profit/(loss) after tax attributable to owners of Allied Gold Limited ...... 9,388,992 (22,415,679) 10,228,815 (7,071,651) (12,224,827) Profit/(loss) per share for loss attributable to ordinary equity holders of Allied Gold Limited Basic earnings/(loss) per share (cents) ...... 90 (4.24) 1.31 (1.65) (3.46) Diluted earning/(loss) per share (cents) ...... 89 (4.24) 1.31 (1.65) (3.46) Cash Flow Data Net cash from/(used in) operating activities ...... 7,856,534 (8,933,231) (20,509,398) 21,563,200 (282,620) Net cash from/(used in) investing activities ...... (103,318,849) (6,592,836) (63,800,604) (24,402,510) (53,313,997) Net cash from/(used in) financing activities ...... 46,437,202 151,091,597 148,677,057 22,963,380 41,092,805 Net increase/(decrease) in cash and cash equivalents (49,025,113) 135,565,530 64,367,055 20,124,070 (12,503,812) Cash and cash equivalents at the beginning of the period ...... 85,525,391 20,529,979 20,529,979 154,180 12,657,949 Effects of exchange rate changes on the balance of cash and cash equivalents . (13,834) 1,146,019 628,357 251,729 43 Cash and cash equivalents at the end of the period .. 36,486,444 157,241,528 85,525,391 20,529,979 154,180

Note: Production at Gold Ridge recommenced in March 2011. Therefore, the Group’s results of operations as at and for the six months ended 31 December 2010 and 2009 and as at and for the years ended 30 June 2010, 2009 and 2008 relate to production at Simberi only.

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As at Consolidated Statement of Financial 31 December As at 30 June Position Data 2010 2010 2009 2008 (audited) (audited) (audited) (audited) Current assets: Cash and cash equivalents ...... 36,486,444 85,525,391 20,529,979 154,180 Trade and other receivables ...... 4,099,013 4,160,718 800,494 1,758,073 Inventories ...... 21,328,397 11,795,370 14,269,497 7,401,734 Derivative financial instruments . . . . — — 2,509,294 314,212 Other assets ...... 1,492,322 3,066,675 246,792 531,032 Total current assets ...... 63,406,176 104,548,154 38,356,056 10,159,231 Non-current assets: Derivative financial instruments . . . . — — 851,002 3,495,855 Available for sale financial assets . . . 1,068,024 524,230 348,974 1,185,074 Property, plant and equipment ..... 375,679,424 302,874,641 145,861,709 130,034,534 Exploration and evaluation expenditure ...... 25,421,216 23,711,261 11,115,743 10,406,786 Total non-current assets ...... 402,168,664 327,110,132 158,177,428 145,122,249 Current liabilities: Trade and other payables ...... 14,379,497 44,032,012 20,683,026 14,446,386 Borrowings ...... 11,517,869 4,481,970 2,094,483 8,561,286 Derivative financial instruments . . . . — — 12,636,875 6,972,407 Provisions ...... 1,170,332 1,008,116 491,709 365,819 Total current liabilities ...... 27,067,698 49,522,098 35,906,093 30,345,898 Non-current liabilities: Borrowings ...... 42,866,750 1,755,820 3,845,885 2,739,755 Derivative financial instruments . . . . — — 7,123,887 18,911,174 Provisions ...... 9,799,544 9,315,217 2,782,426 2,584,870 Total non-current liabilities ...... 52,666,294 11,071,037 13,752,198 24,235,799 Total Liabilities ...... 79,733,992 60,593,135 49,658,291 54,581,697 Net Assets ...... 385,840,848 371,065,151 146,875,193 100,699,783 Equity: Contributed equity ...... 370,183,255 369,525,183 173,098,363 133,686,704 Reserves ...... 21,828,055 17,099,422 (434,901) (14,270,303) Accumulated losses ...... (6,170,462) (15,559,454) (25,788,269) (18,716,618) Total equity ...... 385,840,848 371,065,151 146,875,193 100,699,783

For the six months ended 31 December For the year ended 30 June Other Data 2010 2009 2010 2009 2008 Waste mined (tonnes) ...... 1,063,224 233,095 634,296 199,746 81,390 Ore mined (tonnes) ...... 1,249,785 962,489 1,981,500 1,708,765 416,627 Ore processed (tonnes) ...... 1,153,504 972,121 1,949,650 1,654,149 411,297 Grade (grams of gold/tonne) .... 1.11 1.14 1.18 1.64 2.95 Recovery (%) ...... 89.9 88.1 87.9 83.2 84.3 Gold produced (ounces) ...... 37,127 31,528 64,327 72,609 33,068 Gold sold (ounces) ...... 33,556 33,391 63,960 69,886 28,364

Note: Production at Gold Ridge recommenced in March 2011. Therefore, the Group’s operational metrics information as at and for the six months ended 31 December 2010 and 2009 and as at and for the years ended 30 June 2010, 2009 and 2008 relate to production at Simberi only.

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PART VII—OPERATING AND FINANCIAL REVIEW The following discussion provides information that management believes to be relevant to understanding the Group’s financial condition and results of operations as at and for the six months ended 31 December 2010 and 2009 and as at and for the years ended 30 June 2010, 2009 and 2008. Certain financial information presented in this section has been extracted or derived from the historical financial information in Part IX: ‘‘Historical Financial Information’’ of this Prospectus. The following discussion and analysis should be read in conjunction with the historical financial information in Part IX: ‘‘Historical Financial Information’’ and the information relating to the business of the Group in Part I of this Prospectus. The statements in this discussion and analysis regarding industry outlook, management’s expectations regarding the future performance of the Group’s businesses and other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in ‘‘Risk Factors’’. The Group’s actual results may differ materially from those contained in or implied by any forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this Prospectus, including in ‘‘Risk Factors’’.

1 Overview Allied Gold is a gold exploration and production company whose shares are listed on the TSX, the ASX and AIM. The Group’s major assets are its 100 per cent-owned Simberi gold project (the Simberi Project), which is located on Simberi Island, the northernmost island of the Tabar Islands Group, in the New Ireland Province of eastern Papua New Guinea and its 100 per cent interest in Australian Solomons Gold Limited, the owner of the Gold Ridge gold project, which is located on Guadalcanal Island in the Solomon Islands. Both projects are located in the Pacific Rim of Fire, one of the world’s proven and most prospective areas for gold mining and exploration. Simberi is comprised of: (i) an open-pit mining operation with an associated gold processing plant, located within PNG mining lease 136, which consists of 2,560 ha on the eastern side of Simberi Island; and (ii) a larger 69 sub-block/233 km2 area under PNG exploration licence 609 covering the remainder of Simberi Island and most of the adjacent Tatau and Big Tabar Islands to the south. Simberi is based on seven separate gold deposits: Sorowar, Samat North, Samat South, Samat East, Pigiput, Pigibo and Botlu South. Sorowar is by far the largest resource of the seven gold deposits and is located in the north. Samat North, South and East lie to the south and, while relatively small, are also relatively high grade. Pigiput, Pigibo and Botlu South lie between the Sorowar and Samat areas and are of intermediate tonnage but at a grade similar to Sorowar. All prospects are located within two to three kilometres of each other. The geographic area comprising Simberi also includes other less well-defined prospects. The Group first acquired an interest in Simberi in November 2003 at which time it was an underexplored and undeveloped project. The Group accelerated the exploration programme for the project and established the technical feasibility and economic viability of developing a gold mine. In February 2008, Simberi commenced production. Gold Ridge consists of a mining lease that covers an area of 30 km2 and a prospecting licence in the area surrounding the mining lease that covers an area of 130 km2. The Group acquired control of Gold Ridge on November 2009 at which time it had been shut down and mothballed since June 2000 as a result of civil unrest that had occurred in the Solomon Islands. In March 2010, the Group formally commenced an A$150 million project to refurbish and redevelop Gold Ridge. In March 2011, Gold Ridge recommenced production.

2 Summary of key financial risks The Group’s business activities expose it to a variety of financial risks, including market, commodity, credit liquidity, foreign exchange, interest rate and interest-bearing liabilities risks. These risks are managed by the Audit, Risk and Compliance Committee pursuant to Board-approved directives. During the period covered by the historical information, the principal financial instruments utilised by the Group comprised interest-bearing cash and short-term deposits, interest bearing borrowings (including finance leases), trade receivables and trade payables which arise directly from the Group’s business operations and options that were entered into as part of a gold price hedging programme. For additional information, please refer to paragraph 11 of this Part VII—Qualitative and quantitative disclosure about risk.

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3 Significant factors affecting the Group’s results of operations Historically, the Group’s operations have been influenced by the following key factors, which the Directors believe will continue to affect the Group’s results of operations and financial condition in the future:

Gold price The Group has generated and intends to continue to generate substantially all of its revenues from the sale of gold and, consequently, the price of gold has had and will continue to have a significant impact on the Group’s revenues and operating results to the extent that the Group does not fix the gold price it will receive through gold hedging or forward pricing programmes. As described below, the Group entered into a hedging arrangement for the sale of gold in the period July 2007 to February 2010. At the date of this Prospectus, the Group had not entered and does not currently intend to enter into hedging arrangements in relation to gold prices. In addition to impacting the Group’s revenue, the price the Group realises on gold sold impacts royalties and duties payable by the Group. The Group sells the gold it produces in the international commodities markets. From July 2007 to 26 February 2010, gold available for sale was either delivered against the Group’s contractual commitments under its hedging programme at a fixed price of US$700 per ounce or at the prevailing spot price denominated in US dollars. Historically, the Group’s counterparties for spot sales have been an Australian gold refinery or financial institutions of good standing. The market price for gold is typically quoted as the London Gold Market p.m. gold fixing (the London PM Price). Historically, the price of gold has fluctuated widely, and is affected by numerous factors over which producers do not have control, including international economic and political conditions, levels of supply and demand, the availability and costs of substitutes, inventory levels maintained by producers and others and actions of participants in the commodities markets. Price variations and market cycles have influenced the Group’s financial results and the Group expects that they will continue to do so, particularly now that it has extinguished its gold hedging programme. For information on the Group’s past gold hedging programme, please refer to ‘‘Gold hedging programme’’. The volatility of the price of gold is illustrated in the following graph, which shows the market price for gold for the past ten calendar years: Part V of this Prospectus sets out additional information regarding the gold market. For additional information on the Group’s hedging programme, please refer to paragraph 7 of this Part VII—Liquidity and capital resources—Loan agreements and credit facilities.

Gold hedging programme In July 2007, Allied Gold Limited was obliged to put in place a gold hedging programme to secure the price of gold in respect of 170,000 ounces of gold as a condition of financing obtained to develop Simberi. Pursuant to the hedging programme, the Group committed to delivering an agreed quantity of gold into the hedging programme at a fixed price of US$700 per ounce. During the three years ended 30 June 2010, 2009 and 2008, this fixed price was generally lower than the prevailing spot price. The original maturity of the hedge book was 31 December 2011. During the period of the hedge, the Group restructured the hedge book to reduce the total quantity of gold to be delivered into the hedging programme from 170,000 ounces to 108,544 ounces and to accelerate the maturity of the hedge book to 31 December 2010 In February 2010, however, the Group closed out the hedge programme by pre-delivering all remaining gold to be delivered under the hedge. Whilst the early termination of the hedging programme gave the Group full price participation in all future sales of gold, for accounting purposes the ‘‘Effective Hedge’’ component of the mark to market loss realised on the close out of the hedge was required to be amortised to the Group’s income statement over the period to 31 December 2010. The following table sets out the impact on reported sales revenue of the Group’s gold hedging programme over the period stated. For the purposes of this table, the realised hedge losses are

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calculated as the difference between the fixed hedge price of US$700 per ounce and the prevailing spot price at the time the gold was delivered into the hedge.

Number of ounces delivered into Realised hedge Realised hedge Financial Period the hedge losses losses US$ A$ Year ended 30 June 2008 ...... 17,218 (3,980,604) (4,253,643) Year ended 30 June 2009 ...... 36,743 (6,536,983) (8,820,859) Year ended 30 June 2010 ...... 34,429 (16,311,277) (18,444,804) Year ended 30 June 2011 ...... 20,154 (4,905,931) (5,519,724) Total over life of hedge ...... 108,544 (31,734,795) (37,039,030) Included in the above totals: Six months ended 31 December 2009 ...... 17,071 (5,846,153) (6,633,313) Six months ended 31 December 2010 ...... 20,154 (4,905,931) (5,519,724) At the date of this Prospectus, the Group had not entered into, and does not currently intend to enter into, hedging arrangements in relation to gold prices.

Production volumes For the six months ended 31 December 2010, the Group, through Simberi, produced 37,127 ounces of gold at a total cash cost of A$971 per ounce of gold. In the year ended 30 June 2010, Simberi produced 64,327 ounces of gold at a total cash cost of A$823 per ounce. Since production commenced in February 2008, Simberi has produced in excess of 150,000 ounces of gold. Following the Group’s acquisition of ASG and Gold Ridge in late 2009, the Group expects its output for the year ended 30 June 2011 to be in the range of 75Koz to 80Koz of gold. The amount of gold produced over an operating period can be affected by a number of factors, including unexpected fluctuations in mining rates and recovery rates and variations in the grade of ore mined compared to the Mining Plan(s) and processing inefficiencies leading to lower processing recoveries and unexpected downtime of the processing plant. The volume of gold produced in a given operating period has had, and will continue to have, a significant impact on the Group’s financial condition and operating results. In particular, in the financial periods discussed herein the Group has experienced a number of processing delays, which affected the volumes of gold produced. More specifically, in the year ended 30 June 2010, the Group’s operations at Simberi were adversely impacted by unseasonably heavy rainfall during the three months ended 30 September 2009 and, as a result, the Group experienced reductions in its gold production as a consequence of lower mining volumes. In December 2009 and January 2010, the Group lost a total of 13 days of production due to an illegal cease work order. In addition, in the three months ended 31 March 2010, Simberi suffered a structural mechanical failure of its Scrubber Trommel processing equipment, which resulted in eight days of lost production and lower than planned gold recovery volumes while carbon-in-leach tank linings were recoated as part of a scheduled maintenance programme. The Group has initiated mitigation strategies to counter the adverse impact of excessive rainfall in future periods. In particular, additional mining equipment has been mobilised to work sites to allow for a more flexible utilisation and concentration of mining equipment during periods of dry weather and all-weather access roads to Sorowar and Pigiput mining areas are being constructed. However, there can be no assurance that these unforeseen events that led to processing delays will not occur in the future and impact the Group’s results of operation.

Production costs The Group’s key production cost drivers are energy costs (including fuel costs), personnel costs, transportation costs, material supplies and maintenance. The cost of diesel fuel is a major contributing factor in the fluctuation of the Group’s production costs as it is used to operate the Group’s mining fleet and to generate electrical power inputs for both Simberi and Gold Ridge. The availability and cost of each of these factors is affected by supply and demand factors.

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The raw materials used by the Group to produce gold are primarily ore mined, chemical reagents such as cyanide, lime, caustic soda, hydrochloric acid and carbon and diesel fuel. Ore mined is sourced from Simberi Island, reagents are sourced primarily from Australia and Europe and diesel fuel is purchased from PNG. The Group does not have in place long-term supply contracts for its raw materials and, as a result, the prices paid for those materials are subject to market fluctuations. Historically, with the exception of diesel fuel, prices of raw materials have not demonstrated significant price volatility in the financial periods discussed herein. Diesel fuel is refined from crude oil and is therefore subject to the same price volatility affecting crude oil prices. Prices for diesel fuel have demonstrated significant price volatility over the three year period ended 30 June 2010 and the six months ended 31 December 2010. Generally, with global demand decreasing toward the end of 2008 on fears of a global slowdown in economic activity, global oil prices decreased from a record high of US$147 per barrel in the three months ended 31 December 2008 to close at US$45 per barrel at the end of 2008 and US$77 at the end of 2009. More recently, with growing political uncertainty in certain countries in North Africa and the Middle East, global crude oil prices have increased significantly. While global oil prices are not necessarily directly correlated to the Group’s diesel fuel prices, volatility in crude oil prices has a significant impact on the Group’s productions costs. Production costs are also impacted by the efficiency of the Group’s mining, processing and related administrative functions. Factors that impact this include the availability and productivity of the Group’s mining fleets, the gold content of the ore mined, the quantity and grade of ore delivered to the processing circuit and efficiency and availability of the processing circuit.

Capital costs and depreciation The value of the Group’s mine, plant and infrastructure will be amortised over its useful life. Variables such as the level of capital expenditure, estimates of useful life, including, for those items depreciated on a units of production basis estimates of mineral reserves, will influence the depreciation charge written off to the Group’s income statement. Where the cash flows generated by an asset or group of assets are not sufficient to generate an economic rate of return due to factors such as lower gold prices, higher than expected costs of production, lower than anticipated grades and/or recoveries, the Group may be required to impair the carrying value of the Group’s mine, plant and infrastructure.

Interest rates The Group is affected by fluctuations in interest rates, which directly impact upon the Group’s interest income and interest expense. Further fluctuations in interest rates impact the valuation of the Group’s financial instruments and impact the calculation of the value in use of the Group’s property, plant and equipment. Fluctuations in interest rates may result in gains or losses being recorded in the income statement as a consequence of changes in the value of the Group’s assets and liabilities.

Exchange rates The Group reports its operating results in Australian dollars. Revenues from gold sales are received in US dollars, and a significant portion of its operating expenses are incurred in US dollars, PNG Kina, the Solomon Island dollar, the British pound and other foreign currencies. From time to time, the Group borrows funds and incurs capital expenditures that are denominated in currencies other than the Australian dollar. As a result, fluctuations in the value of non-Australian dollar currencies against the Australian dollar impact the Group’s reported revenues and expenditures. In this way, the financial position of the Group is directly affected by changes in foreign exchange rates. As of the date of this Prospectus, the Group does not hedge with respect to currency exchange rate fluctuations. During the period of the historical information included herein the Group has entered into some intra-quarter foreign currency hedging arrangements, primarily in relation to the Australian dollar and the PNG Kina. The Group maintains a policy of holding currencies in similar proportions to its forecasted currency requirements. For additional information, please refer to paragraph 11 of this Part VII—Qualitative and quantitative disclosure about risk—Foreign exchange risk.

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Resources or reserves The Group’s accounting estimates for depreciation and amortisation are based, in part, on the Group’s mineral reserves and as such are impacted by production and changes in reserves. Reserves are estimates of the amount of gold that can be economically and legally extracted from the Group’s existing properties. In order to calculate reserves, estimates and assumptions must be made with respect to a range of geological, technical and economic factors, including expected quantities, grades, production techniques, recovery rates, production costs, transport costs, commodity demand, commodity prices and exchange rates. Because the economic assumptions used to estimate reserves may change, and because additional geological data is generated during the course of operations, estimates of reserves may vary from period to period. Changes in reported reserves may affect the Group’s financial results and financial position in a number of ways, including the following: • Asset carrying values may be affected due to changes in estimated future cash flows. • Depreciation, depletion and amortisation charged to the statement of comprehensive income may vary where such charges are determined by the units of production basis, or where the useful economic lives of assets change. • Overburden removal costs recorded on the statement of financial position or charged to the statement of comprehensive income may differ due to changes in stripping ratios or the units of production basis of depreciation. • Decommissioning, site restoration and environmental provisions may differ where changes in estimated reserves affect expectations about the timing or cost of these activities. • The carrying value of deferred tax assets may differ due to changes in estimates of the likely recovery of the tax benefits. For additional information, please refer to paragraph 4 of this Part VII—Critical accounting policies.

Share based payments Equity instruments, such as options, issued in return for goods or services are accounted for as share based payments. The cost of equity-settled transactions is measured by reference to the fair value of the equity instruments on the date they are granted. This cost is then recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled (the vesting period).

Factors affecting comparability The table below provides a high level summary of the Group’s operating and financial performance over the historical information period included herein followed by a discussion of any significant items that have impacted the results of each of the periods. The revenue and operating results for the historical period do not reflect any contribution from the Gold Ridge Project. The Group acquired Gold Ridge in November 2009. From November 2009 until 31 December 2010, Gold Ridge was in a capital construction phase (i.e. it did not produce any gold, did not generate revenue and all costs related to the project were capitalised).

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Six months ended Year ended 31 December 31 December 30 June 30 June 30 June Consolidated 2010 2009 2010 2009 2008 Financial metrics Revenue ...... A$ 40,942,585 33,141,171 67,555,369 77,467,668 23,393,798 Income/(loss) for the period . . . . A$ 9,388,992 (22,415,679) 10,228,815 (7,071,651) (12,224,827) Income/(loss) per share—basic . . c/share 0.90 (4.24) 1.31 (1.65) (3.46) Income/(loss) per share—diluted . c/share 0.89 (4.24) 1.31 (1.65) (3.46) Operational metrics Waste mined ...... tonnes 1,063,224 223,095 634,296 199,746 81,390 Ore mined ...... tonnes 1,249,785 962,489 1,981,500 1,708,765 416,627 Ore processed ...... tonnes 1,153,504 972,121 1,949,650 1,654,149 411,297 Gold produced ...... ounces 37,127 31,528 64,327 72,609 33,068 Gold sold ...... ounces 33,556 33,391 63,980 69,886 28,364 The following are the key factors that have impacted the Group’s performance for the periods presented in the above table. These factors should be considered when making a comparative assessment of the Group’s performance over the period of the historical information. • The six months ended 31 December 2010 included a gain of A$4,000,000 on the extinguishment of a liability for less than its book value and an A$1,252,500 writeback of share based remuneration expense in relation to executive options that were cancelled due to performance-based vesting conditions attached to those options not being satisfied. • The six months ended 31 December 2009 included share based remuneration expense of A$6,819,755 and costs of A$1,717,915 relating to the acquisition of ASG. • The year ended 30 June 2010 included an A$36,666,786 gain on the acquisition of ASG, share based remuneration expense of A$6,819,755, a loss of A$2,891,037 on the termination of the Minesite Dry Hire contract and costs of A$1,717,915 relating to the acquisition of ASG. • The year ended 30 June 2009 included share based remuneration expense of A$4,130,120 and an impairment of equity investments of A$1,214,402. • The year ended 30 June 2008 was the year in which Simberi commenced production. The income statement reflects the results of five months of operations from February 2008 to June 2008. Share based remuneration expense of A$3,590,530 was incurred. A more detailed analysis of the factors affecting the Group’s performance in each period is provided at paragraph 6 of this Part VII—Results of operations of the Group.

4 Critical accounting policies Preparation of the Group’s financial statements requires management to make judgements and estimates and form assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as at the date of the financial statements and the reported revenue and expenses during the periods presented therein. On an ongoing basis, management evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements and estimates on historical experience and on other various factors it believes to be reasonable under the circumstances, the results of which form the basis of the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The Group has identified the following critical accounting policies under which significant judgements, estimates and assumptions are made and where actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods. Further details regarding the nature of these assumptions and conditions may be found in the relevant notes to the Group’s historical financial information in ‘‘Part IX—Historical Financial Information’’.

Reserve estimates Reserves are estimates of the amount of gold that can be economically and legally extracted from the Group’s existing properties. In order to calculate reserves, estimates and assumptions must be made with respect to a range of geological, technical and economic factors, including expected quantities,

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grades, production techniques, recovery rates, production costs, transport costs, commodity demand, commodity prices and exchange rates. Estimating the quantity and/or grade of reserves requires the size, shape and depth of ore bodies or fields to be determined by analysing geological data such as drilling samples. This process may require complex and difficult geological judgements and calculations to interpret the data. The Group is required to determine and report ore reserves under the principles incorporated in the Australasian Code for Reporting of Mineral Resources and Ore Reserves December 2004, known as the JORC Code. The JORC Code requires the use of reasonable investment assumptions to calculate reserves. For example, if current prices remain above long-term historical averages for an extended period of time, internal assumptions about future prices may involve the use of lower prices to estimate reserves under the JORC Code. Lower price assumptions generally result in lower estimates of reserves. Because the economic assumptions used to estimate reserves may change, and because additional geological data is generated during the course of operations, estimates of reserves may vary from period to period. Changes in reported reserves may affect the Group’s financial results and financial position in a number of ways, including the following: • Asset carrying values may be affected due to changes in estimated future cash flows. • Depreciation, depletion and amortisation charged to the statement of comprehensive income may vary where such charges are determined by the units of production basis, or where the useful economic lives of assets change. • Overburden removal costs recorded on the statement of financial position or charged to the statement of comprehensive income may differ due to changes in stripping ratios or the units of production basis of depreciation. • Decommissioning, site restoration and environmental provisions may differ where changes in estimated reserves affect expectations about the timing or cost of these activities. • The carrying value of deferred tax assets may differ due to changes in estimates of the likely recovery of the tax benefits.

Exploration and evaluation expenditure The Group’s accounting policy regarding exploration and evaluation expenditure provides that certain expenditure items are capitalised for an area of interest where it is considered likely to be recoverable by future exploitation or sale or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves. This policy requires management to make certain estimates and assumptions as to future events and circumstances, in particular whether an economically viable extraction operation can be established. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised the expenditure under the policy, a judgement is made that recovery of the expenditure is unlikely, the relevant capitalised amount will be written off to the statement of comprehensive income.

Share based payments The Group issues equity-settled share based payments to employees and third parties. Such payments are measured at their fair value on the date they are granted. Fair value is measured using a binomial pricing model that requires the exercise of judgement in relation to variables such as expected volatilities and dividend yields based on information available at the time the fair value is measured.

Development expenditure Development activities typically commence after a particular project is approved by the requisite members of the management team. Management applies judgement in determining whether and when a project is economically viable. In exercising this judgement, management is required to make certain estimates and assumptions similar to those described above for capitalised exploration and evaluation expenditure. Any such estimates and assumptions may change as new information becomes available. If, after having commenced development activities, a judgement is made that a development asset is impaired, the appropriate amount will be written off to the statement of comprehensive income.

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Property, plant and equipment—recoverable amount In accordance with the Group’s accounting policy, each asset or cash generating unit is evaluated every reporting period to determine whether there are any indications of impairment. If any such indication exists, a formal estimate of recoverable amount is performed and an impairment loss recognised to the extent that carrying amount exceeds recoverable amount. The recoverable amount of an asset or cash generating group of assets is measured at the higher of fair value less costs to sell and value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties, and is generally determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset, including any expansion prospects, and its eventual disposal. Value in use is also generally determined as the present value of the estimated future cash flows, but only those expected to arise from the continued use of the asset in its present form and its eventual disposal. Present values are determined using a risk-adjusted pre-tax discount rate appropriate to the risks inherent in the asset. Future cash flow estimates are based on expected production and sales volumes, commodity prices (considering current and historical prices, price trends and related factors), reserves, operating costs, restoration and rehabilitation costs and future capital expenditure. This policy requires management to make these estimates and assumptions, which are subject to risk and uncertainty; hence there is a possibility that changes in circumstances will alter these projections, which may impact the recoverable amount of the assets. In such circumstances, some or all of the carrying value of the assets may be impaired and the impairment would be charged against the statement of comprehensive income.

Restoration and rehabilitation The Group’s accounting policy requires the recognition of provisions for the restoration and rehabilitation of each site. The provision recognised represents management’s best estimate of the present value of the future costs required. Significant estimates and assumptions are made in determining the amount of restoration and rehabilitation provisions. Those estimates and assumptions deal with uncertainties such as: requirements of the relevant legal and regulatory framework; the magnitude of possible contamination and the timing, extent and costs of required restoration and rehabilitation activity. These uncertainties may result in future actual expenditure differing from the amounts currently provided. The provision recognised for each site is periodically reviewed and updated based on the facts and circumstances available at the time. Changes to the estimated future costs for operating sites are recognised in the statement of financial position by adjusting both the asset restoration and rehabilitation provision. Such changes give rise to a change in future depreciation and financial charges.

Derivative financial instruments The Group may use derivative financial instruments to provide protection against unfavourable fluctuations in items such as the price of gold, foreign exchange rates, diesel fuel prices and interest rates. At each reporting date, the fair value of outstanding derivative financial instruments is measured using pricing models that require the exercise of judgement in relation to variables such as expected volatilities based on information available at the reporting date. As the underlying drivers for those judgements are constantly changing, the reported derivative financial assets and liabilities are an estimate that may materially change following the balance date.

Taxation The Group’s accounting policy for taxation requires management’s judgement in assessing whether deferred tax assets and certain deferred tax liabilities are recognised on the statement of financial position. Deferred tax assets, including those arising from unrecouped tax losses, capital losses and temporary differences, are recognised only where it is considered probable that they will be recovered, which is dependent on the generation of sufficient future taxable profits. Deferred tax liabilities arising from temporary differences in investments, caused principally by retained earnings held in foreign tax jurisdictions, are recognised unless repatriation of retained earnings can be controlled and are not expected to occur in the foreseeable future. Assumptions about the generation of future taxable profits and repatriation of retained earnings depend on management’s estimates of future cash flows. These in turn, depend on estimates of future production and sales volumes, commodity prices, reserves, operating costs, restoration and

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rehabilitation costs, capital expenditure, dividends and other capital management transactions. Judgements are also required regarding the application of income tax legislation. These judgements and assumptions are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred tax liabilities recognised on the statement of financial position, as well as the amount of other tax losses and temporary differences not yet recognised. In such circumstances, some or all of the carrying amount of recognised deferred tax assets and liabilities may require adjustment, resulting in a corresponding credit or charge to the statement of comprehensive income.

Business combination During the period ended 30 June 2010, the Group recognised a gain of $36,666,786 on the acquisition of a controlled entity. As described in Note 30 to the Group’s financial statements as at and for the year ended 30 June 2010, this gain was determined by comparing the consideration paid for the acquisition to the fair value of the net assets acquired. Determination of those fair values required management to make estimations and assumptions similar to those described above for reserve estimates, exploration and evaluation expenditures, development expenditure, property, plant and equipment, restoration and rehabilitation and taxation. A change in any of the underlying assumptions or estimates could impact the fair value of the net assets acquired and the resultant gain on acquisition.

5 Segment reporting The Group has adopted IFRS 8 Operating Segments from 1 July 2009, which replaces IAS 14 Segment Reporting. The new standard requires what is referred to as a ‘‘management approach’’, under which segment information is presented on the same basis as that used for internal reporting purposes. As described in the notes to the financial statements as at and for the year ended 30 June 2010, operating segments are reported in a manner consistent with the internal reporting provided to the Executive Chairman and the Chief Financial Officer known together as the ‘‘chief decision maker’’. The Group’s business is considered from both a geographic and functional perspective and management has identified four reportable segments: Mining and Processing and Mining Exploration in Papua New Guinea (with respect to Simberi) and Mining and Processing and Mining Exploration in the Solomon Islands (with respect to Gold Ridge). Mining and Processing in the Solomon Islands was reported for the first time in the Group’s historical financial information for the six months ended 31 December 2010, but the amount was all capitalised and therefore had no impact on the Group’s profit and loss statement.

6 Results of operations of the Group The following discussion and analysis of the Group’s results of operations and financial condition is based on the Group’s historical results as extracted from financial information contained in Part IX: ‘‘Historical Financial Information’’ of this Prospectus. It should be noted that production at the Gold Ridge Project recommenced in March 2011. Therefore, the Group’s results of operations as at and for the six months ended 31 December 2010 and 2009 and as at and for the years ended 30 June 2010, 2009 and 2008 relate to production at Simberi only.

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For the six months ended 31 December 2010 2009 Per cent of Per cent of A$ total revenue A$ total revenue Revenue ...... 40,942,585 100.0 33,141,171 100.0 Cost of sales ...... (32,574,869) 79.6 (38,150,819) 115.1 Gross profit/(loss) ...... 8,367,716 20.4 (5,009,648) 15.1 Gains/(losses) on derivatives ...... — — (812,476) 2.5 Corporate expenses ...... (4,950,553) 12.1 (8,002,387) 24.1 Share based remuneration ...... 1,252,500 3.1 (6,819,755) 20.6 Foreign exchange gain/(loss) ...... 444,063 1.1 (112,698) 0.3 Financial income ...... 4,776,722 11.7 180,483 0.5 Financial costs ...... (501,456) 1.2 (1,839,198) 5.5 Profit/(loss) from continuing operations ...... 9,388,992 22.9 (22,415,679) 67.6 Income tax benefit/(expense) ...... — — — — Profit/(loss) after tax attributable to: Owners of Allied Gold Limited ...... 9,388,992 (22,402,708) Non-controlling interest ...... — (12,971) 9,388,992 (22,415,679) 6 Basic earnings/(loss) per share (cents) . . .90 — (4.24) — Diluted earning/(loss) per share (cents) . . .89 — (4.24) —

Six months ended 31 December 2010 compared to six months ended 31 December 2009 Revenue (increase of A$7,801,414 or 23.5 per cent) Revenue increased by A$7,801,414, or 23.5 per cent, from A$33,141,171 in the six months ended 31 December 2009 to A$40,942,585 in the six months ended 31 December 2010 due primarily to the higher achieved gold prices in the six months. Gold sales of 33,556 ounces in the six months ended 31 December 2010 were at an average realised price (net of hedging adjustments) of A$1,220/oz compared to gold sales of 33,391 ounces in the six months ended 31 December 2009 which were at an average realised price of A$991/oz. Whilst gold production of 37,127 ounces in 2010 exceeded production of 31,528 ounces in 2009, the volume of gold sold was approximately the same in both periods due to two factors. Firstly, in 2010 there was a build up of gold in circuit of approximately 2,190 ounces due to the adverse impact on the elution circuit of a deterioration in water quality arising from below average rainfall at the Simberi Oxide Plant. Secondly, there was gold produced but not shipped to the refinery as at December 31, 2010 totalling approximately 1,380 ounces. This gold was sold in January 2011. The following table sets forth the Group’s revenue and other income for the six months ended 31 December 2010 and 2009.

For the six months ended 31 December 2010 2009 A$ Revenue Gold income ...... 40,880,851 33,103,319 By products ...... 61,734 37,852 Total revenue ...... 40,942,585 33,141,171 Other income Net gain on disposal of property, plant and equipment ...... 35,566 — Net gain on disposal of investments ...... — — Net foreign exchange gains ...... — 1,392,927 Other ...... 47,062 167,988 Total other income ...... 82,628 1,560,915

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Cost of sales (decrease of A$5,575,950 or 14.6 per cent) Cost of sales decreased by A$5,575,950, or 14.6 per cent, from A$38,150,819 in the six months ended 31 December 2009 to A$32,574,869 in the six months ended 31 December 2010. The total cost per ounce of gold sold (including non cash cost) in the six months ended 31 December 2010 amounted to A$971 per ounce compared to A$1,210 per ounce in the six months ended 31 December 2009, which was primarily attributable to the largely fixed nature of the costs derived from the Simberi Project being spread over a larger production volume in the six months ended 31 December 2010. A detailed analysis of cost of sales is set out in the table below:

Six months ended 31 December 2010 2009 A$ Cash operating costs: Employee expenses ...... 4,920,530 3,684,145 Stores and other consumables ...... 6,087,098 6,652,909 Fuel, power and water ...... 5,454,344 4,292,370 Other ...... 12,298,219 14,696,723 Depreciation and amortisation charges ...... 7,964,691 6,119,493 Changes in inventories and work in progress ...... (5,071,073) 2,046,279 Royalties ...... 921,060 658,900 Total cost of sales ...... 32,574,869 38,150,819

Gross profit/(loss) (variance of A$13,377,364) As a result of factors discussed above, gross profit/(loss) varied by A$13,377,364, from a loss of A$5,009,648 in the six months ended 31 December 2009 to a gain of A$8,367,716 in the six months ended 31 December 2010.

Corporate expenses (decrease of A$3,051,834 or 38.1 per cent) Corporate expenses decreased by A$3,051,834, or 38.1 per cent, from A$8,002,387 in the six months ended 31 December 2009 to A$4,950,553 in the six months ended 31 December 2010. This decrease was primarily attributable to the absence of costs in the six months ended 31 December 2010 that were incurred in the corresponding period in the previous year, including approximately A$1.8 million of costs incurred in connection with the Group’s acquisition of ASG, legal costs incurred in relation to a legal action brought by Allied Gold Limited against Intermet and a former director of Intermet in connection with construction work on Simberi, as well as costs associated with the Group’s listing on the TSX. Corporate costs also reduced during the six months ended 31 December 2010 due to the implementation of a cost sharing model resulting in approximately A$2.4 million in corporate costs being recharged to Simberi and Gold Ridge.

Share based remuneration (variance of A$8,072,255) Share based remuneration varied by A$8,072,255, from an expense of A$6,819,755 in the six months ended 31 December 2009 to a gain of A$1,252,500 in the six months ended 31 December 2010. The gain of A$1,252,500 in the six months ended 31 December 2010 represents a write back of previously- recognised share based compensation expense resulting from the cancellation of executive compensation options for which certain production-based vesting conditions were not met.

Foreign exchange gain/(loss) (variance of A$556,761) Foreign exchange gain/(loss) varied by A$556,761, from a loss of A$112,698 in the six months ended 31 December 2009 to a gain of A$444,063 in the six months ended 31 December 2010. This variance was primarily attributable to foreign exchange gains on foreign currency liabilities following an overall strengthening in the Australian dollar during the six months ended 31 December 2010.

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: DD11601A.;29 MERRILL CORPORATION CGONCE//16-JUN-11 13:07 DISK106:[11ZBG1.11ZBG11601]DD11601A.;29 mrll_0909.fmt Free: 3500D*/4055D Foot: 0D/ 0D VJ RSeq: 7 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 27995

Financial income (increase of A$4,596,239 or 254.6 per cent) Financial income increased by A$4,596,239, or 2546.6 per cent, from A$180,483 in the six months ended 31 December 2009 to A$4,776,722 in the six months ended 31 December 2010. This increase was primarily attributable to the recognition of A$4,000,000 of financing income pursuant to the derecognition of accruals that were previously made by a subsidiary. The remaining variance of A$596,239 represents higher interest earned in 2010 due to average cash balances during the six months ended 31 December 2010 being significantly higher than in the six months ended 31 December 2009.

Financial costs (decrease of A$1,337,742 or 72.7 per cent) Financial costs decreased by A$1,337,742, or 72.7 per cent, from A$1,839,198 in the six months ended 31 December 2009 to A$501,456 in the six months ended 31 December 2010. This decrease was primarily attributable to decreases in the Group’s interest charges on its finance leases as a result of the termination of the lease agreement between the Group and Zurich Bay Holdings Pty Ltd (ATF Mine Site Construction Services Trust trading as Mine Site Construction Services) for the hire of mining equipment on 1 April 2010. For additional information on the dry hire agreement, please refer to paragraph 7 of this Part VII—Liquidity and capital resources—Finance leases. It should be noted that the reduction in financial costs occurred despite there being a significant increase in interest bearing liabilities in the six months ended 31 December 2010 pursuant to the draw down of loans from the International Finance Corporation (IFC) and the Bank of the South Pacific (BSP). The IFC loans relate to Gold Ridge and as such interest on that facility was capitalised as the project was in the construction phase throughout the six months ended 31 December 2010. The BSP loan was drawn down in late December and therefore had little effect on financial costs for the six months ended 31 December 2010.

Taxation The Group’s effective tax rate was zero in each of the six months ended 31 December 2010 and 2009. For additional information, please refer to ‘‘Part IX—Historical Financial Information’’.

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: DD11601A.;29 MERRILL CORPORATION CGONCE//16-JUN-11 13:07 DISK106:[11ZBG1.11ZBG11601]DD11601A.;29 mrll_0909.fmt Free: 1545D /2095D Foot: 0D/ 0D VJ RSeq: 8 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 19233

Profit after tax attributable to owners of Allied Gold Limited (variance of A$31,791,700) As a result of factors discussed above, profit after tax attributable to the owners of the Group in the six months varied by A$31,791,700, from a loss of A$22,402,708 in the six months ended 31 December 2009 to a profit of A$9,388,992 in the six months ended 31 December 2010.

For the year ended 30 June 2010 2009 2008 Per cent of Per cent of Per cent of total total total A$ revenue A$ revenue A$ revenue Revenue ...... 67,555,369 100.0 77,467,668 100.0 23,393,798 100.0 Cost of sales ...... (70,289,540) 104.0 (66,436,649) 85.8 (20,264,174) 86.6 Gross profit/(loss) ...... (2,734,171) 4.0 11,031,019 14.2 3,129,624 13.4 Gains/(losses) on derivatives ..... (176,084) 0.3 1,133,187 1.5 (2,685,864) — Corporate expenses ...... (14,773,680) 21.9 (7,545,907) 9.7 (4,404,307) 18.8 Share based remuneration ...... (6,828,559) 10.1 (4,130,120) 5.3 (3,590,530) 15.3 Impairment of available for sale assets ...... (7,740) — (1,214,402) 1.6 — — Gain on acquisition of subsidiary . . 36,666,786 54.3 — — — — Other expenses ...... — — (3,426,778) 4.4 (4,049,118) 17.3 Other income ...... 2,243,413 3.3 149,937 0.2 31,688 0.1 Financial income ...... 1,834,972 2.7 327,760 0.4 533,365 2.3 Financial expenses ...... (5,996,122) 8.9 (3,396,347) 4.4 (1,189,685) 5.1 Profit/(loss) before tax ...... 10,228,815 15.1 (7,071,651) 9.1 (12,224,827) 52.3 Income tax benefit/(expense) ..... — — — — — — Profit/(loss) after tax attributable to owners of Allied Gold Limited 10,228,815 15.1 (7,071,651) 9.1 (12,224,827) 52.3 Profit/(loss) per share for loss attributable to ordinary equity holders of Allied Gold Limited Basic earnings/(loss) per share (cents) ...... 1.31 — (1.65) — (3.46) — Diluted earning/(loss) per share (cents) ...... 1.31 — (1.65) — (3.46) —

Year ended 30 June 2010 compared to year ended 30 June 2009 Revenue (decrease of A$9,912,299 or 12.8 per cent) Revenue decreased by A$9,912,299, or 12.8 per cent, from A$77,467,668 in the year ended 30 June 2009 to A$67,555,369 in the year ended 30 June 2010. This decrease was primarily attributable to a decrease in gold production and a consequential decrease in gold sales. The Group recorded gold sales of 63,980 ounces in the year ended 30 June 2010 at an average realised price (after hedge-related accounting adjustments) of A$1,056 per ounce of gold compared to gold sales of 69,886 ounces in the previous year with an average realised price of A$1,108 per ounce of gold. Despite there being an appreciation in the US dollar price of gold during the 2010 year, the strengthening of the Australian dollar against the US dollar resulted in the Australian dollar gold price remaining relatively constant between the periods.

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: DD11601A.;29 MERRILL CORPORATION CGONCE//16-JUN-11 13:07 DISK106:[11ZBG1.11ZBG11601]DD11601A.;29 mrll_0909.fmt Free: 15D*/120D Foot: 0D/ 0D VJ RSeq: 9 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 829

The following table sets forth the Group’s revenue and other income for the years ended 30 June 2010 and 2009.

Year ended 30 June 2010 2009 A$ Revenue Gold income ...... 67,474,314 77,182,556 By products ...... 81,055 285,112 Total revenue ...... 67,555,369 77,467,668 Other income Net gain on disposal of property, plant and equipment ...... — 52,657 Net gain on disposal of investments ...... 812,353 97,270 Net foreign exchange gains ...... 1,431,060 — Other ...... — 10 Total other income ...... 2,243,413 149,937

Cost of sales (increase of A$3.9 million or 5.8 per cent) Cost of sales increased by A$3,852,891, or 5.8 per cent from A$66,436,649 in the year ended 30 June 2009 to A$70,289,540 in the year ended 30 June 2010. The increase in cost of sales was primarily attributable to lower mine head grade of 1.18 g/t in the year ended 30 June 2010 compared to 1.64 g/t in the previous year, which resulted in the production of lower amounts of gold from higher process plant throughput. Depreciation decreased in 2010 compared to 2009 due to a combination of lower production and an increase in mineral reserves, which led to a lower depreciation charge per ounce of gold produced. The reduction in fuel, power and water in 2010 compared to 2009 was primarily attributable to a significant reduction in diesel fuel prices. The following table sets forth the Group’s cost of sales for the years ended 30 June 2010 and 2009.

Year ended 30 June 2010 2009 A$ Cash operating costs: Employee expenses ...... 8,455,037 6,223,952 Stores and other consumables ...... 11,350,294 13,853,495 Fuel, power and water ...... 8,952,548 11,402,866 Other ...... 24,891,452 17,966,920 Depreciation and amortisation charges ...... 13,087,125 18,437,429 Changes in inventories and work in progress ...... 1,900,873 (3,166,690) Royalties ...... 1,652,211 1,718,677 Total cost of sales ...... 70,289,540 66,436,649

Gross profit/(loss) (variance of A$13,765,190) As a result of factors discussed above, gross profit/(loss) varied by A$13,765,190, from a profit of A$11,031,019 in the year ended 30 June 2009 to loss of A$2,734,171 in the year ended 30 June 2010.

Corporate expenses (increase of A$7,227,773 or 95.8 per cent) Corporate expenses increased by A$7,227,773, or 95.8 per cent, from A$7,545,907 in the year ended 30 June 2009 to A$14,773,680 in the year ended 30 June 2010. This increase was primarily attributable to an expenditure of approximately A$1.8 million in connection with the acquisition of ASG, which the Group was required to expense through its income statement pursuant to a change in accounting standards that became effective from 1 July 2009, as well as to the costs associated with the establishment of the corporate support and infrastructure necessary to support the expanded Group following the acquisition of ASG and the implementation of proposed expansion projects following a

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successful capital raising undertaken by the Group during the three months ended 30 June 2010. In addition, the Group incurred costs in connection with the Intermet litigation, as well as in connection with the Group’s listing on the TSX.

Share based remuneration (increase of A$2,698,439 or 65.3 per cent) Share based remuneration increased by A$2,698,439, or 65.3 per cent, from A$4,130,120 in the year ended 30 June 2009 to A$6,828,559 in the year ended 30 June 2010. The amount in both years related to options issued to Directors and employees.

Impairment of available for sale assets (decrease of A$1,206,662 or 99.4 per cent) Impairment of available for sale assets decreased by A$1,206,662, or 99.4 per cent, from A$1,214,402 in the year ended 30 June 2009 to A$7,740 in the year ended 30 June 2010. In the year ended 30 June 2009, the Company recorded an impairment loss of A$1,214,402 relating to shareholdings in various listed companies, the value of which had decreased significantly following a general decline in global equity markets during that period.

Gain on acquisition of subsidiary In the year ended 30 June 2010, the Group recorded a gain of A$36,666,786 in relation to the acquisition of ASG. This gain represents the excess of the fair value of net assets acquired over the consideration the Company paid to complete the acquisition. For additional information, please refer to the Group’s historical financial information in ‘‘Part IX—Historical Financial Information’’.

Other expenses (decrease of A$3,426,778 or 100 per cent) Other expenses decreased by A$3,426,778, or 100 per cent, from A$3,426,778 in the year ended 30 June 2009 to nil in the year ended 30 June 2010. This decrease was primarily attributable to the Group generating foreign exchange gains on foreign currency cash balances during 2010 compared to foreign exchange losses that were incurred in the previous period.

Other income (increase of A$2,093,476 or 1,396.2 per cent) Other income increased by A$2,093,476, or 1,396.2 per cent, from A$149,937 in the year ended 30 June 2009 to A$2,243,413 in the year ended 30 June 2010. This increase was primarily attributable to the Group realising gains amounting to A$1,006,313 on the sale of shareholdings in various listed companies in the year ended 30 June 2010.

Financial income (increase of A$1,507,212 or 459.9 per cent) Financial income increased by A$1,507,212, or 459.9 per cent, from A$327,760 in the year ended 30 June 2009 to A$1,834,972 in the year ended 30 June 2010. This increase was primarily attributable to interest earned on higher average cash balances following the approximately A$150 million equity raising in December 2009.

Financial expenses (increase of A$2,599,775 or 76.5 per cent) Financial expenses increased by A$2,599,775, or 76.5 per cent, from A$3,396,347 in the year ended 30 June 2009 to A$5,996,122 in the year ended 30 June 2010. This increase was primarily attributable to a loss of A$2,891,037 relating to the termination of a finance lease for the hire of mining equipment prior to its expiration date, which had been entered into with Zurich Bay Holdings Pty Ltd (ATF Mine Site Construction Services Trust trading as Mine Site Construction Services), a company in which Mr. Mark Caruso is a shareholder and director. Prior to its termination, the agreement was accounted for as a finance lease. Under the terms of the agreement, the Group had the option to acquire the leased assets for their agreed fair value on the expiration of the individual leases. The agreement was terminated effective 1 April 2010. The amount payable by the Group as a result of the termination was A$6,466,764, which exceeded the recorded value of the lease liability of A$3,575,727 as at the termination date. The excess of the termination value over the lease liability of A$2,891,037 was recorded as a financial expense. The aggregate amount payable for the mining equipment acquired as a consequence of the termination of the agreement was determined based on an independent valuation of the mining equipment.

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: DD11601A.;29 MERRILL CORPORATION CGONCE//16-JUN-11 13:07 DISK106:[11ZBG1.11ZBG11601]DD11601A.;29 mrll_0909.fmt Free: 1500D*/1935D Foot: 0D/ 0D VJ RSeq: 11 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 30768

Taxation The Group’s effective tax rate was zero in each of the years ended 30 June 2010 and 2009. For additional information, please refer to ‘‘Part IX—Historical Financial Information’’.

Profit after tax attributable to owners of Allied Gold Limited (variance of A$17,300,466) As a result of factors discussed above, profit after tax attributable to the owners of Allied Gold Limited varied by A$17,300,466, from a loss of A$7,071,651 in the year ended 30 June 2009 to a profit of A$10,228,815 in the year ended 30 June 2010.

Year ended 30 June 2009 compared to year ended 30 June 2008 Revenue (increase of A$54,073,870 or 231.1 per cent) Revenue increased by A$54,073,870, or 231.1 per cent, from A$23,393,798 in the year ended 30 June 2008 to A$77,467,668 in the year ended 30 June 2009. This increase was primarily attributable to the fact that the year ended 30 June 2009 reflects a full year of production from Simberi compared to five months of production (from February 2008 to June 2008) in the year ended 30 June 2008. In addition, the increase reflects an increase in the average revenue per ounce (from A$825 in the year ended 30 June 2008 to A$1,108 in the year ended 30 June 2009). The following table sets forth the Group’s revenue and other income for the years ended 30 June 2009 and 2008.

Year ended 30 June 2009 2008 A$ Revenue Gold income ...... 77,182,556 23,350,248 By products ...... 285,112 43,550 Total revenue ...... 77,467,668 23,393,798 Other income Net gain on disposal of property, plant and equipment ...... 52,657 30,455 Net gain on disposal of investments ...... 97,270 — Other ...... 10 1,233 Total other income ...... 149,937 31,688

Cost of sales (increase of A$46,172,475 or 227.9 per cent) Cost of sales increased by A$46,172,475, or 227.9 per cent, from A$20,264,174 in the year ended 30 June 2008 to A$66,436,649 in the year ended 30 June 2009. This increase was primarily attributable to an increase in mining and processing activities in the year ended 30 June 2009 compared to the previous year as a result of full year operations, as described above, as well as an increase in depreciation and amortisation charges of A$11,901,930 from A$6,535,499 in the year ended 30 June 2008 to A$18,437,429 for the year ended 30 June 2009, which was primarily attributable to increased gold production in the year ended 30 June 2009. In particular, a significant proportion of depreciation and amortisation expense is determined using the units of production basis and, as a result, the expense increases or decreases based on variations in gold production.

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: DD11601A.;29 MERRILL CORPORATION CGONCE//16-JUN-11 13:07 DISK106:[11ZBG1.11ZBG11601]DD11601A.;29 mrll_0909.fmt Free: 365D*/540D Foot: 0D/ 0D VJ RSeq: 12 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 61775

The following table sets forth the Group’s revenue and other income for the years ended 30 June 2010 and 2009.

Year ended 30 June 2009 2008 A$ Cash operating costs: Employee expenses ...... 6,223,952 2,423,708 Stores and other consumables ...... 13,853,495 3,558,937 Fuel, power and water ...... 11,402,866 4,642,255 Other ...... 17,966,920 7,469,762 Depreciation and amortisation charges ...... 18,437,429 6,409,615 Changes in inventories and work in progress ...... (3,166,690) (4,763,684) Royalties ...... 1,718,677 523,581 Total cost of sales ...... 66,436,649 20,264,174

Gross profit (increase of A$7,901,395 or 252.5 per cent) As a result of factors discussed above, gross profit increased by A$7,901,395, or 252.5 per cent, from A$3,129,624 in the year ended 30 June 2008 to A$11,031,019 in the year ended 30 June 2009.

Corporate expenses (increase of A$3,141,600 or 71.3 per cent) Corporate expenses increased by A$3,141,600, or 71.3 per cent, from A$4,404,307 in the year ended 30 June 2008 to A$7,545,907 in the year ended 30 June 2009. This increase was primarily attributable to the establishment of the required corporate support and infrastructure necessary to support the Group as Simberi moved into the production phase.

Share based remuneration (increase of A$539,590 or 15.0 per cent) Share based remuneration increased by A$539,590, or 15.0 per cent, from A$3,590,530 in the year ended 30 June 2008 to A$4,130,120 in the year ended 30 June 2009.

Impairment of available for sale assets (increase of A$1,214,402 or 100 per cent) Impairment of available for sale assets increased by A$1,214,402, or 100 per cent, from nil in the year ended 30 June 2008 to A$1,214,402 in the year ended 30 June 2009. This increase was primarily attributable to the an impairment loss of A$1,214,402 recorded by the Company in the year ended 30 June 2009 related to the value of shareholdings in various listed companies, which had decreased significantly following a general decline in global equity markets during that period. No such impairment loss was recorded in the year ended 30 June 2008.

Other expenses (decrease of A$622,340 or 15.4 per cent) Other expenses decreased by A$622,340, or 15.4 per cent from A$4,049,118 in the year ended 30 June 2008 to A$3,426,778 in the year ended 30 June 2009. This decrease was primarily attributable to a decrease in foreign exchange losses.

Other income (increase of A$118,249 or 373.2 per cent) Other income increased by A$118,249, or 373.2 per cent, from A$31,688 in the year ended 30 June 2008 to A$149,937 in the year ended 30 June 2009. This increase was primarily attributable to a net gain on the disposal of investments in an amount of A$97,279.

Financial income (decrease of A$205,605 or 38.5 per cent) Financial income decreased by A$205,605, or 38.5 per cent, from A$533,365 in the year ended 30 June 2008 to A$327,760 in the year ended 30 June 2009. This decrease was primarily attributable to a decrease in the amount of interest received as a result of lower average cash balances during the period.

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Financial expenses (increase of A$2,206,662 or 185.5 per cent) Financial expenses increased by A$2,206,662, or 185.5 per cent, from A$1,189,685 in the year ended 30 June 2008 to A$3,396,347 in the year ended 30 June 2009. This increase was primarily attributable to the fact that all financing expense was required to be recorded in the income statement in the year ended 30 June 2009. In the year ended 30 June 2008, finance expenses amounting to A$2,025,797 that were incurred prior to the commencement of production in February 2008 were capitalised as development costs.

Taxation The Company’s effective tax rate was zero in each of the years ended 30 June 2009 and 2008. Please refer to ‘‘Part IX—Historical Financial Information’’ for additional information’’.

Loss after tax attributable to owners of Allied Gold Limited (decrease of A$5,153,176 or 42.2 per cent) As a result of factors discussed above, loss after tax attributable to the owners of Allied Gold Limited decreased by A$5,153,176, or 42.2 per cent, from A$12,224,827 in the year ended 30 June 2008 to A$7,071,651 in the year ended 30 June 2009.

7 Liquidity and capital resources The Group’s principal source of liquidity is its cash and cash equivalents, which as at 31 December 2010 amounted to A$36,484,444 compared to A$85,525,391 as at 30 June 2010. The majority of the Group’s cash and cash equivalents have been invested in higher interest yielding cash management accounts and have historically been held in a combination of Australian dollars, US dollars and PNG Kina. Historically, the Group has relied on cash provided by equity offerings, its operations, bank loans and leasing facilities to finance its working capital and ensure its liquidity. In particular, during the three years ended 30 June 2010, 2009 and 2008, Allied Gold Limited funded its operating activities primarily through equity offerings through the completion of private placements with gross proceeds of A$159,545,451, A$41,575,365 and A$26,891,855, respectively. Allied Gold Limited did not undertake any equity offerings in the six months ended 31 December 2010, while in the six months ended 31 December 2009, Allied Gold Limited completed an equity offering which resulted in gross proceeds amounting to A$159,545,451. The above-mentioned equity offerings have been supplemented by borrowings from external financing sources. The Group’s management expects that the above-mentioned sources will continue to be its main sources of cash in the future. The Group’s cash requirements relate primarily to its operating activities, exploration programmes, capital expenditures and the repayment of liabilities as they become due. In April 2011, Allied Gold Limited completed an equity raising of A$93.8 million pursuant to a private placement transaction. The Company is of the opinion that the working capital available to the Group is sufficient for its present requirements, that is, for at least the 12 months following the date of this Prospectus.

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: DD11601A.;29 MERRILL CORPORATION PHARDIM//16-JUN-11 04:29 DISK106:[11ZBG1.11ZBG11601]DE11601A.;35 mrll_0909.fmt Free: 35D*/120D Foot: 0D/ 0D VJ RSeq: 1 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 38253

Cash flows of the Group Cash flows for the six months ended 31 December 2010 and 2009 and for the years ended 30 June 2010, 2009 and 2008 The following table sets forth the Group’s cash flows for the six months ended 31 December 2009 and 2010 and for the years ended 30 June 2008, 2009 and 2010.

For the six months ended 31 December For the year ended 30 June 2010 2009 2010 2009 2008 (A$) Net cash from/(used in) operating activities . 7,856,534 (8,933,231) (20,509,398) 21,563,200 (282,620) Net cash from/(used in) investing activities . . (103,318,849) (6,592,836) (63,800,604) (24,402,510) (53,313,997) Net cash from/(used in) financing activities . 46,437,202 151,091,597 148,677,057 22,963,380 41,092,805 Net increase/(decrease) in cash and cash equivalents ...... (49,025,113) 135,565,530 64,367,055 20,124,070 (12,503,812) Cash and cash equivalents at the beginning of the period ...... 85,525,391 20,529,979 20,529,979 154,180 12,657,949 Cash and cash equivalents at the end of the period ...... 36,486,444 157,241,528 85,525,391 20,529,979 154,180

(a) Cash from/(used in) operating activities The Group’s net cash from operating activities was A$7,856,534 in the six months ended 31 December 2010 compared to net cash used in operating activities in the amount of A$8,933,231 in the six months ended 31 December 2009. The increase in cash generated from operating activities was primarily attributable to higher realised Australian dollar gold revenue in the six months ended 31 December 2010 for the reasons described above. The Group’s net cash used in operating activities was A$20,509,398 in the year ended 30 June 2010 compared to net cash from operating activities in the amount of A$21,563,200 in the year ended 30 June 2009. The significant decrease in cash generated from operating activities was primarily attributable to lower realised gold revenue in the year ended 30 June 2010 due to lower volumes of gold sold as a result of the reasons described above, increased cash costs incurred per ounce of production due to lower head grades compared to the previous year, as well as increased corporate costs in connection with the acquisition of ASG. In addition, during the year ended 30 June 2010, the Group made net payments of A$17,826,546 relating to the close out of the Group’s gold hedging commitments, while in the previous year the Group generated cash amounting to A$5,144,710 from a restructuring of the Group’s hedge book. The Group’s net cash from operating activities was A$21,563,200 in the year ended 30 June 2009 compared to net cash used in operating activities in the amount of A$282,620 in the year ended 30 June 2008. The increase in cash generated from operating activities was attributable primarily to increased gold sales in the year ended 30 June 2009 due to increased gold production as a result of the reasons mentioned above, as well as the benefit of proceeds amounting to A$5,122,882 from the settlement of derivatives pursuant to a restructuring of the Group’s hedge book in the year ended 30 June 2009.

(b) Cash from/(used in) investing activities The Group’s net cash used in investing activities was A$103,318,849 in the six months ended 31 December 2010 compared to A$6,592,836 in the six months ended 31 December 2009. The increase in cash used in investing activities was primarily attributable to a significant increase to the Group’s capital expenditure spending primarily in relation to the redevelopment of Gold Ridge following the acquisition of ASG. The Group’s net cash used in investing activities was A$63,800,604 in the year ended 30 June 2010 compared to A$24,402,510 in the year ended 30 June 2009. The increase in cash used in investing activities was primarily attributable to an expenditure of A$52,105,472 on property, plant and equipment in relation to (i) debottlenecking and optimisation initiatives for Simberi in an amount of A$4,156,632, (ii) A$5,203,531 on the upgrade of Simberi mobile equipment fleet, (iii) other capital expenditures for Simberi amounting to A$8,256,643 and (iv) capital expenditures for the redevelopment of Gold Ridge amounting to A$34,198,312, including A$19,078,437 for the purchase of mobile equipment. This was also attributable to exploration and evaluation expenditures amounting to A$9,544,311 that was incurred

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compared to A$4,353,494 in the previous year. These expenditures included A$7.1 million on the ongoing sulphide feasibility study being undertaken on Simberi Island and payment of an A$2,500,000 deposit on the purchase of Barrick’s interest in the Group since in March 2010 the Group negotiated Barrick’s withdrawal from the joint venture agreement over Tatau and Big Tabar Island. Consequently, the Group reassumed management of exploration in the entire area of EL 609. This increase was partially offset by a decrease in development expenditures (from A$7,205,878 in the year ended 30 June 2009 to A$6,915,672 in the year ended 30 June 2010) related primarily to activities undertaken on ML 136 related to the Simberi Project. The Group’s net cash used in investing activities was A$24,402,510 in the year ended 30 June 2009 compared to A$53,313,997 in the year ended 30 June 2008. The decrease in cash used in investing activities was primarily attributable to a reduction in expenditures on property, plant and equipment in the year ended 30 June 2009, following the completion of construction activities during the period, as well as to a reduction in exploration expenditures incurred by Allied Gold Limited in relation to EL 609 as a result of a joint venture agreement entered into with Barrick in March 2008. As described above, the Group negotiated Barrick’s withdrawal from the joint venture agreement in March 2010.

(c) Cash generated from/(used in) financing activities The Group’s net cash from financing activities was A$46,437,202 in the six months ended 31 December 2010 compared to A$151,091,597 in the six months ended 31 December 2009. The change was primarily attributable to the fact that in the six months ended 31 December 2009 Allied Gold Limited benefited from gross proceeds from equity raisings of A$159,545,451 compared to gross proceeds received from debt financings in the six months ended 31 December 2010, which amounted to A$53,772,845 pursuant to two facility agreements with IFC and BSP, respectively. The Group’s net cash from financing activities was A$148,677,057 in the year ended 30 June 2010 compared to A$22,963,380 in the year ended 30 June 2009. The change between the two periods was primarily attributable to a significant increase in proceeds from the issuance of equity securities (from A$41,575,365 in the year ended 30 June 2009 to A$159,545,451 in the year ended 30 June 2010). The Group’s net cash from financing activities was A$22,963,380 in the year ended 30 June 2009 compared to A$41,092,805 in the year ended 30 June 2008. The decrease in cash from financing activities was primarily attributable to the repayment of borrowings amounting to A$16,407,977 in the year ended 30 June 2009.

Capital resources (d) Borrowings The Group has a secured facility agreement in place with the International Finance Corporation for borrowings of up to A$35 million in relation to the development of the Gold Ridge Project, which was fully drawn as at 31 December 2010. In addition, the Group has an A$22 million facility with Bank of the South Pacific Limited, which has been fully drawn down leaving no undrawn credit facilities as at 30 April 2010. As at 30 April 2011, the Group’s long-term borrowings amounted to A$32,768,703 and its short-term borrowings, including the current portion of long-term borrowings, amounted to A$22,606,959. The following table sets forth certain information relating to the Group’s short-term and long-term borrowings as at 31 December 2010 and as at 30 June 2010, 2009 and 2008.

As at 31 December As at 30 June 2010 2010 2009 2008 Short-term borrowings (including current portion of long-term borrowings) ..... 11,517,869 4,481,970 2,094,483 8,561,286 Long-term borrowings ...... 42,866,750 1,755,820 3,845,885 2,739,755 Total ...... 54,384,619 6,237,790 5,940,368 11,301,041

(e) Loan agreements and credit facilities In the six months ended 31 December 2010, the Group drew down an initial tranche (amounting to A$15 million) under a facility provided to the Group by BSP. This facility is secured by a fixed and floating

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charge over the assets of Simberi Gold and by a guarantee provided by Allied Gold Limited. In addition, the Group has an additional A$23 million available to it under this facility. It should be noted that the Group accounts for this facility as a finance lease. For additional information on the facility agreement with BSP, please refer to paragraph 12 of ‘‘Part XII—Additional Information’’ of this Prospectus. In addition, during the six months ended 31 December 2010, the Group drew down a US$35 million loan from IFC that is secured by a fixed and floating charge over the assets of Gold Ridge Mining Limited and by a guarantee provided by Allied Gold Limited. The five-year facility has no principal repayment before November 2011 and no gold hedging is required. The Group utilised the drawn down funds to meet its ongoing capital expenditure commitments in relation to the redevelopment of Gold Ridge. In July 2007, the Group entered into a US$25 million finance facility with RMB and Macquarie Bank Limited to be utilised for the construction of Simberi. This facility was retired during the year ended 30 June 2009, approximately 21 months ahead of schedule. A condition precedent of this financing facility was that Allied Gold Limited enter into a hedging programme for a specified number of ounces of gold. Under the hedging programme, Allied Gold Limited hedged 170,000 ounces of gold at an effective price of US$700 per ounce of gold for delivery between March 2008 and December 2011. In the course of the financial year ended 30 June 2009, the hedge book was restructured through the close out of the ‘‘in the money’’ put option maturing in the period from March 2011 to December 2011, yielding cash proceeds of A$5,122,882 to the Group. A subsequent restructuring of sold call options maturing in the period from March 2010 to December 2011 reduced the duration of the hedge book by approximately 12 months. In February 2010, the Group closed out the hedge book by pre-delivering physical gold in satisfaction of its remaining commitments under the hedging programme. For additional information regarding the facility agreement and the hedging programme, please refer to paragraph 12 of ‘‘Part XII—Additional Information’’ of this Prospectus. At the date of this Prospectus, the Group has not entered into, and does not currently intend to enter into, hedging arrangements in relation to gold prices.

Finance leases In April 2010, a lease agreement between the Group and Zurich Bay Holdings Pty Ltd (ATF Mine Site Construction Services Trust trading as Mine Site Construction Services), a company in which Mark Caruso is a shareholder and director, for the hire of mining equipment, was terminated prior to its scheduled expiry date. Prior to its termination, the agreement was accounted for as a finance lease. Under the terms of the agreement, the Group had the option to acquire the leased assets for their agreed fair value on expiry of the individual leases. The agreement was terminated effective 1 April 2010. The amount payable by the Group in consequence of the termination of the agreement was $6,466,764 which exceeded the recorded value of the lease liability of $3,575,727 as at the termination date. The excess of the termination value over the lease liability of $2,891,037 has been recorded in profit and loss under financing costs. The final amount payable for the mining equipment acquired as a consequence of the termination of the agreement was determined based on an independent valuation of the mining equipment. For additional information, see the notes to the historical financial statements for the year ended 30 June 2010 in ‘‘Part IX—Historical Financial Information’’. In addition, the Group accounts for its facility with BSP as a finance lease. For additional information on the facility agreement with BSP, please refer to paragraph 12 of ‘‘Part XII—Additional Information’’ of this Prospectus.

8 Off-balance sheet arrangements The Group had no off-balance sheet arrangements as at 31 December 2010 or as at 30 June 2010, 2009 and 2008.

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9 Contractual obligations and commercial commitments A summary of the Group’s total contractual obligations and commercial commitments to make future payments as at 31 December 2010 is set forth below:

Payments Due by Period Less than Between 1 More than Total 1 Year and 2 Years 3 to 5 Years 5 Years Contractual obligations as at 31 December 2010 Finance lease and borrowings obligations .... 57,759,616 12,851,288 15,532,322 26,444,028 2,931,978 Operating lease obligations ...... 2,093,847 1,338,066 755,781 — — Purchase obligations ...... 6,734,489 6,734,489 — — — Other liabilities ...... 14,379,947 14,379,947 — — — Total ...... 80,967,899 35,303,790 16,288,103 26,444,028 2,931,978

The Group’s financial commitments and contingent liabilities are generally limited to controllable expenditures at Simberi and Gold Ridge. Allied Gold Limited’s material financial commitments and contingent liabilities as at 31 December 2010 are as follows: • Leases for office premises, operating leases for various plant and machinery and payments for the charter of aircraft under non-cancellable operating leases expiring within one to five years, in the amount of A$2,093,847; • Commitments in relation to finance leases for the hire of mining equipment expiring within one to five years, in the amount of A$19,698,168. This amount includes the financing drawn down under the BSP facility agreement referred to above; • A required expenditure of A$900,900 during the next year in order to maintain current rights of tenure to EL609. Financial commitments for subsequent periods are contingent upon future exploration results and cannot be estimated. These obligations are subject to renegotiation upon the expiration of EL609 or when application for a mining licence is made, and have not been provided for in the accounts; and The above-mentioned commitments are to be funded through existing cash resources as at 31 December 2010, operating cash flows generated from Simberi and Gold Ridge and committed but undrawn finance facilities with BSP. It should also be noted that in April 2011 the Group raised A$93.8 million pursuant to a private placement transaction.

10 Capital expenditures The Group’s cash outflows used in the purchase of property, plant, equipment and intangible assets amounted to A$103,318,849, A$63,800,604, A$24,402,510 and A$53,313,997 in the six months ended 31 December 2010 and in the years ended 30 June 2010, 2009 and 2008, respectively. In the six months ended 31 December 2010, the Group’s capital expenditures primarily focused on the redevelopment of Gold Ridge following the acquisition of ASG, as well as the Simberi Sulphide Bankable Feasibility Study, Simberi oxide expansion works and ongoing near mine exploration activities on Simberi. In the year ended 30 June 2010, the Group’s capital expenditures primarily focused on the redevelopment of Gold Ridge, the purchase of mobile equipment, exploration and evaluation expenditures, debottlenecking and optimisation initiatives of Simberi, as well as the completion of the Simberi Sulphide Pre Feasibility Study. In the year ended 30 June 2009, the Group’s capital expenditures primarily focused on, as well as exploration expenditures in relation to EL609. In the year ended 30 June 2008, the Group’s capital expenditures primarily focused on the completion of construction activities at Simberi and exploration expenditures in relation to EL609. The Group generally finances its capital expenditures from its own funds (primarily consisting of gold revenues and equity raisings) and through debt financing (in particular loans with BSP and the IFC). For additional information on these funding sources, please refer to paragraph 7 of this Part VII—Liquidity and capital resources—Loan agreements and credit facilities.

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11 Qualitative and quantitative disclosure about risk In the normal course of its operations, the Group is exposed to gold price, foreign exchange, interest rate, liquidity, equity price and counterparty risks. In order to manage these risks, the Group may enter into transactions which make use of both on- and off-statement financial position derivatives. The Group does not acquire, hold or issue derivatives for trading purposes. The Group’s management of financial risks is aimed at ensuring that net cash flows are sufficient to meet all its financial commitments as and when they fall due and to maintain the capacity to fund its forecast project development and exploration strategy by: • Safeguarding the Group’s core earnings stream from its major asset through the effective control and management of financial risk. • Effective and efficient use of credit facilities through the adoption of reliable liquidity management planning and procedures. • Ensuring that investment and hedging transactions are undertaken with creditworthy counterparts. The Executive Chairman and Chief Financial Officer are responsible for management of the Group’s financial risks within Board approved directives. As at 31 December 2010, the Group held the following financial instruments:

Six months ended 31 December 2010 A$ Financial assets Cash and cash equivalents ...... 36,486,444 Trade and other receivables ...... 4,099,013 Securities available for sale ...... 1,068,024 Derivative assets ...... — Total ...... 41,653,481 Financial liabilities Trade and other payables ...... 14,379,497 Borrowings ...... 54,384,619 Derivative liabilities ...... — Total ...... 68,764,116

The sensitivity analyses presented in the following notes are based on changes in underlying prices or rates that the Group considered to be reasonably possible at the end of the reporting period.

(a) Market risk (i) Gold price risk Gold price risk is the risk that fluctuations in the price of gold will have an adverse effect on current or future earnings. The Group may use derivative financial instruments to hedge some of its exposure to fluctuations in gold prices. In order to protect against the impact of falling gold prices, the Group enters into hedging transactions which provide a minimum price to cover non-discretionary operating expenses, repayments due under the Group’s financing facilities and sustaining capital. The majority of the Group’s forecast production is unhedged, allowing it to take advantage of increases in gold prices. Prior to 26 February 2010, call and put options were used by the Group to manage the gold price risk. On 26 February 2010, the Group terminated its gold hedging facilities and in the period from 26 February 2010 to 31 December 2010 has maintained an unhedged position in relation to gold price risk. As the Group did not have any hedging in place as at 31 December 2010, it was fully exposed to gold price risk.

(ii) Foreign exchange risk Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Group’s functional currency. The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures

101

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primarily with respect to the PNG Kina, the US dollar, the Solomon Island dollar and the British pound. No material programmes for hedging foreign exchange risk were implemented by the Group in the six months ended 31 December 2010. The Group’s exposure to foreign currency risk at the reporting date was as follows:

31 December 2010 USD PGK SBD GBP A$ A$ A$ A$ Financial assets Cash and cash equivalents ...... 9,151,533 20,394,678 36,881 390,560 Trade and other receivables ...... 2,458,659 272,237 31,902 — 11,610,192 20,666,915 68,783 390,560 Financial liabilities Trade and other payables ...... (7,800,076) 3,561,628 635,885 565 Borrowings ...... 34,206,411 19,699,902 — — 26,406,335 23,261,530 635,885 565

31 December 2009 USD PGK CAD GBP A$ A$ A$ A$ Financial assets Cash and cash equivalents ...... 1,521,046 1,745,885 50,175,515 61,647,899 Trade and other receivables ...... 665,241 446,596 — — Derivative assets ...... 814,922 — — — 3,001,209 2,192,481 50,175,515 61,647,899 Financial liabilities Trade and other payables ...... 835,249 2,617,576 427,811 13,237 Borrowings ...... — 4,360,736 — — Derivative liabilities ...... 15,720,395 — — — 16,555,644 6,978,312 427,811 13,237

Based on the financial instruments held by the Group as at the reporting date, the sensitivity of the Group’s profit after tax for the six months and equity at the reporting date to movements in the Australian dollar to the specified exchange rates was: • Had the Australian dollar weakened/strengthened by 5 per cent against the US dollar with all other variables remaining constant, the Group’s profit after tax would have been A$739,808 lower/higher (2009: A$108,298 lower/higher) and equity would have been A$ nil lower/higher (2009: A$786,020). • Had the Australian dollar weakened/strengthened by 5 per cent against the PNG Kina with all other variables remaining constant, the Group’s profit after tax would have been A$129,731 lower/higher (2009: A$239,392 lower/higher). • Had the Australian dollar weakened/strengthened by 5 per cent against the Solomon Island dollar with all other variables remaining constant, the Group’s profit after tax would have been A$28,395 lower/higher (2009: A$2,114 lower/higher). • Had the Australian dollar weakened/strengthened by 5 per cent against the British pound with all other variables remaining constant, the Group’s profit after tax would have been A$19,500 lower/ higher (2009: A$3,081,733 lower/higher). • Had the Canadian dollar weakened/strengthened by 5 per cent against the Solomon Island dollar with all other variables remaining constant, the Group’s profit after tax would have been A$nil lower/ higher (2009: A$2,487,385 lower/higher).

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(iii) Interest rate risk The Group’s main interest rate risk arises from variable rate interest rates on cash and cash equivalents. No hedging programmes were implemented by the Group to manage interest rate risk during the 2010 or 2009 reporting periods. As at 31 December, the Group had the following exposures to interest rate risk:

31 December 2010 30 June 2009 Weighted Weighted average average interest rate Balance interest rate Balance % A$ % A$ Financial assets Cash and cash equivalents ...... 0.6% 36,486,444 1.2% 157,241,528 Financial liabilities Borrowings ...... 9.6% 54,384,619 32.05% 8,003,632 All interest rates were floating rates. Interest rates on the most significant borrowings are repriced every six months. At 31 December 2010, if interest rates had changed by +/ǁ 50 basis points from the six months end rates per the above table with all other variables held constant, profit for the six months would have been A$104,821 higher/lower (2009: change of +/ǁ 50 basis points—A$487,308 higher/lower).

(iv) Equity price risk The Group and Allied Gold Limited are exposed to equity securities price risk arising from investments classified on the statement of financial position as available for sale. Investments in equity securities are approved by the Board on a case-by-case basis. The majority of the Group’s and Allied Gold Limited’s available for sale equity investments are in junior resource companies listed on the ASX and are included in the S&P/ASX All Ordinaries Gold index. At 31 December 2010, if the index had changed by +/ǁ 5% from its six months end level with all other variables held constant, Group equity at 31 December 2010 would have been A$53,401 higher/lower (2009: change of +/ǁ 5%—A$29,999 higher/lower).

(b) Credit risk Credit risk is the risk that a counterparty will not complete its obligations under a financial instrument resulting in a financial loss for the Group. Credit risk is managed at the Group level. The Group does not generally obtain collateral or other security to support financial instruments subject to credit risk, but adopts a policy of only dealing with credit worthy counterparties. Trade and other receivables mainly comprise banking institutions purchasing gold under normal settlement terms of two working days. Counterparty risk under derivative financial instruments is to two reputable banking institutions. All cash balances are on deposit with the banking institutions that are members of a highly rated major Australian banking group. The carrying amount of financial assets recorded in the financial statements represents the Group’s maximum exposure to credit risk without taking account of the value of any collateral or other security obtained.

(c) Liquidity risk The Group’s liquidity position is managed to ensure sufficient liquid funds are available to meet its financial obligations in a timely manner. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and ensuring that the Group has the ability to access required funding.

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The tables below analyse the Group’s financial liabilities, net settled derivative financial instruments into relevant maturity groupings based on the remaining period to contractual maturity at the reporting date: Group entity as at 31 December 2010

Less than 6 to Between 1 Between 2 Greater than Carrying 6 months 12 months and 2 years and 5 years 5 years Total amount A$ A$ A$ A$ A$ A$ A$ Trade and other payables ...... 14,379,497 ————14,379,497 14,379,497 Borrowings ...... 4,692,784 8,158,502 15,532,322 26,444,028 2,931,978 57,759,614 54,384,619 Total ...... 19,072,281 8,158,502 15,532,322 26,444,028 2,931,978 72,139,111 68,764,116

Group entity as at 31 December 2009

Less than 6 to Between 1 Between 2 Carrying 6 months 12 months and 2 years and 5 years Total amount A$ A$ A$ A$ A$ A$ Non derivatives Trade and other payables ...... 19,322,670 — — — 19,322,670 19,322,670 Borrowings ...... 3,019,933 2,834,429 4,324,518 997,492 11,176,372 8,003,632 Total non derivatives ...... 22,342,603 2,834,429 4,324,518 997,492 30,499,042 27,326,302 Derivatives Net settled—outflows ...... 8,426,557 8,907,418 — — 17,333,976 15,720,395 Total derivatives ...... 8,426,557 8,907,418 — — 17,333,976 15,720,395

(d) Fair value estimation The fair value of cash and cash equivalents, trade and other receivables and trade and other payables is considered to be a reasonable approximation of their fair value due to their short term nature. Other financial assets and other financial liabilities represent unrealised gains and losses under derivative financial instruments. Those unrealised gains and losses represent the fair value of commodity contract derivative financial instruments estimated based upon relevant market information at the reporting date. The fair value of borrowings as at the reporting date is considered to be a reasonable approximation of their fair value as the interest rate on those borrowings is variable and was repriced on the reporting date. Available for sale financial assets are carried at fair value.

12 Recent developments In April 2011, the Group completed an equity raising of A$93.8 million pursuant to a private placement transaction. In March 2011, Gold Ridge recommenced production.

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Quarter ended March 31, 2011 as compared to Quarter ended March 31, 2010 13. Current trading and prospects The tables below summarise the key unaudited financial and operating statistics for Allied Gold’s mining and processing activities for the three months ended 31 March 2010 and the three months ended 31 March 2009:

For the three months ended 31 March 2011 2010 A$ A$ (unaudited) (unaudited) Sales revenue ...... 22,007,771 14,857,132 Cost of sales ...... (16,847,106) (12,357,794) Gross profit/(loss) ...... 5,160,665 2,499,338 Gains/(losses) on derivatives ...... — — Corporate expenses ...... (3,757,726) (3,491,355) Share based remuneration ...... — — Foreign exchange gain/(loss) ...... 784,338 (1,827,806) Financial income ...... 140,006 207,641 Financial costs ...... (794,484) (825,711) Profit/(loss) from continuing operatons ...... 1,532,799 (3,437,893) Income tax benefit/(expense) ...... — — Profit/(loss) after tax attributable to: Owners of Allied Gold Limited .... 1,532,799 (3,437,893) Non-controlling interest ...... — — Basic earnings/(loss) per share ...... 0.15 (0.33) Diluted earnings/(loss) per share ...... 0.14 (0.33) Note: The sales revenue and gross margin presented above relate wholly to the Group’s Simberi operations as the Gold Ridge operation was still in the construction phase as at March 31, 2011 with all expenses being capitalised.

Revenue (increase of $7,150,639 or 48%) Gold revenue for the three months ended 31 March 2011 of $22,007,771 was $7,150,639 or 48% higher than gold revenue of $14,857,132 in the quarter ended 31 March 2010 due a combination of higher sales volumes and higher realised selling prices. Sales of 16,034 ounces were made in 2011 compared to 14,064 ounces in 2010. Whilst gold production from Simberi during 2011 was lower at 10,866 ounces, compared to 14,739 ounces in 2010, the volume of gold sold was higher in 2011.This was due to the recovery of gold in circuit from the prior periods during the March Quarter and realisation in the March quarter of 1,781 ounces of gold that were at the refinery as at 31 December 2010. There had been a build up of gold in circuit due to the adverse impact on the elution circuit of deterioration in water quality arising from below average rainfall at the Simberi Oxide Plant. The average realised gold price of $1,373 per ounce in 2011 compared to $1,056 per ounce in 2010 (a favourable price variance of $317 per ounce). The average realised gold price in 2010 is net of adjustments against revenue arising from the Group’s hedge book. Whilst the hedge book was paid out in February 2010, for accounting purposes the hedging losses crystallised at that time were amortised in accordance with the original maturity schedule of the hedge book. The final maturity of the hedge book at the time of its closure in February 2010 was 31 December 2010 and as such there was no further hedge accounting adjustments required for the March 2011 quarter.

Costs of sales (increase of $4,489,312 or 36%) Cost of sales of $16,847,106 for 2011 equates to $1,051 per ounce of gold sold compared to the 2010 costs of sales of $12,357,794 or $879 per ounce. Costs per ounce were higher in the Quarter due to an increase in the ratio of waste mined to total ore mined from 0.80:1 in 2010 to 2.0:1 in 2011 and a reduction in head grade from 1.22 in 2010 to 1.03 in 2011. The increase in the waste ratio reflected the

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accelerated stripping carried out whilst the processing operations were suspended during the month of March 2011. It is expected that a ratio of 1:1 will be maintained in future quarters.

Corporate expenses (increase of $266,371 or 8%) Corporate expenses of $3,757,726 in 2011 were higher than the corporate expenses of $3,491,355 in the 2010. as a result of Allied Gold Limited increasing its corporate office presence to carry out a number of centralised functions (purchasing, human resources and training) to support the Simberi and Gold Ridge 0perations. The additional shared services costs were charged back to the operations during the current period to give a relatively modest increase in corporate expenses.

Foreign exchange gain/(loss) (increase in gain of $2,612,144 or 143%) Allied Gold recorded a net foreign exchange gain of $784,336 in 2011 compared to a net foreign exchange loss of $1,827,806 in 2010. The gain in 2011 was primarily attributable to gains on foreign currency creditor accounts as a consequence of the strengthening of the Australian dollar. In 2010 the net foreign exchange loss was attributable to foreign exchange losses on foreign currency cash holdings as a consequence of the strengthening Australian dollar.

Financial income (decrease of $67,635 or 33%) Financial income for 2011 of $140,006 was lower than the 2010 financial income of $207,641. The higher amount in the previous quarter mainly reflects higher interest earn on cash invested.

Financial costs (decrease of $31,227 or 4%) Financial costs decreased in 2011 following the early termination of the Mine Site Constructions Services Dry Hire contract on 1 April 2010.

Cash and cash flows for the Quarter compared to the Previous Quarter

For the three months ended 31 March 31 December 2011 2010 Key financial statistics Cashflow from operations ...... 6,789,079 (16,840,133) Cashflow from investing activities ...... (22,969,969) (35,625,026) Cashflow from financing activities ...... (2,597,206) (1,763,858) Net cash outflows ...... (18,778,096) (54,229,017)

In the Quarter, Allied Gold reported a net decrease in cash and cash equivalents of ($18,778,096) compared to a net decrease of ($54,229,017) in cash and cash equivalents in the Previous Quarter.

(a) Cash from/(used in) operations Cash generated by operating activities of $6,789,079 in 2011 compared to the 2010 cash used by operating activities of ($16,840,133) attributed to the hedge book being terminated in February 2010. The cash out flow in the previous Quarter includes net payments of ($18,105,877) relating to the close out of the Group’s gold hedging commitments. Gold revenue in the Quarter was $7.1 million higher than in the Previous Quarter due to increased ounces sold and a higher gold price realised (sales of 16,034 ounces in 2011 compared to 14,064 ounces in 2010). There was no outstanding gold sales receivable at the end of the Quarter.

(b) Cash from/(used in) investing activities Cash used by investing activities decreased from ($35,625,026) in the 2010 to ($22,969,969) in the Quarter due to the Gold Ridge mine construction project nearing completion. There was significant investment expenditure during the Quarter primarily in relation to the Gold Ridge redevelopment and the ongoing Simberi Sulphide Feasibility project. 2011 included $16.4 million expenditure on the Gold Ridge Development Project and $5.4 million upgrading the Simberi mobile fleet.

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(c) Cash from/(used in) financing activities Cash used by financing activities increased from an outflow of ($1,763,858) in 2010 to an outflow of ($2,412,415) during the 2010. The 2011 payments relate predominately to finance leases for capital equipment on Simberi and reflect the drawdown made under the BSP Loan Agreement in December 2010.

Cash position as at March 31, 2011 Allied Gold’s cash position as at March 31, 2011 was $16,303,670 in available cash and cash equivalents, compared with $36,486,444 as at December 31, 2010 and $85,525,391 as at June 30, 2010. The decrease was primarily attributable to capital expenditure during the quarter relating to the redevelopment of Gold Ridge. Subsequent to the quarter end, Allied Gold Limited announced (6 April 2011) completion of $93.8 million placement of new ordinary shares to institutional and sophisticated investors. The proceeds will be used to retire debt, improve Simberi operational efficiency, expand Simberi production and working capital scenario.

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PART VIII—CAPITALISATION AND INDEBTEDNESS STATEMENT Capitalisation and indebtedness The following table shows the Group’s gross indebtedness and the capitalisation as at the dates indicated: The figures for capitalisation have been extracted from the Group’s historical financial information for the six months ended 31 December 2010 set out in Section B of ‘‘Part IX—Historical Financial Information’’. The indebtedness and cash figures have been extracted from the underlying accounting records of the Group as at 31 March 2011. The figures exclude balances between entities that comprise the Group. As at 31 March 2011 AUD Unaudited Current debt: Secured(1) ...... 19,102,501 Non-current debt: Secured(1) ...... 34,933,890 Total indebtedness ...... 54,036,391

As at 31 December 2010 AUD Audited Capitalisation: Share Capital(2) ...... 370,183,255 Other Reserve(3) ...... 21,028,055 Total capitalisation ...... 391,211,310

(1) Assets secured comprise a fixed and floating charge over the assets and undertakings of Simberi Gold Company Limited, Gold Ridge Mining Limited and Allied Gold Finance Pty Ltd. (2) On 12 April 2011, the Company finalised an institutional placement of 156,330,985 of its shares at A$0.60 per share for gross cash proceeds of A$93,798,591. After deducting cash transaction costs of A$4,505,063, the net equity proceeds received by the Company amounted to A$89,293,534. (3) Comprises the Share Based Payments reserve and the Available for Sale Investments reserve. Capitalisation does not include retained earnings and the currency reserve. Apart from the institutional placement on 12 April 2011 described in note (2) above, there has been no material change in the Group’s capitalisation since 31 December 2010 to the date of this document. The following table shows the Group’s net financial indebtedness as at 31 March 2011 As at 31 March 2011 AUD Unaudited Cash ...... 16,303,670 Liquidity ...... 16,303,670 Current financial receivables ...... 2,723,376 Current bank debt ...... 6,397,388 Current portion of non-current debt ...... 12,705,113 Current financial debt ...... 19,102,501 Net current financial indebtedness ...... 75,455 Non-current bank loans ...... 11,277,903 Other non-current loans ...... 23,655,987 Non-current financial indebtedness ...... 34,933,890 Net financial indebtedness ...... 35,009,345

As at 31 March 2011, the Group had no indirect or contingent indebtedness.

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PART IX—HISTORICAL FINANCIAL INFORMATION SECTION A—FINANCIAL STATEMENTS FOR YEARS ENDED 30 JUNE 2010, 2009 AND 2008

38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 15JUN201118584109 Australia

To the Directors of Allied Gold Mining PLC

Report on the Financial Report We have audited the accompanying financial report of Allied Gold Limited, which comprises the consolidated statement of financial position as at 30 June 2010, 2009, and 2008, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the years then ended on those dates, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the disclosing entity and the entities it controlled at the year’s end or from time to time during the financial years.

Directors’ Responsibility for the Full-Year Financial Report The directors of the disclosing entity are responsible for the preparation of the financial report that gives a true and fair view in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations as adopted by the European Union and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility We conducted our audit in accordance with International Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence In conducting our audit, we have complied with the independence requirements of the IFAC Code of Ethics for Professional Accountants.

Opinion In our opinion the financial report of Allied Gold Limited: (i) gives a true and fair view of the consolidated entity’s financial position as at 30 June 2010, 2009, and 2008 and of its performance for the years ended on those dates; and (ii) complies with International Financial Reporting Standards (IFRS) and IFRIC Interpretations as adopted by the European Union.

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Declaration For the purposes of Prospectus Rule 5.5.3R(2)(f) we are responsible for this report as part of the prospectus and declare that we have taken all reasonable care to ensure that the information contained in this report is, to the best of our knowledge, in accordance with the facts and contains no omission likely to affect its import. This declaration is included in the prospectus in compliance with item 1.2 of annex I of the PD Regulation.

BDO Audit (WA) Pty Ltd

Peter Toll Director

Perth, Western Australia Dated this 17th day of June 2011

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee.

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Allied Gold Limited Consolidated Statement of Comprehensive Income For the year ended 30 June 2010, 2009 and 2008

Note 2010 2009 2008 $$$ Revenue ...... 6 67,555,369 77,467,668 23,393,798 Cost of sales ...... 7 (70,289,540) (66,436,649) (20,264,174) Gross profit / (loss) ...... (2,734,171) 11,031,019 3,129,624 Gains / (losses) on derivatives ...... (176,084) 1,133,187 (2,685,864) Corporate expenses ...... (14,773,680) (7,545,907) (4,404,307) Share based remuneration ...... 27(b) (6,828,559) (4,130,120) (3,590,530) Impairment of available for sale assets ...... (7,740) (1,214,402) — Gain on acquisition of subsidiary ...... 30 36,666,786 — — Other expenses ...... — (3,426,778) (4,049,118) Other income ...... 6 2,243,413 149,937 31,688 Financial income ...... 6 1,834,972 327,760 533,365 Financial expenses ...... 8 (5,996,122) (3,396,347) (1,189,685) Profit / (loss) before tax ...... 10,228,815 (7,071,651) (12,224,827) Income tax benefit / (expense) ...... 9 — — — Profit / (loss) after tax attributable to owners of Allied Gold Limited ...... 10,228,815 (7,071,651) (12,224,827) Foreign currency translation differences ...... 6,072,425 (252,552) (414,648) Effective portion of changes in fair value of cash flow hedges, net of tax ...... (6,479,724) 6,520,145 (23,225,075) Net change in fair value of cash flow hedges transferred to profit or loss, net of tax ...... 10,745,465 7,484,731 1,151,561 Restatement of fair value of cash flow hedges . . . 3(i) — (4,320,305) 2,685,864 Net change in fair value for available for sale financial assets, net of tax ...... 1,373,921 129,843 (751,544) Net change in fair value of available for sale financial assets transferred to profit, net of tax . (1,006,313) — — Total comprehensive income for the year attributable to the owners of Allied Gold Limited ...... 20,934,589 2,490,211 (32,778,669) Profit / (loss) per share for loss attributable to the ordinary equity holders of Allied Gold Limited Basic earnings / (loss) per share (cents) ...... 23 1.31 (1.65) (3.46) Diluted earnings / (loss) per share (cents) ...... 23 1.31 (1.65) (3.46) Profit and loss is to be read in conjunction with the notes to the financial statements.

All references to ‘‘$’’ in these financial statements are to Australian dollars.

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Allied Gold Limited Consolidated Statement of Financial Position As at 30 June, 2010,2009 and 2008

Note 2010 2009 2008 $$$ CURRENT ASSETS Cash and cash equivalents ...... 28(a) 85,525,391 20,529,979 154,180 Trade and other receivables ...... 10 4,160,718 800,494 1,758,073 Inventories ...... 11 11,795,370 14,269,497 7,401,734 Derivative financial instruments ...... 12 — 2,509,294 314,212 Other assets ...... 14 3,066,675 246,792 531,032 Total Current Assets ...... 104,548,154 38,356,056 10,159,231 NON-CURRENT ASSETS Derivative financial instruments ...... 12 — 851,002 3,495,855 Available for sale financial assets ...... 13 524,230 348,974 1,185,074 Property, plant and equipment ...... 15 302,874,641 145,861,709 130,034,534 Exploration and evaluation expenditure ...... 16 23,711,261 11,115,743 10,406,786 Total Non-Current Assets ...... 327,110,132 158,177,428 145,122,249 Total Assets ...... 431,658,286 196,533,484 155,281,480 CURRENT LIABILITIES Trade and other payables ...... 18 44,032,012 20,683,026 14,446,386 Borrowings ...... 19 4,481,970 2,094,483 8,561,286 Derivative financial instruments ...... 12 — 12,636,875 6,972,407 Provisions ...... 20 1,008,116 491,709 365,819 Total Current Liabilities ...... 49,522,098 35,906,093 30,345,898 NON-CURRENT LIABILITIES Borrowings ...... 19 1,755,820 3,845,885 2,739,755 Derivative financial instruments ...... 12 — 7,123,887 18,911,174 Provisions ...... 20 9,315,217 2,782,426 2,584,870 Total Non-Current Liabilities ...... 11,071,037 13,752,198 24,235,799 Total Liabilities ...... 60,593,135 49,658,291 54,581,697 NET ASSETS ...... 371,065,151 146,875,193 100,699,783 EQUITY Contributed equity ...... 21 369,525,183 173,098,363 133,686,704 Reserves ...... 22 17,099,422 (434,901) (14,270,303) Accumulated losses ...... 22 (15,559,454) (25,788,269) (18,716,618) TOTAL EQUITY ...... 371,065,151 146,875,193 100,699,783

The statement of financial position is to be read in conjunction with the notes to the financial statements.

All references to ‘‘$’’ in these financial statements are to Australian dollars.

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Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: DN11601A.;11 MERRILL CORPORATION PHARDIM//16-JUN-11 04:29 DISK106:[11ZBG1.11ZBG11601]DN11601A.;11 mrll_0909.fmt Free: 7080DM/0D Foot: 0D/ 0D VJ RSeq: 2 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 9857 7,484,731 7,484,731 — 7,484,731 6,520,145 6,520,145 — 6,520,145 129,843 — 129,843 — 129,843 Available (252,552) 129,843(252,552) 14,004,876 13,882,167 129,843 9,684,571 9,561,862 — 13,882,167 — 9,561,862 (252,552) — — (252,552) — (252,552) based exchange investments Cash Flow Non- Share- Foreign for sale 4,273,540 — — — 4,273,540 — 4,273,540 (8,226,666)(7,071,651) — — — — — — — (8,226,666) — (7,071,651) — (8,226,666) — (7,071,651) (,7,5)—22521983,8,724021— 2,490,211 —(252,552)129,8439,684,5712,490,211 —(7,071,651) Allied Allied Gold Limited $$$$$$$$$ Issued Accumulated payments translation revaluation Hedging controlling 39,411,659 — 4,273,540 — — — 43,685,199 — 43,685,199 39,411,659 — — — — — 39,411,659 — 39,411,659 173,098,363 (25,788,269) 9,776,417 (644,628) 136,389 (9,703,079) 146,875,193 — 146,875,193 3(i) — 1,155,015 —3(i) — — — — — 1,155,015 — — 1,155,015 — — (4,320,305) (4,320,305) — (4,320,305) Note Capital Losses reserve reserve reserve Reserve Total interest equity Total For For the years ended 30 June 2010, 2009 and 2008 Consolidated Consolidated Statement of Changes in Equity (continued) ...... — — — ...... — — — ...... — ...... — — ...... — ...... — — — — — ...... — — — Adjustment on change in accounting policy tax...... loss, net of tax tax...... statements Adjustment on change in accounting policy — — — — — — — — — 2009 financial statements Restated total other comprehensive income comprehensive Total income for the period with Transactions owners, recorded directly in equity Contributions by and distributions to owners Issue of ordinary shares, net of transaction costs Share based payments transactions Total with owners Balance at 30 June 2009 Loss for the period Restated loss for the period Other comprehensive income Foreign currency translation differences Effective portion of changes in fair value of cash flow hedges, net of Net change in fair value of cash flow hedges transferred to profit or Net change in fair value for available for sale financial assets, net of other Total comprehensive income as reported in the 2009 financial Total comprehensive Total income for the period as reported in the

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Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: DN11601A.;11 MERRILL CORPORATION PHARDIM//16-JUN-11 04:29 DISK106:[11ZBG1.11ZBG11601]DN11601A.;11 mrll_0909.fmt Free: 7080DM/0D Foot: 0D/ 0D VJ RSeq: 3 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 63678 1,290,667 1,290,667 (1,290,667) (1,290,667) (6,479,724) (6,479,724) — (6,479,724) 10,745,465 10,745,465 — 10,745,465 Available 1,373,921 — 1,373,921 — 1,373,921 (1,006,313) — (1,006,313) — (1,006,313) 6,072,415 — — 6,072,415 — 6,072,415 based exchange investments Cash Flow Non- Share- Foreign for sale 6,828,559 — — — 6,828,559 — 6,828,559 10,228,815 — — —10,228,815 — — 6,072,415 10,228,815 367,608 4,265,741 — 10,705,764 10,228,815 — 10,705,764 — 10,228,815 — 6,072,415 367,608 4,265,741 20,934,579 — 20,934,579 Allied Allied Gold Limited $$$$$$$$$ 157,500 — — — — — 157,500 — 157,500 Issued Accumulated payments translation revaluation Hedging controlling 46,817,214 — — — — — 46,817,214 — 46,817,214 149,452,106 — — — — — 149,452,106 — 149,452,106 196,426,820369,525,183 (15,559,454) 16,604,976 5,427,787 — 503,997 6,828,559 (5,437,338) 371,065,151 — — 371,065,151 — — 203,255,379 — 203,255,379 196,426,820 — 6,828,559 — — — 203,255,379 — 203,255,379 Note Capital Losses reserve reserve reserve Reserve Total interest equity Total For For the years ended 30 June 2010, 2009 and 2008 Consolidated Consolidated Statement of Changes in Equity (continued) ...... — — — — — — — — — ...... — — — — — — — ...... — — — ...... — — — — — — — ...... — ...... — — — — ...... — — ...... — — — — — ...... — loss of control tax...... loss, net of tax tax...... transferred to profit, net of tax — — — — — — — — — Share based payments Share options exercised contributions Total by and distributions to owners Changes in ownership interests in subsidiaries that do not result in a Non controlling interest on acquisition of subsidiary Acquisition of non-controlling interest changes Total in ownership interests in subsidiaries transactions Total with owners Balance at 30 June 2010 Effective portion of changes in fair value of cash flow hedges, net of Net change in fair value of cash flow hedges transferred to profit or Net change in fair value for available for sale financial assets, net of Net change in fair value of available for sale financial assets other Total comprehensive income comprehensive Total income for the period with Transactions owners, recorded directly in equity Contributions by and distributions to owners Issue of ordinary shares, net of transaction costs Issue of ordinary shares related to business combination Total comprehensive Total income for the period Profit Other comprehensive income Foreign currency translation differences

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Allied Gold Limited Consolidated Statement of Cash Flows For the years ended 30 June 2010, 2009 and 2008

Group Note 2010 2009 2008 $$$ CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers ...... 67,593,909 78,160,874 21,748,690 Payments to suppliers & employees ...... (70,897,182) (61,115,934) (21,374,990) (Payments) / proceeds from settlement of derivatives ...... (17,826,546) 5,122,882 — Interest received ...... 1,590,685 327,760 533,365 Interest paid ...... (970,264) (932,382) (1,189,685) Net cash generated by / (used in) operating activities ...... 28(b) (20,509,398) 21,563,200 (282,620) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of equity investments ...... (15,075) (241,200) (14,999) Proceeds from sale of available for sale financial assets ...... 1,206,000 — — Purchase of plant & equipment ...... (52,105,472) (16,246,475) (40,223,122) Development expenditure ...... (6,915,672) (7,205,878) — Exploration and evaluation expenditure ...... (9,544,311) (708,957) (13,075,876) Cash acquired on acquisition of subsidiary . . . . 30 3,573,926 — — Net cash used in investing activities ...... (63,800,604) (24,402,510) (53,313,997) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the issue of securities ...... 159,545,451 41,575,365 26,891,855 Costs of raising equity capital ...... (9,935,846) (1,766,744) (256,773) Proceeds from borrowings ...... 5,205,282 2,900,000 23,393,561 Finance lease payments ...... (5,411,333) (3,337,264) — Repayments of borrowings ...... (726,497) (16,407,977) (8,935,838) Net cash generated by financing activities .. 148,677,057 22,963,380 41,092,805 Net increase in cash and cash equivalents .. 64,367,055 20,124,070 (12,503,812) Cash and cash equivalents at beginning of financial year ...... 20,529,979 154,180 12,657,949 Effects of exchange rate changes on the balance of cash and cash equivalents ...... 628,357 251,729 43 Cash and cash equivalents at end of financial year ...... 28(a) 85,525,391 20,529,979 154,180

The statement of cash flows is to be read in conjunction with the notes to the financial statements.

All references to ‘‘$’’ in these financial statements are to Australian dollars.

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Allied Gold Limited Notes to the financial statements 30 June 2010, 2009 and 2008

1. Reporting entity Allied Gold Limited (‘‘the Company’’) is a listed public company, incorporated and domiciled in Australia. These financial statements represent the group financial statements of the group consisting of Allied Gold Limited and its subsidiaries (‘‘Group’’).’’). Allied Gold is a gold production company whose shares are listed on the Toronto Stock Exchange (‘‘TSX’’) under the symbol ‘‘ALG’’, on the Australian Securities Exchange under the symbol ‘‘ALD’’ and traded on AIM, a market operated by the London Stock Exchange plc under the symbol ‘‘AGLD’’. Allied Gold’s business is gold exploration and mining. Its major assets are its 100% owned Simberi gold project (the ‘‘Simberi Project’’), which is located on Simberi Island, the northernmost island of the Tabar Islands Group, in the New Ireland Province of eastern PNG and its 100% interest in Australian Solomons Gold Limited (‘‘ASG’’) which owns the Gold Ridge Gold Project (‘‘Gold Ridge’’) which is located on Guadalcanal Island in the Solomon Islands.

2. Basis of preparation (a) Statement of compliance The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations as adopted by the European Union. These are the standards, subsequent amendments and related interpretations issued and adopted by the International Accounting Standards Board (IASB) that have been endorsed by the European Union as at 30 June 2010. The consolidated financial statements also comply with Article 4 of the EU IAS Regulation.

IFRS and IFRIC interpretations applied for the first time in the year ended 30 June 2010 During the year ended 30 June 2010 the Group has adopted the following IFRS and IFRIC interpretations for the first time: • IAS 1 (revised) ‘Presentation of Financial Statements’—The revised standard requires the separate presentation of a statement of comprehensive income and statement of changes in equity. All non-owner changes in equity must now be presented in profit and loss and a statement of changes in equity. As a consequence, the group was required to change the presentation of its financial statements. Comparative information has been re-presented so that it is also in conformity with the revised standard. There was no impact on reported profits or total equity. • IFRS 8 ‘Operating Segments (Amendment)’. The new standard requires a ‘management approach’, under which segment information is presented on the same basis as that used for internal reporting purposes. This has resulted in an increase in the number of reportable segments presented. In addition, the segments are reported in a manner that is consistent with the internal reporting provided to the chief operating decision maker. There has been no impact on the measurement of the company’s assets and liabilities as a consequence of this change in accounting policy. Comparatives for the years ended 30 June 2009 and 30 June 2008 have been restated to conform to the new standard. • IFRIC 16 ‘Hedges of a Net Investment in a Foreign Operation’. This interpretation clarifies the accounting treatment for hedges of net investments in foreign operations. The Application of these new measures has no effect on net income or shareholders’ equity of the Group. • IFRIC 17 ‘Distributions of Non-Cash Assets to Owners’. This interpretation provides guidance on the measurement and accounting treatment of the distribution of non-cash assets as dividends to its owners. The application of these new measures had no effect on net income or shareholders’ equity of the Group. • IFRIC 18 ‘Transfers of Assets from Customers’. This interpretation applies to the accounting for transfers of assets by entities that receive such transfers from their customers. It clarifies the circumstances and requirements in which the revenue related to the transfer of assets from

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

2. Basis of preparation (continued) customers has to be recognized as part of a commercial contract. The application of these new measures had no effect on net income or shareholders’ equity of the Group. • IAS 27 (revised) ‘Consolidated and Separate Financial Statements’. Previously transactions with non-controlling interests were treated as transactions with parties external to the group. Disposals therefore resulted in gains or losses in profit or loss and purchases resulted in the recognition of goodwill. On disposal or partial disposal, a proportionate interest in reserves attributable to the subsidiary was reclassified to profit or loss or directly to retained earnings. Previously when the group ceased to have control, joint control or significant influence over an entity, the carrying amount of the investment at the date control, joint control or significant influence ceased became its cost for the purposes of subsequently accounting for the retained interests as associates, jointly controlled entity or financial assets. The group has applied the new policy prospectively to transactions occurring on or after 1 July 2009. As a consequence, no adjustments were necessary to any of the amounts previously recognised in the financial statements. • IFRS 3 (revised) ‘Business Combinations’. While the revised standard continues to apply the acquisition method to business combinations, there have been some significant changes. All purchase consideration is now recorded at fair value at the acquisition date. Contingent payments classified as debt are subsequently remeasured through profit or loss. Under the group’s previous policy, contingent payments were only recognised when the payments were probable and could be measured reliably and were accounted for as an adjustment to the cost of acquisition. Acquisition-related costs are expensed as incurred. Previously, they were recognized as part of the cost of acquisition. Non-controlling interests in an acquiree are now recognised either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets. This decision is made on an acquisition-by-acquisition basis. Under the previous policy, the non-controlling interest was always recognised at its share of the acquiree’s net identifiable assets. If the group recognises previous acquired deferred tax assets after the initial acquisition accounting is completed there will no longer be any adjustment to goodwill. As a consequence, the recognition of the deferred tax asset will increase the group’s net profit after tax. The changes were implemented prospectively from 1 July 2009 and affected the accounting for the acquisition of Australian Solomons Gold Limited disclosed in note 30. Acquisition related costs of $1,717,914 were recognised in profit or loss. • Amendment to IAS 39 ‘Eligible Hedged Items’. This amendment provides additional guidance to two particular situations in relation to hedge accounting under IAS 39: the identification of inflation as a hedged risk and how to consider the time value of an option in a hedging relationship. The amendment must be applied retrospectively. The Application of these new measures had the effect on net income or shareholders’ equity of the Group as described in note 3(i).

IFRS and IFRIC interpretations issued but not effective as at 30 June 2010 At the date of preparation of these consolidated financial statements, the following IFRS and IFRIC Interpretations which have not been applied in these financial statements were in issue but not yet effective: • Amendments to IFRS 2 ‘Share-Based Payment’—Group Cash- Settled Transactions. The amendments made by the IFRS to IFRS 2 confirm that an entity receiving goods or services in a group share based payment arrangement must recognise an expense for those goods or services regardless of which entity in the group settles the transaction or whether the transaction is settled in shares or cash. They also clarify how the group share-based payment arrangement should be measured, that is, whether it is measured as an equity- or a cash-settled transaction. The group will

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

2. Basis of preparation (continued) • apply these amendments retrospectively for the financial reporting period commencing on 1 July 2010. There will be no impact on the group’s financial statements. • IFRS 9 ‘Financial Instruments’, effective for annual periods beginning on or after 1 January 2013 addresses the classification and measurement of financial assets and is likely to affect the group’s accounting for its financial assets. The standard is not applicable until 1 January 2013. The group is yet to assess its full impact. • Amendment to IAS 24 ‘Related Party Disclosures’, effective for annual periods beginning on or after 1 January 2011. The amendment removes the requirement for government-related entities to disclose details of all transactions with the government and other government-related entities and clarifies and simplifies the definition of a related party. The group will apply the amended standard from 1 July 2011. When the amendments are applied, the group will need to disclose any transactions between its subsidiaries and its associates. However, it has yet to put systems into place to capture the necessary information. It is therefore not possible to disclose the financial impact, if any, of the amendment on the related party disclosures. • IFRS 3 ‘Business Combinations’. The IASB has issued a revised IFRS3 Business Combinations which contains the following principal amendments from the existing IFRS3 Business Combinations • The revised IFRS3 limits the choice of measuring non-controlling interests (NCI) at either fair value or the NCI’s proportionate share of the acquiree’s net identifiable assets to NCI’s that are present ownership instruments that entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation. Other components of NCI must be measured at acquisition date fair value, or as required by other Accounting Standards. There will be no impact on initial adoption as these requirements are only required to be applied prospectively. • The amendments clarify that acquiree awards that the acquirer chooses to, but is not obliged to, replace, must be accounted for in the same way as acquiree awards that the acquirer is obliged to replace. There will be no impact on initial adoption as these requirements are only required to be applied prospectively. • Additional guidance has been added to confirm that, where the acquiree still has outstanding share-based payment transactions, these form part of the NCI of the acquirer and are measured as follows: • If vested—at their market-based measure; and • If not vested—at their market-based measure as if acquisition date were the grant date. There will be no impact on initial adoption as these requirements are only required to be applied prospectively. • IFRIC 19 ‘Extinguishing Financial Liabilities with Equity Instruments’, effective for annual periods beginning on or after 1 July 2010. clarifies the accounting when an entity renegotiates the terms of its debt with the result that the liability is extinguished by the debtor issuing its own equity instruments to the creditor (debt for equity swap). It requires a gain or loss to be recognised in profit or loss which is measured as the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued. The group will apply the interpretation from 1 July 2010. It is not expected to have any impact on the group’s financial statements since it is only retrospectively applied from the beginning of the earliest period presented (1 July 2009) and the group has not entered into any debt for equity swaps since that date.

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

2. Basis of preparation (continued) • IAS 5 Non-current Assets Held for Sale and Discontinued Operations (effective from 1 January 2010). Clarifies that disclosures required for non-current assets (or disposal groups) classified as held for sale or discontinued operations are limited to those required by IAS 5 unless: • Disclosures are specifically required for these assets by other IFRS; or • Assets and liabilities of a disposal group are not within the measurement requirements of IAS 5 and disclosures are required by other IFRS. There will be no impact as these requirements are only required to be applied prospectively to disclosures for non-current assets (or disposal groups) classified as held for sale or discontinued operations. • IAS1 Presentation of Financial Statements (effective from 1 January 2010) Clarifies that terms of a liability that could, at the option of the counterparty, result in the liability being settled by the issue of equity instruments, do not affect its classification. This means that unless the terms of such liabilities require a transfer of cash or other assets within 12 months, they do not necessarily have to be classified as current liabilities. Initial adoption of this amendment will have no impact as the entity does not have any current liabilities where the counterparty has the option to have the liabilities settled by the issue of equity instruments. • IAS7 Statement of Cash Flows (effective 1 January 2010) Clarifies that only expenditures that result in a recognised asset in the statement of financial position are eligible for classification as cash flows from investing activities. Initial adoption of this amendment will have no impact as the entity only recognises cash flows from investing activities for expenditures that result in a recognised asset in the statement of financial position. • IAS17 Leases (effective 1 January 2010) Land can be classified as a finance lease for very long leases where the significant risks and rewards are effectively transferred, despite there being no transfer of title. Initial adoption of this amendment will have no impact as the entity has no leases for land that would qualify for classification as a finance lease. • IAS 36 Impairment of Assets (effective 1 January 2010) Clarifies that CGUs to which goodwill is allocated cannot be larger than an operating segment as defined in IFRS8 Operating Segments before aggregation. There will be no impact as these requirements are only required to be applied prospectively to goodwill impairment calculations for periods commencing on or after 1 July 2010.

(b) Basis of measurement These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available for sale financial assets and derivative financial instruments.

(c) Critical accounting estimates The preparation of the financial statements in accordance with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. These estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

2. Basis of preparation (continued) The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements are disclosed in note 4.

3. Statement of significant accounting policies The significant accounting policies adopted in the presentation of the financial statements are set out below. The accounting policies have been consistently applied to all periods presented in the financial statements and by all entities comprising the group for the purposes of the group financial statements, except for the items described in notes 2(a) above.

(a) Basis of Consolidation Subsidiaries A subsidiary is any entity over which the Company has the power to govern the financial and operating policies so as to obtain benefits from its activities. In assessing control, potential voting rights that are presently exercisable or convertible are taken into account. Subsidiaries are included in the group financial statements from the date on which control is transferred to, or acquired by the Company, until the date control ceases. The acquisition method of accounting is used to account for business combinations by the group (refer to note 3 (z)). Investments in subsidiaries are accounted for at the lower of cost less any impairment losses in the separate financial statements of the Company. A list of subsidiaries during the year ended 30 June 2010 is presented in note 31.

Transactions eliminated on consolidation Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group. Non-controlling interests in the results and equity of subsidiaries are shown separately in the group statement of comprehensive income, statement of comprehensive income, statement of changes in equity and statement of financial position respectively.

Changes in ownership interests The group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of Allied Gold Limited. When the group ceases to have control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, jointly controlled entity or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

3. Statement of significant accounting policies (continued) If the ownership interest in a jointly-controlled entity or an associate is reduced but joint control or significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.

(b) Foreign currency translation Functional and presentation currency Items included in the financial statements of each subsidiary in the group are measured using the currency of the primary economic environment in which that entity operates (‘‘the functional currency’’). The group financial statements are presented in Australian dollars which is Allied Gold Limited’s functional and presentation currency.

Transaction and balances Foreign currency transactions are translated into Australian dollars at exchange rates ruling at the dates of transactions. Monetary assets and liabilities denominated in foreign currencies at balance date are translated to Australian dollars at the rate of exchange ruling on that date. Foreign exchange differences arising on translation are recognised in profit and loss. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to Australian dollars at foreign exchange rates ruling at the dates the fair value was determined.

Group companies The results and financial position of all the group entities (none of which has the functional currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: • assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position • income and expenses for each statement of comprehensive income and statement of comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and • all resulting exchange differences are recognised in other comprehensive income On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, a proportionate share of such exchange differences is reclassified to profit or loss, as part of the gain or loss on sale where applicable. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entities and translated at the closing rate.

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

3. Statement of significant accounting policies (continued) • the product has been dispatched to the customer and is no longer under the physical control of the group (or property in the product has earlier passed to the customer); • the selling price can be measured reliably; • it is probable that the economic benefits associated with the transaction will flow to the group; and • the costs incurred or to be incurred in respect of the transaction can be measured reliably. Sales revenue represents the gross proceeds receivable from the customer.

(d) Financing income Financing income represents interest income which is recognised in profit and loss as it accrues, using the effective interest method.

(e) Financing costs Financing costs are calculated using the effective interest method and include interest, amortisation of discounts or premiums relating to borrowings and amortisation of ancillary costs incurred in connection with arrangement of borrowings and foreign exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs. Financing costs are expensed as incurred unless they relate to qualifying assets. Qualifying assets are assets which take a substantial period of time to get ready for their intended use or sale. Where funds are borrowed specifically for the acquisition, construction or production of a qualifying asset, the amount of borrowing costs capitalised is the amount incurred in relation to that borrowing, net of any interest earned on those borrowings. Where funds are borrowed generally, borrowing costs are capitalised using a weighted average capitalisation rate.

(f) Income Tax Income tax on profit or loss for the year comprises current and deferred tax. Income tax is recognised in profit and loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax paid or payable on the taxable income for the year, using tax rates enacted or substantially enacted at the statement of financial position date, and any adjustment to tax paid or payable in respect of previous years Deferred tax is provided using the statement of financial position liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit and do not arise in a business combination, nor differences relating to investments in subsidiaries where the Company is able to control the reversal of temporary differences and it is probable that the differences will not reverse in the foreseeable future. The amount of deferred tax provided is determined using tax rates enacted or substantively enacted at the statement of financial position date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend. The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

3. Statement of significant accounting policies (continued) group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions or deductibility imposed by the law.

(g) Non-derivative financial assets Non-derivative financial instruments comprise investments in equity securities, trade and other receivables and cash and cash equivalents. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date. The classification depends on the purpose for which the financial assets were acquired or executed. Non-derivative financial assets are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition non derivative financial instruments are measured as described below.

Held to maturity investments If the group has the positive intent and ability to hold securities to maturity, then they are classified as held-to-maturity. Held-to-maturity investments are measured at amortised cost using the effective interest method, less any impairment losses (refer accounting policy 3(n)).

Available-for-sale financial assets The group’s investments in equity securities are classified as available-for sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses (refer accounting policy 3(n)), and foreign exchange gains and losses on available-for-sale monetary items, are recognised directly in equity. When an investment is de-recognised, the cumulative gain or loss in equity is transferred to profit or loss. Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of, or otherwise realise, the investment within twelve months of the reporting date.

Financial assets at fair value through profit or loss An instrument is classified at fair value through profit or loss if it is held for trading or is designated as such upon initial recognition. Financial instruments are designated at fair value through profit or loss if the group manages such investments and makes purchase and sale decisions based on their fair value in accordance with the group’s documented risk management or investment strategy. Upon initial recognition attributable transaction costs are recognised in profit or loss when incurred. Financial instruments at fair value through profit or loss are measured at fair value, and changes therein are recognised in profit or loss.

Cash and cash equivalents Cash comprises cash on hand and demand deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash, which are subject to an insignificant risk of changes in value and have a maturity of three months or less on the date they are acquired by the group. Bank overdrafts are shown within short-term borrowings in current liabilities on the statement of financial position.

Trade and other receivables Trade and other receivables are measured at amortised cost using the effective interest method, less any impairment losses (refer accounting policy 3(n)).

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

3. Statement of significant accounting policies (continued) Trade and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, unless their remaining contractual maturity is greater than twelve months after the reporting date in which case they are classified as non-current assets.

Derecognition of financial assets Financial assets are derecognised when the rights to receive cash flows from the assets have expired or have been transferred and the group has transferred substantially all the risks and rewards of ownership.

(h) Inventories Raw materials and stores, work in progress and finished goods are physically measured or estimated and valued at the lower of cost and net realisable value. Net realisable value less costs to sell is assessed annually based on the amount estimated to be obtained from sale of the item of inventory in the normal course of business, less any anticipated costs to be incurred prior to its sale. Cost is determined primarily on the basis of average costs. For processed inventories, cost is derived on an absorption costing basis. Cost comprises cost of purchasing raw materials and cost of production, including attributable mining and processing overheads. Non-current ore stockpile is ore which is not scheduled to be processed in the twelve months after the reporting date. The group believes the processing of these stockpiles will have a future economic benefit to the group and accordingly values these stockpiles at the lower of cost or net realisable value. Inventories of consumable supplies and spare parts expected to be used in production are valued at the lower of weighted average cost, which includes the cost of purchase as well as transportation and statutory charges, or net realisable value. Any provision for obsolescence is determined by reference to specific stock items identified.

(i) Derivatives and hedging activities Derivative instruments Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The group designates certain derivatives as either: • Hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge); or • Hedges of the cash flows of recognised assets and liabilities and highly probable forecast transactions (cash flow hedge). At the inception of the hedging transaction, the group documents the relationship between the hedging instrument and the hedged item, as well as its risk management objective and strategy for undertaking various hedge transactions. The group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been, and will continue to be, highly effective in offsetting changes in fair values or cash flows of hedged items. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is greater than twelve months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than twelve months. Trading derivatives are classified as a current asset or liability.

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

3. Statement of significant accounting policies (continued) Fair value hedge Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in profit and loss, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The gain or loss relating to the ineffective portion is recognised in profit and loss within other income or other expenses. The Group did not have any fair value hedges in the period covered by these Financial Statements.

Cash flow hedge The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised through other comprehensive income in the hedging reserve. The gain or loss relating to any ineffective portion is recognised immediately in profit and loss within other income or other expenses. Amounts accumulated in equity are recognised in profit and loss in the periods when the hedged item affects profit or loss (for instance when the forecast sale that is hedged takes place). When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately reclassified to profit or loss.

Derivatives that do not qualify for hedge accounting Changes in the fair value of any derivative instrument that does not qualify for hedge accounting are recognised immediately in profit and loss and are included in gains or losses from derivatives.

Change in accounting policy Amendment to IAS 39 Financial Instruments: Recognition and Measurement became effective and required the Group to amend its accounting policy for cash flow hedges to exclude time value from the one sided hedge risk when designating options as hedges. This has had the effect of requiring the time value component of the mark to market value of options forming part of a cash flow hedge to be recorded directly in profit and loss. The amendment to IAS39 requires the restatement of comparative information. The following adjustments were made to the statement of financial position as at 1 July 2008:

1 July 30 June Increase / 2008 Notes 2008 (Decrease) (restated) $$$ Accumulated losses ...... (16,030,754) (2,685,864) (18,716,618) Reserves—cash flow hedging reserve ...... (22,073,514) 2,685,864 (19,387,650)

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

3. Statement of significant accounting policies (continued) Profit for the year ended 30 June 2008 changed as follows:

30 June 30 June Increase / 2008 Notes 2008 (Decrease) (restated) $$ $ Income statement (extract) Unrealised losses on derivatives ...... — (2,685,864) (2,685,864) Loss after tax attributable to members of Allied Gold Limited ...... (9,538,963) (2,685,864) (12,224,827) Basic earnings per share ...... (2.70) (0.76) (3.46) Diluted earnings per share ...... (2.70) (0.76) (3.46) The following adjustments were made to the statement of financial position as at 30 June 2009:

1 July 30 June Increase / 2009 Notes 2009 (Decrease) (restated) $$$ Balance sheet (extract) Derivative financial instruments—assets ...... 12 2,711,759 648,537 3,360,296 Derivative financial instruments—liabilities ...... 12 15,946,935 3,813,827 19,760,762 Net assets ...... 150,040,483 (3,165,290) 146,875,193 Accumulated losses ...... 22 (24,257,420) (1,530,849) (25,788,269) Reserves—cash flow hedging reserve ...... 22 (8,068,638) (1,634,441) (9,703,079) Total equity ...... 150,040,483 (3,165,290) 146,875,193 Profit for the year ended 30 June 2009 changed as follows:

1 July 30 June Increase / 2009 Notes 2009 (Decrease) (restated) $$$ Income statement (extract) Unrealised (losses) gains on derivatives ...... (21,828) 1,155,015 1,133,187 Loss after tax attributable to members of Allied Gold Limited ...... (8,226,666) 1,155,015 (7,071,651) Changes in the fair value of cash flow hedges—gross . 6,520,145 — 6,520,145 Transfers to statement of comprehensive income from cash flow hedging reserve—gross ...... 7,484,731 (4,320,305) 3,164,426 Total comprehensive loss (income) for the year attributable to the owners of Allied Gold Limited . . 5,655,501 (3,165,290) 2,490,211 Basic earnings per share ...... (1.92) 0.27 (1.65) Diluted earnings per share ...... (1.92) 0.27 (1.65)

(j) Exploration and evaluation expenditure Exploration and evaluation expenditure comprises costs that are directly attributable to researching and analysing existing exploration data; conducting geological studies, exploratory drilling and sampling; examining and testing extraction and treatment methods; and/or compiling prefeasibility and feasibility studies. Exploration expenditure relates to the initial search for deposits with economic potential. Evaluation expenditure arises from a detailed assessment of deposits that have been identified as having economic potential.

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

3. Statement of significant accounting policies (continued) Exploration and evaluation expenditure (including amortisation of capitalised licence costs) is charged to profit and loss as incurred except in the following circumstances, in which case the expenditure may be capitalised: • the exploration and evaluation activity is within an area of interest for which it is expected that the expenditure will be recouped by future exploitation or sale; or • at the statement of financial position date, exploration and evaluation activity has not reached a stage which permits a reasonable assessment of the existence of commercially recoverable reserves. Capitalised exploration and evaluation expenditure considered to be tangible is recorded as a component of property, plant and equipment at cost less impairment charges. Otherwise, it is recorded as an intangible asset. As the asset is not available for use, it is not depreciated. All capitalised exploration and evaluation expenditure is monitored for indications of impairment. Where a potential impairment is indicated, assessment is performed for each area of interest in conjunction with the group of operating assets (representing a cash generating unit) to which the exploration is attributed. Exploration areas at which reserves have been discovered but that require major capital expenditure before production can begin are continually evaluated to ensure that commercial quantities of reserves exist or to ensure that additional exploration work is under way or planned. To the extent that capitalised expenditure is not expected to be recovered it is charged to profit and loss. Cash flows associated with exploration and evaluation expenditure (comprising both amounts expensed and amounts capitalised) are classified as investing activities in the statement of cash flows.

(k) Development expenditure When proved reserves are determined and development is sanctioned, capitalised exploration and evaluation expenditure is reclassified as ‘‘Other Mineral Assets’’, and is disclosed as a component of property, plant and equipment. Development expenditure is capitalised and classified as ‘‘Other Mineral Assets’’. The asset is not depreciated until construction is completed and the asset is available for use.

(l) Property, plant and equipment Items of property, plant and equipment are stated at cost less accumulated depreciation (see below) and impairment losses (see accounting policy 3(n)). Cost includes expenditures that are directly attributable to acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, an appropriate proportion of fixed and variable overheads and capitalised borrowing costs. The cost of self-constructed assets and acquired assets include (i) the initial estimate of the time of installation and during the period of use, when relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and (ii) changes in the measurement of existing liabilities recognised for these costs resulting from changes in the timing or outflow of resources required to settle the obligation or from changes in the discount rate. Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment. Costs incurred on property, plant and equipment subsequent to initial acquisition are capitalised when it is probable that future economic benefits in excess of the originally assessed performance of the asset will flow to the group in future years. Where these costs represent separate components they are accounted for as separate assets and are separately depreciated over their useful lives. Costs incurred on property, plant and equipment which do not meet the criteria for capitalisation are expensed as incurred. The cost of each item of property, plant and equipment is depreciated over its expected useful life reflecting the pattern in which the assets’ future economic benefits are expected to be consumed. For

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

3. Statement of significant accounting policies (continued) the majority of assets this is accomplished using the unit-of-production method based on estimated recoverable gold ounces contained in proved and probable ore reserves, although some assets are depreciated using a percentage based on time. Land is not depreciated. Acquired mineral rights are capitalised and classified as ‘‘Other mineral assets’’ and depreciated from commencement of production. The group’s mineral leases are of sufficient duration (or convey a legal right to renew for a sufficient duration) to enable all proven and probable reserves to be mined in accordance with current production schedules.

Depreciation of property, plant and equipment Property, plant and equipment is depreciated over its useful life, or over the remaining mine life if shorter. Residual values and useful lives are reviewed, and adjusted if appropriate at each statement of financial position date. Changes to the estimated residual values or useful lives are accounted for prospectively. The major categories of property, plant and equipment are depreciated on a units of use and/or a straight-line basis as follows:

Units of production basis For mining properties and leases and certain mining equipment, the economic benefits from the asset are consumed in a pattern which is linked to the production level. Except as noted below, such assets are depreciated on a units of production basis. In applying the units of production method, depreciation is normally calculated using based on estimated recoverable gold ounces contained in proved and probable ore reserves.

Straight line basis Assets within operations for which production is not expected to fluctuate significantly from one year to another or which have a physical life shorter than the remaining mine life are depreciated on a straight line basis as follows:

Plant and equipment ...... 3 to 8.5 years Buildings ...... 8.5 years Other mineral assets ...... 3 to 8.5 years An assets’ carrying amount is written down immediately to its recoverable amount if the assets’ carrying amount is greater than its estimated recoverable amount (refer accounting policy 3(n)). Gains and losses on disposals are determined by comparing disposal proceeds with the carrying amount of the asset at the time of disposal. Gains and losses on disposal are included in profit and loss.

(m) Deferred mining costs Overburden and other mine waste materials are often removed during the initial development of a mine site in order to access the mineral deposit. This activity is referred to as development stripping. The directly attributable costs (inclusive of an allocation of relevant overhead expenditure) are capitalised as development costs. Capitalisation of development stripping costs ceases, and depreciation of those capitalised costs commences, at the time that saleable materials begin to be extracted from the mine. Depreciation of capitalised development stripping costs is determined on a unit of production basis for each separate area of interest. Removal of waste material normally continues throughout the life of a mine. This activity is referred to as production stripping and commences at the time that saleable materials begin to be extracted from the mine. The costs of production stripping are charged to profit and loss as operating costs when the ratio of waste material to ore extracted for an area of interest is expected to be constant throughout its estimated

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

3. Statement of significant accounting policies (continued) life. When the ratio of waste to ore is not expected to be constant, production stripping costs are accounted for as follows: • All costs are initially charged to profit and loss and classified as operating costs. • When the current ratio of waste to ore is greater than the estimated life-of-mine ratio, a portion of the stripping costs (inclusive of an allocation of relevant overhead expenditure) is capitalised. • In subsequent years when the ratio of waste to ore is less than the estimated life-of-mine ratio, a portion of capitalised stripping costs is charged to profit and loss as operating costs. The amount of production stripping costs capitalised or charged in a financial year is determined so that the stripping expense for the financial year reflects the estimated life-of-mine ratio. Changes to the estimated life-of-mine ratio are accounted for prospectively from the date of the change. Capitalised development stripping costs are classified as ‘Property, plant and equipment’ and capitalised production stripping costs are classified as ‘Other mineral assets’. These assets are considered in combination with other assets of an operation for the purpose of undertaking impairment assessments.

(n) Impairment of assets The carrying amount of the group’s assets, other than inventories (see accounting policy 3(h)), and deferred tax assets (see accounting policy 3(f), are reviewed at each statement of financial position date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. For goodwill, the recoverable amount is estimated at least annually. An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognised in profit and loss unless the asset has previously been revalued, in which case the impairment loss is recognised as a reversal to the extent of that previous revaluation with any excess recognised through profit and loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (group of units) and then, to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

Calculation of recoverable amount The recoverable amount of the group’s receivables carried at amortised cost is calculated as the present value of estimated future cash flows, discounted at the original effective interest rate (that is, the effective interest rate computed at initial recognition of these financial assets). Receivables with a short duration are not discounted. Impairment of receivables is not recognised until objective evidence is available that a loss event has occurred. Receivables are individually assessed for impairment. The recoverable amount of other assets is the greater of their fair value, less costs to sell, and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

3. Statement of significant accounting policies (continued) Impairment losses recognised in profit and loss on equity instruments classified as available for sale are not reversed through profit and loss. In respect of other assets, an impairment loss is reversed when there is an indication that the impairment may no longer exist and if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(o) Non derivative financial liabilities Trade and other payables Liabilities are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the group. Trade and other payables are initially measured at fair value and subsequently at amortised cost.

Interest bearing borrowings Interest bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in profit and loss over the period of the borrowings on an effective interest rate basis.

(p) Provisions A provision is recognised in the statement of financial position when the group has a present legal, equitable or constructive obligation as a result of a past event, and it is probable that a future sacrifice of economic benefits will be required to settle the obligation, the timing or amount of which is uncertain. If the effect is material, provisions are determined by discounting the expected future cash flows at the pre-tax rate that reflects current market assessments of the time value of money, and where appropriate, the risks specific to the activity.

Restoration and rehabilitation A provision is raised for the restoration and rehabilitation of each mine site. Restoration and rehabilitation works can include facility decommissioning and dismantling; removal or treatment of waste materials; land rehabilitation; and site restoration. The extent of the work required and the associated costs are dependent on the relevant regulatory requirements and the group’s environmental policies. A provision for restoration and rehabilitation is recognised at the time that environmental disturbance occurs. When the extent of disturbance increases over the life of the mine site, the provision is increased accordingly. The provision recognised represents management’s best estimate of the present value of the all future costs required to restore and rehabilitate each mine site in connection with environmental disturbances that have occurred at the reporting date. Restoration and rehabilitation provisions are measured as the full amount that has been estimated based on current costs required to settle present obligations, discounted using a pre-tax discount rate, reflecting current market assessments of the time value of money.

Onerous contracts A provision for onerous contracts is recognised when the expected benefits to be derived by the group from a contract are lower than the unavoidable costs of meeting its obligations under the contract.

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

3. Statement of significant accounting policies (continued) (q) Employee benefits Wages, salaries and annual leave Liabilities for employee benefits for wages, salaries and annual leave expected to be settled within 12 months of the year end represent present obligations resulting from employees’ services provided to the reporting date, calculated at undiscounted amounts based on remuneration wage and salary rates that the group expects to pay as at the reporting date including related on-costs.

Long-term service benefits The provisions for employee entitlements to long service leave and other deferred employee benefits represent the present value of the estimated future cash outflows to be made by the group resulting from employees’ services provided up to the reporting date and include related on-costs. In determining the liability for long service leave, consideration has been given to future increases in wage and salary rates, and the group’s experience with staff departures. Liabilities for employee entitlements which are not expected to be settled within twelve months are discounted using the rates attached to national government securities at the reporting date, which most closely match the terms of maturity of the related liabilities.

(r) Leases Leases of property, plant and equipment where substantially all the risks and rewards of ownership are transferred to the group, as lessee, are classified as finance leases. Finance leases are capitalised at the inception of the lease at the fair value of the leased property, or if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are recorded as a liability. Each lease payment is apportioned between the liability and finance cost. The finance cost is charged to profit and loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases are depreciated in accordance with the group’s depreciation policy (refer accounting policy 3(l)). Leases in which a significant proportion of the risks and rewards of ownership are not transferred to the group as lessee are classified as operating leases. Payments under operating leases, net of any incentives received from the lessor, are charged to profit and loss on a straight line basis over the life of the lease.

(s) Financial guarantee contracts Financial guarantee contracts are recognised as financial liability at the time the guarantee is issued. The liability is initially measured at fair value and subsequently at the higher of the amount determined in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less accumulated amortisation, where appropriate. The fair value of the guarantee is determined as the present value of the difference in the net cash flows between the contractual payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations.

(t) Share based payments The group provides benefits to its directors and employees in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares (‘equity- settled transactions’).

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

3. Statement of significant accounting policies (continued) Details of plans currently in place to provide these benefits are as follows: • the Employee Option Incentive Scheme (EOIS), which provides benefits to employees in the form of options to subscribe for shares subject to vesting periods; and • specific incentive arrangements for directors whereby upon achievement of a particular milestone the director will become entitled to a given number of shares or options. The cost of these equity-settled transactions with directors and employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined using a binomial model. In valuing equity-settled transactions, no account is taken of any performance conditions. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘vesting date’). The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the directors, will ultimately vest. This opinion is formed based on the best available information at the reporting date. No expense is recognised for awards that do not ultimately vest. Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of modification. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph. The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share.

(u) Earnings per share The group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of shares outstanding during the period, adjusted for bonus elements in ordinary shares issued during the year. Diluted EPS adjusts the figures used in the determination of basic EPS to take into account the after income tax effect of interest and other financing costs associated with the dilutive potential ordinary shares and the weighted average number of additional ordinary shares that would have been outstanding assuming conversion of all dilutive potential ordinary shares.

(v) Contributed equity Ordinary shares are classified as equity. Issued and paid up capital is recognised at the fair value of the consideration received by the Company. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(w) Goods and services tax Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Tax Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of expense. Receivables and payables are stated with the amount of GST included. The net amount

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

3. Statement of significant accounting policies (continued) of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the Balance Sheet. Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

(x) Segment Reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the a committee comprising the Executive Chairman and the Chief Financial Officer.

(y) Dividends Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the financial year but not distributed at the statement of financial position date.

(z) Business Combinations The acquisition method of accounting is used to account for all business combinations, including business combinations involving entities or businesses under common control, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets. The excess of the consideration transferred, the amount of any non-controlling interest in the acquire and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the group’s share of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

4. Critical accounting estimates and judgments (continued) expenses during the periods presented therein. On an ongoing basis, management evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements and estimates on historical experience and on other various factors it believes to be reasonable under the circumstances, the results of which form the basis of the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions. The group has identified the following critical accounting policies under which significant judgements, estimates and assumptions are made and where actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods. Further details of the nature of these assumptions and conditions may be found in the relevant notes to the financial statements.

Reserve estimates Reserves are estimates of the amount of product that can be economically and legally extracted from the group’s properties. In order to calculate reserves, estimates and assumptions are required about a range of geological, technical and economic factors, including quantities, grades, production techniques, recovery rates, production costs, transport costs, commodity demand, commodity prices and exchange rates. Estimating the quantity and/or grade of reserves requires the size, shape and depth of ore bodies or fields to be determined by analysing geological data such as drilling samples. This process may require complex and difficult geological judgements and calculations to interpret the data. The group is required to determine and report ore reserves under the principles incorporated in the Australasian Code for Reporting of Mineral Resources and Ore Reserves December 2004, known as the JORC Code. The JORC Code requires the use of reasonable investment assumptions to calculate reserves. For example, if current prices remain above long-term historical averages for an extended period of time, internal assumptions about future prices may involve the use of lower prices to estimate reserves under the JORC Code. Lower price assumptions generally result in lower estimates of reserves. Because the economic assumptions used to estimate reserves change from period to period, and because additional geological data is generated during the course of operations, estimates of reserves may change from period to period. Changes in reported reserves may affect the group’s financial results and financial position in a number of ways, including the following: • Asset carrying values may be affected due to changes in estimated future cash flows. • Depreciation, depletion and amortisation charged in profit and loss may change where such charges are determined by the units of production basis, or where the useful economic lives of assets change. • Overburden removal costs recorded on the statement of financial position or charged to profit and loss may change due to changes in stripping ratios or the units of production basis of depreciation. • Decommissioning, site restoration and environmental provisions may change where changes in estimated reserves affect expectations about the timing or cost of these activities. • The carrying value of deferred tax assets may change due to changes in estimates of the likely recovery of the tax benefits.

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

4. Critical accounting estimates and judgments (continued) and assumptions as to future events and circumstances, in particular whether an economically viable extraction operation can be established. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised the expenditure under the policy, a judgement is made that recovery of the expenditure is unlikely, the relevant capitalised amount will be written off to profit and loss.

Share based payments The group issues equity settled share based payments to employees and third parties. Such payments are measured at their fair value at the date of grant. Fair value is measured using a binomial pricing model that requires the exercise of judgement in relation to variables such as expected volatilities and dividend yields based on information available at the time the fair value is measured.

Development expenditure Development activities commence after project sanctioning by the appropriate level of management. Judgement is applied by management in determining when a project is economically viable. In exercising this judgement, management is required to make certain estimates and assumptions similar to those described above for capitalised exploration and evaluation expenditure. Any such estimates and assumptions may change as new information becomes available. If, after having commenced the development activity, a judgement is made that a development asset is impaired, the appropriate amount will be written off to profit and loss. The carrying value of Development Expenditure is included in Other Mineral Assets—refer note 15.

Property, plant and equipment—recoverable amount In accordance with the group’s accounting policy, each asset or cash generating unit is evaluated every reporting period to determine whether there are any indications of impairment. If any such indication exists, a formal estimate of recoverable amount is performed and an impairment loss recognised to the extent that carrying amount exceeds recoverable amount. The recoverable amount of an asset or cash generating group of assets is measured at the higher of fair value less costs to sell and value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties, and is generally determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset, including any expansion prospects, and its eventual disposal. Value in use is also generally determined as the present value of the estimated future cash flows, but only those expected to arise from the continued use of the asset in its present form and its eventual disposal. Present values are determined using a risk-adjusted pre-tax discount rate appropriate to the risks inherent in the asset. Future cash flow estimates are based on expected production and sales volumes, commodity prices (considering current and historical prices, price trends and related factors), reserves, operating costs, restoration and rehabilitation costs and future capital expenditure. This policy requires management to make these estimates and assumptions which are subject to risk and uncertainty; hence there is a possibility that changes in circumstances will alter these projections, which may impact the recoverable amount of the assets. In such circumstances, some or all of the carrying value of the assets may be impaired and the impairment would be charged against profit and loss. The carrying values of property, plant and equipment are disclosed in note 15.

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

4. Critical accounting estimates and judgments (continued) as: requirements of the relevant legal and regulatory framework; the magnitude of possible contamination and the timing, extent and costs of required restoration and rehabilitation activity. These uncertainties may result in future actual expenditure differing from the amounts currently provided. The provision recognised for each site is periodically reviewed and updated based on the facts and circumstances available at the time. Changes to the estimated future costs for operating sites are recognised in the statement of financial position by adjusting both the restoration and rehabilitation asset and provision. Such changes give rise to a change in future depreciation and financial charges. The carrying value of the mine rehabilitation assets is presented in note 15 and the carrying value of the provision for rehabilitation is presented in note 20.

Derivative Financial Instruments The group uses derivative financial instruments including call and put options to partially hedge its exposure to downward movements in the price of gold. At each reporting date, the fair value of outstanding options is measured using pricing models that require the exercise of judgement in relation to variables such as expected volatilities based on information available at the reporting date. As the underlying drivers for those judgements are constantly changing, the reported derivative financial assets and liabilities are an estimate that may materially change post balance date. The carrying value of derivatives is presented in note 12.

Taxation The group’s accounting policy for taxation requires management’s judgement in assessing whether deferred tax assets and certain deferred tax liabilities are recognised on the statement of financial position. Deferred tax assets, including those arising from unrecouped tax losses, capital losses and temporary differences, are recognised only where it is considered probable that they will be recovered, which is dependent on the generation of sufficient future taxable profits. Deferred tax liabilities arising from temporary differences in investments, caused principally by retained earnings held in foreign tax jurisdictions, are recognised unless repatriation of retained earnings can be controlled and are not expected to occur in the foreseeable future. Assumptions about the generation of future taxable profits and repatriation of retained earnings depend on management’s estimates of future cash flows. These depend on estimates of future production and sales volumes, commodity prices, reserves, operating costs, restoration and rehabilitation costs, capital expenditure, dividends and other capital management transactions. Judgements are also required about the application of income tax legislation. These judgements and assumptions are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred tax liabilities recognised on the statement of financial position and the amount of other tax losses and temporary differences not yet recognised. In such circumstances, some or all of the carrying amount of recognised deferred tax assets and liabilities may require adjustment, resulting in a corresponding credit or charge to profit and loss. Information regarding income tax expense / (benefit) is provided in note 9 and information in relation to deferred tax balances is presented in note 17.

Business combination During the period, the Group recognised a gain of $36,666,786 on the acquisition of a controlled entity. As described in note 30, this gain was determined by comparing the consideration paid for the acquisition to the fair value of the net assets acquired. The determination of those fair values required management to make estimations and assumptions similar to those described above for reserve estimates, exploration and evaluation expenditures, development expenditure, property, plant and equipment, restoration and rehabilitation and taxation. Any change in any of the underlying assumptions or estimates may impact the fair value of the net assets acquired and the resultant gain on acquisition.

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

5. Segment reporting (a) Description of Segments Management has determined the operating segments based on reports reviewed by the Executive Chairman and the Chief Financial Officer that are used to monitor performance and make strategic decisions. The business is considered from both a geographic and functional perspective and has identified four reportable segments being : • Mining and processing in Papua new Guinea and the Solomon Islands. • Mineral exploration in Papua New Guinea and the Solomon Islands. Papua New Guinea consists of mining and processing and mineral exploration activities undertaken at the Simberi project. Solomon Islands consist of mineral exploration activities only as the project is not currently in production. The performance of the two geographic sectors is monitored separately. The segment information presented to the Executive Chairman and the Chief Financial Officer does not include reporting of assets and liabilities or cash flows by segment. Comparative segment information has been recognised in conformity with the requirements of IFRS 8 Operating Segments. In the prior period the segments related to the Solomon Islands were not reported on as these segments were acquired as part of the acquisition of Australian Solomons Gold Limited during the current financial year.

(b) Segment Information provided to the Executive Chairman and the Chief Financial Officer and the Board of Directors 2010

Papua New Guinea Solomon Islands Group Mining and Mineral Mining and Mineral Mining and Mineral Processing Exploration Total Processing Exploration Total Processing Exploration Total $$$$$$$$ $ Revenue Sales to external customers ...... 67,555,369 — 67,555,369 — — — 67,555,369 — 67,555,369 Result Segment contribution . (2,734,171) (6,862,203) (9,596,374) (4,782,491) (16,245) (4,798,736) (7,516,662) (6,878,448) (14,395,110)

2009 Papua New Guinea Mining and Mineral Processing Exploration Total $$$ Revenue Sales to external customers ...... 77,467,668 — 77,467,668 Result Segment contribution ...... 11,031,019 (7,250,878) 3,780,141

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

5. Segment reporting (continued) 2008 Papua New Guinea Mining and Mineral Processing Exploration Total $$$ Revenue Sales to external customers ...... 23,393,798 — 23,393,798 Result Segment contribution ...... 3,129,624 (13,075,876) (9,946,252)

The Solomon Islands segments are not presented in the 2009 and 2008 segment information as those segments were acquired pursuant to the acquisition of Australian Solomons Gold Limited during the current period (refer note 30).

(c) Other segment information Reconciliations of reportable segment revenues, profit or loss, assets and liabilities and other material items

2010 2009 2008 $$$ Revenues Total Revenue for reportable segments ...... 67,555,369 77,467,668 23,393,798 Group Revenue ...... 67,555,369 77,467,668 23,393,798

The Executive Chairman and the Chief Financial Officer assess the performance of the operating segments based on a measure of contribution. This measure excludes items such as the effects of equity settled share based payments, and unrealised gains / (losses) on financial instruments. Interest income and interest expense are not allocated to segments, nor are corporate expenses as these activities are centralised.

2010 2009 2008 Segment contribution ...... (14,395,110) 3,780,141 (9,946,252) Capitalised expenditure ...... 11,660,939 7,250,878 13,075,876 Unrealised loss on derivatives ...... (176,084) 1,133,187 (2,685,864) Corporate expenses ...... (14,773,680) (7,545,907) (4,404,307) Share based remuneration ...... (6,828,559) (4,130,120) (3,590,530) Impairment of available for sale assets ...... (7,740) (1,214,402) — Gain on acquisition of subsidiary ...... 36,666,786 — — Other expenses ...... — (1,607,412) (2,718,288) Other income ...... 812,353 149,937 31,688 Foreign exchange gain / (loss) ...... 1,431,060 (1,819,366) (1,330,830) Financial income ...... 1,834,972 327,760 533,365 Financial costs ...... (5,996,122) (3,396,347) (1,189,685) Loss from continuing operations ...... 10,228,815 (7,071,651) (12,224,827)

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

6. Revenue and other income (a) Revenue

2010 2009 2008 $$$ Gold Income ...... 67,474,314 77,182,556 23,350,248 By products ...... 81,055 285,112 43,550 67,555,369 77,467,668 23,393,798

(b) Other income

2010 2009 2008 Net gain on disposal of property, plant and equipment . . . — 52,657 30,455 Net gain on disposal of investments ...... 812,353 97,270 — Net foreign exchange gains ...... 1,431,060 — — Other ...... — 10 1,233 2,243,413 149,937 31,688

2010 2009 2008 $$$ Interest received ...... 1,834,972 327,760 533,365

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

7. Cost of sales

2010 2009 2008 $$$ Cash operating costs comprise: • employee expenses ...... 8,455,037 6,223,952 2,423,708 • stores and other consumables ...... 11,350,294 13,853,495 3,558,937 • fuel, power and water ...... 8,952,548 11,402,866 4,642,255 • other ...... 24,891,452 17,966,920 7,469,762 53,649,331 49,447,233 18,094,662 Depreciation and amortisation charges ...... 13,087,125 18,437,429 6,409,615 Changes in inventories and work in progress ...... 1,900,873 (3,166,690) (4,763,684) 68,637,329 64,717,972 19,740,593 Royalties ...... 1,652,211 1,718,677 523,581 70,289,540 66,436,649 20,264,174

8. Other expenses

Profit / (loss) before income tax includes the following specific expenses: Operating lease rentals ...... — 2,999,950 2,739,279 Net foreign exchange (gains) / losses ...... (1,431,060) 1,819,366 1,330,830 Employee benefits expense ...... 13,530,903 8,040,573 4,997,000 Amount capitalised ...... (3,388,255) — — Total employee benefits expense expensed ...... 10,142,648 8,040,573 4,997,000 Superannuation expense included in employee benefits expense is superannuation expense ...... 1,035,273 659,327 409,754 Depreciation and Amortisation Depreciation of plant and equipment ...... 8,932,230 12,619,280 4,702,444 Amortisation of leased assets ...... 3,063,658 1,565,355 — Depreciation of development expenditure ...... 2,354,828 4,348,844 1,833,055 14,350,716 18,533,479 6,535,499 Amount capitalised ...... (1,049,791) — — Total depreciation and amortisation expensed ...... 13,300,925 18,533,479 6,535,499

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

8. Other expenses (continued)

2010 2009 2008 $$ $ Finance expenses Interest and finance charges on interest bearing liabilities . . 2,278,098 3,198,791 3,031,951 Loss termination of finance lease ...... 2,891,037 — — Unwinding of discount on provision for rehabilitation ...... 757,759 197,556 183,531 Other ...... 744,520 — — 6,671,414 3,396,347 3,215,482 Amount capitalised ...... (675,292) — (2,025,797) Finance costs expensed ...... 5,996,122 3,396,347 1,189,685 Finance lease contingent rentals ...... 2,996,449 2,216,800 —

9. Income tax expense

(a) Numerical reconciliation of income tax expense to prima facie tax payable Profit / (loss) before income tax ...... 10,228,815 (7,071,651) (12,224,827) Prima facie tax expense / (benefit) at the Australian tax rate of 30% (2009:30%, 2008:30%) ...... 3,068,645 (2,121,495) 3,667,448 Tax effect of amounts which are not deductible / (taxable) in calculating taxable income: Non allowable items ...... (212,912) 2,849,271 (2,310,566) Deferred tax assets not recognised ...... (2,855,733) (727,776) (1,356,882) Income tax expense ...... — — — Effective tax rate ...... 0% 0% 0%

(b) Current tax liabilities Movements in the provision for current income tax during the period were as follows: Balance at the beginning of the year ...... — — — Current year’s income tax expense / (benefit) on loss from ordinary activities ...... 2,855,733 727,776 (551,122) Transfer to tax losses not brought to account ...... (2,855,733) (727,776) 551,122 Balance at end of year ...... — — —

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

10. Trade and other receivables

2010 2009 2008 $$$ Current Trade receivables ...... 1,919,810 562,405 1,406,302 Other receivables ...... 2,240,908 238,089 351,771 4,160,718 800,494 1,758,073

All trade and other receivables are unsecured. No receivables were past due or impaired as at 30 June 2010 (2009: $nil, 2008: $nil)). The group’s exposure to financial risks including interest rate risk, market risk, currency risk and credit risk is discussed in note 29. Note 29 also presents information in relation to the fair value of financial instruments.

11. Inventories

Current Raw materials and stores ...... 5,370,488 5,847,146 2,638,050 Ore stockpiles ...... 8 9 286,683 Gold in circuit ...... 5,450,796 6,685,038 3,980,808 Finished goods ...... 974,078 1,737,304 496,193 11,795,370 14,269,497 7,401,734

12. Derivative financial instruments

Current assets Options—cash flow hedges ...... — 2,509,294 314,212 Current liabilities Options—cash flow hedges ...... — 12,636,875 6,972,407 Non current assets Options—cash flow hedges ...... — 851,002 3,495,855 Non current liabilities Options—cash flow hedges ...... — 7,123,887 18,911,174

The prior period balances have been restated for the impact of a change in accounting policy and an accounting error in the prior period—refer note 3(i). The derivative financial instrument liabilities in the prior period were denominated in United States dollars and were secured by fixed and floating charge over the assets of the subsidiary that has received the loans. The hedging facilities under which these liabilities arose were terminated in the current year and the fixed and floating charge was released by the hedge providers. The group exposure to financial risks including interest rate risk, market risk, currency risk and credit risk is discussed in note 29. Note 29 also presents information in relation to the fair value of financial instruments.

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

13. Available for sale financial assets

Group 2010 2009 2008 $$ $ Non current Listed equity securities—at market value ...... 524,230 348,974 1,185,074

Available for sale financial assets comprise investments in the ordinary issued capital of various entities. There are no fixed returns or fixed maturity dates. During the year ended 30 June 2010 the Group recognised an impairment loss of $7,740 (2009: $1,214,402) in relation to listed equity investments. These investments declined significantly in value during the period and in the view of the Directors the decline in value is not considered to be temporary. The impairment loss has been recognised in profit and loss. The fair value of financial assets and liabilities must be estimated for recognition and measurement. As of 1 July 2009, the group has adopted the amendment to IFRS7 Financial Instruments: Disclosures which requires disclosure of fair values by level of the fair value measurement hierarchy prescribed by IFRS7. The fair value of the group’s available for sale financial assets are determined on the basis of unadjusted quoted prices in an active market for those assets and as such fall within level 1 of the IFRS7 fair value measurement hierarchy. The group’s exposure to financial risks including interest rate risk, market risk, currency risk and credit risk is discussed in note 29. Note 29 also presents information in relation to the fair value of financial instruments.

14. Other assets

Current Prepayments ...... 3,047,878 166,175 523,821 Other ...... 18,797 80,617 7,211 3,066,675 246,792 531,032

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

15. Property, plant and equipment

Group Other Assets Mine Land and Plant and mineral under rehabilitation 2010 buildings equipment assets construction asset Total $$ $ $ $ $ Cost At the beginning of the financial year . . . 7,444,119 94,569,846 58,040,467 9,177,221 2,401,339 171,632,992 Acquired on acquisition of subsidiary (refer note 30) ...... — — 15,117,000 67,160,516 3,738,824 86,016,340 Effect of changes in exchange rates .... — — — 667,657 — 667,657 Additions ...... 1,055,990 23,078,623 4,173,461 55,546,385 955,884 84,810,343 At the end of the financial year ...... 8,500,109 117,648,469 77,330,928 132,551,779 7,096,047 343,127,332 Accumulated depreciation At the beginning of the financial year . . . (1,115,278) (16,197,218) (8,101,275) — (357,512) (25,771,283) Effect of changes in exchange rates .... — — — — — — Charge for the year ...... (469,152) (10,399,362) (3,338,234) — (144,070) (14,350,818) Impairment ...... — (130,590) — — — (130,590) At the end of the financial year ...... (1,584,430) (26,727,170) (11,439,509) — (501,582) (40,252,691) Net book value at 30 June 2010 ...... 6,915,679 90,921,299 65,891,419 132,551,779 6,594,465 302,874,641

Revision of estimate of reserves used for units of production basis of depreciation During the year ended 30 June 2010 the estimate of reserves which is used for the basis of calculating units of use depreciation for certain property, plant and equipment utilised at the Group’s Simberi Gold Project was increased by 437,000 ounces. The net effect of the change in the current year was a decrease in depreciation and amortisation expense of $5,876,992. The actual impact on deprecation and amortisation expense in future periods will be dependent on the quantity of gold produced and additional capital expenditure on assets that are depreciated on the units of production basis.

Group Other Assets Mine Land and Plant and mineral under rehabilitation 2009 buildings equipment assets construction asset Total $$$ $ $ $ Cost At the beginning of the financial year .... 7,419,480 76,264,970 50,834,589 383,588 2,401,339 137,303,966 Additions ...... 24,639 18,304,876 7,205,878 8,793,633 — 34,329,026 At the end of the financial year ...... 7,444,119 94,569,846 58,040,467 9,177,221 2,401,339 171,632,992 Accumulated depreciation At the beginning of the financial year .... (352,592) (4,476,151) (2,326,448) — (114,241) (7,269,432) Charge for the year ...... (762,686) (11,656,675) (5,774,827) — (243,271) (18,437,459) Impairment ...... — (64,392) — — — (64,392) At the end of the financial year ...... (1,115,278) (16,197,218) (8,101,275) — (357,512) (25,771,283) Net book value at 30 June 2009 ...... 6,328,841 78,372,628 49,939,192 9,177,221 2,043,827 145,861,709

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

15. Property, plant and equipment (continued)

Group Land Other Assets Mine and Plant and mineral under rehabilitation 2008 buildings equipment assets construction asset Total $$ $ $ $ $ Cost At the beginning of the financial year ..... — 9,608,945 — 57,613,648 2,401,339 69,623,932 Additions ...... 145,479 552,114 — 34,292,522 — 34,990,115 Disposals ...... — (281,968) — — — (281,968) Transfers from assets under construction . . . 7,274,001 66,385,879 17,862,702 (91,522,582) — — Transfers from exploration and evaluation expenditure ...... — — 32,971,887 — — 32,971,887 At the end of the financial year ...... 7,419,480 76,264,970 50,834,589 383,588 2,401,339 137,303,966 Accumulated depreciation At the beginning of the financial year ..... — (788,961) — — — (788,961) Charge for the year ...... (352,592) (3,742,217) (2,326,448) — (114,241) (6,535,498) Disposals ...... — 55,027 — — — 55,027 At the end of the financial year ...... (352,592) (4,476,151) (2,326,448) — (114,241) (7,269,432) Net book value at 30 June 2008 ...... 7,066,888 71,788,819 48,508,141 383,588 2,287,098 130,034,534

(a) Leased assets Plant and equipment includes the following amounts where the Group is a lessee under a finance lease:

2010 2009 2008 $$$ Leased equipment Cost ...... 5,783,127 7,062,775 — Accumulated depreciation ...... (2,202,115) (1,565,355) — Net carrying value ...... 3,581,012 5,497,420 —

(b) Non current assets pledged as security Refer to note 19 for information on non-current assets pledged as security by Group entities

16. Exploration and evaluation expenditure

Cost At the beginning of the financial year ...... 11,115,743 10,406,786 30,002,238 Transferred from / (to) assets under construction ...... 519,658 — (32,971,887) Effect of changes in exchange rates ...... (852,120) — — Additions ...... 12,927,980 708,957 13,376,435 At the end of the financial year ...... 23,711,261 11,115,743 10,406,786

The ultimate recoupment of capitalised exploration and evaluation expenditure is dependent on successful development and commercial exploitation, or alternatively sale of the exploration areas.

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

17. Deferred tax assets and liabilities

2010 2009 2008 $$$ (a) Unrecognised deferred tax assets Deferred tax assets have not been recognised in respect of the following items:

Deductible temporary differences ...... 11,126,821 1,088,523 295,108 Deductible temporary differences recognised in equity ..... 1,340,363 — — Tax losses ...... 52,784,173 866,916 1,248,188 Deferred tax assets brought to account to reduce provision for deferred income tax ...... (20,839,361) (616,253) — 44,411,996 1,339,186 1,543,296

All unrecognised deferred tax assets relate to items recognised in profit and loss. The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be applied.

(b) Provision for deferred income tax Provision for deferred income tax comprises the estimated expense at the applicable tax rate of the following items:

Exploration and evaluation expenditure ...... 20,044,547 265,235 — Unrealised foreign exchange differences ...... 646,236 351,018 — Accrued income ...... 148,578 — — Deferred tax assets brought to account to reduce provision for deferred income tax ...... (20,839,361) (616,253) — ———

18. Trade and other payables

Current Trade payables ...... 25,377,894 12,786,505 10,889,565 Other payables and accruals ...... 18,654,118 7,896,521 3,556,821 44,032,012 20,683,026 14,446,386

All trade and other payables are unsecured. The group’s exposure to financial risks including interest rate risk, market risk, currency risk and credit risk is discussed in note 29. Note 29 also presents information in relation to the fair value of financial instruments.

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

19. Borrowings

2010 2009 2008 $$ $ Current Interest bearing loans ...... 2,775,551 — 8,561,286 Finance lease liabilities ...... 1,706,419 2,094,483 — 4,481,970 2,094,483 8,561,286 Non current Finance lease liabilities ...... 1,755,820 3,845,885 — Interest bearing loans ...... — — 2,739,755 1,755,820 3,845,885 2,739,755

The carrying amount of assets pledged as security for current and non current borrowings that are subject to fixed charges were:

Property, plant and equipment ...... 3,581,012 138,070,287 130,034,534 Available for sale financial assets ...... — — 1,185,074 Exploration and evaluation expenditure ...... — — 10,406,786 3,581,012 138,070,287 141,626,394

Current assets of the group with a value of $nil that are not subject to a fixed charge are subject to a floating charge (2009: $24,329,033). The group exposure to financial risks including interest rate risk, market risk, currency risk and credit risk is discussed in note 29. Note 29 also presents information in relation to the fair value of financial instruments. On 24 June 2010, the Group entered into a USD35 million financing facility with International Finance Corporation to assist with financing the redevelopment of the Gold Ridge Project in the Solomon Islands (2009: $nil).

20. Provisions

2010 2009 2008 $$$ Current Employee entitlements ...... 1,008,118 491,709 365,819 Non current Rehabilitation and restoration ...... 9,315,217 2,782,426 2,584,870

Movements in each class of provision during the financial year, other than employee benefits, are set out below:

Rehabilitation and restoration Carrying amount at start of year ...... 2,782,426 2,584,870 2,401,339 Increase in provision due to change in estimate ...... 955,884 — — Acquired on acquisition of subsidiary (refer note 30) ...... 4,679,737 — — Effect of exchange rates ...... 139,411 — — Accrual of discount ...... 757,759 197,556 183,551 9,315,217 2,782,426 2,584,870

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

20. Provisions (continued) Provision for rehabilitation and restoration The provision for rehabilitation and restoration is based on the group’s environmental plans, in compliance with current environmental and regulatory requirements. The costs include obligations relating to reclamation, waste site closure, plant closure and other costs associated with the rehabilitation and restoration of mining and exploration sites. Full provision is made based on the net present value of the estimated cost of rehabilitating and restoring the environmental disturbance that has occurred up to the date of the Financial Statements. During the period the Group engaged an independent consultant to prepare a revised estimate of the cost of rehabilitating and restoring the environmental disturbance that has occurred up to 30 June 2010 at the Simberi Gold Project. Based on the independent consultant’s report and a discount rate of 13%, the provision for rehabilitation and restoration for the Simberi Gold Project was increased by $955,884.

21. Contributed equity

2010 2009 2008 $$$ (a) Ordinary shares ...... 369,525,183 173,098,363 133,686,704 Movements in ordinary share capital: Balance at beginning of financial year ...... 173,098,363 133,686,704 105,794,580 Placement January 2008 at 72 cents ...... — — 10,527,728 Placement March 2008 at 85 cents ...... — — 15,000,000 Placement March 2008 at 73 cents ...... — — 987,042 Placement August 2008 at 31 cents ...... — 10,536,451 — Placement February 2009 at 50 cents ...... — 30,824,500 — Issued on acquisition of subsidiary (refer note 30) ..... 46,817,214 — — Placement December 2009 at 35 cents ...... 159,387,951 — — Conversion of options ...... 157,500 — 1,920,477 379,461,028 175,047,655 134,229,827 Costs of capital raising ...... (9,935,845) (1,949,292) (543,123) Balance at end of financial year ...... 369,525,183 173,098,363 133,686,704

2010 2009 2008 Number of Number of Number of shares shares shares (a) Ordinary shares ...... 1,040,132,142 472,643,276 377,005,725 Movements in ordinary share capital: Balance at beginning of financial year ...... 472,643,276 377,005,725 337,649,220 Placement August 2008 at 31 cents ...... — 33,988,551 — Placement January 2008 at 72 cents ...... — — 14,621,844 Placement March 2008 at 85 cents ...... — — 17,647,059 Placement March 2008 at 73 cents ...... — — 1,352,112 Placement February 2009 at 50 cents ...... — 61,649,000 — Issued on acquisition of subsidiary (refer note 30) . . . 110,339,866 — — Placement December 2009 at 35 cents ...... 456,699,000 — — Conversion of options ...... 450,000 — 5,735,600 Balance at end of financial year ...... 1,040,132,142 472,643,276 377,005,725

Ordinary shares entitle the holder to one vote per share and to participate in dividends and proceeds on winding up of the company in proportion to the number of and amounts paid on the shares held.

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

21. Contributed equity (continued) (b) Options Each option is convertible into one ordinary share in the company when exercised. Options do not participate in dividends and do not give holders voting rights. Options granted and exercised during the period, and on issue at balance date are as follows. The table below sets out the movements in options during the year ended 30 June 2010:

Outstanding Options Outstanding at 1 July Options expired or Options at 30 June Exercise Price Maturity 2009 issued cancelled exercised 2010 $0.50 options ..... 31/10/2009 180,000 — (180,000) — — $0.45 options ..... 31/12/2009 3,400,000 — (3,400,000) — — $0.80 options ..... 31/12/2010 1,000,000 — — — 1,000,000 $1 options ...... 31/12/2010 1,000,000 — — — 1,000,000 $1.25 options ..... 31/12/2010 1,000,000 — — — 1,000,000 $1.50 options ..... 31/12/2010 1,000,000 — — — 1,000,000 $2 options ...... 31/12/2010 1,000,000 — — — 1,000,000 $0.35 options(i) .... 31/10/2011 36,325,000 — (5,862,500) (450,000) 30,012,500 $0.31 Options .... 31/12/2010 1,699,427 — — — 1,699,427 $0.35 Options(ii) . . . 31/12/2011 — 1,500,000 — — 1,500,000 $0.50 Options(iii) . . . 31/12/2013 — 37,500,000 — — 37,500,000 $0.50 options(iv) . . . 31/12/2013 — 1,175,000 — — 1,175,000 46,604,427 40,175,000 (9,442,500) (450,000) 76,886,927

Notes: (i) Of the 30,012,500 options expiring 31 October 2011, 9,375,000 vest upon the share price trading at $A0.70 or above on five consecutive days. (ii) Of the 1,500,000 options issued on 11 November 2009 and expiring 31 December 2011, 500,000 vest upon the share price trading at $A0.70 or above on five consecutive days. (iii) Of the 37,500,000 options issued on 11 November 2009 expiring 31 December 2013, 15,000,000 vest on 7 December 2010; 15,000,000 vest upon the share price reaching $A0.70 and 7,500,000 vest upon Allied Gold producing 100,000 ounces of gold in the period 1 October 2009 to 31 December 2010. (iv) Issued 22 December 2009. The table below sets out the movements in options during the 2009 year:

Outstanding Options Outstanding at 1 July Options expired or Options at 30 June Exercise Price Maturity 2008 issued cancelled exercised 2009 $0.50 options ..... 31/12/2008 3,100,000 — (3,100,000) — — $0.45 options ..... 31/12/2009 3,400,000 — — — 3,400.000 $0.80 options ..... 31/12/2008 750,000 — (750,000) — — $0.80 options ..... 31/12/2010 1,400,000 — (400,000) — 1,000,000 $0.40 options ..... 31/12/2008 1,000,000 — (1,000,000) — $0.44 options ..... 31/12/2008 1,000,000 — (1,000,000) — $0.72 options ..... 30/6/2009 713,261 — (713,261) — — $0.50 options ..... 30/10/2009 370,000 — (190.000) — 180,000 $1 options ...... 31/12/2010 1,400,000 — (400,000) — 1,000,000 $1.25 options ..... 31/12/2010 1,400,000 — (400,000) — 1,000,000 $1.50 options ..... 31/12/2010 1,400,000 — (400,000) — 1,000,000 $2 options ...... 31/12/2010 1,400,000 — (400,000) — 1,000,000 $0.35 options ..... 31/12/2011 — 36,325,000 — — 36,325,000 $0.31 options ..... 31/12/2010 — 1,699,427 — — 1,699,427 17,333,261 38,024,427 (8,753,261) — 46,604,427

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

21. Contributed equity (continued) The table below sets out the movements in options during the 2008 year:

Outstanding Options Outstanding at 1 July Options expired or Options at 30 June Exercise Price Maturity 2007 issued cancelled exercised 2008 $0.40 options ..... 31/12/2008 2,040,000 — — (2,040,000) — $0.50 options ..... 31/12/2008 3,850,000 — (750,000) — 3,100,000 $0.80 options ..... 31/12/2008 750,000 — — — 750,000 $0.45 options ..... 31/12/2009 — 4,000,000 — (600,000) 3,400,000 $0.80 options ..... 31/12/2010 — 1,400,000 — — 1,400,000 $0.40 options ..... 31/12/2008 — 1,000,000 — — 1,000,000 $0.44 options ..... 31/12/2008 — 1,000,000 — — 1,000,000 $0.72 options ..... 30/6/2009 — 713,261 — — 713,261 $0.50 options ..... 30/10/2009 — 640,000 — (270,000) 370,000 $1 options ...... 31/12/2010 — 1,400,000 — — 1,400,000 $1.25 options ..... 31/12/2010 — 1,400,000 — — 1,400,000 $1.50 options ..... 31/12/2010 — 1,400,000 — — 1,400,000 $2 options ...... 31/12/2010 — 1,400,000 — — 1,400,000 6,640,000 14,253,261 (750,000) (2,910,000) 17,333,261

(c) Capital management The primary objective of managing the group’s capital is to ensure that there is sufficient capital available, in the form of debt or equity funding, to support the funding requirements of the group, including capital expenditure, in a way that optimises the cost of capital, maximises shareholders’ returns and ensures that the group remains in a sound financial position. There were no changes to the group’s overall capital management approach during the current year. The group manages and makes adjustments to the capital structure as opportunities arise in the market place, as and when borrowings mature or as and when funding is required. This may take the form of raising equity, market or bank debt or hybrids thereof.

22. Reserves and accumulated losses

2010 2009 2008 $$$ Available for sale investments reserve ...... 503,997 136,389 6,546 Hedging reserve—cash flow hedges ...... (5,437,338) (9,703,079) (19,387,654) Share based payments reserve ...... 16,604,976 9,776,417 5,502,877 Foreign currency translation reserve ...... 5,427,787 (644,628) (392,076) 17,099,422 (434,901) (14,270,303) Accumulated losses ...... (15,559,454) (25,788,269) (18,716,618) 1,539,968 (26,223,170) (32,986,921)

(a) Movements Movements in the reserves and accumulated losses during the reporting period are presented in the Statement of Changes in Equity.

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

22. Reserves and accumulated losses (continued) (b) Nature and purpose of reserves (i) Available for sale investments revaluation reserve Changes in the fair value and exchange differences arising on translation of investments classified as available for sale financial assets, are taken to the available for sale investment revaluation reserve, as disclosed in note 3(g). Amounts are recognised in profit or loss when the associated assets are sold or impaired.

(ii) Hedging reserve—cash flow hedges The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised directly in equity, as described in note 3(i). Amounts are recognised in profit or loss when the associated hedged transaction affects profit or loss.

(iii) Share based payments reserve The share based payments reserve is used to recognise: • the fair value of options issued to employees but not exercised • the fair value of shares issued to employees

(v) Foreign currency translation reserve Exchange differences arising on translation of foreign subsidiaries are taken to the foreign currency translation reserve as described in note 3(b). The reserve is recognised in profit and loss when the net investment is disposed of.

23. Earnings per share

2010 2009 2008 Cents Cents Cents (a) Basic earnings / (loss) per share ...... 1.31 (1.65) (3.46) (b) Diluted earnings / (loss) per share ...... 1.31 (1.65) (3.46)

Profit / (loss) from continuing operations ...... 10,228,815 (7,071,651) (12,224,827) The potential ordinary shares represented by issued options would have no impact on the loss from continuing operations if exercised.

(d) Weighted average number of shares used as the denominator

Weighted average number of shares used in calculation of basic earnings / (loss) per share ...... 782,749,594 427,904,462 353,521,502 Adjustment for issued option in calculation of diluted earnings / (loss) per share ...... 3,206,484 652,442 — Weighted average number of shares used in calculation of diluted earnings / (loss) per share ...... 785,956,078 428,556,904 353,521,502

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

23. Earnings per share (continued) (e) Information concerning the classification of securities Options issued are considered to be potential ordinary shares and have been included in the determination of diluted earnings per share to the extent to which they are dilutive. The options have not been included in the calculation of basic earnings / (loss) per share. Details relating to options are set out in note 27.

24. Auditors’ remuneration

2010 2009 2008 $$$ Remuneration of the auditor of the Company: Auditing or reviewing the Financial Statements (BDO Audit (WA) Pty Ltd) ...... 140,389 148,911 84,736 Other assurance services (BDO Audit (WA) Pty Ltd) ...... 91,600 — — Other non assurance services(BDO Corporate Finance (WA) Pty Ltd) ...... 62,762 — 1,414 294,751 148,911 86,150 Audit or reviewing the Financial Statements of subsidiaries (KPMG Australia) ...... 71,593 — —

25. Related party transactions (a) Company The Company is Allied Gold Limited, a company incorporated and domiciled in Australia.

(b) Subsidiaries Interests in subsidiaries are set out in note 31.

(d) Terms and conditions Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties, except that the loans to subsidiaries were non- interest bearing. Outstanding balances are unsecured and repayable in cash.

26. Key management personnel disclosures (a) Details of Key Management Personnel Details of key management personnel during the current and prior financial years are set out in the Remuneration Report that is included in the Directors’ Report accompanying these financial statements. Certain key management personnel have related party relationships with third parties that transact with

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

26. Key management personnel disclosures (continued) the Group. The table below summarises the transactions undertaken with those key management personnel and their related parties during the current and prior financial years:

Key Management Personnel Related entity Description of transaction 2010 2009 2008 $$$ Mark Caruso . . Cancello Plant Hire Pty Limited Directors fees—cash component 967,562 360,600 392,400 Regional Management Directors fees—share based payments 4,397,500 1,198,555 1,521,551 Zurich Bay Holdings Pty Ltd Finance lease—gross lease payments 2,643,900 3,325,200 — Zurich Bay Holdings Pty Ltd Finance lease—contingent rentals 2,946,449 2,216,800 — Zurich Bay Holdings Pty Ltd Finance lease—loss on extinguishment of finance lease liability 2,891,037 — — Zurich Bay Holdings Pty Ltd Finance lease—payout of lease liability 3,307,953 — — Zurich Bay Holdings Pty Ltd Purchase of mining equipment 1,462,126 646,384 763,098 Zurich Bay Holdings Pty Ltd Hire of mining equipment and labour 482,768 1,648,760 2,588,360 Zurich Bay Holdings Pty Ltd Construction of processing plant — 573,333 276,103 Mineral Commodities Limited Administration and support services — 26,308 26,308 19,099,295 9,995,940 5,567,820 Greg Steemson Steemson Geoscience Pty Ltd Directors fees—cash component and share based payments 90,000 302,701 72,000 Steemson Geoscience Pty Ltd Geological consultancy services 37,500 78,962 73,982 127,500 381,663 145.982 Frank Terranova Novabank Pty Ltd Directors fees—share based payments 2,198,750 527,616 — Peter Torre . . . Torre Corporate Pty Ltd Company secretarial services— cash and share based payments 149,100 243,622 84,000

All key management personnel that are not listed in the table above deal with Group in their own name only and do not have a related party relationship with any other party has commercial dealings with the Group.

(b) Key Management Personnel Compensation Remuneration by category

Group 2010 2009 2008 $$$ Key Management Personnel Short-term ...... 2,616,633 1,714,630 1,700,596 Post-employment ...... 175,224 101,960 245,096 Share-based payment ...... 7,029,420 2,917,561 3,326,073 9,821,277 4,734,151 5,271,765

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

26. Key management personnel disclosures (continued) (c) Option holdings of key management personnel 2010

Key Management Balance at Granted as Balance at Vested and Personnel start of year remuneration Exercised Lapsed end of year exercisable T Bubb ...... 750,000 — — (750,000) — — M Caruso ...... 17,400,000 25,000,000 — (5,025,000) 37,375,000 18,375,000 P Davies ...... 1,000,000 175,000 — (175,000) 1,000,000 700,000 P Du Plessis ...... 1,000,000 — — (175,000) 825,000 525,000 R Hastings ...... 3,750,000 500,000 — (500,000) 3,750,000 2,750,000 M House ...... — 1,500,000 — — 1,500,000 1,000,000 A Lowrie ...... 2,000,000 — (250,000) 1,750,000 1,250,000 G Steemson ...... 2,000,000 — — (250,000) 1,750,000 1,250,000 F Terranova ...... 6,250,000 12,500,000 — (750,000) 18,000,000 9,250,000 P Torre ...... 2,000,000 250,000 — (250,000) 2,000,000 1,500,000 36,150,000 39,925,000 — (8,125,000) 67,950,000 36,600,000

2009

Key Management Balance at Granted as Balance at Vested and Personnel start of year remuneration Exercised Lapsed end of year exercisable T Bubb ...... — 750,000 — — 750,000 250,000 M Caruso ...... 3,400,000 14,000,000 — — 17,400,000 10,150,000 P Davies ...... — 1,000,000 — — 1,000,000 350,000 P Du Plessis ..... — 1,000,000 — — 1,000,000 350,000 F Hart ...... 500,000 — — (500,000) — — R Hastings ...... — 3,750,000 — — 3,750,000 1,750,000 R Johnson ...... 5,000,000 — — (5,000,000) — — A Longo ...... 500,000 — — (500,000) — — A Lowrie ...... 2,000,000 2,000,000 — (2,000,000) 2,000,000 1,000,000 G Steemson ..... — 2,000,000 — — 2,000,000 1,000,000 F Terranova ..... 2,000,000 6,250,000 — (2,000,000) 6,250,000 3,500,000 P Torre ...... — 2,000,000 — — 2,000,000 1,000,000 13,400,000 32,750,000 — (10,000,000) 36,150,000 19,000,000

2008

Key Management Balance at Granted as Balance at Vested and Personnel start of year remuneration Exercised Lapsed end of year exercisable M Caruso ...... — 4,000,000 (600,000) — 3,400,000 3,400,000 G Brock ...... 500,000 — — (500,000) — — A Lowrie ...... — 2,000,000 — — 2,000,000 2,000,000 B Burban ...... 500,000 — (250,000) (250,000) — — F Hart ...... 500,000 — — — 500,000 500,000 R Hastings ...... 1,000,000 — (1,000,000) — — — A Longo ...... 500,000 — — — 500,000 500,000 R Johnson ...... — 5,000,000 — — 5,000,000 5,000,000 F Terranova ...... — 2,000,000 — — 2,000,000 2,000,000 3,000,000 13,000,000 (1,850,000) (750,000) 13,400,000 13,400,000

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

26. Key management personnel disclosures (continued) (c) Shareholdings of key management personnel 2010

Balance at Received as Options Net change Balance at Name start of year remuneration exercised other end of year M Caruso ...... 7,585,193 — — — 7,585,193 R Hastings ...... 300,000 — — — 300,000 M House ...... 10,000 — — — 10,000 A Lowrie ...... 1,635,460 — — — 1,635,460 G Steemson ...... 1,100,000 — — — 1,100,000 F Terranova ...... 1,000 — — — 1,000 P Torre ...... 20,000 — — — 20,000 10,651,653 — — — 10,651,653

2009

Balance at Received as Options Net change Balance at Name start of year remuneration exercised other end of year M Caruso ...... 5,577,693 — — 2,007,500 7,585,193 R Hastings ...... 300,000 — — — 300,000 M House ...... — — — 10,000 10,000 R Johnson ...... 55,000 — — (55,000) — A Lowrie ...... 1,635,460 — — — 1,635,460 J Moore ...... 800,000 — — (800,000) — G Steemson ...... 1,100,000 — — — 1,100,000 F Terranova ...... — — — 1,000 1,000 A Longo ...... 2,000 (2,000) — P Torre ...... — — — 20,000 20,000 9,470,153 — — 1,181,500 10,651,653

2008

Balance at Received as Options Net change Balance at Name start of year remuneration exercised other end of year M Caruso ...... 4,977,693 — 600,000 — 5,577,693 Jeff Moore ...... 800,000 — — — 800,000 Greg Steemson ...... 1,600,000 — — (500,000) 1,100,000 Anthony Lowrie ...... 1,635,460 — — — 1,635,460 Bob Burban ...... — — 250,000 (250,000) — Ross Hastings ...... 300,000 — — — 300,000 Albert Longo ...... 2,000 — — — 2,000 Richard Johnson ...... — — — 55,000 55,000 9,315,153 — 850,000 (695,000) 9,470,153

All equity transactions with key management personnel, other than those arising from the exercise of remuneration options, have been entered into under terms and conditions no more favourable than those the group would have adopted if dealing at arm’s length.

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

26. Key management personnel disclosures (continued) (d) Loans to key management personnel There were no loans to key management personnel during the period.

(e) Finance leases During the financial year an agreement entered into with Zurich Bay Holdings Pty Ltd, a company in which Mark Caruso is a shareholder and director, for the hire of mining equipment was terminated prior to their scheduled expiry date. Prior to its termination, the agreement was accounted for as a finance lease. The carrying amount as at the reporting date of various mining equipment subject to finance leases with Zurich Bay Holdings Pty Ltd was $nil (2009: $3,249,717, 2008: $nil). Under the terms of the leases, the Group had the option to acquire the leased assets for their agreed fair value on expiry of the leases. The agreement was terminated effective 1 April 2010. The provisional amount payable by the Group in consequence of the termination of the agreement is $6,466,764 which exceeded the recorded value of the lease liability of $3,575,727 as at the termination date. The excess of the termination value over the lease liability of $2,891,037 has been recorded in profit and loss under financing costs. The final amount payable for the mining equipment acquired as a consequence of the termination of the agreement was determined based on an independent valuation of the mining equipment.The leases also provided for the payment of contingent rentals determined on the basis of a fixed charge per machine hour. Set out below is a summary of amounts recorded in the financials in relation to the operation and termination of the agreement.

2010 2009 2008 $$$ Commitments in relation to finance leases with key management personnel are payable as follows: Within one year ...... — 3,325,200 — Later than one but not later than five years ...... — 4,156,500 — Minimum lease payments ...... — 7,481,700 — Future finance charges ...... — 3,641,886 — Recognised as a liability ...... — 3,839,814 — Amounts recorded in financial statements in relation to the operation of the lease agreement: Lease liabilities: —Current ...... — 1,063,713 — —Non-current ...... — 2,776,101 — — 3,839,814 — Finance charges included in profit and loss as finance expenses ...... 1,843,571 2,043,900 — Contingent rentals paid ...... 2,946,449 2,216,800 — Loss on extinguishment of lease liability recorded as a financing cost ...... 2,891,037 — — Amount payable under termination agreement included in trade creditors ...... 7,864,847 — —

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

27. Share base payments (a) Employee and directors options The Allied Gold Limited employee option plan was re-approved by shareholders at the Annual General Meeting on 28 November 2008. The plan is designed to provide long term incentives for senior employees (including directors) to deliver long term shareholder returns. All full time employees, part time employees and consultants to the group are eligible to participate in the plan at the absolute discretion of the Board. Options are granted under the plan for no consideration and are at terms stipulated at the discretion of the Board. The options hold no voting rights, do not participate in dividends and are not transferable. All options granted are exercisable in exchange for one ordinary share in the Company for every option held. Set out below are summaries of options granted under the plan:

2010 2009 2008 Number of Number of Number of options options options Outstanding at the beginning of the year ...... 44,905,000 14,020,000 3,000,000 Granted ...... 40,175,000 37,650,000 13,640,000 Lapsed ...... (9,442,500) (6,765,000) (750,000) Exercised ...... (450,000) — (1,870,000) Vested and exercisable at end of year ...... 75,187,500 44,905,000 14,020,000

The weighted average share price at the date of exercise of options exercised during the year ended 30 June 2010 was $0.47 (2009: $nil, 2008: $0.83).

Fair value of options granted The fair value of options at grant date is independently determined using a binomial pricing model that takes into account the exercise prices, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. The model inputs for options granted during the year ended 30 June 2010 included:

Non Executive Director options issued 11 November 2009

No vesting Vesting conditions condition(1) Fair value at grant date ...... $0.187 $0.187 Exercise price ...... $0.35 $0.35 Grant date ...... 11/11/2009 11/11/2009 Expiry date ...... 31/12/2011 31/12/2011 Share price at grant date ...... $0.425 $0.425 Expected price volatility of shares ...... 65% 65% Expected dividend yield ...... 0% 0% Risk free interest rate ...... 4.83% 4.83% Probability discount applied in relation to vesting conditions ...... 0% 40% Number of options ...... 1,000,000 500,000

(1) Options may not vest until the ordinary share price of the Company’s shares is greater than $0.70 for five consecutive days after the date of grant.

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

27. Share base payments (continued) Executive Director options issued 11 November 2009

Tranche A Tranche B Tranche C options(1) options(2) options(3) Fair value at grant date ...... $0.166 $0.215 $0.167 Exercise price ...... $0.50 $0.50 $0.50 Grant date ...... 11/11/2009 11/11/2009 11/11/2009 Expiry date ...... 31/12/2013 31/12/2013(4) 31/12/2013 Share price at grant date ...... $0.425 $0.425 $0.425 Expected price volatility of shares ...... 65% 65% 65% Expected dividend yield ...... 0% 0% 0% Risk free interest rate ...... 4.97% 5.25% 4.97% Probability discount applied in relation to vesting conditions ...... 0% 0%(4) 40% Number of options issued ...... 15,000,000 15,000,000 7,500,000 The terms of each Tranche of options are summarised below: (1) Tranche A—vest on grant date. (2) Tranche B—vest upon the 100,000th ounce of gold production between 1 October 2009 and 31 December 2010 (3) Tranche C—vest when the weighted average price of Allied shares is greater than 70 cents for five consecutive days. (4) In calculating the fair value of the Tranche options subject to gold production performance conditions, the term to expiry was reduced to 1/7/2012 from 31/12/2013 to more fully reflect the vesting condition.

Employee options issued 22 December 2009

No vesting conditions Fair value at grant date ...... $0.166 Exercise price ...... $0.50 Grant date ...... 22/12/2009 Expiry date ...... 31/12/2013 Share price at grant date ...... $0.33 Expected price volatility of shares ...... 65% Expected dividend yield ...... 0% Risk free interest rate ...... 4.97% Probability discount applied in relation to vesting conditions ...... 0% Number of options ...... 1,175,000

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

27. Share base payments (continued) The model inputs for options granted during the year ended 30 June 2009 included:

Employee options issued 1 December 2008

Tranche A Tranche B Tranche C options options options Fair value at grant date ...... $0.0924 $0.0924 $0.0858 Exercise price ...... $0.35 $0.35 $0.35 Grant date ...... 1/12/2008 1/12/2008 1/12/2008 Expiry date ...... 31/10/2011 31/10/2011 31/10/2011 Share price at grant date ...... $0.27 $0.27 $0.27 Expected price volatility of shares ...... 60% 60% 60% Expected dividend yield ...... 0% 0% 0% Risk free interest rate ...... 3.27% 3.27% 3.27% Discount applied in relation to vesting conditions ...... 0% 30% 0%

Director options issued 5 December 2008

Tranche A Tranche B Tranche C options options options Fair value at grant date ...... $0.097 $0.097 $0.0905 Exercise price ...... $0.35 $0.35 $0.35 Grant date ...... 5/12/2008 5/12/2008 5/12/2008 Expiry date ...... 30/11/2011 30/11/2011 30/11/2011 Share price at grant date ...... $0.275 $0.275 $0.275 Expected price volatility of shares ...... 60% 60% 60% Expected dividend yield ...... 0% 0% 0% Risk free interest rate ...... 3.24% 3.24% 3.24% Discount applied in relation to vesting conditions ...... 0% 30% 0%

Employee options issued 29 December 2008

Tranche A Tranche B Tranche C options options options Fair value at grant date ...... $0.2009 $0.2009 $0.195 Exercise price ...... $0.35 $0.35 $0.35 Grant date ...... 1/12/2007 1/12/2007 1/12/2007 Expiry date ...... 31/10/2011 31/10/2011 31/10/2011 Share price at grant date ...... $0.425 $0.425 $0.425 Expected price volatility of shares ...... 60% 60% 60% Expected dividend yield ...... 0% 0% 0% Risk free interest rate ...... 2.95% 2.95% 2.95% Discount applied in relation to vesting conditions ...... 0% 30% 0% The terms of each Tranche of options are summarised below: Tranche A—vest on grant date. Tranche B—vest upon the 100,000th ounce of gold production between 1 October 2008 and 31 December 2009. Upon production of 75,000 ounces within that timeframe, the Directors have the discretion to require the holder to exercise 50% of the Tranche B options in which case the holder will forego the balance of the options.

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

27. Share base payments (continued) Tranche C—vest when the weighted average price of Allied shares is greater than 70 cents for five consecutive days. The model inputs for options granted during the year ended 30 June 2008 included:

Director Employee Director Employee options options options options Exercise price ...... $0.40-$0.44 $0.50 $0.45-$2.00 $0.80-$2.00 Grant date ...... 21/12/2007 21/11/2007 28/3/2008 11/6/2008 31/12/2008 31/10/2009 31/12/2008 31/12/2010 and Expiry date ...... 31/12/2010 Share price at grant date ...... $0.72 $0.75 $0.75 $0.65 Expected price volatility of shares ...... 70% 70% 50% 50% Expected dividend yield ...... 0% 0% 0% 0% Risk free interest rate ...... 6.35% 6.35% 6.31% 8.11%

(b) Expenses arising from share based payment transactions Included under employee benefits expense in profit and loss was $6,828,559 (2009 $4,130,120, 2008: $3,590,530), and relates, in full, to equity-settled share-based payment transactions.

28. Cash and cash equivalents and cash flow from operations (a) Cash and cash equivalents

2010 2009 2008 $$$ Cash assets ...... 85,525,391 20,529,979 154,180

The group’s exposure to financial risks including interest rate risk, market risk, currency risk and credit risk is discussed in note 29. Note 29 also presents information in relation to the fair value of financial instruments.

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

28. Cash and cash equivalents and cash flow from operations (continued) (b) Reconciliation of operating profit / (loss) aftern income tax to net cash from operations.

2010 2009 2008 $$$ Profit / (loss) after income tax ...... 10,228,815 (7,071,651) (12,224,827) Depreciation and amortisation ...... 13,300,025 18,533,479 6,535,499 Provision—employee entitlements ...... 339,855 125,890 — Unrealised foreign exchange adjustments ...... (623,444) (806,601) (3,092,637) Share-based payments ...... 6,828,559 4,130,120 3,593,530 Unwinding of environmental discount ...... 757,759 197,556 183,531 Interest on finance leases ...... 2,278,099 2,266,409 — Loss on extinguishment of lease liability ...... 1,990,000 — — Foreign exchange losses on borrowings ...... — 2,155,392 — Impairment of available for sale assets ...... 7,740 1,214,402 — Gain on sale of available for sale assets transferred to profit or loss ...... (1,006,313) — — Realised losses on hedging transactions transferred to profit or loss ...... 5,691,821 (1,155,015) — Bargain purchase ...... (36,666,786) — — Unrealised loss on derivatives ...... 176,124 — 2,685,864 (Payments) / Proceeds from settlement of derivatives . . (17,826,546) 5,122,882 — Other ...... (491,255) (204,443) — Changes in assets and liabilities during the year: (Increase) / decrease in receivables ...... (3,511,424) (2,945,220) 4,603,195 (Increase) / decrease in prepayments ...... (1,787,246) — (445,287) Increase / (decrease)in payables ...... (2,875,650) — 5,283,246 (Increase) / decrease in inventories ...... 2,680,469 — (7,404,734) Net cash from / (used in) operations ...... (20,509,398) 21,563,200 (282,620)

(c) Non cash investing and financing activities Increase in capital accruals ...... 18,967,318 4,000,000 — Property, plant and equipment acquired under finance leases ...... 3,010,068 7,062,775 — Equity settled acquisition of controlled entity (refer note 30) ...... 41,929,149 — Equity settled costs of raising equity capital ...... — 143,240 987,042 Equity settled exploration and evaluation expenditure .... — — 286,350

29. Financial instruments In the normal course of its operations, the group is exposed to gold price, foreign exchange, interest rate, liquidity, equity price and counterparty risks. In order to manage these risks, the group may enter into transactions which make use of both on and off statement of financial position derivatives. The group does not acquire, hold or issue derivatives for trading purposes. The group’s management of financial risks is aimed at ensuring that net cash flows are sufficient to meet all its financial commitments as and when they fall due and to maintain the capacity to fund its forecast project development and exploration strategy by: • Safeguarding the group’s core earnings stream from its major asset through the effective control and management of financial risk.

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

29. Financial instruments (continued) • Effective and efficient usage of credit facilities through the adoption of reliable liquidity management planning and procedures. • Ensuring that investment and hedging transactions are undertaken with creditworthy counterparts. The Executive Chairman and Chief Financial Officer are responsible for the management of the group’s financial risks within Board approved directives. The group holds the following financial instruments:

Group 2010 2009 2008 $$$ Financial assets Cash and cash equivalents ...... 85,525,391 20,529,979 154,810 Trade and other receivables ...... 4,160,718 677,183 1,758,073 Securities available for sale ...... 524,230 348,974 1,185,074 Derivative assets ...... — 2,711,759 3,801,067 90,210,339 24,267,895 6,908,024 Financial liabilities Trade and other payables ...... 44,031,998 18,133,857 11,798,343 Borrowings ...... 6,237,790 5,940,368 11,301,041 Derivative liabilities ...... — 15,946,935 25,883,581 50,269,788 40,021,160 48,982,965

The sensitivity analyses presented in the following notes are based on changes in underlying prices or rates that the group considered to be reasonably possible at the end of the reporting period.

(a) Market risk (i) Gold price risk Gold price risk is the risk that fluctuations in the price of gold will have an adverse effect on current or future earnings. The group may use derivative financial instruments to hedge some of its exposure to fluctuations in gold prices. In order to protect against the impact of falling gold prices, the group enters into hedging transactions which provide a minimum price to cover non-discretionary operating expenses, repayments due under the group’s financing facilities and sustaining capital. The majority of the group’s forecast production is unhedged, allowing it to take advantage of increases in gold prices. Prior to 26 February 2010 call and put options were used by the group to manage the gold price risk. On 26 February 2010 the group terminated its gold hedging facilities and in the period from 26 February 2010 to 30 June 2010 has maintained an unhedged position in relation to gold price risk. As the group did not have any hedging in place as at 30 June 2010 it was fully exposed to gold price risk. The marked to market value of all derivatives making up the hedge position as at 30 June 2010 was $nil (2009: loss of $16,400,466).

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

29. Financial instruments (continued) The group had nil net forward pricing commitments outstanding against future production as at 30 June 2010. As at 30 June 2009 and 2008 the group had net forward pricing commitments outstanding against future production as follows:

2009

Less than 1 to 2 2 to 3 3 to 4 1 year years years years Total Put options (US Dollar / Gold) Amount (ounces) ...... 39,748 20,154 — — 59,902 US$/oz ...... US$700 US$700 — — US$700 Call options (US Dollar / Gold) Amount (ounces) ...... 34,429 20,154 — — 54,583 US$/oz ...... US$700 US$700 — — US$700

2008

Less than 1 to 2 2 to 3 3 to 4 1 year years years years Total Put options (US Dollar / Gold) Amount (ounces) ...... 45,442 39,748 37,934 18,180 141,304 US$/oz ...... US$700 US$700 US$700 US$700 US$700 Call options (US Dollar / Gold) Amount (ounces) ...... 27,270 23,850 22,754 10,908 84,792 US$/oz ...... US$700 US$700 US$700 US$700 US$700 Based on the financial instruments held by the group as at 30 June 2010, had the United States dollar gold price weakened / strengthened by 10% with all other variables held constant, equity would have been $nil higher / lower and the group loss $nil higher / lower (2009: equity $2,803,043 higher / $1,868,696 lower, 2008: equity $8,918,000 higher / $8,628,152 lower). The balance of the gold hedging reserve as at 30 June 2010 represents the realised loss on hedging instruments that were terminated prior to their maturity. The loss will be amortised over the remaining life of the instruments and is not impacted by changes in the gold price. In the current period variations in the gold price impact group loss after tax due to some of the entity’s options being classified as ineffective for hedge accounting purposes following a restructuring of the entity’s hedge book during the period.

(ii) Foreign exchange risk Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the group’s functional currency. The group operates internationally and is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the Papua New Guinea Kina, the United States Dollar, the Solomon Island Dollar and the British Pound. No material programs for hedging foreign exchange risk were implemented by the group in the

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

29. Financial instruments (continued) 2010 or 2009 financial years. The group’s exposure to foreign currency risk at the reporting date was as follows:

30 June 2010

USD PGK SBD GBP $$$$ Financial assets Cash and cash equivalents ...... 11,742,806 1,903,230 87,584 402,308 Trade and other receivables ...... 1,919,810 292,158 21,293 13,662,616 2,195,388 108,877 402,308 Financial liabilities Trade and other payables ...... 1,385,575 2,710,887 776,980 16,235 Borrowings ...... — 3,462,238 — — 1,385,575 6,173,125 776,980 16,235

30 June 2009

USD PGK SBD GBP $$$$ Financial assets Cash and cash equivalents ...... 3,928,292 554,906 — — Trade and other receivables ...... 558,351 117,872 — — Derivative assets ...... 2,711,759 — — — 7,198,402 672,778 — — Financial liabilities Trade and other payables ...... 1,920,071 9,356,717 — — Borrowings ...... — 2,100,554 — — Derivative liabilities ...... 15,946,935 — — — 17,867,006 11,457,271 — —

30 June 2008

USD PGK SBD GBP $$$$ Financial assets Cash and cash equivalents ...... (173,408) 105,567 — — Trade and other receivables ...... 1,406,302 — — — Derivative assets ...... 3,810,067 — — — 5,042,961 105,567 — — Financial liabilities Trade and other payables ...... — 825,704 — — Borrowings ...... 11,301,041 — — — Derivative liabilities ...... 25,883,581 — — — 37,184,622 825,704 — —

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

29. Financial instruments (continued) Based on the financial instruments held by the group as at the reporting date, the sensitivity of the group’s profit after tax for the year and equity at the reporting date to movements in the Australian dollar to US dollar and Australian dollar to PNG Kina exchange rates was: • Had the Australian dollar weakened / strengthened by 5% against the US dollar with all other variables remaining constant, the group’s profit after tax would have been $613,852 lower / higher (2009: $128,328 lower / higher, 2008: $503,407 lower / higher) and equity would have been $nil lower / higher (2009: $661,758, 2008: $1,103,676 lower / higher). • Had the Australian dollar weakened / strengthened by 5% against the PNG Kina with all other variables remaining constant, the group’s profit after tax would have been $198,889 lower / higher (2009: $539,225 lower / higher, 2008: $36,007 lower / higher). • Had the Australian dollar weakened / strengthened by 5% against the Solomon Island dollar with all other variables remaining constant, the group’s profit after tax would have been $33,405 lower / higher (2009 and 2008: $nil lower / higher). • Had the Australian dollar weakened / strengthened by 5% against the British pound with all other variables remaining constant, the group’s profit after tax would have been $19,304 lower / higher (2009 and 2008: $nil lower / higher).

(iii) Interest rate risk The group’s main interest rate risk arises from variable rate interest rates on cash and cash equivalents. No hedging programs were implemented by the group to manage interest rate risk during the 2010 or 2009 reporting periods. As at the reporting date, the group had the following exposures to interest rate risk:

30 June 2010 30 June 2009 30 June 2008 Weighted Weighted Weighted average average average interest interest interest rate Balance rate Balance rate Balance %$%$%$ Financial assets Cash and cash equivalents . . . 3.5% 85,525,391 3.5% 20,529,979 2.71% 154,180 All interest rates were floating rates. Interest rates on the borrowings are repriced quarterly. At 30 June 2010, if interest rates had changed by +/ǁ 50 basis points from the year end rates per the above table with all other variables held constant, profit for the year would have been $427,627 higher / lower (2009: change of +/ǁ 50 basis points—$102,650 higher / lower, 2008: change of +/ǁ 50 basis points—$63,290 higher / lower).

(iv) Equity price risk The group and the Company are exposed to equity securities price risk arising from investments classified on the statement of financial position as available for sale. Investments in equity securities are approved by the Board on a case-by-case basis. The majority of the group’s and the Company’s available for sale equity investments are in junior resource companies listed on the ASX and are included in the S&P/ASX All Ordinaries Gold index. At 30 June 2010, if the index had changed by +/ǁ 5% from its year end level with all other variables held constant, group equity at 30 June 2010 would have been $26,200 higher / lower (2009: change of +/ǁ 5%—$17,400 higher / lower, 2008: change of +/ǁ 5%—$59,285 higher / lower).

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

29. Financial instruments (continued) (b) Credit risk Credit risk is the risk that a counterparty will not complete its obligations under a financial instrument resulting in a financial loss for the group. Credit risk is managed at the group level. The group does not generally obtain collateral or other security to support financial instruments subject to credit risk, but adopts a policy of only dealing with credit worthy counterparties. Trade and other receivables mainly comprise banking institutions purchasing gold under normal settlement terms of two working days. Counterparty risk under derivative financial instruments is to two reputable banking institutions All cash balances are on deposit with the banking institutions that are members of a highly rated major Australian banking group. The carrying amount of financial assets recorded in the financial statements represents the group’s maximum exposure to credit risk without taking account of the value of any collateral or other security obtained.

(c) Liquidity risk The group’s liquidity position is managed to ensure sufficient liquid funds are available to meet its financial obligations in a timely manner. The group manages liquidity risk by continuously monitoring forecast and actual cash flows and ensuring that the group has the ability to access required funding. The tables below analyse the group’s financial liabilities, net settled derivative financial instruments into relevant maturity groupings based on the remaining period to contractual maturity at the reporting date:

Group entity as at 30 June 2010

Less than 6 to 12 Between 1 Between 2 Carrying 6 months months and 2 years and 5 years Total amount $$$$$ $ Trade and other payables ...... 44,032,012 — — — 44,032,012 44,032,012 Borrowings ...... 3,397,939 1,184,875 1,820,486 447,847 6,851,147 6,237,791 Total ...... 47,429,951 1,184,875 1,820,486 447,847 50,883,159 50,269,803

Group entity as at 30 June 2009

Less than 6 to 12 Between 1 Between 2 Carrying 6 months months and 2 years and 5 years Total amount $$$$$ $ Non derivatives Trade and other payables ...... 18,133,857 — — — 18,133,857 18,133,157 Borrowings ...... 3,616,126 3,408,592 2,669,268 185,708 9,879,694 5,940,368 Total non derivatives . 21,749,983 3,408,592 2,669,268 185,708 28,013,551 24,073,525 Derivatives Net settled—outflows . 4,656,493 5,778,864 6,108,635 — 16,543,992 15,946,935 Total derivatives .... 4,656,493 5,778,864 6,108,635 — 16,543,992 15,946,935

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

29. Financial instruments (continued) Group entity as at 30 June 2008

Less than 6 to 12 Between 1 Between 2 Carrying 6 months months and 2 years and 5 years Total amount $$$$$$ Non derivatives Trade and other payables ...... 11,798,343 — — — 11,798,343 11,798,343 Borrowings ...... 6,473,168 2,088,118 2,739,755 — 11,301,041 11,301,041 Total non derivatives ..... 18,271,511 2,088,118 2,739,755 — 23,099,384 23,099,384 Derivatives Gross settled— outflows ...... 3,391,107 3,093,850 5,671,661 8,007,386 20,164,004 22,073,514 Total derivatives ... 3,391,107 3,093,850 5,671,661 8,007,386 20,164,004 22,073,514

30. Business combination (a) Summary of business combination On 24 November 2009, Allied Gold Limited obtained control of Australian Solomons Gold Limited (‘‘ASG’’), the owner of the Gold Ridge gold project in the Solomon Islands. As at 30 June 2010 ASG was wholly owned by Allied Gold Limited. The acquisition was undertaken to diversify the Group’s asset base and to increase its gold production capacity in the South Pacific region. ASG contributed revenues of $Nil and a net loss of $1,571,144 to the Group for the period from 1 December 2009 to 30 June 2010. Had the acquisition occurred on 1 July 2009, the effect would have been to increase revenues by $91,270 and increase the net loss by $2,647,865. Details of the purchase consideration are as follows:

$ Consideration paid by the Company—Issue of 110,339,866 shares of Allied Gold Limited to acquire shares in controlled entity ...... 41,929,149

The value of the Allied Gold Limited shares issued as consideration for the purchase of shares in the controlled entity was determined using the market value of Allied Gold Limited shares at 24 November 2009 of $0.38 per share.

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

30. Business combination (continued) (b) Assets and liabilities acquired The table below summarise the assets and liabilities recognised as result of the business combination:

Acquisition fair value $ Cash ...... 3,573,926 Trade and other receivables ...... 5,568 Inventories ...... 16,495 Property, plant and equipment ...... 67,160,516 Rehabilitation asset ...... 3,738,824 Mining rights ...... 15,117,000 Trade payables ...... (1,205,102) Provision for employee benefits ...... (243,490) Provision for environmental remediation ...... (4,679,737) Net assets acquired ...... 83,484,000

The fair value of acquired receivables is $5,568. The gross contractual amount for trade receivables due is $255,035 of which $249,467 is considered to be uncollectible.

(c) Direct acquisition costs Acquisition related costs of $1,717,914 are included in other expenses in profit or loss and in operating cash flows in the statement of cash flows.

(c) Bargain purchase A gain on consolidation or bargain purchase was recognised in profit or loss as a result of the acquisition as follows:

$ Consideration paid by the Company ...... 41,929,149 Less value of net assets acquired ...... (83,484,000) Gross gain on consolidation ...... (41,554,851) Less impairment loss on shares held in acquiree prior to gaining control ...... 4,888,065 Gain on consolidation recognised in profit or loss ...... 36,666,786

The above table presents information on the basis that the Group acquired 100% of the acquiree within the financial year. At the time of obtaining control there existed a non controlling interest with a fair value of $1,290,667. The non controlling interest was acquired during the period by the company in exchange for shares in Allied Gold Limited at with a fair value of $1,290,667.

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

31. Group entities

Class of Place of Equity Holding share Incorporation 2010 2009 2008 %%% Company or parent entity Allied Gold Limited ...... Australia — — — Subsidiaries Australian Solomons Gold Limited ...... Ord Australia 100 — — AGL (SGC) Pty Ltd ...... Ord Australia 100 — — AGL (ASG) Pty Ltd ...... Ord Australia 100 — — Allied Gold Finance Pty Ltd ...... Ord Australia 100 — — Allied Gold Services Pty Ltd ...... Ord Australia 100 — — Allied Tabar Exploration Pty Ltd ...... Ord Australia 100 100 100 Advance R & D Pty Ltd ...... Ord Australia 100 100 100 Aretrend Pty Ltd ...... Ord Australia 100 100 100 ASG Solomon Islands Limited ...... Ord Solomon Islands 100 — — Compania Minera Nord Pacific de Mexico, S.A. de C.V. . Ord Mexico 100 100 100 Gold Ridge Mining Limited ...... Ord Solomon Islands 100 — — Hicor Corporation ...... Ord United States 100 100 100 JV Mine (Australia) Pty Ltd ...... Ord Australia 100 — — Nord Australex Nominees (PNG) Ltd ...... Ord PNG 100 100 100 Nord Australex Nominees Pty Ltd ...... Ord Australia 100 100 100 Nord Pacific Ltd ...... Ord Canada 100 100 100 Simberi Gold Company Limited ...... Ord PNG 100 100 100 Solomon Islands International Pty Ltd ...... Ord Australia 100 — — Tabar Exploration Company Ltd ...... Ord PNG 100 100 100

32. Commitments and contingent liabilities (a) Lease commitments—Group entity as lessee Non-cancellable operating leases The group leases office premises and various plant and machinery under non-cancellable operating leases expiring within 1 to 5 years. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.

Group 2010 2009 2008 $$$ Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows: Within one year ...... 2,129,368 2,129,368 3,201,727 Later than one year but not later than five years ...... — 2,129,368 4,450,026 2,129,368 4,258,736 7,651,753

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

32. Commitments and contingent liabilities (continued) Finance leases

Group 2010 2009 2008 $$$ Commitments in relation to finance leases are payable as follows: Within one year ...... 2,008,318 4,559,600 — Later than one but not later than five years ...... 1,896,669 5,320,408 — Minimum lease payments ...... 3,904,987 9,880,008 — Future finance charges ...... 442,748 3,939,640 — Recognised as a liability ...... 3,462,239 5,940,368 — Representing lease liabilities: Current ...... 1,706,419 2,094,483 — Non-current ...... 1,755,820 3,845,885 — 3,462,239 5,940,368 — Finance charges included in profit and loss as financing costs . 2,278,099 2,266,410 —

(b) Exploration & Development costs—Commitments for Expenditure. In order to proceed with the development of the Simberi Project and to maintain current rights of tenure to PNG exploration tenements, the group is required to outlay $900,900 over the next financial year (2009: $900,900,2008: $900,900). Financial commitments for subsequent periods are contingent upon future exploration results and cannot be estimated. These obligations are subject to renegotiation upon expiry of the exploration leases or when application for a mining licence is made and have not been provided for in the accounts. These obligations are not provided for in the financial statements.

(c) Capital commitments Capital expenditure contracted for at the reporting date but not recognised in liabilities is as follows:

Group 2010 2009 2008 $$$ Capital expenditure for redevelopment of Gold Ridge Project . 65,774,434 — — Capital expenditure for Simberi Oxide processing plant ..... 232,388 1,412,811 — Capital expenditure for Sulphide pre-feasibility study ...... 153,090 644,760 —

(d) Hedging commitments As disclosed in note 29, in the prior year a subsidiary had entered into commitments under a program for hedging its exposure to gold price risk. Details relating to these commitments are disclosed in note 29.

(e) Contingent liabilities

2010 2009 2008 $$$ Executives of the group will be entitled to compensation for past services if their employment is terminated by the group other than for specific reasons as outlined in their employment contracts. This amounts to: ...... 1,874,730 656,000 962,500

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Allied Gold Limited Notes to the financial statements (continued) 30 June 2010, 2009 and 2008

32. Commitments and contingent liabilities (continued) (f) Legal action In December 2009, Simberi Gold Company initiated legal proceedings against Intermet Engineers (Pty) Ltd (‘‘Intermet’’) and a director of Intermet in respect of breaches of contract entered into between the controlled entity and Intermet whereby Intermet were contracted to design, procure and manage the construction of gold processing and related facilities for the Simberi Oxide Gold Project. Under the legal action, the controlled entity is claiming damages of not less than $40 million. Intermet have advised that they will defend the claim and have indicated that they will make a counter claim for an amount of $1.2 million for outstanding monies due from the controlled entity under the contract. This amount has been fully accrued as a liability by the controlled entity pending the outcome of the litigation.

33. Subsequent events The following events have arisen in the period between 30 June 2010 and the date of preparation of these financial statements: • In September 2010, the Group drew down USD35 million under the financing agreement with the International Finance Corporation (refer note 19). In December 201 the Group drew down $15.8 in borrowings under a financing facility provided by BSP. In March 2011 commissioning of the Gold Ridge project was commenced. • On 6 April 2011, the Company announced that it had raised $93.8 million in equity proceeds through a private placement to sophisticated investors. • On 6 June 2011 the shareholders and options holders approved a scheme whereby the Company, intends to transfer its domicile from Australia to the United Kingdom (‘‘UK’’) via a scheme of arrangement under which Allied Gold Mining PLC, a new company incorporated in England and Wales, will become the holding company of Allied Gold and its controlled entities (the ‘‘Share Scheme’’). Under the Scheme, Allied Gold Mining PLC intends to acquire all of the Allied Gold shares on issue, and as consideration, will issue one (1) share in Allied Gold Mining PLC for each six (6) shares held in Allied Gold. Under a separate scheme of arrangement (the ‘‘Option Scheme’’), Allied Gold Mining PLC is to acquire all of the Allied Gold options on issue, and as consideration, will issue one (1) option in Allied Gold Mining PLC for each six (6) options held in Allied Gold. The terms of the options issued by Allied Gold Mining PLC will effectively be the same as the Allied Gold options, adjusted for the consolidation of the number of options being offered. It is intended that the Schemes will become effective on 30 June 2011, at which time all, the shareholders and optionholders of Allied Gold will effectively become the shareholders and optionholders of Allied Gold Mining PLC and Allied Gold and its controlled entities will become wholly owned subsidiaries of Allied Gold Mining PLC. Allied Gold shareholders will effectively hold the same percentage interest in Allied Gold Mining PLC as they did in Allied Gold and Allied Gold optionholders will have the same relative interest in Allied Gold Mining PLC on a fully diluted basis. Other than the items noted above, raising of these equity proceeds, no matter or circumstance has arisen since 30 June 2010 that has significantly affected, or may significantly affect: a. the Group’s operations in future financial periods, or b. the results of those operations in future financial periods, or c. the Group’s state of affairs in future financial periods.

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SECTION B—FINANCIAL STATEMENTS FOR SIX MONTHS ENDED 31 DECEMBER 2010

38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 15JUN201118584109 Australia

To the Directors of Allied Gold Mining PLC

Report on the Half-Year Financial Report We have audited the accompanying half-year financial report of Allied Gold Limited, which comprises the consolidated statement of financial position as at 31 December 2010, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the half-year then ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the disclosing entity and the entities it controlled at the year’s end or from time to time during the half-year.

Directors’ Responsibility for the Half-Year Financial Report The directors of the disclosing entity are responsible for the preparation of the financial report that gives a true and fair view in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations as adopted by the European Union and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error.

Independence In conducting our audit, we have complied with the independence requirements of the IFAC Code of Ethics for Professional Accountants.

Opinion In our opinion the financial report of Allied Gold Limited: (i) gives a true and fair view of the consolidated entity’s financial position as at 31 December 2010 and of its performance for the half-year ended on that date; and (ii) complies with International Financial Reporting Standards (IFRS) and IFRIC Interpretations as adopted by the European Union.

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BDO Audit (WA) Pty Ltd

Peter Toll Director

Perth, Western Australia Dated this 17th day of June 2011

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Allied Gold Limited Consolidated Statement of Comprehensive Income For the half-year ended 31 December 2010

Half-Year Half-Year Ended Ended 31 December, 31 December, Note 2010 2009 $$ (unaudited) Revenue ...... 6 40,942,585 33,141,171 Cost of sales ...... 7 (32,574,869) (38,150,819) Gross profit / (loss) ...... 8,367,716 (5,009,648) Unrealised losses on derivatives ...... — (812,476) Corporate expenses ...... (4,950,553) (8,002,387) Share based remuneration ...... 27 1,252,500 (6,819,755) Foreign exchange gain / (loss) ...... 444,063 (112,698) Financial income ...... 6 4,776,722 180,483 Financial costs ...... (501,456) (1,839,198) Profit / (loss) before tax ...... 9,388,992 (22,415,679) Income tax benefit / (expense) ...... 9 — — Profit / (loss) after tax attributable to owners of Allied Gold Limited ...... 9,388,992 (22,415,679) Other comprehensive income / (loss) Changes in the fair value of available for sale financial assets . . . 543,795 250,914 Changes in the fair value of cash flow hedges—gross ...... — (5,774,881) Transfers to income statement from cash flow hedging reserve— gross ...... 5,437,338 4,917,149 Exchange differences on translation of foreign operations ..... — 1,141,391 Other comprehensive income / (loss) for the half-year ...... 5,981,133 534,573 Total comprehensive income / (loss) for the half-year ...... 15,370,125 (21,881,106) Profit / (loss) for the half-year is attributable to: Owners of Allied Gold Limited ...... 9,388,992 (22,402,708) Non-controlling interest ...... — (12,971) 9,388,992 (22,415,679) Total comprehensive income / (loss) for the half-year is attributable to: Owners of Allied Gold Limited ...... 15,370,125 (21,829,665) Non-controlling interest ...... — (51,441) 15,370,125 (21,881,106) Profit / (loss) per share for loss attributable to the ordinary equity holders of Allied Gold Limited Basic earnings per share (cents) ...... 23 0.90 (4.24) Diluted earnings per share (cents) ...... 23 0.89 (4.24)

The accompanying notes are an integral part of these interim consolidated financial statements.

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Allied Gold Limited Consolidated Statement of Financial Position As at 31 December 2010

31 December 31 December Note 2010 2009 $$ (unaudited) CURRENT ASSETS Cash and cash equivalents ...... 28(a) 36,486,444 157,241,528 Trade and other receivables ...... 10 4,099,013 1,714,620 Derivative financial instruments ...... 12 — 814,922 Inventories ...... 11 21,328,397 11,342,679 Other assets ...... 14 1,492,322 779,193 Total Current Assets ...... 63,406,176 171,892,942 NON-CURRENT ASSETS Available for sale financial assets ...... 13 1,068,024 599,888 Property, plant and equipment ...... 15 375,679,424 152,474,075 Exploration and evaluation expenditure ...... 16 25,421,216 59,914,705 Total Non-Current Assets ...... 402,168,664 212,988,668 Total Assets ...... 465,574,840 384,881,610 CURRENT LIABILITIES Trade and other payables ...... 18 14,379,497 19,322,670 Borrowings ...... 19 11,517,869 3,500,278 Derivative financial instruments ...... 12 — 15,720,395 Provisions ...... 20 1,170,332 868,260 Total Current Liabilities ...... 27,067,698 39,411,603 NON-CURRENT LIABILITIES Borrowings ...... 19 42,866,750 4,503,354 Provisions ...... 20 9,799,544 7,776,299 Total Non-Current Liabilities ...... 52,666,294 12,279,653 Total Liabilities ...... 79,733,992 51,691,256 NET ASSETS ...... 385,840,848 333,190,354 EQUITY Issued capital ...... 21 370,183,255 369,910,902 Reserves ...... 22 21,828,055 8,526,171 Accumulated losses ...... 22 (6,170,462) (46,673,099) Total equity ...... 385,840,848 331,763,974 Non controlling interests ...... — 1,426,380 TOTAL EQUITY ATTRIBUTABLE TO OWNERS OF ALLIED GOLD LIMITED ...... 385,840,848 333,190,354

The accompanying notes are an integral part of these interim consolidated financial statements. All references to ‘‘$’’ in these financial statements are to Australian dollars.

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Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: EI11601A.;14 MERRILL CORPORATION PHARDIM//16-JUN-11 04:30 DISK106:[11ZBG1.11ZBG11601]EI11601A.;14 mrll_0909.fmt Free: 7080DM/0D Foot: 0D/ 0D VJ RSeq: 2 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 19735 1,374,939 1,374,939 4,917,149 4,917,149 — 4,917,149 (5,774,881) (5,774,881) — (5,774,881) 250,914 — 250,914 — 250,914 Available Attributable 1,141,391 — — 1,141,391 38,470 1,179,861 based exchange investments Cash Flow Non- Equity Holders Share- Foreign for sale to Ordinary 6,792,058 — — — 6,792,058 — 6,792,058 (unaudited) (22,415,679) — — — — (22,415,679) 12,971 (22,402,708) Allied Allied Gold Limited (24569 111315,1 8772(18116 51,441(21,829,665) (857,732)(21,881,106) —1,141,391250,914 —(22,415,679) $$$$$$$$$ 157,500 — — — — — 157,500 — 157,500 Issued Accumulated payments translation revaluation Hedging Controlling of Allied Gold Capital Losses reserve reserve reserve Reserve Total Interest Limited Total (9,251,893) — — — — — (9,251,893) — (9,251,893) 205,906,932 — — — — — 205,906,932 — 205,906,932 173,098,363 (24,257,420) 9,776,417 (644,628) 136,389 (8,068,638) 150,040,483 — 150,040,483 196,812,539369,910,902 (46,673,099) 16,568,475 496,763 — 387,303 6,792,058 (8,926,370) 331,763,974 1,426,380 333,190,354 — — — 203,604,597 1,374,939 204,979,536 For For the half-year ended 31 2009 December, ...... — — — — Consolidated Consolidated Statement of Changes in Equity (continued) ...... — — — ...... — — — — — All references to ‘‘$’’ in these financial statements are to Australian dollars. The accompanying notes are an integral part of these interim consolidated financial statements...... — — — — — ...... — — — — — — — ...... — — ...... — ...... At 31 December 2009 At 1 July 2009 comprehensive Total income for the period Loss for the period Changes in the fair value of available for sale financial assets Changes in the fair value of cash flow hedges—gross Transfers to net profit—gross Exchange differences on translation of foreign operations with Transactions equity holders in their capacity as equity holders Acquisition of Subsidiary Ordinary shares issued Costs of equity raising Share based payments Conversion of options

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Allied Gold Limited Consolidated Statement of Cash Flows For the half-year ended 31 December, 2010

Half-Year Half-Year Ended Ended 31 December 31 December 2010 2009 $$ (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers ...... 46,524,256 33,166,504 Payments to suppliers & employees ...... (36,142,541) (42,260,483) Interest received ...... 694,094 178,099 Interest paid ...... (3,219,275) (17,351) Net cash from / (used in) operating activities ...... 7,856,534 (8,933,231)

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of plant & equipment ...... (98,088,171) (7,201,607) Development expenditure ...... (3,520,723) (2,014,792) Exploration and evaluation expenditure ...... (1,709,955) (950,364) Cash acquired on acquisition of controlled entity ...... — 3,573,927 Net cash used in investing activities ...... (103,318,849) (6,592,836)

CASH FLOWS FROM FINANCING ACTIVTIES Proceeds from equity placements ...... — 159,545,451 Costs of issuing securities ...... — (9,251,893) Proceeds from exercising options ...... 658,072 — Finance lease payments ...... (948,576) (2,534,784) Proceeds from borrowings ...... 53,772,845 3,332,823 Repayments of borrowings ...... (7,045,139) — Net cash from financing activities ...... 46,437,202 151,091,597

Net (decrease) / increase in cash held ...... (49,025,113) 135,565,530 Cash at beginning of the half-year ...... 85,525,391 20,529,979 Effects of exchange rate changes on the balance of cash and cash equivalents ...... (13,834) 1,146,019 Cash and cash equivalents at end of the half-year ...... 36,486,444 157,241,528

The accompanying notes are an integral part of these interim consolidated financial statements. All references to ‘‘$’’ in these financial statements are to Australian dollars.

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Allied Gold Limited Notes to the Consolidated Financial Statements For the half-year ended 31 December 2010

1. Reporting entity Allied Gold Limited (‘‘the Company’’) is a listed public company, incorporated and domiciled in Australia. These financial statements represent the group financial statements of the group consisting of Allied Gold Limited and its subsidiaries (‘‘Group’’). Allied Gold is a gold production company whose shares are listed on the Toronto Stock Exchange (‘‘TSX’’) under the symbol ‘‘ALG’’, on the Australian Securities Exchange under the symbol ‘‘ALD’’ and traded on AIM, a market operated by the London Stock Exchange Plc under the symbol ‘‘AGLD’’. Allied Gold’s business is gold exploration and mining. Its major assets are its 100% owned Simberi gold project (the ‘‘Simberi Project’’), which is located on Simberi Island, the northernmost island of the Tabar Islands Group, in the New Ireland Province of eastern PNG and its 100% interest in Australian Solomons Gold Limited (‘‘ASG’’) which owns the Gold Ridge Gold Project (‘‘Gold Ridge’’) which is located on Guadalcanal Island in the Solomon Islands. The comparative financial information for the half-year ended 31 December 2009 has been reviewed, but not audited.

2. Basis of preparation (a) Statement of compliance The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations as adopted by the European Union (EU-IFRS). These are the standards, subsequent amendments and related interpretations issued and adopted by the International Accounting Standards Board (IASB) that have been endorsed by the European Union as at 31 December 2010. The consolidated financial statements also comply with Article 4 of the EU IAS Regulation.

IFRS and IFRIC interpretations applied for the first time in the half-year ended 31 December 2010 During the half-year ended 31 December 2010 the Group has adopted the following IFRS and IFRIC interpretations for the first time: • Amendments to IFRS 2 ‘Share-Based Payment’—Group Cash-Settled Transactions. The amendments made by the IFRS to IFRS 2 confirm that an entity receiving goods or services in a group share based payment arrangement must recognise an expense for those goods or services regardless of which entity in the group settles the transaction or whether the transaction is settled in shares or cash. They also clarify how the group share-based payment arrangement should be measured, that is, whether it is measured as an equity or a cash-settled transaction. There was no impact on the group’s financial statements. • IFRS 3 ‘Business Combinations’. The IASB has issued a revised IFRS3 Business Combinations which contains the following principal amendments from the existing IFRS3 Business Combinations – The revised IFRS3 limits the choice of measuring non-controlling interests (NCI) at either fair value or the NCI’s proportionate share of the acquiree’s net identifiable assets to NCI’s that are present ownership instruments that entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation. Other components of NCI must be measured at acquisition date fair value, or as required by other Accounting Standards. There will be no impact on initial adoption as these requirements are only required to be applied prospectively. – The amendments clarify that acquiree awards that the acquirer chooses to, but is not obliged to, replace, must be accounted for in the same way as acquiree awards that the acquirer is obliged to replace. There will be no impact on initial adoption as these requirements are only required to be applied prospectively.

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Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

2. Basis of preparation (continued) – Additional guidance has been added to confirm that, where the acquiree still has outstanding share-based payment transactions, these form part of the NCI of the acquirer and are measured as follows: • If vested—at their market-based measure; and • If not vested—at their market-based measure as if acquisition date were the grant date. There was no impact on initial adoption as these requirements are only required to be applied prospectively. • IFRIC 19 ‘Extinguishing Financial Liabilities with Equity Instruments’, clarifies the accounting when an entity renegotiates the terms of its debt with the result that the liability is extinguished by the debtor issuing its own equity instruments to the creditor (debt for equity swap). It requires a gain or loss to be recognised in profit or loss which is measured as the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued. It has not had any impact on the group’s financial statements since it is retrospectively applied from the beginning of the earliest period presented (1 July 2009) and the group has not entered into any debt for equity swaps since that date. • IAS 5 Non-current Assets Held for Sale and Discontinued Operations (effective from 1 January 2010). Clarifies that disclosures required for non-current assets (or disposal groups) classified as held for sale or discontinued operations are limited to those required by IAS 5 unless: – Disclosures are specifically required for these assets by other IFRS; or – Assets and liabilities of a disposal group are not within the measurement requirements of IAS 5 and disclosures are required by other IFRS. There was no impact on the consolidated financial statements. • IAS1 Presentation of Financial Statements Clarifies that terms of a liability that could, at the option of the counterparty, result in the liability being settled by the issue of equity instruments, do not affect its classification. This means that unless the terms of such liabilities require a transfer of cash or other assets within 12 months, they do not necessarily have to be classified as current liabilities. Initial adoption of this amendment had no impact as the entity does not have any current liabilities where the counterparty has the option to have the liabilities settled by the issue of equity instruments. • IAS7 Statement of Cash Flows. Clarifies that only expenditures that result in a recognised asset in the statement of financial position are eligible for classification as cash flows from investing activities. Initial adoption of this amendment had no impact as the entity only recognises cash flows from investing activities for expenditures that result in a recognised asset in the statement of financial position. • IAS17 Leases. Land can be classified as a finance lease for very long leases where the significant risks and rewards are effectively transferred, despite there being no transfer of title. Initial adoption of this amendment had no impact as the entity has no leases for land that would qualify for classification as a finance lease. • IAS 36 Impairment of Assets. Clarifies that CGUs to which goodwill is allocated cannot be larger than an operating segment as defined in IFRS8 Operating Segments before aggregation. There was no impact as these requirements are only required to be applied prospectively to goodwill impairment calculations for periods commencing on or after 1 July 2010.

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Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

2. Basis of preparation (continued) IFRS and IFRIC interpretations issued but not effective as at 31 December 2010 At the date of preparation of these consolidated financial statements, the following IFRS and IFRIC Interpretations which have not been applied in these financial statements were in issue but not yet effective: • IFRS 9 ‘Financial Instruments’, effective for annual periods beginning on or after 1 January 2013 addresses the classification and measurement of financial assets and is likely to affect the group’s accounting for its financial assets. The standard is not applicable until 1 January 2013. The group is yet to assess its full impact. • Amendment to IAS 24 ‘Related Party Disclosures’, effective for annual periods beginning on or after 1 January 2011. The amendment removes the requirement for government-related entities to disclose details of all transactions with the government and other government-related entities and clarifies and simplifies the definition of a related party. The group will apply the amended standard from 1 July 2011. When the amendments are applied, the group will need to disclose any transactions between its subsidiaries and its associates. However, it has yet to put systems into place to capture the necessary information. It is therefore not possible to disclose the financial impact, if any, of the amendment on the related party disclosures. There are no further accounting standards issued not yet effective that will have an impact on the group.

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Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

3. Statement of significant accounting policies (continued) presently exercisable or convertible are taken into account. Subsidiaries are included in the group financial statements from the date on which control is transferred to, or acquired by the Company, until the date control ceases. The acquisition method of accounting is used to account for business combinations by the group (refer to note 3 (y)). Investments in subsidiaries are accounted for at the lower of cost less any impairment losses in the separate financial statements of the Company. A list of subsidiaries during the six months ended 31 December 2010 is presented in note 31.

Transactions eliminated on consolidation Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group. Non-controlling interests in the results and equity of subsidiaries are shown separately in the group statement of comprehensive income, statement of changes in equity and statement of financial position respectively.

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Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

3. Statement of significant accounting policies (continued) arising on translation are recognised in the profit and loss. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to Australian dollars at foreign exchange rates ruling at the dates the fair value was determined.

Group companies The results and financial position of all the group entities (none of which has the functional currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: • assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position • income and expenses are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and • all resulting exchange differences are recognised in other comprehensive income. On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, a proportionate share of such exchange differences is reclassified to profit or loss, as part of the gain or loss on sale where applicable. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entities and translated at the closing rate.

(c) Revenue Sales are recognised as revenue only when there has been a passing of title and risk to the customer, and: • the product is in a form suitable for delivery and no further processing is required by, or on behalf of, the group; • the quantity and grade of the product can be determined with reasonable accuracy; • the product has been dispatched to the customer and is no longer under the physical control of the group (or property in the product has earlier passed to the customer); • the selling price can be measured reliably; • it is probable that the economic benefits associated with the transaction will flow to the group; and • the costs incurred or to be incurred in respect of the transaction can be measured reliably. Sales revenue represents the gross proceeds receivable from the customer.

(d) Financing income Financing income represents interest income which is recognised in the profit and loss as it accrues, using the effective interest method. Financing costs are calculated using the effective interest method and include interest, amortisation of discounts or premiums relating to borrowings and amortisation of ancillary costs incurred in connection with arrangement of borrowings and foreign exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.

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Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

3. Statement of significant accounting policies (continued) Financing costs are expensed as incurred unless they relate to qualifying assets. Qualifying assets are assets which take a substantial period of time to get ready for their intended use or sale. Where funds are borrowed specifically for the acquisition, construction or production of a qualifying asset, the amount of borrowing costs capitalised is the amount incurred in relation to that borrowing, net of any interest earned on those borrowings. Where funds are borrowed generally, borrowing costs are capitalised using a weighted average capitalisation rate.

(e) Income Tax Income tax on profit or loss for the six months comprises current and deferred tax. Income tax is recognised in the profit and loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax paid or payable on the taxable income for the six months, using tax rates enacted or substantially enacted at the statement of financial position date, and any adjustment to tax paid or payable in respect of previous six months. Deferred tax is provided using the statement of financial position liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit and does not arise in a business combination, nor differences relating to investments in subsidiaries where the Company is able to control the reversal of temporary differences and it is probable that the differences will not reverse in the foreseeable future. The amount of deferred tax provided is determined using tax rates enacted or substantively enacted at the statement of financial position date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend. The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions or deductibility imposed by the law.

(f) Non-derivative financial assets Non-derivative financial instruments comprise investments in equity securities, trade and other receivables and cash and cash equivalents. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date. The classification depends on the purpose for which the financial assets were acquired or executed. Non-derivative financial assets are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition non derivative financial instruments are measured as described below.

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Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

3. Statement of significant accounting policies (continued) Available-for-sale financial assets The group’s investments in equity securities are classified as available-for sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses (refer accounting policy 3(m)), and foreign exchange gains and losses on available-for-sale monetary items, are recognised directly in equity. When an investment is de-recognised, the cumulative gain or loss in equity is transferred to profit or loss. Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of, or otherwise realise, the investment within twelve months of the reporting date.

Trade and other receivables Trade and other receivables are measured at amortised cost using the effective interest method, less any impairment losses (refer accounting policy 3(m)). Trade and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, unless their remaining contractual maturity is greater than twelve months after the reporting date in which case they are classified as non-current assets.

(g) Inventories Raw materials and stores, work in progress and finished goods are physically measured or estimated and valued at the lower of cost and net realisable value. Net realisable value less costs to sell is assessed annually based on the amount estimated to be obtained from sale of the item of inventory in the normal course of business, less any anticipated costs to be incurred prior to its sale. Cost is determined primarily on the basis of average costs. For processed inventories, cost is derived on an absorption costing basis. Cost comprises cost of purchasing raw materials and cost of production, including attributable mining and processing overheads.

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Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

3. Statement of significant accounting policies (continued) Non-current ore stockpile is ore which is not scheduled to be processed in the twelve months after the reporting date. The group believes the processing of these stockpiles will have a future economic benefit to the group and accordingly values these stockpiles at the lower of cost or net realisable value. Inventories of consumable supplies and spare parts expected to be used in production are valued at the lower of weighted average cost, which includes the cost of purchase as well as transportation and statutory charges, or net realisable value. Any provision for obsolescence is determined by reference to specific stock items identified.

(h) Derivatives and hedging activities Derivative instruments Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The group designates certain derivatives as either: • Hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge); or • Hedges of the cash flows of recognised assets and liabilities and highly probable forecast transactions (cash flow hedge). At the inception of the hedging transaction, the group documents the relationship between the hedging instrument and the hedged item, as well as its risk management objective and strategy for undertaking various hedge transactions. The group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been, and will continue to be, highly effective in offsetting changes in fair values or cash flows of hedged items. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is greater than twelve months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than twelve months. Trading derivatives are classified as a current asset or liability.

Fair value hedge Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the profit and loss, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The gain or loss relating to the ineffective portion is recognised in the profit and loss within other income or other expenses. The Group did not have any fair value hedges in the period covered by these Financial Statements.

Cash flow hedge The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised through other comprehensive income in the hedging reserve. The gain or loss relating to any ineffective portion is recognised immediately in the profit and loss within other income or other expenses. Amounts accumulated in equity are recognised in the profit and loss in the periods when the hedged item affects profit or loss (for instance when the forecast sale that is hedged takes place). When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a

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Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

3. Statement of significant accounting policies (continued) forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately reclassified to profit or loss.

Derivatives that do not qualify for hedge accounting Changes in the fair value of any derivative instrument that does not qualify for hedge accounting are recognised immediately in the profit and loss and are included in other income or other expenses.

(i) Exploration and evaluation expenditure Exploration and evaluation expenditure comprises costs that are directly attributable to researching and analysing existing exploration data; conducting geological studies, exploratory drilling and sampling; examining and testing extraction and treatment methods; and/or compiling prefeasibility and feasibility studies. Exploration expenditure relates to the initial search for deposits with economic potential. Evaluation expenditure arises from a detailed assessment of deposits that have been identified as having economic potential. Exploration and evaluation expenditure (including amortisation of capitalised licence costs) is charged to the profit and loss as incurred except in the following circumstances, in which case the expenditure may be capitalised: • the exploration and evaluation activity is within an area of interest for which it is expected that the expenditure will be recouped by future exploitation or sale; or • at the statement of financial position date, exploration and evaluation activity has not reached a stage which permits a reasonable assessment of the existence of commercially recoverable reserves. Capitalised exploration and evaluation expenditure considered to be tangible is recorded as a component of property, plant and equipment at cost less impairment charges. Otherwise, it is recorded as an intangible asset. As the asset is not available for use, it is not depreciated. All capitalised exploration and evaluation expenditure is monitored for indications of impairment. Where a potential impairment is indicated, assessment is performed for each area of interest in conjunction with the group of operating assets (representing a cash generating unit) to which the exploration is attributed. Exploration areas at which reserves have been discovered but that require major capital expenditure before production can begin are continually evaluated to ensure that commercial quantities of reserves exist or to ensure that additional exploration work is under way or planned. To the extent that capitalised expenditure is not expected to be recovered it is charged to the profit and loss. Cash flows associated with exploration and evaluation expenditure (comprising both amounts expensed and amounts capitalised) are classified as investing activities in the statement of cash flows.

(j) Development expenditure When proved reserves are determined and development is sanctioned, capitalised exploration and evaluation expenditure is reclassified as ‘‘Other Mineral Assets’’, and is disclosed as a component of property, plant and equipment. Development expenditure is capitalised and classified as ‘‘Other Mineral Assets’’. The asset is not depreciated until construction is completed and the asset is available for use.

(k) Property, plant and equipment Items of property, plant and equipment are stated at cost less accumulated depreciation (see below) and impairment losses (see accounting policy 3(m)). Cost includes expenditures that are directly attributable to acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, an appropriate proportion of fixed and variable overheads and capitalised borrowing costs. The cost of self-constructed assets and acquired assets include (i) the initial estimate of the time of

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Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

3. Statement of significant accounting policies (continued) installation and during the period of use, when relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and (ii) changes in the measurement of existing liabilities recognised for these costs resulting from changes in the timing or outflow of resources required to settle the obligation or from changes in the discount rate. Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment. Costs incurred on property, plant and equipment subsequent to initial acquisition are capitalised when it is probable that future economic benefits in excess of the originally assessed performance of the asset will flow to the group in future six months. Where these costs represent separate components they are accounted for as separate assets and are separately depreciated over their useful lives. Costs incurred on property, plant and equipment which do not meet the criteria for capitalisation are expensed as incurred. The cost of each item of property, plant and equipment is depreciated over its expected useful life reflecting the pattern in which the assets’ future economic benefits are expected to be consumed. For the majority of assets this is accomplished using the unit-of-production method based on estimated recoverable gold ounces contained in proved and probable ore reserves, although some assets are depreciated using a percentage based on time. Land is not depreciated. Acquired mineral rights are capitalised and classified as ‘‘Other mineral assets’’ and depreciated from commencement of production. The group’s mineral leases are of sufficient duration (or convey a legal right to renew for a sufficient duration) to enable all proven and probable reserves to be mined in accordance with current production schedules.

Straight line basis Assets within operations for which production is not expected to fluctuate significantly from one six months to another or which have a physical life shorter than the remaining mine life are depreciated on a straight line basis as follows:

Plant and equipment ...... 3 to 8.5 months Buildings ...... 8.5 months Other mineral assets ...... 3 to 8.5 months An assets’ carrying amount is written down immediately to its recoverable amount if the assets’ carrying amount is greater than its estimated recoverable amount (refer accounting policy 3(m)).

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Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

3. Statement of significant accounting policies (continued) Gains and losses on disposals are determined by comparing disposal proceeds with the carrying amount of the asset at the time of disposal. Gains and losses on disposal are included in the profit and loss.

(l) Deferred mining costs Overburden and other mine waste materials are often removed during the initial development of a mine site in order to access the mineral deposit. This activity is referred to as development stripping. The directly attributable costs (inclusive of an allocation of relevant overhead expenditure) are capitalised as development costs. Capitalisation of development stripping costs ceases, and depreciation of those capitalised costs commences, at the time that saleable materials begin to be extracted from the mine. Depreciation of capitalised development stripping costs is determined on a unit of production basis for each separate area of interest. Removal of waste material normally continues throughout the life of a mine. This activity is referred to as production stripping and commences at the time that saleable materials begin to be extracted from the mine. The costs of production stripping are charged to the profit and loss as operating costs when the ratio of waste material to ore extracted for an area of interest is expected to be constant throughout its estimated life. When the ratio of waste to ore is not expected to be constant, production stripping costs are accounted for as follows: • All costs are initially charged to the profit and loss and classified as operating costs. • When the current ratio of waste to ore is greater than the estimated life-of-mine ratio, a portion of the stripping costs (inclusive of an allocation of relevant overhead expenditure) is capitalised. • In subsequent six months when the ratio of waste to ore is less than the estimated life-of-mine ratio, a portion of capitalised stripping costs is charged to the profit and loss as operating costs. The amount of production stripping costs capitalised or charged in a financial six months is determined so that the stripping expense for the financial six months reflects the estimated life-of-mine ratio. Changes to the estimated life-of-mine ratio are accounted for prospectively from the date of the change. Capitalised development stripping costs are classified as ‘Property, plant and equipment’ and capitalised production stripping costs are classified as ‘Other mineral assets’. These assets are considered in combination with other assets of an operation for the purpose of undertaking impairment assessments.

(m) Impairment of assets The carrying amount of the group’s assets, other than inventories (see accounting policy 3(g)), and deferred tax assets (see accounting policy 3(e), are reviewed at each statement of financial position date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognised in the profit and loss unless the asset has previously been revalued, in which case the impairment loss is recognised as a reversal to the extent of that previous revaluation with any excess recognised through the profit and loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (group of units) and then, to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

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Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

3. Statement of significant accounting policies (continued) interest rate computed at initial recognition of these financial assets). Receivables with a short duration are not discounted. Impairment of receivables is not recognised until objective evidence is available that a loss event has occurred. Receivables are individually assessed for impairment. The recoverable amount of other assets is the greater of their fair value, less costs to sell, and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

Reversals of impairment An impairment loss in respect of goodwill is not reversed. An impairment loss in respect of receivables carried at amortised cost is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised. Impairment losses recognised in the profit and loss on equity instruments classified as available for sale are not reversed through the profit and loss. In respect of other assets, an impairment loss is reversed when there is an indication that the impairment may no longer exist and if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(n) Non derivative financial liabilities Trade and other payables Liabilities are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the group. Trade and other payables are initially measured at fair value and subsequently at amortised cost.

Interest bearing borrowings Interest bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the profit and loss over the period of the borrowings on an effective interest rate basis.

(o) Provisions A provision is recognised in the statement of financial position when the group has a present legal, equitable or constructive obligation as a result of a past event, and it is probable that a future sacrifice of economic benefits will be required to settle the obligation, the timing or amount of which is uncertain. If the effect is material, provisions are determined by discounting the expected future cash flows at the pre-tax rate that reflects current market assessments of the time value of money, and where appropriate, the risks specific to the activity.

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Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

3. Statement of significant accounting policies (continued) A provision for restoration and rehabilitation is recognised at the time that environmental disturbance occurs. When the extent of disturbance increases over the life of the mine site, the provision is increased accordingly. The provision recognised represents management’s best estimate of the present value of the all future costs required to restore and rehabilitate each mine site in connection with environmental disturbances that have occurred at the reporting date. Restoration and rehabilitation provisions are measured as the full amount that has been estimated based on current costs required to settle present obligations, discounted using a pre-tax discount rate, reflecting current market assessments of the time value of money.

(p) Employee benefits Wages, salaries and annual leave Liabilities for employee benefits for wages, salaries and annual leave expected to be settled within 12 months of the six months end represent present obligations resulting from employees’ services provided to the reporting date, calculated at undiscounted amounts based on remuneration wage and salary rates that the group expects to pay as at the reporting date including related on-costs.

(q) Leases Leases of property, plant and equipment where substantially all the risks and rewards of ownership are transferred to the group, as lessee, are classified as finance leases. Finance leases are capitalised at the inception of the lease at the fair value of the leased property, or if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are recorded as a liability. Each lease payment is apportioned between the liability and finance cost. The finance cost is charged to the profit and loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated in accordance with the group’s depreciation policy (refer accounting policy 3(k)). Leases in which a significant proportion of the risks and rewards of ownership are not transferred to the group as lessee are classified as operating leases. Payments under operating leases, net of any incentives received from the lessor, are charged to the profit and loss on a straight line basis over the life of the lease.

192

Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

3. Statement of significant accounting policies (continued) (r) Financial guarantee contracts Financial guarantee contracts are recognised as financial liability at the time the guarantee is issued. The liability is initially measured at fair value and subsequently at the higher of the amount determined in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less accumulated amortisation, where appropriate. The fair value of the guarantee is determined as the present value of the difference in the net cash flows between the contractual payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations.

(s) Share based payments The group provides benefits to its directors and employees in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares (‘equity- settled transactions’). Details of plans currently in place to provide these benefits are as follows: • the Employee Option Incentive Scheme (EOIS), which provides benefits to employees in the form of options to subscribe for shares subject to vesting periods; and • specific incentive arrangements for directors whereby upon achievement of a particular milestone the director will become entitled to a given number of shares or options. The cost of these equity-settled transactions with directors and employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined using a binomial model. In valuing equity-settled transactions, no account is taken of any performance conditions. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘vesting date’). The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the directors, will ultimately vest. This opinion is formed based on the best available information at the reporting date. No expense is recognised for awards that do not ultimately vest. Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of modification. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph. The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share.

(t) Earnings per share The group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of shares outstanding during the period, adjusted for bonus elements in ordinary shares issued during the six months.

193

Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

3. Statement of significant accounting policies (continued) Diluted EPS adjusts the figures used in the determination of basic EPS to take into account the after income tax effect of interest and other financing costs associated with the dilutive potential ordinary shares and the weighted average number of additional ordinary shares that would have been outstanding assuming conversion of all dilutive potential ordinary shares.

(u) Contributed equity Ordinary shares are classified as equity. Issued and paid up capital is recognised at the fair value of the consideration received by the Company. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(v) Goods and services tax Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Tax Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of expense. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the Balance Sheet. Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

(w) Segment Reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the a committee comprising the Executive Chairman and the Chief Financial Officer.

(x) Dividends Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the financial six months but not distributed at the statement of financial position date.

(y) Business Combinations The acquisition method of accounting is used to account for all business combinations, including business combinations involving entities or businesses under common control, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets. The excess of the consideration transferred, the amount of any non-controlling interest in the acquire and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the group’s share of the net identifiable assets acquired is recorded as goodwill. If those amounts are less

194

Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

3. Statement of significant accounting policies (continued) than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.

4. Critical accounting estimates and judgments The preparation of the group financial statements requires management to make judgements and estimates and form assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the Financial Statements, and the reported revenue and expenses during the periods presented therein. On an ongoing basis, management evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements and estimates on historical experience and on other various factors it believes to be reasonable under the circumstances, the results of which form the basis of the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions. The group has identified the following critical accounting policies under which significant judgements, estimates and assumptions are made and where actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods. Further details of the nature of these assumptions and conditions may be found in the relevant notes to the financial statements.

195

Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

4. Critical accounting estimates and judgments (continued) • Depreciation, depletion and amortisation charged in the profit and loss may change where such charges are determined by the units of production basis, or where the useful economic lives of assets change. • Overburden removal costs recorded on the statement of financial position or charged to the profit and loss may change due to changes in stripping ratios or the units of production basis of depreciation. • Decommissioning, site restoration and environmental provisions may change where changes in estimated reserves affect expectations about the timing or cost of these activities. • The carrying value of deferred tax assets may change due to changes in estimates of the likely recovery of the tax benefits.

Exploration and evaluation expenditure The group’s accounting policy for exploration and evaluation expenditure results in certain items of expenditure being capitalised for an area of interest where it is considered likely to be recoverable by future exploitation or sale or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves. This policy requires management to make certain estimates and assumptions as to future events and circumstances, in particular whether an economically viable extraction operation can be established. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised the expenditure under the policy, a judgement is made that recovery of the expenditure is unlikely, the relevant capitalised amount will be written off to the profit and loss.

Development expenditure Development activities commence after project sanctioning by the appropriate level of management. Judgement is applied by management in determining when a project is economically viable. In exercising this judgement, management is required to make certain estimates and assumptions similar to those described above for capitalised exploration and evaluation expenditure. Any such estimates and assumptions may change as new information becomes available. If, after having commenced the development activity, a judgement is made that a development asset is impaired, the appropriate amount will be written off to the profit and loss. The carrying value of Development Expenditure is included in Other Mineral Assets—refer note 15.

196

Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

4. Critical accounting estimates and judgments (continued) as the present value of the estimated future cash flows, but only those expected to arise from the continued use of the asset in its present form and its eventual disposal. Present values are determined using a risk-adjusted pre-tax discount rate appropriate to the risks inherent in the asset. Future cash flow estimates are based on expected production and sales volumes, commodity prices (considering current and historical prices, price trends and related factors), reserves, operating costs, restoration and rehabilitation costs and future capital expenditure. This policy requires management to make these estimates and assumptions which are subject to risk and uncertainty; hence there is a possibility that changes in circumstances will alter these projections, which may impact the recoverable amount of the assets. In such circumstances, some or all of the carrying value of the assets may be impaired and the impairment would be charged against the profit and loss. The carrying values of property, plant and equipment are disclosed in note 15.

Restoration and rehabilitation The group’s accounting policy requires the recognition of provisions for the restoration and rehabilitation of each site. The provision recognised represents management’s best estimate of the present value of the future costs required. Significant estimates and assumptions are made in determining the amount of restoration and rehabilitation provisions. Those estimates and assumptions deal with uncertainties such as: requirements of the relevant legal and regulatory framework; the magnitude of possible contamination and the timing, extent and costs of required restoration and rehabilitation activity. These uncertainties may result in future actual expenditure differing from the amounts currently provided. The provision recognised for each site is periodically reviewed and updated based on the facts and circumstances available at the time. Changes to the estimated future costs for operating sites are recognised in the statement of financial position by adjusting both the restoration and rehabilitation asset and provision. Such changes give rise to a change in future depreciation and financial charges. The carrying value of the mine rehabilitation assets is presented in note 15 and the carrying value of the provision for rehabilitation is presented in note 20.

197

Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

4. Critical accounting estimates and judgments (continued) about the application of income tax legislation. These judgements and assumptions are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred tax liabilities recognised on the statement of financial position and the amount of other tax losses and temporary differences not yet recognised. In such circumstances, some or all of the carrying amount of recognised deferred tax assets and liabilities may require adjustment, resulting in a corresponding credit or charge to the profit and loss. Information regarding income tax expense / (benefit) is provided in note 9 and information in relation to deferred tax balances is presented in note 17.

5. Segment reporting (a) Description of Segments Management has determined the operating segments based on reports reviewed by the Executive Chairman and the Chief Financial Officer that are used to monitor performance and make strategic decisions. The business is considered from both a geographic and functional perspective and has identified four reportable segments being : • Mining and processing in Papua New Guinea and the Solomon Islands. • Mineral exploration in Papua New Guinea and the Solomon Islands. Papua New Guinea consists of mining and processing and mineral exploration activities undertaken at the Simberi project. Solomon Islands consists of mineral exploration activities only as the project is not currently in production. The performance of the two geographic sectors is monitored separately. The segment information presented to the Executive Chairman and the Chief Financial Officer does not include reporting of assets and liabilities or cash flows by segment. Comparative segment information has been recognised in conformity with the requirements of IFRS 8 Operating Segments. In the prior period the segments related to the Solomon Islands were not reported on as these segments were acquired as part of the acquisition of Australian Solomons Gold Limited during the current financial six months.

198

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: EN11601A.;13 MERRILL CORPORATION PHARDIM//16-JUN-11 04:30 DISK106:[11ZBG1.11ZBG11601]EP11601A.;13 mrll_0909.fmt Free: 7080DM/0D Foot: 0D/ 0D VJ RSeq: 1 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 65292 Total Processing Exploration Total (1) unting Standards. In the Solomon Islands both Mining and Processing and Mining both Islands Solomon the In Standards. unting Exploration Total Processing Exploration Total Exploration (1) (1) Total Processing Allied Allied Gold Limited (1) For For the half-year ended 31 December 2010 Papua Papua New Guinea Solomon Islands Papua New Guinea Consolidated Solomon Islands Consolidated $$$$ $ $$$$ $$$$ $ $$$$ Notes to the Consolidated Financial Statements (continued) 8,367,716 (3,979,595) 4,388,121 (13,106,310) (514,370) (13,620,680) (4,738,594) (4,493,965) (9,232,559) Mining and Mineral Mining and MineralMining and Mineral Mining and Mineral Mining and Mineral Mining and Mineral Processing Exploration Processing Exploration Total Processing (5,009,648) (2,014,792) (7,024,440) — (1,364,790) (1,364,790) (5,009,648) (3,379,582) (8,389,230) 40,942,585 — 40,942,585 —33,141,171 — — 33,141,171 — 40,942,585 — — 40,942,585 — — 33,141,171 — 33,141,171 ...... and Mineral Exploration costs were capitalised for financial reporting in accordance with Australian Accounting Standards Revenue Sales to external customers Result Segment contribution 2010 Revenue Sales to external customers Result Segment contribution (1)Acco Australian with accordance in reporting financial for capitalised are costs exploration mineral the Guinea New Papua In 2009 (unaudited) 5. Segment reporting (continued) (b) Segment Information provided to the Executive Chairman and the Chief Financial Officer and the Board of Directors

199

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: EP11601A.;13 MERRILL CORPORATION PHARDIM//16-JUN-11 04:30 DISK106:[11ZBG1.11ZBG11601]ER11601A.;15 mrll_0909.fmt Free: 45D*/2275D Foot: 0D/ 0D VJ RSeq: 1 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 37563

Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

5. Segment reporting (continued) (c) Other segment information Reconciliations of reportable segment revenues, profit or loss, assets and liabilities and other material items

Consolidated 2010 2009 $$ (unaudited) Revenues Total Revenue for reportable segments ...... 40,942,585 33,141,171 Group Revenue ...... 40,942,585 33,141,171

The Executive Chairman and the Chief Financial Officer assess the performance of the operating segments based on a measure of contribution. This measure excludes items such as the effects of equity settled share based payments, and unrealised gains / (losses) on financial instruments. Interest income and expenditure are not allocated to segments, nor are corporate expenses as these activities are centralised.

Segment contribution ...... (9,232,559) (8,389,230) Capitalised expenditure ...... 17,600,275 3,379,583 Unrealised loss on derivatives ...... — (812,477) Corporate expenses ...... (4,950,553) (8,002,387) Share based remuneration ...... 1,252,500 (6,819,755) Foreign exchange gain / (loss) ...... 444,063 (112,698) Financial income ...... 4,776,722 180,483 Financial costs ...... (501,456) (1,839,198) Profit / (loss) from continuing operations ...... 9,388,992 (22,415,679)

6. Revenue and other income (a) Revenue

Gold Income ...... 40,880,851 33,103,319 By products ...... 61,734 37,852 40,942,585 33,141,171

(b) Other income

Net gain on disposal of property, plant and equipment ...... 35,566 — Net foreign exchange gains ...... — 1,392,927 Other ...... 47,062 167,988 82,628 1,560,915

Gain on derecognition of financial liability ...... 4,000,000 — Interest received ...... 776,772 180,483 4,776,772 180,483

200

Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

7. Cost of sales

Consolidated 2010 2009 $$ (unaudited) Cash operating costs comprise: • employee expenses ...... 4,920,530 3,684,145 • stores and other consumables ...... 6,087,098 6,652,909 • fuel, power and water ...... 5,454,344 4,292,370 • other ...... 12,298,219 14,696,723 28,760,191 29,326,147 Depreciation and amortisation charges ...... 7,964,691 6,119,493 Changes in inventories and work in progress ...... (5,071,073) 2,046,279 31,653,809 37,491,919 Royalties ...... 921,060 658,900 32,574,869 38,150,819

8. Other expenses Profit / (loss) before income tax includes the following specific expenses:

Operating lease rentals ...... 1,588,012 1,255,766 Employee benefits expense ...... 12,388,440 7,211,605 Amount capitalised ...... (5,097,291) (1,202,568) Total employee benefits expense expensed ...... 7,291,149 6,009,037 Superannuation expense included in employee benefits expense ...... 602,249 496,347 Depreciation and Amortisation Depreciation of plant and equipment ...... 8,348,970 3,637,980 Amortisation of leased assets ...... 1,116,979 1,431,390 Depreciation of development expenditure ...... 1,543,049 1,124,857 11,008,998 6,194,227 Amount capitalised ...... (2,697,131) — Total depreciation and amortisation expensed ...... 8,311,867 6,194,227

201

Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

8. Other expenses (continued)

Consolidated 2010 2009 $$ (unaudited) Finance expenses Interest and finance charges on interest bearing liabilities ...... 1,304,117 1,463,542 Unwinding of discount on provision for rehabilitation ...... 261,218 358,927 Loan establishment and management fees ...... 1,817,094 — Other ...... 61,913 16,729 3,444,342 1,839,198 Amount capitalised ...... (2,942,886) — Finance costs expensed ...... 501,456 1,839,198 Finance lease contingent rentals ...... — 1,765,852

9. Income tax expense (a) Numerical reconciliation of income tax expense to prima facie tax payable

Profit / (loss) before income tax ...... 9,388,992 (22,415,679) Prima facie tax expense / (benefit) at the Australian tax rate of 30% (2009:30%) ...... 2,816,698 (6,724,704) Tax effect of amounts which are not deductible / (taxable) in calculating taxable income: Non allowable items ...... 148,495 (1,930,246) Deferred tax assets recognised / (not recognised) ...... (2,965,193) 8,654,949 Income tax expense ...... — — Effective tax rate ...... 0% 0%

(b) Current tax liabilities

Movements in the provision for current income tax during the period were as follows: Balance at the beginning of the six months ...... — — Half-year’s income tax expense / (benefit) on loss from ordinary activities . 2,965,193 (8,654,949) Transfer to / (from) tax losses not brought to account ...... (2,965,193) 8,654,949 Balance at end of half-year ...... — —

202

Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

10. Trade and other receivables

Group 2010 2009 $$ (unaudited) Current Trade receivables ...... 2,497,156 927,333 Other receivables ...... 1,601,857 787,287 4,099,013 1,714,620

All trade and other receivables are unsecured. No receivables were past due or impaired as at 31 December 2010 (2009: $nil). The group’s exposure to financial risks including interest rate risk, market risk, currency risk and credit risk is discussed in note 29. Note 29 also presents information in relation to the fair value of financial instruments.

11. Inventories

Current Raw materials and stores ...... 5,698,294 5,063,203 Ore stockpiles ...... 8 11 Gold in circuit ...... 13,051,833 6,090,145 Finished goods ...... 2,578,262 189,320 21,328,397 11,342,679

12. Derivative financial instruments

Current assets Options—cash flow hedges ...... — 814,922 Current liabilities Options—cash flow hedges ...... — 15,720,395

The derivative financial instrument liabilities in the prior period were denominated in United States dollars and were secured by fixed and floating charge over the assets of the subsidiary that has received the loans. The hedging facilities under which these liabilities arose were terminated in the current six months and the fixed and floating charge was released by the hedge providers. The group exposure to financial risks including interest rate risk, market risk, currency risk and credit risk is discussed in note 29. Note 29 also presents information in relation to the fair value of financial instruments. The amount of realised losses on derivative financial statements included in equity as at the end of the reporting period was $5,437,338 (2009: restated unrealised losses $9,703,079).

203

Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

13. Available for sale financial assets

Group 2010 2009 $$ (unaudited) Non-current Listed equity securities—at market value ...... 1,068,024 599,888

Available for sale financial assets comprise investments in the ordinary issued capital of various entities. There are no fixed returns or fixed maturity dates. The fair value of financial assets and liabilities must be estimated for recognition and measurement. As of 1 July 2009, the group has adopted the amendment to IFRS7 Financial Instruments: Disclosures which requires disclosure of fair values by level of the fair value measurement hierarchy prescribed by IFRS7. The fair value of the group’s available for sale financial assets are determined on the basis of unadjusted quoted prices in an active market for those assets and as such fall within level 1 of the IFRS7 fair value measurement hierarchy. The group’s exposure to financial risks including interest rate risk, market risk, currency risk and credit risk is discussed in note 29. Note 29 also presents information in relation to the fair value of financial instruments.

14. Other assets

Current Prepayments ...... 1,473,525 390,481 Other ...... 18,797 388,712 1,492,322 779,193

204

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: ER11601A.;15 MERRILL CORPORATION PHARDIM//16-JUN-11 04:30 DISK106:[11ZBG1.11ZBG11601]ET11601A.;14 mrll_0909.fmt Free: 7080DM/0D Foot: 0D/ 0D VJ RSeq: 1 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 25250 Group Other Assets Mine 11,821,758 637,911 71,354,112 — 83,813,781 $$ $ $ $ $ (294,933) (6,915,650) (3,679,817) — (118,598) (11,008,998) buildings equipment assets construction asset Total Land and Plant and mineral under rehabilitation 8,500,109 117,648,469 77,330,9288,500,109 132,551,779 129,470,227 7,096,047 77,968,839 203,905,891 343,127,332 7,096,047 426,941,113 6,620,746 95,827,407 62,849,513 203,905,891 6,475,867 375,679,424 (1,584,430) (26,727,170) (11,439,509)(1,879,363) (33,642,820) (15,119,326) — (501,582) — (40,252,691) (620,180) (51,261,689) Allied Gold Limited For For the half-year ended 31 December 2010 Notes to the Consolidated Financial Statements (continued) ...... — Charge for the six months At the end of the half-year Net book value at 31 December 2010 15. plant Property, and equipment 2010 Cost At the beginning of the half-year Additions At the end of the half-year Accumulated depreciation At the beginning of the half-year

205

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: ET11601A.;14 MERRILL CORPORATION PHARDIM//16-JUN-11 04:30 DISK106:[11ZBG1.11ZBG11601]ET11601A.;14 mrll_0909.fmt Free: 7080DM/0D Foot: 0D/ 0D VJ RSeq: 2 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 12653 Group Other Assets Mine 2,117,558 2,078,739 7,403,542 — 11,599,839 $$ $$$ $ (189,293) (4,239,347) (496,596) — (62,237) (4,987,473) buildings equipment assets construction asset Total Land and Plant and mineral under rehabilitation 7,444,119 94,569,846 58,040,4677,444,119 96,687,404 9,177,221 60,119,206 2,401,339 16,580,763 171,632,992 2,401,339 183,232,831 6,139,548 76,250,839 51,521,335 16,580,763 1,981,590 152,474,075 (1,115,278) (16,197,218) (8,101,275)(1,304,571) (20,436,565) (8,597,871) — (357,512) — (25,771,283) (419,749) (30,758,756) Allied Gold Limited For For the half-year ended 31 December 2010 Notes to the Consolidated Financial Statements (continued) ...... — Charge for the six months At the end of the half-year Net book value at 31 December 2009 15. plant Property, and equipment (continued) 2009 (unaudited) Cost At the beginning of the half-year Additions At the end of the half-year Accumulated depreciation At the beginning of the half-year

206

Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

15. Property, plant and equipment (continued) (a) Leased assets Plant and equipment includes the following amounts where the Group is a lessee under a finance lease:

Group 2010 2009 $$ (unaudited) Leased equipment Cost ...... 22,681,272 10,373,958 Accumulated depreciation ...... (3,262,332) (2,996,845) Net carrying value ...... 19,418,940 7,377,113

(b) Non-current assets pledged as security Refer to note 19 for information on non-current assets pledged as security by Group entities.

16. Exploration and evaluation expenditure

Cost At the beginning of the half-year ...... 23,711,261 11,115,743 Transferred from assets under construction ...... — — Effect of changes in exchange rates ...... — 2,293,237 Additions ...... 1,709,955 — Acquired on acquisition of subsidiary ...... — 46,505,725 At the end of the half-year ...... 25,421,216 59,914,705

In November 2009, the Group acquired control of Australian Solomons Gold Limited (refer note 30). As described in note 30, at the time the consolidated financial statements for the half-year ended 31 December 2009 were prepared, the determination of the fair value of the net assets acquired was incomplete; as a consequence the acquisition was accounted for on a provisional basis in those financial statements. As part of this provisional accounting, the excess of the consideration paid over the book value of the net tangible assets acquired of $46,505,725 was classified as exploration and evaluation expenditure. This amount was subsequently adjusted as the accounting for the acquisition was funded in year ended 30 June 2010. The ultimate recoupment of capitalised exploration and evaluation expenditure is dependent on successful development and commercial exploitation, or alternatively sale of the exploration areas.

17. Deferred tax assets and liabilities (a) Unrecognised deferred tax assets Deferred tax assets have not been recognised in respect of the following items:

Deductible temporary differences ...... 9,842,304 8,713,000 Tax losses ...... 53,113,656 65,394,650 Deferred tax assets brought to account to reduce provision for deferred income tax ...... (20,909,487) (23,920,635) 42,046,473 50,187,015

All unrecognised deferred tax assets relate to items recognised in the profit and loss.

207

Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

17. Deferred tax assets and liabilities (continued) The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be applied.

(b) Provision for deferred income tax Provision for deferred income tax comprises the estimated expense at the applicable tax rate of the following items: Group 2010 2009 $$ (unaudited) Exploration and evaluation expenditure ...... 20,052,300 23,654,895 Unrealised foreign exchange differences ...... 857,187 265,740 Deferred tax assets brought to account to reduce provision for deferred income tax ...... (20,909,487) (23,920,635) ——

18. Trade and other payables

Current Trade payables ...... (11,428,015) 11,750,603 Other payables and accruals ...... 25,807,512 7,572,067 14,379,497 19,322,670

19. Borrowings

Current Interest bearing loans ...... 4,841,102 — Finance lease liabilities ...... 6,676,767 3,500,278 11,517,869 3,500,278 Non-current Interest bearing loans ...... 29,845,349 — Finance lease liabilities ...... 13,021,401 4,503,354 42,866,750 4,503,354

208

Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

19. Borrowings (continued) The carrying amount of assets pledged as security for current and non current borrowings that are subject to fixed charges were:

Group 2010 2009 $$ (unaudited) Property, plant and equipment ...... 374,221,224 151,612,365

Current assets of the group with a value of $50,454,974 that are not subject to a fixed charge are subject to a floating charge (2009: $20,526,667). The group had committed, undrawn borrowing facilities totalling $nil (2009:$nil) as at the reporting date. The group exposure to financial risks including interest rate risk, market risk, currency risk and credit risk is discussed in note 29. Note 29 also presents information in relation to the fair value of financial instruments.

20. Provisions

Current Employee entitlements ...... 1,170,332 868,260 Non-current Employee entitlements ...... — 60,448 Rehabilitation and restoration ...... 9,799,544 7,715,851 9,799,544 7,776,299

Movements in the provision for rehabilitation and restoration were as follows:

Rehabilitation and restoration Carrying amount at start of six months ...... 9,315,217 2,782,426 Acquired on acquisition of subsidiary (refer note 30) ...... — 4,679,737 Accrual of discount ...... 484,327 253,688 9,799,544 7,715,851

Provision for rehabilitation and restoration The provision for rehabilitation and restoration is based on the group’s environmental plans, in compliance with current environmental and regulatory requirements. The costs include obligations relating to reclamation, waste site closure, plant closure and other costs associated with the rehabilitation and restoration of mining and exploration sites. Full provision is made based on the net present value of the estimated cost of rehabilitating and restoring the environmental disturbance that has occurred up to the date of the Financial Statements.

209

Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

21. Contributed equity

Group 2010 2009 2010 2009 Number of Number of $ $ shares shares (unaudited) Ordinary shares ...... 1,042,206,569 1,036,712,735 370,183,255 369,910,902 Balance at 1 July ...... 1,040,132,142 472,643,276 369,525,183 173,098,363 Shares issued through capital raising ...... — 456,699,000 — 159,387,951 Shares issued on the conversion of options ...... 2,074,427 450,000 658,072 157,500 Shares issued to acquire controlled entity ...... — 106,920,459 — 46,518,981 370,183,255 379,162,795 Costs of capital raising ...... — (9,251,893) Balance at 31 December ...... 1,042,206,569 1,036,712,735 370,183,255 369,910,902

Ordinary shares entitle the holder to one vote per share and to participate in dividends and proceeds on winding up of the company in proportion to the number of and amounts paid on the shares held.

(b) Options The table below sets out the movements in options during the six months ended 31 December 2010:

Options Options outstanding outstanding Options at at 1 July Options expired or Options 31 December Exercise Price Maturity 2010 issued cancelled exercised 2010 $0.80 options ..... 31/12/2010 1,000,000 — (1,000,000) — — $1 options ...... 31/12/2010 1,000,000 — (1,000,000) — — $1.25 options ..... 31/12/2010 1,000,000 — (1,000,000) — — $1.50 options ..... 31/12/2010 1,000,000 — (1,000,000) — — $2 options ...... 31/12/2010 1,000,000 — (1,000,000) — — $0.35 options(i) .... 31/10/2011 30,012,500 — (2,362,500) (375,000) 27,275,000 $0.31 Options ..... 31/12/2010 1,699,427 — — (1,699,427) — $0.35 Options(ii) .... 31/12/2011 1,500,000 — — — 1,500,000 $0.50 Options(iii),(iv) . . 31/12/2013 37,500,000 — (7,500,000) — 30,000,000 $0.50 options(iii) .... 31/12/2013 1,175,000 — — — 1,175,000 76,886,927 — (14,862,500) (2,074,427) 59,950,000

Notes: (i) Of the 27,275,000 options expiring 31 October 2011, 8,325,000 vest upon the share price trading at $A0.70 or above on five consecutive trading days.

(ii) Of the 1,500,000 options expiring 31 December 2011, 500,000 vest upon the share price trading at $A0.70 or above on five consecutive trading days. (iii) The 31,175,000 outstanding options expiring 31 December 2013, had all vested as at 31 December 2010. (iv) 7,500,000 options were forfeited during the period as the vesting conditions were not met.

210

Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

21. Contributed equity (continued) The table below sets out the movements in options during the half-year ended 31 December 2009:

Options Options outstanding outstanding Options at at 1 July Options expired or Options 31 December Exercise Price Maturity 2009 issued cancelled exercised 2009 $0.50 options ..... 31/10/2009 180,000 — (180,000) — — $0.45 options ..... 31/12/2009 3,400,000 — (3,400,000) — — $0.80 options ..... 31/12/2010 1,000,000 — — — 1,000,000 $1 options ...... 31/12/2010 1,000,000 — — — 1,000,000 $1.25 options ..... 31/12/2010 1,000,000 — — — 1,000,000 $1.50 options ..... 31/12/2010 1,000,000 — — — 1,000,000 $2 options ...... 31/12/2010 1,000,000 — — — 1,000,000 $0.35 options(i) .... 31/10/2011 36,325,000 — (5,862,500) (450,000) 30,012,500 $0.31 Options .... 31/12/2010 1,699,427 — — — 1,699,427 $0.35 Options(ii) . . . 31/12/2011 — 1,500,000 — — 1,500,000 $0.50 Options(iii) . . . 31/12/2013 — 37,500,000 — — 37,500,000 $0.50 options ..... 31/12/2013 — 1,175,000 — — 1,175,000 46,604,427 40,175,000 (9,442,500) (450,000) 76,886,927

Notes: (v) Of the 30,012,500 options expiring 31 October 2011, 9,375,000 vest upon the share price reaching $A0.70. (vi) Of the 1,500,000 options expiring 31 December 2011, 500,000 vest upon the share price trading at or above $A0.70 on five consecutive trading days. (vii) Of the 37,500,000 options expiring 31 December 2013, 15,000,000 vest on 7 December 2010; 15,000,000 vest upon the share price trading at or above $A0.70 on five consecutive trading days and 7,500,000 vest upon Allied Gold producing 100,000 ounces of gold in the period 1 October 2009 to 31 December 2010. Each option is convertible into one ordinary share in the company when exercised. Options do not participate in dividends and do not give holders voting rights.

(c) Capital management The primary objective of managing the group’s capital is to ensure that there is sufficient capital available, in the form of debt or equity funding, to support the funding requirements of the group, including capital expenditure, in a way that optimises the cost of capital, maximises shareholders’ returns and ensures that the group remains in a sound financial position. There were no changes to the group’s overall capital management approach during the current six months. The group manages and makes adjustments to the capital structure as opportunities arise in the market place, as and when borrowings mature or as and when funding is required. This may take the form of raising equity, market or bank debt or hybrids thereof.

211

Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

22. Reserves and accumulated losses

Group 2010 2009 $$ (unaudited) Available for sale investments reserve ...... 1,047,792 387,303 Hedging reserve—cash flow hedges ...... — (8,926,370) Share based payments reserve ...... 15,352,476 16,568,475 Foreign currency translation reserve ...... 5,427,787 496,763 21,828,055 8,526,171 Accumulated losses ...... (6,170,462) (46,673,099) 15,657,593 (38,146,928)

(a) Movements Movements in the reserves and accumulated losses during the reporting period are presented in the Statement of Changes in Equity.

(b) Nature and purpose of reserves (i) Available for sale investments revaluation reserve Changes in the fair value and exchange differences arising on translation of investments classified as available for sale financial assets, are taken to the available for sale investment revaluation reserve, as disclosed in note 3(f). Amounts are recognised in profit or loss when the associated assets are sold or impaired.

(ii) Hedging reserve—cash flow hedges The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised directly in equity, as described in note 3(h). Amounts are recognised in profit or loss when the associated hedged transaction affects profit or loss.

(iv) Foreign currency translation reserve Exchange differences arising on translation of foreign subsidiaries are taken to the foreign currency translation reserve as described in note 3(b). The reserve is recognised in profit and loss when the net investment is disposed of.

23. Earnings per share

Group 2010 2009 (unaudited) Cents Cents (a) Basic earnings / (loss) per share ...... 0.90 (4.24) (b) Diluted earnings / (loss) per share ...... 0.89 (4.24)

212

Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

23. Earnings per share (continued) (c) Reconciliation of earnings used in calculating earnings / (loss) per share

Group 2010 2009 $$ (unaudited) Profit / (loss) from continuing operations ...... 9,388,992 (22,415,679) The potential ordinary shares represented by issued options would have no impact on the loss from continuing operations if exercised.

(d) Weighted average number of shares used as the denominator

Weighted average number of shares used in calculation of basic earnings / (loss) per share ...... 1,040,537,217 529,188,975 Adjustment for issued options in calculation of diluted earnings / (loss) per share ...... 1,215,850 83,561 Weighted average number of shares used in calculation of diluted earnings / (loss) per share ...... 1,041,753,067 529,272,536

(e) Information concerning the classification of securities Options issued are considered to be potential ordinary shares and have been included in the determination of diluted earnings per share to the extent to which they are dilutive. The options have not been included in the calculation of basic earnings / (loss) per share. Details relating to options are set out in note 27.

24. Auditors’ remuneration

Remuneration of the auditor of the Company: Auditing or reviewing the Financial Statements (BDO Audit (WA) Pty Ltd) ...... 89,000 44,000 Other assurance services (BDO Audit (WA) Pty Ltd) ...... 30,500 55,600 119,500 99,600 Audit or reviewing the Financial Statements of subsidiaries (KPMG Australia) . . . — 71,593

25. Related party transactions (a) Company The Company is Allied Gold Limited, a company incorporated and domiciled in Australia.

(b) Subsidiaries Interests in subsidiaries are set out in note 31.

213

Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

25. Related party transactions (continued) (d) Terms and conditions Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties, except that the loans to subsidiaries were non-interest bearing. Outstanding balances are unsecured and repayable in cash.

26. Key management personnel disclosures (a) Details of Key Management Personnel Details of key management personnel during the current and prior financial six months are set out in the Remuneration Report that is included in the Directors’ Report accompanying these financial statements. Certain key management personnel have related party relationships with third parties that transact with the Group. The table below summarises the transactions undertaken with those key management personnel and their related parties during the current and prior financial six months:

Key Management Personnel Related entity Description of transaction 2010 2009 $$ (unaudited) Mark Caruso . . . Cancello Plant Hire Pty Directors fees—cash Limited component 341,579 429,188 Regional Management Directors fees—share based payments (835,000) 4,397,500 Zurich Bay Holdings Finance lease—gross Pty Ltd lease payments — 1,842,600 Zurich Bay Holdings Finance lease—contingent Pty Ltd rentals — 1,765,852 Zurich Bay Holdings Purchase of mining Pty Ltd equipment — 638,511 Zurich Bay Holdings Hire of mining equipment Pty Ltd and labour 180,844 436,440 (312,577) 9,510,091 Greg Steemson . Steemson Geoscience Directors fees—cash Pty Ltd component and share based payments 42,500 37,500 Steemson Geoscience Geological consultancy Pty Ltd services 7,000 22,500 49,500 60,000 Frank Terranova . Novabank Pty Ltd Directors fees—share based payments (417,500) 2,198,750 Peter Torre ..... Torre Corporate Pty Ltd Company secretarial services—cash and share based payments 60,000 42,000

All key management personnel that are not listed in the table above deal with the Group in their own name only and do not have a related party relationship with any other party has commercial dealings with the Group.

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Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: EV11601A.;19 MERRILL CORPORATION PHARDIM//16-JUN-11 04:30 DISK106:[11ZBG1.11ZBG11601]EX11601A.;13 mrll_0909.fmt Free: 7080DM/0D Foot: 0D/ 0D VJ RSeq: 1 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 44836 Proportion Value of Total related remuneration % ore than 4 executives. onsequence those options expired. propriate basis for allocation. ances and leave entitlements. The Company has also paid insurance paid also has Company The entitlements. leave and ances bonus Total benefits options @ Allied Allied Gold Limited Prior year Share of options as a Short term- adjustment & For For the half-year ended 31 December 2010 45,00047,50042,500 —52,500 — — — — — — — 45,000 47,500 42,500 52,50060,000 — — — — — — — 45,000 — — 47,500 — 42,500 — 52,500 — 60,000 — — 5,400 — — — — — 65,400 — — 313,375196,200 —160,000 —109,000125,000 —150,000 — — — — — — 313,375 — 196,200 28,204 — 17,658 — 160,000 (835,000) 109,000 (493,421) 11,200 (417,500) 125,000 (203,642) 9,810 150,000 — 11,250 — 13,500 — 171,200 — — — — 118,810 136,250 — — 163,500 — — — — — — — 187,500 — — 187,500 — — 187,500 — — and fees Short term- salary and Short term- Post based remuneration proportion Cash salary fees STI cash Short term- employment payments- performance of 1,113,5751,301,075 — — — — 1,113,575 97,022 1,301,075 (1,252,500) (41,903) 97,022 (1,252,500) 145,597 — — — — Notes Notes to the Consolidated Financial Statements (continued) ...... premiums in respect of Directors’ and Officers’ Liability Insurance which is not reflected in the above table as there is no ap management personnel personnel P DuPlessis ^ R Hastings ^ * P * Torre Sub-total executive directors and key directors Total and key management ^* Denotes one of the 5 highest paid executives of the &Group, as required to be disclosed under the Corporations Act 2001. Denotes an executive of the Company, as required to allow subscriptions, and be memberships professional benefits, disclosed fringe fees, and under salary gross includes the benefits and fees Corporations Salaries, Act 2001. The Company did not @employ m The vesting conditions on certain options granted to Mr Caruso and Mr in Terranova a prior period were not achieved and as a c NameNon-executive directors S Harvey M House A Lowrie G Steemson Sub-total non-executive directors Executive directors M Caruso ^ * F ^ Terranova * Other key management personnel D Anwyll P Davies^ $ $ $ $ $ $ $ % % 26. Key management personnel disclosures (continued) (b) Key ended Management 31 Personnel Compensation—Half-Year December 2010

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Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: EX11601A.;13 MERRILL CORPORATION PHARDIM//16-JUN-11 04:30 DISK106:[11ZBG1.11ZBG11601]EX11601A.;13 mrll_0909.fmt Free: 7080DM/0D Foot: 0D/ 0D VJ RSeq: 2 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 51470 Proportion Value of ore than 4 executives. ted salaries were effective from 1 October 2008. The adjustment propriate basis for allocation. ances and leave entitlements. The Company has also paid insurance paid also has Company The entitlements. leave and ances bonus Total benefits options Total related remuneration @ Allied Allied Gold Limited Prior year Share of options as a Short term- adjustment & For For the half-year ended 31 December 2010 37,50037,50060,000 — — — — — — 37,500 37,50042,000 60,000 — — — — 270,000 307,500 — — —% — 37,500 42,000 60,000 —% —% —% — —% 44,100 —% 86,100 51% 51% 287,500192,250 106,250109,000 83,117125,000 —104,000 — — 393,750 — 35,438 275,367 — — 4,397,500 24,783 — 4,826,688 — 2,198,750 2,498,900 109,000 91% 125,000 9,810 104,000 88% 11,250 9,360 91% 30,870 88% 149,680 88,200 — 201,560 136,250 21% 44% —% 21% 44% —% and fees 135,000 — — 135,000859,750 189,367994,750 — 189,367 — 270,000 405,000 — 1,049,117 90,641 —% 1,184,117 6,759,420 7,899,178 90,641 7,029,420 8,304,178 —% Short term- salary and Short term- Post based remuneration proportion Cash salary fees STI cash Short term- employment payments— performance of Notes Notes to the Consolidated Financial Statements (continued) ...... — — — — — — — —% —% premiums in respect of Directors’ and Officers’ Liability Insurance which is not reflected in the above table as there is no ap amount in the above table represents amounts accrued and paid in the current period for services rendered in the prior period. management personnel personnel R Hastings ^ * P * Torre Sub-total executive directors and key directors Total and key management ^* Denotes one of the 5 highest paid executives of the &Group, as required to be disclosed under the Corporations Act 2001. Denotes an executive of the Company, as required to allow subscriptions, and be memberships professional benefits, disclosed fringe fees, and under salary gross includes the benefits and fees Corporations Salaries, Act 2001. The Company did not @employ m were adjusted to align with In market the benchmarks. current The period adjus the base salaries of Mr Caruso and Mr Terranova NameNon-executive directors S Harvey M House A Lowrie G Steemson Sub-total non-executive directors Executive directors M Caruso ^ * F ^ Terranova * Other key management personnel P Davies^ P DuPlessis ^ $ $ $ $ $ $ $ % % 26. Key management personnel disclosures (continued) (b) Key ended Management 31 Personnel Compensation—Half-Year December 2009 (unaudited)

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Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

26. Key management personnel disclosures (continued) (c) Option holdings of key management personnel 2010

Balance at Balance at Vested start of Granted as end of and Key Management Personnel half-year remuneration Exercised Lapsed half-year exercisable M Caruso ...... 33,875,000 — — (5,000,000) 28,875,000 25,875,000 P Davies ...... 1,000,000 — — — 1,000,000 700,000 P Du Plessis ...... 825,000 — — — 825,000 525,000 R Hastings ...... 3,750,000 — — — 3,750,000 2,750,000 M House ...... 1,500,000 — — — 1,500,000 1,000,000 A Lowrie ...... 1,750,000 — — — 1,750,000 1,250,000 G Steemson ...... 1,750,000 — — — 1,750,000 1,250,000 F Terranova ...... 18,000,000 — — (2,500,000) 15,500,000 14,250,000 P Torre ...... 2,000,000 — — — 2,000,000 1,500,000 64,450,000 — — (7,500,000) 56,950,000 49,100,000

2009 (unaudited)

Balance at Balance at Vested start of Granted as end of and Key Management Personnel half-year remuneration Exercised Lapsed half-year exercisable T Bubb ...... 750,000 — — (750,000) — — M Caruso ...... 13,400,000 25,000,000 — (4,525,000) 33,875,000 15,875,000 P Davies ...... 1,000,000 175,000 — (175,000) 1,000,000 700,000 P Du Plessis ...... 1,000,000 — — (175,000) 825,000 525,000 R Hastings ...... 3,750,000 500,000 — (500,000) 3,750,000 2,750,000 M House ...... — 1,500,000 — — 1,500,000 1,000,000 A Lowrie ...... 2,000,000 — (250,000) 1,750,000 1,250,000 G Steemson ...... 2,000,000 — — (250,000) 1,750,000 1,250,000 F Terranova ...... 6,250,000 12,500,000 — (750,000) 18,000,000 9,250,000 P Torre ...... 2,000,000 250,000 — (250,000) 2,000,000 1,500,000 32,150,000 39,925,000 — (7,625,000) 64,450,000 34,100,000

(d) Shareholdings of key management personnel 2010

Balance at Balance at start of Received as Options Net change end of Key Management Personnel half-year remuneration exercised other half-year D Anwyll ...... — — — 102,000 102,000 M Caruso ...... 7,585,193 — — 100,000 7,685,193 T Harvey ...... — — — 200,000 200,000 R Hastings ...... 300,000 — — — 300,000 M House ...... 10,000 — — — 10,000 A Lowrie ...... 1,635,460 — — — 1,635,460 G Steemson ...... 1,100,000 — — — 1,100,000 F Terranova ...... 1,000 — — — 1,000 P Torre ...... 20,000 — — — 20,000 10,651,653 — — 402,000 11,053,653

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Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

26. Key management personnel disclosures (continued) 2009 (unaudited)

Balance at Balance at start of Received as Options Net change end of Key Management Personnel half-year remuneration exercised other half-year M Caruso ...... 5,577,693 — — 2,007,500 7,585,193 R Hastings ...... 300,000 — — — 300,000 M House ...... — — — 10,000 10,000 R Johnson ...... 55,000 — — (55,000) — A Lowrie ...... 1,635,460 — — — 1,635,460 J Moore ...... 800,000 — — (800,000) — G Steemson ...... 1,100,000 — — — 1,100,000 F Terranova ...... — — — 1,000 1,000 P Torre ...... — — — 20,000 20,000 9,468,153 — — 1,183,500 10,651,653

(e) Loans to key management personnel There were no loans to key management personnel during the period.

(f) Finance leases During the six months the Group hired mining equipment from Zurich Bay Holdings Pty Ltd, a company in which Mark Caruso is a shareholder and director. Set out below is a summary of amounts recorded in the financials in relation to the operation and termination of the agreement.

Group 2010 2009 $ (unaudited) Commitments in relation to finance leases with key management personnel are payable as follows: Within one year ...... — 3,685,200 Later than one but not later than five years ...... — 2,456,800 Minimum lease payments ...... — 6,142,000 Future finance charges ...... — (2,445,260) Recognised as a liability ...... — 3,696,740 Amounts recorded in financial statements in relation to the operation of the lease agreement: Lease liabilities: —Current ...... — 1,734,788 —Non-current ...... — 1,908,108 — 3,642,896 Finance charges included in the profit and loss as finance expenses .... — 1,262,214 Contingent rentals paid ...... — 1,764,852

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Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

27. Share based payments (a) Employee and directors options The Allied Gold Limited employee option plan was re-approved by shareholders at the Annual General Meeting on 28 November 2008. The plan is designed to provide long term incentives for senior employees (including directors) to deliver long term shareholder returns. All full time employees, part time employees and consultants to the group are eligible to participate in the plan at the absolute discretion of the Board. Options are granted under the plan for no consideration and are at terms stipulated at the discretion of the Board. The options hold no voting rights, do not participate in dividends and are not transferable. All options granted are exercisable in exchange for one ordinary share in the Company for every option held. Set out below are summaries of options granted under the plan:

Group and Company 2010 2009 Number of Number of options options Outstanding at the beginning of the half-year ...... 75,187,500 44,905,000 Granted ...... — 40,175,000 Lapsed ...... (14,862,500) (9,442,500) Exercised ...... (375,000) (450,000) Vested and exercisable at the end of the half-year ...... 59,950,000 75,187,500

The weighted average share price at the date of exercise of options exercised during the half-year ended 31 December 2010 was $0.35 (2009: $0.35).

Fair value of options granted The fair value of options at grant date is independently determined using a binomial pricing model that takes into account the exercise prices, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. No options were granted by the Company during the half-year ended 31 December 2010. The model inputs for options granted during the half-year ended 31 December 2009 included:

Non-Executive Director options issued 11 November 2009

(1) Options may not vest until the ordinary share price of the Company’s shares is greater than $0.70 for five consecutive days after the date of grant.

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Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

27. Share based payments (continued) Executive Director options issued 11 November 2009

The terms of each Tranche of options are summarised below: (1) Tranche A—vest on grant date. (2) Tranche B—vest upon the 100,000th ounce of gold production between 1 October 2009 and 31 December 2010. (3) Tranche C—vest when the weighted average price of Allied shares is greater than 70 cents for five consecutive days. (4) In calculating the fair value of the Tranche options subject to gold production performance conditions, the term to expiry was reduced to 1/7/2012 from 31/12/2013 to more fully reflect the vesting condition.

Employee options issued 22 December 2009

(b) Expenses arising from share based payment transactions Included under employee benefits expense in the profit and loss was a benefit of $1,252,500 (2009: $6,828,559), and relates, in full, to equity-settled share-based payment transactions.

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Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

28. Cash and cash equivalents and cash flow from operations (a) Cash and cash equivalents

Group 2010 2009 $$ (unaudited) Cash assets ...... 36,486,444 157,241,528

Profit / (loss) after income tax ...... 9,388,992 (22,415,679) Depreciation and amortisation ...... 11,008,988 6,246,365 Provision—employee entitlements ...... (60,171) 147,580 Unrealised foreign exchange adjustments ...... — (728,809) Share-based payments ...... (1,252,500) 6,819,755 Unwinding of environmental discount ...... 484,327 106,327 Interest on finance leases ...... 182,181 1,462,521 Foreign exchange losses on borrowings ...... (2,562,252) — Realised losses on hedging transactions transferred to profit or loss . 5,437,338 4,917,149 Unrealised loss on derivatives ...... — 812,476 Gain on derecognition of financial liability ...... (4,000,000) — Other ...... 13,844 — Changes in assets and liabilities during the six months: (Increase) / decrease in receivables ...... 61,705 (654,731) (Increase) / decrease in other assets ...... 1,574,353 (532,401) Increase / (decrease)in payables ...... (7,021,392) (2,173,767) (Increase) / decrease in inventories ...... (5,398,879) (2,940,017) Net cash used in operations ...... 7,856,534 (8,933,231)

(b) Non cash investing and financing activities

Decrease in capital accruals ...... (13,674,488) — Equity settled acquisition of controlled entity (refer note 30) ...... — 46,361,481

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Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

29. Financial instruments (continued) • Ensuring that investment and hedging transactions are undertaken with creditworthy counterparts. The Executive Chairman and Chief Financial Officer are responsible for the management of the group’s financial risks within Board approved directives. The group holds the following financial instruments:

Group 2010 2009 $$ (unaudited) Financial assets Cash and cash equivalents ...... 36,486,444 157,241,528 Trade and other receivables ...... 4,099,013 1,714,620 Securities available for sale ...... 1,068,024 599,888 Derivative assets ...... — 11,342,679 41,653,481 170,898,715 Financial liabilities Trade and other payables ...... 14,379,497 19,322,670 Borrowings ...... 54,384,619 8,003,632 Derivative liabilities ...... — 15,720,395 68,764,116 43,046,697

The sensitivity analyses presented in the following notes are based on changes in underlying prices or rates that the group considered to be reasonably possible at the end of the reporting period.

(a) Market risk (i) Gold price risk Gold price risk is the risk that fluctuations in the price of gold will have an adverse effect on current or future earnings. The group may use derivative financial instruments to hedge some of its exposure to fluctuations in gold prices. In order to protect against the impact of falling gold prices, the group enters into hedging transactions which provide a minimum price to cover non-discretionary operating expenses, repayments due under the group’s financing facilities and sustaining capital. The majority of the group’s forecast production is unhedged, allowing it to take advantage of increases in gold prices. Prior to 26 February 2010 call and put options were used by the group to manage the gold price risk. On 26 February 2010 the group terminated its gold hedging facilities and in the period from 26 February 2010 to 31 December 2010 has maintained an unhedged position in relation to gold price risk. As the group did not have any hedging in place as at 31 December 2010 it was fully exposed to gold price risk. The marked to market value of all derivatives making up the hedge position as at 31 December 2010 was $nil (2009: loss of $16,400,466).

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Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

29. Financial instruments (continued) The group had nil net forward pricing commitments outstanding against future production as at 31 December 2010. As at 31 December 2009 the group had net forward pricing commitments outstanding against future production as follows:

2009 (unaudited)

Less than 1 1 to 2 2 to 3 3 to 4 six months six months six months six months Total Put options (US Dollar / Gold) Amount (ounces) ...... 39,748 20,154 — — 59,902 US$/oz ...... US$700 US$700 — — US$700 Call options (US Dollar / Gold) Amount (ounces) ...... 34,429 20,154 — — 54,583 US$/oz ...... US$700 US$700 — — US$700 Based on the financial instruments held by the group as at 31 December 2010, had the United States dollar gold price weakened / strengthened by 10% with all other variables held constant, equity would have been $nil higher / lower and the group loss $nil higher / lower (2009: equity $2,803,043 higher / $1,868,696). The balance of the gold hedging reserve as at 31 December 2010 represents the realised loss on hedging instruments that were terminated prior to their maturity. The loss will be amortised over the remaining life of the instruments and is not impacted by changes in the gold price. In the current period variations in the gold price impact group loss after tax due to some of the entity’s options being classified as ineffective for hedge accounting purposes following a restructuring of the entity’s hedge book during the period.

31 December 2010

USD PGK SBD GBP $$$$ Financial assets Cash and cash equivalents ...... 9,151,533 20,394,678 36,081 390,560 Trade and other receivables ...... 2,458,659 272,237 31,902 — 11,610,192 20,666,915 67,983 390,560 Financial liabilities Trade and other payables ...... (7,800,076) 3,561,628 635,885 565 Borrowings ...... 34,206,411 19,699,902 — — 26,406,335 23,261,530 635,885 565

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Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

29. Financial instruments (continued) 31 December 2009 (unaudited)

USD PGK CAD GBP $$$ $ Financial assets Cash and cash equivalents ...... 1,521,046 1,745,885 50,175,515 61,647,899 Trade and other receivables ...... 665,241 446,596 — — Derivative assets ...... 814,922 — — — 3,001,209 2,192,481 50,175,515 61,647,899 Financial liabilities Trade and other payables ...... 835,249 2,617,576 427,811 13,237 Borrowings ...... — 4,360,736 — — Derivative liabilities ...... 15,720,395 — — — 16,555,644 6,978,312 427,811 13,237

Based on the financial instruments held by the group as at the reporting date, the sensitivity of the group’s profit after tax for the six months and equity at the reporting date to movements in the Australian dollar to US dollar and Australian dollar to PNG Kina exchange rates was: • Had the Australian dollar weakened / strengthened by 5% against the US dollar with all other variables remaining constant, the group’s profit after tax would have been $739,808 lower / higher (2009: $108,298 lower / higher) and equity would have been $nil lower / higher (2009: $786,020). • Had the Australian dollar weakened / strengthened by 5% against the PNG Kina with all other variables remaining constant, the group’s profit after tax would have been $129,731 lower / higher (2009: $239,392 lower / higher). • Had the Australian dollar weakened / strengthened by 5% against the Solomon Island dollar with all other variables remaining constant, the group’s profit after tax would have been $28,395 lower / higher (2009: $2,114 lower / higher). • Had the Australian dollar weakened / strengthened by 5% against the British pound with all other variables remaining constant, the group’s profit after tax would have been $19,500 lower / higher (2009: $3,081,733 lower / higher). • Had the Canadian dollar weakened / strengthened by 5% against the Solomon Island dollar with all other variables remaining constant, the group’s profit after tax would have been $Nil lower / higher (2009: $2,487,385 lower / higher).

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Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

29. Financial instruments (continued) As at the reporting date, the group had the following exposures to interest rate risk:

31 December 2010 31 December 2009 (unaudited) Weighted Weighted average average interest rate Balance interest rate Balance %$ % $ Financial assets Cash and cash equivalents ...... 0.6% 36,486,444 1.2% 157,241,528 Financial liabilities Borrowings ...... 9.6% 54,384,619 32.05% 8,003,632 All interest rates were floating rates. Interest rates on the most significant borrowings are repriced six monthly At 31 December 2010, if interest rates had changed by +/ǁ 50 basis points from the six months end rates per the above table with all other variables held constant, profit for the six months would have been $104,821 lower / higher (2009: change of +/ǁ 50 basis points—$487,308 higher / lower).

(iv) Equity price risk The group and the Company are exposed to equity securities price risk arising from investments classified on the statement of financial position as available for sale. Investments in equity securities are approved by the Board on a case-by-case basis. The majority of the group’s and the Company’s available for sale equity investments are in junior resource companies listed on the ASX and are included in the S&P/ASX All Ordinaries Gold index. At 31 December 2010, if the index had changed by +/ǁ 5% from its six months end level with all other variables held constant, group equity at 31 December 2010 would have been $53,401 higher / lower (2009: change of +/ǁ 5%—$29,999 higher / lower).

(b) Credit risk Credit risk is the risk that a counterparty will not complete its obligations under a financial instrument resulting in a financial loss for the group. Credit risk is managed at the group level. The group does not generally obtain collateral or other security to support financial instruments subject to credit risk, but adopts a policy of only dealing with credit worthy counterparties. Trade and other receivables mainly comprise banking institutions purchasing gold under normal settlement terms of two working days. Counterparty risk under derivative financial instruments is to two reputable banking institutions. All cash balances are on deposit with the banking institutions that are members of a highly rated major Australian banking group. The carrying amount of financial assets recorded in the financial statements represents the group’s maximum exposure to credit risk without taking account of the value of any collateral or other security obtained.

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Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

29. Financial instruments (continued) The tables below analyse the group’s financial liabilities, net settled derivative financial instruments into relevant maturity groupings based on the remaining period to contractual maturity at the reporting date:

Group entity as at 31 December 2010

Less than 6 to 12 Between 1 Between 2 Greater than Carrying 6 months months and 2 years and 5 years 5 years Total amount $$$ $ $ $ $ Trade and other payables ...... 14,379,497 — — — — 14,379,497 14,379,497 Borrowings ...... 4,692,784 8,158,502 15,532,322 26,444,028 2,931,978 57,759,614 54,384,619 Total ...... 19,072,281 8,158,502 15,532,322 26,444,028 2,931,978 72,139,111 68,764,116

Group entity as at 31 December 2009 (unaudited)

Less than 6 to 12 Between 1 Between 2 Carrying 6 months months and 2 years and 5 years Total amount $$$ $ $ $ Non derivatives Trade and other payables ...... 19,322,670 — — — 19,322,670 19,322,670 Borrowings ...... 3,019,933 2,834,429 4,324,518 997,492 11,176,372 8,003,632 Total non derivatives .. 22,342,603 2,834,429 4,324,518 997,492 30,499,042 27,326,302 Derivatives Net settled—outflows . . . 8,426,557 8,907,418 — — 17,333,976 15,720,395 Total derivatives ..... 8,426,557 8,907,418 — — 17,333,976 15,720,395

30. Business combination On 30 November 2009, Allied Gold Limited acquired a 96.9% ownership interest in ASG, the owner of the Gold Ridge gold project in the Solomon Islands. The acquisition was undertaken to diversify the Group’s asset base and to increase its gold production capacity in the South Pacific region. ASG contributed revenues of $nil and a net loss of $415,427 to the Group for the period from 1 December 2009 to 31 December 2009. Had the acquisition occurred on 1 July 2009, the effect would have been to increase revenues by $nil and increase the net loss by $1,406,287. The Group acquired net cash of $3,573,926 on the acquisition of ASG. The consideration paid by Allied Gold Limited was 0.85 Allied Gold Limited ordinary shares for each ASG ordinary share. As at 31 December 2009, Allied Gold Limited had issued 106,920,459 shares of Allied

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Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

30. Business combination (continued) Gold Limited with a fair value of $46,361,481 to acquire a 96.9% ownership interest in ASG. The value of the Allied Gold Limited shares issued as consideration for the purchase of shares in the controlled entity was determined using the market value of Allied Gold Limited shares at the time the shares were issued. The Company acquired control of ASG in November 2009. At the time of preparing this interim consolidated financial report for the half-year ended 31 December 2009, the Company had not finalised its assessment of the fair values of the acquired assets and liabilities. The principal items for which the assessment of fair value is incomplete as at the date of this interim consolidated financial report were: • Exploration and evaluation expenditure, including mining rights. • Property, plant and equipment. • Provision for environmental remediation. • Taxation assets and liabilities, including an assessment of the continued availability of unutilised tax losses. As the determination of the fair value of net assets acquired was incomplete, no amounts were recognised in the interim consolidated financial report for the half-year ended 31 December 2009 for goodwill or discount on acquisition. The accounting for the acquisition was finalised in the full year financial statements for the year ended 30 June 2010.

31. Group entities

Class Equity of Place of Holding share Incorporation 2010 2009 %% Company or parent entity Allied Gold Limited ...... Australia — — Subsidiaries Australian Solomons Gold Limited ...... Ord Australia 100 — AGL (SGC) Pty Ltd ...... Ord Australia 100 — AGL (ASG) Pty Ltd ...... Ord Australia 100 — Allied Gold Finance Pty Ltd ...... Ord Australia 100 — Allied Gold Services Pty Ltd ...... Ord Australia 100 — Allied Tabar Exploration Pty Ltd ...... Ord Australia 100 100 Advance R & D Pty Ltd ...... Ord Australia 100 100 Aretrend Pty Ltd ...... Ord Australia 100 100 ASG Solomon Islands Limited ...... Ord Solomon Islands 100 — Compania Minera Nord Pacific de Mexico, S.A. de C.V. . . . Ord Mexico 100 100 Gold Ridge Mining Limited ...... Ord Solomon Islands 100 — Hicor Corporation ...... Ord United States 100 100 JV Mine (Australia) Pty Ltd ...... Ord Australia 100 — Nord Australex Nominees (PNG) Ltd ...... Ord PNG 100 100 Nord Australex Nominees Pty Ltd ...... Ord Australia 100 100 Nord Pacific Ltd ...... Ord Canada 100 100 Simberi Gold Company Limited ...... Ord PNG 100 100 Solomon Islands International Pty Ltd ...... Ord Australia 100 — Tabar Exploration Company Ltd ...... Ord PNG 100 100

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Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

Group 2010 2009 $$ (unaudited) Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows: Within one year ...... 1,338,066 860,165 Later than one year but not later than two years ...... 755,781 227,318 2,093,847 1,087,483

Finance leases

Group 2010 2009 $$ (unaudited) Commitments in relation to finance leases are payable as follows: Within one year ...... 8,604,350 5,854,362 Later than one year but not later than five years ...... 14,611,221 5,322,010 Minimum lease payments ...... 23,215,571 11,176,372 Future finance charges ...... (3,517,403) (3,172,740) Recognised as a liability ...... 19,698,168 8,003,632 Representing lease liabilities: Current ...... 6,676,767 3,500,278 Non-current ...... 13,021,401 4,503,354 19,698,168 8,003,632 Finance charges included in the profit and loss as financing costs ..... 178,325 1,462,521

(b) Exploration & Development costs—Commitments for Expenditure. In order to proceed with the development of the Simberi Project and to maintain current rights of tenure to PNG exploration tenements, the group is required to outlay $900,900 over the next financial six months (2009: $900,900). Financial commitments for subsequent periods are contingent upon future exploration results and cannot be estimated. These obligations are subject to renegotiation upon expiry of the exploration leases or when application for a mining licence is made and have not been provided for in the accounts. These obligations are not provided for in the financial statements.

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Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

32. Commitments and contingent liabilities (continued) (c) Capital commitments Capital expenditure contracted for at the reporting date but not recognised in liabilities is as follows:

Group 2010 2009 $$ (unaudited) Capital expenditure for redevelopment of Gold Ridge Project ...... 17,540,169 — Capital expenditure for Simberi Oxide processing plant ...... 10,333,624 — Capital expenditure for Sulphide feasibility study ...... 586,341 —

(d) Hedging commitments As disclosed in note 29, in the prior half-year a subsidiary had entered into commitments under a program for hedging its exposure to gold price risk. Details relating to these commitments are disclosed in note 29.

(e) Contingent liabilities

Group 2010 2009 $$ Executives of the group will be entitled to compensation for past services if their employment is terminated by the group other than for specific reasons as outlined in their employment contracts. This amounts to: ..... 1,874,730 656,000

(f) Legal action In December 2009, Simberi Gold Company initiated legal proceedings against Intermet Engineers (Pty) Ltd (‘‘Intermet’’) and a director of Intermet in respect of breaches of contract entered into between the controlled entity and Intermet whereby Intermet were contracted to design, procure and manage the construction of gold processing and related facilities for the Simberi Oxide Gold Project. Under the legal action, the controlled entity is claiming damages of not less than $40 million. Intermet have advised that they will defend the claim and have indicated that they will make a counter claim for an amount of $1.2 million for outstanding monies due from the controlled entity under the contract. This amount has been fully accrued as a liability by the controlled entity pending the outcome of the litigation.

33. Subsequent events The following events have arisen in the period between 31 December 2010 and the date of preparation of these financial statements: • In March 2011 commissioning of the Gold Ridge project was commenced. • On 6 April 2011, the Company announced that it had raised $93.8 million in equity proceeds through a private placement to sophisticated investors. • On 6 June 2011 the shareholders and options holders will be requested to approve a scheme whereby the Company, intends to transfer its domicile from Australia to the United Kingdom (‘‘UK’’) via a scheme of arrangement under which Allied Gold Mining PLC, a new company incorporated in England and Wales, will become the holding company of Allied Gold and its controlled entities (the’’Share Scheme’’). Under the Scheme, Allied Gold Mining PLC intends to

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Allied Gold Limited Notes to the Consolidated Financial Statements (continued) For the half-year ended 31 December 2010

33. Subsequent events (continued) acquire all of the Allied Gold shares on issue, and as consideration, will issue one (1) share in Allied Gold Mining PLC for each six (6) shares held in Allied Gold. Under a separate scheme of arrangement (the ‘‘Option Scheme’’), Allied Gold Mining PLC is to acquire all of the Allied Gold options on issue, and as consideration, will issue one (1) option in Allied Gold Mining PLC for each six (6) options held in Allied Gold. The terms of the options issued by Allied Gold Mining PLC will effectively be the same as the Allied Gold options, adjusted for the consolidation of the number of options being offered. It is intended that the Schemes will become effective on 30 June 2011, at which time all, the shareholders and optionholders of Allied Gold will effectively become the shareholders and optionholders of Allied Gold Mining PLC and Allied Gold and its controlled entities will become wholly owned subsidiaries of Allied Gold Mining PLC. Allied Gold shareholders will effectively hold the same percentage interest in Allied Gold Mining PLC as they did in Allied Gold and Allied Gold optionholders will have the same relative interest in Allied Gold Mining PLC on a fully diluted basis. Other than the items noted above, raising of these equity proceeds, no matter or circumstance has arisen since 31 December 2010 that has significantly affected, or may significantly affect: a. the Group’s operations in future financial periods, or b. the results of those operations in future financial periods, or c. the Group’s state of affairs in future financial periods.

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PART X—ADMISSION 1 Dealings and Admission Application has been made to (i) the FSA for all of the Ordinary Shares to be admitted to the premium segment of the Official List of the FSA and (ii) the London Stock Exchange plc for the Ordinary Shares to be admitted to trading on its main market for listed securities. Admission to trading on the London Stock Exchange constitutes admission to trading on a regulated market. It is expected that Admission of the Ordinary Shares will become effective and that dealings will commence in the Ordinary Shares on the London Stock Exchange, at 8.00 a.m. (London time) on 30 June 2011. The Ordinary Shares are currently admitted to trading on AIM. Upon Admission, trading of the Ordinary Shares on AIM will be cancelled. Admission is conditional on the Pre-IPO Reorganisation being successfully completed.

2 The Ordinary Shares The Ordinary Shares were created under the 2006 Act and can be issued in certificated or uncertificated form. The Ordinary Shares are registered with ISIN number GB00B44QDS07 and SEDOL number B44QDS0. The nominal value of the Ordinary Shares is 10 pence. The Ordinary Shares will, following Admission, rank pari passu in all respects and will carry the right to receive all dividends and other distributions declared, paid or made on or in respect of the Ordinary Shares after Admission. The Ordinary Shares will, on Admission, be freely transferable.

3 CREST CREST is a paperless settlement system enabling securities to be evidenced otherwise than by a certificate and to be transferred otherwise than by a written instrument. With effect from Admission, the Articles will permit the holding of Ordinary Shares under the CREST system. The Company has applied for the Ordinary Shares to be admitted to CREST with effect from Admission. Accordingly, settlement of transactions in the Ordinary Shares following Admission may take place within the CREST system if any Shareholder so wishes. CREST is a voluntary system and holders of Ordinary Shares who wish to receive and retain share certificates will be able to do so. An investor applying for Ordinary Shares in the Global Offer may, however, elect to receive Ordinary Shares in uncertificated form if that investor is a system-member (as defined in the Uncertificated Securities Regulations) in relation to CREST.

4 Selling and transfer restrictions The distribution of this Prospectus in certain jurisdictions may be restricted by law and therefore persons into whose possession this Prospectus comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws in any such jurisdiction. No action has been taken or will be taken in any jurisdiction that would permit a public offering or sale of the Ordinary Shares, or possession or distribution of this Prospectus (or any other offering or publicity material relating to Ordinary Shares), in any country or jurisdiction where action for that purpose is required or doing so may be restricted by law. None of the Ordinary Shares may be offered for subscription, sale or purchase or be delivered, and this Prospectus and any other offering material in relation to the Ordinary Shares may not be circulated, in any jurisdiction where to do so would breach any securities laws or regulations of any such jurisdiction or give rise to an obligation to obtain any consent, approval or permission or to make any application, filing or registration.

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PART XI—TAXATION The following statements are intended only as a general guide to the UK tax position under current legislation and published HM Revenue & Customs’ practice at the date of this Prospectus, both of which are subject to change at any time, possibly with retrospective effect. It only deals with the position of certain types of Shareholder who are resident or ordinarily resident in the United Kingdom for UK tax purposes and who are the beneficial owners of Ordinary Shares. It does not deal with others (such as dealers in securities, insurance companies, collective investment schemes and persons who acquired Ordinary Shares by virtue of an office or employment) whose tax position might in some cases be different. The information given is by way of general summary only and does not constitute legal or tax advice to any person. Shareholders who are in any doubt about their tax position, or who are taxable in a jurisdiction other than the UK, should obtain detailed tax advice. Any change in the Group’s tax status or changes in tax legislation or tax treaties negotiated by those countries in which the Group operates, or in taxation legislation or taxation practice in Australia, the United Kingdom or any other tax jurisdiction affecting shareholders could affect the value of investments held by the Group or affect the Company’s ability to pay dividends or alter the post tax returns to Shareholders. Prospective purchasers of Ordinary Shares who are in any doubt as to their tax position or who are or may be resident or otherwise subject to tax in a jurisdiction other than the United Kingdom should consult their own tax advisers on the potential tax consequences of purchasing, holding, converting or selling Ordinary Shares under the laws of their country and/or state of citizenship, domicile or residence.

The Pre-IPO Reorganisation A UK resident or, in the case of an individual, ordinarily resident holder of shares in Allied Gold who does not hold (either alone or together with other persons connected with him) more than 5 per cent of, or of any class of, shares in or debentures of Allied Gold should not be treated as having made a disposal or part disposal of his shares in Allied Gold for the purposes of UK taxation of chargeable gains as a result of the Pre-IPO Reorganisation. Instead any chargeable gain or allowable loss which would otherwise have arisen on a disposal of such holder’s shares in Allied Gold should be ‘‘rolled over’’ into the Ordinary Shares which he acquires on the Pre-IPO Reorganisation. As a result, those Ordinary Shares should be treated as the same asset and as having been acquired at the same time and for the same consideration as the shares in Allied Gold from which they derived. A UK resident or, in the case of an individual, ordinarily resident holder of shares in Allied Gold who holds (either alone or together with other persons connected with him) more than 5 per cent of, or of any class of, shares in or debentures of Allied Gold should qualify for the ‘roll over’ treatment described above provided the Pre-IPO Reorganisation is effected for bona fide commercial reasons and does not form part of a scheme or arrangements of which the main purpose, or one of the main purposes, is avoidance of a liability to capital gains tax or corporation tax. If these conditions are not met, then such a person will be treated, on receiving Ordinary Shares as consideration for the exchange of his shares in Allied Gold, as having made a disposal of those shares in Allied Gold which may, depending on individual circumstances, give rise to a chargeable gain or allowable loss for the purposes of UK taxation of chargeable gains. HMRC has given clearance under Section 138 of the Taxation of Chargeable Gains Act 1992 that these conditions should be met in respect of the Pre-IPO Reorganisation. HMRC has also given clearance under Section 701 of the Income Tax Act 2007 and Section 748 of the Corporation Tax Act 2010 that no counteraction notices should be served under Section 698 of the Income Tax Act 2007 or Section 746 of the Corporation Tax Act 2010 in relation to the Pre-IPO Reorganisation. No UK stamp duty or SDRT will be payable by holders of shares in Allied Gold as a result of the exchange of their shares in Allied Gold for Ordinary Shares.

The affairs of the Company The statements in the following sub-paragraphs of this Part XI are based on the assumption that the Company is not, and will not become, resident in the United Kingdom for tax purposes. The Directors intend to conduct the affairs of the Company so that it does not become resident in the United Kingdom for taxation purposes. Accordingly, and provided that the Company does not carry on a trade in the United Kingdom (whether or not through a permanent establishment situated therein), the Company will not be expected (subject to the possible application of the CFC Rules described on

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page 15) to be subject to United Kingdom income tax or corporation tax other than on United Kingdom source income.

Dividends Under current UK legislation, no UK tax is withheld from dividend payments by the Company in respect of the Ordinary Shares. Shareholders should note that in certain circumstances, dividends paid to them may be subject to Australian withholding tax. For UK tax purposes, shareholders will be treated as actually receiving the gross dividend (ie, the dividend before deduction of the Australian withholding tax). The Australian withholding tax is likely to be creditable in respect of any UK tax liability they have on the dividend but is not likely to be repayable to them. A UK resident individual Shareholder who owns less than 10 per cent of the Company’s issued share capital will be entitled to a non-refundable tax credit in respect of any dividend paid by the Company on that Shareholder’s Ordinary Shares equal to one-ninth of the amount of the dividend received by the Shareholder. The tax credit therefore equals 10 per cent of the aggregate amount of the dividend and the associated tax credit. Liability to UK income tax is calculated on the sum of the dividend and the associated tax credit. The tax credit will be available to offset such a Shareholder’s liability to income tax on the dividend. Other UK resident Shareholders should also be entitled to such a tax credit for so long as the Australia-UK Double Taxation Convention contains an appropriate non-discrimination provision. Individual Shareholders whose income is within the starting rate for savings or basic rate tax bands are subject to income tax at the rate of 10 per cent on dividends received by them in respect of their Ordinary Shares, so that such Shareholders who are eligible for the tax credit will have no further liability to income tax in respect of such dividends. The higher rate of income tax is 32.5 per cent in respect of dividend income (rather than the main rate of 40 per cent), so that a Shareholder who is eligible for the tax credit and whose income is subject to higher rate income tax in respect of a dividend received from the Company will, after allowing for the 10 per cent tax credit, be liable to pay further income tax equal to 25 per cent of the dividend actually received in respect of that Shareholder’s Ordinary Shares, before the addition of the tax credit. Individual Shareholders eligible for the tax credit who are subject to the additional rate of income tax (being 42.5 per cent in respect of dividend income) in respect of a dividend received from the Company will, after allowing for the 10 per cent tax credit, be liable to pay further income tax equal to approximately 36 per cent of the dividend actually received in respect of that Shareholder’s Ordinary Shares, before the addition of the tax credit. Any dividends received from the Company by an Individual Shareholder will be treated, along with certain other investment income, as the top slice of that individual’s total income which is chargeable to UK income tax. A Shareholder who is not liable to income tax on the dividend (or any part of it) is not able to claim payment of the tax credit (or part of it) in cash from HM Revenue & Customs. The tax treatment of individual Shareholders who are not domiciled in the UK may differ from that described above, in that such shareholders might qualify for the remittance basis of tax in respect of dividends paid by the Company. It is recommended that such individuals take advice as to the tax consequences of investing in the Company. UK resident corporate Shareholders will be subject to UK corporation tax in respect of any dividend received from the Company, unless the dividend falls within an exempt class and certain conditions are met. Whether an exempt class applies and the other conditions are met will depend on the circumstances of the Shareholder. In particular, UK corporate shareholders which are not medium or large companies should note that a different tax regime would apply to dividends paid to them.

Capital Gains Tax Shareholders who are resident or ordinarily resident for tax purposes in the UK may, depending on their individual circumstances, be liable to UK taxation in respect of any chargeable gain (or entitled to relief for any allowable loss) which is realised on a disposal of their Ordinary Shares. In the case of such a Shareholder who is an individual, an annual allowance (for the tax year 2010/2011 this is £10,100 and is expected to rise to £10,600 for the tax year 2011/12) is available to set against the gain. If, after all allowable deductions, such an individual Shareholder’s taxable income for the tax year exceeds the basic rate income tax limit, any chargeable gain realised on a disposal of Ordinary Shares

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by such an individual Shareholder will be taxed at 28 per cent. Chargeable gains realised on such a disposal by other individual Shareholders who are resident or ordinarily resident for tax purposes in the UK will be taxed at 18 per cent, 28 per cent or a combination of these rates, depending on that individual’s circumstances. An individual who ceases to be resident or ordinarily resident for tax purposes in the UK for a period of less than five years and who disposes of Ordinary Shares during that period of temporary non-residence may, depending on that Shareholder’s individual circumstances, be liable to UK capital gains tax on any chargeable gain realised on such a disposal on that Shareholder’s return to the UK. A disposal of Ordinary Shares by a corporate Shareholder which is resident for tax purposes in the UK may give rise to a chargeable gain or allowable loss for the purposes of corporation tax. Such a Shareholder may be entitled to an indexation allowance (depending on the period of ownership) which, in general terms, increases the capital gains base cost of an asset in line with the rise in the retail prices index. This allowance can reduce a chargeable gain realised by such a Shareholder, but cannot increase an allowable loss. A Shareholder who is an individual not resident or ordinarily resident for tax purposes in the UK will not normally be liable to UK taxation in respect of any chargeable gain realised on a disposal of that Shareholder’s Ordinary Shares unless that Shareholder carries on a trade, profession or vocation in the UK through a branch or agency in the UK and the Ordinary Shares in question are, or have been used, held or acquired for the purposes of such trade, profession or vocation or for the purposes of such branch or agency. A non-resident corporate Shareholder is not normally liable to UK corporation tax on chargeable gains in respect of a disposal of that Shareholder’s Ordinary Shares, unless the non-resident Shareholder company carries on a trade in the UK through a permanent establishment in the UK and the Ordinary Shares in question are, or have been used, held or acquired for the purposes of such trade or for the purposes of such permanent establishment.

Other United Kingdom tax considerations United Kingdom resident companies, together with connected or associated persons, having an interest in the Company, such that 25 per cent or more of the Company’s profits for an accounting period could be apportioned to them, may be liable to United Kingdom corporation tax in respect of their share of the Company’s undistributed profits, if any, in accordance with the provisions of Chapter IV of Part XVII of the Income and Corporation Taxes Act 1988 relating to controlled foreign companies. These provisions only apply if the Company is controlled by United Kingdom residents. Shareholders should be aware that the controlled foreign companies regime is the subject of an ongoing consultation on reform by the UK Government. Although the scope of any reform cannot be accurately predicted, it is anticipated that full changes to the regime will be introduced by Finance Bill 2012. Individuals who are ordinarily resident in the United Kingdom should note that Chapter 2 of Part 13 of the Income Tax Act 2007, which contains provisions for preventing avoidance of income tax by transactions resulting in the transfer of income to persons (including companies) abroad, may render them liable to taxation in respect of any undistributed profits of the Company. The attention of United Kingdom Shareholders resident or ordinarily resident and, if an individual, domiciled in the United Kingdom, is drawn to the provisions of Section 13 of the Taxation of Chargeable Gains Act 1992 under which, in certain circumstances, a portion of capital gains made by the Company can be attributed to a Shareholder who holds, alone or together with associated persons, more than 10 per cent of the Ordinary Shares.

Stamp Duty and Stamp Duty Reserve Tax Where Ordinary Shares in the Company are held in certificated form, no stamp duty or stamp duty reserve tax (SDRT) will arise on a transfer of such shares into CREST unless such transfer is made for a consideration in money or money’s worth, in which case a liability to SDRT (usually at a rate of 0.5 per cent of the amount or value of the consideration given) will arise. Transfers of Ordinary Shares within CREST will generally be liable to SDRT, at the rate of 0.5 per cent of the amount or value of the consideration given, rather than stamp duty.

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A transfer of Ordinary Shares outside CREST made for a consideration in money or money’s worth will, subject to an exemption for certain low value transactions, give rise to a liability on the purchaser to stamp duty at the rate of 0.5 per cent (rounded up to the nearest £5) of the consideration paid. An agreement to transfer Ordinary Shares will generally give rise to a liability to SDRT at the rate of 0.5 per cent of the amount or value of the consideration given for the Ordinary Shares, although that liability will be cancelled (and any SDRT which has been paid) if within six years of the date of the agreement becoming unconditional an instrument of transfer is executed in pursuance of the agreement and duly stamped and a claim is made. Different rules may apply to dealings in shares which are quoted on the ASX or TSX.

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PART XII—ADDITIONAL INFORMATION 1 Persons responsible The Directors (whose names appear on page 30 of this Prospectus) and the Company accept responsibility for the information contained in this Prospectus. To the best of the knowledge and belief of the Directors and the Company (each of whom has taken all reasonable care to ensure that such is the case), the information contained in this Prospectus is in accordance with the facts and contains no omission likely to affect its import.

2 Incorporation and activity 2.1 The Company was incorporated in England and Wales on 7 March 2011 with registered number 7553802 under the 2006 Act as a public company with the name Allied Gold Mining PLC. 2.2 The principal legislation under which the Company operates, and under which the Ordinary Shares have been created, is the 2006 Act and regulations made thereunder. 2.3 The business of the Company, and its principal activity, is to act as the ultimate holding company of the Group. 2.4 The registered office of the Company is 3 More London Riverside, London SE1 2AQ, United Kingdom (telephone number 00 44(0)207 283 6000). 2.5 The principal place of business of the Company is Building 23, Garden Office Park, 2404 Logan Road, Eight Mile Plains, Queensland, 4113 Australia (telephone number 00 617 3252 5911). 2.6 BDO (Audit) Pty Ltd, whose address is 38 Station Street, Subiaco WA 6008, Australia, were the auditors of Allied Gold for the period covered by the Historical Financial Information. BDO (Audit) Pty Ltd are authorised and registered to carry out audit work by the Australian Securities and Investments Commission. BDO (Audit) Pty Ltd continue to be the auditors of Allied Gold as at the date of this Prospectus. 2.7 The Company’s auditors are BDO LLP, and BDO LLP has been the only auditor of the Company since its incorporation. BDO LLP are authorised and registered to carry out audit work by the Institute of Chartered Accountants of England and Wales. 2.8 As at the date of this Prospectus, the Company has not commenced operations, and therefore has no financial information to disclose.

3 Subsidiaries 3.1 The Company is the holding company of the Group, the principal activities of which are mining, processing and exploration for gold in PNG and the Solomon Islands.

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3.2 The following table shows details of the Company’s subsidiaries:

Country of Percentage Company Principal activity incorporation ownership Allied Gold Limited ...... Investment company Australia 100 Australian Solomons Gold Limited ...... Investment company Australia 100 JV Mine (Australia) Pty Ltd ...... Investment company Australia 100 Allied Gold Finance Pty Ltd ...... Treasury services Australia 100 Solomons Islands International Pty Ltd .... Investment Australia 100 Nord Australex Nominees Pty Ltd* ...... Corporate trustee and Australia 100 exploration Nord Pacific Limited ...... Investment company Canada 100 Nord Australex Nominees (PNG) Ltd ...... Corporate Trustee PNG 100 Simberi Gold Company Limited ...... Mining, production and PNG 100 exploration Nord Australex Exploration (PNG) Trust .... Exploration PNG 100 Tabar Exploration Company Ltd ...... Exploration PNG 100 Gold Ridge Mining Limited ...... Mining, production and Solomon Islands 100 exploration ASG Solomon Islands Ltd ...... Investment company Solomon Islands 100 AGL (ASG) Pty Ltd ...... Non-operating Australia 100 AGL (SGC) Pty Ltd ...... Non-operating Australia 100 Aretrend Pty Ltd* ...... Non-operating Australia 100 Allied Tabar Exploration Pty Ltd ...... Non-operating Australia 100 Advance R&D Pty Ltd* ...... Non-operating Australia 100 Allied Gold Services Pty Ltd ...... Non-operating Australia 100 Nord Australex Exploration (Australia) Trust* Non-operating Australia 100 Nord Resources (Pacific) Pty Ltd* ...... Non-operating Australia 100 HICOR Corporation ...... Non-operating Delaware, USA 100 Nord Highlands Mineral Joint Venture ..... Non-operating California, USA 100

Note: Items marked * are dormant and expected to be liquidated by 31 December 2011.

4 Share capital The Company 4.1 The ISIN number for the Ordinary Shares is GB00B44QDS07. The Ordinary Shares are issued in registered form and are capable of being held in uncertificated form. The Ordinary Shares are freely transferable. The Company’s register of Ordinary Shares is maintained by Computershare Investor Services PLC. 4.2 The Company’s share capital on incorporation was £1 divided into one fully paid Ordinary Share of £1, which was issued to the subscriber to the Company’s Memorandum and Articles of Association. The subscriber share was subsequently transferred to F Terranova on 27 April 2011. 4.3 Since incorporation, there have been the following changes to the Company’s share capital: (a) At a shareholder meeting of the Company held on 25 May 2011 the sole Shareholder resolved, amongst other things, to: (i) sub-divide the Ordinary Share of £1 into 10 Ordinary Shares of 10 pence each; and (ii) adopt new articles of association. (b) At a shareholder meeting of the Company held on 16 June 2011 the sole Shareholder resolved, amongst other things, to: (i) grant authority to the Directors to issue up to 199,756,259 new Ordinary Shares of 10 pence each (i.e. up to an aggregate nominal value of £19,975,626), in connection with the Listing; (ii) grant authority to the directors to issue up to a further 66,585,420 new Ordinary Shares of 10 pence each, which is approximately one third of the proposed enlarged issued share capital of the Company following the Listing or, if less, one third of the Company’s enlarged issued share capital following the Listing;

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(iii) grant authority to the directors to issue up to a further 133,170,839 new Ordinary Shares of 10 pence each (i.e. up to an aggregate nominal value of £13,317,084), such amount to be reduced by any Ordinary Shares allotted or rights granted by the directors under paragraph 4.3(b)(ii) above, which is approximately two thirds of the proposed enlarged issued share capital of the Company following the Listing, or, if less, two thirds of Company’s enlarged issued share capital following the Listing, in connection with a rights issue only; (iv) conditional on the passing of the resolutions summarised at paragraphs 4.3(b)(i), (ii) and (iii) above, grant authority to the directors to dis-apply pre-emption rights relating to the Ordinary Shares to be issued in connection with the Listing; and (v) conditional on the passing of the resolutions summarised to at paragraphs 4.3(b)(i), (ii) and (iii) above being passed, grant authority to the directors to dis-apply pre-emption rights in connection with a rights issue and, otherwise, up to 5 per cent of the proposed enlarged issued share capital of the Company (i.e. up to an aggregate nominal value of £998,781). 4.4 The authorised, issued and fully paid share capital of the Company as at 15 June 2011 is as follows:

Number of Nominal Shares Aggregate Class value issued nominal value Ordinary ...... £0.10 10 £1 4.5 Save as disclosed below at paragraph 4.8, as at 15 June 2011, there are no acquisition rights or obligations over authorised but unissued share capital of the Company or any undertakings to increase the share capital of the Company.

Allied Gold Limited 4.6 During the period covered by the historical financial information, there were the following changes to Allied Gold’s share capital: (a) On 2 October 2007, 1,000,000 shares were issued at a price of A$0.40 per ordinary share pursuant to the exercise of options, resulting in an issued share capital of 340,974,710 ordinary shares. (b) On 8 November 2007, 1,040,000 shares were issued at a price of A$0.40 per ordinary share pursuant to the exercise of options, resulting in an issued share capital of 342,014,710 ordinary shares. (c) On 22 December 2007, 50,000 shares were issued at a price of A$0.50 per ordinary share pursuant to the exercise of options, resulting in an issued share capital of 342,064,710 ordinary shares. (d) On 7 January 2008, 14,621,844 ordinary shares were issued at a price of A$0.72 per ordinary share pursuant to an institutional placing, resulting in an issued share capital of 356,686,554 ordinary shares. (e) On 6 March 2008, 500,000 ordinary shares were issued at a price of A$0.50 per ordinary share pursuant to the exercise of options, resulting in an issued share capital of 357,186,554 ordinary shares. (f) On 28 March 2008, 17,647,059 ordinary shares were issued at a price of A$0.85 per ordinary share to Barrick pursuant to exploration joint venture arrangements between Allied Gold and Barrick. This resulted in an issued share capital of 374,833,613 ordinary shares. (g) On 3 April 2008, 20,000 ordinary shares were issued at a price of A$0.50 per ordinary share pursuant to the exercise of options, resulting in an issued share capital of 374,853,613 ordinary shares. (h) On 9 April 2008, 100,000 ordinary shares were issued at a price of A$0.50 per ordinary share pursuant to the exercise of options, resulting in an issued share capital of 374,953,613 ordinary shares.

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(i) On 21 April 2008, 1,352,112 ordinary shares were issued at a price of A$0.73 per ordinary share pursuant to a Deed or Relinquishment entered into with Niugini Mining Limited and Kennecott Explorations (Australia) Limited to relinquish their claw back rights over the Company’s projects in PNG, resulting in an issued share capital of 376,305,725 ordinary shares. (j) On 9 April 2008, 100,000 ordinary shares were issued at a price of A$0.50 per ordinary share pursuant to the exercise of options, resulting in an issued share capital of 376,405,725 ordinary shares. (k) On 30 June 2008, 600,000 ordinary shares were issued pursuant to the exercise of options, resulting in an issued share capital of 377,005,725 ordinary shares. (l) On 12 August 2008, 33,988,551 ordinary shares were issued at a price of A$0.31 per ordinary share pursuant to an institutional placing, resulting in an issued share capital of 410,994,276 ordinary shares. (m) On 27 February 2009, 61,649,000 ordinary shares were issued at a price of A$0.50 per ordinary share pursuant to an institutional placing, resulting in an issued share capital of 472,643,276 ordinary shares. (n) On 20 October 2009, 100,000 ordinary shares were issued at a price of A$0.35 per ordinary share pursuant to the exercise of options, resulting in an issued share capital of 472,743,276 ordinary shares. (o) On 9 November 2009 54,489,911 ordinary shares were issued of which 54,139,911 were issued as partial consideration in relation to the acquisition of Australian Solomons Gold Limited and 350,000 were issued at a price of A$0.35 pursuant to the exercise of options, resulting in an issued share capital of 527,233,187 ordinary shares. The value of the ordinary shares issued as consideration for the purchase of shares in Australian Solomons Gold Limited was determined using the market value of the Allied Gold ordinary shares at 24 November 2009 of A$0.38 per share. (p) On 17 November 2009 773,670 ordinary shares were issued as partial consideration in relation to the acquisition of Australian Solomons Gold Limited, resulting in an issued share capital of 528,006,857 ordinary shares. The value of the ordinary shares issued as consideration for the purchase of shares in Australian Solomons Gold Limited was determined using the market value of the Allied Gold ordinary shares at 24 November 2009 of A$0.38 per share. (q) On 1 December 2009 50,707,008 ordinary shares were issued as partial consideration in relation to the acquisition of Australian Solomons Gold Limited, resulting in an issued share capital of 578,713,865 ordinary shares. The value of the ordinary shares issued as consideration for the purchase of shares in Australian Solomons Gold Limited was determined using the market value of the Allied Gold ordinary shares at 24 November 2009 of A$0.38 per share. (r) On 7 December 2009 456,699,000 ordinary shares were issued at a price of A$0.35 per share pursuant to an institutional placement, resulting in an issued share capital of 1,035,412,865 ordinary shares. (s) On 22 December 2009 1,299,870 ordinary shares were issued as partial consideration in relation to the acquisition of Australian Solomons Gold Limited, resulting in an issued share capital of 1,036,712,735 ordinary shares. The value of the ordinary shares issued as consideration for the purchase of shares in Australian Solomons Gold Limited was determined using the market value of the Allied Gold ordinary shares at 24 November 2009 of A$0.38 per share. (t) On 23 February 2010 3,419,407 ordinary shares were issued pursuant to the compulsory acquisition of the remaining Australian Solomons Gold Limited shares, resulting in an issued share capital of 1,040,132,142 ordinary shares. The value of the ordinary shares issued as consideration for the purchase of shares in Australian Solomons Gold Limited was determined using the market value of the Allied Gold ordinary shares at 24 November 2009 of A$0.38 per share.

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(u) On 12 April 2011, Allied Gold completed a placement of 156,330,985 million new ordinary shares, representing 15 per cent of the issued share capital of Allied Gold, to institutional and sophisticated investors at a price of A$0.60 per share, resulting in an issued share capital of 1,198,537,554 ordinary shares. 4.7 As at 31 December 2010 ASG held 1.3 million Allied Gold shares pursuant to the completion of the compulsory acquisition procedures in February 2010. These were transferred to ASIC as unclaimed monies in accordance with the Corporations Act on 28 February 2011. 4.8 Pursuant to the farm-in agreement entered into between Allied Gold and Barrick, Barrick would have been entitled to receive Allied Gold shares in final settlement of the farm-in agreement close out arrangements. Please refer to paragraph 12.1(c) below. Following the Pre-IPO Reorganisation, Barrick will be entitled to receive Ordinary Shares. 4.9 The authorised share capital of Allied Gold as at 31 December 2010, being the date of the most recent balance sheet included in ‘‘Part IX—Historical Financial Information’’, was 1,042,206,569 divided into 1,042,206,569 ordinary shares being the date of the most recent balance sheet included in ‘‘Part IX—Historical Financial Information’’.

5 Articles of Association of the Company The Articles, which were adopted by a special resolution of the Company passed on 25 May 2011, include provisions to the following effect:

Objects/Purposes 5.1 The Articles do not provide for any objects of the Company and accordingly the company’s objects are unrestricted. 5.2 The Articles do not provide for any purposes for which the Company was established.

Voting rights 5.3 Subject to the provisions of the Companies Acts, to any special terms as to voting on which any shares may have been issued or may from time to time be held and any suspension or abrogation of voting rights pursuant to the Articles, at a general meeting of the Company every member who is present in person shall, on a show of hands, have one vote, every proxy who has been appointed by a member entitled to vote on the resolution shall, on a show of hands, have one vote and every member present in person or by proxy shall, on a poll, have one vote for each share of which he is a holder. In the case of joint holders, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders. 5.4 Unless the Board otherwise determines, no member is entitled to vote at a general meeting or at a separate meeting of the shareholders of any class of shares, either in person or by proxy, or to exercise any other right or privilege as a member in respect of any share held by him, unless all calls presently payable by him in respect of that share, whether alone or jointly with any other person, together with interest and expenses (if any) payable by such member to the Company or if he, or any other person whom the Company reasonably believes to be interested in such shares, has been issued with a notice pursuant to the Companies Acts requiring such person to provide information about his interests in the Company’s shares and has failed in relation to any such shares to give the Company the required information within 14 days.

Dividends 5.5 Subject to the provisions of the Companies Acts and of the Articles, the Company may by ordinary resolution declare dividends to be paid to members according to their respective rights and interests in the profits of the Company. However, no dividend shall exceed the amount recommended by the Board. 5.6 Subject to the provisions of the Companies Acts, the Board may declare and pay such interim dividends (including any dividend payable at a fixed rate) as appears to the Board to be justified by the profits of the Company available for distribution. If at any time the share capital of the Company is divided into different classes, the Board may pay such interim dividends on shares which rank after shares conferring preferential rights with regard to dividends as well as on shares conferring

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preferential rights, unless at the time of payment any preferential dividend is in arrears. Provided that the Board acts in good faith, it shall not incur any liability to the holders of shares conferring preferential rights for any loss that they may suffer by the lawful payment of any interim dividend on any shares ranking after those preferential rights. 5.7 Except as otherwise provided by the rights attached to shares, all dividends shall be declared and paid according to the amounts paid up (otherwise than in advance of calls) on the shares on which the dividend is paid. Subject as aforesaid, all dividends should be apportioned and paid proportionately to the amounts paid up on the shares during any portion or portions of the period in respect of which the dividend is paid, but if any share is issued on terms providing that it shall rank for dividend as from a particular date, it shall rank for dividend accordingly. 5.8 All dividends, interest or other sums payable and unclaimed for a period of 12 months after having become payable may be invested or otherwise used by the Board for the benefit of the Company until claimed and the Company shall not be constituted a trustee in respect thereof. All dividends unclaimed for a period of 12 years after having become payable shall (if the Board so resolves) be forfeited and shall cease to remain owing by, and shall become the property of, the Company. 5.9 The Board may, with the authority of an ordinary resolution of the Company, direct that payment of any dividend declared may be satisfied wholly or partly by the distribution of assets, and in particular of paid up shares or debentures of any other company, or in any one or more of such ways. 5.10 The Board may also, with the prior authority of an ordinary resolution of the Company and subject to such terms and conditions as the Board may determine, offer to holders of ordinary shares (excluding any member holding ordinary shares as treasury shares) the right to elect to receive ordinary shares, credited as fully paid, instead of the whole (or some part, to be determined by the Board) of any dividend specified by the ordinary resolution. 5.11 Unless the Board otherwise determines, the payment of any dividend or other money that would otherwise be payable in respect of shares will be withheld if such shares represent at least 0.25 per cent in nominal value of their class and the holder, or any other person whom the Company reasonably believes to be interested in those shares, has been duly served with a notice pursuant to the Companies Acts requiring such person to provide information about his interests in the Company’s shares and has failed to supply the required information within 14 days. Furthermore such a holder shall not be entitled to elect to receive shares instead of a dividend.

Transfer of shares 5.12 Subject to any applicable restrictions in the Articles, each member may transfer all or any of his shares which are in certificated form by instrument of transfer in writing in any usual form or in any form approved by the Board. Such instrument must be executed by or on behalf of the transferor and (in the case of a transfer of a share which is not fully paid up) by or on behalf of the transferee. The transferor is deemed to remain the holder of the share until the transferee’s name is entered in the register of members. 5.13 The Board may, in its absolute discretion, refuse to register any transfer of a share or renunciation of a renounceable letter of allotment unless: (a) it is in respect of a share which is fully paid up; (b) it is in respect of only one class of shares; (c) it is in favour of a single transferee or not more than four joint transferees; (d) it is duly stamped (if so required); and (e) it is delivered for registration to the registered office for the time being of the Company or such other place as the Board may from time to time determine, accompanied (except in the case of (a) a transfer by a recognised person where a certificate has not been issued (b) a transfer of an uncertificated share or (c) a renunciation) by the certificate for the share to which it relates and such other evidence as the Board may reasonably require to prove the title of the transferor or person renouncing and the due execution of the transfer or renunciation by him or, if the transfer or renunciation is executed by some other person on his behalf, the authority of that person to do so,

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provided that the Board shall not refuse to register a transfer or renunciation of a partly paid share on the grounds that it is partly paid in circumstances where such refusal would prevent dealings in such share from taking place on an open and proper basis on the market on which such share is admitted to trading. The Board may refuse to register a transfer of an uncertificated share in such other circumstances as may be permitted or required by the regulations and the relevant systems. 5.14 Unless the Board otherwise determines, a transfer of shares will not be registered if the transferor or any other person whom the Company reasonably believes to be interested in the transferor’s shares has been duly served with a notice pursuant to the Companies Acts requiring such person to provide information about his interests in the Company’s shares, has failed to supply the required information within 14 days and the shares in respect of which such notice has been served represent at least 0.25 per cent in nominal value of their class, unless the member is not himself in default as regards supplying the information required and proves to the satisfaction of the Board that no person in default as regards supplying such information is interested in any of the shares the subject of the transfer, or unless such transfer is by way of acceptance of a takeover offer, in consequence of a sale on a recognised stock exchange or is in consequence of a bona fide sale to an unconnected party. 5.15 If the Board refuses to register a transfer of a share, it shall send the transferee notice of its refusal, together with its reasons for refusal, as soon as practicable and in any event within two months after the date on which the transfer was lodged with the Company. 5.16 No fee shall be charged for the registration of any instrument of transfer or any other document relating to or affecting the title to any share.

Variation of rights 5.17 Subject to the provisions of the Companies Acts, if at any time the share capital of the Company is divided into shares of different classes, any of the rights for the time being attached to any shares may be varied or abrogated in such manner (if any) as may be provided in these Articles by such rights or, in the absence of any such provision, either with the consent in writing of the holders of not less than three-quarters in nominal value of the issued shares of the relevant class (excluding any shares of that class held as treasury shares) or with the sanction of a special resolution passed at a separate general meeting of the holders of the class. 5.18 The quorum at any such meeting shall be not less than two persons present (in person or by proxy) holding at least one-third of the nominal amount paid up on the issued shares of the relevant class (excluding any shares of that class held as treasury shares) and at an adjourned meeting not less than one person holding shares of the relevant class or his proxy. 5.19 Subject to the terms of issue of or rights attached to any shares, the rights for the time being attached to any shares shall be deemed not to be varied or abrogated by the creation or issue of any new shares ranking pari passu in all respects (save as to the date from which such new shares shall rank for dividend) with or subsequent to those already issued or by the reduction of the capital paid up on such shares or by the purchase or redemption by the Company of its own shares or the sale of any shares held as treasury shares in accordance with the provisions of the Companies Acts and the Articles.

General meetings 5.20 The Board may convene a general meeting (which is not an annual general meeting) whenever it thinks fit. 5.21 A general meeting shall be convened by such notice as may be required by law from time to time. 5.22 The notice shall specify whether the meeting is convened as an annual general meeting or any other general meeting, the day, time and place of the meeting and the general nature of the business to be transacted at the meeting. In the case of a meeting convened to pass a special resolution, the notice shall specify the intention to propose the resolution as a special resolution. The notice shall specify that a member entitled to attend and vote is entitled to appoint one or more proxies to attend and to speak and vote instead of the member and that a proxy need not also be a member. The notice must be given to the members (other than any who, under the provisions of the Articles or of any restrictions imposed on any shares, are not entitled to receive notice from the

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Company), to the Directors and the Auditors. The accidental omission to give notice to, or the non-receipt of notice by, any person entitled to receive the same, shall not invalidate the proceedings at the meeting. 5.23 The right of a member to participate in the business of any general meeting shall include without limitation the right to speak, vote, be represented by a proxy or proxies and have access to all documents which are required by the Companies Acts or the Articles to be made available at the meeting. 5.24 A Director shall, notwithstanding that he is not a member, be entitled to attend and speak at any general meeting. The Chairman of any general meeting may also invite any person to attend and speak at that meeting if he considers that this will assist in the deliberations of the meeting. 5.25 No business shall be transacted at any general meeting unless a quorum is present. Subject to the Articles, two persons (either members, duly authorised representatives or proxies) entitled to vote upon the business to be transacted at the meeting shall be a quorum. The Chairman of the meeting may, with the consent of the meeting at which a quorum is present, and shall, if so directed by the meeting, adjourn the meeting from time to time (or indefinitely) and from place to place as the meeting shall determine. Where a meeting is adjourned indefinitely, the Board shall fix a time and place for the adjourned meeting. Whenever a meeting is adjourned for 30 days or more or indefinitely, seven clear days’ notice at the least, specifying the place, the day and time of the adjourned meeting and the general nature of the business to be transacted, must be given in the same manner as in the case of the original meeting. 5.26 A resolution put to a vote of the meeting shall be decided on a show of hands unless a poll is duly demanded. Subject to the provisions of the Companies Acts, a poll may be demanded by the Chairman, at least five members having the right to vote on the resolution, a member or members representing not less than ten per cent of the total voting rights of all the members having the right to vote on the resolution or member or members holding shares conferring the right to vote on the resolution, being shares on which an aggregate sum has been paid up equal to not less than ten per cent of the total sum paid up on all the shares conferring that right. 5.27 The Board may, for the purpose of controlling the level of attendance and ensuring the safety of those attending at any place specified for the holding of a general meeting, from time to time make such arrangements as the Board shall in its absolute discretion consider to be appropriate and may from time to time vary any such arrangements or make new arrangements in place thereof. The entitlement of any member or proxy to attend a general meeting at such place shall be subject to any such arrangements as may be for the time being approved by the Board. In the case of any meeting to which such arrangements apply the Board may, when specifying the place of the meeting: (a) direct that the meeting shall be held at a place specified in the notice at which the chairman of the meeting shall preside (being the principal place); and (b) make arrangements for simultaneous attendance and participation at satellite meeting places or by way of any other electronic means by members otherwise entitled to attend the general meeting or who wish to attend at satellite meeting places or other places at which persons are participating by electronic means, provided that persons attending at the principal place and at satellite meeting places or other places at which persons are participating by electronic means shall be able to see, hear and be seen and heard by, persons attending at the principal place and at such other places, by any means. Such arrangements for simultaneous attendance at such other places may include arrangements for controlling the level of attendance in any manner aforesaid at any of such other places, provided that they shall operate so that any excluded members are able to attend at one of the satellite meeting places or other places at which persons are participating by electronic means. Any such meeting shall be treated as taking place at and being held at the principal place.

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5.28 The Board may direct that any person wishing to attend any meeting should provide such evidence of identity and submit to such searches or other security arrangements or restrictions as the Board shall consider appropriate in the circumstances and shall be entitled in its absolute discretion to refuse entry to any meeting to any person who fails to provide such evidence of identity or to submit to such searches or to otherwise comply with such security arrangements or restrictions.

Borrowing powers 5.29 The Board may exercise all the powers of the Company to borrow money and to mortgage or charge all or any part of its undertaking, property and assets (present and future) and uncalled capital and, subject to the provisions of the Companies Acts, to create and issue debentures and other loan stock and other securities, whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party. The Board shall restrict the borrowings of the Company and shall exercise all voting and other rights and powers of control exercisable by the Company such that the aggregate principal amount outstanding in respect of monies borrowed by the Company does not at any time, without previous sanction of an ordinary resolution of the Company, exceed US$900 million.

Issue of shares 5.30 Subject to the provisions of the Companies Acts and to any rights for the time being attached to any shares, any shares may be allotted or issued with or have attached to them such preferred, deferred or other rights or restrictions, whether in regard to dividend, voting, transfer, return of capital or otherwise, as the Company may from time to time by ordinary resolution determine or, if no such resolution has been passed or so far as the resolution does not make specific provision, as the Board may determine, and any share may be issued which is, or at the option of the Company or the holder of such share is liable to be, redeemed in accordance with the Articles or as the Directors may determine. 5.31 Subject to the provisions of the Companies Acts and to any relevant authority of the Company required by the Companies Acts, any new shares shall be at the disposal of the Board.

Directors’ fees 5.32 The Non-Executive Directors (other than alternate Directors) shall be entitled to receive by way of fees for their services as Directors such sum as the Board may from time to time determine (not exceeding in aggregate £2 million per annum or such other sum as the Company in general meeting shall from time to time determine). Any such fees payable shall be distinct from any salary, remuneration or other amounts payable to a Director pursuant to any other provision of the Articles or otherwise and shall accrue from day to day. 5.33 The salary or remuneration of any Director appointed to hold any employment or executive office may be either a fixed sum of money, or may altogether or in part be governed by business done or profits made or otherwise determined by the Board or any committee authorised by the Board and may be in addition to or in lieu of any fee payable to him for his services as Director. 5.34 The Directors are entitled to be repaid all reasonable travelling, hotel and other expenses properly incurred by them in or about the performance of their duties as Directors.

Pensions and gratuities for Directors 5.35 The Board, or any committee authorised by the Board, may exercise all the powers of the Company to provide pensions, other retirement or superannuation benefits, death or disability benefits or other allowances or gratuities for persons who are or were directors of the Company or any company in the Group and their relatives or dependants.

Directors’ interests 5.36 The Board may authorise any matter proposed to it in accordance with these Articles which would otherwise involve a breach by a Director of his duty to avoid conflicts of interest under the Companies Acts, including any matter which relates to a situation in which a Director has or can have an interest which conflicts, or possibly may conflict, with the interest of the Company or the exploitation of any property, information or opportunity, whether or not the Company could take

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advantage of it (excluding any situation which cannot reasonably be regarded as likely to give rise to a conflict of interest). This does not apply to a conflict of interest arising in relation to a transaction or arrangement with the Company. Any authorisation will only be effective if any quorum requirement at any meeting in which the matter was considered is met without counting the Director in question or any other interested Director and the matter was agreed to without their voting or would have been agreed to if their votes had not been counted. The Board may impose limits or conditions on any such authorisation or may vary or terminate it at any time. 5.37 Subject to having, where required, obtained authorisation of the conflict from the Board, a Director shall be under no duty to the Company with respect to any information which he obtains or has obtained otherwise than as a Director of the Company and in respect of which he has a duty of confidentiality to another person and will not be in breach of the general duties he owes to the Company under the Companies Acts because he fails to disclose any such information to the Board or to use or apply any such information in performing his duties as a Director, or because he absents himself from meetings of the Board at which any matter relating to a conflict of interest, or possible conflict, of interest is discussed and/or makes arrangements not to receive documents or information relating to any matter which gives rise to a conflict of interest or possible conflict of interest and/or makes arrangements for such documents and information to be received and read by a professional adviser. 5.38 Provided that his interest is disclosed at a meeting of the Board, or in the case of a transaction or arrangement with the Company, in the manner set out in the Companies Acts, a Director, notwithstanding his office: (a) may be a party to or otherwise be interested in any transaction arrangement or proposal with the Company or in which the Company is otherwise interested: (b) may hold any other office or place of profit at the Company (except that of auditor of the Company or any of its subsidiaries) and may act by himself or through his firm in a professional capacity for the Company, and in any such case on such terms as to remuneration and otherwise as the Board may arrange; (c) may be a director or other officer of, or employed by, or a party to any transaction or arrangement with, or otherwise interested in, any company promoted by the Company or in which the Company is otherwise interested or as regards which the Company has powers of appointment; and (d) shall not be liable to account to the Company for any profit, remuneration or other benefit realised by any office or employment or from any transaction, arrangement or proposal or from any interest in any body corporate. No such transaction, arrangement or proposal shall be liable to be avoided on the grounds of any such interest or benefit nor shall the receipt of any such profit, remuneration or any other benefit constitute a breach of his duty not to accept benefits from third parties. 5.39 A Director need not declare an interest in the case of a transaction or arrangement with the Company if the other Directors are already aware, or ought reasonably to be aware, of the interest or it concerns the terms of his service contract that have been or are to be considered at a meeting of the Directors or if the interest consists of him being a director, officer or employee of a company in which the Company is interested. 5.40 The Board may cause the voting rights conferred by the shares in any other company held or owned by the Company or any power of appointment to be exercised in such manner in all respects as it thinks fit and a Director may vote on and be counted in the quorum in relation to any of these matters.

Restrictions on Directors voting 5.41 A Director shall not vote on, or be counted in the quorum in relation to, any resolution of the Board or of a committee of the Board concerning any arrangement, transaction or arrangement which is to his knowledge a material interest and, if he purports to do so, his vote will not be counted, but

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this prohibition shall not apply in respect of any resolution concerning any one or more of the following matters: (a) any transaction or arrangement in which he is interested by means of an interest in shares, debentures or other securities or otherwise in or through the Company; (b) the giving of any guarantee, security or indemnity in respect of money lent to, or obligations incurred by him or any other person at the request of or for the benefit of, the Company or any of its subsidiary undertakings; (c) the giving of any guarantee, security or indemnity in respect of a debt or obligation of the Company or any of its subsidiary undertakings for which he himself has assumed responsibility in whole or in part under a guarantee or indemnity or by the giving of security; (d) the giving of any other indemnity where all other Directors are also being offered indemnities on substantially the same terms; (e) any proposal concerning an offer of shares or debentures or other securities of or by the Company or any of its subsidiary undertakings in which offer he is or may be entitled to participate as a holder of securities or in the underwriting or sub-underwriting of which he is to participate; (f) any proposal concerning any other body corporate in which he does not to his knowledge have an interest (as the term is used in Part 22 Companies Act 2006) in one per cent or more of the issued equity share capital of any class of such body corporate nor to his knowledge hold one per cent or more of the voting rights which he holds as shareholder or through his direct or indirect holding of financial instruments (within the meaning of the Disclosure and Transparency Rules) in such body corporate; (g) any proposal relating to an arrangement for the benefit of the employees of the Company or any of its subsidiary undertakings which does not award him any privilege or benefit not generally awarded to the employees to whom such arrangement relates; (h) any proposal concerning insurance which the Company proposes to maintain or purchase for the benefit of Directors or for the benefit of persons who include Directors; (i) any proposal concerning the funding of expenditure by one or more Directors on defending proceedings against him or them, or doing anything to enable such Director or Directors to avoid incurring such expenditure; or (j) any transaction or arrangement in respect of which his interest, or the interest of Directors generally has been authorised by ordinary resolution. 5.42 A Director shall not vote or be counted in the quorum on any resolution of the Board or committee of the Board concerning his own appointment (including fixing or varying the terms of his appointment or its termination) as the holder of any office or place of profit with the Company or any company in which the Company is interested.

Number of Directors 5.43 Unless and until otherwise determined by an ordinary resolution of the Company, the number of Directors shall not be less than two.

Directors’ appointment and retirement 5.44 Directors may be appointed by the Company by ordinary resolution or by the Board. If appointed by the Board, a Director holds office only until the next annual general meeting and shall not be taken into account in determining the number of Directors who are to retire by rotation. 5.45 At each annual general meeting of the company, any Directors appointed by the Board since the last annual general meeting shall retire. In addition one-third of the remaining Directors or, if their number is not three or a multiple of three, the number nearest to but not exceeding one-third, shall retire from office by rotation. 5.46 At each annual general meeting, any Director who was last elected or last re-elected at or before the annual general meeting held in the third calendar year before the current year shall retire by

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rotation. If the number of Directors so retiring is less than the minimum number of Directors who are required to retire by rotation, additional Directors up to that number shall retire (namely, those Directors who are subject to rotation but who wish to retire and not offer themselves for re-election and those Directors who have been Directors longest since their appointment or last re-appointment (and, as between those who have been in office an equal length of time, those to retire shall, unless they otherwise agree, be determined by lot). 5.47 Any Director (other than the Chairman and any Director holding executive office) who would not otherwise be required to retire shall also retire if he has been with the Company for a continuous period of nine years or more at the date of the meeting and shall not be taken into account when deciding which and how many Directors should retire by rotation at the annual general meeting.

Untraced shareholders 5.48 Subject to the Articles, the Company may sell any shares registered in the name of a member remaining untraced for 12 years who fails to communicate with the Company following advertisement of an intention to make such a disposal. Until the Company can account to the member, the net proceeds of sale will be available for use in the business of the Company or for investment, in either case at the discretion of the Board. The proceeds will not carry interest.

Non-United Kingdom shareholders 5.49 There are no limitations in the Articles on the rights of non-United Kingdom shareholders to hold, or to exercise voting rights attached to, the ordinary shares. However, non-United Kingdom shareholders are not entitled to receive notices of general meetings unless they have given an address in the United Kingdom to which such notices may be sent or, subject to and in accordance with the Companies Acts, an address to which notices may be sent in electronic form.

CREST 5.50 CREST is a paperless settlement system enabling securities to be evidenced otherwise than by a certificate and transferred otherwise than by a written instrument. The Articles are consistent with CREST membership and, amongst other things, allow for the holding and transfer of shares in uncertificated form. The Articles contain other provisions in respect of transactions with the shares in the Company in uncertificated form and generally provide for the modifications of certain provisions of the Articles so that they can be applied to transactions with shares in the Company in uncertificated form.

Indemnity of officers 5.51 Subject to the provisions of the Companies Acts, but without prejudice to any indemnity to which he might otherwise be entitled, every past or present Director (including an alternate Director) or officer of the Company or a director or officer of an associated company (except the Auditors or the auditors of an associated company) shall be entitled to be indemnified out of the assets of the Company against all costs, charges, losses, damages and liabilities incurred by him for negligence, default, breach of duty, breach of trust or otherwise in relation to the affairs of the Company or of an associated company, or in connection with the activities of the Company, or of an associated company, as a trustee of an occupational pension scheme (as defined in Section 235(6) Companies Act 2006). In addition the Board may purchase and maintain insurance at the expense of the Company for the benefit of any such person indemnifying him against any liability or expenditure incurred by him for acts or omissions as a Director or officer of the Company (or of an associated company).

Lien and forfeiture 5.52 The Company shall have a first and paramount lien on every share which is not fully paid for all amounts payable to the Company (whether presently or not) in respect of that share to the extent and in the circumstances permitted by the Companies Acts. The Board may sell any share on which the Company has a lien if a sum in respect of which the lien exists is presently payable and is not paid within 14 clear days after notice has been sent to the holder of the share demanding payment and stating that if the notice is not complied with the share may be sold.

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5.53 The Board may from time to time make calls on members in respect of any money unpaid on their shares, subject to the terms of allotment of the shares. Each member shall (subject to receiving at least 14 clear days’ notice) pay to the Company the amount called on his shares. If a call or any instalment of a call remains unpaid in whole or in part after it has become due and payable, the Board may give the person from whom it is due not less than 14 clear days’ notice requiring payment of the amount unpaid together with any interest which may have accrued and any costs, charges and expenses incurred by the Company by reason of such non-payment. The notice shall name the place where payment is to be made and shall state that if the notice is not to be complied with the shares in respect of which the call was made is liable to be forfeited.

Conversion provisions 5.54 The Articles do not contain any provisions relating to conversion of the ordinary shares.

6 City Code on Takeovers and Mergers 6.1 As an English public limited company, resident in the United Kingdom and whose securities are admitted to trading on London Stock Exchange’s main market for listed securities, the Company is subject to the UK City Code on Takeovers and Mergers (the City Code). 6.2 Rule 9 of the City Code stipulates, inter alia, that except with the consent of the Panel, when: (a) any person acquires, whether by a series of transactions over a period of time or not, an interest in shares which (taken together with shares in which persons acting in concert with him are interested) carry 30 per cent or more of the voting rights of a company; or (b) any person, together with persons acting in concert with him, is interested in shares which in the aggregate carry not less than 30 per cent of the voting rights of a company but does not hold shares carrying more than 50 per cent of such voting rights and such person, or any person acting in concert with him, acquires an interest in any other shares which increases the percentage of shares carrying voting rights in which he is interested such person shall extend (an) offer(s) to the other shareholders in the company on the basis set out in the City Code. 6.3 Where a person or group of persons acting in concert holds shares carrying more than 50 per cent of the voting rights in a company no obligation would normally arise to make a general offer under Rule 9 if the concert party increases its aggregate shareholding. However, even if the concert party holds shares carrying over 50 per cent of the voting rights, the Panel may, inter alia, regard any acquisition by a member that increases his interests in shares to 30 per cent or more or, if he is already interested in 30 per cent or more, which increases the percentage of shares carrying voting rights in which he is interested as giving rise to an obligation on that individual to make an offer. In the above summary, persons ‘‘acting in concert’’ are persons who, pursuant to an agreement or understanding (whether formal or informal), actively co-operate, through the acquisition by any of them of shares in the Company, to obtain or consolidate control of the Company. 6.4 Control means a holding, or aggregate holdings, of shares carrying 30 per cent or more of the voting rights of the Company, irrespective of whether the holding or holdings give de facto control.

Squeeze-out and sell-out provisions 6.5 Part 28 of the 2006 Act came into force on 6 April 2007 and governs ‘‘squeeze-out’’ and ‘‘sell-out’’ provisions, which are triggered when a person acquires 90 per cent of both the issued shares and voting rights in the Company as a result of having made a takeover offer for the Company. Under this new regime, such an acquirer may serve a notice on the remaining minority shareholder stating that it desires to buy their shares (‘‘squeeze-out’’) and, conversely, the remaining minority shareholder may exercise in writing its right to require the acquirer to acquire its shares (‘‘sell out’’). The consideration offered to the minority shareholder whose shares are compulsorily acquired must, in general, be the same as the consideration that was available under the takeover offer. 6.6 Both squeeze-out and sell-out rights are exercisable within a three month period from the end of the period within which the takeover offer can be accepted. Under the squeeze-out provisions, the acquirer must, at the end of six weeks from the date of the notice, send a copy of its notice and an executed transfer for the shares to the Company and pay the consideration for the shares to the

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Company, whereupon the shares will be registered in the name of the acquirer. The consideration is then held on trust by the Company for the minority shareholder. Under the sell-out provisions, the acquirer is entitled and bound to acquire the shares on the terms of the takeover offer or on such other terms as may be agreed. 6.7 As at 15 June 2011, the Directors are not aware of any public takeover bids by third parties in respect of the Ordinary Shares which have occurred during the last financial year and the current financial year.

7 Directors and Senior Managers 7.1 The names of the Directors and Senior Managers and their functions in the Company are set out in ‘‘Part II—Management, Corporate Governance and Employees’’ of this Prospectus. 7.2 The business address of each of the Directors and each of the Senior Managers is Building 23, Garden City Office Park, 2404 Logan Road, Eight Mile Plains, Queensland, 4113 Australia. 7.3 In addition to their directorships of the Company (in the case of the Directors), the Directors and the Senior Managers hold or have held the following directorships (other than those of subsidiaries of the Company) and/or were members of the following partnerships, within the past five years:

Name Current Former M V Caruso ...... Blackhawk Oil & Gas Limited CI Resources Limited Busselton Free Range Vegi Egg Farm Pty Ltd Cityside Corporate Pty Ltd Zurich Bay Holdings Pty Ltd Simto Australia Pty Ltd Simto Resources Limited Mineral Commodities Ltd CLR No.5 Pty Ltd Gulf Asiatic Pty Ltd Mincom Waste Pty Ltd Q Smelt Pty Ltd Queensland Minex NL Regional Management Pty Ltd Rexelle Pty Ltd Ritara Pty Ltd Spherical Pty Ltd Kariba Kono (SL) Limited F Terranova ...... Novabank Pty Ltd Nil T S Harvey ...... Perseus Mining Limited Moto Goldmines Andina Minerals Inc Polaris Geothermal Inc Victoria Gold Corporation Orvana Minerals Corp Serabi Mining plc Nord Resources Corporation Sarama Resources Ltd Manicouagan Minerals Inc M House ...... Landcorp Western Australia Landgate Western Australia Latent Petroleum Pty Ltd Gemstar Diamonds Limited A Lowrie ...... Edinburgh Dragon Trust Quadrise Fuels International plc Kenmare Resources plc Thai Euro Fund G H Steemson ...... Court Resources Pty Ltd Carbine Resources Limited Steemson Geoscience Pty Ltd Mineral Commodities Ltd Sandfire Resources NL Blackhawk Oil & Gas Limited Rexelle Pty Ltd Q Smelt Pty Ltd

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Name Current Former P Torre ...... Mission NewEnergy Limited Carbine Resources Limited Neo Resources Limited CI Resources Limited Mineral Commodities Limited Katica Pty Ltd A Better Life Foundation WA Gold Street Corporation Pty Ltd Biotrade Pty Ltd Blackhawk Oil and Gas Limited Queensland Minex NL R Hastings ...... Neo Resources Limited Nil P Williams ...... Kieta Holdings Pty Ltd Focus Minerals Ltd P DuPlessis ...... Nil Nil D Anwyll ...... Nil Nil P Davies ...... Nil Nil 7.4 Within the period of five years preceding the date of this Prospectus none of the Directors or Senior Managers: (a) has any convictions in relation to fraudulent offences; (b) has been a director or senior manager of any company at the time of any bankruptcy, receivership or liquidation of such company; or (c) has been the subject of any official public incrimination and sanction by any statutory or regulatory authorities (including designated professional bodies) or has been disqualified by a court from acting as a member of the administrative, management or supervisory bodies of a company or from acting in the management or conduct of the affairs of any company. 7.5 Save as set out in note 26(e) to the financial statements for the years ended 30 June 2010, 2009 and 2008 in Section A of ‘‘Part IX—Historical Financial Information’’ and in note 26(f) to the financial statements for the six months ended 31 December 2010 in Section B of ‘‘Part IX—Historical Financial Information’’ of this Prospectus, none of the Directors or Senior Managers has any potential conflicts of interest between his duties to the Company and his private interests or other duties. 7.6 None of the Directors or Senior Managers was selected for his position pursuant to any arrangement or understanding with major shareholders, customers, suppliers or others. 7.7 None of the Directors or Senior Managers has agreed to any restrictions on the disposal within a certain time of his holding in the Ordinary Shares.

8 Directors’, senior managers’ and major shareholders’ interests 8.1 As at 15 June 2011 (being the latest practicable date prior to the date of this Prospectus) interests of the Directors, Senior Managers and their immediate families (which are beneficial unless otherwise stated) in the securities of Allied Gold and the Company which: (a) have been notified by each Director (or, in the case of Senior Managers, would have been, had they been Directors) to the Company; or

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(b) are interests of a connected person (within the meaning of Section 252 of the 2006 Act) of a Director or Senior Manager which would, if the connected person were a Director or Senior Manager, be required to be disclosed and the existence of which is known to or could with reasonable diligence be ascertained by the Director or Senior Manager, are as follows:

No. vested No. yet to No. of No. of as at vest as at Allied options Date of Date 6 June 6 June Gold Name granted Terms grant expires 2011 2011 shares M V Caruso ...... 8,875,000 A$0.35 expiring 05.12.2008 31.10.2011 5,875,000 3,000,000 7,685,193 31.10.2011 20,000,000 A$0.50 expiring 05.11.2009 31.12.2013 20,000,000 — 31.12.2013 F Terranova ...... 5,500,000 A$0.35 expiring 01.12.2008 31.10.2011 4,250,000 1,250,000 1,000 30.10.2011 10,000,000 A$0.50 expiring 11.11.2009 31.12.2013 10,000,000 — 31.12.2013 T S Harvey ...... 1,500,000 A$0.50 expiring 06.06.2011 31.12.2011 N/A N/A 200,000 31.12.2011 M House ...... 1,500,000 A$0.35 expiring 11.11.2009 31.12.2011 1,000,000 500,000 10,000 31.12.2011 A Lowrie ...... 1,750,000 $0.35 expiring 05.12.2008 30.11.2011 1,500,000 250,000 1,635,460 30.11.2011 G H Steemson .... 1,750,000 A$0.35 expiring 05.12.2008 30.11.2011 1,500,000 250,000 1,100,000 30.11.2011 P DuPlessis ...... 825,000 $0.35 expiring 29.12.2008 31.10.2011 525,000 300,000 Nil 31.10.2011 R Hastings ...... 3,250,000 $0.35 expiring 01.12.2008 31.10.2011 2,250,000 1,000,000 300,000 31.10.2011 500,000 $0.50 expiring 22.12.2009 31.12.2013 500,000 — 31.12.2013 P Torre ...... 1,750,000 $0.35 expiring 01.12.2008 31.10.2011 1,250,000 500,000 20,000 31.10.2011 250,000 $0.50 expiring 22.12.2009 31.12.2013 250,000 — 31.12.2013 D Anwyll ...... — —————102,000 P Davies ...... 825,000 $0.35 exoiring 29.12.2008 31.10.2011 525,000 300,000 Nil 31.10.2011 175,000 $0.50 expiring 22.12.2009 31.12.2013 175,000 — 31.12.2013 P Williams ...... — —————— 8.2 Pursuant to the Schemes, the Directors will receive: (a) Ordinary Shares as consideration for the acquisition of their Allied Gold Shares under the Share Scheme; and (b) Allied Gold Mining Options as consideration for the acquisition of their Allied Gold Options under the Option Scheme.

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8.3 The following table sets out the relevant interest of each Director in securities of the Company upon completion of the Schemes:

Number of Ordinary Shares to be Terms of Allied Gold Mining No. vested as No. yet to vest issued under Options under the Option at 31 March as at 31 March the Share Name Scheme 2011 2011 Scheme M V Caruso ..... £1.26 expiring 30.11.2011 979,166 500,000 1,280,865 £1.80 expiring 31.12.2013 3,333,333 Nil Nil F Terranova ..... £1.26 expiring 30.11.2011 708,333 208,333 166 £1.80 expiring 31.12.2013 1,666,666 Nil Nil T S Harvey ..... £1.26 expiring 31.12.2011 166,666 83,333 33,333 M House ...... £1.80 expiring 31.12.2011 166,666 83,333 1,666 A Lowrie ...... £1.26 expiring 30.11.2011 250,000 41,666 272,576 G H Steemson . . £1.26 expiring 30.11.2011 250,000 41,666 183,333 P DuPlessis ..... £1.26 expiring 31.10.2011 87,500 50,000 Nil R Hastings ..... £1.26 expiring 31.10.2011 375,000 166,666 50,000 £1.80 expiring 31.12.2013 83,333 Nil Nil P Torre ...... £1.26 expiring 31.10.2011 208,333 83,333 3,333 £1.80 expiring 31.12.2013 41,666 Nil Nil P Davies ...... £1.26 expiring 31.10.2011 87,500 50,000 Nil £1.80 expiring 31.12.2013 29,166 Nil Nil 8.4 Save as disclosed above, none of the Directors or Senior Managers or any person connected with any Director or Senior Manager within the meaning of Section 252 of the 2006 Act has any interest in the share capital of the Company or any of its subsidiaries. 8.5 As at 15 June 2011 (being the latest practicable date prior to the date of this Prospectus) there were no outstanding loans granted by any member of the Group to any Director, nor by any Director to any member of the Group, nor was any guarantee which had been provided by any member of the Group for the benefit of any Director, or by any Director for the benefit of any member of the Group, outstanding. 8.6 Save as set out in note 26 to the financial statements for the years ended 30 June 2010, 2009 and 2008 in Section A of ‘‘Part IX—Historical Financial Information’’ and in note 26 to the financial statements for the six months ended 31 December 2010 in Section B of ‘‘Part IX—Historical Financial Information’’ of this Prospectus, no Director is or has been interested, directly or indirectly, in any transaction which is or was unusual in its nature or conditions or significant in relation to the business of the Group and which has been effected by the Group during the current or immediately preceding financial year or which was effected by the Group during an earlier financial year and which remains in any respect outstanding or unperformed.

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8.7 Prior to the Pre-IPO Reorganisation, the following persons (in addition to members of the administrative, management or supervisory bodies) were, as at 2 June 2011, directly or indirectly interested in 3 per cent or more of the issued ordinary share capital of or voting rights in Allied Gold:

Percentage of issued No. of Ordinary Ordinary Share Shareholder Shares capital M & G Investment Management Ltd ...... 231,239,177 19.29 Franklin Resources Inc...... 95,644,554 7.98 Legal & General Investment Management Ltd ...... 86,772,468 7.24 Baker Steel Capital Managers LLP ...... 83,654,889 6.98 Capital Research Global Investors ...... 77,303,411 6.45 JP Morgan Asset Management UK Limited ...... 56,016,586 4.67 Resource Capital Associates L.L.C...... 53,685,093 4.48 BlackRock Inc ...... 38,606,143 3.22 8.8 Following the Pre-IPO Reorganisation, based on the proposed 1:6 share exchange under the Scheme, it is expected that the following persons (in addition to members of the administrative, management or supervisory bodies) will be directly or indirectly interested in 3 per cent or more of the issued ordinary share capital of or voting rights in the Company:

Percentage of issued No. of Ordinary Ordinary Share Shareholder Shares capital M & G Investment Management Ltd ...... 38,539,862 19.29 Franklin Resources Inc...... 15,940,759 7.98 Legal & General Investment Management Ltd ...... 14,462,078 7.24 Baker Steel Capital Managers LLP ...... 13,942,481 6.98 Capital Research Global Investors ...... 12,883,901 6.45 JP Morgan Asset Management UK Limited ...... 9,336,097 4.67 Resource Capital Associates L.L.C...... 8,947,515 4.48 BlackRock Inc ...... 6,434,357 3.22 8.9 None of the shareholders referred to at paragraphs 8.7 and 8.8 above has different voting rights from any other holder of Ordinary Shares in respect of any Ordinary Shares held by them. 8.10 The Company is not aware of any persons who, directly or indirectly, jointly or severally, will own or could exercise control over the Company. 8.11 The Company is not aware of any arrangements the operation of which may at a subsequent date result in a change of control of the Company.

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9 Directors’ service contracts, terms of appointment and remuneration 9.1 The terms of the Directors’ and Senior Managers service contracts are summarised below: Notice Current Name Date of contract period salary/fees A$ Executive Directors Mark Caruso ...... 26 May 2003 1 month 626,750(1) Frank Terranova ...... 10 December 2009 1 month 419,650(1) Non Executive Directors Sean Harvey ...... 11 March 2010 1 month 90,000 Monty House ...... 4 March 2009 1 month 95,000 Anthony Lowrie ...... 9 March 2007 1 month 85,000 Gregory H Steemson ...... 14 June 2005 1 month 90,000 Senior Managers Peter Torre ...... 6 October 2008 3 months 120,000 Ross Hastings ...... 1 January 2010 1 month 327,000(1) Peter DuPlessis ...... 9 February 2009 1 month 272,500(1) Drew Anwyll ...... 19 May 2010 1 month 342,400(1) P Davies ...... 20 October 2009 1 month 237,620(1) P Williams ...... 11 April 2011 1 month 381,500(1)

Note: (1) Inclusive of compulsory employer superannuation contributions.

9.2 The employing company for each of the Directors and Senior Managers is Allied Gold. 9.3 The Directors will be appointed to the Board of the Company pursuant to a resolution of the Board. An internal group re-charge mechanism will be implemented in relation to their fees, whereby Allied Gold charges the Company an proportionate cost for the services provided to the Company by the Directors, but all payments made to the directors by way of remuneration are made by Allied Gold. 9.4 Formal service agreements are entered into between Allied Gold and all Directors and key management personnel. On appointment to the Board, all Non Executive Directors enter into a letter of appointment with the Company. The letter summarises the Board policies and terms, including compensation, relevant to the office of Director. Remuneration and other terms of employment for the Chairman, Chief Financial Officer and other key management personnel are also formalised in contracts of employment. Some of these agreements provide for the provision of performance related bonuses as well as participation in the Employee Share Option Scheme. All contracts with executives may be terminated by either party giving relevant notice. (a) Mark V Caruso, Executive Chairman Mr Caruso’s service agreement has no fixed term. Base remuneration payable under the service agreement is A$626,750 per annum, inclusive of superannuation effective from 1 October 2009. The increase in Mr Caruso’s salary to A$575,000 was backdated to 1 October 2008. Mr Caruso is entitled to an annual bonus of no more than 30 per cent of base remuneration if key performance indicators set by the Board on an annual basis are achieved. In the year ended 30 June 2010 formal key performance indicators were not established, however certain of the options granted to Mr Caruso during the period include vesting conditions related to gold production and Allied Gold’s share price. For the year ended 30 June 2010, the Board exercised its discretion to award Mr Caruso a bonus of A$225,000 for achieving the acquisition of Australian Solomon Gold Limited and achieving the listing of the Company’s shares on the Toronto Stock Exchange and the associated capital raising. The Company may terminate Mr Caruso’s appointment on four weeks’ written notice. In the event that Mr Caruso’s appointment is terminated by the Company, Mr Caruso is entitled to 12 months’ base remuneration plus any amount payable in lieu of notice. Mr Caruso may terminate his appointment on eight weeks’ written notice. In the event of such termination, Mr Caruso is entitled to three months’ base remuneration plus any amount payable in lieu of notice.

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(b) F Terranova, Chief Financial Officer and Executive Director Mr Terranova’s service agreement has no fixed term. Total fixed remuneration payable under the service agreement is A$419,650, inclusive of superannuation effective 1 October 2009. The increase in Mr Terranova’s salary to A$419,650 was backdated to 1 October 2008. Mr Terranova is entitled to an annual bonus not exceeding 30 per cent of base remuneration dependent on achievement of specific objectives as determined by the Chief Executive Officer, commencing. Formal key performance indicators were not established in the financial year ending 30 June 2010; however certain of the options granted to Mr Terranova during the period include vesting conditions related to gold production and the Company’s share price. The Company may terminate Mr Terranova’s appointment on eight weeks’ written notice. On termination by the Company, Mr Terranova is entitled to termination pay of twelve months total fixed remuneration. (c) S Harvey, Non Executive Director Mr Harvey’s appointment has no fixed term, but can be terminated by either Mr Harvey or the Company on four weeks’ written notice. Details of the remuneration of Non Executive Directors are contained at paragraph 9.6 below. (d) M House, Non Executive Director Mr House’s appointment has no fixed term, but can be terminated by either Mr House or the Company on four weeks’ written notice. Details of the remuneration of Non Executive Directors are contained at paragraph 9.6 below. (e) A Lowrie, Non Executive Director Mr Lowrie’s appointment has no fixed term, but can be terminated by either Mr Lowrie or the Company on four weeks’ written notice. Details of the remuneration of Non Executive Directors are contained at paragraph 9.6 below. (f) G Steemson, Non Executive Director Mr Steemson’s appointment has no fixed term, but can be terminated by either Mr Steemson or the Company on four weeks’ written notice. Details of the remuneration of Non Executive Directors are contained at paragraph 9.6 below. Until July 2010, Mr Steemson also received an annual retainer from the Company of A$45,000 for geological consulting services. (g) P Torre, Company Secretary Mr Torre’s appointment is for a three year term, commencing 6 October 2008. Total fixed remuneration payable to Mr Torre under the terms of his appointment is A$120,000 per annum, effective 1 December 2009. The Company may terminate Mr Torre’s appointment on three months’ written notice. On termination by the Company, Mr Torre is entitled to the lesser of three month’s base remuneration or the balance of the contract term. Mr Torre may terminate his appointment on three month’s written notice. In the event of such termination, Mr Torre is entitled to three months’ base remuneration plus any amount payable in lieu of notice. (h) R Hastings, General Manager Resource and Development Mr Hasting’s appointment has no fixed term. Total fixed remuneration payable under the service agreement is A$327,000, exclusive of superannuation effective 1 January 2010. Mr Hastings is entitled to four weeks’ pay on termination by the Company or by him. On termination by the Company, he is entitled to further termination pay of twelve months’ total fixed remuneration. (i) P DuPlessis, Resident Manager Simberi Operation Mr DuPlessis’s appointment has no fixed term. Mr DuPlessis’s base salary, exclusive of superannuation, is A$250,000 per annum. Mr DuPlessis is entitled to a gross performance bonus of A$22,000 based upon the satisfaction of achieving quarterly key performance indicators (KPIs). The KPIs are as follows: (i) average cost of gold per ounce sold for the Quarter is A$600 or less, as calculated by the Chief Financial Officer; and/or

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(ii) the total gold shipped per quarter is a minimum of 21Koz. The KPIs were not achieved in the financial year ended 30 June 2010, and as such there Mr DuPlessis was not entitled to a bonus. Mr DuPlessis’s is entitled to a payment equivalent to three month’s salary upon termination of his appointment by the Company. (j) D Anwyll, Resident Manager, Gold Ridge Operation Mr Anwyll’s appointment has no fixed term. Mr Anwyll’s base salary is A$342,400 per annum inclusive of superannuation effective 19 May 2010. Mr Anwyll’s appointment may be terminated by either Mr Anwyll or the Company on one month’s written notice. On termination by the Company, Mr Anwyll is entitled to a payment equivalent to three month’s salary. Mr Anwyll is entitled to (i) 12 month’s base salary for termination without cause within first six months of his employment plus payment in lieu of notice where applicable; (ii) six month’s base salary for termination without cause within after six months but less than 18 months of employment, plus payment in lieu of notice where applicable; and (iii) six month’s base salary on termination for redundancy, plus payment in lieu of notice where applicable. Mr Anwyll is also entitled to (iv) an annual bonus not exceeding 30 per cent of his base salary, payable after one year from commencement, dependent on achievement of agreed KPIs including but not limited to cash costs and oz of gold produced, and (v) an annual bonus not exceeding 50 per cent of base salary payable annually after two years from commencement of his employment, dependent on achievement of agreed KPIs, including but not limited to cash costs and oz of gold produced. (k) P Davies, Group Exploration Manager Mr Davies’ appointment has no fixed term. Mr Davies is entitled to a base salary of A$237,620 per annum, inclusive of 9 per cent superannuation effective 20 October 2008. Mr Davies is not entitled to a performance bonus. Mr Davies’ appointment may be terminated by either him or the Company on one month’s written notice of termination. Upon termination by the Company, Mr Davies is entitled to a payment equivalent to three month’s salary. (l) P Williams, Group General Manager Operations Mr Williams’ appointment has no fixed term. Total fixed remuneration payable under the service agreement is A$381,500 inclusive of 9 per cent. superannuation. Subject to certain conditions, Mr Williams is entitled to relocation assistance up to the value of A$15,000. Mr Williams’ appointment can be terminated by either Mr Williams or the Company on one month’s written notice. Upon termination without notice by the Company within the first year of employment (after the end of a probationary period of 3 months), Mr Williams is entitled to six months’ base salary less any payment in lieu of notice where applicable. 9.5 Save as set out in this paragraph 9, there are no service contracts or consultancy agreements in existence between any of the Directors and the Company or any of its subsidiaries which cannot be determined by the employing company without payment of compensation or benefits (other than statutory compensation) and no such contracts are proposed. 9.6 The current base remuneration for non-executive directors of A$85,000 per annum was last reviewed with effect from 1 January 2010. Directors receive an additional A$10,000 per annum for each Board sub-committee on which they serve as Chairman. Other directors serving on Board sub-committees receive an additional A$5,000 per annum for each sub-committee to which they are appointed. Non-executive directors’ fees are determined within an aggregate directors’ fee pool limit. The current fee pool limit of A$500,000 was approved by shareholders at the Annual General Meeting on 28 November 2008. Non-executive directors’ fees and payments are reviewed annually by the Board. 9.7 Executives are offered a competitive base pay that consists of fixed components plus incentive payments that are payable at the Board’s discretion. Base pay for senior executives is reviewed annually to ensure each executive’s pay is competitive with the market. The executive remuneration framework has three components: (a) base pay and benefits, including superannuation;

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(b) short term cash based incentives available to nominated executives; and (c) long term incentives through participation in the Employee Option Plan. 9.8 The remuneration (including contingent and/or deferred compensation) and benefits in kind, paid by the Company to the Directors and Senior Managers in respect of the financial year ended 30 June 2010, being the last full financial year, were as follows:

Post Basic Share based employment salary/fees Bonus compensation benefits Total A$ A$ A$ A$ A$ Executive Directors M V Caruso ...... 681,250 225,000 4,397,500 61,313 5,365,063 F Terranova ...... 468,117 — 2,198,750 42,131 2,708,998 Subtotal Executive Directors ...... 1,149,367 225,000 6,596,250 103,444 8,074,061 Non Executive Directors S Harvey ...... 28,333 — — — 28,333 M House ...... 87,500 — 270,000 — 357,500 A Lowrie ...... 81,667 — — — 81,667 G H Steemson ...... 127,500 — — — 127,500 Subtotal Non-Executive Directors ...... 325,000 — 270,000 — 595,000 Senior Managers P Torre ...... 105,000 — 44,100 — 149,100 R Hastings ...... 280,000 — 88,200 25,200 393,400 P DuPlessis ...... 250,000 — — 22,500 272,500 D Anwyll ...... 64,266 — — 4,820 69,086 P Davies ...... 218,000 — 30,870 19,260 268,130 Subtotal Senior Managers 917,266 163,170 71,780 1,152,216 Grand total ...... 2,391,633 225,000 7,029,420 175,224 9,821,277

Note: salaries, fees and benefits includes gross salary and fees, fringe benefits, professional memberships and subscriptions, allowances, leave entitlements and adjustments made to the base salaries of Mr Caruso and Mr Terranova to align them with market benchmarks.

10 Pensions 10.1 Allied Gold does not have a pension plan that provides for payments or benefits to Directors or Employees at, following, or in connection with retirement. In compliance with certain statutory requirements in Australia, PNG and the Solomon Islands, Allied Gold is required to make payments to a superannuation fund as prescribed by the relevant legislation in each of those jurisdictions. Allied Gold has no involvement in the management or selection of any such fund, and does not have access to information with respect to any such fund, including principal amounts held by such funds or rates of return of such funds. The salary compensation figures provided in paragraph 9.8 above include such superannuation payments. 10.2 The Company does not have any employees, and therefore does not have a pension plan that provides for payments or benefits to Directors or Employees at, following, or in connection with retirement.

11 Share plans Allied Gold Option Plan 11.1 Allied Gold established an employee incentive option scheme (the Allied Gold Option Plan) for, inter alia, the employees and consultants of Allied Gold or any related entity (Eligible Persons). The Allied Gold Option Plan was re-approved by shareholders at an annual general meeting on 28 November 2008. The Allied Gold Option Plan was established to advance the interests of Allied

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Gold by encouraging stock ownership by Eligible Persons and attracting, motivating and retaining Eligible Participants by providing long term incentives for senior employees (including Directors) to deliver long term Shareholder returns. All full time employees, part time employees and consultants to the Group are eligible to participate in the plan at the absolute discretion of the Board. Options are granted under the plan for no consideration and are on terms stipulated at the discretion of the Board. The options hold no voting rights, do not participate in dividends and are not transferable. All options granted are exercisable in exchange for one Ordinary Share in the Company for every option held. 11.2 The Allied Gold Option Plan is administered by the board of directors of Allied Gold (the Allied Gold Board). Under the Allied Gold Option Plan, options to purchase shares in Allied Gold may be granted by the Allied Gold Board to Eligible Persons. The Allied Gold Board has the authority, subject to the terms of the Allied Gold Option Plan, to determine the terms, including the limitations, restrictions and conditions, if any, upon such grants and shall take into account the skill, experience, length of service with Allied Gold, remuneration level and such other criteria as the directors consider appropriate in the circumstances. The Allied Gold Option Plan provides that directors of Allied Gold are not included as Eligible Persons; Allied Gold has a separate plan on substantially similar terms to the Allied Gold Option Plan for members of the Allied Gold Board, except that shareholders must ratify grants of stock options to Allied Gold directors and that options granted to Allied Gold directors do not generally expire until their original expiry date, regardless as to whether an Allied Gold director resigns or is not re-elected prior to such expiry date. 11.3 The Allied Gold Option Plan provides that, subject to any regulatory requirements, the exercise price for any option granted under the Allied Gold Option Plan shall be determined by the Allied Gold Board and shall be no less than any minimum specified by the listing rules of the ASX. All offers of option grants will be made using an ‘‘Offer Document’’ as prescribed by the Allied Gold Option Plan or by applicable regulation. The terms of each grant will be set out in the Offer Document. Options are not assignable. The terms of grant of options may be varied by the Allied Gold Board only in accordance with the rules of the ASX, and requires the consent of the grantee if any such variation would be materially prejudicial to the grantee, other than adjustments to comply with applicable legislation, to correct errors, or to permit Allied Gold to comply with the rules of the ASX or foreign laws or regulatory bodies. 11.4 Options are exercisable when the conditions in respect of each grant of options have been satisfied and there is otherwise no prohibition precluding the exercise of such options. Options must be exercised in such minimum numbers as prescribed by the rules of the ASX. 11.5 The Allied Gold Board may determine in its discretion the number of options to be granted to an Eligible Person. Options are exercisable during a period established at the time of their grant, such period to be set out in Offer Document. Any Option not exercised prior to the expiry date will become null and void. Options that are not exercisable at the time an Eligible Person ceases to be an Eligible Person for any reason, including termination of employment for cause or resignation, will be immediately null and void. Options that are exercisable at the time an Eligible Person ceases to be an eligible person for any reason, including termination of employment for cause or resignation, will be exercisable for a period of 60 days after such date of termination or resignation. In the case of death, permanent disability, retirement or redundancy of an Eligible Person, the legal representative of such Eligible Person may exercise any unexercised options which are otherwise eligible to be exercised. In such event, the Allied Gold Board may, in its discretion, permit the exercise of Options that are not exercisable at such time and have not otherwise lapsed. In all cases, the Allied Gold Board may determine in its discretion that any options that are not otherwise exercisable, but have not lapsed, may be exercised within any such additional time as determined by the Allied Gold Board. 11.6 A number of Allied Gold Options have not vested. For all of the unvested options the vesting condition is that Allied Gold Shares trade at A$0.70 or higher for five consecutive trading days.

The Allied Gold Mining PLC Option Plan 11.7 The terms and conditions of the Allied Gold Mining Options issued as consideration to Scheme Optionholders are to be identical to the terms and conditions of the Allied Gold Options as set out above, with the exception of the capital consolidation and exercise price.

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11.8 Under the proposed Option Scheme, the vesting condition is to remain the same for all unvested Allied Gold Mining Options as it was for Allied Gold Options except for an adjustment of the trading price from AUD to GBP, such that unvested Ordinary Shares must trade at or above £2.56 for five consecutive trading days. 11.9 Each Allied Gold Mining Option entitles the holder to subscribe for one Ordinary Share at an exercise price set out in the table below, reflecting the one Allied Gold Mining Option for six Allied Gold Options consolidation which was implemented under the Option Scheme and an adjustment of the exercise price of Allied Gold Options from AUD to GBP.

Exercise Type of Allied Gold Mining Option Price Director Options expiring 30.11.2011 ...... £1.26 Director Options expiring 31.12.2013 ...... £1.80 Employee Options expiring 31.10.2011 ...... £1.26 Employee Options expiring 31.12.2013 ...... £1.80 Unlisted Director Options expiring 30.11.2011 ...... £1.80

12 Material contracts 12.1 The following contracts (not being contracts entered into in the ordinary course of business) have been entered into by members of the Group within the two years immediately preceding the date of this Prospectus and are, or may be, material or have been entered into at any time by any member of the Group and contain any provisions under which any member of the Group has any obligation or entitlement which is, or may be, material to the Group as at the date of this Prospectus:

Admission (a) Sponsor Agreement Under this agreement, dated 17 June 2011 and between the Company, Allied Gold, RBC Capital Markets and the Directors, the appointment of RBC Capital Markets to act as sponsor to the Company in connection with the application for Admission is confirmed. The Company and Allied Gold Limited have given RBC Capital Markets certain customary warranties and undertakings regarding, amongst other things, the accuracy of information contained in this Prospectus and concerning the Group and its business. RBC Capital Markets may terminate this agreement in certain circumstances at any time before Admission becomes effective. The Company and Allied Gold have also indemnified RBC Capital Markets against certain losses incurred in connection with Admission.

Assets and acquisitions (b) Details of the Group’s mining and exploration licences are to be found in Section B of ‘‘Part III—Papua New Guinea’’ and Section B of ‘‘Part IV—Solomon Islands’’ of this Prospectus. (c) In March 2008, the Group signed the Barrick LOI with Barrick PNG, to enter into a A$20 million farm-in agreement with respect to Allied Gold’s exploration licence on Tatau and Big Tabar Islands. At the time of entering into the Barrick LOI, Barrick subscribed for and purchased A$15 million of fully paid ordinary shares in Allied Gold at a price of A$0.85 per share. In March 2010, Allied negotiated Barrick PNG’s withdrawal from the joint venture agreement over Tatau and Big Tabar Islands and consequently reassumed management of exploration in the entire area of permit EL609. Allied made an immediate A$2.5 million payment to Barrick PNG with a further A$3 million to be paid as either cash or Allied Gold shares. Barrick agreed to place its holding of Allied Gold shares in escrow until 2012. (d) On 16 September 2009, Allied Gold and ASG entered into an Implementation Agreement in relation to Allied Gold’s offer for the entire issued share capital of ASG. Pursuant to the Implementation Agreement, the Independent Directors of ASG have agreed to unanimously recommend the transaction in the absence of a superior proposal, and Allied Gold has agreed to make, or to procure a wholly-owned subsidiary to make, the offer to the Shareholders. The Implementation Agreement contains certain undertakings from ASG and

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Allied Gold in relation to the transaction, including customary deal protections in the form of ‘‘no-shop’’ and ‘‘no-talk’’ commitments from ASG which are subject to a fiduciary exception. ASG has agreed to pay a break fee of A$300,000 to Allied Gold in the event that the Independent Directors cease to unanimously recommend the transaction other than in certain prescribed circumstances, a third party acquires control of ASG, or ASG breaches its exclusivity commitments. (e) On 3 September 2009, Allied Gold and RCF entered into a Pre-Bid Agreement. Pursuant to the Pre-Bid Agreement, RCF has agreed to deposit under the transaction, and not withdraw, subject to certain exceptions, ASG Shares representing 19.9 per cent of the issued and outstanding ASG Shares, and to publicly announce its intention to accept the Offer in respect of the balance of its ASG Shares (representing a further 29.0 per cent of issued and outstanding ASG Shares) and to not withdraw that acceptance in the absence of a superior proposal to the transaction.

Commercial contracts (f) CSS Housing and Village Relocation Contract On 9 April 2010 GRML entered into a contract for the supply and installation of 302 modular housing structures with Complete Site Services Pty Ltd (CSS). Services provided by CSS included the design, supply, manufacture, delivery to Chinese port and loading to shipping provided by GRML, unpacking at site and construction of packaged housing units, complete with all fixtures, to enable the resettlement of local personnel at Gold Ridge. CSS is also required to provide a small crew of supervisors and expatriate tradesmen skilled in the related building trades to supervise trade personnel provided by GRML for the assembly and construction of the housing units to handover stage. Under the terms of the agreement, CSS submits a progress claim within seven days after the end of each month. Under the terms of the agreement, the period of time for completion of supply and installation is 14 months. The total contract sum is A$8,512,564.60. Under the terms of the agreement, CSS gives various warranties in favour of GRML, and is also required to obtain warranties from the manufacturers and suppliers of the equipment provided under the agreement. The agreement contains a standard representation that the CSS has special knowledge, experience and expertise in the supply and installation of such equipment and has the skills to supply and construct the resettlement housing. The agreement includes standard warranties found in Australian Standard 4910-2002 General Conditions of contract for supply of equipment with installation. The agreement contains various indemnities given by either party in favour of the other. The indemnities given by the parties are the standard indemnities found in Australian Standard 4910-2002 General Conditions of Contract for supply of equipment with installation. CSS’s liability is, for the most part, limited to the proceeds of any insurance policy required to be maintained by it under the contract. GRML may terminate the agreement for any reason by giving seven days’ notice. GRML is only liable for payment for work performed to the date of termination of the agreement and any extra costs CSS incurred as a direct consequence of termination. GRML may terminate the agreement or take the works out of CSS’s hands upon substantial breach by CSS and failure by CSS to show cause after being served with a written ‘‘show cause notice’’ by GRML. Upon a substantial breach of the contract by GRML, CSS may serve GRML with a written ‘‘show cause notice’’. If GRML fails to do so, CSS may suspend the works, and ultimately terminate the agreement if the breach is not remedied by GRML within 28 days of suspension. Both parties also have termination rights upon insolvency of the other party or in the case of frustration of the agreement.

Financing (g) Mine Site Dry Hire Contract Between August 2008 and 1 April 2010, Allied Gold was party to a finance agreement with Zurich Bay Holding Pty Ltd ATF Mine Site Construction Services Trust trading as Mine Site

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Construction Services (Minesite) relating to the hire of mining equipment. The agreement was accounted for as a finance lease. The lease provided for the payment of contingent rentals determined on the basis of a fixed charge per machine hour. Under the terms of the lease, the Group had the option to acquire the leased assets for their agreed fair value on expiry of the leases. The agreement was terminated effective 1 April 2010. A termination payment was made to Minesite based on an independent valuation of the mining equipment. Further details of this contract are are set out in note 26 to the financial statements for the years ended 30 June 2008, 2009 and 2010 in Section A of ‘‘Part IX—Historical Financial Information’’ and in note 26 to the financial statements for the six months ended 31 December 2010 in Section B of ‘‘Part IX—Historical Financial Information’’. (h) IFC loan agreement On 24 June 2010, GRML entered into a loan agreement with the International Finance Corporation (IFC) for the amount of US$35 million (Tranche 1 Loan for US$30 million and Tranche 2 Loan for US$5 million) (the IFC Loan Agreement) to partially finance the rehabilitation, reconstruction, equipping and placing into operation of GRML’s gold mining and processing facility located at Gold Ridge and certain other costs and expenditures associated with the development of Gold Ridge. The interest rate for Tranche 1 Loan is 7.5 per cent per annum plus the British Banker’s Association interbank offered rates for deposits in US Dollars (BBA Rate) and the interest for Tranche 2 Loan is 10 per cent per annum plus the BBA Rate. The IFC Loan Agreement contains representations and warranties given by GRML and events of default customary for loan facilities of this type. The loan made pursuant to the IFC Loan Agreement is secured by the following: (i) First ranking fixed and floating Charge in favour of IFC granted by GRML over all of its assets other than the Mining Equipment (as defined in the Loan Agreement) which is secured to any lender providing finance for the Mining Equipment. (ii) a share charge given by Solomon Islands International Pty Ltd as the pledgor of its shares in GRML in favour of IFC as pledgee; (iii) a share charge given by ASG Solomon Islands Limited as pledgor of its shares in GRML in favour of IFC as pledgee; (iv) a share charge given by Australian Solomon Gold Limited as pledgor of its shares in GRML in favour of IFC as pledgee; (v) a mortgage given by GRML in favour of IFC with respect to the mining tenement and any sublease of the mining tenement; (vi) a deed of collateral assignment of any intercompany debt owed by GRML; (vii) an endorsement of GRML’s insurance and reinsurance policies; and (viii) a guarantee from Allied Gold in respect of all of GRML’s obligations under the IFC loan agreement only until the occurrence of the Security Completion Date (as defined in the IFC Loan Agreement). Under the IFC loan agreement, a change of control of GRML constitutes an event of default and a ‘‘change of control’’ means: (i) Allied Gold individually at any time and for any reason ceases to own, whether directly or indirectly, at least 51 per cent of both the economic and voting interests in GRML’s share capital; or (ii) any person or group other than Allied Gold shall have obtained the power (whether or not exercised) to elect a majority of the board of directors of GRML. Further, pursuant to the terms of a Deed of Assignment and Subordination dated October 2010, the IFC loan is further secured by floating charges over any intra-group debt owed by

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GRML to Allied Gold, Allied Gold Finance and Australian Solomons Gold Limited. IFC also has fixed and floating charges over the assets of various other Group companies, including Solomon Islands International Pty Ltd and Australian Solomons Gold Limited pursuant to the share charges referred to above. The interests of Allied Gold, Allied Gold Finance, Australian Solomons Gold Limited and Simberi Gold in each agreement evidencing such intra-group debts are assigned to IFC. (i) BSP Loan Agreement On 23 November 2010, Simberi Gold entered into a loan agreement with BSP of approximately PGK 52 million (the BSP Loan Agreement) to refinance equipment for Simberi. The interest rate for the BSP loan is a variable interest rate published weekly on Monday in the Post Courier newspaper, however BSP reserves the right to vary the margin at any time. As at 23 November 2010, the interest rate was 10.95 per cent plus a margin of 1.05 per cent per annum. The BSP Loan Agreement contains representations and warranties given by Simberi Gold and events of default customary for loan facilities of this type. The BSP Loan Agreement is secured, inter alia, by a fixed and floating charge in favour of BSP granted by Simberi Gold over all of its assets and undertakings including called but unpaid and uncalled capital, and various guarantees and indemnities given by Allied Gold. Under the BSP Loan Agreement, any change in ownership or control of Simberi Gold without the prior written consent of BSP constitutes an event of default. BSP has provided written acknowledgement waiving its rights (subject to the fulfilment of certain conditions) under the loan agreement and associated security arrangements in this regard. Pursuant to one of the conditions, the Company has entered into a new guarantee and indemnity, limited to PGK 56 million plus interest and costs, on substantially the same terms as the existing guarantee and indemnity provided by Allied Gold. The new guarantee and indemnity entered into by the Company will become effective when the Company becomes the parent company of Allied Gold.

13 Property, plant and equipment Details of the Group’s material existing tangible fixed assets, (other than its mines, licences and contract terms, which are set out in Section B of ‘‘Part III—Papua New Guinea’’ and Section B of ‘‘Part IV— Solomon Islands’’ of this Prospectus) are set out in note 15 to the financial statements for the years ended 30 June 2008, 2009 and 2010 in Section A of ‘‘Part IX—Historical Financial Information’’ and note 15 to the financial statements for the six months ended 31 December 2010 in Section B of ‘‘Part IX— Historical Financial Information’’ of this Prospectus.

14 Working capital 14.1 The Company is of the opinion that the working capital available to the Group is sufficient for its present requirements, that is, for at least the 12 months following the date of this Prospectus.

15 Significant change 15.1 Save for the commencement of production at Gold Ridge in March 2011 and the A$93.8 million equity fundraising conducted in April 2011, there has been no significant change to the financial or trading position of the Group since 31 December 2010, being the latest period for which audited financial information in relation to the Group was published. 15.2 The Directors confirm that no material changes have occurred since the date of the Competent Persons’ Reports contained in ‘‘Part XIV—Competent Person’s Reports’’, the omission of which would make those reports misleading.

16 Related party transactions Details of related party transactions entered into by members of the Group during the period covered by the historical financial information and up to the date of this Prospectus are set out in notes 25 and 26 to the financial statements for the years ended 30 June 2008, 2009 and 2010 in Section A of ‘‘Part IX—

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Historical Financial Information’’ and in notes 25 and 26 to the financial statements for the six months ended 31 December 2010 in Section B of ‘‘Part IX—Historical Financial Information’’ of this Prospectus.

17 Litigation 17.1 Save as set out below, no member of the Group is or has been involved in any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Company is aware) during the 12 months preceding the date of this Prospectus which may have or have had in the recent past a significant effect on the Company and/or the Group’s financial position or profitability. 17.2 In December 2009, Simberi Gold initiated legal proceedings against Intermet and a director of Intermet in respect of breaches of contract entered into between Simberi Gold and Intermet whereby Intermet were contracted to design, procure and manage the construction of gold processing and related facilities for Simberi. Under the legal action, Simberi Gold is claiming damages of not less than A$40 million. Intermet have entered a defence against the claim and have made a counter claim for A$1,178,558.66 in respect of outstanding monies allegedly owed by Simberi Gold under the contract. A directors hearing was held on 20 May 2011. The parties have discussed the possibility of mediation. On 19 May 2011, orders were made by consent as follows: • the parties are to provide formal disclosure of all relevant documents in relation to the proceedings by 6 June 2011; • the parties are to engage in good faith negotiations with a view to determining a process by which a mediation of the dispute can occur, and these discussions are to conclude by 6 June 2011; and • the matter is listed for further directions on 17 June 2011. The amount counter claimed by Intermet has been fully accrued as a liability by Simberi Gold pending the outcome of the litigation. 17.3 Milling and processing at Simberi was suspended for four weeks from 4 March 2011 to 7 April 2011 to repair a valve and onshore piping to the tailings mixing tank. A minor leak in the tailings and mixing tank was caused by valve wear and tear. The leak was detected within hours of its occurrence, and was repaired within three days. The leak was reported to the DEC. The DEC issued an EPO requesting that the tank be repaired and that operations cease until such repair was completed. Though not considered major, the repair work was below the water table and required continuous de-watering to provide access. Following the repair of the tank, the DEC did not immediately lift the EPO and therefore Simberi Gold applied and obtained a court order from the PNG National Court to allow milling and processing at Simberi to recommence. As part of this process, an independent inspection and review of the repairs to the tailings facility and operating procedures at Simberi was commissioned by the DEC. The EPO has since been formally discharged by the PNG Environment Council pursuant to PNG environmental legislation.

18 Consents 18.1 BDO Audit (WA) Pty Ltd of 38 Station Street, Subiaco WA 6008, Australia has given and not withdrawn its written consent to the inclusion in this Prospectus of its reports in ‘‘Part IX—Historical Financial Information’’ of this Prospectus in the form and context in which they appear and has authorised the contents of its reports for the purpose of paragraph 5.5.3R(2)(f) of the Prospectus Rules. 18.2 Golder Associates of Level 2, Havelock Street, West Perth, WA 6005, Australia has given and not withdrawn its written consent to the inclusion in this Prospectus of its competent person’s report, mineral resource estimates and technical review in Part XIV of this Prospectus, references to them and statements and information extracted from them in the form and context in which they appear and has authorised the contents of its report, estimates and review for the purpose of paragraph 5.5.3R(2)(f) of the Prospectus Rules and item 23.1 of Annex I of the Commission Regulation (EC) 809/2004. 18.3 BatteryLimits Pty Ltd of Suite 5/162 Colin Street, West Perth, WA 6005, Australia has given and not withdrawn its written consent to the inclusion in this Prospectus of its competent person’s report, mineral resource estimates and technical review in Part XIV of this Prospectus, references to them

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and statements and information extracted from them in the form and context in which they appear and has authorised the contents of its report, estimates and review for the purpose of paragraph 5.5.3R(2)(f) of the Prospectus Rules and item 23.1 of Annex I of the Commission Regulation (EC) 809/2004.

19 Miscellaneous 19.1 The total costs and expenses relating to Admission payable by the Company (assuming that Admission takes place) are estimated to amount to approximately £2.6 million (excluding VAT) (A$4 million). 19.2 Save for the mining and exploration licences described in Section B of ‘‘Part III—Papua New Guinea’’ and Section B of ‘‘Part IV—Solomon Islands’’ of this Prospectus, there are no patents or intellectual property rights, licences, industrial, commercial or financial contracts or new manufacturing processes which are material to the Group’s business or profitability. 19.3 Market, economic and industry data used throughout this Prospectus is extracted from various industry and other independent sources. The Company confirms that such data has been accurately reproduced and, so far as the Company is aware and is able to ascertain from information published by such third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. Where third party information has been used in this Prospectus, the source of such information has been identified.

20 Documents available for inspection Copies of the following documentation will be available for inspection during normal business hours on any weekday (Saturdays, Sundays and public holidays excluded) for a period of not less than 14 days following Admission at the offices of Norton Rose LLP, 3 More London Riverside, London SE1 2AQ: (a) the articles of association of the Company; (b) the reports from BDO (Audit) WA Pty Ltd which are set out in ‘‘Part IX—Historical Financial Information’’ of this Prospectus; (c) the Competent Person’s Report of Golder Associates and BatteryLimits; (d) the letters of consent referred to at paragraph 18 above; and (e) this Prospectus.

Dated: 17 June 2011

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PART XIII—INTERPRETATION SECTION A—DEFINITIONS 2006 Act the Companies Act 2006 (to the extent in force) ABG Autonomous Bougainville Government ACP African, Caribbean and Pacific group of states Admission the admission of the Ordinary Shares to the premium segment of the Official List and to trading on the London Stock Exchange’s main market for listed securities Admission and Disclosure the Admission and Disclosure Standards of the London Stock Standards Exchange, as revised from time to time AIM the AIM Market of the London Stock Exchange AIM Rules the AIM Rules for Companies and the AIM Rules for Nominated Advisers, as published by the London Stock Exchange Allied Gold Limited or Allied Allied Gold Limited Gold Allied Gold Board the board of directors of Allied Gold Allied Gold Option means an option to acquire Allied Gold shares Allied Gold Optionholder each person in the register of shareholders of Allied Gold who is registered as the holder of an Allied Gold Option Allied Gold Option Plan the employee incentive option scheme operated by Allied Gold APEC Asia-Pacific Economic Cooperation Articles or Articles of the articles of association of the Company from time to time Association ASG Australian Solomons Gold Limited Assignment Agreement the assignment agreement for the Gold Ridge mining agreement dated 12 May 2005 ASX or Australian Stock Australian Securities Exchange Exchange Australian Corporations Act Corporations Act 2001 (Commonwealth of Australia) Barrick Gold Corporation or Barrick Gold Corporation Barrick Barrick LOI letter of intent entered into between the Group and Barrick PNG in March 2008 Barrick PNG Barrick (PNG) Exploration Ltd, a subsidiary of Barrick Gold Corporation BatteryLimits BatteryLimits Pty Ltd BBA Rate British Banker’s Association interbank offered rates for deposits in US Dollars Board the board of Directors of the Company BSP Bank of South Pacific Ltd BSP Loan Agreement the PGK 52 million loan agreement dated 23 November 2010 between Simberi Gold and BSP CBGA Central Bank Gold Agreement CDI or CDIs CHESS depositary interests, a unit of beneficial ownership of the Ordinary Shares with legal title being held by CDN CDN CHESS Depositary Nominees Pty Ltd

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CFC Rules UK Controlled Foreign Company Rules CHESS Clearing House Electronic Subregister System China the People’s Republic of China CIMM Canadian Institute of Mining and Metallurgy Classification System Code the US Internal Revenue Code of 1986, as amended Coffey Coffey Natural Systems COMEX New York Mercantile Exchange and Commodity Exchange, Inc Commonwealth the Commonwealth of Nations, normally referred to as the Commonwealth and formerly known as the British Commonwealth Cotonou Agreement agreement entered into between the European Union and the African, Caribbean, and Pacific Group of States aimed at the reduction and eradication of poverty while contributing to sustainable development and to the gradual integration of ACP countries into the world economy CREST the system for paperless settlement of trades and holdings of uncertificated shares administered by Euroclear UK & Ireland Limited (formerly known as CRESTCo Ltd) CR team the Gold Ridge indigenous community relations team CSS Complete Site Services Ltd DEC PNG Department of Environment and Conservation Directors the directors of the Company, whose names are set out on page 30 of this Prospectus Disclosure and Transparency the Disclosure and Transparency Rules made by the FSA under Rules Part VI of FSMA ECP the Enhanced Cooperation Program that Australia and PNG embarked on in 2004 EEA States member states of the European Economic Area Effective the coming into effect, under Section 411(10) of the Australian Corporations Act, of the order of the Court approving the Scheme of Arrangement Effective Date the date upon which the Scheme of Arrangement becomes Effective EHSMS environment, health and safety management system EL609 PNG Exploration Licence 609 Eligible Persons employees and consultants of Allied Gold eligible to benefit under the Allied gold Option Plan EMMP Environment Managing and Monitoring Program implemented by Nord Pacific in May 1999 prior to construction at Simberi EMP amendment to the EMMP EPO Environmental Protection Order ESMA European Securities and Markets Authority ESRS Environmental and Social Review Summary ETFs Exchange Traded Funds EWC Energy World Corporation

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Financial Services Authority or the Financial Services Authority acting in its capacity as a FSA competent authority for the purposes of Part VI of FSMA FODE Flexible, Open and Distance Education FSMA the Financial Services and Markets Act 2000 (as amended) Gold Ridge the business and operations of the Group associated with the ASG Mining Lease and SPL194 in the Solomon Islands Golder Associates Golder Associates Pty Ltd Group The Company and/or Allied Gold Limited and its subsidiaries and subsidiary undertakings as the context requires, except for the purpose of the working capital statement where Group means (i) prior to the Pre-IPO Reorganisation, the Company and (ii) following the Pre-IPO Reorganisation, the Company and its subsidiaries and subsidiary undertakings GRCLC Gold Ridge Community and Landowners Council GRES GR Engineering Services GRML Gold Ridge Mining Limited GRML Mining Lease the mining lease relating to the Gold Ridge project on Guadalcanal Island which was granted on 12 March 1997 (No 1/1997) HFO heavy fuel oil HMRC HM Revenue & Customs ICJ International Court of Justice IFC International Finance Corporation IFC Loan Agreement the US$35 million loan ageement dated 24 June 2010 between GRML and IFC IFRS International Financial Reporting Standards Intermet Intermet Engineers (Pty) Ltd ISA Individual Savings Account ISIN International Securities Identification Number JORC Code (2004) or JORC the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, 2004 version KPIs key performance indicators LBMA London Bullion Market Association Listing the listing of the entire issued Ordinary Share capital of the Company on the Official List of the UKLA and admission to trading on the premium segment of the main market of the London Stock Exchange, the Australian Stock Exchange and the Toronto Stock Exchange Listing Rules the rules relating to admission to the Official List made in accordance with Section 73A(2) FSMA LNG liquefied natural gas London PM Price London gold market p.m. gold fixing London Stock Exchange London Stock Exchange plc LPV limited preferential voting Main Market the main market for listed securities of the London Stock Exchange

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MDC mining development contract Melanesia a subregion of Oceania extending from the Western end of the Pacific Ocean to the Arafura Sea and eastward to Fiji Member State a member state of the European Economic Area Memorandum of Association the memorandum of association of the Company Mining Group the mining group, being wholly owned subsidiaries of Allied Gold, as that term is defined in the Assignment Agreement ML136 PNG Mining Lease 136 MRA PNG Mineral Resources Authority MSG Melanesian Spearhead Group NI 43-101 Canadian National Instrument 43-101 Non Executive Directors the non executive directors of the Company, whose names are set out on page 30 of this Prospectus Nord Pacific Nord Pacific Ltd Official List the Official List of the FSA OH&S occupational health and safety OPIC Overseas Private Investment Corporation Option Scheme the scheme of arrangement between Allied Gold and Allied Gold Optionholders. Ordinary Shares the ordinary shares of 10 pence each in the capital of the Company Pacific Rim the countries and cities located around the edge of the Pacific Ocean Panel the Panel on Takeovers and Mergers Papua New Guinea or PNG the Independent State of Papua New Guinea PFIC a passive foreign investment company, as defined in the Code PICTA Pacific Islands Countries Trade Agreement PIF Pacific Islands Forum Pre-IPO Reorganisation the re-organisation of the companies comprising the Group and the acquisition by means of the Scheme of Arrangement by the Company of the companies comprising the Group Prospectus this document relating to the Company and the Ordinary Shares prepared and published in accordance with the Listing Rules and the Prospectus Rules Prospectus Directive the European Securities Prospectus Directive (No. 2003/71/EC) Prospectus Rules the rules made for the purpose of Part VI FSMA in relation to offers of securities to the public and admission of securities to trading on a regulated market RAMSI Regional Assistance Mission to the Solomon Islands RBC Capital Markets the trading name of Royal Bank of Canada Europe Limited Registrar the registrar of the Company, Computershare Investor Services PLC Saracen Saracen Minerals Pty Limited, a subsidiary of Crusader Limited Schemes together, the Option Scheme and the Share Scheme

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Scheme Optionholder an Allied Gold Optionholder registered in the Allied Gold register of shareholders and Optionholders as at the Scheme Record Date Scheme of Arrangement the scheme of arrangement effected under Part 5.1 of the Australian Corporations Act between Allied Gold and Allied Gold shareholders, pursuant to which the Company acquired 100 per cent of the issued share capital of Allied Gold and thereby became the holding company of the Group Scheme Record Date the date for determining participation in the Option Scheme being 5.00 p.m. on the date five Business Days following the Effective Date or such other date (after the Effective Date) as Allied Gold and the Company agree in writing SDRT stamp duty reserve tax Securities Act US Securities Act of 1933 Senior Managers the senior managers of the Company Shareholders holders of any of the Ordinary Shares Share Scheme means the Share Scheme pursuant to Part 5.1 of the Corporations Act between Allied Gold and Allied Gold Shareholders Simberi the business and operations of the Group associated with ML136 and EL609 in PNG Simberi Gold Simberi Gold Company Limited SIPP Self-invested Personal Pension Schemes SMAA the Simberi landowner representative body SMJV Simberi Mining Joint Venture Solomon Islands the sovereign state of the Solomon Islands SPL194 Solomon Islands Special Prospecting Licence 194 TEJV Tabar Exploration Joint Venture TOCOM the Tokyo Commodity Exchange TSX or Toronto Stock Exchange Toronto Stock Exchange UKLA the FSA, acting in its capacity as the competent authority United Kingdom or UK the United Kingdom of Great Britain and Northern Ireland US or United States the United States of America US Holder a Shareholder who, for U.S. federal income tax purposes, is a beneficial owner of Ordinary Shares and is (i) a citizen or resident of the United States; (ii) a corporation, or other entity taxable as a corporation, created or organised in or under the laws of the United States, any state therein or the District of Columbia; or (iii) an estate the income of which is subject to US federal income taxation regardless of its source or (iv) a trust if (a) such trust has validly elected to be treated as a US person for US federal income tax purposes or (b) a US court is able to exercise primary supervision over the administration of such trust and one or more US persons have the authority to control all substantial decisions of such trust WTO World Trade Organisation

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SECTION B—GLOSSARY OF TECHNICAL TERMS alluvial detrital material which is transported by a river and deposited at points along the flood plain AOFS Amendment to the OFS Au gold BFS bankable feasibility study BOF basic oxygen furnace CIL carbon in leach cut-off-grade or COG lowest grade of mineralised material considered economic, used in the calculation of ore resources deposit coherent geological body such as a mineralised body epithermal said of a hydrothermal mineral deposit formed within about 1km of the earth’s surface in the range of 50⍭C to 200⍭C fault surface of rock fracture along which has been differential movement feasibility study extensive technical and financial study to assess the commercial viability of a project g/t gram per metric tonne grade relative quantity or the percentage of ore mineral or metal content in an ore body hydrothermal refers in the broad sense to the process associated with alteration and mineralisation by a hot mineralised fluid (water) Indicated Resource as defined in the JORC Code, is that part of a mineral resource which has been sampled by drill holes, underground openings or other sampling procedures at locations that are too widely spaced to ensure continuity but close enough to give a reasonable indication of continuity and where geoscientific data is known with a reasonable degree of reliability. An indicated mineral resource will be based on more data and therefore will be more reliable than an inferred resource estimate Inferred Resource as defined in the JORC Code, is that part of a mineral resource for which the tonnage and grade and mineral content can be estimated with a low level of confidence. It is inferred from the geological evidence and has assumed but not verified geological and/or grade continuity. It is based on information gathered through the appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain quality and reliability JORC Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and the Minerals Council of Australia km kilometres km2 square kilometres Koz thousand ounces kt kilo tonnes (1,000 tonnes) kv kilovolts Kwh kilowatt hour

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leached a rock that is in the process of being broken down by the action of substances dissolved in water leaching see cyanidation

magnetite an iron ore mineral (Fe2O4) being a ferromagnetic material form of iron oxide which is a valuable source of iron ore Measured defined in the JORC Code, as that part of a mineral resource for which the resource has been intersected and tested by drill holes, underground openings or other sampling procedures at locations which are spaced closely enough to confirm continuity and where geoscientific data is reliably known. A measured resource estimate will be based on a substantial amount of reliable data, interpretation and evaluation which allows a clear determination to be made of the shapes, sizes, densities and grades metallurgical describing the science concerned with the production, purification and properties of metals and their applications mill equipment used to grind crushed rocks to the desired size for mineral extraction mineralisation process of formation and concentration of elements and their chemical compounds within a mass or body of rock mineral resource concentration or occurrence of material of intrinsic economic interest in or on the Earth’s crust in such a form that there are reasonable prospects for eventual economic extraction. The location, quantity, grade geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge. Mineral resources are sub-divided into Inferred, Indicated and Measured categories m metres m2 square metres mm millimetres mobile belt long, relatively narrow crustal region of tectonic activity Moz million ounces Mt or mt million tonnes Mtpa ml per annum OFS Optimised Feasibility Study open pit large scale hard rock surface mine operating gold mine mineral processing plant currently engaged in the extraction and processing of ore to produce gold on a commercial scale optimisation process process to define an open pit outline based on geotechnical and economic parameters ore mineral deposit that can be extracted and marketed profitably ore body mining term to define a solid mass of mineralised rock that can be mined profitably under current or immediately foreseeable economic conditions ore reserve the economically mineable part of a Measured or Indicated mineral resource. It includes diluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments, which may include feasibility studies, have been carried out, and include consideration of and modification by

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realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could be reasonably justified. Ore reserves are sub-divided in order of increasing confidence into Probable and Proven ounce or oz troy ounce (= 31.1035 grams) oxide a mineral formed by the direct union of an element with oxygen; e.g. corundum, hematite, magnetite and cassiterite oxide ore often known as secondary or supergene ore, which consists of alteration products of primary ore as a result of weathering or other surficial processes resulting from descending surface waters PFS a prefeasibility study porphyry igenous rock containing conspicuous phenocrysts (crystals) in fine-grained or glassy groundmass primary ore often known as hypogene ore, where ore minerals are deposited during the original period or periods of mineralisation. Ore that has remained practically unchanged from the time of original formation precious metal gold, silver and platinum group minerals pressure oxidation or POX a high temperature and pressure process in which gold bearing sulphides are oxidised to render gold amenable to cyanide leaching pre-stripping the removal of overburden to access the ore deposit propylitisation plagioclase in an igneous rock is altered to epidote, sericite and secondary albite, and terro-magnesian minerals are altered to chlorite-calcite-epidote-iron oxide assemblages pyrite mineral compound of iron and sulphur, sulphide mineral, iron

sulphide, chemical symbol FeS2 quartz mineral composed of silicon dioxide quartzite hard, metamorphic rock which was originally sandstone RC reverse circulation recovery proportion of valuable material obtained in the processing of an ore, stated as a percentage of the material recovered compared with the total material present reserves Proven: measured mineral resources, where technical economic studies show that extraction is justifiable at the time of the determination and under specific economic conditions Probable: measured and/or indicated mineral resources which are not yet proven, but where technical economic studies show that extraction is justifiable at the time of the determination and under specific economic conditions ROM run of mine SAG Mill semi-autogenous mill sandstone detrital sedimentary rock in which particles range from 1116 to 2mm silicification or silicified introduction of silica into a rock, either filling pore spaces or replacing pre-existing minerals

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stockpile an accumulation of ore or mineral formed to create a reserve for loading or when demand slackens or when the processing plant is unequal to handling mine output strike direction in which a horizontal line can he drawn on a plane, and determines the direction in which to measure the true dip strike length longest horizontal dimension of an ore body or zone of mineralisation strip ratio the unit amount of spoil or waste that must be removed to gain access to a similar unit of ore or mineral material sulphide mineral containing sulphur in its non-oxidised form t or tonne metric tonne tailings material that remains after all metals/minerals considered economic have been removed from the ore tpa tonnes per annum transition ore zone of an orebody where both oxide and sulphide/primary ore material exists treatment plant plant where ore undergoes physical or chemical treatment to extract the valuable metals/minerals vein tabular deposit of minerals occupying a fracture, in which particles may grow away from the walls towards the middle veinlet narrow vein

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PART XIV—COMPETENT PERSON’S REPORTS

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SECTION A—SUMMARY

20APR201122215417

REPORT

17 June 2011

MINERAL EXPERTS’ REPORT Combined Operations of Allied Gold

Submitted to: Allied Gold Limited Royal Bank of Canada Europe Ltd 34 Douglas Street 71 Queen Victoria Street PO Box 2019 London EC4V 4DE MILTON QLD 4064 United Kingdom

Report Number. 117641009-004-R-RevB-Draft-1100

Distribution: Allied Gold RBC Europe

11JAN200602133027 21APR201110390875

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ALLIED GOLD MINERAL EXPERT’S REPORT 20APR201122215417

Table of Contents

1.0 INTRODUCTION ...... 277 2.0 SUMMARY—SIMBERI PROJECT ...... 277 2.1 Scope ...... 277 2.2 Property Description ...... 277 2.3 Ownership ...... 277 2.4 Geology ...... 277 2.5 Exploration ...... 278 2.6 Mineral Resources ...... 278 2.7 Mineral Reserves ...... 280 2.8 Mining ...... 280 2.9 Processing ...... 281 2.10 Authors’ Conclusions ...... 281 2.10.1 Mineral Resources ...... 281 2.10.2 Mineral Reserves ...... 281 2.10.3 Processing ...... 282 2.11 Recommendations ...... 282 3.0 SUMMARY—GOLD RIDGE PROJECT ...... 282 3.1 Scope ...... 282 3.2 Property Description and Location ...... 283 3.3 History ...... 283 3.4 Geology ...... 283 3.5 Metallurgy ...... 283 3.6 Mineral Resources ...... 284 3.7 Mineral Reserves ...... 284 3.8 Interpretation and Conclusions ...... 284 3.8.1 Resources ...... 284 3.8.2 Reserves ...... 284 3.8.3 Metallurgy and Processing ...... 285 3.9 Recommendations ...... 285 3.9.1 Mineral Resources ...... 285 3.9.2 Mineral Reserves ...... 285 3.9.3 Metallurgy and Processing ...... 285 4.0 COMBINED FINANCIAL ANALYSIS ...... 285

TABLES Table 2-1: Simberi Resource (0.5 g/t Au cut off—depleted to EOM January 2011) ...... 279 Table 2-2: Simberi Mineral Reserves and Resources within Design Pits (January 2011) ...... 280 Table 2-3: Simberi Gold Company (SGC) Mining Fleet ...... 281 Table 3-1: Gold Ridge Mineral Resources ...... 284 Table 3-2: Gold Ridge Mineral Reserves ...... 284 Table 4-1: Key Economic and Financial Parameters ...... 285 Table 4-2: Allied Gold Combined Cashflow Statement ...... 287

FIGURES Figure 4 1: Allied Gold Overall—Cumulative Discounted Cash Flow ...... 286

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1.0 INTRODUCTION Golder Associates Pty Ltd (‘‘Golder’’, the ‘‘Mineral Expert’’) has been requested by the Allied Gold Limited (‘‘the Company’’) to prepare a Mineral Experts’ Report (the ‘‘MER’’) on the mineral assets of the Company. The MER will be reproduced in a Prospectus being produced by the Company in connection with its proposed admission of ordinary shares to the premium listing segment of the Official List of the United Kingdom Listing Authority (‘‘UKLA’’) maintained by the Financial Services Authority (the ‘‘FSA’’) and admission (the ‘‘Admission’’) to trading on the Main Market of the London Stock Exchange plc (the ‘‘Exchange’’). The Company is currently listed on the Alternative Investment Market (‘‘AIM’’), the Australian Stock Exchange and the Toronto Stock Exchange. Royal Bank of Canada Europe Limited (‘‘RBC’’) has been appointed as the Company’s sponsor in support of the Admission. The mineral assets of Allied Gold are primarily two gold operations: the Simberi project on Simberi Island in the New Ireland Province of Papua New Guinea (‘‘the Simberi Project’’) and the Gold Ridge project on the island of Guadalcanal in the Solomon Islands (‘‘the Gold Ridge Project’’). Separate Competent Persons’ Reports (‘‘CPRs’’) for the Simberi Project and the Gold Ridge Project have been prepared for inclusion in the Prospectus. This document provides an overall summary of the two CPRs and presents the results of a combined financial analysis using Discounted Cashflow (DCF) methodology. For the purposes of Prospectus Rule 5.5.3R(2)(f) Golder Associates accepts responsibility for the information contained in this section of the Prospectus and those sections of the Prospectus which include references to the information in this section. Golder Associates declares that to the best of its knowledge and belief, having taken all reasonable care to ensure that such is the case, the information contained herein is in accordance with the facts and does not omit anything likely to affect the import of such information. For the purposes of Prospectus Rule 5.5.3R(2)(f) BatteryLimits accepts responsibility for the information contained in this section of the Prospectus and those sections of the Prospectus which include references to the information in this section. BatteryLimits declares that to the best of its knowledge and belief, having taken all reasonable care to ensure that such is the case, the information contained herein is in accordance with the facts and does not omit anything likely to affect the import of such information.

2.0 SUMMARY—SIMBERI PROJECT 2.1 Scope This section is a summary of the Simberi Gold Project CPR which has been prepared separately.

2.2 Property Description The Simberi Gold Project is located on Simberi Island in the Tabar Islands Group. The Tabar Islands are situated in the New Ireland Province of Papua New Guinea (PNG) at approximately latitude 2.5⍭ South and longitude 152⍭ East. The four sparsely inhabited islands of the Tabar Group are located 130 km east of the capital city of New Ireland Province, Kavieng. The Simberi Gold Project is located within Mining Lease ML136 which covers the eastern half of Simberi Island.

2.3 Ownership Simberi Gold Company Ltd (‘‘Simberi Gold’’), a fully owned subsidiary of Allied Gold Pty Ltd (‘‘Allied’’) operates the Simberi Gold Mine on Simberi Island.

2.4 Geology Simberi Island is the oldest and northernmost island of the Tabar Island group. It forms part of a silica-poor, potassium-rich alkaline volcanic Pliocene-Pleistocene island arc to the immediate north of New Ireland, PNG. The currently known gold prospects on Simberi Island are located in the eastern half of the island, within the central volcanic core and are contained within a sub-cropping epithermal alteration system

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extending 4 km north-south and 2 km east-west. The host rocks for the mineralisation comprise altered andesitic lava flows or intrusives (porphyries), volcanoclastics and tuffs. Gold mineralisation, however, does not appear to be closely associated with any particular lithology. Where recognised, the main primary control of gold mineralisation is steeply dipping fracture systems, in places associated with milled breccia dykes (diatremes). Particularly high grades are associated with diatreme-country rock contact zones. Gold mineralisation is generally associated with sulphides or iron oxides occurring within all variety of hydraulic fractures, such as simple fracture infills, single vein coatings and crackle brecciation in the more competent andesite units and broad disseminations in the naturally porous volcanoclastic rocks. In the Oxidised zone, the gold is predominantly associated with iron oxides after sulphides, with higher grades occurring with rare vuggy and chalcedonic quartz. The Sulphide zone mineralisation includes refractory gold hosted by pyrite or marcasite and scarcer arsenopyrite at depth. Trace element analyses indicate the pyrite is arsenian.

2.5 Exploration The Tabar Island Group has been extensively explored by a number of operators since the discovery of in situ gold in 1981. Exploration in ML 136 is focussed around the identified deposits of Sorowar, Pigiput, Pigibo, Botlu, Pigicow, Bekou and Samat. In addition to these, there are a number of smaller prospects yet to be properly defined. Exploration uses a combination of channel sampling, reverse circulation and diamond core drilling. In addition to ML 136, Allied also hold Exploration Lease 609 covering most of the rest of the Tabar Island Group. EL 609 is also being actively explored.

2.6 Mineral Resources Table 2-1 summarises the Mineral Resources for the Simberi deposits.

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Table 2-1: Simberi Resource (0.5 g/t Au cut off—depleted to 1 January 2011)

Deposit Material Measured Indicated Inferred Mt Au g/t koz Mt Au g/t koz Mt Au g/t koz Bekou ...... Oxide 0.04 1.74 2 0.06 1.14 2 Transition 0.01 1.17 0 0.05 1.16 2 Sulphide 0.02 1.93 2 0.92 1.38 41 Bekou Total ...... 0.07 1.71 4 1.03 1.36 45 Botlu ...... Oxide 1.22 1.14 44 0.45 1.23 18 0.31 1.16 11 Transition Sulphide 1.45 1.81 84 Botlu Total ...... 1.22 1.14 44 0.45 1.23 18 1.76 1.70 95 Pigibo ...... Oxide 2.96 1.11 106 0.6 0.89 17 Transition 2.19 1.19 84 0.51 0.92 15 Sulphide 3.86 1.11 137 6.22 0.94 188 Pigibo Total ...... 9.01 1.13 327 7.33 0.93 220 Pigicow ...... Oxide 0.15 1.65 8 0.29 1.3 12 Transition 0.11 1.29 4 Sulphide 2.00 1.26 81 Pigicow Total ...... 0.15 1.65 8 2.40 1.27 97 Pigiput ...... Oxide 2.89 0.86 80 4.60 0.92 137 2.01 0.79 51 Transition 1.95 0.89 56 0.77 0.83 21 Sulphide 32.56 1.51 1583 32.25 1 1042 Pigiput Total ...... 2.89 0.86 80 39.11 1.41 1776 35.03 0.98 1114 Samat East ...... Oxide 0.40 1.13 14 Transition 0.08 0.78 2 Sulphide 3.50 0.78 88 Samat East Total ...... 3.98 0.82 104 Samat North A ...... Oxide 0.11 0.78 3 0.11 0.84 3 Transition 0.04 1.29 2 0.01 1.26 0 Sulphide 0.36 0.81 9 1.08 0.86 30 Samat North A Total .... 0.51 0.84 14 1.2 0.86 33 Samat North B ...... Oxide 0.12 0.86 3 0.12 0.75 3 Transition 0.05 2.86 5 0.02 0.78 1 Sulphide 1.90 1.22 74 1.05 0.73 25 Samat North B Total ... 2.07 1.24 82 1.19 0.73 29 Samat South A ...... Oxide 0.02 1.96 1 0.16 1.28 7 Transition 0.01 0.98 0 0.01 0.77 0 Sulphide 0.02 1.01 1 1.73 0.97 54 Samat South A Total ... 0.05 1.38 2 1.90 1.00 61 Samat South B ...... Oxide 0.05 2.94 5 0.17 1.51 8 Transition 0.05 2.03 3 0.02 0.99 1 Sulphide 1.7 1.76 96 3.36 1.07 115 Samat South B Total ... 1.8 1.80 104 3.55 1.09 124 Sorowar ...... Oxide 5.61 1.3 235 8.56 1.08 298 2.40 1.09 84 Transition 0.54 1.17 20 1.46 1.14 53 0.29 0.83 8 Sulphide 1.3 0.93 39 6.93 0.92 205 19.03 0.90 549 Sorowar Total ...... 7.45 1.23 294 16.95 1.02 556 21.72 0.92 641 Sorowar South ...... Oxide 0.68 0.82 18 Transition 0.28 0.68 6 Sulphide 5.39 0.66 114 Sorowar South Total ... 6.35 0.68 138 Grand Total ...... 11.56 1.13 418 70.17 1.28 2891 87.44 0.96 2701

Rounding may cause numerical discrepancies

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2.7 Mineral Reserves Table 2-2 summarises the Mineral Reserves and Resources within designed pits for the Simberi deposits.

Table 2-2: Simberi Mineral Reserves and Resources within Design Pits (1 January 2011)

Proven Probable Total Ore Pit Mt Au g/t koz Mt Au g/t koz Mt Au g/t koz Sorowar Oxide ...... 6.03 1.23 238 5.40 1.18 205 11.43 1.21 433 Transition ...... 0.55 1.08 19 0.52 1.29 22 1.07 1.18 41 Sulphide ...... 0.38 1.10 13 0.74 1.49 35 1.12 1.36 49 Sorowar Total ...... 6.96 1.21 271 6.66 1.22 262 13.62 1.22 533 Pigiput Oxide ...... 3.94 0.73 92 5.35 0.82 141 9.42 0.78 233 Transition ...... 1.67 0.86 46 1.67 0.86 46 Sulphide ...... 12.51 2.39 961 12.51 2.39 961 Pigiput Total ...... 3.94 0.73 92 19.53 1.83 1148 23.47 1.64 1241 Pigibo Oxide ...... 3.43 1.00 110 3.43 1.00 110 Transition ...... 1.65 1.21 64 1.65 1.21 64 Sulphide ...... 0.43 2.04 28 0.43 2.04 28 Pigibo Total ...... 5.51 1.14 203 5.51 1.14 203 Samat North A Oxide ...... 0.07 0.70 2 0.07 0.70 2 Transition ...... Sulphide ...... Samat North A Total ...... 0.07 0.70 2 0.07 0.70 2 Samat North B Oxide ...... 0.12 0.79 3 0.12 0.79 3 Transition ...... 0.05 3.61 6 0.05 3.61 6 Sulphide ...... 0.33 2.28 24 0.33 2.28 24 Samat North B Total ...... 0.50 2.06 33 0.50 2.06 33 Samat South Oxide ...... 0.08 2.37 6 0.08 2.37 6 Transition ...... 0.05 2.16 3 0.05 2.16 3 Sulphide ...... 0.68 2.43 53 0.68 2.43 53 Samat South Total ...... 0.81 2.41 62 0.81 2.41 62 Botlu South Oxide ...... 0.74 1.35 32 0.12 1.61 6 0.86 1.39 38 Transition ...... Sulphide ...... Botlu South Total ...... 0.74 1.35 32 0.12 1.61 6 0.86 1.39 38 Total All Pits Oxide ...... 10.71 1.05 363 14.57 1.01 473 25.28 1.03 836 Transition ...... 0.55 1.08 19 3.94 1.11 141 4.49 1.11 160 Sulphide ...... 0.38 1.10 13 14.69 2.33 1102 15.07 2.30 1116 Total All Pits ...... 11.64 1.06 395 33.20 1.61 1716 44.84 1.46 2112 The Mineral Reserves are included in the Mineral Resources stated above.

2.8 Mining The current mine plan consists of the open pit mining of oxide deposits. The Samat oxide pits have been largely depleted. Ore is currently being extracted from the Sorowar pit. The Simberi mining operation is a conventional load and haul operation using a mixed fleet of owner and contractor equipment (Table 2-3). Ore from the Sorowar pit is transported to the processing plant by an aerial conveying system. Currently, just over 100,000 t of ore per month is being mined.

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Table 2-3: Simberi Gold Company (SGC) Mining Fleet

Machine Number Cat 740 articulated truck ...... 8 Cat 725 articulated truck ...... 2 Cat 330 excavator ...... 2 Komatsu PC450 LC-7 excavator ...... 2 Cat D10N dozer ...... 1 Cat D9N dozer ...... 1 Cat D6R dozer ...... 3 Cat 140 grader ...... 1 Cat CS-563E roller ...... 1 Cat IT38G ...... 1 Cat 980G FEL ...... 2

2.9 Processing The current oxide plant is treating greater than 2 Mtpa at a recovery of greater than 92% gold. Expansion of the oxide plant is based on providing increased comminution capacity including a SAG mill, and increased leaching and carbon adsorption capacity. Capital cost is estimated at A$32 M for the oxide expansion project. Metallurgical testwork has aimed at developing a viable flotation, roast, leach flowsheet for the sulphide ore. A preliminary process design has been developed. Preliminary engineering at PFS level has resulted in a capital cost estimate of $188 M for the sulphide plant, and a further $7.6 M for infrastructure associated with the use of Heavy Fuel Oil (HFO) for power supply. A project to expand of the oxide processing plant capacity to 3.5 Mtpa is currently underway and a Bankable Feasibility Study is currently being conducted to consider a proposed development of a 1.5 Mtpa sulphide processing facility on Simberi Island to facilitate treatment and recovery of gold from sulphide ore. Operating cost for the expanded oxide plant is estimated at $9.25/t ore milled. This is based on the current operating cost adjusted for increased throughput. Operating cost for the sulphide plant has been estimated from first principles at $23.29/t. NPV of the combined expanded 3.5Mtpa oxide and 1.5Mtpa sulphide project has been calculated at $334 M. This includes the contribution of the existing oxide project. Cash operating costs are $678/oz. All dollars are in Australian Dollars (A$) unless otherwise denoted.

2.10 Authors’ Conclusions 2.10.1 Mineral Resources • The Simberi resource is a robust and proven gold deposit. • The current resource models show a positive reconciliation in the mined pits. This issue should be investigated with the objective of optimising production and potentially increasing the mine life. • The historical resource at Botlu is accepted as Inferred based on the Author’s validations. The resource models should be re-estimated using the current data set and understanding of the deposits’ geology. • The Sulphide resource at Sorowar needs to be drilled and assessed. • Beyond the Simberi mining lease, the exploration ground held by Allied over the Island group is all very prospective.

2.10.2 Mineral Reserves • The reserves at Simberi, being based on the resource are also proven and robust. • Improvements to the reserve position come directly from improvements and increases in the resource.

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• The development of some of the satellite deposits will add to the reserve base. • Inclusion of more Sulphide material has the potential to significantly increase reserves.

2.10.3 Processing • The current oxide processing plant is operating well and achieving good oxide recoveries. • The infrastructure that is in place at Simberi Gold is adequate for the 2 Mtpa operation, and with some upgrading including the wharf facility, will be adequate for the 3.5 Mtpa oxide operation and 1.5 Mtpa sulphide operation. • The author is of the opinion that the proposed oxide plant expansion modifications and additions will be effective in increasing oxide plant throughput to 3.5 Mtpa. • The capital cost estimate of $32 M for the oxide plant expansion to 3.5 Mtpa is reasonable for the modifications and additions proposed. • The capital estimate of $188 M for the 1.5 Mtpa sulphide plant design and construction is reasonable. • The gold grades to be fed to the oxide process plant are low at 1.1 g/t average over the mine life, and maintaining low overhead and operating costs will be critical to project viability. • The combined 3.5 Mtpa oxide project and 1.5 Mtpa sulphide project is commercially viable with NPV of $334 M (at 10% discount factor) pre-tax, using US$1,000/oz gold price and A$:US$ exchange rate of 0.8. The NPV is sensitive to gold price.

2.11 Recommendations • The remaining historical resources should be re-estimated incorporating the current geological understanding of the island, recent drilling and other geological data and any updated topographical information. Outsourced this is estimated to cost AUD$50 K. • The positive mining reconciliation should be investigated. This could be done in-house or outsourced at an estimated cost of AUD$30 K. • A critical review of current mining operations should be undertaken and any revisions applied to the optimisation, pit design and scheduling. This could be done in-house or outsourced at an estimated cost of AUD$40 K. • Optimisation of the resource and reserve calculations, final pit designs and scheduling should be revisited on a regular basis. The pit optimisations need to be updated to reflect more recent increasing trend in the gold price. • Exploration drilling to investigate the nature of the sulphide mineralisation beneath the current Sorowar pit design should proceed as a matter of priority. There appears to be significant potential to increase the sulphide resource and reserve base at Simberi, and thus improve the overall economics of the project, through improving the understanding of the sulphide mineralisation in the Sorowar area. • Expansion of the oxide plant to 3.5 Mtpa should proceed. Estimated cost is $32 M. • Allied Gold should consider a Bankable Feasibility Study, in conjunction with additional drilling, which will provide greater confidence to the combined oxide and sulphide project. The cost of a Bankable Study is estimated at $6-$10 M. The total cost of the combined oxide and sulphide project is estimated at $278 M including the $32 M oxide plant expansion. • Allied should closely manage its operating costs to keep its costs within budget estimates.

3.0 SUMMARY—GOLD RIDGE PROJECT 3.1 Scope This section is a summary of the Gold Ridge Project CPR which has been prepared separately.

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3.2 Property Description and Location The Gold Ridge Project is located on the island of Guadalcanal, the central island of the Solomon Islands, approximately 30 km south-east of the capital city Honiara. The project is accessed from Honiara by approximately 40 km of varying quality road. The mine area is located on the lower northern slopes of Mount Chaunapaho in the central ranges of Guadalcanal Island. The project area is extremely rugged, with very steep gradients and is heavily forested. The area has a north-south aspect and an approximate average elevation of 550 m. The gold deposits are situated in the Chovohio and Charivungo river catchments in the headwaters of the Matepono River. Both these rivers have steep gradients with a combined catchment area of 17.4 km2 above their confluence. The river system falls from 1200 m (Chovohio) and 800 m (Charivungo) to the sea in 20 kilometres. The property consists of Special Prospecting License (SPL) #194 covering an area of 130 km2 which surrounds a 30 km2 Mining Lease (No 1/1997).

3.3 History Serious exploration has been undertaken at the site since 1939. The Project was an operating mine from 1998 until June 2000, when it was shut down during the period of civil unrest. During the 22 months that the Valehaichichi mine was actively operating the total gold production amounted to approximately 210,000 ounces. After the shutdown, the camp and office buildings were destroyed by people taking usable construction material. The refurbishment of the plant by GRML is expected to be completed in March 2011. The Gold Ridge project is managed by Gold Ridge Mining Limited (GRML), a subsidiary of Australian Solomons Gold (ASG), which is in turn a wholly owned subsidiary of Allied Gold Limited. Allied Gold has held effective control of the property since March 2010.

3.4 Geology Gold Ridge is located within the central part of Guadalcanal Island which lies between the North Solomon Plate and the San Cristobal Trench. Rock-types occurring on Guadalcanal range from ultramafic to diorite intrusives, felsic to mafic and marine sedimentary rocks to fluvial sediments. The Gold Ridge deposits are hosted by the Lower Pliocene Gold Ridge Volcanics. The Gold Ridge deposits are concentrations of low-sulphidation intrusion related epithermal gold mineralisation. Mineralisation is related mainly to alteration and veining and to a lesser extent lithology. Although alteration assemblages are similar throughout Gold Ridge, the relative abundance and intensity of alteration is different for each deposit. Valehaichichi hosts the most intense and concentrated argillic and silica-pyrite alteration. Propylitic alteration survived at Kupers and Dawsons where argillic and silica- pyrite alteration is less intense. Primary porosity of shallow dipping lithologies as well as moderate to shallow dipping fractures and veins combine to impart a strong sub-horizontal distribution to gold mineralisation. The Gold Ridge project comprises four separate gold deposits called, from north to south, Valehaichichi, Namachamata, Kupers and Dawsons. To date only Valehaichichi has seen any significant mining, mostly by Ross Mining (August 1998 to June 2000). GRML under Allied Gold has recently re-commenced mining operations in the Valehaichichi pit. Numerous artisan workings can be found throughout the mining lease area.

3.5 Metallurgy The Gold Ridge processing plant treated 4.4 million tonnes of ore from the Valehaichichi pit from August 1998 until the plant was shut down due to escalating civil unrest in June 2000. The plant produced approximately 210,000 ounces of gold at a mean gold recovery of around 78%. Gold recovery generally trended downwards during the period of operations ranging from a high of 86% in May 1999 to a low of 68% in April 2000 In 2005 ASG initiated a metallurgical testwork programme to resolve the reasons for the poor metallurgical performance within segments of the deposits.

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The Gold Ridge ores were considered to range from ‘‘free-milling’’ to refractory. Processing by conventional cyanidation resulted in a range of gold recoveries. Gold recovery was shown to correlate with the arsenic content for the fresh and transition ores, but was independent of it in oxide ores. Average gold recoveries by ore type and by pit, are calculated from the arsenic head grade using a regression algorithm developed from the testwork.

3.6 Mineral Resources A recoverable resource estimation was undertaken by Hellman and Schofield Limited in 2008. The method used was Multiple Indicator Kriging (MIK). The estimation is based on sample data from Diamond and Reverse Circulation drill holes. The resource at a cut off grade of 0.5 g/t Au is as shown in Table 3-1.

Table 3-1: Gold Ridge Mineral Resources

Deposit Cut off Measured Indicated Inferred Au g/t Mt Au g/t Mt Au g/t Mt Au g/t Valehaichichi ...... 0.5 2.04 1.38 10.56 1.14 4.83 1.21 Namachamata ...... 0.5 1.15 1.92 1.46 1.43 0.43 1.28 Kupers ...... 0.5 3.95 1.54 10.97 1.23 4.30 1.26 Dawsons ...... 0.5 1.09 1.40 17.91 1.27 5.47 1.34 Total ...... 0.5 8.24 1.53 40.89 1.23 15.03 1.27 Based on the Author’s validation of the Hellman and Schofield work, the models appear to be a consistent and reasonable representation of the data.

3.7 Mineral Reserves The latest Ore Reserves estimation for Gold Ridge was completed by IMC in June 2010. Based on a USD$850 per ounce gold price the current Reserves are as shown in Table 3-2.

Table 3-2: Gold Ridge Mineral Reserves

In situ Predicted Au Recovered Au Mineral Reserve Category Tonnage Grade Au Recovery Grade dry Mt g/t % g/t Proved ...... — — — — Probable ...... 23.2 1.71 0.82 1.40 Proved + Probable ...... 23.2 1.71 0.82 1.40 Waste ...... 33.4 The Mineral Reserves are included in the Mineral Resources stated above.

3.8 Interpretation and Conclusions 3.8.1 Resources The shortcomings of early drilling and sampling have been addressed adequately and the drill sample database used in the resource estimation seems robust. The current resource estimation is a reasonable reflection of the sample database and geological understanding of the deposit. There is potential to improve the selectivity of the resource by reconsidering the variance reductions applied to the models.

3.8.2 Reserves The mining fleet installed at Gold Ridge is considered appropriate for the application and should provide sufficient capacity to achieve the production rates set out in the Life of Mine plan. In reporting the Mineral Reserves, appropriate account has been taken of the uncertainty associated with the plant recovery, by converting Measure Mineral Resources within the pit design to Probable Mineral Reserves, rather than Proven Mineral Reserves.

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3.8.3 Metallurgy and Processing The Gold Ridge processing plant operated from August 1998 until the plant was shut down due to civil unrest in June 2000. The plant has recently been refurbished and upgraded. A number of process design changes and plant improvements have been incorporated in the refurbished plant design to increase plant capacity, and mitigate previous operational issues. Ore commissioning of the upgraded plant commenced in March 2011. Metallurgical testwork on Gold Ridge fresh and transitional ore samples has shown that the ore types are partially refractory, and that gold recovery is dependent on the arsenic grade of feed. Further variability testing will be required to confirm the gold recovery relationship. Gold recovery in initial operations is predicted to be 72-74% with ore from the Valehaichichi and Namachamata pits. Recovery is then predicted to increase to 80-85% as increasing amounts of Kupers and Dawsons are processed.

3.9 Recommendations 3.9.1 Mineral Resources When the exploration and mine drilling is again fully operational the drilling and sampling processes should be reviewed to ensure they have been implemented as documented and are applicable to the Gold Ridge geology and environment. New drilling should be routinely validated against the current models and trigger updates where changes are noted. An investigation into the variance reductions applied in modelling should be considered as a possible path to improving the selectivity of the models and consequently any mine planning based on these models.

3.9.2 Mineral Reserves Once the mine is again fully operational the optimisation parameters used in the reserve definition, especially recovery, should be validated against production data.

3.9.3 Metallurgy and Processing Variability metallurgical testing should be undertaken on drill samples and plant feed samples to further develop gold recovery prediction relationships, and minimise variations in plant metallurgical recovery.

4.0 COMBINED FINANCIAL ANALYSIS Financial evaluation of the combined operations of Allied Gold has been completed. Key financial and economic parameters used for the evaluation are detailed in Table 4-1.

Table 4-1: Key Economic and Financial Parameters

Parameter Units Value Discount rate for DCF ...... % 10 Gold Price ...... USD/oz 1350 Exchange Rate ...... AUD/USD 1.00 Exchange Rate ...... AUD/PGK 0.44 A summary of the combined Allied Gold cashflows is presented in Table 4-2. Figure 4 1 shows the cumulative discounted cashflows, including exploration costs, by year.

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The financial analysis shows a positive NPV10 (including corporate and exploration costs) of just under AUD$500 M over the life of existing operations at Simberi and Gold Ridge.

Cumulative Discounted Cash Flow (at 10%)

600.00

500.00

400.00

300.00

200.00

100.00 Cumulative Discounted Cashflow (AUD$M) Cumulative Discounted Cashflow

0.00 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

-100.00 21APR201105233969 Figure 4 1: Allied Gold Overall—Cumulative Discounted Cash Flow The gold price of US$1350/oz which has been used for the purposes of this financial analysis reflects the average gold spot price from 1 July 2010 to end of May 2011, and is used in the financial analysis to more closely reflect the revenue being generated by the assets. Given that the Company’s assets are currently in production and generating revenue at spot prices of above US$1500/oz, US$1350/oz used for this financial analysis can be considered by the Company as conservative and reasonable. Pit optimisations for the purposes of final pit limit determination and Ore Reserves estimation for individual deposits at Simberi and Gold Ridge were carried out using a range of gold prices between US$350/oz and US$1000/oz, reflecting the view of the long-term gold price which was held at the time that each of the individual pit optimisation and reserve estimation studies were completed.

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Report Signature Page

GOLDER ASSOCIATES PTY LTD

John Battista Stephen Godfrey Principal Mining Engineer Principal Resource Geologist

JEB/RGB/jlt

A.B.N. 64 006 107 857

Golder, Golder Associates and the GA globe design are trademarks of Golder Associates Corporation.

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At Golder Associates we strive to be the most respected global company Africa + 27 11 254 4800 providing consulting, design, and construction services in earth, environment, and Asia + 86 21 6258 5522 related areas of energy. Employee owned since our formation in 1960, our focus, Australasia + 61 3 8862 3500 unique culture and operating environment offer opportunities and the freedom to Europe + 356 21 42 30 20 excel, which attracts the leading specialists in our fields. Golder professionals take North America + 1 800 275 3281 the time to build an understanding of client needs and of the specific environments South America + 55 21 3095 9500 in which they operate. We continue to expand our technical capabilities and have experienced steady growth with employees who operate from offices located [email protected] throughout Africa, Asia, Australasia, Europe, North America, and South America. www.golder.com

Golder Associates Pty Ltd Level 3, 1 Havelock Street West Perth, Western Australia 6005 Australia T: +61 8 9213 7600

21APR201110390875

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SECTION B—SIMBERI PROJECT COMPETENT PERSON’S REPORT

20APR201122215417

REPORT

17 June 2011

COMPETENT PERSONS’ REPORT Simberi Gold Project, Simberi Island, Papua New Guinea

Submitted to: Allied Gold Limited Royal Bank of Canada Europe Ltd 34 Douglas Street 71 Queen Victoria Street PO Box 2019 London EC4V 4DE MILTON QLD 4064 United Kingdom Australia

Authors and Competent Persons

Stephen Godfrey ...... BSc(Hons)(UNE), DipEd(QU), MAusIMM, MAIG Associate, Principal Resource Geologist, Golder Associates Pty Ltd John Battista ...... B.Eng.(Mining), MAusIMM, Associate, Principal Mining Engineer, Golder Associates Pty Ltd Phil Hearse ...... BAppSc, MBA, FAusIMM, Managing Director, Battery Limits Pty Ltd

Report Number. 117641009-002-R-RevB-Draft-1100

Distribution: Allied Gold RBC Europe Ltd

11JAN200602133027 21APR201110390875

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COMPETENT PERSONS’ REPORT—SIMBERI 20APR201122215417

AUTHOR/CP COMPANY ADDRESS Stephen Godfrey Golder Associates Pty Ltd Level 2, 1 Havelock Street 21APR201110390875 WEST PERTH WA 6872

John Battista Golder Associates Pty Ltd Level 2, 1 Havelock Street 21APR201110390875 WEST PERTH WA 6872

23APR201114252950 Phil Hearse Battery Limits Pty Ltd 5/162, Colin Street West Perth WA 6005

Author/CP Section Responsibility Stephen Godfrey ...... 1.0-15.0, 17.1-19.0, 19.1,20.1, 21.0, 22.0, 23.0 John Battista ...... 17.20, 18.1, 20.2, 21.0, 22.0, 23.0 Phil Hearse ...... 16.0, 18.2-18.11, 19.2, 20.3, 21.0, 22.0, 23.0

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Table of Contents

1.0 SUMMARY ...... 302 1.1 Scope ...... 302 1.2 Property Description ...... 302 1.3 Ownership ...... 302 1.4 Geology ...... 302 1.5 Mineralisation ...... 302 1.6 Exploration ...... 303 1.7 Resource ...... 304 1.8 Reserves ...... 305 1.9 Mining ...... 306 1.10 Processing ...... 306 1.11 Authors’ Conclusions ...... 306 1.11.1 Resources ...... 306 1.11.2 Reserves ...... 307 1.11.3 Processing ...... 307 1.12 Recommendations ...... 307 2.0 INTRODUCTION AND TERMS OF REFERENCE ...... 308 3.0 RELIANCE ON OTHER EXPERTS ...... 309 4.0 PROPERTY DESCRIPTION AND LOCATION ...... 310 4.1 Area and Location ...... 310 4.2 Title ...... 310 4.3 Property Boundaries ...... 313 4.4 Location of Mineralisation and Mine Workings ...... 314 4.5 Royalties and Encumbrances ...... 314 4.6 Environmental Liabilities ...... 314 4.6.1 Waste Dumps ...... 315 4.6.2 Open Pits ...... 315 4.6.3 Pipelines ...... 315 4.6.4 Access/Haul Roads ...... 315 4.6.5 Process Plant ...... 315 4.6.6 Stormwater ...... 315 4.6.7 Deep Sea Tailings ...... 315 4.7 Required Permits ...... 315 4.8 Surface Rights ...... 316 5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ...... 316 5.1 Access ...... 316 5.2 Physiography ...... 317 5.3 Climate ...... 317 5.4 People and Infrastructure ...... 317 6.0 HISTORY ...... 318 7.0 GEOLOGICAL SETTING ...... 321 7.1 Regional Geology ...... 321 7.2 Prospect Geology ...... 322 7.3 Interpreted Geological History ...... 322 8.0 DEPOSIT TYPES ...... 323 8.1 Simberi ...... 323 8.1.1 Sorowar ...... 324 8.1.2 Samat ...... 326 8.1.3 Botlu ...... 327 8.1.4 Pigiput ...... 328 8.1.5 Pigibo ...... 329 8.1.6 Pigicow ...... 330

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8.1.7 Bekou ...... 331 9.0 MINERALISATION ...... 331 10.0 EXPLORATION ...... 332 10.1 Surveys and Investigations ...... 332 11.0 DRILLING ...... 335 11.1 Surveying ...... 341 11.1.1 Collar Surveys ...... 341 11.1.2 Downhole Surveys ...... 342 11.2 Drill hole Database ...... 342 12.0 SAMPLING METHOD AND QUALITY CONTROL MEASURES ...... 345 12.1 Kennecott Sampling ...... 345 12.2 Nord Sampling ...... 346 12.3 Allied Sampling ...... 347 12.3.1 RC Sample Processing ...... 347 12.3.2 Core Sample Processing ...... 349 12.3.3 Procedural Variations ...... 351 12.4 Bulk Densities ...... 352 12.5 Bulk Density Determination Method ...... 353 12.5.1 Allied—Since 2008 ...... 353 13.0 SAMPLE PREPARATION, ANALYSES AND SECURITY ...... 353 13.1 Sample Preparation and Analyses ...... 353 13.2 Sampling Security ...... 353 14.0 DATA VERIFICATION ...... 354 14.1 Kennecott ...... 354 14.1.1 Nord ...... 354 14.1.2 Allied ...... 354 14.1.2.1 Statistics of the Standards ...... 356 14.1.2.2 Duplicates ...... 358 14.1.2.3 Blanks ...... 359 14.1.3 Round Robin Inter-laboratory Checks ...... 360 14.1.3.1 Analysis of Inserted Standards ...... 362 14.1.3.2 Analysis of Pulp Duplicate Results ...... 363 14.1.3.3 Diamond Twins of RC Holes ...... 364 14.2 Author’s Verification ...... 364 14.2.1 Site Visit ...... 364 14.2.2 Database Validation ...... 364 15.0 ADJACENT PROPERTIES ...... 365 16.0 MINERAL PROCESSING AND METALLURGICAL TESTING ...... 365 16.1 Historical Testwork ...... 365 16.2 Simberi Sulphide Scoping Study ...... 365 16.3 PFS Testwork ...... 366 16.3.1 Sample Selection ...... 366 16.3.1.1 Sorowar Deposit ...... 366 16.3.1.2 Pigiput Deposit ...... 366 16.3.2 Head Assays ...... 366 16.3.2.1 Sorowar ...... 366 16.3.2.2 Pigiput ...... 367 16.3.3 Comminution ...... 367 16.3.3.1 Sorowar ...... 367 16.3.3.2 Pigiput ...... 367 16.3.4 Cyanidation Leaching ...... 368 16.3.4.1 Sorowar ...... 368 16.3.4.2 Pigiput ...... 368 16.3.5 Rougher Flotation Testwork ...... 368 16.3.5.1 Grind Size Optimisation ...... 368

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16.3.5.2 Flotation Reagent Optimisation ...... 368 16.3.5.3 Cleaner Flotation Testwork ...... 369 16.3.5.4 Bulk Flotation ...... 369 16.3.6 Leaching of Ultra Fine Ground Concentrate ...... 369 16.3.7 Roast-Leach Testwork ...... 369 16.3.8 Concentrate Thickening, Filtration and Physical Testing ...... 370 16.3.8.1 Thickening Testing ...... 370 16.3.8.2 Filtration Testing ...... 370 16.3.8.3 Physical Characteristics of Concentrate ...... 371 17.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES ...... 372 17.1 Mineral Resource ...... 372 17.1.1 Introduction ...... 372 17.1.2 Sorowar Resource Estimation ...... 374 17.1.2.1 Database ...... 374 17.1.2.2 Exploratory Data Analysis ...... 375 17.1.2.2.1 Assays ...... 375 17.1.2.2.2 Composites ...... 376 17.1.2.2.3 Geological Interpretation ...... 376 17.1.2.2.4 Spatial Analysis ...... 376 17.1.2.2.5 Domaining ...... 377 17.1.2.2.6 Resource Block Model ...... 377 17.1.2.2.7 Interpolation Plan ...... 377 17.1.2.2.8 Bulk Densities ...... 378 17.1.2.2.9 Mineral Resource Classification ...... 378 17.1.2.2.10 Block Model Validation ...... 378 17.1.3 Pigiput/Pigibo/Sorowar South Resource Estimation ...... 380 17.2 Geological Modelling ...... 380 17.3 Geological Block Model ...... 381 17.3.1 Block Model Parameters ...... 381 17.3.2 Model Domain Codes ...... 382 17.4 Statistical Analysis ...... 383 17.4.1 Data Extraction and Processing ...... 383 17.4.2 Sample Flagging ...... 383 17.4.3 Compositing ...... 383 17.5 Exploratory Data Analysis ...... 384 17.5.1 Univariate Statistics ...... 384 17.5.2 Population Statistics ...... 385 17.6 Treatment of High-Grade Samples during Estimation ...... 386 17.7 Variographic Analysis ...... 386 17.7.1 Introduction ...... 386 17.7.2 Variography Interpretation and Modelling ...... 387 17.8 Grade Interpolation Strategy ...... 387 17.9 Kriging Plan ...... 388 17.10 Treatment of High-Grade Samples During Estimation ...... 389 17.11 Density Assignment ...... 389 17.11.1 Validation of Grade Estimates ...... 389 17.11.2 Visual Assessment of Grade Estimates ...... 389 17.11.3 Statistical Assessment of Grade Estimates ...... 389 17.11.4 Mean Grade Reproduction ...... 389 17.11.4.1 Swath Plot Validations ...... 390 17.12 Mineral Resource ...... 391 17.12.1 Resource Classification ...... 391 17.12.2 Mineral Resource Statement ...... 391 17.12.3 Pigicow and Bekou Resource Estimation ...... 395 17.12.3.1 Databases ...... 395 17.12.3.2 Exploratory Data Analysis ...... 396 17.12.3.2.1 Composites ...... 396 17.12.3.2.1.1 Statistical Analysis ...... 396

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17.12.3.3 Assays ...... 397 17.12.3.4 Geological Interpretation ...... 397 17.12.3.5 Spatial Analysis ...... 398 17.12.3.6 Domaining ...... 398 17.12.3.7 Resource Block Model ...... 398 17.12.3.8 Interpolation Plan ...... 398 17.12.3.9 Bulk Densities ...... 399 17.12.3.10 Mineral Resource Classification ...... 399 17.12.3.11 Mineral Resource Tabulation ...... 400 17.12.3.12 Block Model Validation ...... 400 17.12.4 Botlu Oxide Resource Estimation ...... 401 17.12.4.1 Surveying ...... 402 17.12.4.2 The Database ...... 403 17.12.4.3 Bulk Densities ...... 404 17.12.4.4 Variography ...... 404 17.12.4.5 Block Model Estimation ...... 405 17.12.4.6 Classification ...... 406 17.12.4.7 Block Estimate Results ...... 406 17.12.4.8 Block Estimate Validation ...... 406 17.12.5 Botlu Sulphide Resource Estimation ...... 407 17.12.5.1 Authors Validation ...... 408 17.12.6 Samat Resource Estimation ...... 409 17.12.7 Geological Interpretation ...... 409 17.13 Geological Block Model ...... 410 17.13.1 Block Model Parameters ...... 410 17.13.2 Block Model Variables and Coding ...... 411 17.14 Exploratory Data Analysis ...... 412 17.14.1 Data Preparation and Compositing ...... 412 17.14.2 Univariate Statistics ...... 413 17.14.3 Grade Distribution Analysis ...... 415 17.15 Variographic Analysis ...... 419 17.15.1 Variography Objectives and Approach ...... 419 17.15.2 Variography Domains ...... 419 17.15.3 Summary of Variogram Models ...... 419 17.15.4 Grade Interpolation Strategy ...... 420 17.15.5 Kriging Plan ...... 420 17.16 Validation of Grade Estimates ...... 421 17.16.1 Visual Assessment of Grade Estimates ...... 422 17.16.2 Global Statistical Validation ...... 422 17.16.3 Swath Plot Validation ...... 422 17.17 Bulk Density ...... 423 17.18 Resource Classification ...... 423 17.19 Resource Statement ...... 424 17.20 Mineral Reserves ...... 427 18.0 MINING AND MINERAL PROCESSING OPERATIONS ...... 431 18.1 Mining ...... 431 18.1.1 Operations ...... 431 18.1.2 Reconciliation ...... 436 18.2 Metallurgical Processes ...... 436 18.2.1 Current Process Plant ...... 436 18.2.1.1 Ore Transport and Scrubbing ...... 436 18.2.1.2 Grind-Leach ...... 437 18.2.1.3 Elution and Carbon Regeneration ...... 437 18.2.1.4 Tailings Disposal ...... 437 18.2.1.5 Reagents ...... 437 18.2.2 Expanded Oxide Process Plant to 3.5 Mtpa ...... 437 18.2.3 Proposed Sulphide Process Plant ...... 438 18.2.3.1 Comminution ...... 438

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18.2.3.2 Flotation ...... 438 18.2.3.3 Concentrate Roasting ...... 439 18.2.3.4 Gas Scrubbing ...... 439 18.2.3.5 Calcine Neutralisation and Regrind ...... 440 18.2.3.6 Calcine Leaching and Gold Recovery ...... 440 18.2.4 Process Production Forecasts ...... 440 18.2.4.1 Historical ...... 440 18.2.4.2 Future Oxide Capacity—Expanded Plant ...... 441 18.2.4.3 Sulphide Project ...... 441 18.2.4.4 Combined Oxide/Sulphide Project ...... 442 18.3 Markets ...... 443 18.4 Contracts ...... 443 18.5 Environment ...... 443 18.5.1 Introduction and Debottlenecked Case ...... 443 18.5.2 Combined Oxide and Sulphide Expansion Case ...... 443 18.5.3 Permits ...... 444 18.5.4 Auditing ...... 444 18.6 Taxes ...... 444 18.7 Capital Cost Estimates ...... 445 18.7.1 Summary ...... 445 18.7.2 Mining Fleet ...... 445 18.7.3 3.5 Mtpa Expanded Oxide Processing Plant ...... 445 18.7.4 1.5 Mtpa Sulphide Processing Plant ...... 446 18.8 Operating Cost Estimates ...... 447 18.8.1 Mining ...... 447 18.8.2 Expanded 3.5 Mtpa Oxide Processing Plant ...... 447 18.8.3 1.5 Mtpa Sulphide Processing Plant ...... 447 18.8.4 G&A Costs ...... 447 18.9 Financial Assessment ...... 448 18.9.1 Financial Model Basis ...... 448 18.9.2 Financial Model Outputs ...... 449 18.9.3 Sensitivity Analysis ...... 450 18.10 Mine Life ...... 451 18.11 Payback ...... 451 18.12 Historical Production and Cost Performance ...... 451 18.13 Expertise of Technical Staff ...... 451 19.0 OTHER RELEVANT DATA AND INFORMATION ...... 452 19.1 Regional Exploration ...... 452 19.1.1 Simberi Island ...... 452 19.1.1.1 Patan ...... 452 19.1.1.2 Adora ...... 452 19.1.1.3 Kekenminda ...... 452 19.1.2 Tatau Island ...... 453 19.1.2.1 Daramba ...... 453 19.1.2.2 Tugi Tugi ...... 453 19.1.2.3 Talik and Talik West ...... 453 19.1.2.4 Kupo ...... 453 19.1.2.5 West Tatau Prospects ...... 453 19.1.3 Tabar Island (also see Barrick) ...... 453 19.1.3.1 Banesa ...... 453 19.1.3.2 Tupinda ...... 453 19.1.3.3 Fotombar ...... 453 19.1.4 Kennecott ...... 455 19.1.5 Barrick ...... 458 19.1.5.1 Banesa Prospect ...... 458 19.1.5.2 Tupinda ...... 460 19.1.5.3 Tatau Island ...... 460 19.2 Infrastructure ...... 461

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19.2.1 Overview ...... 461 19.2.2 Power ...... 461 19.2.2.1 Historical ...... 461 19.2.2.2 Combined Oxide/Sulphide Expansion Project ...... 462 19.2.3 Water ...... 463 19.2.4 Buildings ...... 463 19.2.5 Camp Accommodation ...... 464 19.2.6 Airstrip and Wharf ...... 465 19.2.6.1 Airstrip ...... 465 19.2.6.2 Wharf ...... 466 19.2.6.3 Roads and Communications ...... 466 20.0 INTERPRETATION AND CONCLUSIONS ...... 467 20.1 Resources ...... 467 20.2 Reserves ...... 467 20.3 Processing ...... 467 21.0 RECOMMENDATIONS ...... 467 22.0 REFERENCES ...... 468 23.0 QUALIFIED PERSONS STATEMENTS ...... 472

TABLES Table 1-1: Simberi Resource (0.5 g/t Au cut off—depleted to EOM January 2011) ...... 304 Table 1-2: Simberi Mineral Reserves and Resources within Design Pits (January 2011) ...... 305 Table 1-3: Simberi Gold Company (SGC) Mining Fleet ...... 306 Table 2-1: Glossary of Terms ...... 308 Table 4-1: ML136—Survey ...... 314 Table 6-1: History of Exploration Activity on ML136 ...... 320 Table 7-1: Interpreted Geological History ...... 323 Table 11-1: Adora—Drilling History ...... 335 Table 11-2: Bekou—Drilling History ...... 335 Table 11-3: Botlu—Drilling History ...... 335 Table 11-4: Kekenminda—Drilling History ...... 335 Table 11-5: Patan—Drilling History ...... 335 Table 11-6: Pigibo—Drilling History ...... 336 Table 11-7: Pigicow—Drilling History ...... 336 Table 11-8: Pigiput—Drilling History ...... 336 Table 11-9: Plant—Drilling History ...... 337 Table 11-10: Samat—Drilling History ...... 337 Table 11-11: Sorowar—Drilling History ...... 337 Table 11-12: All Deposits—Total Drilling ...... 338 Table 11-13: Drilling Samples by Period and Drilling Method—Sorowar Prospect ...... 338 Table 11-14: Drilling Samples by Period and Drilling Method—Pigiput Prospect ...... 339 Table 11-15: Drilling Samples by Period and Drilling Method—Samat Prospect ...... 339 Table 11-16: Drilling Samples by Period and Drilling Method—Botlu Prospect ...... 340 Table 11-17: Drilling Samples by Period and Drilling Method—Pigibo Prospect ...... 340 Table 11-18: Drilling Samples by Period and Drilling Method—Other Prospects ...... 341 Table 11-19: Tabar Islands Grid (TIG) Parameters ...... 342 Table 12-1: Bulk Density Measurements—since Inception ...... 352 Table 14-1: Allied—Commercially prepared CRM Standards used 2008 to April 2009 ...... 355 Table 14-2: Allied—Summary of Reported Values Site Prepared Standards ...... 356 Table 14-3: Allied—Commercially prepared CRM Standards used since Apr 2009 ...... 356 Table 14-4: CRM Analyses—Apr to Dec 2009—ALS_TSV Fire Assay ...... 357 Table 14-5: CRM Analyses—Apr to Dec 2009—EXLAB Aqua Regia digest/AAS finish ...... 357 Table 14-6: Duplicates Analyses—Apr to Dec 2009—EXLAB Aqua Regia digest/ALS Fire assays ...... 358 Table 14-7: Blank samples analysed by EXLAB and ALS, Apr—Dec 2009...... 360 Table 14-8: Allied—Holes used for the March 2009 Round Robin Checks ...... 360 Table 14-9: Jan 2010 Round Robin Check Programme—Summary Statistics ...... 361

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Table 14-10: CRM values and results from SGS and GLS Laboratories ...... 362 Table 16-1: Pigiput Sample Intervals Composites ...... 366 Table 16-2: Sorowar Composite Head Analyses ...... 366 Table 16-3: Pigiput Ore Composite Head Analyses ...... 367 Table 16-4: Sorowar Comminution Testwork Results ...... 367 Table 16-5: Pigiput Comminution Testwork Results ...... 367 Table 16-6: Sorowar Cyanide Leaching Results ...... 368 Table 16-7: Pigiput Cyanide Direct Leaching Results ...... 368 Table 16-8: Calcine Grind Optimisation ...... 370 Table 16-9: Concentrate Thickening Tests ...... 370 Table 16-10: Concentrate Thickening Tests ...... 370 Table 16-11: ATSIS Physical Test Results ...... 371 Table 17-1: Comparison of JORC and CIM classification ...... 373 Table 17-2: Simberi Mineral Resources (0.5 g/t Au cut off—depleted to EOM January 2011) . . 374 Table 17-3: Sorowar—Model dimensions ...... 377 Table 17-4: Sorowar—Domain coding ...... 377 Table 17-5: Sorowar—High Grade thresholds ...... 377 Table 17-6: Sorowar—Details of density variables ...... 378 Table 17-7: Sorowar—Mineral Resource—Depleted to October 2010 ...... 378 Table 17-8: Summary of Model Codes in Relation to the Wireframes ...... 381 Table 17-9: Block Model Dimensions—Pigiput/Pigibo ...... 381 Table 17-10: Block Model Dimensions—Sorowar South ...... 382 Table 17-11: Block Model Domain Codes ...... 382 Table 17-12: Pigiput coding schema ...... 382 Table 17-13: Sorowar South coding schema ...... 383 Table 17-14: Pigiput—Univariate Statistics ...... 384 Table 17-15: Pigibo—Univariate Statistics ...... 384 Table 17-16: Tolerances used for directional variogram calculation ...... 387 Table 17-17: Pigiput deposit Kriging Plan Parameters ...... 388 Table 17-18: Search Parameters ...... 388 Table 17-19: Summary of high grade thresholds ...... 389 Table 17-20: Dry Bulk Density Calculation ...... 389 Table 17-21: Composite vs. Block Model Grades ...... 390 Table 17-22: Pigiput Model (PP_062010.bmf)—Measured and Indicated resource (0.5 g/t Au cut off) ...... 392 Table 17-23: Pigiput Model (PP_062010.bmf)—Inferred resource (0.5 g/t Au cut off) ...... 392 Table 17-24: Sorowar South Model (SS_062010.bmf)—Inferred resource (0.5 g/t Au cut off) . . 393 Table 17-25: Pigiput Model (PP_062010.bmf)—Inferred Ag and S resource (0.5 g/t Au cut off) . 393 Table 17-26: Sorowar South Model (SS_062010.bmf)—Inferred Ag and S resource (0.5 g/t Au cut off) ...... 394 Table 17-27: Pigicow and Bekou—Drill Holes ...... 395 Table 17-28: Pigicow and Bekou—Azimuths of Angled holes ...... 395 Table 17-29: Bekou and Pigicow—Number of Assays per analyte ...... 397 Table 17-30: Bekou and Pigicow—mineralisation triangulations ...... 397 Table 17-31: Model Dimensions ...... 398 Table 17-32: Pigicow and Bekou Kriging Plan Parameters ...... 399 Table 17-33: Summary of High-Grade Thresholds ...... 399 Table 17-34: Pigicow and Bekou Details of Variables ...... 399 Table 17-35: Pigicow—Mineral Resource—0.5 g/t Au cut off ...... 400 Table 17-36: Bekou—Mineral Resource—0.5 g/t Au cut off ...... 400 Table 17-37: Botlu—2 m composite statistics—drill holes ...... 403 Table 17-38: Botlu—5 m channel sample statistics ...... 403 Table 17-39: Botlu—Grade class cut offs and statistics ...... 404 Table 17-40: Botlu—Indicator variogram cut offs and models ...... 405 Table 17-41: Botlu—2-m Sulphide composite statistics...... 407 Table 17-42: Botlu—Sulphide Block model statistics ...... 407 Table 17-43: Block model origin and extensions ...... 410 Table 17-44: Block model variables ...... 411 Table 17-45: Wireframes, flagging values and priorities applied to the geological block model . 412

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Table 17-46: Samat Estimation Domains ...... 412 Table 17-47: Statistics by DOMAIN ...... 413 Table 17-48: Statistics by ESTDOM ...... 414 Table 17-49: Variography domains ...... 419 Table 17-50: Summary of Variogram Continuity Orientations ...... 419 Table 17-51: Search radius and ellipsoid orientation by pass according to estimation domain . 421 Table 17-52: Samat Kriging Plan Parameters ...... 421 Table 17-53: Samat high grade restraining thresholds by estimation domain ...... 421 Table 17-54: Au—Composite Grades vs. Block Model ...... 422 Table 17-55: Details of Variables used in the spherical bulk density model ...... 423 Table 17-56: Samat Model—Depleted Mineral Resources for Au, 0.5 g/t Au cut-off By Domain 425 Table 17-57: Samat Model—Depleted Mineral Resources for Au, 0.5 g/t Au cut-off by Classification ...... 426 Table 17-58: Samat Model—Depleted Mineral Resources for Au, 0.5 g/t Au cut-off by Material type ...... 426 Table 17-59: Samat Model—Depleted Inferred Mineral Resources for Ag and S, 0.5 g/t Au cut-off By Domain ...... 426 Table 17-60: Samat Model—Depleted Inferred Mineral Resources for Ag and S, 0.5 g/t Au cut-off by Material type ...... 426 Table 17-61: Pit Optimisation Parameters ...... 427 Table 17-62: Bulk Mining Pits—Theoretical Au Cut-off Grades ...... 428 Table 17-63: Selective Mining Pits—Theoretical Au Cut-off Grades ...... 428 Table 17-64: Mineral Reserves and Resources within Design Pits ...... 429 Table 17-65: Mineral Reserve and Inferred Resource by Material Type ...... 430 Table 18-1: Simberi Gold Company (SGC) Mining Fleet ...... 436 Table 18-2: Simberi Mine Operations Work Force Levels (as at July 2009) ...... 436 Table 18-3: Production Summary ...... 440 Table 18-4: Basis for Financial Modelling ...... 441 Table 18-5: Key Criteria for Sulphide Project ...... 442 Table 18-6 Key Criteria for combined 3.5 Mtpa oxide project and 1.5 Mtpa sulphide project . . 442 Table 18-7: Capital Cost Estimate Breakdown ...... 445 Table 18-8: Summary of Capital Cost Estimate ...... 446 Table 18-9: Mining Costs ...... 447 Table 18-10: Financial modelling outputs ...... 449 Table 18-11: Historical Production and Cost Statistics ...... 451 Table 19-1: Drilling on Tabar/Tatau ...... 454 Table 19-2: Kennecott RC Drilling Results—Pepewo, Tatau Island ...... 455 Table 19-3: Kennecott RC Drilling Results—Seraro, Tatau Island ...... 456 Table 19-4: Kennecott RC Drilling Results—Mt Tiro, Tatau Island ...... 457 Table 19-5: Banesa drill hole geochemistry (Note BND1 is a Kennecott 1989 drill hole) ...... 459 Table 19-6: Tupinda drill hole geochemistry ...... 460

FIGURES Figure 4-1: Simberi Gold Project—Location ...... 310 Figure 4-2: Simberi Gold Project—Mining Licences with Principal Prospects and Deposits, shown with local metric grid coordinates (TIG) ...... 312 Figure 4-3: Simberi Island ...... 313 Figure 7-1: Simberi—Regional Tectonic map and Gold Mines ...... 321 Figure 7-2: Simberi Island Geology (Simberi Island Grid) ...... 322 Figure 8-1: Simberi—Mineralised deposit locations ...... 324 Figure 8-2: Sorowar Deposit—Drill Collar Locations and Topographic Contours ...... 325 Figure 8-3: Samat—Drill hole locations and pit design outlines ...... 326 Figure 8-4: Botlu—Drill hole collar locations and proposed pit outline ...... 327 Figure 8-5: Pigiput drill hole collar location plan with proposed pit outline ...... 328 Figure 8-6: Pigicow—drill hole locations ...... 330 Figure 8-7: Bekou—drill hole locations ...... 331 Figure 10-1: Simberi Is—ML136—Comparative Images of Geophysics Data ...... 333 Figure 10-2: AEROTEM Survey—Interpretation (Barrick, 2009) ...... 334 Figure 10-3: AEROTEM 100 m Resistivity with Simberi Drill hole Collars ...... 334

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Figure 11-1: Data Flow—Site Data ...... 343 Figure 11-2: Data Flow—Assays ...... 344 Figure 12-1: Kennecott—Initial Aircore and RC Sample Preparation Chart ...... 345 Figure 12-2: Kennecott—Revised Aircore and RC Sample Preparation Chart ...... 345 Figure 12-3: Kennecott—Diamond Core Sample Preparation Chart ...... 345 Figure 12-4: Nord—Aircore and RC Sample Preparation Chart ...... 346 Figure 12-5: Nord—Diamond Sample Preparation Chart ...... 346 Figure 12-6: Allied—RC Sample Preparation Chart ...... 347 Figure 12-7: Allied—mid-2008 RC Sample Flow Chart ...... 349 Figure 12-8: Allied—Diamond Core Sample Preparation Chart—to 2006 ...... 349 Figure 12-9: Allied—Post mid-2008 Diamond Drill Hole Sample Flow Chart ...... 351 Figure 14-1: CRM population defined by Au vs. Cu values ...... 357 Figure 14-2: Allied—Au in Pulp Duplicates Scattergram ...... 358 Figure 14-3: Duplicates Analyses—Apr to Dec 2009—EXLAB Aqua Regia digest/ALS Fire assays ...... 359 Figure 14-4: Jan 2010 Round Robin Check Programme—Graphical Illustrations of Summary Statistics ...... 361 Figure 14-5: Inter Lab assay correlation ...... 362 Figure 14-6: Allied—Round Robin Check—March Qtr 2009—Gold by FAA—ALS vs. SGS Townsville ...... 363 Figure 14-7: Allied—Round Robin Check—March Qtr 2009—Gold by FAA—ALS vs. Genalysis 363 Figure 14-8: Round Robin Check—March Qtr 2009—Gold by FAA—Genalysis vs. SGS Townsville ...... 363 Figure 17-1: Simberi resource locations ...... 372 Figure 17-2: Sorowar—Deposit Geology and drill collars ...... 375 Figure 17-3: Sorowar—Cumulative probability plots—Au and Ag by geological unit ...... 376 Figure 17-4: Sorowar—Swath plot validations Au Ag ...... 379 Figure 17-5: Pigiput/Pigibo domains ...... 380 Figure 17-6: Lithological domains ...... 381 Figure 17-7: Log probability plot of Au plotted for oxide (red), transitional (green) and sulphide (blue) comparisons ...... 385 Figure 17-8: Log probability comparing Au with Geology. Geol = 2 is Tuff; Geol = 1 is Andesite ...... 386 Figure 17-9: Scatter Plot, QQ plot and swath plots of Au in Pigiput ...... 390 Figure 17-10: Pigicow and Bekou—Resource model areas and drill hole locations ...... 395 Figure 17-11: Bekou and Pigicow Oxide Sulphide Comparison ...... 396 Figure 17-12: Pigicow and Bekou Mineralisation (blue crosses mark drill hole collar locations) 397 Figure 17-13: Pigibo—Block Model validation oxide swath plots ...... 401 Figure 17-14: Bekou—Block Model validation oxide swath plots ...... 401 Figure 17-15: Botlu—Oxide Au cumulative frequency plot ...... 404 Figure 17-16: Botlu—Block model historical validation ...... 406 Figure 17-17: Botlu—Oxide—Authors validation ...... 408 Figure 17-18: Botlu—Sulphide—Authors validation ...... 408 Figure 17-19: Samat structural wireframe surfaces ...... 409 Figure 17-20: Samat geological domains, completed by Golder ...... 410 Figure 17-21: Plan view showing the Samat model area (blue polygon) as well as the drill hole collar locations ...... 411 Figure 17-22: Log-probability plot of the Au distribution by DOMAIN ...... 415 Figure 17-23: Cumulative probability plots for Samat South A by ESTDOM ...... 416 Figure 17-24: Cumulative probability plots for Samat South B by ESTDOM ...... 416 Figure 17-25: Cumulative probability plots for Samat North A by ESTDOM ...... 417 Figure 17-26: Cumulative probability plots for Samat North B by ESTDOM ...... 417 Figure 17-27: Cumulative probability plots for Samat East by ESTDOM ...... 418 Figure 17-28: Cumulative probability plots for S in sulphide material by DOMAIN (ESTDOMs ending in 3) ...... 418 Figure 17-29: Variogram models for Samat North A transition and sulphide material (ESTDOMs 3002/3003) ...... 420 Figure 17-30: Swath Plot validation for oxide Au—Samat ...... 423 Figure 18-1: Simberi Island—Oxide pit outlines (Q2 2010) ...... 431

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Figure 18-2: Mining at Sorowar after rain ...... 432 Figure 18-3: Pantera 1100 blast hole drill ...... 432 Figure 18-4: Super Rock drill 3000 undertaking grade control drilling at Sorowar ...... 434 Figure 18-5: Mining at Samat South ...... 434 Figure 18-6: Ropecon showing discharge end and overland conveyor with process plant in background ...... 435 Figure 18-7: Production Profile ...... 441 Figure 18-8: Production Profile for the Sulphide Project ...... 442 Figure 18-9: Combined Production Profile ...... 443 Figure 18-10: Combined Oxide and Sulphide Project Capital Cost ...... 445 Figure 18-11: NPV Inputs and Assumptions ...... 448 Figure 18-12: Cumulative Net Cash Flows ...... 449 Figure 18-13: Sensitivity Analysis to variable gold price movements ...... 450 Figure 18-14: Sensitivity Analysis ...... 450 Figure 19-1: Simberi Island ...... 452 Figure 19-2: Plan view geology and location map of Banesa target area on Tabar Island . . . . 458 Figure 19-3: Tupinda project alteration and drilling ...... 460 Figure 19-4: Coastal Infrastructure Simberi Gold ...... 461 Figure 19-5: shows the current power station at Simberi ...... 463 Figure 19-6: Simberi Camp ...... 464 Figure 19-7: Simberi Airstrip ...... 465 Figure 19-8: Simberi Wharf ...... 466

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1.0 SUMMARY 1.1 Scope Golder Associates Pty Ltd (‘‘Golder’’, the ‘‘Mineral Expert’’) has been requested by the Allied Gold Limited (‘‘the Company’’) to prepare a Mineral Experts’ Report (the ‘‘MER’’) on the mineral assets of the Company. The MER will be reproduced in a Prospectus being produced by the Company in connection with its proposed admission of ordinary shares to the premium listing segment of the Official List of the United Kingdom Listing Authority (‘‘UKLA’’) maintained by the Financial Services Authority (the ‘‘FSA’’) and admission (the ‘‘Admission’’) to trading on the Main Market of the London Stock Exchange plc (the ‘‘Exchange’’). The Company is currently listed on AIM, the Australian Stock Exchange and the Toronto Stock Exchange. Royal Bank of Canada Europe Limited (‘‘RBC’’) has been appointed as the Company’s sponsor in support of the Admission. The mineral assets of Allied Gold are primarily two gold operations: the Simberi project on Simberi Island in the New Ireland Province of Papua New Guinea (‘‘the Simberi Project’’) and the Gold Ridge project on the island of Guadalcanal in the Solomon Islands (‘‘the Gold Ridge Project’’). This report presents the Competent Persons’ Report for the Simberi Project. For the purposes of Prospectus Rule 5.5.3R(2)(f) Golder Associates accepts responsibility for the information contained in this section of the Prospectus and those sections of the Prospectus which include references to the information in this section. Golder Associates declares that to the best of its knowledge and belief, having taken all reasonable care to ensure that such is the case, the information contained herein is in accordance with the facts and does not omit anything likely to affect the import of such information. For the purposes of Prospectus Rule 5.5.3R(2)(f) BatteryLimits accepts responsibility for the information contained in this section of the Prospectus and those sections of the Prospectus which include references to the information in this section. BatteryLimits declares that to the best of its knowledge and belief, having taken all reasonable care to ensure that such is the case, the information contained herein is in accordance with the facts and does not omit anything likely to affect the import of such information.

1.2 Property Description The Simberi Gold Project is located on Simberi Island in the Tabar Islands Group. The Tabar Islands are situated in the New Ireland Province of Papua New Guinea (PNG) at approximately latitude 2.5⍭ South and longitude 152⍭ East. The four sparsely inhabited islands of the Tabar Group are located 130 km east of the capital city of New Ireland Province, Kavieng. The Simberi Gold Project is located within Mining Lease ML136 which covers the eastern half of Simberi Island.

1.3 Ownership Simberi Gold Company Ltd (‘‘Simberi Gold’’), a fully owned subsidiary of Allied Gold Pty Ltd (‘‘Allied’’) operates the Simberi Gold Mine on Simberi Island.

1.4 Geology Simberi Island is the oldest and northernmost island of the Tabar Island group. It forms part of a silica-poor, potassium-rich alkaline volcanic Pliocene-Pleistocene island arc to the immediate north of New Ireland, PNG. The currently known gold prospects on Simberi Island are located in the eastern half of the island, within the central volcanic core and are contained within a sub-cropping epithermal alteration system extending 4 km north-south and 2 km east-west. The host rocks for the mineralisation comprise altered andesitic lava flows or intrusives (porphyries), volcanoclastics and tuffs.

1.5 Mineralisation Gold mineralisation, however, does not appear to be closely associated with any particular lithology. Where recognised, the main primary control of gold mineralisation is steeply dipping fracture systems, in places associated with milled breccia dykes (diatremes). Particularly high grades are associated with diatreme-country rock contact zones. Gold mineralisation is generally associated with sulphides or iron

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oxides occurring within all variety of hydraulic fractures, such as simple fracture infills, single vein coatings and crackle brecciation in the more competent andesite units and broad disseminations in the naturally porous volcanoclastic rocks. In the Oxidised zone, the gold is predominantly associated with iron oxides after sulphides, with higher grades occurring with rare vuggy and chalcedonic quartz. The Sulphide zone mineralisation includes refractory gold hosted by pyrite or marcasite and scarcer arsenopyrite at depth. Trace element analyses indicate the pyrite is arsenian.

1.6 Exploration The Tabar Island Group has been extensively explored by a number of operators since the discovery of in situ gold in 1981. Exploration in ML 136 is focussed around the identified deposits of Sorowar, Pigiput, Pigibo, Botlu, Pigicow, Bekou and Samat. In addition to these, there are a number of smaller prospects yet to be properly defined. Exploration uses a combination of channel sampling, reverse circulation and diamond core drilling. In addition to ML 136, Allied also hold Exploration Lease 609 covering most of the rest of the Tabar Island Group. EL 609 is also being actively explored.

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1.7 Resource Table 1-1 summarises the Mineral Resources for the Simberi deposits.

Table 1-1: Simberi Resource (0.5 g/t Au cut off—depleted to 1 January 2011)

Deposit Material Measured Indicated Inferred Mt Au g/t koz Mt Au g/t koz Mt Au g/t koz Bekou ...... Oxide 0.04 1.74 2 0.06 1.14 2 Transition 0.01 1.17 0 0.05 1.16 2 Sulphide 0.02 1.93 2 0.92 1.38 41 Bekou Total ...... 0.07 1.71 4 1.03 1.36 45 Botlu ...... Oxide 1.22 1.14 44 0.45 1.23 18 0.31 1.16 11 Transition Sulphide 1.45 1.81 84 Botlu Total ...... 1.22 1.14 44 0.45 1.23 18 1.76 1.70 95 Pigibo ...... Oxide 2.96 1.11 106 0.60 0.89 17 Transition 2.19 1.19 84 0.51 0.92 15 Sulphide 3.86 1.11 137 6.22 0.94 188 Pigibo Total ...... 9.01 1.13 327 7.33 0.93 220 Pigicow ...... Oxide 0.15 1.65 8 0.29 1.30 12 Transition 0.11 1.29 4 Sulphide 2.00 1.26 81 Pigicow Total ...... 0.15 1.65 8 2.40 1.27 97 Pigiput ...... Oxide 2.89 0.86 80 4.60 0.92 137 2.01 0.79 51 Transition 1.95 0.89 56 0.77 0.83 21 Sulphide 32.56 1.51 1583 32.25 1 1042 Pigiput Total ...... 2.89 0.86 80 39.11 1.41 1776 35.03 0.98 1114 Samat East ...... Oxide 0.40 1.13 14 Transition 0.08 0.78 2 Sulphide 3.50 0.78 88 Samat East Total ...... 3.98 0.82 104 Samat North A ...... Oxide 0.11 0.78 3 0.11 0.84 3 Transition 0.04 1.29 2 0.01 1.26 0 Sulphide 0.36 0.81 9 1.08 0.86 30 Samat North A Total ...... 0.51 0.84 14 1.2 0.86 33 Samat North B ...... Oxide 0.12 0.86 3 0.12 0.75 3 Transition 0.05 2.86 5 0.02 0.78 1 Sulphide 1.90 1.22 74 1.05 0.73 25 Samat North B Total ...... 2.07 1.24 82 1.19 0.73 29 Samat South A ...... Oxide 0.02 1.96 1 0.16 1.28 7 Transition 0.01 0.98 0 0.01 0.77 0 Sulphide 0.02 1.01 1 1.73 0.97 54 Samat South A Total ...... 0.05 1.38 2 1.90 1.00 61 Samat South B ...... Oxide 0.05 2.94 5 0.17 1.51 8 Transition 0.05 2.03 3 0.02 0.99 1 Sulphide 1.70 1.76 96 3.36 1.07 115 Samat South B Total ...... 1.80 1.80 104 3.55 1.09 124 Sorowar ...... Oxide 5.61 1.30 235 8.56 1.08 298 2.4 1.09 84 Transition 0.54 1.17 20 1.46 1.14 53 0.29 0.83 8 Sulphide 1.30 0.93 39 6.93 0.92 205 19.03 0.90 549 Sorowar Total ...... 7.45 1.23 294 16.95 1.02 556 21.72 0.92 641 Sorowar South ...... Oxide 0.68 0.82 18 Transition 0.28 0.68 6 Sulphide 5.39 0.66 114 Sorowar South Total ...... 6.35 0.68 138 Grand Total ...... 11.56 1.13 418 70.17 1.28 2891 87.44 0.96 2701

Rounding may cause numerical discrepancies

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1.8 Reserves Table 1-2 summarises the Mineral Reserves and Resources within designed pits for the Simberi deposits.

Table 1-2: Simberi Mineral Reserves and Resources within Design Pits (1 January 2011)

Proven Probable Total Ore Pit Mt Au g/t koz Mt Au g/t koz Mt Au g/t koz Sorowar Oxide ...... 6.03 1.23 238 5.40 1.18 205 11.43 1.21 443 Transition ...... 0.55 1.08 19 0.52 1.29 22 1.07 1.18 41 Sulphide ...... 0.38 1.10 13 0.74 1.49 35 1.12 1.36 49 Sorowar Total ...... 6.96 1.21 271 6.66 1.22 262 13.62 1.22 533 Pigiput Oxide ...... 3.94 0.73 92 5.35 0.82 141 9.42 0.79 233 Transition ...... 1.67 0.86 46 1.67 0.86 46 Sulphide ...... 12.51 2.39 961 12.51 2.39 961 Pigiput Total ...... 3.94 0.73 92 19.53 1.83 1148 23.47 1.65 1241 Pigibo Oxide ...... 3.43 1.00 110 3.43 1.00 110 Transition ...... 1.65 1.21 64 1.65 1.21 64 Sulphide ...... 0.43 2.04 28 0.43 2.04 28 Pigibo Total ...... 5.51 1.14 203 5.51 1.14 203 Samat North A Oxide ...... 0.07 0.70 2 0.07 0.70 2 Transition Sulphide Samat North A Total ...... 0.07 0.70 2 0.07 0.70 2 Samat North B Oxide ...... 0.12 0.79 3 0.12 0.79 3 Transition ...... 0.05 3.61 6 0.05 3.61 6 Sulphide ...... 0.33 2.28 24 0.33 2.28 24 Samat North B Total ...... 0.50 2.06 33 0.50 2.06 33 Samat South Oxide ...... 0.08 2.37 6 0.08 2.37 6 Transition ...... 0.05 2.16 3 0.05 2.16 3 Sulphide ...... 0.68 2.43 53 0.68 2.43 53 Samat South Total ...... 0.81 2.41 62 0.81 2.41 62 Botlu South Oxide ...... 0.74 1.35 32 0.12 1.61 6 0.86 1.39 38 Transition Sulphide Botlu South Total ...... 0.74 1.35 32 0.12 1.61 6 0.86 1.39 38 Total All Pits Oxide ...... 10.71 1.05 363 14.57 1.01 473 25.28 1.02 836 Transition ...... 0.55 1.08 19 3.94 1.11 141 4.49 1.11 160 Sulphide ...... 0.38 1.10 13 14.69 2.33 1102 15.07 2.30 1116 Total All Pits ...... 11.64 1.06 395 33.20 1.61 1716 44.84 1.46 2112 The Mineral Reserves are included in the Mineral Resources stated above.

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1.9 Mining The current mine plan consists of the open pit mining of oxide deposits. The Samat oxide pits have been depleted. Ore is currently being extracted from the Sorowar pit. The Simberi mining operation is a conventional load and haul operation using a mixed fleet of owner and contractor equipment (Table 1-3). Ore from the Sorowar pit is transported to the processing plant by an aerial conveying system. Currently just over 100,000 t of ore per month is being mined.

Table 1-3: Simberi Gold Company (SGC) Mining Fleet

Machine Number Cat 740 articulated truck(1) ...... 8 Cat 725 articulated truck ...... 2 Cat 330 excavator ...... 2 Komatsu PC450 LC-7 excavator ...... 2 Cat D10N dozer ...... 1 Cat D9N dozer ...... 1 Cat D6R dozer ...... 3 Cat 140 grader ...... 1 Cat CS-563E roller ...... 1 Cat IT38G(2) ...... 1 Cat 980G FEL(2) ...... 2

1.10 Processing The current oxide plant is treating greater than 2 Mtpa at a recovery of greater than 92% gold. Expansion of the oxide plant is based on providing increased comminution capacity including a SAG mill, and increased leaching and carbon adsorption capacity. Capital cost is estimated at A$32 M for the oxide expansion project. Metallurgical testwork has aimed at developing a viable flotation, roast, leach flowsheet for the sulphide ore. A preliminary process design has been developed. Preliminary engineering at PFS level has resulted in a capital cost estimate of $188 M for the sulphide plant, and a further $7.6 M for infrastructure associated with the use of Heavy Fuel Oil (HFO) for power supply. A project to expand of the oxide processing plant capacity to 3.5 Mtpa is currently underway and a Bankable Feasibility Study is currently being conducted to consider a proposed development of a 1.5 Mtpa sulphide processing facility on Simberi Island to facilitate treatment and recovery of gold from sulphide ore. Operating cost for the expanded oxide plant is estimated at $9.25/t ore milled. This is based on the current operating cost adjusted for increased throughput. Operating cost for the sulphide plant has been estimated from first principles at $23.29/t. NPV of the combined expanded 3.5Mtpa oxide and 1.5Mtpa sulphide project has been calculated at $334 M. This includes the contribution of the existing oxide project. Cash operating costs are $678/oz. All dollars are in Australian Dollars (A$) unless otherwise denoted.

1.11 Authors’ Conclusions 1.11.1 Resources • The Simberi resource is a robust and proven gold deposit. • The current resource models show a positive reconciliation in the mined pits. This issue should be investigated with the objective of optimising production and potentially increasing the mine life. • The historical resource at Botlu is accepted as Inferred based on the Author’s validations. The resource models should be re-estimated using the current data set and understanding of the deposits’ geology. • The Sulphide resource at Sorowar needs to be drilled and assessed.

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• Beyond the Simberi mining lease, the exploration ground held by Allied over the Island group is all very prospective.

1.11.2 Reserves • The reserves at Simberi, being based on the resource are also proven and robust. • Improvements to the reserve position come directly from improvements and increases in the resource. • The development of some of the satellite deposits will add to the reserve base. • Inclusion of more Sulphide material has the potential to significantly increase reserves.

1.11.3 Processing • The current oxide processing plant is operating well and achieving good oxide recoveries. • The infrastructure that is in place at Simberi Gold is adequate for the 2 Mtpa operation, and with some upgrading including the wharf facility, will be adequate for the 3.5 Mtpa oxide operation and 1.5 Mtpa sulphide operation. • BatteryLimits is of the opinion that the oxide plant expansion modifications and additions as proposed by GRES will be effective in increasing oxide plant throughput to 3.5 Mtpa. • The capital cost estimate of $32 M for the oxide plant expansion to 3.5 Mtpa is reasonable for the modifications and additions proposed. • The capital estimate of $188 M for the 1.5 Mtpa sulphide plant design and construction as estimated by GRES is reasonable. • The gold grades to be fed to the oxide process plant are low at 1.1 g/t average over the mine life, and maintaining low overhead and operating costs will be critical to project viability. • The combined 3.5 Mtpa oxide project and 1.5 Mtpa sulphide project is commercially viable with NPV of $334 M (at 10% discount factor) pre-tax, using US$1,000/oz gold price and A$:US$ exchange rate of 0.8. The NPV is sensitive to gold price.

1.12 Recommendations • The remaining historical resources should be re-estimated incorporating the current geological understanding of the island, recent drilling and other geological data and any updated topographical information. Outsourced this is estimated to cost AUD$50 K. • The positive mining reconciliation should be investigated. This could be done in-house or outsourced at an estimated cost of AUD$30 K. • A critical review of current mining operations should be undertaken and any revisions applied to the optimisation, pit design and scheduling. This could be done in-house or outsourced at an estimated cost of AUD$40 K. • Optimisation of the resource and reserve calculations, final pit designs and scheduling should be revisited on a regular basis. The pit optimisations need to be updated to reflect more recent increasing trend in the gold price. • Exploration drilling to investigate the nature of the sulphide mineralisation beneath the current Sorowar pit design should proceed as a matter of priority. There appears to be significant potential to increase the sulphide resource and reserve base at Simberi, and thus improve the overall economics of the project, through improving the understanding of the sulphide mineralisation in the Sorowar area. • Expansion of the oxide plant to 3.5 Mtpa should proceed. Estimated cost is $32 M. • Allied Gold should consider a Bankable Feasibility Study, in conjunction with additional drilling, which will provide greater confidence to the combined oxide and sulphide project. The cost of a Bankable Study is estimated at $6-$10 M. The total cost of the combined oxide and sulphide project is estimated at $278 M including the $32 M oxide plant expansion. • Allied should closely manage its operating costs to keep its costs within budget estimates.

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2.0 INTRODUCTION AND TERMS OF REFERENCE Golder Associates Pty Ltd (Golder) has been retained by Allied Gold Limited (Allied) to prepare an independent technical report on Allied’s Simberi Gold Project in Papua New Guinea (PNG). This report is prepared to conform to both Australian JORC and Canadian National Instrument 43-101 standards. The technical report is required to document the mineral resource estimates, mineral reserve estimates, metallurgy and processing at the Simberi Gold Project. The Simberi Gold Project is part of Allied’s PNG holdings and is located on Simberi Island approximately 500 km north-east of the PNG mainland. The prospect has been systematically explored by a number of parties since 1981 and has been wholly controlled by Allied since 2005. Stephen Godfrey, Associate, Principal Resource Geologist, with Golder Associates, visited Simberi Island in between 18 January 2011 and 21 January 2011. John Battista, Associate, Principal Mining Engineer, with Golder Associates, visited Simberi Island between 28 October 2008 and 31 October 2008. Phil Hearse, Managing Director, with Battery Limits Pty Ltd, visited Simberi Island between 17 and 19 February 2009, and 7 and 12 June 2009.

Table 2-1: Glossary of Terms

AC...... Air Core Accuracy ...... The ability to obtain the correct result ALS ...... ALS Laboratory Group, ALS Chemex is the groups Mineral Division ASX ...... Australian Stock Exchange BFS ...... Bankable Feasibility Study BHP ...... Originally Broken Hill Proprietary Limited, now BHP Billiton Blank ...... Sample without metal content to check possible contamination during assaying (e.g. crushed glass) Cut off ...... Grade above which mineralised material is considered to be ore. CRA ...... Originally Conzinc Rio Tinto Australia now CRA DataShed ...... Database Management software—www.datashed.com.au DD...... Diamond Drill DEC ...... Department of Environment and Conservation (PNG) DTM ...... Digital terrain model—Electronic computer model of topography Duplicate ...... Sample that has been split from another to check the field sampling or laboratory’s precision EOM ...... End Of Month HQ ...... Diamond core 63.5 mm ICP-OES ...... Inductively Coupled Plasma Optical Emission Spectrometry IP ...... Induced Polarisation—geophysical exploration technique JORC ...... Australasian Joint Ore Reserves Committee Kriging ...... Grade estimation technique incorporating variability by distance Leapfrog ...... 3D drill data analysis and viewing software MRA ...... Mineral Resources Authority ML...... Mining Lease

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Multiple Indicator Kriging ..... Estimation of grades into block model using probabilistic grade estimation techniques incorporating variability by distance NATA...... National Association of Testing Authorities, Australia NQ ...... Diamond core 47.6 mm Ordinary Kriging ...... Estimation of grades into block model using a grade estimation technique incorporating variability by distance Ore ...... Mineralised material that can be economically mined PNG ...... Papua New Guinea ppb ...... Parts Per Billion ppm ...... Parts Per Million—10,000 ppm = 1% PQ...... Diamond core 85.0 mm Precision ...... The ability to obtain the same result each time RAB ...... Reverse Air Blast RC...... Reverse Circulation SEM ...... Scanning Electron Microscope Standard Sample ...... Specially prepared sample whose metal grade is very accurately known and certified Strip Ratio ...... Ratio of waste that needs to be mined to obtain a unit of ore expressed as tonnes of waste to tonnes of ore. Tailings ...... The reject material from the processing plant TIG ...... Tabar Island Grid TSX ...... Toronto Stock Exchange Variogram ...... Mathematical and graphical way of representing variation of data as a function of separation distance Vulcan ...... Computer program by Maptek that is used to carry out resource estimation and mine planning—www.vulcan3D.com. XRD ...... X-Ray Diffraction analytical technique.

3.0 RELIANCE ON OTHER EXPERTS This report has been compiled by Golder Associates Pty Ltd (Golder) with contributions from Battery Limits Pty Ltd (Battery Limits) for Allied Gold Limited (Allied). The information, interpretations, conclusions, opinions, and recommendations contained herein are based upon: • Information available to Golder and Battery Limits at the time of preparation of this report • Assumptions, conditions, and qualifications as set forth in this report, and • Data, reports, and opinions supplied by Allied and other third party sources are listed as references.

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4.0 PROPERTY DESCRIPTION AND LOCATION 4.1 Area and Location Allied Gold’s Simberi Gold Project is located on Simberi Island in the Tabar Islands Group. The Tabar Islands are situated in the New Ireland Province of Papua New Guinea (PNG) at approximately latitude 2.5⍭ South and longitude 152⍭ East. The four sparsely inhabited islands of the Tabar Group are located 130 km east of the capital city of New Ireland Province, Kavieng, and 80 km north-west of the Lihir Island site of the world class Ladolan gold deposit. The southern-most island in the group, Tabar Island, lies approximately 30 km north of mainland New Ireland. Simberi Island is the northern-most island of the Tabar Group and measures approximately 10 km east-west and 8 km north-south.

20APR201122000652 Figure 4-1: Simberi Gold Project—Location

4.2 Title The Simberi Gold Project is operated by The Simberi Gold Company, a fully owned subsidiary of Nord Pacific Limited which is, in turn, a fully owned subsidiary of Allied Gold Limited. The Simberi Gold Project comprises: • an open-pit mining operation with an associated gold processing plant, located within the 2,560 ha Mining Lease ML136 on the eastern side of Simberi Island, and • a larger 69 graticular sub-block/233 km2 Exploration Licence, EL609, covering the remainder of Simberi Island and most of the adjacent Tatau and Big Tabar Islands to the south. Mining Leases (MLs) in PNG are issued by the Mineral Resources Authority (MRA) on behalf of the National Government. The ML conditions address surface rights such as lost land, trees, vegetation and surface water with compensation due to the lease owner. Alluvial gold rights belong to the citizens of PNG and the landowner. The lease was conferred on 3 December 1996 for a term of 12 years. On 4 May 2007 the MRA granted The Simberi Gold Company an extension on ML 136 for a term of ten years commencing 3 December 2008 and ending 2 December 2018. The Simberi Gold Project oxide processing plant has an annual throughput rate of 2 Mtpa with a feasibility study planned to look at increasing this to 3.5 Mtpa. Exploration for gold within the ML136 is focused on the replacement of oxide resources, hosted by volcanic rocks and investigation of underlying sulphide mineralisation. The lease is subject to the following conditions: • The Lessee must follow an approved proposal. A proposal has been submitted and approved.

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• The Lessee must comply with the Mining (Safety) Act. • The Lessee must comply with conditions imposed by the Department of Environment and Conservation and by conditions set out by the Bureau of Water Resources. • The Lessee must provide the Department of Mining and Petroleum, now the MRA, with six monthly reports on exploration and monthly production figures. • The Lessee may not use the land without the consent of the State for other purposes than for which the Lease was granted. • The Lessee must not interfere with the cultural use of the land without permission and will accommodate traditional uses subject to efficient and safe mining practices. • The Lessee shall compensate the owners of private land which is located within the Mining Lease to a level at least within accordance of the Act. • The Lessee shall provide the Department of Mining and Petroleum with a Closure Plan and Schedule at least one year before shutdown. • The Lessee shall stockpile all topsoil, where practical, to be used for re-vegetation purposes. • The Lessee shall submit the open pit mine plan to the Chief Inspector of Mines six weeks before start of mining operations. • The Lessee shall submit to the Chief Inspector of Mines all mine plant plans and details, for the mine construction phase and later. The conditions of the Approved Mining Proposal were: • That gold production should have commenced by 31 December 1998. This date was extended to 31 December 2006. • The Lessee shall provide an alternative water supply to any village whose normal water supply is impacted by the development. This condition has been addressed by the installation of rainwater tanks, piped spring water and bores installed with hand pumps in a number of the affected areas. • The Lessee shall maintain all drainage channels from the mining areas to minimise flood impacts on village areas.

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21APR201103052635 Figure 4-2: Simberi Gold Project—Mining Licences with Principal Prospects and Deposits, shown with local metric grid coordinates (TIG)

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4.3 Property Boundaries

20APR201122115274 Figure 4-3: Simberi Island The bounding points of ML136 were surveyed and pegged by Palanga Surveyors (Rabaul) in consultation and agreement of landowners. The limits of EL609 coincide with the boundaries of selected blocks within the MRA’s pre-defined graticule system.

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Table 4-1: ML136—Survey

Direction Latitude Longitude TIG_East_m TIG_North_m a line starting from ...... 2⍭ 39’ 41.5771’’S 151⍭ 58’ 59.5071’’E 41838.1 205690.2 then to ...... 2⍭ 38’ 30.9722’’S 151⍭ 59’ 08.8972’’E 42128.3 207859.0 then to ...... 2⍭ 37’ 50.7484’’S 151⍭ 59’ 15.2380’’E 42324.1 209094.6 then to ...... 2⍭ 37’ 23.6744’’S 151⍭ 59’ 21.5694’’E 42519.8 209926.1 then to ...... 2⍭ 37’ 11.3034’’S 151⍭ 59’ 13.2708’’E 42263.4 210306.1 then to ...... 2⍭ 36’ 58.2258’’S 151⍭ 59’ 07.2152’’E 42076.4 210707.8 then to ...... 2⍭ 36’ 34.0965’’S 151⍭ 59’ 15.0260’’E 42317.6 211449.0 then to ...... 2⍭ 36’ 22.5467’’S 151⍭ 59’ 31.2811’’E 42819.8 211803.7 then to ...... 2⍭ 36’ 26.9386’’S 151⍭ 59’ 46.6216’’E 43293.7 211668.8 then to ...... 2⍭ 36’ 30.2907’’S 152⍭ 00’ 03.9012’’E 43827.5 211565.9 then to ...... 2⍭ 36’ 26.2656’’S 152⍭ 00’ 16.6492’’E 44221.3 211689.5 then to ...... 2⍭ 36’ 25.5196’’S 152⍭ 00’ 21.0398’’E 44356.8 211712.4 then to ...... 2⍭ 36’ 24.4487’’S 152⍭ 00’ 24.6617’’E 44468.7 211745.3 then to ...... 2⍭ 36’ 23.4575’’S 152⍭ 00’ 26.4053’’E 44522.6 211775.7 then to ...... 2⍭ 36’ 26.7222’’S 152⍭ 00’ 37.7219’’E 44872.2 211675.4 then to ...... 2⍭ 36’ 30.6035’’S 152⍭ 00’ 44.5937’’E 45085.9 211556.2 then to ...... 2⍭ 36’ 41.4078’’S 152⍭ 01’ 20.6950’’E 46199.7 211224.3 then to ...... 2⍭ 38’ 09.3200’’S 152⍭ 01’ 43.3186’’E 46898.5 208524.0 then to ...... 2⍭ 38’ 57.9380’’S 152⍭ 01’ 20.6165’’E 46197.0 207030.5 then to ...... 2⍭ 39’ 34.1136’’S 152⍭ 01’ 07.5247’’E 45792.6 205919.3 then to ...... 2⍭ 39’ 56.3371’’S 152⍭ 00’ 13.8167’’E 44133.6 205236.8 then to ...... 2⍭ 39’ 41.5771’’S 151⍭ 58’ 59.5071’’E 41838.1 205690.2 There is no requirement for boundary markers on the ground in respect of exploration licences; however, concrete survey markers have been installed. Location of boundaries when required is done using Global Positioning Equipment (GPS). In applying for an ML or SML all lease boundaries must be clearly marked out in accordance with the Mining Act.

4.4 Location of Mineralisation and Mine Workings All identified mineralisation and mine workings on Simberi Island are located within ML 136 on the eastern side of the island (Figure 4-3).

4.5 Royalties and Encumbrances A Memorandum of Agreement dated 21 November 1996 details the relationship between the National Government, Provincial Government, Simberi Landowners Association, Tabar Community Government and Simberi Gold Company. Normally the holder of a Mining Lease must pay the PNG government a 2% royalty on the free-on-board (FOB) value of the product if exported without smelting or refining. However, under the Memorandum of Agreement (MOA) all of the royalty is being returned to the landowners whereby 60% goes to Simberi Island, 15% each goes to Tabar and Tatau islanders and 10% to the Central New Ireland Local Level Government. The New Ireland Provincial Government has the right under the MOA to review the royalty distribution if the gold production exceeds 100,000 ounces in any one or more years. A 0.25% mining levis based on gross revenue is paid to the MRA.

4.6 Environmental Liabilities Historically, there has been no large scale mining and the previous alluvial workings have had no significant impact. There are no pre-existing environmental liabilities. Prior to construction Simberi must implement an Environmental Management and Monitoring Program (EMMP). Nord submitted a draft EMMP in May 1999 and an amendment to the EMMP (now known as the EMP) addressing changes to the previous scope, prepared by Nord’s consultants, was submitted in July 2003. A baseline environmental survey was undertaken in June 2003 and two further supplementary environmental baseline studies were completed in March 2004 and December 2004. During the environmental baseline studies, a network of monitoring stations was established to support the ongoing collection of data.

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The 2005 feasibility study addresses the environmental impacts associated with: • open cut mining operations and haul roads • ore processing operations • pipeline and power line corridors • deep sea tailings placement, and • project infrastructure. The mitigating engineering measures incorporated into the designs are also described. The project has the following objectives with respect to the environment:

4.6.1 Waste Dumps Elimination of all waste dumps through adoption of bulk mining techniques at the Samat, Botlu and Pigiput deposits. Waste generation at the Sorowar and Pigibo deposits will be placed within the mining voids. The recent reserve increase has also increased waste tonnages and this additional waste will be stored in land sited waste repositories.

4.6.2 Open Pits Progressive rehabilitation of the pits to minimise soil erosion and complete re-vegetation.

4.6.3 Pipelines Provision of engineering safeguards in the design of pipelines.

4.6.4 Access/Haul Roads Minimisation of soil erosion and dust generation.

4.6.5 Process Plant Minimise dust generation from crusher and conveyors, containment of chemicals and reagents, comply with air quality and water quality regulations.

4.6.6 Stormwater Stormwater management of open pits, mine infrastructure and processing plant, minimisation of soil erosion, collection of runoff for use in processing in preference to other supplies, installation of silt curtains at mouth of streams most likely to be affected by the project where practical installation and operation can be obtained.

4.6.7 Deep Sea Tailings Provision of a proven and accepted tailings disposal method, conservative design parameters and compliance with environmental permit conditions. A letter on the 24 February 2004 from the Acting Secretary for the Department of Environment & Conservation confirms that the Environmental Plan Approval for the Simberi Oxide Gold Project that was issued on 30 December 1996 under the Environmental Planning Act 1978 is valid and deemed to be an Environmental (Waste Discharge) Permit for the purposes of the Environment Act 2000. It also notes that the Department of Environment and Conservation is processing the amendment application which was submitted due to the changes in the mine plan and engineering concept. A further update to the EMP was prepared and submitted in conjunction with the Optimised Feasibility Study and is under consideration by the Department of Environment and Conservation.

4.7 Required Permits To commence mining in Papua New Guinea the operator needs a granted Mining Lease and an Environmental Permit.

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Allied hold water extraction permit WE-L3 (15), issued and commencing 30 December 1996 and expiring 31 December 2053, allowing them to extract water from sources within ML 136 for mining purposes. Allied also hold Mining Waste Discharge permit WD-L3(36), issued and commencing 30 December 1996 and expiring 31 December 2053. As part of this process Allied was required to submit a waste management plan. This plan covers the management and disposal of domestic and industrial wastes.

4.8 Surface Rights From the PNG Mining Act (1992) the granting of ML 136 to Allied confers the following rights: 1) A Mining Lease authorises the holder, in accordance with the Mining (Safety) Act (Chapter l95A) and any conditions to which the mining lease is subject, to: a) enter and occupy the land over which the mining lease was granted for the Purpose of mining the minerals on that land and carry on such operations and undertake such works as may be necessary or expedient for that purpose, and b) construct a treatment plant on that land and treat any mineral derived from mining operations, whether on that land or elsewhere, and construct any other facilities required for treatment including waste dumps and tailings dams, and c) take and remove rock, earth, soil and minerals from the land, with or without treatment, and d) take and divert water situated on or flowing through such land and use it for any purpose necessary for his mining or treatment operations subject to and in accordance with the Water Resources Act (Chapter 205), and e) do all other things necessary or expedient for the undertaking of mining or treatment operations on that land. 2) Subject to this Act, the holder of a mining lease: a) is entitled to the exclusive occupancy for mining and mining purposes of the land in respect of which the mining lease was granted, and b) owns all minerals lawfully mined from that land. The granting of EL 609 to Allied confers the following rights: 1) An exploration licence authorises the holder, in accordance with any conditions to which it may be subject, to: a) enter and occupy the land which comprises the exploration licence for the purpose of carrying out exploration for minerals on that land b) subject to Section 162, extract, remove and dispose of such quantity of rock earth, soil or minerals as may be permitted by the approved program c) take and divert water situated on or flowing through such land and use it for any purpose necessary for his exploration activities subject to and in accordance with the provisions of the Water Resources Act (Chapter 205), and d) do all other things necessary or expedient for the undertaking of exploration on the land. 2) The holder of an exploration licence is entitled to the exclusive occupancy for exploration purposes of the land in respect of which the exploration licence was granted.

5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY 5.1 Access Site personnel work rotating rosters and, as Simberi is not serviced by regular passenger services, charter flights are used to transport company personnel from various locations in PNG, including Port Moresby, Rabaul and Kavieng. A company-built airstrip, located at the southern end of Simberi Island on

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Company owned land called Pikung Plantation, can accommodate aircraft up to the size of a Bombardier Dash 8 (18.6t, 56 seat twin turboprop). The company also operates a loading barge, the Lady Geraldine, ferrying bulk supplies to the island on a regular schedule from the mainland towns of Lae in Morobe Province and Rabaul in the New Britain Province. The Lady Geraldine’s capacity is supplemented, as required, by privately owned barges chartered from Lae and Rabaul. The wharf, processing plant, offices and camp accommodation are located at Pigiput Bay on Simberi Island. Material is brought to the process plant by either 40 t articulated dump trucks along the haul road or a suspended aerial conveying system. An island ring road provides access to all parts of the island and the many hamlets inhabited by the islanders along the coast.

5.2 Physiography The Tabar Group islands are fringed by coral reefs and, with the exception of low-lying and sandy Mapua Island, have rugged and hilly interiors typically up to 300 m in elevation on Simberi Island and up to 600 m on Big Tabar Island. Flat coastal areas may extend up to several kilometres inland. Simberi Island, where the know gold deposits occur, is approximately 9 km in diameter and comprises a central rugged volcanic core of Pliocene age which rises to over 300 m in height. The volcanic core is flanked by Pliocene to Pleistocene raised limestone reefs. The reefs are surrounded by Quaternary deposits including lower level raised coral reefs, alluvium and present day fringing coral reefs. The central part of Simberi Island is deeply dissected, a result of the prevailing high rainfall tropical climate, giving rise to sharp ridges and incised valleys. Features such as volcanic craters or caldera structures cannot be pinpointed with any degree of certainty. The raised limestone reefs form a broken ring of bluffs around the outermost flanks of the central volcanic terrain. These limestone bluffs are topographic highs that rise to elevations of between 180 m to 210 m. The more recent Quaternary reef complexes and alluvial sediments form a flat lying coastal strip. The vegetation of the Tabar Group of islands varies greatly. Coconut plantations grow notably on Simberi Island and village gardens are tended along the low-lying coastal fringe. Secondary and tertiary forest growth generally covers the hinterland and dense primary rainforest is more restricted to the interior.

5.3 Climate The Tabar Group is located approximately 2.5⍭ south of the equator, making for a generally humid and wet environment. The islands, however, are not affected by tropical cyclones, being well north of the Southern Cyclone Belt that extends from 10⍭S to 20⍭S. Rainfall shows no real seasonal pattern and is distributed throughout the year with a not so distinct wetter period from October through to April. Mean annual rainfall is about 3,000 mm, with monthly totals typically varying from about 30 mm to 600 mm. This range is consistent with data collected at Lihir Island, 80 km to the south-east. There is a no well defined relationship between elevations however rainfall can vary from the coast to the interior. Close to sea level, the winds are generally light; with monthly wind speed usually less than 5 knots. Two wind seasons occur during the year, and vary in duration from year to year. Generally, prevailing winds are from the south-east from May to October, while from November to April, they are mainly from the north-west.

5.4 People and Infrastructure At the 1990 census, the population of Tabar Island as of the 1990 Census was 660 with 1,415 people living on the Tatau-Mapua Islands. A census of Simberi, in the early part of the 21st century, showed 1,093 inhabitants. The Tabar people speak a common language, Mandara, and share the same cultural rites and beliefs. Many also speak English and Pidgin, the preferred languages for business dealings with Allied. Approximately 280 local people are employed directly by the mining operation making up just over 57% of the total workforce. The remainder of the workforce is made up Australian expatriates (4%) and non-local Papua New Guineans (39%). In addition there are approximately 158 contractor personnel engaged made up in similar proportions of expatriates, non-local and local Papua New Guineans as the mine breakup. The people are grouped under clans and sub-clans with intermarriage generally forbidden within the same clan. The clans in the Tabar Group are matrilineal, in which the children of a married couple belong

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to the mother’s clan and look to their mother’s people, (particularly her brothers) for ultimate support and guidance. Under a matrilineal inheritance system, maternal uncles pass on land rights to their sisters’ children. Land can also be ‘‘purchased’’ in the traditional sense with ‘‘shell-money’’ or ‘‘cash-money’’. The Tabar Islands are accessible by sea and air and therefore have encountered a great deal of external economic, political, social and cultural influence since the turn of the century. Outside influences have included missionaries and planters as well as German, Japanese, Australian and PNG government administrations. The coastal strips fringing the islands support the villages’ needs. The villagers subsist mainly on food grown in their gardens, with sweet potato being the most popular crop, supplemented by tapioca, banana, taro, coconut and yam. Food gardens are now extending further inland and on cleared slopes of mountains as the coastal strips become increasingly crowded with homes and established plantings of trees such as coconut, betel nuts, traditional nut trees, breadfruit, mango and other fruit trees. Pigs play an extremely important part in the Tabar-peoples’ culture as a medium for exchange, gifts, compensation-settlements and for ceremonial feasts. With the exception of several small portions of land purchased by locals and two plantation leases held by the Allied, most of Simberi Island is held as communal land, owned by various clans. The mineral deposits relevant to this report occur on this communal land. Compensation agreements have been negotiated with each clan within the proposed mining area for loss and disruption caused by mining activities. Title to the deposits and mineralisation rests with the National Government, which then grants rights to development through the issue of mining leases. The two long term plantation leases, referred to as Pigiput and Pikung Plantations, are located within ML 136 on Simberi Island (Figure 4-3). Both leases are fully controlled by Allied and valid for 99 years from the grant date (Pigiput, 13th June 1985 and Pikung, 1st January 1938). This land is not subject to communal claims from landowners. The wharf, processing plant, offices and camp accommodation are all located within the 203 ha Pigiput Plantation Lease and the project’s airstrip is located fully within the limits of the 140 ha Pikung Plantation lease.

6.0 HISTORY There is evidence of very limited alluvial gold workings, probably dating from the 1920s, to the north of Sorowar in Matanabol Creek and at Tugi Tugi on Tatau Island. Prior to systematic exploration being applied in 1981, earlier exploration consisted of reconnaissance surveys searching for copper by Conzinc Rio Tinto and Broken Hill Propriety Ltd. Nord Pacific Ltd (‘‘Nord’’) acquired an exploration licence over the Tabar Islands Group in 1981 at which time modern reconnaissance exploration on Simberi Island indentified gold mineralisation. In 1982 a joint venture was established between Kennecott Exploration (Kennecott), Nord Resources and Niugini Mining Ltd, with Kennecott as the operator. The Tabar Joint Venture, Kennecott Explorations (Australia) Ltd (61.6%), Nord (30%) and Niugini Mining Ltd (8.4%), was formed in 1982 to explore for gold mineralisation in Prospecting Authority PA 609-1, on the Tabar Island Group. Reconnaissance geochemical exploration and geological mapping by Kennecott identified anomalous gold over a large area of eastern Simberi Island. Within this area, there were several prospects with evidence of higher grade and coherent mineralisation. These prospects were systematically aircore and diamond drilled between 1983 and 1990, initially testing both oxidised and sulphidic gold mineralisation, but later concentrating on the oxide material with a view to testing the viability of a low-cost open-cut mining operation. In 1993, Nord re-acquired the interests of both Kennecott and Niugini Mining. Subsequently Nord continued exploration and in 1996 commissioned a feasibility study. The study demonstrated favourable project economics and culminated in the grant of a Mining Lease (ML 136) to Nord Pacific in December 1996. This Study included a detailed review of deposit geology and mineralisation, data acquisition methods, data validation and Mineral Resource estimation methodology. Resource estimates of the Sorowar, Pigiput, Samat South, Samat North and Samat East deposits were reported. The Project became uneconomic with the decline in the gold price in early 1997.

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In 1997, an extensive drilling program tested extensions to Sorowar and two additional deposits, Botlu and Pigibo. In 1998, the oxide Resources at Sorowar were re-estimated using the larger drill database and new estimates were made for the Botlu and Pigibo deposits (see Section 17.1). The program was successful in almost doubling known resources but a desktop update of the feasibility study carried out in 1999 indicated that the low gold price still precluded development. In 2002, Nord Pacific entered into two joint ventures with PGM Ventures Corporation (PGM), a Canadian public company. The first venture was known as the Simberi Mining Joint Venture (SMJV) and covered development of the gold resources within ML 136. The second was Tabar Exploration Joint Venture and covered exploration within Exploration Licence 609 over the remaining areas in the Tabar Group. The Simberi Oxide Gold Project is wholly contained within ML 136, which was issued in December 1996 to Simberi Gold Company Limited, a wholly owned PNG subsidiary of Nord Pacific Limited. In January 2003, PGM announced an agreement to vend its interest in the Simberi Project into another Canadian public company, Alive International Inc. This transaction resulted in Alive International becoming a 60% owned subsidiary of PGM. On 15th November 2004, Allied Gold Limited entered into an agreement with Simberi Gold Corporation (‘‘SGC’’) to acquire its interests in the Tabar Islands Gold Project. Under the terms of the Agreement, Allied Gold moved to an 87.5% interest (ML136) in the Simberi Mining Joint Venture, which was joint venture between Nord Pacific and SGC, and a 100% interest in EL609 which covers the remainder of the Tabar Island Group. In October 2005, agreement was reached with SGC for Allied Gold to purchase the remaining 12.5% free carried interest in the Simberi Oxide Gold Project. Accordingly, Allied Gold now controls a 100% interest in ML136. Allied also currently holds title to the 233 km2 Exploration Licence EL609 comprising three blocks A, B and C, illustrated in Figure 4-2. EL609 Block A covers the remainder of Simberi Island not included in ML136. Blocks B and C cover the islands of Tatar and Tabar respectively. Under the PNG Mining Act (1992), an Exploration Licence may be granted for up to two years and is renewable, subject to the holder reporting on and satisfying prescribed expenditure requirements on approved exploration activities. Documentation for the renewal of Exploration EL609 is currently under review by the PNG Mining Advisory Board. EL609 Blocks B and C were subject to a Letter of Intent, signed with Barrick (PNG) Exploration Ltd in March 2008, through till 28 February 2010 during which time Barrick (PNG) managed all exploration activity. Allied negotiated a deal allowing Barrick (PNG)’s withdrawal from the terms of the Letter of Intent and has since reassumed management of exploration in the entire area of permit EL609. Allied made an immediate $AUD2.5M payment with a further $A3M to be made in July 2010 to Barrick (PNG) as either cash or Allied shares. Barrick agreed to place its holding of Allied in escrow until 2012.

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Table 6-1: History of Exploration Activity on ML136

Year Activity 1930s ...... Small-scale alluvial workings in Matanabol, Darum & Waturu Creeks north of Sorowar Figure 4-3. 1960s ...... CRA (formerly Conzinc Rio Tinto of Australia Limited) undertook reconnaissance for porphyry copper and bauxite. 1969 ...... To 1974, regional mapping by the Bureau of Mineral Resources 1973 ...... BHP reconnaissance for porphyry copper 1981 ...... Nord Pacific Ltd granted PA451 1982 ...... Joint venture formed: Kennecott Explorations Australia Ltd (61.6%), Nord (30.0%), Niugini Mining Limited (8.4%). PA451 converted to PA609 1993 ...... Nord re-acquired all Kennecott and Niugini Mining interests in PA451, after the latter elected to focus on Lihir. PA609 converted to EL609 1996 ...... Nord commissioned feasibility study. ML136 excised from EL609 and granted in December 1997 ...... Drilling campaign almost doubled resources 1998 ...... Project put in care and maintenance due to falling gold price 2001 ...... Simberi Mining Joint Venture between Nord Pacific and PGM Ventures 2003 ...... Lycopodium Pty Ltd updated the 1996 feasibility study 2004 ...... Allied Gold Ltd commenced acquisition of interests in ML136 and EL609 2005 ...... Allied Gold Ltd acquired 100% interest in ML136 and EL609. Optimised Feasibility Study completed by Lycopodium Engineering 2006 ...... Allied Gold Limited started mine & mill construction. 2008 ...... Mine production began and mill commissioned. Mar 2008 ...... Blocks B and C of EL609 joint ventured to Barrick Jul 2009 ...... Simberi Oxide Plant production achieved total 100,000oz gold Jul 2009 ...... Simberi Reserves exceed 1Moz (pre-mining Proven & Probable 23.9Mt @ 1.36g/t Au for 1.04Moz gold) Feb 2010 ...... Allied Gold assumes full control of EL609 after negotiating Barrack (PNG) withdrawal Mar 2010 ...... Simberi pre-mining MEAS + IND resources total 3.2Moz gold and INF resources total 2.5Moz (78.4Mt @ 1.27 g/t Au for 3.20 Moz of gold, with additional Inferred 78.2Mt @ 0.99 g/t Au for 2.49 Moz of gold) Sep 2010 ...... Completion of Sulphide Project pre-feasibility study. Reserve increased to 1.31 Moz to 2.15 Moz

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7.0 GEOLOGICAL SETTING 7.1 Regional Geology Simberi Island is the oldest and northernmost island of the Tabar Island group. It forms part of a silica-poor, potassium-rich alkaline volcanic Pliocene-Pleistocene island arc to the immediate north of New Ireland, PNG. This island arc includes the Lihir, Feni and Tanga Island groups that lie to the south-east of the Tabar Group. The island arc was distorted by a complex underlying subduction system causing the islands to form along north-south tension gashes (Figure 7-1). It is inferred that these deep-seated structures have controlled the location of porphyry intrusives derived from re-melting of the oceanic crust following reversal of subduction coupled with epithermal alteration and associated mineralisation.

20APR201122060695 Figure 7-1: Simberi—Regional Tectonic map and Gold Mines Simberi Island itself is approximately 9 km in diameter and is the smallest of the three islands forming the Tabar Island Group. The rugged central part of the island contains volcanic and intrusive rocks in an area about 6 km in diameter, rising to over 300 m elevation. The volcanic edifice is partially encircled by raised bioclastic reefal limestone. The interpreted geological history of the island is that of a volcano-intrusive centre in an ocean island arc setting in which the alteration and epithermal gold mineralisation, driven by porphyritic igneous bodies intruded below, was emplaced in the waning stages of volcanism. Results from a high definition airborne magnetic and spectrometer geophysical survey, dipole-dipole Induced Polarisation geophysical surveys carried out in early 2005 and a helicopter borne high definition time—domain electromagnetic (Heli-TEM) survey undertaken in December 2008 support this interpretation. The geophysics indicates the likely presence of highly resistive porphyry intrusives at depth. Conductive and chargeable clay-pyrite alteration zones lie above and trend away from the interpreted intrusives. Gold mineralisation is often associated with chargeable zones on the margins of intrusives.

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7.2 Prospect Geology The currently known gold prospects on Simberi Island are located in the eastern half of the island, within the central volcanic core and are contained within a sub-cropping epithermal alteration system and structural corridor extending 4 km north-south and 2 km east-west. The host rocks for the mineralisation comprise altered alkaline lava flows or intrusives (porphyries), volcanoclastics and tuffs. Some local fine-grained bedded tuffs with soft-sediment structures may represent lake sediments deposited in maar-like depressions or craters (Figure 7-2). Gold mineralisation, however, does not appear to be closely associated with any particular lithology. The epithermal system is characterised by widespread surface gold anomalism, a distinctive airborne radiometric and magnetic geophysical signature and ground IP geophysical chargeability and resistivity anomalies. The identified (4 km by 2 km) epithermal alteration system appears coincident with a broad anomalous >0.2 g/t gold surface geochemical halo. There is no thermal spring activity, though remnants of such activity exist. Subsequent drilling of higher-grade anomalies within this halo has mostly focused on the definition of seven shallow oxide resources and, potentially open pit mining Reserves. Evaluation of deeper sulphide mineralisation has concentrated primarily on the Pigiput and Pigibo deposits, with lesser amounts of deeper drilling being undertaken on the Samat, Botlu and Sorowar deposits. All the known oxide deposits, except Samat East, are immediately underlain or proximal to sulphide gold mineralisation.

20APR201122132507 Figure 7-2: Simberi Island Geology (Simberi Island Grid)

7.3 Interpreted Geological History The following interpreted sequence of geological events has provided a framework to guide resource estimation and further exploration. Research suggests typical island-arc volcanoes (10-100 km3 in volume) have typical life spans of 200,000-600,000 years indicating a likely timeframe for events 1 to 5 in Table 7-1. Events 6 to 9 occurred

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once the volcano became dormant. Deep weathering and erosion under a tropical weathering regime is presently active.

Table 7-1: Interpreted Geological History

Late Pliocene (3Ma) to Present 9 Extensional block faulting, producing horsts and grabens 8 Development of latersol on the sediments and deep oxidation of some of the mineralisation 7 Development of local and partial cover of clayey sediments, possibly at the same time as the formation of the now-raised limestone reefs 6 Weathering and oxide development, affecting the upper part of the mineralisation, with oxidation preferentially extending to some depth along major structural zones 5 Introduction of gold mineralisation into some of the zones of hydraulic fracturing, with some spreading into adjacent clastics where structural pathways are available 4 Further alteration (clay, feldspar, magnetite destruction) by porphyry-sourced magmatic fluids, in some cases causing otherwise clayey and altered diatremes to become competent and providing a favourable lithology for subsequent fracturing and mineralisation emplacement 3 Emplacement of multiple diatremes by phreatomagmatic explosive processes along zones of weakness above the intrusive(s) 2 Porphyry intrusion(s) at depth along the same zone, moving up into the volcanic pile, with associated propylitic alteration 1 Formation of a pile of crystalline and clastic volcanics sourced from volcanic activity along a major zone of crustal weakness

8.0 DEPOSIT TYPES 8.1 Simberi The Simberi Gold Project plans to exploit seven separate prospects on the eastern portion of the island. Sorowar in the north is by far the largest Oxide gold resource (Figure 8-1). Samat North, South and East lie to the south and while relatively small are also relatively high grade. Pigiput, Pigibo and Botlu South lie between the Sorowar and Samat areas and have Oxide gold resources of intermediate tonnage but at a grade similar to Sorowar. Pigiput has the largest Sulphide gold resource. All prospects lie within 2-3 km of each other. The project area also includes other less well defined prospects and anomalies. The main Oxide deposits are Sorowar, Pigiput, Samat South, North and East, Botlu and Pigibo. The base of oxidation varies between a few metres to greater than 50 m vertical depth and generally favours higher elevations, from 100 m elevation at Samat to 280 m at Sorowar. The grade of the mineralisation is related to the natural porosity and degree of fracturing of the host rocks, greatest in the vicinity of steep and moderately dipping feeder structures interpreted to have been the pathways for both alteration and mineralising fluids. Gold bearing Sulphide (unoxidised) mineralisation has been identified at depth beneath Oxide mineralisation at Sorowar, Pigiput and Pigibo, beneath oxide mineralisation and near-surface at Botlu and immediately beneath oxide and transition mineralisation at Samat South and Samat North. Primary gold occurs within sulphide minerals, dominantly arsenean-pyrite, and remains very fine grained when released by oxidation.

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20APR201122043653 Figure 8-1: Simberi—Mineralised deposit locations

8.1.1 Sorowar At Sorowar, the largest known deposit on Simberi, the oxide gold mineralisation is associated with an alternating sequence of NW (315⍭) trending porphyry and volcanoclastic tuff interbeds or intercalations with lesser volcanic diatreme bodies or slices that dip at moderate angles (25⍭ to 45⍭) to the SW. The diatreme bodies appear structurally controlled, exploiting a series of more recent E-W and NE-SW trending structures. The main part of the deposit is located at the intersection of a major E-W and NE-SW structures with the most favourable lithological zones being diatreme and brecciated formations. Higher grade zones have an E-W trend. Irregularities in the depth of oxidation over the Sorowar deposit indicate interplay between lithologies and structures. A NW trending steep dipping surface, interpreted as a fault, marks the western boundary of the main body of oxide mineralisation and coincides with a zone of deep oxidation. It also marks the western edge of a prominent ridge and the eastern side of a shallow valley that contains a superficial clay cover. Finer grained tuffaceous sediments, with local bedding and soft sediment deformation structures, outcrop on a ridge coinciding with the north-west margin of the pit design. These are interpreted to be either part of tuff-ring sediments ejected around diatreme emplacement centres or maar deposits. Most of the mineralisation exposed at surface by mining is in fractured porphyry or volcanoclastic/ diatreme material, with gold grade being related to the intensity of fracturing and rock porosity. The higher gold grades, those over 3.0g/t, are often found in intensely fractured (crackle brecciated) porphyries adjacent to a steeply dipping fractures interpreted to have been a fluid flow pathways. Narrow vertical structures and groups of structures in the overlying sediments that can carry gold up to 16.0 g/t, suggest fluids or gases rose upwards through a thick slurry of tuffaceous sand and clay. Sorowar mineralisation occupies both a shallow valley and ridges to the east and north. The depth of oxidation is greater in the valley than on the ridges, particularly the ridge to the east. There are several different phases of volcanoclastics and breccias, either mono- or hetreo-lithic, with varying clast sizes varying from sand-sized to several tens of metres. While the tenor of gold mineralisation is more closely related to fracture intensity than lithology the naturally porous volcanic tuffs and breccias host significant disseminated mineralisation.

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The main part of the Sorowar mineralised zone is situated at the intersection of an interpreted E-W structural zone with a favourable lithological sequence. Originally, three separate pods of mineralisation were identified outside the original (Oct 2006) planned pit, to the north-west, south-east and east. Subsequent infill drilling, in 2007 and 2008, linked these bodies to the main area of mineralisation. The current pit design (May 2009) has a pronounced elongation of the Oxide pit in a NW-SE direction, consistent with the orientation of the main NW trending fractures (Figure 10-2). The base of oxidation at Sorowar was re-interpreted in 2008, using three-dimensional surface modelling (wireframing). As in earlier models, broad zones of deep oxidation were identified, though, in detail, significant irregularities in the depth of oxidation indicate interaction between intersecting lithologies and structures. In some places, the model was made to conform to distinct linear deeper-oxidation zones (usually east-west). There are two oxidised zone forms at Sorowar: • an upper-oxide zone that matches the topographic profile and rarely exceeds 30m depth from surface, and • a sheet-like zone that penetrates to a depth of ~100 m below surface and results from the deeper weathering of structural fractures. Detached sulphide ‘pods’ in the sheet-like zone, that occur where the rock is less permeable, whether due to the original lithology or its alteration, to allow meteoric fluids to penetrate, are common. The Sulphide gold mineralisation at Sorowar is less drilled, due to the past focus of solely drilling for shallow Oxide gold. To date, intercepts in the sulphide zone are narrow and generally of lower grade than those in the oxide zone. Mining of the Sorowar deposit commenced in May 2008.

20APR201122202767 Figure 8-2: Sorowar Deposit—Drill Collar Locations and Topographic Contours

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8.1.2 Samat At Samat the pattern of the thin layers of mineralisation is suggestive of mineralisation sources along discrete structural zones, with spreading by supergene processes and soil creep at surface, modified by local erosion.

20APR201122144194 Figure 8-3: Samat—Drill hole locations and pit design outlines At Samat South, volcanoclastics and diatremes are closely associated with the mineralisation. An interpreted 085⍭ trending fault to the south marks a boundary between hydrothermally altered and unaltered rocks. Within the mineralised zone itself, structures are not sufficiently well defined to provide limits that can be used in resource estimation. At Samat North, differences between several twinned drill holes indicate structural complexity. The northern boundary of the mineralisation appears to lie along a NW-SE trending fault. A NE-SW trending fracture zone may pass through the mineralised zone and intersect the northern end of the Samat East structure. At Samat East, a thin layer of oxide mineralisation extends in a NNE direction, on the western slopes of a prominent ridge.

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8.1.3 Botlu Oxidised material at Botlu is generally thin, up to 10 m deep, however at one location, in the north of the prospect area, oxidation extends to 80 m from surface over an area approximately 100 m by 150 m. Oxide gold grades tend to be higher near surface decrease with depth. In the south-east of the prospect moderate to high-grade gold in un-oxidised material occurs from near surface to 100 m depth. Gold mineralisation is associated with highly fractured and altered porphyritic andesite and volcanoclastic rocks, occasionally with minor quartz veining and silicification.

20APR201122024194 Figure 8-4: Botlu—Drill hole collar locations and proposed pit outline

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8.1.4 Pigiput

20APR201122100739 Figure 8-5: Pigiput drill hole collar location plan with proposed pit outline At Pigiput, the near-surface oxide mineralisation is closely associated with an east-west trending ridge. The deeper sulphide mineralisation is interpreted to be related to alteration of the shallow dipping stratigraphy best developed around steeper dipping dominantly NW, N and E trending fractures. The dominant lithologies intersected near-surface in drill holes, are crudely bedded, coarse to fine grained tuffs, with occasional volcanic breccia. Deeper drill holes have intersected fine-grained crystalline rocks that may be either intrusive or extrusive feldspar porphyries. Petrographic analysis reveals a typical latite andesite composition. The latite andesite porphyries have potential to act as aquitards, allowing alteration veining and replacement to develop in underlying more permeable units around structures that cross cut lithlogical boundaries. The porosity of tuff units is inherently significantly greater than the interbedded andesite units allowing more widespread alteration to occur, leading to total replacement in some cases. Both permeability and porosity in the andesite units is provided by crackle brecciation, best developed at andsite/tuff contacts, particularly around cross-cutting structures. The main geological units mapped at surface are moderate to intensely altered and interbedded tuffs with alternating coarse to fine beds dipping at shallow angles (5⍭ to 20⍭) to the south and east. Structural mapping has highlighted three main trends of fracturing: 1) NW striking, moderate NE dipping 2) N-striking and steeply dipping, and 3) E-W striking, moderate to shallow N dipping. Higher grade gold mineralisation is mainly associated with silica-carbonate-pyrite and clay-pyrite alteration haloes particularly well developed around the N-striking, steeply dipping structures and in the hanging wall of the moderate to shallow dipping NW trending structures.

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The higher-grade Oxide mineralisation occurs in a near-surface layer on the ridge crests, suggesting some supergene enrichment. Oxide mineralisation can extend to over 100 m depth in the mineralised zone. Mineralisation is contiguous into the transitional and sulphide zones. Sulphide mineralisation at the Pigiput deposit was the main focus of Allied’s 2009 exploration programme. Core holes drilled tested the down dip extension of the Pigiput Prospect gold mineralisation defining a broad zone of NW dipping mineralisation that contains structurally related higher grades within lower grade disseminated haloes in both tuffs and brecciated porphyritic andesites. Gold mineralisation is associated with broad zones of variably intense carbonate and quartz-carbonate replacement and fracture fill alteration. This differs from the clay-sulphide dominant alteration seen in the upper levels of the Pigiput Prospect and also the Samat deposits 1 km south. At Pigiput, gold mineralisation (>=0.5g/t Au) is associated with pyrite and geochemically elevated arsenic (average 855.6 ppm in 5,682 drill hole sample analyses) and copper values (average 121.4 ppm). While relatively low average base metals levels of other base metal elements (molybdenum 52.0 ppm, lead 163.8 ppm and zinc 271.8 ppm) are noticeably higher than those at the neighbouring Pigibo Deposit. Base metal contents vary with depth and sulphur content, the latter generally linked to degree of weathering. In the upper 100 m of holes drilled at Pigiput, where sulphur values average 1.0% (typical of Oxide zone), arsenic contents are relatively high (average 1200 ppm) while base metals are low (molybdenum 11.8 ppm, lead 13.0 ppm and zinc 76.5 ppm). This contrasts significantly with samples below 100 m downhole, where sulphur averages 4.0% (typical of Sulphide zone) arsenic contents are noticeably lower (average 541.7 ppm) while base metals are higher (molybdenum 80.7 ppm, lead 271.4ppm and zinc 405.3 ppm). Copper values are similar in both zones, averaging 126.0 ppm to 100 m downhole and 134.5 ppm below 100 m, suggesting the difference in base metal contents is genetic and not simply caused by weathering.

8.1.5 Pigibo At Pigibo, gold mineralisation (>=0.5g/t Au) is associated with pyrite and geochemically elevated arsenic (average 712.8 ppm in 1670 drill hole sample analyses) and copper values (average 165.8 ppm) and otherwise low average base metals levels (molybdenum 5.3 ppm, lead 10.3 ppm and zinc 90.3 ppm) similar to the upper parts of the Pigiput Deposit. Host rocks are predominantly, porphyritic intermediate intrusive, crackle brecciated where mineralised, with lesser tuffs. The mineralised zones are interpreted to strike east-west and dip moderately to steeply northwards. These structures run through host rocks (predominantly andesitic in nature) and have a pervasive lower grade halo around them. The 2009/2010 drill programme tested mineralisation over 600 m in length. Drill holes are oriented ǁ60⍭ south to intersect the mineralisation. The oxide zone is on average 30-40 m deep although in localised areas it can go deeper. Bottle roll tests on the RC drill chips showed good cyanide leachability of the gold in the oxide zone, consistent with other deposits at Simberi. Poor recoveries were achieved in transition and sulphide materials. Recent RC drilling in at the Pigibo Prospect, improved section-to-section continuity of the main zone of gold mineralisation (Figure 8-5). The mineralisation follows the crest and southern flank of a hill and is modelled around a moderately north dipping surface, consistent form section-to-section. Two steep NNW trending flexures are interpreted to cross the surface, causing right-lateral off-sets of the mineralised zones and a drop in grade over short strike lengths The limits of the Pigibo gold mineralisation are yet to be fully defined, being still open at depth on most sections and along strike to the east.

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8.1.6 Pigicow At Pigicow, narrow intrusives of intermediate composite commonly cross cut coarse grained volcanoclastics and andesite/latite flows. In nearly all cases, they are steep to sub-vertical and trend WNW. The contacts are usually gouged and there is little evidence of wall rock alteration. Such contacts may have been activated repeatedly during the volcanic evolution of Simberi and, likely, subsequently. Diatreme breccias, exhibiting milled clasts and a rock flour, or clay, matrix also trend WNW. Adjacent bodies of intrusive and breccia are common. The diatremes represent a late event, as they often contain clasts of the intrusive lithologies. Gold mineralisation is rather diluted in oxide, and the protolith fabric is largely degraded yet the primary occurrence is not totally obliterated. Higher grade channel samples may be correlated with porous breccias, for the most part and in such cases, the rocks are usually heavily stained by both hematite and goethite, after pyrite. Lesser jarosite is also present as a supergene accessory in zones of higher gold grade. IP chargeability profiles define a conductive body that likely represents disseminated primary sulphides (pyrite Ǆ arsenopyrite). This body can be traced as WNW trending throughout Samat (five 2005 IP sections) and within Pigicow (one 1997 IP section). Gold grades are attributable to the margins of such a body and this correlation is evident within many drill core/chargeability comparisons, whereby high chargeability represents a clay-pyrite halo (or core), with gold mineralisation focused along the margins. Strong fracturing of margins of such bodies produces a low resistivity.

20APR201122081451 Figure 8-6: Pigicow—drill hole locations

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8.1.7 Bekou Mapping of the Bekou tracks in late 1996 revealed the presence of numerous diatreme breccias containing abundant disseminated pyrite with jarosite staining and pervasive clay alteration. These pipes are largely subvertical trending in WNW direction although flat lying and N-S breccias have been observed. These are invariably bounded by strong fracturing with associated hematite and goethite in boxworks after sulphides. These breccias are relatively devoid of Au mineralisation but their margins are generally well mineralised over some distance. Field mapping and correlation with gold grades in channel samples at Bekou reveals that the majority of gold mineralisation may be attributed to both fine and large scale structures. Mineralisation is very intermittent and probably represents limited zones of palaeo-dilation within the WNW trending bodies. The broad scale trend of the prospect scale ore bodies is WNW (reflecting the regional trend), with haloes of higher grades to the diatremes commonly highly oblique to this, representing early tension structures which are present throughout the Bismarck region. Such zones are characterised by abundant hematite-goethite replacement of sulphides in structures. Both diatreme breccias and intrusives have exploited the steep WNW trending structures. Au grades in such diatreme breccias are variable, suggesting that they formed prior to the main mineralisation event. Where they are mineralised, it is usually along the margins or within fracture sets. These diatremes are readily recognisable on the surface by their distinctive blue-grey smectite-pyrite alteration and below the surface by their remarkable high chargeability values (generally 30-40 mV/V).

20APR201122011975 Figure 8-7: Bekou—drill hole locations

9.0 MINERALISATION Where recognised, the main primary control of gold mineralisation is steeply dipping fracture systems, in places associated with milled breccia dykes (diatremes). Particularly high grades are associated with diatreme-country rock contact zones. Gold mineralisation is generally associated with sulphides or iron oxides occurring within all variety of hydraulic fractures, such as simple fracture infills, single vein coatings and crackle brecciation. This fracturing can occur in any rock type competent enough to fail under stress, particularly porphyry (either intrusive or extrusive) but also altered diatreme breccias and tuff deposits. Higher gold grades tend to be associated with higher sulphide/iron oxide content and greater degrees of fracturing. Alteration intensity and areal extent can be correlated with gold mineralisation. In the oxidised zone, the gold is predominantly associated with iron oxides after sulphides, with higher grades being associated with rare vuggy and chalcedonic quartz.

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The gold in the oxide zone occurs as ‘free’ gold as verified by high gold recoveries during cyanide leach. Gold in mineralised primary rocks includes refractory gold hosted by pyrite. The particle size of the gold in the oxide zone is very fine (the bulk of it is less than 50 microns) and limited testwork has shown that the gold in primary rocks occurs as solid solution within the fresh pyrite and or marcasite and occasional arsenopyrite crystal lattice. Gold sometimes also occurs with carbonates and base metal sulphides at depth, with or without silver. The most notable silver—gold occurrence is in NW Sorowar. Fluid inclusion studies of quartz from Sorowar identified a low temperature of homogenisation (207⍭C). This, along with the fine-grained nature of the quartz and inter-layered clay alteration, is believed indicative of cooler near-surface epithermal levels of a hydrothermal system

10.0 EXPLORATION 10.1 Surveys and Investigations Gold mineralisation was discovered by modern reconnaissance exploration on Simberi in 1981, though there is evidence of very limited alluvial gold workings, probably dating from the 1920s, to the north of Sorowar. Reconnaissance geochemical exploration and geological mapping by Kennecott identified a large area of eastern Simberi as being anomalous in gold, within which there were several prospects with evidence of higher grade and coherent mineralisation. These prospects were systematically aircore and diamond drilled between 1983 and 1990, initially testing both oxidised and sulphidic gold mineralisation. Later drilling programs focused on oxide material only. A helicopter borne magnetic and radiometric survey carried out in 1987 was reinterpreted in 1995 to produce composite radiometric and reduced-to-pole magnetic images. The radiometric data highlights the potassic alteration associated with the known mineralisation. The aeromagnetic data shows the known mineralisation is associated with zones of subdued magnetic response, interpreted as zones of alteration-related magnetite destruction (Figure 10-1). The aeromagnetic data shows the known mineralisation is associated with zones of interpreted magnetite destruction. These features are evident as zones of subdued magnetic response in contrast to the highly variable magnetic response seen over most of the western half of the island. Several dipole-dipole IP surveys, pole-dipole surveys, and gradient arrays IP surveys have been carried out on Simberi Island. An image of the dipole-dipole and pole dipole surveys is shown in Figure 10-1. In conjunction with Barrick’s exploration of the Tabar and Tatau Islands, an AEROTEM electromagnetic survey was flown over the leases in December 2008/January 2009. Approximately 530 line km of data was acquired over Simberi Island. Barrick geophysicists interpreted the main features, shown in Figure 10-2 to be: • conductive ring due to seawater • central resistive zone that hosts the known mineralisation • moderately conductive ring, likely to be a stratigraphic unit, and • weakly conductive cover, possibly volcanic ash, that is considered prospective and under-explored, (see also Figure 10-3 that overlays the drill hole coverage). Subsequent systematic exploration programs using aircore, RC and diamond holes by Nord, PGM Ventures and Allied Gold together with surface geochemistry and IP geophysical surveys have continued to increase resources on Simberi. Ongoing drilling by Allied resulted in increased resources and reserves at Sorowar, Pigiput/Pigibo and Samat. This drilling includes RC and diamond core holes drilled to verify older holes completed by Kennecott and Nord in respect to mineralisation orientations, grade and metallurgy.

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20APR201122163845 Figure 10-1: Simberi Is—ML136—Comparative Images of Geophysics Data

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20APR201121592096 Figure 10-2: AEROTEM Survey—Interpretation (Barrick, 2009)

SIMBERI ISLAND—2009 TEM GEOPHYSICAL SURVEY

21APR201104282093 Figure 10-3: AEROTEM 100 m Resistivity with Simberi Drill hole Collars

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11.0 DRILLING Simberi has been explored and developed using channel sampling, Reverse Circulation Drilling and Diamond Drilling. A summary of the drilling history is provided below:

Table 11-1: Adora—Drilling History

Year Company Hole Type Number of Holes Metres 1995 ...... Nord RC 4 113.00 1997 ...... Nord RC 6 384.00 2006 ...... Allied RC 6 268.00 2007 ...... Allied DDH 4 579.42 RC 16 884.00 2008 ...... Allied DDH 1 179.50 Total Adora ...... 37 2,367.92

Table 11-2: Bekou—Drilling History

Year Company Hole Type Number of Holes Metres 1997 ...... Nord DDH 3 508.05 RC 20 1,259.00 2006 ...... Allied RC 48 1,122.00 Total Bekou ...... 71 2,889.05

Table 11-3: Botlu—Drilling History

Year Company Hole Type Number of Holes Metres 1986 ...... Kennecott DDH 6 1,587.10 1987 ...... Kennecott AC 30 2,662.50 DDH 3 666.15 1988 ...... Kennecott DDH 1 218.00 1989 ...... Kennecott AC 10 1,141.00 DDH 1 185.70 1996 ...... Nord MET 2 184.20 RC 8 302.00 1997 ...... Nord DDH 3 371.70 RC 83 4,010.00 1998 ...... Nord RC 3 450.00 2003 ...... Allied MET 2 66.00 2010 ...... Allied RC 2 240.00 DD 9 2,148.80 Total Botlu ...... 152 11,844.35

Table 11-4: Kekenminda—Drilling History

Year Company Hole Type Number of Holes Metres 1998 ...... Nord RC 6 621.00 Total Kekenminda ...... 6 621.00

Table 11-5: Patan—Drilling History

Year Company Hole Type Number of Holes Metres 1989 ...... Kennecott AC 10 569.00 2007 ...... Allied RC 11 848.00 Total Patan ...... 21 1,417.00

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Table 11-6: Pigibo—Drilling History

Year Company Hole Type Number of Holes Metres 1986 ...... Kennecott DDH 1 302.00 1987 ...... Kennecott AC 12 1,094.00 1989 ...... Kennecott AC 2 289.00 1997 ...... Nord DDH 2 266.10 RC 31 3,372.00 1998 ...... Nord DDH 3 878.10 RC 1 100.00 2005 ...... Allied RC 4 188.00 2008 ...... Allied RC 11 1,309.00 2009 ...... Allied DDH 18 2,376.80 RC 23 2,753.00 DD 2 429.60 2010 ...... Allied RC 31 2,055.00 DD 6 1,228.20 Total ...... 147 16640.80

Table 11-7: Pigicow—Drilling History

Year Company Hole Type Number of Holes Metres 1987 ...... Kennecott AC 10 972.00 1997 ...... Nord DDH 1 201.00 RC 21 1,399.00 1998 ...... Nord DDH 1 100.00 RC 1 100.00 2004 ...... Allied RC 1 30.00 2006 ...... Allied DDH 6 832.00 RC 100 3,312.00 141 6946.00

Table 11-8: Pigiput—Drilling History

Year Company Hole Type Number of Holes Metres 1984 ...... Kennecott DDH 2 526.80 1985 ...... Kennecott DDH 13 3,052.35 1988 ...... Kennecott AC 51 6,604.50 DDH 8 1,855.35 MET 4 274.00 1989 ...... Kennecott AC 20 2,605.50 DDH 10 2,287.60 1996 ...... Nord RC 15 930.00 1997 ...... Nord DDH 12 2,830.50 RC 20 2,015.10 2005 ...... Allied DDH 7 1,614.90 RC 7 790.00 2006 ...... Allied DDH 2 326.10 RC 4 444.00 2008 ...... Allied DDH 9 1,933.74 RC 66 7,283.00 2009 ...... Allied DDH 47 12,673.20 MET 5 1,083.10 RC 4 722.00 DD 7 2,047.50 2010 ...... Allied RC 2 328.00 DD 14 3,211.10 Total Pigiput ...... 329 55,438.34

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Table 11-9: Plant—Drilling History Year Company Hole Type Number of Holes Metres 1995 ...... Nord GEOTECH 18 275.30 RC 6 226.00 2006 ...... Allied DDH 4 494.00 RC 1 56.00 2010 ...... Allied DD 14 271.00 Plant Total ...... 43 1,322.30

Table 11-10: Samat—Drilling History Year Company Hole Type Number of Holes Metres 1985 ...... Kennecott DDH 2 332.80 1987 ...... Kennecott AC 27 1,905.00 1988 ...... Kennecott AC 115 8,276.00 DDH 3 560.20 MET 6 147.30 1989 ...... Kennecott AC 68 7,534.50 DDH 8 1,081.91 MET 1 38.70 1996 ...... Nord MET 4 119.40 RC 95 2,337.00 1997 ...... Nord DDH 3 673.40 MET 2 110.00 2006 ...... Allied DDH 3 659.50 RC 22 1,030.40 2007 ...... Allied DDH 2 412.84 RC 10 406.00 2008 ...... Allied DDH 1 76.00 RC 42 1,598.00 2010 ...... Allied RC 12 1,358.10 DD 3 577.00 429 29,234.05

Table 11-11: Sorowar—Drilling History Year Company Hole Type Number of Holes Metres 1985 ...... Kennecott DDH 3 732.60 1986 ...... Kennecott DDH 3 562.25 1987 ...... Kennecott AC 61 6,252.50 DDH 2 435.10 1988 ...... Kennecott AC 16 1,992.50 DDH 7 1,583.91 1989 ...... Kennecott AC 16 1,829.00 1995 ...... Nord DDH 4 278.40 MET 6 480.80 RC 25 1,808.60 1996 ...... Nord DDH 3 307.40 MET 2 184.00 RC 59 3,984.00 1997 ...... Nord RC 28 2,830.00 2004 ...... Allied RC 74 6,259.00 2005 ...... Allied DDH 8 1,330.00 MET 3 240.10 RC 120 10,391.20 2006 ...... Allied DDH 7 1,583.70 RC 33 3,553.00 2007 ...... Allied DDH 4 292.17 2008 ...... Allied MET 5 938.42 RC 173 14,670.00 2009 ...... Allied RC 1 98.00 2010 ...... Allied DD 33 6,828.20 Sorowar Total ...... 696 69,444.85

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Table 11-12: All Deposits—Total Drilling

Deposit Number of Holes Total Metres Adora ...... 37 2,407.92 Bekou ...... 71 2,889.05 Botlu ...... 163 14,233.15 Kekenminda ...... 6 621.00 Patan ...... 21 1,417.00 Pigibo ...... 147 16,640.80 Pigicow ...... 141 6,946.00 Pigiput ...... 329 55,438.34 Plant ...... 43 1,322.30 Samat ...... 429 29,234.05 Sorowar ...... 696 69,444.85 Grand Total ...... 2083 200,594.46 In addition to drilling, various operators have undertaken surface channel sampling. A total of 14,804 samples, each representing approximately 5 m of channel, were collected and analysed and the results stored in the Allied database. The samples have an average grade of 0.52 g/t Au. Some of the channel sampling was used in the estimation of resources done by Minstat Pty Ltd (Botlu and Samat). No channel samples were used in the estimation of Sorowar, Pigiput, Pigibo, Pigicow or Bekou. To give perspective to the extent and variety of drill sampling undertaken, Table 11-13 to Table 11-18 provide a breakdown of samples generated by prospect, period and drilling method for each of the prospects.

Table 11-13: Drilling Samples by Period and Drilling Method—Sorowar Prospect

Prospect Year Company Drill Company Hole Type Samples SOROWAR ...... 1985 Kennecott PNG Drillers and Wallis Drilling DDH 733 1986 Kennecott PNG Drillers and Wallis Drilling DDH 563 1987 Kennecott PNG Drillers and Wallis Drilling AC 3507 DDH 434 1988 Kennecott PNG Drillers and Wallis Drilling AC 1935 DDH 1477 1989 Kennecott PNG Drillers and Wallis Drilling AC 1703 1995 Nord PNG Drillers DDH 335 MET 212 RC 1802 1996 Nord PNG Drillers DDH 133 MET 180 RC 3943 1997 Nord Pacific Drilling Services RC 2794 2004 Allied Zenex RC 6254 2005 Allied Zenex DDH 731 RC 10391 2006 Allied Zenex DDH 1123 RC 3553 2007 Allied Allied DDH 276 2008 Allied Allied MET 989 RC 14607 2009 Allied Allied RC 86 2010 Allied Allied DD 31 Total 57792

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Table 11-14: Drilling Samples by Period and Drilling Method—Pigiput Prospect

Prospect Year Company Drill Company Hole Type Samples PIGIPUT ...... 1984 Kennecott PNG Drillers and Wallis Drilling DDH 526 1985 Kennecott PNG Drillers and Wallis Drilling DDH 3047 1988 Kennecott PNG Drillers and Wallis Drilling AC 6187 DDH 1368 MET 24 1989 Kennecott PNG Drillers and Wallis Drilling AC 2466 DDH 1352 1996 Nord PNG Drillers RC 899 1997 Nord Pacific Drilling Services DDH 2432 RC 1985 2005 Allied Zenex DDH 825 RC 791 2006 Allied Zenex DDH 115 RC 444 2008 Allied Allied DDH 1528 RC 7286 2009 Allied Allied DDH 1317 Capital DDH 151 Met 0 RC 714 2010 Allied RC 3 Allied DDH 20 Total 42373

Table 11-15: Drilling Samples by Period and Drilling Method—Samat Prospect

Prospect Year Company Drill Company Hole Type Samples SAMAT ...... 1985 Kennecott PNG Drillers and Wallis Drilling DDH 333 1987 Kennecott PNG Drillers and Wallis Drilling AC 958 1988 Kennecott PNG Drillers and Wallis Drilling AC 8246 DDH 557 MET 19 1989 Kennecott PNG Drillers and Wallis Drilling AC 6683 DDH 550 MET 9 1996 Nord PNG Drillers MET 19 RC 2325 1997 Nord Pacific Drilling Services DDH 730 2006 Allied Allied RC 59 Zenex DDH 334 RC 970 2007 Allied Allied DDH 427 RC 377 2008 Allied Allied DDH 82 RC 1605 2010 Allied Allied RC 12 Allied Allied DDH 3 Total 24298

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Table 11-16: Drilling Samples by Period and Drilling Method—Botlu Prospect

Prospect Year Company Drill Company Hole Type Samples BOTLU ...... 1986 Kennecott PNG Drillers and Wallis Drilling DDH 1579 1987 Kennecott PNG Drillers and Wallis Drilling AC 1464 DDH 661 1988 Kennecott PNG Drillers and Wallis Drilling DDH 218 1989 Kennecott PNG Drillers and Wallis Drilling AC 1037 DDH 123 1996 Nord PNG Drillers MET 179 RC 294 1997 Nord Pacific Drilling Services DDH 315 RC 3020 PNG Drillers DDH 25 RC 891 1998 Nord Pacific Drilling Services RC 447 2010 Allied Allied RC 2 DDH 10 Total 10265

Table 11-17: Drilling Samples by Period and Drilling Method—Pigibo Prospect

Prospect Year Company Drill Company Hole Type Samples PIGIBO ...... 1986 Kennecott PNG Drillers and Wallis Drilling DDH 302 1987 Kennecott PNG Drillers and Wallis Drilling AC 551 1989 Kennecott PNG Drillers and Wallis Drilling AC 279 1997 Nord Pacific Drilling Services DDH 266 RC 3067 PNG Drillers RC 60 1998 Nord Pacific Drilling Services DDH 398 RC 98 2005 Allied Zenex RC 187 2008 Allied Allied RC 1309 2009 Allied Allied DDH 2405 RC 2742 Total 11664

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Table 11-18: Drilling Samples by Period and Drilling Method—Other Prospects

Prospect Year Company Drill Company Hole Type Samples ADORA ...... 1995 Nord PNG Drillers RC 110 1997 Nord Pacific Drilling Services RC 377 2006 Allied Zenex RC 268 2007 Allied Allied DDH 540 RC 908 2008 Allied Allied DDH 188 Total 2391 BEKOU ...... 1997 Nord Pacific Drilling Services DDH 507 RC 1233 2006 Allied Zenex RC 1120 Total 2860 KEKENMINDA ...... 1998 Nord Pacific Drilling Services RC 613 Total 613 PATAN ...... 1989 Kennecott PNG Drillers and Wallis Drilling AC 557 2007 Allied Allied RC 847 Total 1404 PIGICOW ...... 1987 Kennecott PNG Drillers and Wallis Drilling AC 489 1997 Nord Pacific Drilling Services DDH 201 RC 1353 1998 Nord Pacific Drilling Services DDH 50 RC 99 2004 Allied Zenex RC 28 2006 Allied Zenex DDH 604 RC 3308 Total 6132 PLANT ...... 1995 Nord PNG Drillers RC 111 2006 Allied Zenex DDH 438 RC 56 Total 605 OTHER ...... Total 14005

11.1 Surveying 11.1.1 Collar Surveys All hole collars were surveyed (by EDM) during Kennecott’s initial exploration program and selectively (51 holes) validated by Nord in mid-1994. The collars of all of the holes drilled by Nord in 1994-97 were surveyed by EDM. During the period 1994-96 detailed topographic surveys were carried out by CPS Palanga, a group of surveyors based in Port Moresby, to yield 2 m contours in the Samat area and 5 m contours in the Sorowar and Pigiput areas. CPS Palanga produced topographic maps showing 10 m contours based on its surveying and field observations, probably the best resolution that could be expected from this survey point density. During 1996-97 additional surveying located all of the latest drill collars, numerous 5 m channel samples (usually every fifth endpoint), the edges of track formations and many control points. All these data were used to construct topographic surfaces to constrain Nord’s oxide Resource models. In 1995, a topographic map over the whole of Simberi Island was prepared using photogrammetry. All 2004/2005, Sorowar drill hole collars were surveyed by APS surveyors using traditional EDM instruments. Before 2004, drill hole collars and control points were surveyed by CPS Palanga using the same method. An audit by McMullen Nolan and Partners Surveyors Ltd, using two dual frequency GPS units, determined that the Simberi survey had a very high accuracy, with drill holes and control points is accurate to within a few centimetres. The McMullen Nolan and Partners survey was undertaken to investigate operational problems related to GPS usage and to create a plane coordinate system for the Tabar Islands (Table 11-19) based on UTM WGS84 (IRTF2003).

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Table 11-19: Tabar Islands Grid (TIG) Parameters

Element Value Ellipsoid ...... GRS80 (or WGS84) Projection ...... Transverse Mercator Latitude of Origin ...... 0⍭ Central Meridian ...... 151⍭58’ False Easting ...... 40,000 False Northing ...... 500,000 Scale Factor ...... 1.00002985 Zone Width ...... 15’ Datum ...... ITRF2000 (Epoch 12.7.2005) The conversion formula between the original Simberi Grid and TIG is: • TIG East = (Sim East * 1.0000184742) + (Sim North * 0.0000723594) + 34993.496. • TIG North = (Sim North * 1.0000184742) ǁ (Sim East * 0.0000723594) + 104.755 + 200000. The original Tatau and Tabar grid (the ‘‘Tatau Grid’’) is directly related to the Simberi grid by the addition of constants to the easting and northing. The most extreme difference is for the southernmost hole, hole BA01 at Banesa, where the difference between WGS84 and TIG 31 m east and 14 m north. The high quality ground topographic surveys over each of the prospect areas remain valid. Between the prospects and over the rest of the island, there is now a topographic digital elevation model (DEM) derived from the airborne geophysical survey. This is an improvement over the previous photogrammetric DEM though, where no ground truthing is done, still represents tree canopy elevations. Since 2007, CPS Palanga has routinely surveyed major roads, tracks and collars used for drilling and access to mining areas. The topographic surfaces created in these areas are continually updated with the new data, increasing their overall accuracy. Since late 2007, an additional QC step was introduced to record all collars with a GPS used to cross check the values delivered by the surveying company. This ensures that hole identifiers have not been transposed. The collars are also checked using modelling software against tracks and geographic markers.

11.1.2 Downhole Surveys Downhole surveys are restricted to some of the diamond drill holes. Nord used a downhole Eastman camera to survey holes at Sorowar (11), Samat South (4), Pigiput (10) and Botlu (3). The lack of downhole surveys for the bulk of the drill holes should have limited effect on the determination of the relatively shallow oxide resources. Since 2006, Allied has surveyed the bulk of diamond core holes using a Ranger 1100 multi-shot downhole camera. Surveys are typically once the hole is drilled, generally at 30 m intervals from 15 m downhole. In some instances, surveys were not be taken due to hole collapse or un-retrievable drill strings in the ground. In 2009, the surveying technique was modified to include a reading at 15 m below surface, with this 15 m shot is used as an estimation value for the surface dip and azimuth. Previously, the practice was to use the rig mast line up orientation as the top of hole survey. Current drill contractors, Capital Drilling, record downhole surveys with an Easy Track multi-shot camera, on a run in basis with a shot taken every 30 m. All downhole survey data is reviewed and outlier readings are invalidated.

11.2 Drill hole Database A technical review of the geology, data collection and resource estimation relating to the Pigiput, Samat South, Samat North and Samat East gold deposits was made during June and early July 1996 by Behre Dolbear Associates, who concluded that the work done and the approach was satisfactory. The geology,

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data collection and resource estimation relating to the Sorowar, Botlu and Pigibo gold deposits have not been externally reviewed Drilling in 2004 and 2005 by Allied Gold was subject to significant external review. Golder Associates visited the site in April 2004 and reviewed data collection procedures. The laboratory procedures on Simberi Island were reviewed by ALS Chemex in October 2004 and found to be satisfactory. In early 2009, the historic data was transferred into a Maxwell’s Datashed model. Subsequently generated data is now entered directly into the Datashed SQL database directly, according to the flow chart illustrated in Figure 11-1 and Figure 11-2. The flow chart is a formalised adaptation of the practice followed by Allied since 2007.

20APR201123275126 Figure 11-1: Data Flow—Site Data

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20APR201123212565 Figure 11-2: Data Flow—Assays

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12.0 SAMPLING METHOD AND QUALITY CONTROL MEASURES 12.1 Kennecott Sampling During the early part of the aircore drilling program (up to approximately RC320, February-May 1989), each 1 m sample was collected from a cyclone in a calico bag. The sample was dried and jaw crushed to less than 7 mm and a 1.5 kg riffle split sub-sample dispatched for assay. Approximately 100 g of chips from each sample were sieved and retained in transparent plastic boxes. The remainder of each sample, approximately 7 kg, was stored on site but are now not accessible because the calico or plastic bags containing them have disintegrated. At the laboratory, the 1.5 kg jaw-crushed sample was split to 250 g, disc pulverised to ǁ80 mesh, further split to a 50 g sub-sample and finely pulverised for assay (Figure 12-1). Lack of correlation between duplicate and original sample assays obtained from a preliminary check assay program led Kennecott to believe that the sampling procedure was deficient. To address this issue, the sample preparation procedure was revised (Figure 12-2). The original sample was then dried, jaw-crushed, hammer-milled to a ǁ80 mesh then a 250 g split was taken and sent to the laboratory.

Initial Kennecott Sampling Procedure

21APR201104284975 Figure 12-1: Kennecott—Initial Aircore and RC Sample Preparation Chart

Revised Kennecott Sampling Procedure

21APR201104285770 Figure 12-2: Kennecott—Revised Aircore and RC Sample Preparation Chart The 1 m diamond drill core samples were cut in half using a diamond saw, dried, jaw crushed, hammer- milled to ǁ30 mesh then a 200-250 g sub-sample was pulverised to ǁ80 mesh (Figure 12-3). The pulverised sample was dispatched to the laboratory where a 50 g split was finely pulverised for assay.

Kennecott Diamond Sample Preparation Chart

21APR201104283921 Figure 12-3: Kennecott—Diamond Core Sample Preparation Chart

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12.2 Nord Sampling Nord sampled aircore, RC and diamond holes every 1 m. Approximately 100 g of every RC sample (chips) were washed, dried and retained for reference. Aircore and RC samples weigh around 7-9 kg (depending on bit diameter). They were collected in polyweave bags direct from a cyclone. Every aircore and RC sample was dried in a wood-fired oven and hammer-milled at a Nord sample preparation facility, located on Simberi Island, to approximately ǁ30 mesh (Figure 12-4). The sample preparation facility was supervised by contract personnel from Astrolabe Pty Ltd, an analytical laboratory in Madang. A 1 kg subsample was riffle split for dispatch for assay and the remainder stored.

Nord Aircore and RC Sample Preparation Chart

25APR201110410870 Figure 12-4: Nord—Aircore and RC Sample Preparation Chart Diamond core was photographed, logged and cut in half using a diamond saw. One half was dried, jaw-crushed, hammer-milled and reduced to a 1 kg sub-sample using a riffle splitter. The sub-samples were dispatched to Astrolabe (Madang, PNG) for final preparation and assay up until September 1996. At the laboratory the 1 kg sub-samples were dried, pulverised and a 50 g sub-sample was fire assayed for gold using an AAS finish (Figure 12-5). The laboratory maintained its own quality control with two Gannet gold standards and blanks. After September 1996, the samples were dispatched to Australian Laboratory Services (ALS) in Townsville, Queensland, for preparation and assay using the same method. Pulp rejects from the ALS Laboratory are in secure storage.

Nord Diamond Sample Preparation Chart

21APR201104292006 Figure 12-5: Nord—Diamond Sample Preparation Chart

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12.3 Allied Sampling 12.3.1 RC Sample Processing Whole RC samples were collected at 1 m intervals. Approximately 100 g of chips from each RC sample were washed, dried and retained for reference. The remainder of the samples were dried on galvanised core trays in wood fired copra driers. Each sample was then jaw-crushed, hammer-milled to ǁ80 mesh and reduced to two approximate 1 kg sub-samples using a riffle splitter. One 1 kg sample was hammer- milled to ǁ30 mesh and the other ‘‘reject’’ split was archived on site for a minimum of 3 months after assays were returned (Figure 12-6). The 1 kg crushed samples were dispatched to ALS and finely pulverised. A 50 g sub-sample was fire assayed for base metal analysis and the remainder for stored at their facility in Garbutt, Queensland. The Simberi processing equipment was flushed with glass before each hole was processed.

Allied RC Sampling Procedure to 2006

25APR201110410105 Figure 12-6: Allied—RC Sample Preparation Chart In mid-2008, a new core shed and sample preparation facility was constructed with upgraded security and new sample processing equipment to reduce processing risks (e.g. contamination, theft, etc). This allowed a change to the RC sampling and preparation procedures, as described below:

RC Field Technicians: 1) Collect whole samples from cyclone in large polyweave bags. Bags are to be marked with hole identification (Id) and depth-from and depth-to information (in metres). 2) Weigh entire sample (procedure started later 2008), record in notebook along with condition of sample (Wet/Dry/Moist). 3) Place sub-samples in calico bags with the following information recorded on the bag: date collected, the hole Id, prospect, depth-from, depth-to and whether the sample is a ‘‘reject’’ or duplicate. 3.1) For dry/damp samples, reduce volume using riffle splitter to approximately 500 g for processing and approximately 500 g for a ‘‘reject’’ archive sample. 3.2) Spear wet samples to obtain two 800 g sub-samples, one for archive and one for processing (quantity may change depending on the capacity of the drying oven). 3.3) Collect riffle split field duplicate samples. 3.4) Collect samples for reference chip trays, by washing out the fines using water and an appropriate sieve, and record the relevant data on the chip tray (hole Id, prospect, depth-from, depth-to). 4) Send sub-samples, grouped by hole Id., to sample preparation technician in a logical order and notify a geologist of their readiness.

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Sample Preparation Technician: 1) Place sub-samples in the electric ovens until dry, recording the date the sample arrived and where from, and actively update the ledger and white board of all sample movements during preparation. 2) When drying, samples can be turned and broken up if high clay content causes significant clumping. 3) Receive samples Id and QC insertion sheets from geologist, locate blanks and required CRM samples. Field duplicates and Blanks must be processed in the sequential order as provided on the sampling sheet. 4) Sample pulverising: Clean bowls and pucks at the beginning of the run using the provided material (typically clean glass). Process samples in order and as a single batch per hole. Bowls are to be blown out with compressed air and a brush. If caking has occurred then bowls are to be cleaned with crushed glass. RC samples of up to 600 g are to be milled in the LM2 to obtain a 90% pass through 75 microns for dispatch to the Laboratory. Running time is approximately minimum 3.5 minutes. If the sample feels gritty after an initial run, it is pulverised again. i) Three samples are to be collected directly from the bowl (QC samples plus an extra). ii) Approximately 100 g samples are dispatched in 3 ǂ 4 wire tie craft bags. To ensure samples are easily locatable and sorted, groups of 10 samples are placed in a larger poly bags with sample number ranges recorded on them. iii) The 150-200 g archive pulp samples are stored in 5 ǂ 9 wire tie craft bags for permanent storage. All samples are to be bagged into the large poly bags then into polyweave bags. iv) To collect pulp duplicates—resample from the bowl as indicated on the sampling list provided by the geologist. v) Collect the Inter-laboratory check samples at the rate of (2-3%) and record in the ticket book the parent Id. Inter-laboratory check samples are stored separately ready for dispatch. vi) One teaspoon per sample is collected within a batch and placed into a polyethylene bag (mixing samples together) this is for sizing fraction determinations where the mixed sample is weighed and the wet sample is sieved, the coarse fraction is weighed and the grid efficiency is determined. The generated fractions are included for analysis, at the end of the batch to determine whether grinding and sample homogenisation are adequate. 5) Samples ready for dispatch: Once in a logical order with sequential sample Ids, the samples will be dispatched as a single hole batch to avoid risks associated with sample swaps. Notify the geologist of hole Ids, sample number ranges and that the batch will be dispatched. When the required documents are received, place a copy in the box with the samples and a copy on the box, clearly addressed to the appropriate laboratory(s). 6) The preparation white board and ledger are updated accordingly. 7) The sampling sheet is returned to the geologist with any variations (e.g. if an alternate CRM was used or if a variation in sample Id assignment per sampling interval occurred). The RC sample flow chart used since mid-2008 is presented in Figure 12-7.

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Drill RC Sampling Flow Chart

21APR201104275971 Figure 12-7: Allied—mid-2008 RC Sample Flow Chart

12.3.2 Core Sample Processing Before mid-2008, drill core samples were processed in a similar way to the RC samples. Core was sampled on 1 m intervals, cut in half using diamond saws and dried in wood fired copra driers on galvanised core trays. One half of each sample was stored on site in the secured core shed, the other half of each sample was crushed with a jaw crusher and split to two approximately 1 kg. One 1 kg sample was hammer-milled to ǁ30 mesh and the ‘‘reject’’ sample was archived in the core shed for a minimum period of 3 months after assays were returned. The Simberi processing equipment was flushed with glass before each hole was processed. The 1 kg samples were dispatched to ALS Townsville for pulverising and a 50 g sub-sample was fire assayed for base metal analysis (Figure 12-8). ALS forwarded the remainder of the 1 kg samples for storage at their facility in Garbutt, Queensland.

Allied Diamond Sample Preparation Chart to 2006

21APR201104271798 Figure 12-8: Allied—Diamond Core Sample Preparation Chart—to 2006

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In early-2008, an Almonte automatic core saw was commissioned with the interest of reducing core handling and the advantage of closing core cradles to preserve the integrity of the core during cutting. Also, the security of the logging, preparation area and storage facility areas were upgraded with extra fencing, and repairs to damaged doors and windows. Furthermore, core trays were changed from galvanised metal to plastic, to remove the problem of tray deterioration due to sulphides reacting with the metal. The inauguration of the new logging and sample preparation facility in mid 2008 allowed a change to the core drill sample methodology as described below:

Core Yard Technicians: Note: Sampling of diamond core can only occur once the logging and technical operations have occurred. 1) Cutting core, using the Almonte automatic core saw, if the sample is not suitable for cutting then it is sampled by splitting with another appropriate method. Notes are made on the sampling list if variations or discrepancies have been identified and amended, after consultation with the responsible geologist (samples should be no smaller that 30 cm and no longer than 1.2 m). Samples are based on geology but have a maximum length of 1.2 m with the target being 1 m. 2) Following the sampling list, half core is put in calico bags ready for drying, bags are marked with the hole id, depth-from and depth-to information and date.

Sample Preparation Technicians: Primary duties of the core yard technician include performing bulk density determinations, putting trays in sequential order, photographing of core and weighing the core. After the geologist has provided the cutting and sampling list and has marked the core for cutting, the following procedure applies: 1) Samples are transported to sample prep in their groups and kept in a logical order where possible, and geologist are notified of readiness. 2) Preparation technician receives samples places in electric ovens until dry, the preparation ledger is updated recording the date arrived and location of samples in preparation, the information is updated with all sample movements. 3) Core is dried in the electric oven at 106⍭C, the Blank samples are added to the process cue. 4) Once dry the samples are crushed the using the Terminator Jaw Crusher, cleaning the jaws with compressed air in between samples. 5) Sub-samples of approximately 500 g for processing are generated using a riffle splitter, duplicate splits of crush are also taken in this step, the residual jaw crush is archived for a minimum of 3 months after assay results are returned and are only disposed of upon the Chief Geologist’s consent. 6) Sample pulverising: 6.1) Bowls and pucks are cleaned at the beginning of the run utilising the provided material (typically clean glass). Processing occurs with samples in order and as a single batch per hole. 6.2) Approximately 600 g is processed in the LM2. Typical running time is 3.5 minutes. If the sample feels gritty after the run, mill the sample again. 6.3) Typically 3 samples are collected directly from the bowl (more samples are required to include the QC samples): 6.3.1) For pulp sample for analysis (approximately 100 g), place them in the 3 ǂ 4 wire tie craft bags and package them so that they can be easily sorted and audited. 6.3.2) An archive pulp sample (approximately 200 g) is collected and placed in the 5 ǂ 9 wire tie craft bags for permanent storage. All samples are placed into the large polyethylene bags then into a polyweave bag and stored in the core shed.

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6.3.3) Pulp duplicate samples are collected as indicated on the sampling list as provided by the geologist. 6.3.4) Inter-laboratory check samples are taken at the rate of 2-3%. The parent id is recorded in the ticket book and samples are stored separately and prepared for dispatch. 6.3.5) One teaspoon of each sample within a batch is taken and placed into a polyethylene bag for mixing. This is for grind efficiency determinations where the generated fractions are to be included for analysis at the end of the batch. 7) Samples are dispatched in a clear and logical order with sequential sample ids and as a single hole per batch. 8) The preparation lab whiteboard and ledger are updated with all movements of the samples through the facility. 9) The sampling sheet is returned to the geologist, with any variations to the sampling being noted (e.g. if an alternate CRM was used, or if a variation in sample id assignment occurred). The drill core sample flow chart used since mid-2008 is presented in Figure 12-9.

DDH Sampling Flow Chart

21APR201104405298 Figure 12-9: Allied—Post mid-2008 Diamond Drill Hole Sample Flow Chart

12.3.3 Procedural Variations In late-2007, 11 drill holes (918 samples) were analysed by Kalassay Laboratories in Western Australia. In the first quarter of 2008 26 RC holes and 4 diamond holes (2,161 samples) were sent to Quantum Laboratories in Western Australia. Both laboratories performed Fire Assay on a 50 g charge. The use of both laboratories was discontinued due to slow turnaround times.

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12.4 Bulk Densities A bulk density of 1.7 t/m3 was used in resource estimates prior to 1994 for Sorowar, Pigiput and Samat deposits. This was based on laboratory tests done by Kennecott comprising 179 diamond hole samples from Samat South (41), Pigiput (69) and Sorowar (69). Kennecott commented that the samples that were tested were generally more competent, so there may have been some selection bias in the results. In late 1994 Nord carried out some dry bulk density determinations of near-surface material exposed in bulldozer cuts crossing the prospects. This was achieved by forcing a steel box of known volume into the material and weighing and drying the excavated material. These tests yielded average values of only 1.0 t/m3. Bulk densities of oxide material measured in drill core samples by Nord ranged from 1.0 at surface to 1.9 at 55 m depth. There was no relationship between grade and bulk density. For the Sorowar resource estimate reported in Lycopodium, 2003 a total of 525 bulk density determinations were made from nine PQ diamond holes (SO15—SO19, SO22—SO24 and SO27). These holes were drilled within the 1995 conceptual pit, between 36 m and 115 m deep and for metallurgical or grade characterisation purposes. These determinations showed that there was an increase in dry bulk density and a decrease in water content at depth. Forty bulk density measurements were taken from one diamond hole (SO28) at Sorowar for the 2005 FS update. Results were consistent with the existing data. Since 2006, Allied have carried out bulk density measurements on Sorowar, Pigicow and Pigiput deposits (Table 12-1), bringing the number of measurements taken to over 4 800. From 2008, bulk density measurements were routinely taken from full core before cutting and sampling. Since 2009, a program of determining density by tray has been used to validate the point density measurements. Nearly 5,000 tray measurements have been made for core from Pigiput and Pigibo.

Table 12-1: Bulk Density Measurements—since Inception

Material Prospect Number of samples Average Dry Density (tm-3) OXIDE ...... Botlu 144 1.84 Pigiput 589 1.65 Pigicow 21 1.61 Samat 50 1.42 Sorowar 464 1.67 Pigibo 89 1.78 OXIDE Total ...... 1357 1.67 TRANSITION ...... Botlu 2 1.73 Pigiput 264 1.92 Pigicow 4 1.65 Samat 32 1.57 Sorowar 26 1.85 Pigibo 72 1.94 TRANSITION Total ...... 400 1.89 SULPHIDE ...... Botlu 201 2.01 Pigiput 3568 2.13 Pigicow 50 1.86 Samat 218 2.05 Sorowar 125 2.03 Pigibo 342 2.12 SULPHIDE Total ...... 4504 2.12 Grand Total ...... 6261 2.01

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12.5 Bulk Density Determination Method A detailed description of the bulk density determination method used is given in ‘‘Physical and Metallurgical Characterisation of Diamond Holes SO15-SO19, 0Sorowar Oxide Deposit’’ by Tony Macfarlane, June 1995. In summary, the method was as follows. A total of 525 bulk density determinations were made from diamond core from nine PQ diamond holes (SO15-SO19, SO22-24 and SO27) drilled to between 36 m and 115 m depth for metallurgical, geological or grade characterisation, within the 1995 Sorowar conceptual pit. Diamond hole SO19 had an average dry bulk density of 1.69 t/m3. Nord found an increase in dry bulk density and a decrease in water content with depth. They found no relationship between mineralisation (gold and arsenic values) and depth. Additional dry bulk density determinations were made for diamond holes SO15-SO18, SO22-24 and SO27. Nord found small differences between the depth and bulk density relationship in holes in the centre and the north-east sector of the deposit. Near the centre of the 1995 conceptual pit dry bulk densities increased from approximately 1.0 t/m3 at surface to about 1.8-1.9 t/m3 at 40-55 m depth, after which the dry bulk density remains constant. This was located within an interpreted zone of deep oxidation affecting both porphyry and volcanoclastic/diatreme lithologies. In the north-east, SO17 has a dry bulk density of approximately 0.8 t/m3, near surface, increasing to 1.6 t/ m3 at 20 m depth then remaining constant. SO18 has a constant dry bulk density, of approximately 1.6 t/ m3, between 4 m and 35 m depth. These holes were collared at higher elevations than the others and intersected tuffs and diatreme breccias rather than porphyry. It is clear that there is a progressive increase in dry bulk density with depth. Nord chose to model the BD using a spherical variogram to estimate between 1.0 t/m3 at surface and 1.9 t/m3 at and beyond 55 m depth. The spherical model parameters were nugget=1.0, sill=0.9 and range=55.

12.5.1 Allied—Since 2008 All bulk density determinations have been performed using the water displacement method. Samples are approximately 20 cm long and taken on average of 1 sample per tray. After sample weights are recorded wet, the samples are wrapped in cling-film and placed into a cylinder of water, with the volume of displaced water being recorded. The samples are then dried overnight in an electric oven at 106⍭C. Once dry the weight is again recorded. Density and moisture content is then calculated. Outliers are invalidated and new readings of weights and volumes are performed when possible. In 2009, the density data interpretation changed from using depth in hole to a calculate sample depth below the topographic surface to give an increase accuracy and account for variations derived from angled drilling. The impact of the change in method for the Pigiput data set was minimal, as most of the density samples were derived from vertical drill holes. Density measurements are also determined for each core tray, measured before the core is cut. The trays are weighed on an electronic balance and the volume estimated by multiplying the recovered length by the average area for the particular core size. The method provides a means of validating the point density data and is particularly effective in the sulphide zone.

13.0 SAMPLE PREPARATION, ANALYSES AND SECURITY 13.1 Sample Preparation and Analyses Sample preparation and analyses for the operators that have explored Simberi are detailed in Section 12.0.

13.2 Sampling Security The chain of custody for sample handling and transportation is such that an Allied employee is with the samples at all time until they are locked up in a secure facility. This is common to both RC chip samples and diamond drill core. No samples are left unattended unless locked up. RC drilling is on day shift only while core drilling is done on double shift. The drill rig is visited by an Exploration Department staff member at least once a day. The sample storage facility/core shed was examined by John Batista, Golder Associates in 2008. The author considers the sample handling and management provides adequate security to minimise the risk of sample contamination or tampering.

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14.0 DATA VERIFICATION 14.1 Kennecott Between 1987 and 1989 Kennecott carried out a limited assay check program that identified some sample preparation procedure problems and an assay bias in results reported by Pilbara Laboratories in Lae. The bias was identified by standard samples returning values fluctuating between 10% above and below the recommended values, with the degree of bias varying month by month. Kennecott re-assayed 1,062 Lihir drill core samples at Fox Laboratories, Sydney and Comlabs, Perth, during 1989, and calculated that there was a Pilbara Laboratories bias of +3.9%. It was then proposed that a correction factor of 0.9615 to be applied to the original Pilbara Laboratory assays. In September 1989, consultant Harry Parker evaluated the bias issue and proposed a factor of 0.959 be applied. Between October 1989 and March 1990 Fox Laboratories in Sydney re-assayed a total of 3,208 Simberi aircore samples and 187 standards, previously assayed by Pilbara Laboratories. The RC samples selected for re-assay were nominally above 2.0 g/t Au and included RC samples that had previously been only jaw-crushed on site before taking an assay split. However, not all of the original samples which had assayed above 2.0 g/t Au were available. For the re-assay program, new samples for assay were prepared by hammer-milling the remaining jaw-crushed bulk rejects to ǁ30 mesh (0.6 mm) and a 250 g split taken for dispatch to the laboratory. If the bulk rejects had already been hammer-milled to ǁ30 mesh, a new 250 g split was taken. Kennecott evaluated the results of the re-assay program in March 1990 for its oxide resource calculations and determined a Pilbara bias of +8.4% for oxide zone samples. Only the oxide zone samples in the drill holes required for the resource estimates were corrected using the factor. In 1992 a more exhaustive evaluation was carried out, dividing the data into oxide, transition and sulphide and grade classes between 0.0-3.3 g/t Au, 3.3-8.3 g/t Au, 8.3-14.4 g/t Au and above 14.4 g/t Au. Overall Pilbara bias figures were determined of +6.1% for oxide, +10.3% for transition and +9.2% for sulphide.

14.1.1 Nord Every 20th 1 m drill interval (5% of the samples) was re-sampled twice and the additional (duplicate) 1 kg sample submitted for assay under a different sample number. Nord concluded that the majority of the duplicate pairs agreed well. Nord also prepared a range of internal standard samples by taking about 32 kg (dry weight) of oxide material from bulldozed benches where 5 m channel sample gold grades were available. Each standard was dried, hammer-milled and split into 32 ǂ 1 kg sub-samples. One internal standard was submitted for assay with every 50 drill samples. Nord considered agreement between the assays was acceptable.

14.1.2 Allied Allied’s sample preparation and analytical control procedures include the use of blanks to monitor contamination, duplicates to test splitting and milling efficiency and standards to monitor analytical accuracy and precision From the Feasibility Update in 2003 to 2005, Allied’s QC sample insertion rate remained the same, with one standard or control sample every 50th sample and duplicates every 20th sample. During this period, Au assays for 288 standards showed precision well within the deemed acceptable limits of mean (+/- two standard deviations). Au assays for 574 duplicates, representing 4.2% of the samples assayed show good agreement with a correlation coefficient of 0.994. In addition, Au assays for 570 samples submitted to a second laboratory, as a cross-laboratory check, also showed good agreement, with a correlation coefficient of 0.996 (Hastings, 2005). Blanks were collected from beach sands some distance from the Pigiput Bay industrial area and expected to contain no trace of any of the elements tested. Initially five locally prepared standards were in use at Simberi. These standard samples (179312, 179313, 179314, 179315 and 179316) were collected from the proposed Sorowar pit area. All the standard samples were processed once and separate from all other samples. Each standard sample was then subdivided into a total of 64 splits, identified as Sample_id/1 to Sample_id/64. The sub-sample standards were packed in large numbered polyethylene bags and stored in the on-site preparation

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laboratory. The sample preparation crew were instructed to use these samples randomly from the various bags. From late-2006, QC sample insertion was increased to 10%. Phase 5 (from 2008) saw the switch from in-house standards to commercially produced (Geostats Pty Ltd) CRM materials with a spread of gold grades and sulphur contents (Table 14-1). The blank material was changed from carbonate beach sand to crushed local barren intrusive to better approximate the volcanic matrix of the drill hole samples.

Table 14-1: Allied—Commercially prepared CRM Standards used 2008 to April 2009

Deemed Acceptable Bounds Provided CRM details (defined by standard deviations) Mean Mean Mean Mean Product Code Mean SDev +1SDev ᎈ1SDev +2SDev ᎈ2SDev G901-7 ...... 1.52 0.06 1.58 1.46 1.64 1.40 G907-6 ...... 7.25 0.29 7.53 6.96 7.82 6.68 G306-1 ...... 0.41 0.03 0.43 0.38 0.46 0.36 G306-2 ...... 1.05 0.07 1.12 0.98 1.19 0.90 G905-7 ...... 3.91 0.14 4.05 3.76 4.19 3.62 G01...... 0.02 0.02 0.04 0.00 0.06 ǁ0.02 G306-4 ...... 21.57 0.78 22.35 20.79 23.13 20.01 G306-6 ...... 48.53 2.29 50.82 46.24 53.11 43.95 G906-2 ...... 2.46 0.11 2.57 2.35 2.68 2.24 G302-10 ...... 0.18 0.03 0.21 0.15 0.24 0.12

Sampling practice and QC protocol Between drill holes, sample preparation equipment is cleaned with crushed glass and compressed air. Between samples, the same equipment is cleaned with compressed air and a brush. If caking of sample on to components occurs, the equipment is cleaned with a glass run. RC samples split at the rig site to 400 g, samples, and a rig split archive kept for 3 months after drilling. The samples are placed in oven at 106 degrees Celsius, and dried overnight, then crushed with the terminator jaw crusher, to a nominal <2 mm. The whole sample is pulverised in the LM2 to a nominal 85% pass 75 microns. Two samples are taken; 1 ~+50 g for dispatch, and a +100 g pulp archive. Currently 5% of the sample pulps are sub sampled to 50 g FAA for inter lab checks. Diamond drill samples, are cut in half or split with knife if soft oxides. Samples are dried and crushed, the crush is split using a riffle splitter to 400 g with the split rejects archived indefinitely. The whole 400 g sample is pulverised in the LM2 to an 85% pass 75 microns. Two samples are taken; 1 ~+50 g for dispatch, and a +100 g pulp archive. Currently 5% of the samples are sub sampled to 50 g for inter lab check sampling. With the commissioning of the on-site dedicated EXLAB Sample Analysis Facility in late Sep 2009, the pulp sample size was doubled to allow for confirmation analysis of mineralised zones by fire assay at a commercial laboratory. Also, to improve the reliability of the aqua regia digest used by EXLAB, pulverisation time was increased to produce >95% pass 75 microns. The ‘‘Grey Hill’’ blank is introduced into the sample stream in the form of jaw crushed ǁ2 mm fraction. This fraction is riffle split down to 400 gram samples and stored in calico bags. Blanks are taken to the field, placed with the RC samples to come down for drying and pulverising. A second blank source has been identified and is now in use, it is composed of oxide ash, and extensive testing identified the material as consistently barren. Certified Reference material is supplied by Geostats, a commercial producer of geochemical standards and a ten different CRM’s of varying grade and composition are used. Duplicates are sampled in two forms: • Field Duplicate (FD), a second riffle split of the drill cuttings or crushed core testing the first sample division stage, and • Pulp Duplicate (PD), a second scoop of pulverised material from the LM2 bowl testing the second and final sample division stage.

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14.1.2.1 Statistics of the Standards A statistical analysis of the standards was performed by subscribing to the Horrats method of calculating a residual standard deviation (RSD) and comparing it with a predicted RSD. The RSD prescribes to the reproducibility of the standards assay values. The Au has in all instances come in better than the predicted value (Table 14-2). The predicted value is 8 and the normal predicted is 16, hence the gold assay values for the standard are no-less than excellent. After clustering the standard samples, analysed in 2008 and until Apr 2009, into seven populations, reported values were found to be rarely more than two standard deviations from the population average. The outlier, a ‘‘standard’’ used with samples from hole RC1362, does not fit into any of the populations. Gold contents of all samples from the batch eliminated the possibility of a sample swap and it appears likely the standard belonged for either Pop 2 or Pop 7 with either a spuriously reported gold or copper content.

Table 14-2: Allied—Summary of Reported Values Site Prepared Standards Gold in Standards: RSD and Averages

Population/Group Average Au (g/t) Standard Deviation RSD POP 1 ...... 2.77 0.12 4.20 179312 ...... 2.76 0.11 4.14 POP 2 ...... 2.25 0.14 6.09 179313 ...... 2.25 0.13 5.68 POP 3 ...... 2.26 0.13 5.68 179314 ...... 2.27 0.13 5.62 POP 4 ...... 1.49 0.07 4.77 179315 ...... 1.47 0.07 4.98 POP 5 ...... 1.03 0.05 4.60 179316 ...... 1.03 0.04 3.68 POP 6 ...... 3.25 0.17 5.19 POP 7 ...... 3.69 0.17 4.75 As two different analytical laboratories and methods were used from late 2009, the CRM data was split accordingly, as its statistical analysis based upon laboratory. CRM-type insertion errors have decreased since the Apr 2009 QC report with implementation of training and documentation procedures. A total of 6 out of 265 sent to ALS were recorded incorrectly. Their true identity could be identified from their reported base metals and Au contents. CRM insertion errors in batches sent to EXLAB cannot be independently identified as EXLAB has no multi-element analysis equipment. Six likely CRM insertion record errors were identified in the 137 CRM samples dispatched. EXLAB batches that made up the commissioning data set are excluded, as a full pulp duplicate split was analysed by FAA at ALS Townsville as part of the EXLAB commissioning process

Table 14-3: Allied—Commercially prepared CRM Standards used since Apr 2009 Certified mean values for CRMs

Fire assay Aqua-regia Standard ID Mean (Au) Stdev Mean (Au) Stdev G01 ...... 0.02 0.02 0.02 0.02 G302-10 ...... 0.18 0.03 0.16 0.02 G306-1 ...... 0.41 0.03 0.41 0.05 G306-2 ...... 1.05 0.07 1.05 0.09 G901-7 ...... 1.52 0.06 1.53 0.11 G905-7 ...... 3.91 0.14 3.88 0.24 G906-2 ...... 2.46 0.11 2.4 0.14 G907-6 ...... 7.25 0.29 7.3 0.32

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The populations of the ALS analysed CRM’s are graphically illustrated in Figure 14-1.

CRM populations

21APR201101585606 Figure 14-1: CRM population defined by Au vs. Cu values The reference material has a similar very limited scatter to that found in the Apr 2009 QC Study.

Table 14-4: CRM Analyses—Apr to Dec 2009—ALS_TSV Fire Assay ALS_TSV—Fire Assay Results Count> % > 2 Count> % > 3 2 STD STD 3 STD STD REF SAMPLE COUNT QC AVE Au Max Au Min Au DEV DEV DEV DEV CRM_G01 ...... 46 0.03 0.1 0.005 2 4.35 2 4.35 CRM_G302-10 ...... 29 0.18 0.23 0.12 0 0.00 0 0.00 CRM_G306-1 ...... 39 0.41 0.45 0.33 3 7.69 0 0.00 CRM_G306-2 ...... 31 1.07 1.3 0.97 1 3.23 1 3.23 CRM_G901-7 ...... 38 1.51 1.66 1.25 4 10.53 1 2.63 CRM_G905-7 ...... 28 3.98 4.25 3.77 3 10.71 0 0.00 CRM_G906-2 ...... 13 2.41 2.55 2.15 2 15.38 0 0.00 CRM_G907-6 ...... 41 7.40 7.98 7.01 1 2.44 0 0.00 TOTAL ...... 265 16 6.04 4 1.51 Approximately 94% of certified reference material (CRM) sample results from ALS are within 2 standard deviations of the certified values. As noted in the previous QC report (April 2009), CRM_901-7 and CRM_G905-7, have higher variances than the other CRMs.

Table 14-5: CRM Analyses—Apr to Dec 2009—EXLAB Aqua Regia digest/AAS finish EXLAB Aqua-regia Results Count> % > 2 Count> % > 3 2 STD STD 3 STD STD REF SAMPLE COUNT QC AVE Au Max Au Min Au DEV DEV DEV DEV CRM_G01 ...... 12 0.01 0.01 0.01 0 0.00 0 0.00 CRM_G302-10 ...... 12 0.13 0.18 0.01 2 16.67 2 16.67 CRM_G306-1 ...... 17 0.43 1.03 0.31 0 0.00 0 0.00 CRM_G306-2 ...... 11 1.03 1.1 0.92 0 0.00 0 0.00 CRM_G901-7 ...... 16 1.46 1.6 1.26 0 0.00 0 0.00 CRM_G905-7 ...... 16 3.63 4.09 0.16 1 6.25 1 6.25 CRM_G906-2 ...... 1 0.37 0.37 0.37 1 100.00 1 100.00 CRM_G907-6 ...... 10 6.97 7.57 6.47 0 0.00 0 0.00 TOTAL ...... 95 4 4.21 4 4.21

NOTE G906-2 is a single CRM of its type in this data set. The outlier value is considered either a faulty analysis or a sample swap.

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Excluding CRMs analysed during the commissioning period, approximately 96% of the CRM results determined by EXLAB are within +-2 STDEV of the certified values.

14.1.2.2 Duplicates The results of duplicate pairs analysed in 2008 were plotted on a scattergram and the correlation- coefficient calculated. Gold returned a value of 97.5% correlation in the duplicate splits (Figure 14-2).

Gold Duplicate Split Comparison

21APR201102014567 Figure 14-2: Allied—Au in Pulp Duplicates Scattergram From April to December 2009, a total of 341 sample pairs were analysed (excluding samples analysed by EXLAB and subsequently dispatched for confirmation fire assay). The data has been split according to Laboratory and Duplicate sample type groups for statistical analysis. Predictably the ‘‘Field’’ Duplicates (FD) demonstrate a higher variance compared to a pulp duplicates; and the Aqua-regia method data produced by EXLAB has a higher variance than the ALS Fire Assay data. A summary tabulation of the HARD (Half Absolute Relative Difference) averages for duplicates with Au values greater than ten times detection, and defined into populations based on sample type, and analytical method (ALS = FAA, EXLAB = AR). Where sample pair results were both less than ten times detection, they were treated as outliers and removed from the statistical analyses.

Table 14-6: Duplicates Analyses—Apr to Dec 2009—EXLAB Aqua Regia digest/ALS Fire assays

Lab and Duplicate type Full Num Pairs Count > 10X D.L. % HARD Ave > 10X D.L. EXLAB PD ...... 78 46 6.9 EXLAB FD ...... 82 51 10.2 ALS FD ...... 96 78 7.6 ALS PD ...... 85 67 5.8 Total ...... 341 242

PD = pulp resample FD = chips riffle split duplicate D.L. = Detection Limit

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Au Original Vs Au Duplicate, ALS and EXLAB

21APR201102054919 Figure 14-3: Duplicates Analyses—Apr to Dec 2009—EXLAB Aqua Regia digest/ALS Fire assays Duplicates data indicates sampling consistency with acceptable reproducibility as demonstrated by the 4 different statistical analyses of the data, with the majority of the sample scatter being located in the less than 0.1 g/t region of Au concentration and at higher grades (+6 g/t Au). Overall, the duplicate sample results demonstrate a remarkable reproducibility for both duplicate types and analytical methods. An average HARD of EXLAB field duplicate pairs of 10.2% is somewhat elevated by the presence of two high grade sample pairs with large differences between the original and duplicate values. These large differences were attributed to insufficient grinding for the aqua-regia digest method. Subsequently grinding time was increased to achieve a nominal 95% pass 75 microns. The average HARD of 6.9% for Pulp Duplicates analysed by EXLAB indicates slightly better reproducibility than found in Field Duplicates. The average HARD of 7.6% for Field Duplicates analysed by ALS indicates the initial reduction split is satisfactory and the sample is representivity though some scatter is evident at the higher grades. An obvious outlier was considered to be a sample swap. An average HARD of 5.8% for Pulp Duplicates analysed by ALS indicates the pulps are homogenous and can be considered representative. The ǁ1.6% average HRD suggests a slight bias as does the Q-Q plot however this is due to 3 assays with large variance as seen in the Au vs. Au plot.

14.1.2.3 Blanks Due to the poor initial selection of blank material, the blanks analysis data could not be used to accurately determine the degree of contamination in sample preparation or at the ALS laboratories with any certainty. Seven blanks returned gold values greater than 0.05 g/t. As a result, the use of beach sand as a blank was abandoned and a new local source, Grey Hill (TIG coordinates 43650 mE:208100 mN) was selected. A total of 429 Grey Hill Blank samples were submitted with samples from Pigiput-Pigibo. 98.6% of the blanks returned Au values less than ten times the detection limit (of the respective analytical methods) thus providing confidence that minimal sample contamination has occurred. Six blanks returned values more ten times detection Au, representing 1.4% of the samples. Investigation showed three of the six were the result of sample swap, and another the result of contamination.

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The spurious high blank values are from various holes and the different sample processing dates eliminate a systematic contamination issue in sample preparation. It does however show a minor QC sample handling problem. Sample preparation workers periodically undergo refresher training to minimise the instances of QC sample swapping.

Table 14-7: Blank samples analysed by EXLAB and ALS, Apr—Dec 2009.

LAB NUM BLANKS NUM > D.L. Num > 10X D.L. % > 10X D.L. ALS ...... 278 37 5 1.80 EXLAB ...... 151 13 1 0.66 Total ...... 429 50 6 1.40

D.L. = Detection Limit

14.1.3 Round Robin Inter-laboratory Checks In 2009, round robin checks were included as a routine part of Allied’s QAQC program, with 2-3% of samples selected from each hole. In March 2009, an inter-laboratory round robin check was done on selected samples from 11 holes (Table 14-8), to check Analytical Laboratory Services (ALS) Townsville, the laboratory used for routine analyses. Samples were dispatched to Genalysis (GLS) and SGS Laboratories Townsville and analysed using 50 g fire assay with AAS finish. Control samples, standards, blanks and duplicates were included at a rate of 1 in 20.

Table 14-8: Allied—Holes used for the March 2009 round robin checks

Hole_id ALS Lab_Batch_ID SDH012 ...... TV08157095 RC1759 ...... TV08165120 RC1758 ...... TV08164449 RC1731 ...... TV08139939 RC1744 ...... TV08149837 RC1724 ...... TV08136556 SDH011 ...... TV08132961 RC1718 ...... TV08132964 RC1736 ...... TV08144662 RC1748 ...... TV08152753 SDH015 ...... TV08180185 A second set of Round Robin checks was completed in Jan 2010. The study used 286 samples from 53 holes selected, in compliance with the inter-laboratory check QC protocol, between 13 November 2008 and 22 September 2009. With a small number of exceptions, the results of the check assays received closely match the original results from ALS. The Round Robin check protocol followed at the Exploration Sample Preparation Facility at Simberi calls for a second scoop sample to be taken from the pulverising bowl. This sample set aside for analysis, by the same fire assay method, at a different laboratory from the original (ALS Townsville), in this case Genalysis Laboratory Service laboratory in Perth. The pulp duplicate sampling frequency is approximately one sample of every 30 original sample. The majority (245) of the total 286 round robin checks came from 49 holes drilled at Pigiput (29 holes/168 samples) and Pibigo (20 holes/77 samples). The remainder, 4 holes/41 samples, were from holes drilled at the Sorowar Prospect. A small low bias is evident when results returned from Genalysis (GLS) are compared with the ALS data. On average the GLS results are 0.016 g/t Au lower, an insignificant difference when the detection limit for the 50 g fire assay method at both laboratories is 0.01 g/t Au.

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Table 14-9: Jan 2010 Round Robin Check Programme—Summary Statistics

Intra Batch DUPs ALS_FAAu_orig GLS FAA Au Mean Diff HRD (%) HARD (%) Mean ...... 0.85 0.84 0.85 ᎈ0.01 ᎈ4.6 10.4 Max...... 30.1 32.0 31.0 2.22 88.7 88.7 Min ...... 0.01 0.01 0.01 ǁ1.34 ǁ7.7 0.0 Kurtosis ...... 100.5 111.0 Skewness ...... 8.66 9.16 Median ...... 0.24 0.22 0.23 ǁ0.01 ǁ2.13 3.59 Std Deviation ...... 2.26 2.35 2.30 0.25 19.18 16.73 CV...... 5.26 3.21 No. Pairs ...... 286 Pearson CC ...... 0.99 F-test ...... 0.55 Graphical representations for statistical analysis are presented below. An minor positive bias is evident in the Q-Q plot and HRD histogram.

21APR201102101894 Figure 14-4: Jan 2010 Round Robin Check Programme—Graphical Illustrations of Summary Statistics

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Excluding outliers, an overall correlation coefficient of 98.9% is achieved (Figure 14-5).

Inter-Lab check assays GIS Au v ALS Au

21APR201102022222 Figure 14-5: Inter Lab assay correlation Excluding sample pairs where both assays are less than 10 times the detection limit, twenty three check samples displayed relatively larger variance (>15% HARD), this represents 8% of the total dataset. Of these samples, ten include at least one assay value greater than 0.5g/t Au. The results are considered to demonstrate the validity of the ALS fire assay gold data albeit with a slight positive bias, particularly in assays less than 1 g/t Au.

14.1.3.1 Analysis of Inserted Standards The Certified Reference Material passed QC requirements returning with in 2 standard deviations of certified Au grade. Also no anomalous values were obtained for the blank material. CRM values and results from SGS and GLS laboratories are provided in Table 14-10:

Table 14-10: CRM values and results from SGS and GLS Laboratories

Recomm SGS Townsville Genalysis Perth Control Sample Type Au ppm Samp id Reported Au ppm Samp id Reported Au ppm QC analysis blank ...... 209257 X 209357 0.01 PASS blank ...... 209258 0.02 209358 0.01 PASS blank ...... 209265 0.02 209365 0.01 PASS blank ...... 209279 X 209379 X PASS blank ...... 209280 X 209380 X PASS blank ...... 209287 X 209387 0.03 PASS blank ...... 209318 X 209418 0.01 PASS CRM_G306-1 ...... 0.41 209259 0.39 209359 0.38 PASS CRM_G901_7 ...... 1.52 209229 1.51 PASS CRM_G302-10 ...... 0.18 209273 0.14 209373 0.18 PASS CRM_G906-2 ...... 2.46 209266 2.42 209366 2.33 PASS CRM_G901-7 ...... 1.52 209256 1.43 209356 1.5 PASS CRM_G901-7 ...... 1.52 209293 1.41 209393 1.54 PASS CRM_G907-6 ...... 7.25 209286 7.14 209386 7.27 PASS CRM_G907-6 ...... 7.25 209300 7.65 209400 7.28 PASS CRM_G01 ...... 0.02 209272 0.04 209372 0.04 PASS

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14.1.3.2 Analysis of Pulp Duplicate Results Figure 14-6, Figure 14-7 and Figure 14-8 below illustrate the correlation of Au values of samples submitted in the round robin check and the original Au values reported by ALS Townsville, the laboratory used for routine drill hole sample analyses. While samples near detection limits show some spread, correlation coefficients of greater than 97% were calculated, demonstrating the accuracy of the original ALS results were acceptable.

ALS Vs SGS

21APR201101565861 Figure 14-6: Allied—Round Robin Check—March Qtr 2009—Gold by FAA—ALS vs. SGS Townsville

ALS vs GLS

21APR201101563769 Figure 14-7: Allied—Round Robin Check—March Qtr 2009—Gold by FAA—ALS vs. Genalysis

GLS Vs SGS

21APR201102010841 Figure 14-8: Round Robin Check—March Qtr 2009—Gold by FAA—Genalysis vs. SGS Townsville

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14.1.3.3 Diamond Twins of RC Holes A limited number of RC holes were twinned by diamond core holes in late-2008. An analysis of the results indicated that while the comparison was good, poor recovery issues can affect the reliability of both RC and core sample assays. The reliability of drill hole data needs to be assessed on a hole-by-hole basis.

14.2 Author’s Verification 14.2.1 Site Visit The Authors representative, John Batista, Associate with Golder, visited Simberi between 28 October 2008 and 31 October 2008. The drilling and sampling operations were observed and sample storage facilities visited. The mining operation and plant facilities were also inspected.

14.2.2 Database Validation For the deposits modelled by Golder Associates routine internal database validation checks are performed on the drill hole data sets prior to analysis, modelling and estimation. These checks include: • Cross table checks (holes in collar but not in assay, etc). • Collar depth against final assay and geology depth. • Overlapping intervals or gaps in the assay and geology tables. • Duplicate hole names and duplicate coordinates. • Coordinate values of zero. • Integer coordinate values (indicate of a lack of detailed survey data). • Extreme variations (>= 10⍭) in drill hole azimuth or dip between consecutive downhole survey records Any anomalies or errors noted were brought to the attention and resolved. In all instances the anomalies or errors noted were minor and the Author considers that they would have made no material difference to the resource if left unresolved. Maxwell Geoservices were commissioned to audit the full Allied Simberi database for the purpose of general data integrity and compliancy. The key areas identified as requiring attention were: • Identify and update missing coordinates for 2 drill holes. • Source and update missing: • collar survey dates and methods • drill dates • sample dates, types and methods • downhole survey methods and dates • Local Grid establishment data, and • Implement procedure change to ensure that this data is collected for all future drilling programs. • Review codes with no descriptions. • Review BDL result treatment. • Review Pb values > 100%. • Review un-ranked assay data. • Update Lab Element mapping. • Update Lab Method Priority: • DIL.

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• Review sample and drilling metadata collection. These recommendations will improve the overall data quality and in some local instances the data integrity but in the Author considers that this would make no material difference to the resource.

15.0 ADJACENT PROPERTIES There are no adjacent properties which are not under the control of Allied. Allied controls the exploration lease over the western half of Simberi, and covering most of the other islands in the group. A summary of these prospects is included in Section 19.0.

16.0 MINERAL PROCESSING AND METALLURGICAL TESTING Section 16.0 has been prepared by Battery Limits Pty Ltd under the supervision of Phil hearse, Managing Director A Scoping Study, based on historical testwork, and a Prefeasibility Study, based on significant new metallurgical testing on the proposed sulphide plant has been conducted as part of this Revised Technical Report. Test work included sulphide ore comminution, flotation, direct cyanidation, ultra-fine grinding-cyanidation, and roasting-cyanidation. The most appropriate option for the sulphide plant was found to be roasting-cyanidation. The testwork performed is discussed in this section, and an assessment of this information and projected performance of the process plant is discussed in Section 18.2 of this report.

16.1 Historical Testwork Historical testwork had shown that the sulphide ore was refractory, and not amenable to gold and silver recovery by conventional cyanidation. However, it was amenable to conventional flotation and pyritic refractory ore treatment by pressure oxidation. Pressure oxidation was found to result in high gold recovery on both the ore and the flotation concentrate. No testwork was undertaken to evaluate other conventional refractory treatment routes such as roasting or biological oxidation (BIOXᓼ). Samples used in the historical sulphide testwork came from the Botlu, Samat, and Pigiput deposits. Cyanidation testwork demonstrated that cyanide extractable gold generally ranged from 13% to 45%. Mineralogical investigations indicated very little visible gold. As the main sulphide mineral was crystalline pyrite, most of the gold was assumed to be ultra-fine or solid solution gold in pyrite.

16.2 Simberi Sulphide Scoping Study Allied Gold completed a Scoping Study for the Simberi Sulphide Project in 2009. The scoping study was mostly based on results from the historical testwork, as well as benchmarking of other projects. Key metallurgical and processing outcomes from the Scoping Study included: • The Simberi sulphide ore is refractory and requires sulphide oxidation to release the gold for cyanidation. • Production of a flotation concentrate and export is potentially the most economic option for exploitation of the sulphide ore. However, a market will need be secured for the concentrate product. • Biological oxidation using BIOXᓼ is not viable because of high power consumption and high power costs. • Roasting with off-gas scrubbing is a potentially economic and low risk option. Metallurgical recommendations from the Scoping Study included: • Conduct further testwork to determine comminution characteristics and flotation parameters • Undertake a preliminary roasting metallurgical testwork program on flotation concentrate • Conduct metallurgical testwork to confirm that UFG (ultra-fine grinding) is not a viable option for the project. A program of testwork was then commenced as part of a Prefeasibility Study for the Project.

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16.3 PFS Testwork Testwork commenced on samples of Sorowar sulphide ore, and was then followed by a more detailed program of work with Pigiput samples. Pigiput accounts for over 90% of the gold in the Simberi sulphide resource.

16.3.1 Sample Selection 16.3.1.1 Sorowar Deposit Four distinct alteration zones for the Sorowar deposit were noted by geological personnel, namely: clay and siliceous located in the upper and middle alteration zones; and carbonate and chlorite in the lower alteration zones. For testwork purposes two composite samples were prepared. Composite 1 consisted of clay and silicate material from the upper and middle alteration zones and Composite 2 comprised carbonate and chlorite material from the lower alteration zone. Core samples were selected in 3 m intervals, which represented approximately half the anticipated mining bench height. Composite 1 consisted of eight intervals that ranged from depths of 63.5 m to 153 m, with gold grades from 0.90 g/t to 9.35 g/t and sulphur grades from 2.8% to 4.2%. Composite 2 consisted of four intervals that ranged from depths of 153 m to 192 m, with gold grades from 0.80 g/t to 1.0 g/t and sulphur grades from 3.3% to 4.7%.

16.3.1.2 Pigiput Deposit Metallurgical drill holes used to generate samples for testwork were twinned (Holes ID SDH 022 to SDH 027) from previous drill hole collars (Holes ID P017, P033, P016, P021 and P020 respectively). Two composites were prepared to represent the Porphyry and Tuff lithologies. The sample intervals used in the Porphyry and Tuff composites is summarised in Table 16-1.

Table 16-1: Pigiput Sample Intervals Composites

Sample Interval (m)Lithology Average Geological Grade of Intervals Hole ID From To Description Au g/t As ppm S% Porphyry SDH 022 ...... 110 141 Porphyry 2.64 538 2.8 SDH 024 ...... 151 173 Porphyry 4.84 1184 3.6 SDH 026 ...... 139 145 Porphyry 1.51 202 4.7 SDH 027 ...... 62 150 Porphyry 6.21 379 3.7 Tuff SDH 024 ...... 132 217 Tuff 2.94 608 4.2 SDH 026 ...... 98 123 Tuff 3.77 802 5.5 SDH 027 ...... 60 62 Tuff 2.04 1184 6.4

16.3.2 Head Assays 16.3.2.1 Sorowar The gold content of Composite 2 was significantly lower than Composite 1 although the sulphide component of both composites was similar at 3.9%. Both composites contained high carbonate levels, which can affect processing performance with some refractory technologies such as pressure and biological oxidation but is unlikely to have a significant effect on the roasting option. Head analyses for the two Sorowar composites are provided in Table 16-2.

Table 16-2: Sorowar Composite Head Analyses

Element Composite 1 Composite 2 Au ...... ppm 2.79 0.97 Ag ...... ppm 2.10 1.90 As ...... ppm 498 250 S2- ...... % 3.9 3.9 2- CO3 ...... % 11.8 5.5

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16.3.2.2 Pigiput The head assays for the two ore types are similar. Repeat gold assays on samples showed only small variation suggesting a low presence of coarse free gold. Head analyses for the two Pigiput composites are provided in Table 16-3

Table 16-3: Pigiput Ore Composite Head Analyses

Element Porphyry Tuff Au (mean) ...... ppm 3.40 2.71 Ag ...... ppm 4.2 6.1 As ...... ppm 548 645 S2- ...... % 3.55 4.47 2- CO3 ...... % 0.36 1.27

16.3.3 Comminution Comminution testwork was carried out to characterise the grinding energy requirements of the ore samples.

16.3.3.1 Sorowar The results of the Bond rod and ball mill work indices suggest that the composite samples have moderate grinding requirements for primary grinding, and that there are no significant differences between the two alteration samples. The abrasion indices for two composites indicate that both samples have low abrasiveness and that grinding media and liner consumption would be low. The ratio of RWI to BWI is frequently used as an indication of amenability to SAG milling and potential for critical size build-up. The values of this ratio for both composites infer that SAG milling is likely to be applicable for this material. The results of the testwork for the two composites are presented in Table 16-4.

Table 16-4: Sorowar Comminution Testwork Results

Bond Parameter Composite 1 Composite 2

Abrasion Index ...... Ai 0.082 0.027 Rod Mill Work Index ...... kWh/t 14.7 13.7 Ball Mill Work Index ...... kWh/t 13.9 14.7 Rod:Ball WI Ratio ...... RWI:BWI 1.06 0.93

16.3.3.2 Pigiput The results of the bond rod and ball mill work indices suggest that the composite samples have moderate grinding requirements for primary grinding. The Ai result indicates that the Porphyry ore is abrasive and is likely to result in significant grinding media and liner consumption. Results of the testwork for the two composites are presented in Table 16-5.

Table 16-5: Pigiput Comminution Testwork Results

Bond Parameter Porphyry Tuff Abrasion Index ...... Ai 0.121 0.066 Rod Mill Work Index ...... kWh/t 16.1 N/A** Ball Mill Work Index ...... kWh/t 17.8 16.2 Rod:Ball WI Ratio ...... RWI:BWI 0.90 N/A

** Sample result invalid due to incorrect crushing procedure

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16.3.4 Cyanidation Leaching Cyanidation leaching testwork was undertaken on both Sorowar and Pigiput composites. Tests included direct cyanidation and carbon in leach (CIL) testing. Tests were undertaken with one hour pre-aeration and oxygen addition. The tests were performed in agitated vessels with an initial cyanide concentration of 0.1% (w/v) and subsequent additions to maintain 0.05% (w/v).

16.3.4.1 Sorowar Composite 2 proved to be slower leaching and significantly more refractory than Composite 1. CIL leaching appeared to increase the rate of gold extraction for Composite 1 compared to direct leaching. Both samples can be considered refractory to conventional cyanidation processing. The test results at different leach times are summarised in Table 16-6.

Table 16-6: Sorowar Cyanide Leaching Results

Composite 1 Composite 2 Test 24 h 48 h 24 h 48 h Direct Leaching ...... Au Ext % 30.3 41.6 7.4 7.4 CIL Leaching ...... Au Ext % 39.6 47.8 7.3 7.3

16.3.4.2 Pigiput Only direct leaching was performed on Pigiput composites. For the Porphyry composite there was a significant increase in leach extraction between 24 hours and 48 hours, indicating that a portion of slow leaching gold. It is likely that gold extraction would continue increase slightly with longer residence times. In contrast, the Tuff composite showed no significant increase in leach extraction between 8 hours and 48 hours residence, indicating that the leachable gold present is fast leaching. Overall leach extractions are low at less than 40%. Both samples can be considered refractory to conventional cyanidation processing. The test results at different leach times are shown in Table 16-7.

Table 16-7: Pigiput Cyanide Direct Leaching Results

Porphyry Tuff Test 8 h 24 h 48 h 8 h 24 h 48 h Direct Leaching ...... Au Ext % 28 33 39 25 26 27

16.3.5 Rougher Flotation Testwork 16.3.5.1 Grind Size Optimisation A series of flotation tests were undertaken, initially on Sorowar composites, to establish a relationship between grind size and gold recovery for the primary rougher flotation. Tests were performed at varying

P80 grind sizes of 150 Ȗm, 125 Ȗm, 106 Ȗm and 75 Ȗm, using identical reagents and conditions for each test. The reagent scheme used in the four tests was CuSO4 as an activator, a combination of the dithiophosphate reagent (DTP) and potassium amyl xanthate (PAX) as collectors, and methyl isobutyl carbinol (MIBC) as a frother. For the Sorowar composites, the grind optimisation testwork showed that flotation performance improved as the grind size decreased from 150 Ȗm to 106 Ȗm on both composites. No further improvement was achieved with finer grinding. The flotation test using PAX alone at the optimum 106 Ȗm grind showed improved flotation performance over the equivalent test with PAX and DTP. The Pigiput composites behaved similarly to the Sorowar samples. Based on the results from the flotation tests, a 106 Ȗm grind and PAX collector was recommended for primary rougher flotation for both Sorowar and Pigiput ores.

16.3.5.2 Flotation Reagent Optimisation For all composites of both ore types, flotation tests were performed at the optimum 106 Ȗm grind size with varying reagent schemes. The primary rougher optimisation testwork was carried out varying the

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quantity of CuSO4 activator added, decreasing flotation density and increasing both the flotation time and collector addition. The test results indicated that there were only minor improvements in flotation performance with increased activator and collector additions. However, increasing flotation time from 22 minutes to 32 minutes for Sorowar composites improved gold recovery and was recommended for all subsequent primary rougher floats. The improvement in performance was considered to be due to the presence of a very slow floating pyritic gold component.

16.3.5.3 Cleaner Flotation Testwork Initial rougher flotation testwork was carried out on both Sorowar composites at the optimised conditions. Rougher scavenger concentrate was reground before being cleaned at natural pH to produce cleaner concentrate. Cleaner flotation testwork was then carried out on both composites at the optimised conditions. The tests showed that improved concentrate grade could be achieved at an optimum regrind size of 53 Ȗm. Gold recovery to concentrate significantly improved and the concentrate mass pull was reduced by about 50% with regrinding for both concentrates. Similar results were achieved with Pigiput composites.

16.3.5.4 Bulk Flotation For the Pigiput samples, a bulk roughing and cleaning flotation test was performed on both the Porphyry and Tuff ore composites. The tests were conducted at 30% solids using a feed mass of 50 kg to the mill. Tests were conducted as follows, using optimum conditions which were determined in previous testing: • Grind size of P80 = 106 Ȗm. • Natural pH in roughing and cleaning.

• Addition of 120 g/t CuSO4 activator prior to roughing flotation. • Staged additions of PAX collector during roughing and scavenging and staged addition of MIBC frother. • Total of four minutes in roughing flotation and 70 minutes in scavenging flotation. • Two stages of cleaning flotation. The results showed that for Porphyry ore, a maximum 93% gold recovery could be achieved into a 14% mass concentrate at a gold grade of 22 g/t. For Tuff, 92% gold recovery was obtained into a 20% mass concentrate containing 12.5 g/t. Most of the sulphide sulphur (92% to 94%) and arsenic (81% to 87%) also reported to these concentrates, resulting in sulphur and arsenic grades of 20% to 23% and 0.27% to 0.31% respectively.

16.3.6 Leaching of Ultra Fine Ground Concentrate The cyanidation leach response of Ultra-Fine Ground (UFG) flotation concentrate was determined for both composites for Sorowar ore only. The test results were compared to leaching of whole ore. Gold dissolution increased significantly from 42% to 69% for Composite 1 but less for Composite 2 (7.4% to 15%) for UFG samples (estimated size of 5 Ȗm) compared with direct leaching of ore at 106 Ȗm. Although improvements were noted, the gold dissolution after UFG was considered too low for this technology to be considered further as a possible treatment route for Sorowar ore. It was expected that Pigiput ore would behave similarly.

16.3.7 Roast-Leach Testwork Roast-leach tests were undertaken on Pigiput concentrate samples prepared by bulk flotation. Roasting

tests were conducted on the ‘‘as received’’ flotation concentrate (P80 =106 Ȗm), and also on concentrate ground to P80 sizes of 63, 38 and 25Ȗm. Roasted samples were subjected to 24 and 96 hour cyanidation leach tests to determine the amount of recoverable gold. Roasting in a rotating Midrex furnace produced a better roast-leach performance than roasting in a static muffle furnace with rabbling, though neither technique provided a good simulation of a fluid bed roaster. The results of the outlined testwork are summarised in Table 16-8.

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Table 16-8 Calcine Grind Optimisation

63 Ȗm 38 Ȗm 25 Ȗm Midrex Test Parameter Regrind Regrind Regrind No Regrind Porphyry 24 Hour Leach Extraction (%) ...... 89.5 90.6 90.1 88.9 96 Hour Leach Extraction (%) ...... 90.4 90.6 91.1 90.1 Tuff 24 Hour Leach Extraction (%) ...... 82.5 83.6 86.5 87.0 96 Hour Leach Extraction (%) ...... 84.0 86.0 87.3 88.1 The Porphyry concentrate showed negligible increases in gold extraction with decreasing grind size, but the Tuff material showed greater an increase of 4% (24 hour leach) for a change in regrind size from 63 Ȗm down to 25 Ȗm. The Midrex roasting technique, without any calcine regrind step, resulted in similar or better extractions to that of a 25 Ȗm regrind with the muffle roast. The significant increase in recovery for Tuff material using both the Midrex roasting technique, and UFG was considered unusual, and suggests full piloting will be required in the bankable feasibility study to optimise the roasting parameters and downstream calcine treatment steps to maximize design gold recovery.

16.3.8 Concentrate Thickening, Filtration and Physical Testing 16.3.8.1 Thickening Testing The concentrate samples were tested for thickening and filtration performance by Outotec technology. The concentrate samples were raked only with bottom rakes to assist in dewatering. Flocculant screening tests showed that supernatant clarity was achieved with all tested flocculants after an addition of 30 g/t. Magnafloc M 5250 was selected as it resulted in the best settling performance. The results from the continuous test runs are summarised in Table 16-9.

Table 16-9: Concentrate Thickening Tests

Sample Diluted Feed Floc Underflow Overflow Liquor Solids Solids Yield Flux Rate Density Type Dose Density Stress Clarity t/m2h m/h % g/t % Pa mg/L Porphyry ...... 0.25 1.30 17.0 M 5250 30 61.3 152 <50 Tuff ...... 0.25 1.30 17.0 M 5250 20 67.3 149 <50

16.3.8.2 Filtration Testing Samples of both Porphyry and Tuff concentrates were tested by Larox to evaluate the filtration characteristics of each concentrate. The objective of the testwork was to determine optimum cake thickness, cake moisture and filtration rate capacity. The testwork was conducted in a mini Larox 100 test unit. The target moisture for the testwork was <10%. Both concentrate samples were readily dewatered in the laboratory filter press with a 25 mm chamber and the filter cakes produced were found to be solid and easily handled. Key data from the tests are presented in Table 16-10.

Table 16-10: Concentrate Thickening Tests

Parameter Porphyry Tuff Residual Cake Moisture ...... % w/w 12.0 9.9 Cake Thickness ...... mm 19.5 23 Specific Filtration Rate (solids) ...... kgDSm2h 84.3 133 Specific Filtration Rate (liquid) ...... L/m2h 30 39.7

Slurry Sizing Measurement ...... P80 Ȗm 69 72

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16.3.8.3 Physical Characteristics of Concentrate Samples of both Porphyry and Tuff concentrate were despatched to ATSIS in Newcastle for physical testing. The main objective of the testwork was to characterise the concentrate to ensure safe exportation of the material from site, if required. ATSIS use international and national test methods, which meet the needs of concentrate exporters and ensure that the materials can be safely exported. The parameters measured and results are presented in Table 16-11.

Table 16-11: ATSIS Physical Test Results

Parameter Porphyry Tuff Bulk Density (as received) ...... wt/m3 2.182 2.075 (calculated) ...... dt/m3 1.813 1.708 Stowage Factor ...... m3/t 0.458 0.482 Angle of Repose ...... deg 43.4 42.9 Transportable Moisture Limit ...... % 12.2 11.9 Crossing Point Temperature ...... ⍭C >350 >350 The TML values are within expectations for sulphide concentrates, and can be obtained by standard filtration techniques. The Crossing Point Temperature is a measure of the pyrophoric nature of concentrates. The ‘‘Crossing Point’’ is defined as the point at which the temperature of the sample exceeds the ambient temperature of the oven, caused by the heat from the oxidation of the sample. Temperatures over 250⍭C are considered stable for storage and shipping. The two samples analysed have a high Crossing Point and therefore represent a negligible risk for spontaneous combustion in transport. In summary, both the Porphyry and Tuff concentrates settled readily with low suspended solids. Both settled concentrate samples were readily dewatered in a pressure filter to reasonable moisture contents, and the filter cakes produced were found to be solid and easily handled, with transportable moisture limits (TML) and crossing points suitable for safe export.

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17.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES 17.1 Mineral Resource Section 17.1 has been prepared by Golder Associates under the supervision of Stephen Godfrey, Associate, Senior Resource Geologist.

17.1.1 Introduction The Simberi resources have been classified in accordance with the guidelines of the Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC, 2004). The resource classification was based on data quality, data density, confidence in the geological interpretation and confidence in the estimation. The resource has been classified as Inferred, Indicated and Measured. The JORC classification is comparable with the CIM definitions for the same categories as presented in Table 17-1.

21APR201103021143 Figure 17-1: Simberi resource locations

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Table 17-1: Comparison of JORC and CIM classification

JORC CIM An ‘Inferred Mineral Resource’ is that part of a An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which tonnage, grade and Mineral Resource for which quantity and grade or mineral content can be estimated with a low level quality can be estimated on the basis of geological of confidence. It is Inferred from geological evidence and limited sampling and reasonably evidence and assumed but not verified geological assumed, but not verified, geological and grade and/or grade continuity. It is based on information continuity. The estimate is based on limited gathered through appropriate techniques from information and sampling gathered through locations such as outcrops, trenches, pits, appropriate techniques from locations such as workings and drill holes which may be limited or of outcrops, trenches, pits, workings and drill holes. uncertain quality and reliability. An ‘Indicated Mineral Resource’ is that part of a An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for which tonnage, densities, Mineral Resource for which quantity, grade or shape, physical characteristics, grade and mineral quality, densities, shape and physical content can be estimated with a reasonable level characteristics, can be estimated with a level of of confidence. It is based on exploration, sampling confidence sufficient to allow the appropriate and testing information gathered through application of technical and economic appropriate techniques from locations such as parameters, to support mine planning and outcrops, trenches, pits, workings and drill holes. evaluation of the economic viability of the deposit. The locations are too widely or inappropriately The estimate is based on detailed and reliable spaced to confirm geological and/or grade exploration and testing information gathered continuity but are spaced closely enough for through appropriate techniques from locations continuity to be assumed. such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed. A ‘Measured Mineral Resource’ is that part of a A ‘Measured Mineral Resource’ is that part of a Mineral Resource for which tonnage, densities, Mineral Resource for which quantity, grade or shape, physical characteristics, grade and mineral quality, densities, shape, and physical content can be estimated with a high level of characteristics are so well established that they confidence. It is based on detailed and reliable can be estimated with confidence sufficient to exploration, sampling and testing information allow the appropriate application of technical and gathered through appropriate techniques from economic parameters, to support production locations such as outcrops, trenches, pits, planning and evaluation of the economic viability workings and drill holes. The locations are spaced of the deposit. The estimate is based on detailed closely enough to confirm geological and grade and reliable exploration, sampling and testing continuity. information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity. The Simberi resources have been estimated by Minstat Pty Ltd and Golder Associates Pty Ltd. The Sorowar, Pigiput, Pigibo, Bekou and Pigicow resources have been estimated by, or estimated under the direct supervision of, the Author. The Botlu resource is an historical estimate undertaken by M. Binns of Minstat Pty Ltd. The Author has reviewed these models and satisfactorily undertaken independent validations of the estimations and believes they are a still relevant and reliable. Table 17-2 details the Simberi resources depleted to the end of December 2010. The figures are based on depletion of the models to the end of October 2010 topographic surface, plus actual reconciled depletion by production for November and December 2010.

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Table 17-2: Simberi Mineral Resources (0.5 g/t Au cut off—depleted to 1 January 2011)

Deposit Material Measured Indicated Inferred Mt Au g/t koz Mt Au g/t koz Mt Au g/t koz Bekou ...... Oxide 0.04 1.74 2 0.06 1.14 2 Transition 0.01 1.17 0 0.05 1.16 2 Sulphide 0.02 1.93 2 0.92 1.38 41 Bekou Total ...... 0.07 1.71 4 1.03 1.36 45 Botlu ...... Oxide 1.22 1.14 44 0.45 1.23 18 0.31 1.16 11 Transition Sulphide 1.45 1.81 84 Botlu Total ...... 1.22 1.14 44 0.45 1.23 18 1.76 1.70 95 Pigibo ...... Oxide 2.96 1.11 106 0.60 0.89 17 Transition 2.19 1.19 84 0.51 0.92 15 Sulphide 3.86 1.11 137 6.22 0.94 188 Pigibo Total ...... 9.01 1.13 327 7.33 0.93 220 Pigicow ...... Oxide 0.15 1.65 8 0.29 1.30 12 Transition 0.11 1.29 4 Sulphide 2.00 1.26 81 Pigicow Total ...... 0.15 1.65 8 2.4 1.27 97 Pigiput ...... Oxide 2.89 0.86 80 4.60 0.92 137 2.01 0.79 51 Transition 1.95 0.89 56 0.77 0.83 21 Sulphide 32.56 1.51 1583 32.25 1.00 1042 Pigiput Total ...... 2.89 0.86 80 39.11 1.41 1776 35.03 0.98 1114 Samat East ...... Oxide 0.40 1.13 14 Transition 0.08 0.78 2 Sulphide 3.50 0.78 88 Samat East Total ...... 3.98 0.82 104 Samat North A ...... Oxide 0.11 0.78 3 0.11 0.84 3 Transition 0.04 1.29 2 0.01 1.26 0 Sulphide 0.36 0.81 9 1.08 0.86 30 Samat North A Total ...... 0.51 0.84 14 1.20 0.86 33 Samat North B ...... Oxide 0.12 0.86 3 0.12 0.75 3 Transition 0.05 2.86 5 0.02 0.78 1 Sulphide 1.90 1.22 74 1.05 0.73 25 Samat North B Total ...... 2.07 1.24 82 1.19 0.73 29 Samat South A ...... Oxide 0.02 1.96 1 0.16 1.28 7 Transition 0.01 0.98 0 0.01 0.77 0 Sulphide 0.02 1.01 1 1.73 0.97 54 Samat South A Total ...... 0.05 1.38 2 1.90 1.00 61 Samat South B ...... Oxide 0.05 2.94 5 0.17 1.51 8 Transition 0.05 2.03 3 0.02 0.99 1 Sulphide 1.70 1.76 96 3.36 1.07 115 Samat South B Total ...... 1.80 1.80 104 3.55 1.09 124 Sorowar ...... Oxide 5.61 1.3 235 8.56 1.08 298 2.40 1.09 84 Transition 0.54 1.17 20 1.46 1.14 53 0.29 0.83 8 Sulphide 1.30 0.93 39 6.93 0.92 205 19.03 0.90 549 Sorowar Total ...... 7.45 1.23 294 16.95 1.02 556 21.72 0.92 641 Sorowar South ...... Oxide 0.68 0.82 18 Transition 0.28 0.68 6 Sulphide 5.39 0.66 114 Sorowar South Total ...... 6.35 0.68 138 Grand Total ...... 11.56 1.13 418 70.17 1.28 2891 87.44 0.96 2701

Rounding may cause numerical discrepancies

17.1.2 Sorowar Resource Estimation 17.1.2.1 Database The Sorowar resource model is based on the geological database as at 31 October 2008. The Sorowar dataset comprised 581 RC holes for a total of 51,625 m and 57 Diamond Holes for a total of 9701 m. The RC holes were 5.25 inch diameter. The Diamond holes were predominantly NQ with 10 HQ and 1 PQ hole.

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The Sorowar deposit as modelled in 2008 has had the Sorowar South domain excised from the block model. Sorowar South was re-estimated in 2010 in conjunction with the Pigiput and Pigibo block models and is reported separately.

21APR201103041084 Figure 17-2: Sorowar—Deposit Geology and drill collars

17.1.2.2 Exploratory Data Analysis 17.1.2.2.1 Assays Preliminary data analysis was done on the raw assay data. Display of the data highlighting logged geology and grades Indicated trends in the data. In general Ag grades were observed to be higher in the northern part of the deposit coincident with a change in geology from predominantly volcanics to andesite. The geology was digitised and the drill hole data flagged for analysis. Cumulative probability plots for Au and Ag clearly show how the different geological units host different populations of Au and Ag. The diatreme (domain 4) hosts the highest grade gold mineralisation and the northern andesite (domain 1) hosts the highest Ag grades. As a result of this analysis the geology was added into the estimation as an additional domain.

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Sorowar Geology 1 And Nth; 2 And Sth; 3 Vx; 4 Diat

21APR201103030067 Figure 17-3: Sorowar—Cumulative probability plots—Au and Ag by geological unit

17.1.2.2.2 Composites For detailed statistical analysis, spatial analysis and the estimation the drill hole data was composited to 5 m.

17.1.2.2.3 Geological Interpretation Geological modelling of the deposit was undertaken by Stephen Godfrey from Golder Associates Pty Ltd (‘‘Golder’’) in consultation with Carmel Grant (Resource Geologist) and Ross Hastings (Development Manager) from Allied. Solid modelling of the geology, construction of the block model and grade estimation was undertaken by Stephen Godfrey. The wireframe geological model was constructed using Maptek’s Vulcan software.

17.1.2.2.4 Spatial Analysis Directional variography was undertaken to determine the directions of maximum continuity of mineralisation and provide input parameters for the kriging process. Au showed maximum continuity towards approximately 130⍭ (400⍭) direction with ranges of the order of 60 to 90 m for all domains. Ag shows a similar direction of maximum continuity and range with the andesites modelling slightly longer ranges than the volcanics. The semi-major variographic direction was modelled down dip to the south-west with ranges of 60 to 80 m.

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17.1.2.2.5 Domaining The composited drill hole data was flagged by the weathering domains representing Oxide, Transition and Sulphide material types. Additionally, pods of ‘floating’ transition and sulphide material were modelled within the Oxide domain. The 2008 modelling also defined Volcanic, Andesitic and Diatreme lithological domains over the deposit. The Andesitic domain was further subdivided into North and South to define an area of significantly higher Silver grades.

17.1.2.2.6 Resource Block Model The resource block model was constructed aligned to the Tabar Island Grid. Figure 17-2 illustrates the position of the model and Table 17-3 details its dimension and block sizes. Sub-celling was used to help the model honour the geological boundaries.

Table 17-3: Sorowar—Model dimensions

Sorowar XYZ Model ...... Min 43790 209600 ǁ80 Max 44700 210650 300 Parent Cell ...... Min 10 10 10 Max 10 10 10 Subcell ...... Min 5 5 5 Max 10 10 10 Domains were defined in the model based in the modelled geology units and weathering surfaces.

Table 17-4: Sorowar—Domain coding

Volcanics Andesite South Andesite North Diatreme Oxide ...... 1001 2001 3001 4001 Transition ...... 1002 2002 3002 4002 Fresh ...... 1003 2003 3003 4003 The topographic data as of 15 September 2008 was provided by Allied in Surpac string and dtm format and imported into Vulcan.

17.1.2.2.7 Interpolation Plan Grade estimations for Gold (Au) and Silver (Ag) were done using Ordinary Kriging. High grade restraining was applied to the Au and Ag estimates. Where composites have a grade greater than the values specified in Table 17-5 the influence of that composite was restricted to one block model cell. A grade restricting envelope was applied to the model to limit the extrapolation of grades beyond the area drilled.

Table 17-5: Sorowar—High Grade thresholds

Oxide Transition Fresh Au Volcanics ...... 25 10 9 Andesite South ...... 25 10 9 Andesite North ...... 25 10 9 Diatreme ...... 25 10 9 Ag Volcanics ...... 20 20 20 Andesite South ...... 20 Andesite North ...... 65 30 40 Diatreme ...... 30 10 10

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17.1.2.2.8 Bulk Densities Dry Bulk Density was assigned using a spherical function developed by Allied Gold. The function has a nugget of 1.0 t/m3 and a sill of 0.9 t/m3 at a range 55 m, i.e. at surface the bulk density is 1.0 and at 55 m below surface bulk density is 1.9. This was calculated with the following formulae:

21APR201102493510 and

21APR201102493685 Table 17-6 explains the variables used above.

Table 17-6: Sorowar—Details of density variables

Variable Name Description Value

co = 1.0, ...... Nugget Minimum SG—at surface 1 c = 0.9, ...... Sill differential Maximum SG 0.9 a = 55 ...... Range Depth at which maximum SG reached 55 h ...... Lag Depth below surface variable The bulk density was calculated based on the depth of the block below the topographic surface.

17.1.2.2.9 Mineral Resource Classification The resource has been classified based on the quality and density of the drilling data used in the modelling and estimation. Golder’s review of the analytical and survey data for the resource has shown it to be of a consistent quality and the resource has been classified Measured, Indicated or Inferred based principally on drill spacing. The classification was applied to the model using wireframe solids for each classification category. Table 17-7 list the Sorowar gold resource depleted to 1 January 2011.

Table 17-7: Sorowar—Mineral Resource—Depleted to 1 January 2011

Class Mt Au g/t Au Oz Measured ...... 7.45 1.23 294 Indicated ...... 16.95 1.02 556 Indicated + Measured ...... 24.40 1.08 850 Inferred ...... 21.72 0.92 641

17.1.2.2.10 Block Model Validation Statistical and visual assessment of the block model were undertaken to assess successful application of the various estimation passes and to ensure that as far as the data allowed, all blocks within ore domains were estimated and the model estimates considered acceptable.

Visual Assessment of Grade Estimates Onscreen validations between samples and blocks were completed on the model. The onscreen validation process involved comparing block estimates and composites grades in cross-section and in plan.

Mean Grade Reproduction The global estimated mean domain grade against 5 m composite data was checked as a means to validate reproduction of the mean grade of the data. Global statistical comparisons of the mean grade are influenced by varying drill hole density, data sharing between domains and high-grade treatment. These issues can sometimes distort the comparison. In particular, peripheral blocks representing extrapolated estimates can create apparent anomalies in the grade conformance. Differences observed

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in the global average grades may not be evident on swath comparisons, which is an advantage of using swath plots to assess conformance. Overall, reproduction of the mean grade at Sorowar is acceptable. Some apparent under and over-estimation of the domain average in the block model for some domains is likely to be an artefact of the issues described above.

Swath Plot Validations Swath plots are used to assess the block model estimates for global bias; the estimates should have a close relationship to the drill hole composite data used for estimation. The process involved averaging both the blocks and samples in panels of 40 m (easting) by 40 m (northing) by 10 m (RL). The relationship between model and sample panel averages was assessed in the form of scatter plots and Q-Q plots. Conformance of the model and sample average grades was assessed in the form of easting, northing and RL swaths of the panel averages. As an example the Swath plots for Au in the Oxide domain are presented in Figure 17-4. Generally good agreement is observed between the data and block model au mean grade for easting, northing and RL slices. QQ and scatter plots for the averaged sample data vs. block model results show deviation from the 45⍭ line, with overstatement of low grades and understatement of high grades by the block model. This is a natural expected behaviour of moving from sample size data to a much bigger volume as represented by Kriged models. The swath plot validation process shows that the block model estimates follow the trend of the 5 m composite grades across the deposit. From the perspective of conformance of the average model grade to the input data, Golder considers the model to be a satisfactory representation of the drill hole data used.

Sorowar—Blocks vs Samples in 40m x 40m x 20m Panels Domain All Domains

21APR201103035455 Figure 17-4: Sorowar—Swath plot validations Au Ag

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17.1.3 Pigiput/Pigibo/Sorowar South Resource Estimation The Pigiput and Pigibo deposits have been developed to the extent where they have merged and can be estimated as one model. The two deposits are still distinct within this model and are separated by a geological boundary. Additionally the northern part of the model has been recognised as being continuous with the southern part of the Sorowar area. Consequently this zone called Sorowar South was added to the Pigiput and Pigibo models and an additional model was built to estimate that part of the Sorowar South extending into the original Sorowar model. The original Sorowar model was depleted for the blocks estimated in Sorowar South.

17.2 Geological Modelling The geological models and resource estimation are based on an extract of the Datashed SQL database was supplied to Golder in the form of .csv files containing drill hole collar, assay, lithology, oxide, RQD, survey and specific gravity information. The extract contains data to 4 June 2010. Sectional interpretations of the oxide and sulphide horizons were completed by Allied in May 2010. The interpretation strings were imported from Surpac in to Vulcan, validated and used to create surfaces for use in the construction of the geological block model. The oxide interpretation occurs at the base of the oxidation zone. The interpretation of the sulphide boundaries occurs on north south sections based on the weathering profile in the lithological logs and interpreted at the base of the transition zone. Mineralisation estimated into the block model was controlled vertically by the bounding weathering wireframes interpreted for the oxide, transition and sulphide domains Structural domain boundaries were supplied to delimit Pigiput from Pigibo. These structural boundaries resulted in a third domain being created which extends north of the Pigiput/Pigibo model boundary into Sorowar. This domain is identified hereafter as Sorowar South (Figure 17-5). Previously Pigibo and Pigiput were demarcated geographically by the 44,000 m Easting. Interpreted wireframe models were supplied by Allied to define the Tuff unit mostly within Pigiput. The remaining geology defaulted to Andesite (Figure 17-6).

21APR201102553857 Figure 17-5: Pigiput/Pigibo domains

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21APR201102485851 Figure 17-6: Lithological domains Table 17-8 summarises the relationship between the model codes and the relevant triangulations used to construct the .block models.

Table 17-8: Summary of Model Codes in Relation to the Wireframes

Model Variable Description Wireframe Code Geology ...... Tuff pig_tuff_1006 10 Andesite default 20 Domain ...... Pigibo pigibo_1006 1 Pigiput pigiput_1006 2 Sorowar South central_1006 3 Weathering ...... oxide (base) pig_oxide_1006 1 transition n/a 2 sulphide (top) pig_sulphide_1006 3

17.3 Geological Block Model 17.3.1 Block Model Parameters Two block models were constructed using Vulcan 3D software. One covering the Pigiput/Pigibo domains and the southern part of Sorowar South and the other a duplicate of the Sorowar model but with only the Sorowar South and Pigiput parts of the estimated. The models are hereafter referred to as Pigiput and Sorowar South. A 10 m by 10 m by 10 m parent cell was chosen for the model based on the drill sample spacing. A sub-block size of 5 m by 5 m by 5 m was used to improve the volumetric accuracy of the model in and around the wireframe boundaries. The dimensions for the block models along with the respective block sizes are provided in Table 17-9 and Table 17-10.

Table 17-9: Block Model Dimensions—Pigiput/Pigibo

Orientation Minimum Maximum Length Parent Block Sub-Block (m) (m) (m) (m) (m) X—Easting ...... 43000 44900 1900 10 5 Y—Northing ...... 208600 209350 750 10 5 Z—RL...... ǁ250 300 550 10 5

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Table 17-10: Block Model Dimensions—Sorowar South

Orientation Minimum Maximum Length Parent Block Sub-Block (m) (m) (m) (m) (m) X—Easting ...... 43700 44800 1100 10 5 Y—Northing ...... 209350 210850 1500 10 5 Z—RL...... ǁ250 300 550 10 5

17.3.2 Model Domain Codes Variables were assigned to each block and set to a default value. Each block variable was then flagged by wireframe surfaces or solids and assigned a value according to the block’s position relative to the wireframe. In the case of multiple, overlapping wireframes, the priority assigned to the block dictated the final block variable value. Wireframes with the highest priority took precedence over wireframes with lower priorities for a particular block variable. Where wireframes have the same priority, the sequential order determines the flagging code—blocks are flagged by the first wireframe that encompasses them. The block model coding schema used is detailed in Table 17-11. Blocks were flagged in the domain code order (1-3; default of ǁ99 used).

Table 17-11: Block Model Domain Codes

Variable Description Default Coding ox...... Weathering Code ǁ99 1 ox, 2 tr, 3 fr geology ...... Geology Code 20 10 tuff 20 andesite estdom ...... Estimation Domain ǁ99 (ox ǂ 1000)+(geology) mined ...... Mined Flag 0 0 = in situ 1 = mined domain ...... Domain Code ǁ99

Table 17-12: Pigiput coding schema

Wireframe Variable Code Priority simtopo_may2010b.00t ...... ox ǁ99 4 pig_oxide_1006.00t ...... ox 1 2 pig_sulphide_1006.00t ...... ox 2 1 pig_sulphide_1006.00t ...... ox 3 3 pigiput_may10_eom.00t ...... mined 1 1 simtopo_may2010b.00t ...... mined ǁ99 4 pbo_tuff_1006.00t ...... geology 10 1 pig_tuff_1006.00t ...... geology 10 1 pigibo_1006.00t ...... domain 1 1 pigiput_1006.00t ...... domain 2 2 central_1006.00t ...... domain 3 3 pig_fw_1006.00t ...... domain ǁ99 10 simtopo_may2010b.00t ...... domain ǁ99 10

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Table 17-13: Sorowar South coding schema

Wireframe Variable Code Priority simtopo_may2010c.00t ...... ox ǁ99 4 transition2.00t ...... ox 1 2 sulphide2.00t ...... ox 2 1 sulphide2.00t ...... ox 3 3 simtopo_may2010c.00t ...... ox ǁ99 14 pig_oxide_1006.00t ...... ox 1 12 pig_sulphide_1006.00t ...... ox 2 11 pig_sulphide_1006.00t ...... ox 3 13 pigiput_may10_eom.00t ...... mined 1 1 simtopo_may2010c.00t ...... mined ǁ99 4 pbo_tuff_1006.00t ...... geology 10 1 pig_tuff_1006.00t ...... geology 10 1 pigibo_1006.00t ...... domain 1 1 pigiput_1006.00t ...... domain 2 2 central_1006.00t ...... domain 3 3 pig_fw_1006.00t ...... domain ǁ99 10 simtopo_may2010c.00t ...... domain ǁ99 10

17.4 Statistical Analysis 17.4.1 Data Extraction and Processing Initial data selection was from the Vulcan database sim02062010.tab.isis. Eleven assay variables were available: Au, Ag, As, Cu, Fe, Mn, Mo, Pb, S, Sb, Zn. The Pigiput/Pigibo analysis and resource estimation was completed for Au, Ag and S only.

17.4.2 Sample Flagging Prior to compositing, the raw sample intervals in the geological database sim02062010.tab.isis were flagged to the geological interpretation wireframes with the appropriate domain codes for weathering (oxide transition or sulphide), geology (tuff or andesite) and structural domain (Pigiput, Pigibo or Sorowar South). The database flagging used the same wireframes and code values as those in the block model construction. Flagging directly into the Vulcan database is based on sample interval centroids, and the downhole depth from and to intervals are preserved.

17.4.3 Compositing 95% of the samples in the database are 1 m in length. A composite length of 5 m was generated on the Pigiput data breaking the compositing at the domain boundary. A 5 m composite length was used for estimation, to minimise differences in support for all samples and moderating the sample variance whilst retaining sufficient numbers of samples for grade estimation. The 5 m length was considered a compromise between smoothing of the original variability and maintaining sufficient resolution for the geological wireframes. The composite length matches the block height in the resource model and is equivalent to the selective mining unit being used. The parameter file used for compositing was sim5m.cm1. • sim5m.map (main composite file output) ǁ 5 m downhole composites. This mapfile was used in the exploratory data analysis and estimation of Au, Ag (g/t) and S (%) grades in the resource.

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17.5 Exploratory Data Analysis 17.5.1 Univariate Statistics Univariate statistics based on the clustered sample configuration were generated from raw composites and the 5 m composited data, as shown in Table 17-14 and Table 17-15 for Au, Ag and S. Statistics are reported by domain codes and geology. Due to the regular nature of the drilling grid, spatial declustering was considered unnecessary. The statistics were calculated on length-weighted data.

Table 17-14: Pigiput—Univariate Statistics

Domain Lithology Weathering Obs Minimum Maximum Mean Variance CV Median AU ...... 1001 Tuff oxide 2407 0.00 20.62 0.70 1.42 1.70 0.37 AU ...... 1002 Tuff transition 734 0.00 15.24 0.43 0.86 2.16 0.17 AU ...... 1003 Tuff sulphide 2102 0.00 146.10 0.74 20.74 6.17 0.20 AU ...... 2001 Andesite oxide 105 0.01 5.14 0.62 0.74 1.40 0.29 AU ...... 2002 Andesite transition 257 0.01 4.13 0.37 0.42 1.74 0.12 AU ...... 2003 Andesite sulphide 3534 0.01 36.19 0.79 4.26 2.61 0.28 AU ...... Global 9149 0.00 146.10 0.71 6.88 3.68 0.26 AG ...... 1001 Tuff oxide 2297 0.01 10.98 0.24 0.11 1.38 0.20 AG ...... 1002 Tuff transition 660 0.01 5.16 0.27 0.11 1.21 0.20 AG ...... 1003 Tuff sulphide 1859 0.01 146.20 0.91 16.35 4.42 0.26 AG ...... 2001 Andesite oxide 103 0.10 0.76 0.21 0.02 0.59 0.20 AG ...... 2002 Andesite transition 252 0.01 1.20 0.25 0.05 0.93 0.18 AG ...... 2003 Andesite sulphide 3058 0.01 91.65 2.62 29.25 2.06 0.90 AG ...... Global 8237 0.01 146.20 1.28 15.66 3.10 0.22 S...... 1001 Tuff oxide 2443 0.00 5.65 0.14 0.21 3.33 0.00 S...... 1002 Tuff transition 743 0.00 6.32 0.77 1.75 1.71 0.00 S...... 1003 Tuff sulphide 2122 0.00 11.61 1.63 4.39 1.29 0.00 S...... 2001 Andesite oxide 105 0.00 4.68 0.20 0.28 2.65 0.03 S...... 2002 Andesite transition 260 0.00 3.04 0.60 0.68 1.39 0.12 S...... 2003 Andesite sulphide 3648 0.00 9.28 1.88 3.88 1.05 1.61 S...... Global 10604 0.00 11.61 0.95 3.41 1.94 0.00

Table 17-15: Pigibo—Univariate Statistics

Variable Domain Lithology Weathering Obs Minimum Maximum Mean Variance CV Median AU ...... 2001 Andesite oxide 747 0.01 26.66 0.82 2.23 1.82 0.40 AU ...... 2002 Andesite transition 412 0.00 7.70 0.55 1.03 1.85 0.17 AU ...... 2003 Andesite sulphide 1017 0.01 14.59 0.51 1.50 2.40 0.13 AU ...... Global Andesite 2178 0.00 26.66 0.62 1.68 2.08 0.21 AG ...... 2001 Andesite oxide 704 0.04 20.02 0.73 1.81 1.84 0.50 AG ...... 2002 Andesite transition 346 0.02 39.60 1.26 7.93 2.23 0.50 AG ...... 2003 Andesite sulphide 832 0.05 35.80 1.20 4.52 1.78 0.50 AG ...... Global Andesite 1884 0.02 39.60 1.03 4.18 1.98 0.50 S...... 2001 Andesite oxide 749 0.00 5.83 0.19 0.34 3.13 0.00 S...... 2002 Andesite transition 413 0.00 8.29 1.03 2.98 1.68 0.03 S...... 2003 Andesite sulphide 1102 0.00 14.87 1.43 5.15 1.58 0.00 S...... Global Andesite 2300 ǁ1.00 14.87 0.92 3.46 2.03 0.00

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17.5.2 Population Statistics Cumulative probability plots were generated for all domains. Comparison of the complete oxide mineralisation to the complete transitional and sulphide mineralisation (Figure 17-7) supports the separate domaining of the mineralisation types. The transitional domain has a limited number of observations for each of the variables so due to the support of a similar mean and median to the sulphide observations, the composites were grouped with the composites bearing a sulphide code for the purpose of grade estimation. The log probability plots support the univariate statistical observation of a difference in populations when separated by geological domain.

Cumulative Probability Plot of AU BY OX Filter: OX>0

21APR201102504925 Figure 17-7: Log probability plot of Au plotted for oxide (red), transitional (green) and sulphide (blue) comparisons

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Cumulative Probability Plot of AU BY GEOL Filter: GEOL>0

21APR201102511029 Figure 17-8: Log probability comparing Au with Geology. Geol = 2 is Tuff; Geol = 1 is Andesite

17.6 Treatment of High-Grade Samples during Estimation Cumulative log-probability plots were examined for each estimation domain to assess for population outliers (anomalous values) that may adversely impact on grade estimation. These values were identified from the probability plots by observing for significant points of inflexion, which represent a change in variance, or checking for a tail of very high value(s) that depart from the overall trend of the data. Final thresholds were selected from the total oxide and total transitional/sulphide plots for Pigiput. High-grade outlier values were managed during the grade estimation phase by spatial restraining. No high grade cutting was applied to Au, Ag or S in the oxide domain. The high grade thresholds applied to the models are detailed under the kriging plan.

17.7 Variographic Analysis 17.7.1 Introduction The objectives of the variography were to establish the directions of major grade continuity for grade variables Au, Ag and S and to provide variogram model parameters for use in geostatistical grade interpolation. Variography was examined by oxide and transitional/sulphide mineralisation type. Experimental variograms were generated from the 5 m composite data. Directional variography requires search tolerances to be used for calculation of variograms, to address the fact that the drill hole samples are not perfectly aligned in a given direction in 3D space, and are not equally spaced along that direction. This requires the use of angular and distance tolerances. The tolerances used for directional variogram calculation are provided in Table 17-16 between the angular and distance tolerances with respect to the direction in which the variogram is required to be calculated.

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An overview of the variography procedure used is as follows: • Variograms were generated with a 20 m lag interval, in 10⍭ increments horizontally and 10⍭ increments vertically to provide directional coverage. The vertical bandwidth was selected to be as constrained as possible to avoid vertical smoothing through the profile when calculating variograms. • Correlograms were used for spatial continuity analysis as these generally produced the clearest variogram structure in the domains examined. • The nugget variances were modelled from downhole variograms based on a 5 m lag, reflecting the downhole composite spacing. The downhole variogram model provided the most accurate interpretation of the nugget effect due to the closer sample spacing. • Directions of continuity were selected from variogram maps. A east-north-east to west-south-west trend (70⍭) was identified as the primary direction of mineralisation in the transitional/sulphide material for grade variable Au which is consistent with the regional trend. The primary direction of continuity of the oxide material was downhole (plunge 33 -> 000). This was partially masked by the north-east to south-west distribution of lodes. The primary direction of mineralisation for grade variable Ag was a north-east to south-west trend (50⍭) in both oxide and transition/sulphide domains. • Directional variograms were generally poorly structured for S. Omni-directional variography was modelled for S in the oxide and transitional/sulphide to obtain kriging parameters for the resource estimation.

Table 17-16: Tolerances used for directional variogram calculation

Parameter Value Start Azimuth (ang)...... 0⍭ End Azimuth ...... 180⍭ Step Azimuth ...... 10⍭ Start Plunge ...... ǁ90⍭ End Plunge ...... 90⍭ Step Plunge ...... 5⍭ Horizontal Angle Tolerance (atol) ...... 20⍭ Vertical Angle Tolerance (vtol) ...... 20⍭ Horizontal Distance Bandwidth (bandw) ...... 10 m Vertical Distance Bandwidth ...... 10 m Lag Distance (xlag)...... 20 m Lag Tolerance (xltol) ...... 10 m

17.7.2 Variography Interpretation and Modelling Variography was carried out for each variable (Au, Ag and S) within the two variographic groups (oxide and transitional/sulphide) separately for the Pigiput, Pigibo and Sorowar South Domains. The approach was to interpret and model the orthogonal orientations which reflect the interpreted major, semi-major and minor axes of continuity. The principal directions were modelled with two-structure spherical models. The sub-horizontal nature of the mineralisation resulted in correlograms modelled along a horizontal plane, with the major axis orientated in the general strike orientation of the mineralisation.

17.8 Grade Interpolation Strategy Grade estimation of the Pigiput deposit was carried out using the geostatistical method of Ordinary Kriging (OK) using Vulcan. All variables were interpolated by OK. The OK method used estimation parameters defined by the variography. The estimation was performed by oxide and transitional/ sulphide zone according to the respective wireframes. Au, Ag and S grades were estimated by OK within all domains.

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The geological block model used a parent block size of 10 by 10 by 10 m for blocking purposes with sub-blocks set as 5 by 5 by 5 m. Given the nominal average drilling density of 20 by 40 m, the parent block size is reasonable to ensure local estimation quality and reduce conditional bias. Un-estimated blocks were assigned default grade values. These default values were the mean estimated block grade by domain, for each variable. The default values estimation pass was assigned to 4. The interpolated Vulcan block models were named pp_062010.bmf (Pigiput and Pigibo) and ss_062010.bmf (Sorowar South).

17.9 Kriging Plan The OK estimation was run in a three-pass kriging plan, the latter passes using progressively larger search neighbourhoods to enable the estimation of blocks un-estimated on the first pass. Further explanation and details are as follows: • Sample weighting determined by variogram model parameters (kriging approach) for all variables. • Block discretisation was set to 5 (X) by 5 (Y) by 2 (Z) to estimate block grades of 10 m by 10 m by 10 m parent blocks, using nominal 5 m composites. Sub-cells of 5 m by 5 m by 5 m received the parent cell estimate. • A three-pass kriging plan was used; Pass 1 search of ǁ40 by 40 by 10 m; Pass 2 search of 8 by 80 by 20 m and a third of 120 by 12 by 20 m. Search dimensions were selected based on drilling density and configuration. The Z direction was limited to restrict grade from estimating far beyond the last sample. • A minimum of two composites using an octant based search where a maximum of 2 samples per octant were allowed equating to a maximum of 16 composites per estimate. Pass 2 used a minimum of four and two composites and pass 3 one and one respectively. • Any remaining un-estimated blocks were assigned the average value from the kriged estimates and an estimation pass value of 4. • Spatial restraining was used to limit the influence of outlier high grades for all estimations. A 5.1 by 5.1 by 5.1 m search was used for the restraint effectively limiting the outlier high grades to one block in the model. Table 17-19 details the high grades restraint values used. A summary of parameters is provided in Table 17-17 and Table 17-18.

Table 17-17: Pigiput deposit Kriging Plan Parameters

Parameter Values Discretisation (X/Y/Z) ...... 5/5/2 Search type ...... Octant search Minimum No. samples (Pass 1/2/3) ...... 4/4/1 Maximum No. samples ...... 32 (4 per octant) Minimum Octants ...... 2/2/1 min samp per oct ...... 1

Table 17-18: Search Parameters

Orientation Ellipsoid radii (m) Azimuth/Plunge pass1 pass2 pass3 Domain Dip (R1/R2/R3) X Y Z X Y Z X Y Z Andesite (Au/Ag/S) oxide ...... 90/0/40 40 40 10 80 80 20 120 120 20 Trans/Fresh ...... 40 40 10 80 80 20 120 120 20 Tuff (Au/Ag/S) oxide ...... 90/0/40 40 40 10 80 80 20 120 120 20 Trans/Fresh ...... 40 40 10 80 80 20 120 120 20

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17.10 Treatment of High-Grade Samples During Estimation Grades estimates are usually strongly influenced by outlier values. This can result in an over-estimation of the global grades. To prevent this, high-grade treatment was applied to the Pigiput model using spatial restraining above grade thresholds. The high grade thresholds were initially chosen according to discontinuities in the cumulative probability plots for the respective estimation domains, and iteratively adjusted based on visual and statistical validation of the model against the drill hole data. The final thresholds used are summarised in Table 17-19.

Table 17-19: Summary of high grade thresholds

Threshold Threshold Threshold Geology Domain Au Ag S Andesite ...... oxide 2 6 999 Trans/Fresh 6 6 8 Tuff...... oxide 7 6 4 Trans/Fresh 8 20 12

17.11 Density Assignment Dry Bulk Density values were applied to the model based on depth below surface. Independent regression equations were developed for the oxide, transition and sulphide zones in all domains based on the available core density measurements stored in the Allied drill holes database.

Table 17-20: Dry Bulk Density Calculation

Material Calculation oxide ...... 1.40 + (depth/250*1.06) transition ...... 1.65 + (depth/100*0.456) sulphide ...... 2.00 + (depth/350*0.500)

17.11.1 Validation of Grade Estimates Statistical and visual assessment of the block model were undertaken to assess successful application of the various estimation passes and to ensure that as far as the data allowed, all blocks within ore domains were estimated and the model estimates considered acceptable.

17.11.2 Visual Assessment of Grade Estimates Onscreen validations between samples and blocks were completed on the model. The onscreen validation process involved comparing block estimates and composite grades in cross-section and in plan.

17.11.3 Statistical Assessment of Grade Estimates Statistical assessment of the grade estimates included mean grade reproduction checks and swath plots. The grade comparisons are influenced by the method of high-grade treatment applied in the estimation and data sharing between domains, which make representative comparisons more difficult. Composites and blocks were compared within the oxide and sulphide domains for each model.

17.11.4 Mean Grade Reproduction The global estimated mean domain grade against 5 m composite data was checked as a means to validate reproduction of the mean grade of the data. This comparison is shown for all estimation domains in Table 17-21. Global statistical comparisons of the mean grade are influenced by varying drill hole density, data sharing between domains and high-grade treatment. These issues can sometimes distort the comparison. In particular, peripheral blocks representing extrapolated estimates can create apparent anomalies in the grade conformance. Differences observed in the global average grades may not be evident on swath comparisons, which is an advantage of using swath plots to assess conformance.

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Overall, reproduction of the data average is acceptable. Some apparent under and over-estimation of the domain average in the block model for some domains is likely to be an artefact of the issues described above. The swath validations do not show the same discrepancies and are probably a more representative indication of the average grade conformance.

Table 17-21: Composite vs. Block Model Grades

1 m Drill Hole Domain Variable Composites Ordinary Kriging OK/DH(%)(1) No. Mean Decl. Mean Var. No. Mean Var. Pigibo ...... AU 2232 0.66 0.63 1.66 51559.00 0.47 0.26 74.92 Pigiput ...... AU 9279 0.76 0.70 7.02 130129.00 0.65 0.63 92.86 Sor.Sth ...... AU 1455 0.39 0.36 1.77 29514.00 0.16 0.02 44.01 Pigibo ...... AG 1802 1.48 1.44 10.40 46172.00 1.38 1.47 95.83 Pigiput ...... AG 8011 1.66 1.56 29.54 129045.00 2.04 11.81 130.98 Sor.Sth ...... AG 1234 1.35 1.31 3.39 28246.00 1.17 0.92 89.02 Pigibo ...... SUL 1036 2.34 2.39 6.41 37963.00 3.03 4.42 126.74 Pigiput ...... SUL 4520 2.36 2.23 3.42 122942.00 2.60 2.21 116.43 Sor.Sth ...... SUL 891 3.12 3.22 2.52 15499.00 3.58 1.32 111.12

17.11.4.1 Swath Plot Validations Swath plots are used to assess the block model estimates for global bias; the estimates should have a close relationship to the drill hole composite data used for estimation. The process involved averaging both the blocks and samples in panels of 20 m (easting) by 20 m (northing) by 20 m (RL). The relationship between model and sample panel averages was assessed in the form of scatter plots and Q-Q plots. Conformance of the model and sample average grades was assessed in the form of easting, northing and RL swaths of the panel averages. Generally good agreement is observed between the data and block model Au mean grade for easting, northing and RL slices. QQ and scatter plots for the averaged sample data vs. block model results show deviation from the 45⍭ line, with overstatement of low grades and understatement of high grades by the block model. This is a natural expected behaviour of moving from sample size data to a much bigger volume as represented by Kriged models. Overall, the swath plot validation process shows that the block model estimates follow the trend of the 5 m composite grades across the deposit. From the perspective of conformance of the average model grade to the input data, Golder considers the model to be a satisfactory representation of the drill hole data used.

21APR201102594377 Figure 17-9: Scatter Plot, QQ plot and swath plots of Au in Pigiput

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17.12 Mineral Resource 17.12.1 Resource Classification Resources were classified in compliance with the Australasian Code for the Reporting of Identified Mineral Resources and Ore Reserves (JORC, 2004). The Au estimation has been classified as Measured, Indicated and Inferred based on data quality and density. The Measured Resource is confined to the oxide material at Pigiput. The Indicated Resource has a nominal data density of 50 m by 50 m and the Inferred Resource 100 m by 100 m. Material south of the interpreted mineralisation footwall (pig_fw.00t) and outside the Inferred Resource boundary is not classified. Due to the under sampling of the historical drilling, Ag and S are classified as Inferred.

17.12.2 Mineral Resource Statement The 2010 Resource Statement for Pigiput, Pigibo and Sorowar South deals with the Gold Mineral Resource for these deposits located on Simberi Island of the Tabar Island Group of Papua New Guinea. Allied Gold Limited (Allied) commissioned Golder Associates Pty Ltd (Golder) to combine and update the Pigiput and Pigibo deposit resource models on Simberi Island in June 2010. The combined model is based on the geological database as at 31 May 2010. The database includes RC and Diamond drill holes and some Diamond Core ‘tails’. Geological modelling of the deposit was undertaken by Carmel Grant (Resource Geologist) and Phil Davies (Chief Geologist) from Allied. Construction of the block model and grade estimation was undertaken by Stephen Godfrey (Associate, Principal Resource Geologist) and Marnie Mathews (Senior Resource Geologist) and reviewed by Richard Gaze (Principal). For this update, the oxide, transition and sulphide resource was modelled and estimated for gold (Au), silver (Ag) and sulphur (S). The Pigiput-Pigibo model has been based on the structural/geological controls interpreted by Allied. The Sorowar South domain extends into the existing Sorowar model. Drill sample data was composited to five metres and flagged using domain, geology, oxide, transition and sulphide wireframes. The flagged composites were used to estimate their corresponding geological/weathering domains in the block model. Grade estimations were done using Ordinary Kriging. High grade restraining was applied to restrict the influence of high grade composites. Dry Bulk Density values were applied to the model based on depth below surface. Independent regression equations were developed for the oxide, transition and sulphide zones in Pigibo and Pigiput. The Au estimation has been classified as Measured, Indicated and Inferred based on data quality and density. The Measured Resource is confined to the oxide material at Pigiput. The Indicated Resource has a nominal data density of 50 m by 50 m and the Inferred Resource 100 m by 100 m. Material south of the interpreted mineralisation footwall and outside the Inferred Resource boundary is not classified. Due to the under sampling of the historical drilling, Ag and S are classified as Inferred. The Pigiput/Pigibo/Sorowar South resource stated here is an in situ resource and has not been depleted for any mining activity. The tables below summarise the Mineral Resource by classification, geology and material type at a cut-off of 0.5 g/t Au.

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Table 17-22: Pigiput Model (PP_062010.bmf)—Measured and Indicated resource (0.5 g/t Au cut off)

Domain Geology Material kt Au g/t k oz Pigibo ...... Andesite oxide 7 0.74 0.2 transition 189 0.84 5 sulphide 1097 0.94 33 Andesite Total 1294 0.92 38 Tuff oxide 2952 1.11 106 transition 1996 1.23 79 sulphide 2759 1.17 104 Tuff Total 7707 1.16 289 Pigibo Total ...... 9001 1.13 327 Pigiput ...... Andesite oxide 520 0.81 14 transition 594 0.86 16 sulphide 22190 1.59 1134 Andesite Total 23304 1.55 1164 Tuff oxide 7415 0.93 222 transition 1356 0.91 39 sulphide 10373 1.34 448 Tuff Total 19144 1.15 710 Pigiput Total ...... 42448 1.37 1874 Grand Total ...... 51449 1.33 2201

Table 17-23: Pigiput Model (PP_062010.bmf)—Inferred resource (0.5 g/t Au cut off)

Domain Geology Material kt Au g/t k oz Pigibo ...... Andesite oxide 94 0.87 3 transition 454 0.94 14 sulphide 5737 0.92 169 Andesite Total 6285 0.92 185 Tuff oxide 508 0.89 15 transition 54 0.84 1 sulphide 484 1.22 19 Tuff Total 1047 1.04 35 Pigibo Total ...... 7332 0.93 220 Pigiput ...... Andesite oxide 278 0.7 6 transition 88 0.74 2 sulphide 23564 1.02 774 Andesite Total 23929 1.02 782 Tuff oxide 1731 0.81 45 transition 685 0.84 18 sulphide 5896 0.99 187 Tuff Total 8311 0.94 250 Pigiput Total ...... 32240 1 1033 Sorowar South ...... Andesite oxide — — transition — — sulphide 891 0.6 17 Andesite Total 891 0.6 17 Tuff oxide — — transition — — sulphide 64 0.55 1 Tuff Total 64 0.55 1 Sorowar South Total ...... 955 0.6 18 Grand Total ...... 40527 0.98 1271

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Table 17-24: Sorowar South Model (SS_062010.bmf)—Inferred resource (0.5 g/t Au cut off)

Domain Geology Material kt Au g/t k oz Pigiput ...... Andesite oxide — — transition — — sulphide 2791 0.9 81 Andesite Total 2791 0.9 81 Tuff oxide — — transition — — sulphide — — Tuff Total — — Pigiput Total ...... 2791 0.9 81 Sorowar South ...... Andesite oxide 682 0.82 18 transition 283 0.68 6 sulphide 4433 0.67 95 Andesite Total 5398 0.69 120 Tuff oxide — — transition — — sulphide — — Tuff Total — — Sorowar South Total ...... 5398 0.69 120 Grand Total ...... 8189 0.76 201

Notes: The Sorowar South model contains only Inferred resource. The Sorowar South domain of the Sorowar South model replaces 12.2 Mt at 0.86 g/t Au in the Sorowar resource (based on 0.5 g/t Au cut off in model sor_0902.bmf).

Table 17-25: Pigiput Model (PP_062010.bmf)—Inferred Ag and S resource (0.5 g/t Au cut off)

Domain Geology Material kt Ag ppm S ppm Pigibo ...... Andesite oxide 102 0.98 1.15 transition 643 1.42 2.80 sulphide 6835 1.91 3.54 Andesite Total 7579 1.86 3.45 Tuff oxide 3460 0.80 0.33 transition 2050 1.96 1.98 sulphide 3243 2.69 3.67 Tuff Total 8754 1.77 1.95 Pigibo Total ...... 16333 1.81 2.65 Pigiput ...... Andesite oxide 798 0.30 0.18 transition 682 0.47 0.78 sulphide 45753 5.21 3.56 Andesite Total 47233 5.06 3.47 Tuff oxide 9145 0.56 0.46 transition 2040 0.68 2.49 sulphide 16269 1.92 3.66 Tuff Total 27455 1.37 2.50 Pigiput Total ...... 74688 3.71 3.11 Sorowar South ...... Andesite oxide — — transition — — sulphide 891 2.77 3.93 Andesite Total 891 2.77 3.93 Tuff oxide — — transition — — sulphide 64 1.35 3.58 Tuff Total 64 1.35 3.58 Sorowar South Total ...... 955 2.67 3.91 Grand Total ...... 91976 3.36 3.04

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Table 17-26: Sorowar South Model (SS_062010.bmf)—Inferred Ag and S resource (0.5 g/t Au cut off)

Domain Geology Material kt Ag ppm S ppm Pigiput ...... Andesite oxide — — transition — — sulphide 2791.1 4.98 3.59 Andesite Total 2791.1 4.98 3.59 Tuff oxide — — transition — — sulphide — — Tuff Total — — Pigiput Total ...... 2791.1 4.98 3.59 Sorowar South ...... Andesite oxide 682.1 0.36 1.31 transition 282.7 0.76 2.62 sulphide 4432.8 2.67 3.64 Andesite Total 5397.7 2.28 3.29 Tuff oxide — — transition — — sulphide — — Tuff Total — — Sorowar South Total ...... 5397.7 2.28 3.29 Grand Total ...... 8188.7 3.2 3.4

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17.12.3 Pigicow and Bekou Resource Estimation 17.12.3.1 Databases The Pigicow and Bekou resources are both based on drill hole databases as at 23 October 2006.

21APR201102542982 Figure 17-10: Pigicow and Bekou—Resource model areas and drill hole locations

Table 17-27: Pigicow and Bekou—Drill Holes

Reverse RC/Diamond Pigicow Circulation Diamond Tail Total Number of holes ...... 123 n/a 2 125 Metres ...... 5175 n/a 450.4 5625.4

Reverse RC/Diamond Bekou Circulation Diamond Tail Total Number of holes ...... 68 3 n/a 71 Metres ...... 2381 508.05 n/a 2889.05

Table 17-28: Pigicow and Bekou—Azimuths of Angled holes

Azimuth Number of holes 350⍭ - 0⍭ ...... 19 30⍭ - 50⍭ ...... 12 180⍭ ...... 18 200⍭ - 230⍭ ...... 32 270⍭ ...... 2 Total ...... 83

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17.12.3.2 Exploratory Data Analysis 17.12.3.2.1 Composites 93% of the samples in the database are 1 m in length. After analysis a 3 m composite size was used for estimation, to minimise differences in support for all samples and moderating the sample variance whilst retaining sufficient numbers of samples for grade estimation. The 3 m length was also considered a compromise between smoothing of the original variability and maintaining sufficient resolution for the geological wireframes. The same 3 m composite length was used for the Bekou drilling.

17.12.3.2.1.1 Statistical Analysis The Bekou and Pigicow composites were summarised statically. Figure 17-11 illustrates the sample populations and shows the difference in grades between the oxide and sulphide domains which supports treating them separately during the interpolation of the block models. The high grade outliers for both deposits can be seen on the graphs also.

% Cumulative Probability Pigicow: Weighted Cumulative Probability Plot

21APR201102065355

% Cumulative Probability Bekou: Weighted Cumulative Probability Plot

21APR201101571925 Figure 17-11: Bekou and Pigicow Oxide Sulphide Comparison

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17.12.3.3 Assays Table 17-29 details the assays available in the database. Au is available for all composites Ag and As for most. For the Bekou and Pigicow resource only Au was estimated

Table 17-29: Bekou and Pigicow—Number of Assays per analyte

Au Ag As Cu Fe Mn Pb S Sb Zn Assays ...... 7894 7503 7501 4766 3964 4506 4766 4330 4672 4576 Percentage ...... 99.9% 95.0% 94.9% 60.3% 50.2% 57.0% 60.3% 54.8% 59.1% 57.9%

17.12.3.4 Geological Interpretation Mineralisation domains were interpreted and wireframed by Allied. Mineralisation follows the regional south-east to north-west trends and to a lesser extent the south-west to north-east trend. Pigicow and Bekou have been modelled as a series of subvertical sulphide bodies with an overlying sub-horizontal oxide component. Figure 17-12 illustrates the position of the Pigicow and Bekou mineralisation relative to the drilling at Pigicow, Bekou and the adjacent Samat.

21APR201102072360 Figure 17-12: Pigicow and Bekou Mineralisation (blue crosses mark drill hole collar locations) The Bekou and Pigicow mineralisation was interpreted and modelled in 3D by Allied Gold. For model construction and estimation Allied provided Golder with the mineralisation wireframe models summarised in Table 17-30 . Wireframe surfaces were also supplied for the base of oxide and top of sulphide. The topography wireframe was based on survey in November 2006.

Table 17-30: Bekou and Pigicow—mineralisation triangulations

Deposit Sulphide Oxide Bekou ...... 14 8 Pigicow ...... 38 8 The wireframe models were validated by Golder prior to incorporation into the resource models.

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17.12.3.5 Spatial Analysis Directional variography was undertaken to determine the directions of maximum continuity of mineralisation and provide input parameters for the kriging process. Poor directional variograms were produced for both Bekou and Pigicow. This is due to the dispersed nature of the mineralisation and drill density over the areas. Omni directional variograms were modelled to provide parameter for the estimation kriging.

17.12.3.6 Domaining During the block model construction and estimation the individual pods of oxide and sulphide mineralisation were treated as separate domains. Only samples within a pod of ore were used in the estimation of that pod.

17.12.3.7 Resource Block Model A geological block models for Pigicow and Bekou were constructed in Vulcan. The models were aligned to the local grid with an origin at 0 m north, 0 m East and an RL of 0 m. Offsets from the origin and block sizes are detailed in Table 17-31

Table 17-31: Model Dimensions

Model Extent Parent Cell Sub-Cell Model/Direction Offset Start Offset End (m) Size (m) Size (m) Bekou X...... 43700 44500 800 10 1 Y...... 207000 207400 400 10 1 Z...... ǁ60 170 230 5 1 Pigicow X...... 43450 44350 900 10 1 Y...... 207500 208300 800 10 1 Z...... ǁ160 230 390 5 1

17.12.3.8 Interpolation Plan The OK estimation was run in a three-pass kriging plan, the second and third passes using progressively larger search neighbourhoods to enable the estimation of blocks un-estimated on the first pass. A summary of parameters is provided in Table 17-32. Further explanation and details are as follows: • Sample weighting determined by variogram model parameters (kriging approach) for all variables, using unfolding to reference surfaces for each domain. • Block discretisation was set to 3 (X) by 3 (Y) by 2 (Z) to estimate block grades of 10 m by 10 m by 5 m parent size, using nominal 3 m composites. Sub-cells received the parent cell estimate. • A three-pass kriging plan was used; Pass 1 search—40 by 40 by 20 m; Pass 2 search ǁ80 by 80 by 16 m; Pass 3 search 160 by 160 by 80 m. Search dimensions were selected based on drilling density and configuration. • A minimum of 6 composites in total and a maximum of 4 composites per octant was used which equates to a maximum of 32 composites per estimate. Passes 2 and 3 used a minimum of 4 and 2 composites per octant respectively. • The effect of high-grade composites above designated thresholds was limited by applying spatial restraining of values within a search of 5.1 by 5.1 by 7.5 m.

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Table 17-32: Pigicow and Bekou Kriging Plan Parameters

Estimation Method Search Radius OK X radius (pass 1/2/3) ...... 40/80/160 Y radius (pass 1/2/3) ...... 40/80/160 Z radius (pass 1/2/3) ...... 20/40/80 Discretisation (x/y/z) ...... 3/3/2 Search type ...... Octant Minimum No. composites (pass 1/2/3) ...... 6/4/2 Maximum No. composites per octant (pass 1/2/3) ...... 4/4/4 Minimum No. composites per octant ...... 1 Maximum No. composites per hole ...... 5 Minimum No. of octants (pass 1/2/3) ...... 4/4/1 High-grade outlier composites were managed in the Pigicow and Bekou models using spatial restraining above grade thresholds. The high grade thresholds were initially chosen according to discontinuities in the cumulative probability plots for the respective estimation domains, and iteratively adjusted based on visual and statistical validation of the model against the drill hole data. The final thresholds used are summarised in Table 17-33.

Table 17-33: Summary of High-Grade Thresholds

Model Domains Threshold Bekou ...... Oxide 10 Bekou ...... Sulphide 10 Pigicow ...... Oxide 6 Pigicow ...... Sulphide 10

17.12.3.9 Bulk Densities Dry Bulk Density was assigned using a spherical function developed by Allied Gold. The function has a nugget of 1.3 t/m3 and a sill differential of 0.45 t/m3 at a range 35 m, i.e. at surface the bulk density is 1.3 and at 35 m below surface bulk density is 1.75. This was calculated with the following formulae:

21APR201102493510 and

21APR201102493685 Table 17-34 explains the variables used above.

Table 17-34: Pigicow and Bekou Details of Variables

Variable Name Description Value

co = 1.3, ...... Nugget Minimum SG—at surface 1 c = 0.45, ...... Sill differential c + co = Maximum SG 0.45 a = 35 ...... Range Depth at which maximum SG reached 35 h ...... Lag Depth below surface variable

17.12.3.10 Mineral Resource Classification Resources were classified in compliance with the Australasian Code for the Reporting of Identified Mineral Resources and Ore Reserves (JORC, 2004). The resource estimates have been classified based on data density, data quality, confidence in the geological interpretation and confidence in the estimation. The resources for Pigicow and Bekou are predominantly Inferred with small areas of closely drilled oxide material being classified as Indicated.

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17.12.3.11 Mineral Resource Tabulation Table 17-35: Pigicow—Mineral Resource—0.5 g/t Au cut off

Indicated Inferred Zone Kt Au Oz Kt Au Oz Oxide ...... 150 1.65 7,957 289 1.30 12,079 Transition ...... 0 105 1.29 4,355 Sulphide ...... 0 1,999 1.26 80,979 Total ...... 150 1.65 7,957 2393 1.27 97,413

Table 17-36: Bekou—Mineral Resource—0.5 g/t Au cut off

Indicated Inferred Zone kt g/t Au Oz kt Au Oz Oxide ...... 42 1.74 2,350 58 1.14 2,126 Transition ...... 6 1.17 226 48 1.16 1,790 Sulphide ...... 24 1.93 1,489 916 1.39 40,936 Total ...... 72 1.76 4,064 1022 1.37 44,852

17.12.3.12 Block Model Validation Statistical and visual assessment of the block model were undertaken to assess successful application of the various estimation passes and to ensure that as far as the data allowed, all blocks within ore domains were estimated and the model estimates considered acceptable.

Mean Grade Reproduction For the Pigicow and Bekou models the overall reproduction of the mean grade is acceptable. Some apparent under and over-estimation of the domain average in the block model for some domains is likely to be an artefact of the issues described above. The swath validations do not show the same discrepancies and are probably a more representative indication of the average grade conformance.

Swath Plot Validations Swath plots are used to assess the block model estimates for global bias; the estimates should have a close relationship to the drill hole composite data used for estimation. The process involved averaging both the blocks and samples in panels of 40 m (easting) by 40 m (northing) by 10 m (RL). The relationship between model and sample panel averages was assessed in the form of scatter plots and Q-Q plots. Conformance of the model and sample average grades was assessed in the form of easting, northing and RL swaths of the panel averages. Generally good agreement is observed between the data and block model au mean grade for easting, northing and RL slices. QQ and scatter plots for the averaged sample data vs. block model results show deviation from the 45⍭ line, with overstatement of low grades and understatement of high grades by the block model. This is a natural expected behaviour of moving from sample size data to a much bigger volume as represented by Kriged models. Overall, the swath plot validation process shows that the block model estimates follow the trend of the 3 m composite grades across the deposit. From the perspective of conformance of the average model grade to the input data, Golder considers the model to be a satisfactory representation of the drill hole data used (Figure 17-13 and Figure 17-14).

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Pigicow—Blocks vs Samples in 40m x 40m x 10m Panels Domain 1 to 8 (Oxide)

21APR201102080851 Figure 17-13: Pigibo—Block Model validation oxide swath plots

Bekou—Blocks vs Samples in 40m x 40m x 10m Panels Domain 16 to 22 (Oxide)

21APR201101574292 Figure 17-14: Bekou—Block Model validation oxide swath plots

17.12.4 Botlu Oxide Resource Estimation The following modelling description is adapted from the M. Binns report on his modelling of the deposit. Allied completed an updated resource estimation for the Botlu deposit in March 2011. This resource estimation was completed after the cut-off date for inclusion into this Report. The changes in the updated Mineral Resources are not considered to be material to the overall Simberi mineral inventory and therefore the resulting updated Mineral Resources at Botlu are not included in this report. The Botlu oxide resource block model was estimated using multiple indicator kriging between the topographic surface and an interpreted base-of-oxide surface. Most resource drilling was completed by 1996, but in 1997, several holes were drilled at the northern end of the oxide deposit, targeting IP geophysical anomalies. In summary, there is a thin (up to 10 m) blanket of oxidised material over most of Botlu. In one location in the north of the prospect, oxidation extends down to 80 m depth in an area of about 100 m by 150 m. Surface 5 m channel samples return grades up to 12 g/t gold, and define a horseshoe shaped area of gold mineralisation. Drilling in general intersected higher oxide gold grades near surface, decreasing in tenor with depth. In the south-east of the prospect, however, moderate to high-grade gold in unoxidised material occurs from near surface to 100 m depth.

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As in the other East Simberi prospects, at Botlu the oxide gold mineralisation is associated with highly fractured and altered porphyry and volcanoclastic lithologies. However, unlike the other prospects, quartz veining and silicification are common. Higher gold grades are associated with the silicification. The depth of oxidation is variable, from a few metres thick in parts of the south and south-east of the prospect, to about 80 m thick in the north. Thicker oxide development occupies an area of about 100 m by 150 m, and appears to have reasonably well defined boundaries to its east and north-west. The east boundary coincides with a shallow valley, a tributary to Botlu Creek, and the north-west boundary coincides with Botlu Creek itself. Both boundaries may reflect structural control, and the deeper oxidation may have taken place in fractured ground between the structures. The area of deep oxidation also coincides with a ridge, probably due to the presence of silica. About 90 surface 5 m channel samples over this immediate area average 1.9 g/t gold. Gold grades (in channel samples) progressively decrease to the south-west, and the host lithologies become finer grained, and ultimately become crudely bedded tuffs. Drilling within the deeply oxidised area shows that, on average, gold grades decrease with depth, though grade variability downhole is consistent with intersection of a series of steeply dipping mineralised zones. In the areas of shallow oxide development, in the south and south-east of the prospect, both surface channel sampling and drilling indicate that there are several small areas of moderate grade oxide gold mineralisation, immediately underlain by moderate grade sulphides. Past drilling by Kennecott intersected high-grade gold zones to about 100 m depth beneath this area. Additional drilling is required to better define and test the sulphide resources. As in the other prospects, the main primary control of gold mineralisation is likely to be steeply dipping fracture systems, in places associated with milled breccia dykes (diatremes). Higher grades are associated with quartz veining and silicification, and in some places with sulphide veining. Iron oxides on fractures, and crackle brecciation are common. The main information sources for interpretation of the oxide zone include: • Prospect topography, partly surveyed by CPS in 1996, with additional compass and chain data, and 1997 CPS drill hole and channel sample location data. • Gold assays from drill holes (Kennecott and Nord). • Gold assays from Nord 5 m channel samples. • Gold assays from Kennecott surface sampling (not used in block estimates). • Oxide, transition and sulphide coding downhole. Interpretation of mineralisation continuity on cross-sections and plan for the purpose of resource estimation concluded that the mineralisation was too complex at small scales for any higher-grade mineralised structures to be identified. Consequently the oxide material was defined as the volume confined by the topography, the interpreted base-of-oxide boundary, and a peripheral boundary based on either a local average grade cut-off or lack of data. For the purpose of this resource estimate, the definition of the interpreted structurally controlled margin on the east of the deeper oxide zone was improved by making the interpreted oxidised zone thinner to the east of the margin. Short and isolated (usually 1-2 m) transition or sulphide intersections were included within the oxide interpretation to avoid unnecessary complexity, but normally the base of the oxide zone was placed above the first appearance (downhole) of transition or sulphide material. In places, there were oxide intersections below the oxide boundary, probably in more deeply weathered structures, but these were not included in the oxide resource model.

17.12.4.1 Surveying There has been no specific surveying campaign at Botlu to establish a topographic model. However, a substantial amount of survey data does exist. All of the Kennecott hole collars were surveyed (by EDM) during Kennecott’s initial exploration programme, and most were confirmed by re-surveying. CPS Palanga surveyed every fifth Nord 5 m

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channel sample endpoint, and the northing and easting of all the other channel sample midpoints were determined by fitting compass/chain surveys of the sampling to the CPS survey. CPS Palanga produced a map showing 10 m contours based on their surveying and field observations, which is probably the best resolution that can be expected from their survey point density. Also, CPS Palanga produced surveyed road and track formation lines, with 3-D coordinates. All these data, along with other point data (e.g. control points) were used to form a topographic DTM.

17.12.4.2 The Database The total Botlu drill hole assay database consisted of 135 aircore or aircore/RC drill holes (total 8,565 m), with an additional 186 m of diamond tail, and 15 diamond drill holes (total 3,027 m). The drill hole traverse spacing was nominally 25-30 m, but very irregular due to the steep topography. The resource was estimated on the Simberi grid. The base of oxidation was interpreted on cross-sections 20 m apart (8010N to 8490N), and digitised on-screen, snapping onto drill holes where possible. A digital terrain model (DTM) of the base of oxidation surface was formed, as was one of the surface topography. The two surfaces were linked to form a solid model that enclosed all the potentially mineralised oxidised material. This model was used to identify drill assay data inside it, for use in variography and block grade estimation. Table 17-37 and Table 17-38 compare 2 m composite data from drill holes only, and from both drill holes and 5 m surface channel samples, all within or on the upper surface of the interpreted oxide model. There are a greater proportion of higher grades in the channel sample data than in the drill data, but at this prospect, there is a strong tendency for higher grades to occur near surface. There is also a clustering of surface data in higher-grade sections of the deposit, so these raw average grades will be biased.

Table 17-37: Botlu—2 m composite statistics—drill holes

Topcut Avg >0.5 Avg Median Min Max SD CV No cut ...... 1.02 0.66 0.00 19.30 1.40 1.38 1.47 Topcut to 7.9 g/t (99%) ...... 0.99 0.66 0.00 7.90 1.16 1.18 1.43 Topcut to 5.1 g/t (98%) ...... 0.95 0.66 0.00 5.10 0.97 1.02 1.36

Table 17-38: Botlu—5 m channel sample statistics

Topcut Avg >0.5 Avg Median Min Max SD CV No cut ...... 1.10 0.68 0.00 19.30 1.53 1.39 1.64 Topcut to 8.0 g/t (99%) ...... 1.06 0.68 0.00 8.00 1.29 1.21 1.58 Topcut to 5.3 g/t (98%) ...... 1.02 0.68 0.00 5.30 1.10 1.08 1.52 The full drill hole plus channel sample data set was used as input for block grade estimation, on the basis that the two data sets are statistically similar. However, only the drill hole composites were used to determine grade continuity.

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Figure 17-15 illustrates the Botlu sample population distribution for the Oxide horizon.

21APR201101580667 Figure 17-15: Botlu—Oxide Au cumulative frequency plot

17.12.4.3 Bulk Densities In December 1996, Nord drilled two diamond holes (BO012, BO013) at Botlu, both in the area of deep oxide development. In March 1997, Nord drilled another three diamond holes (BO014-16) in areas of both oxide and sulphide mineralisation. A total of 144 oxide and 201 sulphide bulk density determinations were made. As in the other prospects, there is an increase in oxide dry BD with depth, though there is more scatter. The results showed that bulk densities were generally higher than had been determined in the other prospects, probably due to silica content. In BO012, there were some lower BDs (around 1.2-1.5) in the vicinity of core loss, probably in a fracture zone. In BO013, there were some BDs around 2.0 associated with a near-surface sulphidic zone with oxide above and below it. Both these occurrences were discounted when estimating the relationship between oxide bulk density and depth below surface. Figure BO-4 shows the relationships between depth and bulk density for both oxide and sulphide samples. The variation of dry bulk densities with depth was modelled by the spherical function used for representing variograms. Using this, the dry BD is 1.25 at surface, and 1.9 at 35 m depth and below, with a progressive variation according to the spherical function in between. The spherical model parameters are nugget = 1.25, sill = 0.65, range = 35.

17.12.4.4 Variography For the full indicator estimates, nine cut-offs were selected which divided the drill hole 2 m composites data into class intervals that became smaller with higher grades. The lowest grade class represented 15.8% of the data and the highest class represented 3.4% of the data. Table 17-39 details the cut-offs used for the grade classes are listed below, along with class statistics.

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Table 17-39: Botlu—Grade class cut offs and statistics

From To Average Median % of Class % Cu % Cu % Cu % Cu Data 1...... 0.00 0.23 0.13 0.14 15.8 2...... 0.23 0.35 0.30 0.30 11.3 3...... 0.35 0.48 0.42 0.42 9.8 4...... 0.48 0.62 0.55 0.55 10.6 5...... 0.62 0.78 0.70 0.70 10.8 6...... 0.78 0.99 0.88 0.86 10.2 7...... 0.99 1.32 1.16 1.14 10.8 8...... 1.32 2.02 1.62 1.57 10.3 9...... 2.02 3.45 2.55 2.42 7.0 10 ...... 3.45 19.3 6.62 5.25 3.4 This table shows that for all classes except the highest, the class average is almost the same as the class median. This means that the average for these classes is robust, with no outliers. For the highest class, however, there is a significant difference between the average and the median, a consequence of the presence of a few exceptionally high-grade composites. Median values were used for the two highest classes in this estimate. A series of global and directional variograms established that there was a preferred directional continuity (maximum range) at 160⍭, with a minimum at 70⍭, for the median indicator variogram. This was supported by normal and log variograms. The same preferred directional continuity was also present at higher-grade cut-offs. At lower cut-offs, the mineralisation became isotropic. The data used for the variograms was derived from the oxide zone, including the south-east where there is some geological evidence for a north-north-east orientation of sulphide mineralisation beneath the thin oxide zone. However, exclusion of the data in this area had no effect on the variograms, probably because the zone is thin and the relative amount of data is small. Furthermore, variograms of the 5 m channel samples, which test only the near-surface oxide material, showed isotropic continuity supporting some gold remobilisation and homogenisation near surface. For the purpose of block estimation, continuity of gold grade in 2 m downhole oxide composites was established using indicator variograms at the 9 cut-offs in Table 17-40.

Table 17-40: Botlu—Indicator variogram cut offs and models

R1(DH) R1(160) R1(70) R2(DH) R2(160) R2(70) Cut-off g/t Au Co C1 m m m C2 m m m 0.23 ...... 0.32 0.18 9.0 11.0 11.0 0.50 70 140 140 0.35 ...... 0.32 0.26 10.0 11.0 11.0 0.42 70 100 100 0.48 ...... 0.32 0.30 10.0 14.0 10.0 0.38 55 80 80 0.62 ...... 0.32 0.32 12.0 14.0 8.0 0.36 35 70 35 0.78 ...... 0.32 0.32 10.0 15.0 7.0 0.36 33 50 23 0.99 ...... 0.32 0.34 8.0 14.0 6.0 0.34 30 47 20 1.32 ...... 0.32 0.35 7.5 12.0 6.0 0.33 20 45 20 2.02 ...... 0.32 0.35 5.0 10.0 6.0 0.33 17 44 20 3.45 ...... 0.32 0.35 4.5 8.0 6.0 0.33 15 40 20

Key: Co—Nugget variance; C—Variance of spherical model structure;

R(160), R(70)—Horizontal ranges; R(DH)—Downhole range

17.12.4.5 Block Model Estimation The block estimation was done in Simberi grid coordinates using a Surpac block model. The model extent was 8,170 m to 8,700 m east, 7,940 m to 8,510 m north, and 1,050 m to 1,250 m RL. Block size was 10 m by 10 by 5 m, sub-blocked to 5 m by 5 m by 2.5 m against topographic and base-of-oxide surfaces. This block size is consistent with the drill hole density, and the type of mineralisation being modelled.

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2 m downhole oxide drill composite data, and 5 m surface channel samples, were used. Bulk density was estimated for each block on the basis of depth below surface, using diamond drill core data.

17.12.4.6 Classification Classification into Measured, Indicated and Inferred Resources was done using proximity to source data, as Indicated by the average number of samples inside the search ellipsoid during a separate block estimation run for this purpose. Solid models enclosing a range of average sample numbers were made, and visually compared to drill density. Two models were selected to contain Measured and Indicated Resources, and edited to delete isolated and non-coherent segments. The average number of samples used for Measured Resources was 45, and 23 for Indicated Resources. Blocks estimated from fewer than three composites were not included in the model. As expected, Measured blocks were located in well-drilled, coherent and central portions of the deposit, and Inferred blocks were located around its margins.

17.12.4.7 Block Estimate Results At a cut-off of 0.5 g/t gold the model contains 1.67 million tonnes at 1.16 g/t gold, with an average bulk density of 1.59.

17.12.4.8 Block Estimate Validation Average grades of the 2 m composite and 5 m channel sample source data, and of blocks in the oxide block model, were compared in 10 m flitches. Figure 17-16 shows the results graphically. The average grades of the data are those remaining after a 10 g/t Au top cut (which removes a few outlier values). The grades of the blocks (10 m by 10 m by 5 m) result from indicator kriging for which the grade of the top class was reduced from the average 6.62 g/t to the median 5.25 g/t. Taking these factors into account, the agreement between the source data and the block grades is quite good for that part of the deposit with good data density. In areas of less data, the block model effectively averages the composite data. Note that there is a double peak in all the data on the graph. The RL range 1,120 m to 1,190 m relates to deeper oxide resource, while the range 1,190 m to 1,230 m corresponds to the thinner oxides in the south-east of the prospect.

BOTLU SOUTH OXIDE BLOCK MODEL DATA AND BLOCK GRADE COMPARISON

21APR201101581137 Figure 17-16: Botlu—Block model historical validation

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17.12.5 Botlu Sulphide Resource Estimation Resource tonnage inside nominal 1.0 g/t Au envelope. Average grade of 10 ǂ10 ǂ 5 m blocks estimated by ID from data inside envelope, cut at 98th percentile. A block grade model, inside a sulphide envelope interpreted from cross-sections, was estimated by inverse distance squared (ID) interpolation. Search parameters were 35 m isotropic. The block size used was 10 m North by 10 m East by 5 m RL, sub-blocked to 5 by 5 by 2.5 m against topographic, oxidation and grade boundaries. 2 m downhole drill composite data were used. Bulk density was taken to be 1.9 t/m3 (constant). The grade data are approximately log normally distributed. Two data sets were used, cut to the 99th and 98th percentiles. Table 17-41 details the 2 m Sulphide composite statistics for the 671 composite samples.

Table 17-41: Botlu—2-m Sulphide composite statistics.

Topcut Mean Median Min Max SD CV No cut ...... 2.22 1.18 0 115.5 5.64 2.54 Topcut to 22g/t ...... 2 1.18 0 22 2.7 1.35 Topcut to 9g/t ...... 1.86 1.18 0 9 1.89 1.02

Table 17-42: Botlu—Sulphide Block model statistics

Grade Grade Grade range Tonnes Grade (uncut) (cut 22) (cut 9) BD 0.0 - 1.0 g/t ...... 307,206 0.71 0.71 0.71 1.9 >1.0 g/t ...... 1,203,769 2.77 2.29 2.02 1.9 TOTAL ...... 1,510,975 2.35 1.97 1.76 1.9

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17.12.5.1 Authors Validation The author supervised the validation of the historical Botlu model. A statistical and visual assessment of the block model were undertaken to assess the successful application of the estimation and to ensure that as far as the data allowed, all blocks within ore domains were estimated and the model estimates were considered acceptable. The model was imported into the mining software package Vulcan and examined against the raw drilling data where an acceptable match was observed. Statistically, the mean grade of the data was preserved in the oxide and sulphide models. Figure 17-17and Figure 17-18 show swath plots across the deposit illustrating a good correlation between the composite data and the block models across the deposit.

Botlu—Blocks vs Samples in 20m x 20m x 5m Panels Domain: Oxide

21APR201101581897 Figure 17-17: Botlu—Oxide—Authors validation

Botlu—Blocks vs Samples in 20m x 20m x 5m Panels Domain: Sulphide

21APR201101583843 Figure 17-18: Botlu—Sulphide—Authors validation

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17.12.6 Samat Resource Estimation 17.12.7 Geological Interpretation Pre-2010 Previously at Samat definitive controls on mineralisation were not identified. The pattern of the thin layers of mineralisation is suggestive of mineralisation sources along discrete structural zones, with spreading by supergene processes and soil creep at surface, modified by local erosion. At Samat South, volcanoclastics and diatremes are closely associated with the mineralisation. An interpreted 085⍭ trending fault to the south marks a boundary between hydrothermally altered and unaltered rocks. Within the mineralised zone itself, structures are not sufficiently well defined to provide limits that can be used in resource estimation. At Samat North, differences between several twinned drill holes indicate structural complexity. The northern boundary of the mineralisation appears to lie along a NW-SE trending fault. A NE-SW trending fracture zone may pass through the mineralised zone and intersect the northern end of the Samat East structure. At Samat East, a thin layer of oxide mineralisation extends in a NNE direction, on the western slopes of a prominent ridge.

2010 Allied supplied Golder with a geological interpretation consisting of wireframe surfaces defining the weathering profiles and the structural controls on the mineralisation at Samat (Figure 17-19). Golder used the structural wireframe surfaces to construct wireframe solids defining the geological domains (Figure 17-20), which were used to flag the drill hole database and construct the geological block model. Allied also supplied Golder with the latest pit surveys.

21APR201102105043 Figure 17-19: Samat structural wireframe surfaces

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21APR201102112859 Figure 17-20: Samat geological domains, completed by Golder

17.13 Geological Block Model A geological block model for Samat (samat1007.bmf) was created in Vulcan software.

17.13.1 Block Model Parameters The parent block size of 10 by 10 by 10 m (X, Y and Z) reflects the average drill spacing in the deposit, which is predominantly 10 to 20 m between and on section. The minimum sub-blocking was defined as 5 by 5 by 5 m. The summary of block model parameters is provided in Table 17-43. The block model origins and extensions are shown in Figure 17-21.

Table 17-43: Block model origin and extensions

Parameter Easting Northing RL Parent Block Size (m) ...... 10 10 10 Sub Cell Block Size (m) ...... 5 5 5 Origin Minimum (m) ...... 44250 207100 ǁ250 Origin Maximum (m) ...... 44940 208050 300 Extension (m) ...... 690 950 550 Number of Cells: ...... 69 95 55

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21APR201102083872 Figure 17-21: Plan view showing the Samat model area (blue polygon) as well as the drill hole collar locations

17.13.2 Block Model Variables and Coding Variables with default values were assigned to each block. Table 17-44 summarises the variables created for the geological block model. Each block geological variable was then coded by the wireframe surfaces and solids and assigned a value according to the block’s position relative to the wireframe (Table 17-45). In the case of multiple wireframes, the sequential order in which the flagging occurred dictated the final block variable value.

Table 17-44: Block model variables

Variable Name Default Type Description OX ...... ǁ99 Integer Weathering Codes: 1 = oxide 2 = transition 3 = sulphide ESTDOM ...... ǁ99 Integer Estimation Domains: 1000s = Samat S A 2000s = Samat S B 3000s = Samat N A 4000s = Samat N B 5000s = Samat E MINED ...... 0 Integer Mined Code: 0 = in situ 1 = mined DOMAIN ...... 5000 Integer Geological Domains: 1000 = Samat S A 2000 = Samat S B 3000 = Samat N A 4000 = Samat N B 5000 = Samat E

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Table 17-45: Wireframes, flagging values and priorities applied to the geological block model

Projection Variable Priority Projection Direction Value Wireframe Wireframe Description OX ...... 1 none Z 1 10_sim_topo.00t Topographic surface OX ...... 2 none Z 2 10_samat_base_oxide.00t Base of complete oxidation surface OX ...... 3 none Z 3 10_samat_top_sulphide.00t Top of sulphide (base of transition) surface OX ...... 4 partial Z ǁ99 10_sim_topo.00t Topographic surface MINED ...... 1 partial Z 1 10_samat_north_east_pits.00t Combined North A Pit and East Pit MINED ...... 2 partial Z 1 10_samat_south_pit.00t South Pit MINED ...... 3 partial Z 1 10_samat_northb_pit.00t North B Pit MINED ...... 4 partial Z ǁ99 10_sim_topo.00t Topographic surface DOMAIN ...... 1 none Z 1000 10_samat_south_A.00t Samat South A solid DOMAIN ...... 2 none Z 2000 10_samat_south_B.00t Samat South B solid DOMAIN ...... 3 none Z 3000 10_samat_north_A.00t Samat North A solid DOMAIN ...... 4 none Z 4000 10_samat_north_B.00t Samat North B solid DOMAIN ...... 5 partial Z ǁ99 10_sim_topo.00t Topographic surface Estimation domains (ESTDOM) were calculated based on combinations of geological domain codes and oxidation codes. These are summarised in Table 17-46.

Table 17-46: Samat Estimation Domains

ESTDOM Description 1001 ...... Samat South A Oxidised 1002 ...... Samat South A transition 1003 ...... Samat South A sulphide 2001 ...... Samat South B Oxidised 2002 ...... Samat South B transition 2003 ...... Samat South B sulphide 3001 ...... Samat North A Oxidised 3002 ...... Samat North A transition 3003 ...... Samat North A sulphide 4001 ...... Samat North B Oxidised 4002 ...... Samat North B transition 4003 ...... Samat North B sulphide 5001 ...... Samat East Oxidised 5002 ...... Samat East transition 5003 ...... Samat East sulphide

17.14 Exploratory Data Analysis 17.14.1 Data Preparation and Compositing Raw samples in the validated Vulcan database sim16072010.tig.isis were flagged using the geological interpretation for DOMAIN and OX based on the centroid position of the raw sampling interval. The flagging of raw data was carried out using a process identical to that used to assign the variables to the geological block model. Therefore, the variable names, variable values and definitions and the wireframes names used are all identical. ESTDOM codes were calculated the same as for the block model. The nominal raw sampling interval in the Samat database is 1 m (around 90% of the Samat drill holes). A relatively small proportion (less than 10%) of intervals in the database range from 0.06 to 19.8 m in length. These predominantly reflect waste or low-grade regions of the deposit. Data was composited to 5 m lengths. The 5 m length was selected to reflect minimum sub-blocking height of 5 m. Compositing reduces the impact of high outlier values by reducing spikes 9 the variance) in the data.

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The compositing was broken on changes in the DOMAIN code, retaining majority codes for OX and ESTDOM. Gaps in the downhole sequence were treated as missing during compositing with no default values assigned to represent the missing sample intervals. Assay intervals that were not sampled for Au were excluded from compositing. The standard filtering routine (in Vulcan) was used to exclude from composite creation any null values representing non-sampled intervals for other variables. This routine excludes sample values >ǁ9999 ǉ 0.001.

17.14.2 Univariate Statistics A summary of the global statistics broken down by DOMAIN is presented in Table 17-47. Statistics broken down by ESTDOM is summarised in Table 17-48. All statistics are weighted by length.

Table 17-47: Statistics by DOMAIN

DOMAIN No.Obs. Minimum Maximum Mean Variance Coeff.Var Median Au 1000 ...... 718 0.01 21.48 0.27 0.97 3.68 0.05 2000 ...... 1877 0.01 67.64 1.73 15.01 2.24 0.43 3000 ...... 633 0.01 21.75 0.43 1.35 2.72 0.19 4000 ...... 1352 0.01 123.25 1.46 30.75 3.81 0.33 5000 ...... 1124 0.01 23.99 0.52 1.30 2.18 0.20 Global ...... 5704 0.01 123.25 1.11 13.22 3.29 0.23 Ag 1000 ...... 604 0.01 35.20 0.72 2.42 2.15 1.00 2000 ...... 1600 0.05 65.00 1.80 15.00 2.15 1.00 3000 ...... 538 0.05 90.00 1.02 15.76 3.88 1.00 4000 ...... 1184 0.10 146.00 2.52 89.46 3.75 1.00 5000 ...... 994 0.02 230.00 2.25 91.74 4.26 1.00 Global ...... 4920 0.01 230.00 1.85 47.35 3.72 1.00 S 1000 ...... 211 0.01 8.22 2.87 4.69 0.75 2.69 2000 ...... 197 0.01 9.54 2.83 4.85 0.78 3.09 3000 ...... 92 0.01 6.48 1.28 3.09 1.37 0.33 4000 ...... 181 0.01 7.19 2.64 2.76 0.63 2.54 5000 ...... 253 0.01 9.72 2.35 5.30 0.98 1.93 Global ...... 934 0.01 9.72 2.51 4.55 0.85 2.39

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Table 17-48: Statistics by ESTDOM

ESTDOM No.Obs. Minimum Maximum Mean Variance Coeff.Var Median Au 1001 ...... 75 0.01 15.89 0.94 4.53 2.28 0.21 1002 ...... 25 0.01 1.48 0.27 0.18 1.58 0.05 1003 ...... 618 0.01 21.48 0.19 0.50 3.80 0.05 2001 ...... 293 0.01 67.64 3.59 42.61 1.82 1.41 2002 ...... 115 0.01 27.05 2.21 18.16 1.93 0.45 2003 ...... 1469 0.01 54.32 1.31 8.19 2.18 0.35 3001 ...... 179 0.01 21.75 0.69 2.96 2.48 0.31 3002 ...... 38 0.01 14.49 0.81 5.28 2.84 0.28 3003 ...... 416 0.01 6.03 0.27 0.19 1.58 0.16 4001 ...... 241 0.02 21.08 2.07 11.79 1.66 0.52 4002 ...... 79 0.02 123.25 5.86 334.44 3.12 0.47 4003 ...... 1032 0.01 54.66 0.96 9.28 3.17 0.29 5001 ...... 434 0.01 23.99 0.68 2.53 2.34 0.23 5002 ...... 94 0.01 3.10 0.31 0.26 1.64 0.07 5003 ...... 596 0.01 6.83 0.44 0.48 1.59 0.19 Global ...... 5704 0.01 123.25 1.11 13.22 3.29 0.23 Ag 1001 ...... 66 0.05 35.20 1.40 19.98 3.19 1.00 1002 ...... 23 0.01 1.00 0.48 0.16 0.83 0.20 1003 ...... 515 0.05 4.20 0.65 0.21 0.71 1.00 2001 ...... 252 0.05 16.04 1.24 3.70 1.56 1.00 2002 ...... 95 0.05 14.00 1.27 3.55 1.49 1.00 2003 ...... 1253 0.05 65.00 1.96 18.09 2.17 1.00 3001 ...... 160 0.05 5.37 0.64 0.54 1.16 0.33 3002 ...... 32 0.12 3.56 1.00 0.61 0.78 1.00 3003 ...... 346 0.05 90.00 1.21 24.35 4.08 1.00 4001 ...... 208 0.10 31.00 1.79 11.70 1.91 1.00 4002 ...... 71 0.10 145.00 8.72 689.35 3.01 1.00 4003 ...... 905 0.10 146.00 2.20 56.16 3.42 1.00 5001 ...... 404 0.02 90.00 1.38 27.41 3.79 0.50 5002 ...... 86 0.08 70.00 3.03 96.11 3.24 1.00 5003 ...... 504 0.04 230.00 2.84 144.06 4.23 1.00 Global ...... 4920 0.01 230.00 1.85 47.35 3.72 1.00 S 1001 ...... 31 0.03 3.22 0.63 0.76 1.39 0.20 1002 ...... 15 0.01 3.89 1.97 1.31 0.58 1.63 1003 ...... 165 0.06 8.22 3.34 4.45 0.63 3.31 2001 ...... 44 0.01 4.50 0.57 0.76 1.53 0.20 2002 ...... 13 0.01 2.40 0.46 0.46 1.47 0.08 2003 ...... 140 0.01 9.54 3.81 3.43 0.49 3.89 3001 ...... 50 0.01 4.70 0.38 0.50 1.86 0.21 3002 ...... 7 0.01 6.48 1.14 4.80 1.92 0.20 3003 ...... 35 0.19 6.04 2.67 3.47 0.70 2.50 4001 ...... 41 0.01 4.04 0.89 0.96 1.10 0.42 4002 ...... 15 0.31 3.78 1.85 0.88 0.51 1.92 4003 ...... 125 0.38 7.19 3.33 2.02 0.43 3.12 5001 ...... 71 0.01 8.68 0.30 1.20 3.65 0.05 5002 ...... 34 0.01 7.41 0.76 2.17 1.93 0.30 5003 ...... 148 0.25 9.72 3.82 3.23 0.47 3.86 Global ...... 934 0.01 9.72 2.51 4.55 0.85 2.39 Golder also implemented data declustering on the drill holes. The declustered data was mainly used in validations of the grade estimation process against the drill hole data, to achieve more representative comparisons with the grade estimates.

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The declustering weights were calculated via a cell declustering technique which uses the moving window method. The window size was set to 40 by 40 by 5 m orientated at an azimuth of 340⍭ with a ǁ90⍭ dip, to match the overall mineralisation trend.

17.14.3 Grade Distribution Analysis The distributions of Au, Ag and S across the DOMAIN and ESTDOM domains were analysed using cumulative log-probability plots. This analysis was carried out to assess distribution behaviour across the domains and also to identify outliers and thresholds for potential spatial restraining of high-grades during estimation. Figure 17-22 displays cumulative log-probability plots of the Au distribution within each geological domain (DOMAIN) as overlays, for all weathering profiles combined. The distributions indicate clear differences in the grade distributions between the domains.

Samat Au Deposit: Weighted Cumulative Probability Plot

21APR201102025418 Figure 17-22: Log-probability plot of the Au distribution by DOMAIN Grade distributions by weathering profiles were also compared to assess for any global differences between in situ oxide, transition and sulphide material. Figure 17-23 to Figure 17-27 show examples of log-probability plots for Au in each geological domain with the in situ oxide, transition and sulphide distributions compared as overlays. The distributions also highlight clear differences in grade between the weathering profiles in each geological domain.

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Samat Au Deposit: Weighted Cumulative Probability Plot

21APR201102115917 Figure 17-23: Cumulative probability plots for Samat South A by ESTDOM

Samat Au Deposit: Weighted Cumulative Probability Plot

21APR201102122639 Figure 17-24: Cumulative probability plots for Samat South B by ESTDOM

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Samat Au Deposit: Weighted Cumulative Probability Plot

21APR201102043446 Figure 17-25: Cumulative probability plots for Samat North A by ESTDOM

Samat Au Deposit: Weighted Cumulative Probability Plot

21APR201102051684 Figure 17-26: Cumulative probability plots for Samat North B by ESTDOM

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Samat Au Deposit: Weighted Cumulative Probability Plot

21APR201101595067 Figure 17-27: Cumulative probability plots for Samat East by ESTDOM This process was repeated for Ag and S. Ag has similar differences in grade distributions across the domains as Au, however, the probability plots for S in sulphide material (Figure 17-28) shows that the grade distributions in all geological domain are similar. Based on the limited number of samples of S in transition material and on the comparison of S in sulphide material (above), the decision was made to combined S for all transition and sulphide material irrespective of geological domain or weathering profile.

% Cumulative Probability Samat Au Deposit: Weighted Cumulative Probability Plot

21APR201101592095 Figure 17-28: Cumulative probability plots for S in sulphide material by DOMAIN (ESTDOMs ending in 3)

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17.15 Variographic Analysis 17.15.1 Variography Objectives and Approach Variography was undertaken to model the spatial variability of the Au, Ag and S mineralisation. The objectives of the variography were to: • establish the directions of major grade continuity for each domain • quantify spatial continuity (variability, anisotropy and overall continuity), and • provide variogram model parameters for use in geostatistical grade interpolation.

17.15.2 Variography Domains Variography focused on the ESTDOM combinations are summarised in Table 17-49. Each variography domain was treated as a global unit, to derive global variogram models with good short and long-scale variogram definition.

Table 17-49: Variography domains

ESTDOM Combination Description 1002/1003 (Au and Ag) ...... Samat South A transition and sulphide material 2002/2003 (Au and Ag) ...... Samat South B transition and sulphide material 3002/3003 (Au and Ag) ...... Samat North A transition and sulphide material 4002/4003 (Au and Ag) ...... Samat North B transition and sulphide material 5002/5003 (Au and Ag) ...... Samat East transition and sulphide material OX = 1 (Au, Ag and S) ...... All oxide material OX = 2/3 (S) ...... All transition and sulphide material for S

17.15.3 Summary of Variogram Models Table 17-50 shows the orientations of mineralisation continuity that were identified and modelled. The ‘‘separation’’ is the angle between the major and semi-major vectors. The ‘‘rotation’’ applies to the semi-major axis; it is the angle required to rotate the search ellipsoid around the major axis vector to align the ellipsoid with the interpreted resultant plane for grade interpolation.

Table 17-50: Summary of Variogram Continuity Orientations

Semi-Major Resultant Major & Rotation Major Axis Axis Plane Semi-Major Angles Plunge/ Dip/Dip Separation Domain Plunge/Direction Direction Direction Angle R1/R2/R3 1002/1003 (Au and Ag) ...... 0 ង 120 70 ង 030 30 ង 060 90 0/120/30 2002/2003 (Au and Ag) ...... 0 ង 100 60 ង 010 10 ង 060 90 0/100/10 3002/3003 (Au and Ag) ...... 0 ង 135 70 ង 220 20 ង 070 90 0/130/20 4002/4003 (Au and Ag) ...... 0 ង 080 20 ង 170 70 ង 020 90 0/080/70 5002/5003 (Au and Ag) ...... 0 ង 130 70 ង 220 20 ង 070 90 0/130/20 OX = 1 (Au, Ag and S) ...... 0 ង 150 0 ង 240 0 ង 000 90 0/150/0 OX = 2/3 (S) ...... 0 ង 160 0 ង 250 0 ង 000 90 0/160/0

KEY: R1/R2/R3 Search orientations (conventional left hand rule) R1 = azimuth rotation clockwise from north R2 = plunge along R1 direction (+ve = up, -ve = down) R3 = dip rotation around R1-R2 axis (+ve = anticlockwise, -ve = clockwise)

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As an example, Figure 17-29 illustrates the Au variogram models for Samat North A transition and sulphide material (ESTDOMs 3002/3003).

21APR201103055270 Figure 17-29: Variogram models for Samat North A transition and sulphide material (ESTDOMs 3002/3003)

17.15.4 Grade Interpolation Strategy Grade estimation of the Samat deposit was carried out using the geostatistical method of Ordinary Kriging (OK) using Vulcan. All variables were interpolated by OK. The OK method used estimation parameters defined by the variography. The estimation was performed by oxide and transitional/ sulphide zone according to the respective wireframes. Au, Ag and S grades were estimated by OK within all domains. The geological block model used a parent block size of 10 by 10 by 10 m for blocking purposes with sub-blocks set as 5 by 5 by 5 m. For the Samat drilling density the parent block size is reasonable to ensure local estimation quality and reduce conditional bias (Figure 17-21). Un-estimated blocks were assigned default grade values. These default values were the mean domain grade from the estimated blocks. Default values pass was identified as pass 4. The interpolated Vulcan block model was named samat1007_OK.bmf.

17.15.5 Kriging Plan The OK estimation was run in a three-pass kriging plan, the latter passes using progressively larger search neighbourhoods to enable the estimation of blocks un-estimated on the first pass. Further explanation and details are as follows: • Sample weighting determined by variogram model parameters (kriging approach) for all variables. • Block discretisation was set to 5 (X) by 5 (Y) by 2 (Z) to estimate block grades of 10 m by 10 m by 10 m parent blocks, using nominal 5 m composites. Sub-cells of 5 m by 5 m by 5 m received the parent cell estimate.

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• A three-pass kriging plan was used; Pass 1 search of ǁ40 by 40 by 10 m; Pass 2 search of 8 by 80 by 20 m and a third of 120 by 12 by 20 m. Search dimensions were selected based on drilling density and configuration. The Z direction was limited to restrict grade from estimating far beyond the last sample. • A minimum of two composites using an octant based search where a maximum of 2 samples per octant were allowed equating to a maximum of 16 composites per estimate. Pass 2 used a minimum of four and two composites and pass 3 one and one respectively. • Any remaining un-estimated blocks were assigned the average value from the kriged estimates and an estimation pass value of 4. • Spatial restraining was used to limit the influence of outlier high grades for all estimations. A 5.1 by 5.1 by 5.1 m search was used for the restraint effectively limiting the outlier high grades to one block in the model. Table 17-53 details the high grades restraint values used. Table 17-51, Table 17-52 and Table 17-53 detail the kriging parameters used in the Samat estimation.

Table 17-51: Search radius and ellipsoid orientation by pass according to estimation domain

Orientation Ellipsoid radii (m) Azimuth/Plunge pass1 pass2 pass3 Domain Dip (R1/R2/R3) X Y Z X Y Z X Y Z 1002/1003 (Au and Ag) ...... 0/120/30 40 40 10 80 80 20 120 120 20 2002/2003 (Au and Ag) ...... 0/100/10 40 40 10 80 80 20 120 120 20 3002/3003 (Au and Ag) ...... 0/130/20 40 40 10 80 80 20 120 120 20 4002/4003 (Au and Ag) ...... 0/080/70 40 40 10 80 80 20 120 120 20 5002/5003 (Au and Ag) ...... 0/130/20 40 40 10 80 80 20 120 120 20 oxide (Au, Ag and S) ...... 0/150/0 40 40 10 80 80 20 120 120 20 S (transition/sulphide) ...... 0/160/0 40 40 10 80 80 20 120 120 20

Table 17-52: Samat Kriging Plan Parameters

Parameter Values Discretisation (X/Y/Z) ...... 5/5/2 Search type ...... Octant search Minimum No. samples (Pass 1/2/3) ...... 4/4/1 Maximum No. samples ...... 32 (4 per octant)

Table 17-53: Samat high grade restraining thresholds by estimation domain

Domain Threshold Au Threshold Ag Threshold S 1002/1003 (Au and Ag) ...... 999 999 — 2002/2003 (Au and Ag) ...... 13 25 — 3002/3003 (Au and Ag) ...... 999 999 — 4002/4003 (Au and Ag) ...... 12 30 — 5002/5003 (Au and Ag) ...... 999 20 — oxide (Au, Ag and S) ...... 18 17 999 S (transition/sulphide) ...... — — 999

999 = no high grade threshold

17.16 Validation of Grade Estimates An on-screen validation between samples and blocks was completed on the model. The estimated block model was also validated for conformance of the block average grades against the drill hole data using swath plots and reproduction of the declustered point support (5 m composite) data distribution in the kriged model

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17.16.1 Visual Assessment of Grade Estimates The on-screen validation process involved comparing block average grade estimates and composite grades in cross-section and in plan view for each modelled domain. The inspection showed a good correlation between the estimated blocks and the drill hole data.

17.16.2 Global Statistical Validation The global estimated mean domain grade against 5 m composite data was checked as a means to validate reproduction of the mean grade of the data. This comparison is shown for all estimation domains in Table 17-54. Global statistical comparisons of the mean grade are influenced by varying drill hole density, data sharing between domains and high-grade treatment. These issues can sometimes distort the comparison. In particular, peripheral blocks representing extrapolated estimates can create apparent anomalies in the grade conformance. Differences observed in the global average grades may not be evident on swath comparisons, which is an advantage of using swath plots to assess conformance. Overall, reproduction of the data average is acceptable to poor in places. Some apparent under and over-estimation of the domain average in the block model for some domains is likely to be an artefact of the issues described above. The swath validations do not show the same discrepancies and are probably a more representative indication of the average grade conformance.

Table 17-54: Au—Composite Grades vs. Block Model

Domain 5 m Composites Block Model Average Variance No. Obs Average Variance No. Obs Average Variance % Difference ADJ Ratio 1000 ...... 643 0.19 0.49 24489 0.21 0.14 109.6% 0.286 2000 ...... 1584 1.38 8.99 17102 0.50 0.56 36.4% 0.062 3000 ...... 454 0.32 0.65 14602 0.25 0.08 79.6% 0.119 4000 ...... 1111 1.32 34.81 13850 0.31 0.35 23.2% 0.010 5000 ...... 690 0.42 0.45 24090 0.26 0.07 61.3% 0.152

17.16.3 Swath Plot Validation Swath plots are used to assess the block model estimates for global bias; the estimates should have a close relationship to the drill hole composite data used for estimation. The plots are useful for assessing average grade conformance, and also to detect any obvious interpolation issues. The relationship between model and sample panel averages was assessed in the form of scatter plot and Q-Q plot. This allows some assessment of the smoothing effect of the interpolation to be made. General swath plots were generated for lodes and supergene mineralisation. The process involved averaging both the blocks and samples in panels of 20 m by 20 m by 20 m RL. Conformance of the model and sample average grades was assessed in the form of easting, northing and RL swaths of the panel averages. Figure 17-30 illustrates the scatter and Q-Q plots as well as the swath plots along easting, northing and vertical direction for Au in the oxide material at Samat. Generally good agreement was observed between the drill hole data and block model grades, indicating that in general the model has reproduced the local average grades of the drilling data with no obvious global bias. The block model grade appears lower/higher than the drill hole grade in places which is likely a function of the declustering effect of the kriging, and the high grade restraining used. The Q-Q plot of block model and composite panel averages indicates the smoothing effect of the interpolation, which in this case seems to affect the high-grade end of the distribution where the block model understates the Au grades. This reflects the effect of outliers which were treated for estimation purposes. This smoothing effect is an expected behaviour of moving from sample size data to a bigger volume as represented by kriged models. The scatter plot shows deviation from the 45⍭ line, which is normal. Generally, the graphs show good conformance (see angular coefficient).

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Overall, the swath plot validation process shows that the block model grade estimates show acceptable conformance with the drill hole data.

21APR201102591141 Figure 17-30: Swath Plot validation for oxide Au—Samat

17.17 Bulk Density Dry Bulk Density was assigned using a spherical function of depth below surface developed by Allied Gold. The function was developed from empirical data in the form of core density measurements across the deposit. The function has a nugget of 1.3502 g/cc and a sill differential of 0.46 g/cc at a range 45 m below topographic surface and was applied to the oxide and transition domains only, i.e. at surface the bulk density is 1.3502 and at 45 m below surface bulk density is 1.81. This was calculated with the following formulae:

21APR201102493510 and

21APR201102493685 Table 17-55 explains the variables used above.

Table 17-55: Details of Variables used in the spherical bulk density model

Variable Name Description Value

co ...... Nugget Minimum SG—at surface 1.3502 c...... Sill differential c + co = Maximum SG 0.46 a...... Range Depth at which maximum SG reached 45 h ...... Lag Depth below surface variable For the sulphide domain a regression against depth was applied:

Dry Bulk Density(sulphide) = (0.0024 * depth below surface) + 1.81 The application of this regression at depth should be critically reviewed in future models as it will be overestimating density at depth.

17.18 Resource Classification Resources were classified in compliance with the Australasian Code for the Reporting of Identified Mineral Resources and Ore Reserves (JORC, 2004).

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The Au estimation has been classified as Indicated and Inferred based on data quality and density. The Indicated Resource has a nominal data density of 20 m by 10 m and the Inferred Resource 30-40 m by 20 m. Due to the under sampling of the historical drilling, Ag and S are classified as Inferred.

17.19 Resource Statement The tables below summarise the depleted Mineral Resources by classification and material type at a 0.5 g/t Au cut-off grade (model samat1007_OK.bmf). The model has been depleted to the current mining surfaces: • 10_samat_east_pit.00t • 10_samat_north_east_pits.00t • 10_samat_northb_pit.00t • 10_samat_south_pit.00t • adroa_june2008.00t. Depletion used the above mining surfaces to flag the in situ blocks as mined allowing reporting of in situ, depleted and mined tonnes and grade from the model. In order to update the Mineral Resources to the end of December 2010, the Samat North A and Samat South A figures in Table 17-56 have been further depleted by reconciled actual production figures for November and December 2010. No mining occurred in the other Samat areas during these two months.

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Table 17-56: Samat Model—Depleted Mineral Resources for Au, 0.5 g/t Au cut-off By Domain

Domain Classification Material KTonnes Au g/t Au KOz Samat East ...... Inferred oxide 402.1 1.13 14.6 sulphide 3499.7 0.78 88.3 transition 82.7 0.78 2.1 Inferred Total 3984.5 0.82 105 Samat North A ...... Indicated oxide 114.3 0.78 2.9 sulphide 358.9 0.81 9.4 transition 43.3 1.29 1.8 Indicated Total 516.5 0.84 14.1 Inferred oxide 115.1 0.85 3.1 sulphide 1080.6 0.86 29.7 transition 10.6 1.26 0.4 Inferred Total 1206.3 0.86 33.2 Samat North B ...... Indicated oxide 117.1 0.87 3.3 sulphide 1900.2 1.22 74.5 transition 51.9 2.86 4.8 Indicated Total 2069.2 1.24 82.6 Inferred oxide 119.1 0.75 2.9 sulphide 1048.3 0.73 24.6 transition 20.8 0.78 0.5 Inferred Total 1188.2 0.73 28 Samat South A ...... Indicated oxide 17.4 1.96 1.1 sulphide 18.9 1.01 0.6 transition 5.0 0.98 0.2 Indicated Total 41.3 1.41 1.9 Inferred oxide 161.1 1.28 6.6 sulphide 1730.8 0.97 53.9 transition 8.5 0.77 0.2 Inferred Total 1900.4 1.00 60.7 Samat South B ...... Indicated oxide 50.2 2.94 4.7 sulphide 1696.1 1.76 96.1 transition 51.2 2.03 3.3 Indicated Total 1797.5 1.80 104.1 Inferred oxide 165.9 1.51 8.1 sulphide 3356.3 1.07 115.4 transition 21.8 0.99 0.7 Inferred Total 3544 1.09 124.2

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Table 17-57: Samat Model—Depleted Mineral Resources for Au, 0.5 g/t Au cut-off by Classification

Classification Material KTonnes Au g/t Au KOz Indicated ...... oxide 299.0 1.18 13.4 sulphide 3974.1 1.41 180.6 transition 151.4 2.07 10.1 Indicated Total ...... 4424.46 1.42 204.1 Inferred ...... oxide 963.3 1.14 35.3 sulphide 10715.7 0.91 311.9 transition 144.5 0.85 3.9 Inferred Total ...... 11823.4 0.92 351.1

Table 17-58: Samat Model—Depleted Mineral Resources for Au, 0.5 g/t Au cut-off by Material type

Material Classification KTonnes Au g/t Au KOz oxide ...... Indicated 299.0 1.25 12.0 Inferred 963.3 1.14 35.3 sulphide ...... Indicated 3974.1 1.41 180.6 Inferred 10715.7 0.91 311.9 transition ...... Indicated 151.5 2.07 10.1 Inferred 144.5 0.85 3.9

Table 17-59: Samat Model—Depleted Mineral Resources for Ag and S, 0.5 g/t Au cut-off By Domain

Domain Material Tonnes Ag g/t Ag Oz S ppm* Samat East ...... oxide 402.1 1.47 19.0 0.48 sulphide 3462.5 2.93 325.9 3.36 transition 82.7 2.59 6.9 3.07 Samat North A ...... oxide 229.4 0.67 6.0 0.43 sulphide 1435.3 2.11 97.2 2.82 transition 53.9 1.11 1.9 1.27 Samat North B ...... oxide 236.2 1.42 10.8 0.77 sulphide 2948.6 2.29 217.2 2.86 transition 72.7 3.67 8.6 2.61 Samat South A ...... oxide 178.5 1.59 9.3 0.74 sulphide 1682.3 0.37 20.2 3.60 transition 13.6 0.59 0.3 4.46 Samat South B ...... oxide 216.1 1.76 12.2 0.53 sulphide 5051.8 2.55 414.5 3.10 transition 73.1 1.62 3.8 3.32

Table 17-60: Samat Model—Depleted Mineral Resources for Ag and S, 0.5 g/t Au cut-off by Material type

Material KTonnes Ag g/t Ag KOz S ppm* oxide ...... 1262.3 1.35 57.3 0.57 sulphide ...... 14580.5 2.29 1075.0 3.16 transition ...... 296.0 2.25 21.5 2.71

* S has not been estimated into all blocks due to the inconsistent assay suites for samples.

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17.20 Mineral Reserves Section 17.20 has been prepared by Golder Associates under the supervision of John Battista, Principal Mining Engineer. John Battista of Golder, Perth, Western Australia is responsible for the development of the Mineral Reserves. • Mineral Reserves for the Botlu South deposit are based on historical reserves from a 2005 Optimised Feasibility Study, depleted by mining up to the end of May 2009. No further mining occurred at Botlu South between May 2009 and 1 January 2011. • Mineral Reserves for the Sorowar deposit are based on a 2009 Technical Report, with reserves depleted by mining up to 1 January 2011. • Mineral Reserves for the Pigiput, Pigibo and Samat deposits are based on a 2010 Technical Report, with reserves depleted by mining up to 1 January 2011. All Technical Reports were completed by Golder. The original Mineral Reserve estimates are prepared in accordance with JORC standards. The JORC Proven and Probable Ore Reserves categories have been directly transferred to Proven and Probable Mineral Reserves as prescribed by National Instrument 43-101. The pit designs from which the Mineral Reserves estimates are derived were based on Lerchs- Grossmann pit optimisations using various gold prices, costs and other technical parameters, as outlined in Table 17-61.

Table 17-61: Pit Optimisation Parameters

Technical Study 2005 2010 2009 2009 Deposit ...... Botlu South Samat Sorowar Pigiput/Pigibo Mining Method ...... Selective Selective Selective Selective Gold Price (USD/oz) ...... 350 1000 750 1000 Waste Mining Cost (AUD/tonne) ..... 3.98 Ox – 4.00 Oxide – 4.00 Ox – 4.00 Tr – 4.00 Trans – 4.00 Tr – 4.00 Pri – 5.00 Primary – 5.00 Pri – 5.00 Ore Mining Cost (AUD/tonne) ...... 3.98 Ox – 4.00 Oxide – 4.00 Ox – 4.00 Tr – 4.00 Trans – 4.00 Tr – 4.00 Pri – 5.00 Primary – 5.00 Pri – 5.00 Ox – Processing Cost (AUD/tonne) ...... 10.36 12.96 Oxide – 14.00 Ox – 12.96 Tr – 12.96 Trans – 14.00 Tr – 12.96 Pri – 35.65 Primary – 14.00 Pri – 35.65 Au Recovery (%) ...... Ox – 89 Oxide – 86.5 Ox – 89 Oxide – 92.2 Tr – 71.8 Tr – 71.8 Tr – 71.8 Pri – 81 Pri – 65.6 Pri – 81 Slope Angles ...... 45 47 47 Oxide – 35 Pri – 47 Royalty (%) ...... 2.0 2.0 2.0 2.0 Discount Rate (10%) ...... 10 10 10 10 There is some allowance for dilution inherent within the block modelling process for all of the models and no additional dilution or mining recovery factors used in the optimisation process. Golder has used Whittle Four-Xȶ optimisation and Maptek Vulcanȶ software with mine production scheduling and cost estimation completed using a Microsoft Excel spreadsheet. The mining methodology is a conventional ‘‘selective mining’’ or ‘‘selective mode’’ approach, where material above a nominated cut-off grade is fed to the mill and material below the nominated cut-off grade is sent to waste dumps.

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Table 17-62: Bulk Mining Pits—Theoretical Au Cut-off Grades

Oxide Transitional Primary Deposit (g/t Au) (g/t Au) (g/t Au) Samat East ...... 0.69 2.05 n/a Samat South ...... 0.71 2.05 n/a Samat North ...... 0.67 2.05 n/a Botlu South ...... 0.91 n/a For the selective mode optimisations, the cut-off grades used are as summarised in Table 17-63.

Table 17-63: Selective Mining Pits—Theoretical Au Cut-off Grades

Oxide Transitional Primary Deposit (g/t Au) (g/t Au) (g/t Au) Sorowar ...... 0.51 0.62 0.68 Pigiput ...... 0.37 0.46 1.12 Pigibo ...... 0.37 0.46 1.12 Samat North A ...... 0.37 0.46 1.12 Samat North B ...... 0.37 0.46 1.12 Samat South ...... 0.37 0.46 1.12 Botlu South ...... 0.91 n/a The cut-off grade for Primary material at Pigiput, Pigibo and Samat assumes that a new sulphide processing circuit will be installed on Simberi Island in future. The technical work on this processing path is currently at the PFS stage and is sufficiently advanced to permit the inclusion of the Pigiput, Pigibo and Samat sulphide material in Mineral Reserves Estimates. The pit optimisation runs on which the Mineral Reserves are based did not consider material in the Inferred resource category and hence the pit limits are not driven by any Inferred resources. However, the pit designs resulting from these optimisations do include some Inferred class material and this is reported separately from the Mineral Reserves. Table 17-64 shows the Proven and Probable Mineral Reserves and the Inferred Resources contained within the various designed pits. Table 17-65 shows the Mineral Reserves and the Inferred Resources within the pit designs, categorised by Material Type (Oxide, Transitional and Primary). The Mineral Reserves are stated as at 1 January 2011.

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Table 17-64: Mineral Reserves within Design Pits

Proven Probable Total Ore Pit Mt Au g/t koz Mt Au g/t koz Mt Au g/t koz Sorowar Oxide ...... 6.03 1.23 238 5.40 1.18 205 11.43 1.21 443 Transition ...... 0.55 1.08 19 0.52 1.29 22 1.07 1.18 41 Sulphide ...... 0.38 1.10 13 0.74 1.49 35 1.12 1.36 49 Sorowar Total ...... 6.96 1.21 271 6.66 1.22 262 13.62 1.22 533 Pigiput Oxide ...... 3.94 0.73 92 5.35 0.82 141 9.42 0.78 233 Transition ...... 1.67 0.86 46 1.67 0.86 46 Sulphide ...... 12.51 2.39 961 12.51 2.39 961 Pigiput Total ...... 3.94 0.73 92 19.53 1.83 1148 23.47 1.64 1241 Pigibo Oxide ...... 3.43 1.00 110 3.43 1.00 110 Transition ...... 1.65 1.21 64 1.65 1.21 64 Sulphide ...... 0.43 2.04 28 0.43 2.04 28 Pigibo Total ...... 5.51 1.14 203 5.51 1.14 203 Samat North A Oxide ...... 0.07 0.70 2 0.07 0.70 2 Transition ...... Sulphide ...... Samat North A Total ...... 0.07 0.70 2 0.07 0.70 2 Samat North B Oxide ...... 0.12 0.79 3 0.12 0.79 3 Transition ...... 0.05 3.61 6 0.05 3.61 6 Sulphide ...... 0.33 2.28 24 0.33 2.28 24 Samat North B Total ...... 0.50 2.06 33 0.50 2.06 33 Samat South Oxide ...... 0.08 2.37 6 0.08 2.37 6 Transition ...... 0.05 2.16 3 0.05 2.16 3 Sulphide ...... 0.68 2.43 53 0.68 2.43 53 Samat South Total ...... 0.81 2.41 62 0.81 2.41 62 Botlu South Oxide ...... 0.74 1.35 32 0.12 1.61 6 0.86 1.39 38 Transition ...... Sulphide ...... Botlu South Total ...... 0.74 1.35 32 0.12 1.61 6 0.86 1.39 38 Total All Pits Oxide ...... 10.71 1.05 363 14.57 1.01 473 25.28 1.03 836 Transition ...... 0.55 1.08 19 3.94 1.11 141 4.49 1.11 160 Sulphide ...... 0.38 1.10 13 14.69 2.33 1102 15.07 2.30 1116 Total All Pits ...... 11.64 1.06 395 33.20 1.61 1716 44.84 1.46 2112

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Table 17-65: Mineral Reserve by Material Type as at 1 January 2011

Oxide Transition Sulphide Total Ore Pit Mt Au g/t koz Mt Au g/t koz Mt Au g/t koz Mt Au g/t koz Sorowar Proven ...... 6.03 1.23 238 0.55 1.08 19 0.38 1.10 13 6.96 1.18 271 Probable ...... 5.40 1.18 205 0.52 1.29 22 0.74 1.49 35 6.66 1.22 262 Sorowar Total ...... 11.43 1.21 443 1.07 1.18 41 1.12 1.36 49 13.62 1.20 533 Pigiput Proven ...... 3.94 0.73 92 3.94 0.73 92 Probable ...... 5.35 0.82 141 1.67 0.86 46 12.51 2.39 961 19.53 1.83 1148 Pigiput Total ...... 9.29 0.78 233 1.67 0.86 46 12.51 2.39 961 23.47 1.64 1241 Pigibo Proven Probable ...... 3.43 1.00 110 1.65 1.21 64 0.43 2.04 28 5.51 1.14 203 Pigibo Total ...... 3.43 1.00 110 1.65 1.21 64 0.43 2.04 28 5.51 1.14 203 Samat North A Proven Probable ...... 0.07 0.70 2 0.07 0.70 2 Samat North A Total ... 0.07 0.70 2 0.07 0.70 2 Samat North B Proven Probable ...... 0.12 0.79 3 0.05 3.61 6 0.33 2.28 24 0.5 2.06 33 Samat North B Total ... 0.12 0.79 3 0.05 3.61 6 0.33 2.28 24 0.50 2.06 33 Samat South Proven Probable ...... 0.08 2.37 6 0.05 2.16 3 0.68 2.43 53 0.81 2.41 62 Samat South Total .... 0.08 2.37 6 0.05 2.16 3 0.68 2.43 53 0.81 2.41 62 Botlu South Proven ...... 0.74 1.35 32 0.74 1.35 32 Probable ...... 0.12 1.61 6 0.12 1.61 6 Botlu South Total ..... 0.86 1.39 38 0.86 1.39 38 Total All Pits Proven ...... 10.71 1.05 363 0.55 1.08 19 0.38 1.10 13 11.64 1.06 395 Probable ...... 14.51 1.01 473 3.94 1.11 141 14.69 2.33 1102 33.20 1.61 1716 Total All Pits ...... 25.28 1.03 836 4.49 1.11 160 15.07 2.30 1116 44.84 1.46 2112

The stated Mineral Reserves are included in the Mineral Resources quoted in 17.1. As part of the mine planning process, the effect of changes in variables such as price and metallurgical recovery were examined. There are no particular factors other than those covered in this report that would have a significant impact upon these estimates. The categorisation of Proven and Probable Reserves in this study has used the accepted guidelines defined within the Canadian NI 43-101. The 87.44 Mt of Total Inferred Resource in Section 17.1 is not included in the Total Mineral Reserve Estimate.

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18.0 MINING AND MINERAL PROCESSING OPERATIONS 18.1 Mining 18.1.1 Operations The current mine plan consists of the open pit mining of seven oxide deposits as indicated on the plan below. The mining sequence was to commence at the smallest but highest grade deposits at Samat, then start mining at the largest deposit at Sorowar. Mining of Pigiput and Botlu would occur in conjunction with waste removal from Sorowar and finally the Pigibo deposit would be mined last.

21APR201102514094 Figure 18-1: Simberi Island—Oxide pit outlines (Q2 2010) The mineralisation in all oxide deposits excluding the deeper levels of the Sorowar deposit is disseminated to the point that there is very little internal waste. The limited waste present is still mineralised but at levels below cut-off and is contained in small pockets which would be inefficient to mine separately. For these reasons all the material extracted from the pits excluding the deeper levels of the Sorowar deposit and selected zones within the Pigibo deposit will be treated as ore. Material taken from pits with no waste generation is termed ‘‘bulk mining’’, while material from pits that will produce waste is termed ‘‘selective mining’’. The decision to mine some material selectively is based on practicability and economics. Any waste generated will be contained within the mined void, thereby mitigating any potential environmental impacts.

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21APR201102032495 Figure 18-2: Mining at Sorowar after rain

21APR201102061940 Figure 18-3: Pantera 1100 blast hole drill The soft ground conditions and high rainfall combine to give a situation where maintaining large trafficable operating areas are impractical. To overcome this, the proposed mining method requires development of all weather sheeted roads onto the resource areas and then using dozers to push the soft material to the road where it will be either loaded into trucks at Samat and transported to the process plant at Pigiput Bay or similarly loaded into trucks and transported to aerial conveyor for conveying to the process plant at Pigiput Bay. Operational experience at Sorowar has resulted in a practice of ceasing mining operations during in rainfall events and feeding the process plant with ROM ore from either the larger (70,000 wet tonnes)Pigiput stockpile or the smaller (6,000 wet tonnes) Sorowar stockpile. This

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requirement to cease mining operation during rainfall periods has necessitated a larger than initially planned mining fleet to allow feeding the plant as well as replenishing ROM stockpiles while clear weather conditions permit. As the larger pits at Sorowar, Pigiput and Pigibo deepen the ore although still oxidised becomes stronger to the point where ripping with a dozer is not cost effective or practical and light blasting will be carried out to break the ore up and make excavation easier. Drilling will be carried out using a top drifter blast hole drill. The nominal drill hole diameter will be 102 mm and holes will be drilled to 10.7 m with samples for grade control collected each 2.5 m and the 0.7 m sub-drill will not be sampled. Typical blast pattern design would be 4.5 m spacing and 4.0 m burden on a staggered pattern. Typical powder factor would be initially <0.4 kg/t but this would increase with pit depth to compensate for harder ore and waste. Groundwater for most part is absent although the moisture content of surface and near surface ores can be as high as 35%. It is anticipated that ANFO will make up the majority of explosive used although in wet area packaged water proof explosive will be used. Currently grade control for ore/waste definition is carried out using a Super Rock Drill 3000 machine utilising a 102 mm reverse circulation (RC) drill string and down the hole RC hammer. The holes are normally drilled to 30 m depth with samples being collected each metre and assays being composited over 2.5 m which is the current mining height. The sample assays are subjected to a normal kriged analysis to produce grade blocks and ore/waste boundaries. Ore blocks are subdivided in to low grade and high grade material to allow ore blending to be carried out to maintain a somewhat constant mill feed head grade. Ore/waste boundaries are also pegged in the field. Mining operations commenced at the Samat East deposit in November 2007 to provide a parcel of ore for plant commissioning. In February 2008 after plant commissioning, ore was sourced from the Samat deposits (North, South and East) and the ore was delivered to the process plant via a 1,500 m long haul road. The ore was excavated using a combination of Caterpillar 30t and Komatsu 45t hydraulic excavators. The ore was free digging and ‘‘bulk’’ mined and no waste was produced. Caterpillar 40t articulated trucks were used to deliver the ore directly into the dump pocket reclaimer or to the ROM stockpile at the process plant. In May 2008 the aerial conveying system (Ropeconᓼ) was commissioned and ore was mined from the Sorowar deposit and trucked approximately 400 m from the pit edge to the Ropecon dump pocket. The ore at Sorowar is free digging and mined by 45t hydraulic excavators and hauled to the dump pocket by 40t articulated trucks. The dump pocket at Sorowar consists of a Stammler chain conveyor and hydraulic breaker rated at 600 wet tph. The ore is transferred from the breaker to the rope conveyor via a 49 m long sacrificial conveyor fitted with a metal detector. The rope conveyor consists of a 650 mm wide conveyor belt fitted with side skirts and has a capacity of 600 wet tph. The conveyor length is 2,498 m and falls a vertical distance of 210 m and is supported by 3 pylons placed on intervening ridges. At the bottom end of the rope conveyor ore is transferred to a conventional overland conveyor over a distance of 359 m before ore is transferred to a radial stacker that can feed directly into the process plant dump pocket or can be discharged onto the ROM which has a capacity of approximately 70,000 wet tonnes of ore. Ore on the ROM is either pushed by D6 dozer or tipped into the dump pocket by a Caterpillar 880 front end loader.

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21APR201102124638 Figure 18-4: Super Rock drill 3000 undertaking grade control drilling at Sorowar

21APR201102035804 Figure 18-5: Mining at Samat South

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21APR201102092382 Figure 18-6: Ropecon showing discharge end and overland conveyor with process plant in background The Simberi mining operations is a conventional load and haul and this is reflected in the equipment schedule indicated below. Currently the fleet is a mix of owner and contractor equipment and the mining contractor is responsible for supervision of mining operations. The mining contractor is Mine Site Construction Services (MSCS), a Perth WA based business. Machine operators are a mix of non-local experienced PNG citizens and local PNG citizens that have been trained or undergoing training as machine operators. Mine technical support is provided by the Mine engineering Department that is responsible for mine geology and grade control, mine planning and scheduling, and mine survey. Work force levels are shown in the table below. Mine shifts comprise 2 ǂ 12 hour shifts, however nominally local operators work minimum 8 hours and up to 12 hours if required (typically happens after rainfall events). Non-local PNG operators and expatiates supervisors and staff operate on a fly in fly out (FIFO) roster of 28 days on/14 days off and 16 days on/12 days off respectively. Mobile equipment repairs and maintenance is carried out on site through the company’s maintenance department. This is supported by local caterpillar dealer (Hastings Deering) with consignment spares and mechanical labour.

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Table 18-1: Simberi Gold Company (SGC) Mining Fleet

(1) Two trucks fitted with retractor trays (2) Machines part of Process Department used for stockpile rehandle

Table 18-2: Simberi Mine Operations Work Force Levels (as at July 2009)

Source Number Expatriate ...... 8 Non-Local PNG ...... 44 Local PNG ...... 67 Contractor ...... 14 Total Mining ...... 133

18.1.2 Reconciliation Records for reconciliation of actual mined material versus geological model are kept by Simberi mining department staff on a monthly basis and summarised in Excel spreadsheets. This has been done in a consistent manner since start of mining on the island in February 2008. The mining actual volume and tonnages for the reconciliation are based on both daily truck count figures and end of month survey volumes, with moisture contents, wet and dry densities based on regular sampling. Overall, there is a positive reconciliation of actual against model in both tonnes (by an overall 6.4%) and grade (by an overall 1.9%), giving a positive reconciliation in actual contained gold mined against the models of some 8.4%.

18.2 Metallurgical Processes 18.2.1 Current Process Plant 18.2.1.1 Ore Transport and Scrubbing Ore is mined at the Sorowar mine site and trucked to the Sorowar feeder. The Sorowar feeder and breaker delivers ore to the rope conveyor that conveys ore to the plant site on the coast. The rope conveyor has capacity to transport 600 wet t/h. The rope conveyor discharges onto an overland conveyor and then stacking conveyor both with current carrying capacity of 512 wet t/h. The stacking conveyor discharges as feed to the Pigiput feeder and sizer. The Pigiput feeder/reclaimer feeds the wet scrubber that is 3 m diameter by 7.5 m EGL (Effective Grinding Length). Water is added to the scrubber to slurry the ore. The unit is fitted with dual 160 kW drive motors. The capacity of the scrubber is a nominal 330 dry t/h. Oversize from the scrubber has been fed to the ball mill but will feed directly to a pebble crushing circuit to be installed to reduce scats from the ball mill.

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18.2.1.2 Grind-Leach Scrubber undersize is pumped to a cyclone circuit. Cyclone underflow flows by gravity to a 3.4 m diameter by 5.0 m EGL ball mill. The mill drive is 850 kW and the mill rotates at 17.8 rpm (76% of the critical speed). Make-up ball addition is a mixture of 80 mm and 65 mm balls. Cyclone overflow passes to the leach tanks. The cyclone overflow density feeding the leach circuit is operated at lower density than the original design (31%-34% solids versus 40% solids for design). A trash screen is installed on the leach feed to minimise oversize material in the carbon-in-leach (CIL) tanks that will potentially block the inter-tank screens. The leaching and adsorption circuit at Simberi is comprised of a single leach stage followed by five CIL tanks. Recovery and adsorption efficiency is impacted by low pulp density and reduced residence time. The CIL circuit design includes only five stages of adsorption and does not deliver an acceptable soluble loss.

18.2.1.3 Elution and Carbon Regeneration The acid-wash and elution functions are performed in a single 5 tonne capacity column. The column is butyl-lined carbon steel. The acid-wash and rinse is performed at ambient temperature. The elution process is AARL with pregnant liquor stored in a 98 m3 tank in closed circuit with two electrowinning cells. A kiln is used to regenerate the carbon.

18.2.1.4 Tailings Disposal Tailings are discharged using Deep Sea Tailings Placement (DSTP). The slurry is diluted with sea water to the ratio of 8:1 sea water to tailings volume. The diluted tailings overspills a central well in the dilution tank and flows by gravity from the outer annulus of the tank to the DSTP pipeline to be discharged 115 m below surface level on a steep submarine slope.

18.2.1.5 Reagents Quicklime is currently fed dry onto the ball mill feed conveyor (CV06) from a variable speed screw conveyor from the quicklime storage bin. Coarse granular quicklime is purchased in bulk bags (arriving in sea containers) and manually handled into the storage bin by plant operations personnel. Reagent storage volumes and dosing equipment are adequate for the operation.

18.2.2 Expanded Oxide Process Plant to 3.5 Mtpa The expansion design concentrated on the ore handling and reclamation, grinding and classification and tailings thickening and disposal areas. Flexibility has been built into the milling circuit to handle 3.5 Mtpa throughput. Major changes are: • The Sorowar ore handling circuit will be modified to include a drive-over dump arrangement with the equipment upgraded to a capacity of 600 wet t/h. The Pigiput ore handling circuit will also be upgraded to a capacity of 600 wet t/h. Pigiput ore will be reclaimed by a new apron feeder discharging onto the mill feed conveyor. • A new single stage, high aspect, 2.5 MW Semi-Autogenous Grinding (SAG) mill operating in closed circuit with the pebble crushing circuit and classification cyclones will be installed. The pebble crusher product will be recycled to the SAG mill feed conveyor, while the cyclone underflow will be returned to the SAG mill feed chute. • The new SAG mill will be 6.7 m in diameter with an effective grinding length (EGL) of 3.2 m. This circuit is still under review. • The leaching circuit will comprise two new 2500 m3 mechanically agitated tanks in addition to the existing 5 ǂ 1500 m3 tanks already installed. Sodium cyanide is added into the leach tank distribution box. • Oxygen gas from a new Pressure Swing Adsorption (PSA) plant will be added to the leach circuit via the tank agitator shafts. Slurry exiting the leach circuit flows by gravity to six mechanically agitated

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adsorption tanks. The adsorption tank interstage screens will be upgraded to 19 m2 Alloytech screens as part of the debottlenecking to handle the increased slurry volume flow. • For the expanded plant the daily loaded carbon required to be eluted is 6 t, while the existing elution circuit capacity is 5 t/cycle. To meet this requirement, eight to ten elution cycles per week are required. To manage this, rather than undertaking carbon acid washing and stripping in the one column, a new SAF 2205 column will be installed to separate these duties. Acid washing will be completed in the existing rubber lined column, while elution will be completed in the new SAF 2205 column. • To meet the expanded gold productivity, the pregnant liquor storage and electrowinning facilities will be duplicated. • Screened slurry discharging the adsorption circuit will be pumped to a new 26 m diameter high rate tailings thickener which will be located adjacent to the Deep Sea Tailings Pipeline (DSTP) dilution tank in Pigiput Bay. A new flocculant plant will also be installed to service the tailings thickener. • The tailings are thickened to an underflow density of 53% solids and pumped to the tailings dilution tank. The pulp will then be diluted with sea water to the ratio of 8:1 sea water to tailings volume. The diluted tailings overspills a central well in the dilution tank and flows by gravity from the outer annulus of the tank to the DSTP. • With the installation of the tailings thickener, the tailings dilution tank, DSTP and sea dilution pumps have adequate capacity for 3 Mtpa and upside capacity of 3.6 Mtpa.

18.2.3 Proposed Sulphide Process Plant The sulphide plant is designed to treat 1.5 Mtpa (dry tonnes) of ore, with a design availability for the milling and flotation plant of 91.3%, based on 7,998 operating h/a. The plant has standby equipment in critical areas and sufficiently automated plant control to minimise the need for operator interface on a continuous basis but allow manual override and control if required.

18.2.3.1 Comminution ROM ore will be dumped directly into the ROM bin by the haul trucks. Stockpiled ROM ore may also be reclaimed from the ROM pad by a Front-End loader (FEL). This will be fed to the 80 t capacity ROM bin. The ROM bin will be equipped with a 600 mm aperture static grizzly. Oversize material may be broken on the ROM pad area or returned to the mine. Comminution will be via a semi-autogenous grinding (SAG) mill/ball mill/crusher configuration (SABC). Ore will be drawn from the ROM bin, via a 1200 mm ǂ 6400 mm variable speed apron feeder into a 1070 mm ǂ 1400 mm single toggle jaw crusher operating with a CSS of 130 mm. The primary crusher

product (P80 = 108 mm) will discharge onto the 900 mm mill feed conveyor belt, fitted with a weightometer, which in turn will discharge into the SAG mill containing a nominal ball charge of 8-12% and a total charge of 26% of mill volume. High pressure water spray heads on all feeder discharge point, will provide dust suppression. The SAG mill (1,500 kW) will operate in open circuit and the ball mill (2,800

kW) grinding in closed circuit, with a recycle pebble crusher, to produce a P80 grind size of 106Ȗm. Eight 640 mm hydrocyclones will be used for the fine classification duty around the ball mill. The hydrocyclones are designed to operate with an overflow density of 30% w/w solids for direct feed to the flotation circuit. Coarse particles will pass through the cyclone spigots as a dense slurry and gravitate to the ball mill for further grinding.

18.2.3.2 Flotation The ground and classified ore will be treated in a rougher/scavenger flotation circuit consisting of seven 100 m3 tank cells in series, and a cleaner flotation circuit consisting of three banks of cleaners with a total of seven cells. The flotation feed, flotation concentrate and scavenger tails streams will be monitored by online analysis for sulphur grade. The results of these measurements will be transmitted to the SCADA system and will allow calculation of plant recovery, warnings and trend displays. The scavenger flotation tailings will be pumped to the 12 m high-rate tails thickener. The rougher concentrate will be combined with cleaner concentrate and will be thickened in a single 12 m high-rate concentrate thickener at a flocculant dosage of 10 g/t. Thickened flotation tailings slurry at the required density will be pumped from the bottom of the thickener into the dilution hopper where it is diluted with

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sea-water then pumped to the roaster off-gas scrubbing circuit where it will assist in neutralising the roaster off-gases. Thickener overflow will gravitate to the process water dam. Thickened concentrate underflow slurry will be pumped to the concentrate storage tank. The storage tank is an agitated tank designed to hold six hours storage capacity of concentrate at the average production rate. The tank will operate with a varying slurry level to allow for storage during peak production periods and smoothing out of the treatment rate for the downstream filtration equipment. Thickened slurry will be pumped from the base of the storage tank to the concentrate filter. The concentrate filter will be a chamber-style membrane filter press fitted with 60 chambers, and equipped with hydraulic pressing, water squeeze and air blow cake drying cycles. The filter will operate with the following cycles; fill, press, squeeze, blow, discharge. The typical cycle time for the filter will be15 minutes, which allows the filter to operate four cycles per hour. Filtrate water discharging from the chamber press will be recycled back to the concentrate thickener. Concentrate discharging from the filter will drop under gravity directly onto a variable speed conveyor below the filter, from where it can either feed a bucket-type conveyor that supplies the roaster or it can drop into a bunker with 24 hours storage capacity for later reclaim.

18.2.3.3 Concentrate Roasting Concentrate feed will be received at the Reversible Belt Conveyor, which alternately fills the Feed Surge Bins. Variable Speed Weigh Belt Feeders, discharge and meter concentrate feed to two Slinger Feeders. The Slinger Feeders will be high-speed belt feeders designed to ‘‘throw’’ filter cake feed into the FluoSolids Roaster and spread the feed across the cross-sectional area of the bed surface. Preheated luidising air will be supplied to the roaster by the Fluidising Air Blower. A roaster preheat system, consisting of two Preheat Burners, Preheat Burner Air Blower, and Preheat Burner Fuel Oil Pump will be used to preheat the roaster during start-up to a temperature sufficient to allow safe introduction of sulphide concentrate feed into the roaster. During operation, the roaster will be operated with a slight negative pressure in the freeboard to ensure that gases and hot solids are not discharged into the plant area through the open feed ports. Dust laden roaster exhaust gases will pass through two Primary Cyclones for primary dust capture. The exhaust gases from the cyclone will be cooled in the Quench Tower by evaporation of water, prior to introduction of the gases into the Electrostatic Precipitator (ESP). The temperature of gases entering the ESP will be maintained above the dew point to prevent condensation of sulphuric acid on the internal surfaces of the ESP and duct shells. Solids discharged from the bed overflow nozzles of the Roaster, Primary Cyclone solids discharge lines, and from the ESP via the ESP Drag Conveyor and ESP Solids Double Flap Valve will be quenched with water in Quench Tanks. The combined Calcine slurries from the quench tanks (approximately 10% solids) will be collected in the Quench Slurry Launder. Roaster exhaust gas, at the gas discharge of the ESP will be sent to the Gas Scrubbing System for removal of acid gases and residual particulates.

18.2.3.4 Gas Scrubbing

A simplified explanation of the process is that the sulphur dioxide (SO2) gas, which dissolves in the re-circulated slurry, reacts with calcium carbonate present in the tailings stream to form calcium sulphite 1 hemi-hydrate (CaSO3. ⁄2H2O) according to the following reaction:

1 1 SO2 + CaCO3 + ⁄2H2O → CaSO3. ⁄2H2O + CO2 The tail-gas scrubbing system will comprise a primary and secondary scrubber, each with two stages of reverse-jet nozzles which promote efficient gas/liquid contact. Hot ESP treated gas, at approximately 350⍭C, will enter the top of the primary scrubber inlet barrel and collide with the circulation liquor,

creating a highly efficient environment for simultaneous gas quenching, particulate scrubbing and SO2 absorption. From the contacting zone, the gas/liquor mixture will enter a separation vessel. The liquor will drop into the sump of the vessel (reaction tank) and the gas will exit the vessel and pass into the secondary scrubber, where the process will be repeated.

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The sumps of the disengagement vessels will act as reaction tanks. The tailings stream will be added to the secondary scrubber sump, overflow from the secondary into the primary scrubber sump and be discharged from the primary scrubber sump under level control. The vessel sumps will be sized to allow maximum utilisation of the calcium carbonate present in the tailings. The treated gases will pass from the secondary scrubber and will be discharged to atmosphere via a stack.

18.2.3.5 Calcine Neutralisation and Regrind Quenched calcine will be pumped to the neutralisation circuit where lime slurry is added to neutralise acids formed during roasting. The calcine neutralisation circuit will consist of two 250 m3 (live) leach tanks in series interconnected with launders to allow the slurry to flow by gravity through the tank train. Neutralised calcine will gravitate to the calcine thickener. The calcine thickener is a high-rate thickener designed to achieve a high underflow density. Thickened calcine slurry at the required density will be pumped from the bottom of the thickener into the calcine regrind mill. Thickener overflow gravitates through a cooler tower to the calcine water dam. Thickened calcine will be pumped to the calcine regrind circuit. The calcine regrind circuit will

incorporate a ball mill operating in closed circuit to produce P80 passing 30 Ȗm product. Reground calcine will be pumped to the calcine leach.

18.2.3.6 Calcine Leaching and Gold Recovery The reground calcined slurry, discharged from the quench slurry launder will be pumped to downstream processing for gold recovery by a conventional carbon-in-pulp (CIP) circuit consisting of four leach tanks (725 m3) followed by six adsorption tanks (100 m3), giving a leach residence time of 94 h at 50% w/w solids pulp density. In the adsorption tanks, an average carbon concentrations between 10 g/L and 15 g/ L will be used to ensure high gold adsorption efficiencies and low solution tails. Barren carbon returning to the CIP circuit from the oxide carbon regeneration kiln will be screened over a vibrating screen to remove fine carbon, which is discarded to the tailings hopper. Sodium cyanide solution will be metered into leach tanks 1, 2 and 4 via a ring main system. Compressed air will be injected into the leach tanks, to provide oxygen for the cyanidation reaction. Tailings slurry from the last CIP tank will gravitate to the carbon safety linear screen to recover any carbon which may be present in the event of damage, wear or incorrect installation of the final stage inter-stage screen. Carbon recovered on the screen will be delivered to a bulk bag for re-use. Tailings discharging from the carbon safety screen will gravitate to the tailings tank and will be pumped to the tailings mixing tank. . Mixed tails slurry will deposited underwater via a gravity pipeline for DSTP. The existing oxide plant AARL elution will be used for recovering gold from loaded carbon.

18.2.4 Process Production Forecasts 18.2.4.1 Historical Table 18-3 shows the production summary for the current oxide plant for the period June to September 2010.

Table 18-3: Production Summary

June 2010 to June 2010 to September 2010 September 2010 Units Actual Actual Annualised Mill Throughput ...... dry tonnes 765,824 2,300,000 Au Recovery ...... % 92.3 92.3 Operating Cost ...... $/t 11.15 11.15 This demonstrates the capacity of the plant to treat oxide ore at greater than 2 Mtpa capacity and to achieve recovery of greater than 92% on oxide ores. Operating cost for the process plant for the four-month period was $11.15/t.

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Annualised G&A cost based on the four-month period was $20.1 M.

18.2.4.2 Future Oxide Capacity—Expanded Plant In May 2009, Allied commissioned GRES to undertake an evaluation of the process engineering options to expand the process plant capacity to 3 Mtpa and to provide capital cost estimates for the expanded process facilities and construction. Allied instructed that the process design and major equipment selection was to include a throughput allowance of 20%, giving a maximum treatment rate of 3.6 Mtpa. This case is now referred to as the 3.5 Mtpa oxide plant expansion. Key criteria used for financial modelling purposes are shown in Table 18-4.

Table 18-4: Basis for Financial Modelling

Criteria Units Expansion Annual Throughput ...... dry t/a 3,500,000 Average Gold Grade ...... g/t Au 1.01 Gold Recovery—Oxide Ore ...... % 91.3 Gold Recovery—Transition Ore ...... % 71.0 Gold Recovery—Sulphide Ore ...... % 65 Overall Average Gold Recovery ...... % 86.1 Production profile for the oxide project is shown in Figure 18-7.

Production Profile Oxide Plant 4,000.0 160,000.0

3,500.0 140,000.0

3,000.0 120,000.0 Thousands 2,500.0 100,000.0

2,000.0 80,000.0 (tonnes) 1,500.0 60,000.0 (ounces)

1,000.0 40,000.0

500.0 20,000.0

- 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Year

Oxide Ore Mined and Milled Oxide Transition Ore Mined and Milled Low Grade Oxide Stockpile Milled Sulphide Ore Mined and Milled - Oxide Plant Sulphide Ore Mined and Milled - Oxide Plant 2 Contained Au - Oxide Plant (RHS) Total Dore Recovered from Oxide Plant (RHS) 21APR201103145235 Figure 18-7: Production Profile

18.2.4.3 Sulphide Project During 2010, BatteryLimits has proceeded with the metallurgical testwork and process design for a 1.0 Mtpa sulphide project at Simberi. The testwork, as described in Section 16.0 of this report, has focussed on flotation, roasting and CIL to produce gold dore. GRES undertook engineering and capital cost estimating for a 1.0 Mtpa and then 1.5 Mtpa sulphide processing project based on the process design and equipment selection provided by BatteryLimits. The process description is provided in Section 18.2.1. The sulphide project is based on established technology of flotation to produce a sulphide concentrate, and roasting of the concentrate to free the gold for conventional cyanide leach extraction and recovery.

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Key criteria developed for the sulphide project at PFS stage are shown in Table 18-5.

Table 18-5: Key Criteria for Sulphide Project

Parameter Value Plant Throughput ...... 1.5 Mtpa Feed Grade Gold ...... 2.41 g/t Recovery ...... 83.3% Production profile for the sulphide project is shown in Figure 18-8.

Production Profile Sulphide Plant 1,600.0 140,000.0

1,400.0 120,000.0

Thousands 1,200.0 100,000.0

1,000.0 80,000.0 800.0 (tonnes)

60,000.0 (ounces) 600.0 40,000.0 400.0

200.0 20,000.0

- 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Year

Sulphide Ore Mined and Milled Low Grade Sulphide Stockpile Milled Contained Au - Sulphide Plant (RHS) Sulphide Dore Recovered from Calcine (RHS)21APR201103145910 Figure 18-8: Production Profile for the Sulphide Project

18.2.4.4 Combined Oxide/Sulphide Project Key criteria for the combined 3.5 Mtpa oxide project and 1.5 Mtpa sulphide project at PFS stage are shown in Table 18-6.

Table 18-6 Key Criteria for combined 3.5 Mtpa oxide project and 1.5 Mtpa sulphide project

Parameter Value Plant Throughput ...... 5.0 Mtpa Feed Grade Gold ...... 1.43 g/t Recovery ...... 84.7% Production profile for the sulphide project is shown in Figure 18-9.

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Production Profile Combined 6,000.0 300,000.0

5,000.0 250,000.0 Thousands 4,000.0 200,000.0

3,000.0 150,000.0 (tonnes) (ounces) 2,000.0 100,000.0

1,000.0 50,000.0

- - 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Year Oxide Ore Mined and Milled Oxide Transition Ore Mined and Milled Low Grade Oxide Stockpile Milled Sulphide Ore Mined and Milled - Oxide Plant Sulphide Ore Mined and Milled - Oxide Plant 2 Sulphide Ore Mined and Milled Low Grade Sulphide Stockpile Milled Contained Au - All Sources (RHS) Total Dore Recovered - All Sources (RHS) 21APR201104530672 Figure 18-9: Combined Production Profile

18.3 Markets Simberi Gold Company Limited sells its gold in the international commodities markets. Simberi Gold does not have any long term contracts in place for the sale of gold.

18.4 Contracts Allied Gold has had no gold hedging in place since March 2010. It has no FX hedging in place.

18.5 Environment 18.5.1 Introduction and Debottlenecked Case Currently the Simberi Gold Mine is permitted to mine and process oxide ore at a nameplate capacity of 2 Mtpa with a nominal production capacity of 85 000 oz/a. This covers the debottlenecked case and no additional permitting is required for this case.

18.5.2 Combined Oxide and Sulphide Expansion Case Additional permitting will be required to cover the expanded 3.5 Mtpa oxide and the 1.5Mtpa sulphide case. In February 2010, SGC sought approval from the PNG government to increase oxide ore production to a nominal rate of 3 Mtpa (to a peak throughput of 3.6 Mtpa). Proposed relevant changes to achieve 3.5 Mtpa oxide and 1.5 Mtpa sulphide are: • Tailing discharge to an annual rate of 6.7 Mm3/a, and abstraction of sea water for dilution of tailing of 53 m3/a. • Abstraction of additional process water from the current 500 m3/h to about 825 m3/h, to achieve the 3.6 Mtpa plant throughput. • Additional process equipment, including scats crushing circuit, two additional leach tanks, a SAG mill, thickener, roaster and off-gas stack. • Utilisation of Heavy Fuel Oil (HFO) for power generation, due to an increase in power draw from 3 MW to 14 MW and additional fuel storage on site.

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An increase in ore mining from 2.2 Mtpa to 3.5 Mtpa in addition to a 1.5 Mtpa sulphide plant, will result in: • Bringing waste forward from the Sorowar deposit and will require approval for waste disposal by means of ocean disposal or alternatively by construction of a waste rock storage emplacement. • Expansion of the Pigiput pit footprint from about 2 ha to about 8 ha. • Upgrading the Pigiput to Sorowar mine access road to a haul road. • Scrubbing of the roaster off gas to remove volatised As and sulphur dioxide for disposal in the tailings stream and off gas stack. As part of the 3.5 Mtpa expansion, it is proposed to install a tailings thickener to recycle water, lime and cyanide. The thickener will also avoid the need to expand or duplicate the Deep Sea Tailings Placement (DSTP) system. The thickened tailings (at 3.5 Mtpa) will deliver approximately the same volume of thickened tailings slurry to the DSTP mix tank as is currently delivered from unthickened tailings from the existing 2 Mtpa plant. It is expected that the thickener will enable the existing pre-discharge dilution ratio of 8:1 (seawater to tailings slurry by volume) to be maintained. If so, there should be no change to the designated DSTP mixing zone. In fact, increasing the solids in the feed to the DSTP system will increase the density of combined mixture of tailing and seawater at the outfall terminus. This will cause the tailing density current to be more coherent for a greater distance down slope and less material should be lost to subsurface tailing plumes. In June 2010, EBA Engineering Consultants (formerly known as Hay & Company Consultants) investigated the expansion of the DSTP system to include the oxide and sulphide project. The EBA report found that if the production rate is greater than 6 Mtpa, the discharged velocity in the outfall pipe will exceed 4.5 m/s, which could lead to hydraulic instability in the outfall pipe. EBA recommended that a separate DSTP system be considered in order to accommodate the additional tailings slurry if the production rate exceeds 6 Mtpa. EBA’s analysis of the mix tank showed that when the production is less than 6 Mtpa, additional seawater will need to be pumped into the mix tank to prevent air ingestion in the outfall pipe. The potential for acid rock drainage will also need investigating as part of further studies.

18.5.3 Permits The environmental permits required for operation were discussed in Section 4.7. Conditions 28 and 29 of Environment Permit WDL3(36) require that a Waste Management Plan to be submitted to the Department of Environment and Conservation (‘‘DEC’’). A waste management plan was prepared by Enesar Consulting Pty Ltd (September 2006). The plan has been submitted to the DEC and reviewed by the Author. The Sulphide Project will require specific approval under the Environment Act 2000. SGC will negotiate with DEC on the requirements for seeking approval for the Sulphide Project. At worst, this may require an Environmental Impact Statement (EIS) to be prepared.

18.5.4 Auditing In 2008 Coffey Natural Systems undertook a compliance monitoring audit. This report showed compliance in most areas, with any impacts they are consistent with predictions made in the Environmental Plan submitted with the original mining lease application. Coffey recommended focusing attention on controlling erosion and sedimentation upstream in order to reduce the impacts on the nearshore fringing coral reef and on the streams and rivers around Simberi Island.

18.6 Taxes On the 13th April 2005 the Simberi Gold Company Limited was granted a zero tax rating status with respect o GST on local purchases, service contracts or at the point of entry of import (excluding cars) (Sode, 2005). Simberi is subject to import duties on certain items, however this is assessed on a case by case basis. It is subject to company corporate tax at the rate of 30%, however has not as yet been in a tax paying situation. There are no payroll taxes in PNG.

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There are no material other taxes that are levied on Simberi Gold Ltd.

18.7 Capital Cost Estimates 18.7.1 Summary Capital cost estimate summary for the combined 3.5 Mtpa oxide and 1.5 Mtpa sulphide project is shown in Figure 18-10.

Capital Expenditure Assumptions 31 Dec 2011 31 Dec 2012 31 Dec 2013 31 Dec 2014 Toal (A$) (A$) (A$) (A$) (A$) Mining Fleet Tranche 1 ...... $23,249,072 $ — $ — $ — $ 23,249,072 Mining Fleet Tranche 2 ...... $ — $ 2,168,320 $ — $ — $ 2,168,320 Mining Fleet Tranche 3 ...... $ — $ — $ 10,230,000 $ — $ 10,230,000 Mining Fleet Tranche 4 ...... $ — $ — $ — $ 7,230,300 $ 7,230,300 Sulphide Plant ...... $ — $ — $ 94,142,500 $ 94,142,500 $ 188,285,000 Oxide Throughput Upgrade ...... $32,000,000 $ — $ — $ — $ 32,000,000 Haul Road ...... $ 3,600,000 $ 3,600,000 $ — $ — $ 7,200,000 HFO Power ...... $ — $ 7,570,000 $ — $ — $ 7,570,000 Total ...... $58,849,072 $13,338,320 $104,372,500 $101,372,800 $277,932,692 Figure 18-10: Combined Oxide and Sulphide Project Capital Cost

18.7.2 Mining Fleet Mining fleet costs have been estimated by Golder. Haul road cost construction has been supplied by Allied Gold and verified to PFS level of accuracy by BatteryLimits based on Allied Gold’s experience at Simberi Island.

18.7.3 3.5 Mtpa Expanded Oxide Processing Plant The capital cost for the 3.5 Mtpa processing plant expansion has been developed by GRES to an accuracy of Ǆ 20%. The capital cost estimate for the design, supply, fabrication, transport, construction and commissioning of the process facilities was reported by GRES in October 2009 as A$30.67 million. This has been updated to A$32 M for this current cost estimate. Breakdown of the cost estimate is shown in Table 18-7.

Table 18-7: Capital Cost Estimate Breakdown

Materials Labour Labour Freight Contingency Total Area A$ hours A$ A$ A$ A$ Direct Costs Earthworks ...... 275,000 0 0 0 34,375 309,375 Civil works ...... 676,223 21,871 1,350,073 184 185,904 2,212,384 Buildings ...... 0 0 0 0 0 0 Mechanical equipment ...... 9,804,463 11,411 2,420,348 377,805 1,059,454 12,041,834 Platework ...... 1,597,852 7,403 703,243 95,790 257,780 2,654,665 Structural steel ...... 1,947,986 10,642 769,064 212,182 310,843 3,250,210 Piping ...... 658,273 4,597 321,435 34,734 134,799 1,149,240 Electrical installations ...... 1,555,417 7,848 570,671 40,000 162,457 2,328,545 Construction equipment ...... 0 0 0 0 0 0 Total Direct Costs ...... 16,515,215 63,773 6,134,834 760,695 2,145,612 23,946,254 Indirect Costs Temporary construction facilities ...... 322,280 924 97,265 56,400 44,590 520,535 Mobilisation and demobilisation ...... 418,200 0 0 0 41,820 460,020 Project and procurement management . 74,750 10,035 1,271,675 0 102,851 1,449,276 Engineering design ...... 0 11,170 1,503,805 0 112,785 1,616,590 Site supervision ...... 0 15,825 1,449,375 0 108,703 1,558,078 Commissioning ...... 28,000 3,859 520,375 0 41,828 590,203 Owners Costs ...... 0 0 0 0 0 0 Spare Parts & First Fills ...... 412,700 0 0 75,000 48,770 536,470 Total Indirect Costs ...... 1,255,930 41,813 4,842,495 131,400 501,347 6,731,172 TOTAL CAPITAL ESTIMATE (Ǆ20%) .. 17,771,145 105,586 10,977,329 892,095 2,646,959 30,677,426

Source: Simberi Gold Project 3 Mtpa Expansion Study, October 2009

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18.7.4 1.5 Mtpa Sulphide Processing Plant The capital cost for the 1.5 Mtpa expansion has been developed by GRES to an accuracy of Ǆ 25%. The capital cost estimate for the design, supply, fabrication, transport, construction and commissioning of the process facilities was estimated as A$195.8 M including A$7.57 M for HFO infrastructure facilities. An area-by-area breakdown is shown in Table 18-8.

Table 18-8: Summary of Capital Cost Estimate

Base Cost Contingency Total A$ A$ A$ AREA 310—SAG Feed and Pebble Crushing ...... 6,155,010 591,991 6,747,000 AREA 330—Grinding & Classification ...... 14,466,633 1,474,895 15,941,527 AREA 340—Flotation ...... 7,051,518 708,978 7,760,497 AREA 350—Concentrate Thickening & Filtration ...... 4,562,388 462,045 5,024,433 AREA 360—Fluosolids Roaster System ...... 33,874,179 3,455,632 37,329,811 AREA 370—Tail Gas Scrubbing ...... 17,671,369 1,781,790 19,453,159 AREA 380—Neutralisation, Calcine Thickener & Regrind 3,549,815 365,176 3,914,991 AREA 390—Concentrate Leach ...... 3,180,568 379,112 3,559,680 AREA 391—Concentrate Adsorption ...... 2,456,105 273,676 2,729,781 AREA 392—Reagents ...... 1,463,122 155,092 1,618,214 AREA 393—Sea & Fire Water Area ...... 1,997,045 224,024 2,221,069 AREA 401—Process & Raw Water Area ...... 474,408 53,983 528,391 AREA 339—Plant Piping ...... 11,535,841 1,153,584 12,689,425 AREA 370—Power & Reticulation ...... 11,124,847 1,113,296 12,238,143 AREA 400—Tailings Thickening & Disposal ...... 2,421,173 242,140 2,663,313 AREA 420—Air Compressors ...... 734,845 79,339 814,184 AREA 382—HFO Capital Inc Wharf Piling & LCT Vessel . 6,881,810 688,181 7,570,000 AREA 430—Plant Buildings ...... 338,714 35,366 374 080 AREA 440—Workshop/Stores ...... 1,385,127 150,967 1,536,094 AREA 450—Plant Site Bulk Earthworks ...... 4,487,630 452,963 4 940 593 AREA 640—Accommodation Camp ...... 1,598,663 165,446 1,764,109 AREA 460—Fencing/Civil Trades ...... 94,721 9,472 104,193 AREA 470—Fuel Stores Extension ...... 1,063,291 110,315 1,173,605 AREA 500—Engineering ...... 14,345,485 1 442,829 15,788,314 AREA 510—Commissioning ...... 1,689,901 168,990 1 858,891 AREA 550—Initial Fills ...... 4,199,533 419,953 4,619,487 AREA 560—Insurance Spares ...... 3,274,800 327,480 3,602,280 AREA 804—Contractors Equipment ...... 4589,369 458,937 5,048,305 AREA 600—Temporary Facilities ...... 3,227,800 322,780 3,550,580 TOTAL CAPITAL ESTIMATE (Ǆ25%) ...... 178,050,000 17,805,000 195,855,000

Source: GRES Simberi Gold Project 3 Mtpa Expansion Study, August 2009

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18.8 Operating Cost Estimates Operating cost estimates vary from year to year according the total material movements of ore and waste mined. The financial model considers total material movement on a year-by-year basis. Costs are based on the assumptions as set out in the following sections.

18.8.1 Mining Mining costs are based on the assumptions outlined in Table 18-9.

Table 18-9: Mining Costs

Parameter Cost Estimate/t Material Oxide Ore Mined ...... $3.26/t Oxide Waste Mined ...... $3.26/t Sulphide Waste Mined ...... $3.83/t Sulphide Waste Mined ...... $3.83/t In years when total mining volumes (ore and waste) exceed 12.5 Mtpa, it is assumed that contract mining and haulage arrangements are utilised. Additional cost for contract haulage on top of the mining cost estimates in Table 18-9 of $1.70/t has been estimated, that includes cost of haulage to the coast for ore and waste. In addition to the mining expenditure rates for the mining of ore, ore rehandling expenditure of A$1.00 per tonne of ore is assumed to be incurred at the time of processing the low grade stockpiles.

18.8.2 Expanded 3.5 Mtpa Oxide Processing Plant BatteryLimits has reviewed operating cost of the current processing plant. Based on the four-month period June to September 2010, average operating cost is $11.15/t. BatteryLimits has applied fixed and variable cost ratios to the operating costs, and has estimated oxide plant processing operating cost at $9.25/t for the 3.5 Mtpa expanded case.

18.8.3 1.5 Mtpa Sulphide Processing Plant Operating costs for the sulphide processing plant have been developed from first principles. Sulphide plant operating cost is estimated at $23.29/t. Operating cost assumptions are shown in Figure 18-11.

18.8.4 G&A Costs G&A costs have been estimated at $13.65 M/a for the oxide plant and a further $3 M/a for the sulphide plant. Current G&A costs are around $20 M/a, but this is expected to reduce as the operation matures.

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18.9 Financial Assessment 18.9.1 Financial Model Basis An advanced financial model has been developed for the financial evaluation. Inputs and assumptions are shown in Figure 18-11 for the NPV. High-level Assumption Summary Scenario 1 Scenario 2 Base Case—3.5 Mtpa Additional Scenario— Oxide & 1.5 Mtpa 3.5 Mtpa Oxide & 2.5 Sulphide Mtpa Sulphide Capital Expenditure Mining Fleet Tranche 1 ...... (A$ M) $ 23.2 $ 23.2 Mining Fleet Tranche 2 ...... (A$ M) $ 2.2 $ 2.2 Mining Fleet Tranche 3 ...... (A$ M) $ 10.2 $ 10.2 Mining Fleet Tranche 4 ...... (A$ M) $ 7.2 $ 7.2 Sulphide Plant ...... (A$ M) $ 188.3 $ 255.8 Oxide Throughput Upgrade ...... (A$ M) $ 32.0 $ 32.0 Haul Road ...... (A$ M) $ 7.2 $ 7.2 HFO Power ...... (A$ M) $ 7.6 $ 7.6 Total ...... (A$ M) $ 277.9 $ 345.5 General Assumptions Exchange Rates ...... (A$: US$) 0.8000 0.8000 Gold Price ...... (US$ per oz.) $ 1,000.00 $ 1,000.00 Gold Price ...... (A$ per oz.) $ 1,250.00 $ 1,250.00 Oxide Credits ...... (% of Gross Oxide Rev.) 0.1700% 0.1700% Dore RC ...... (A$ per oz.) $ 0.69 $ 0.69 Taxation Rate ...... (%) 30.0% 30.0% Working Capital—Revenue Days ...... (days) 45.0 45.0 Working Capital—Expenditure Days ..... (days) 45.0 45.0 Operating Expenditure Sulphide Ore—Mining ...... (A$ per dmt) $ 3.83 $ 3.83 Oxide Ore—Mining ...... (A$ per dmt) $ 3.26 $ 3.26 Sulphide Waste—Mining ...... (A$ per dmt) $ 3.83 $ 3.83 Oxide Waste—Mining ...... (A$ per dmt) $ 3.26 $ 3.26 Contract Mining Operating Expenditure Profit Margin ...... (%) 17.2% 17.2% Contract Mining Capital Equipment Charge (A$ per dmt) $ 1.02 $ 0.58 Average Contract Mining Cost ...... (A$ per dmt) $ 1.70 $ 1.28 Contract Mining Mobilisation Cost Rate . . . (A$) $ 500,000.00 $ 500,000.00 Contract Mining De-mobilisation Cost Rate (A$) $ 500,000.00 $ 500,000.00 Handling Expenditure—Oxide Stockpile . . (A$ per dmt) $ 0.90 $ 0.90 Mean Power Cost—Sulphide Plant ...... (A$ per Kw/h) $ 0.2325 $ 0.2325 Power Consumption—Sulphide Plant .... (kw / p. a. @ 1.5 Mtpa) 61,315,868 61,315,868 Oxide Power HFO Saving ...... (%) 33.6% 33.6% Oxide Processing Expenditure Power Component ...... (%) 40.0% 40.0% Sulphide Process—Plant Head Count . . . . (FTE) 71.0 71.0 Sulphide Process—Labour Cost ...... (A$ p. a. @ 1.5 Mtpa) $ 2,471,385 $ 2,876,853 Sulphide Process—Maintenance Materials . (A$ p. a. @ 1.5 Mtpa) $ 3,480,053 $ 3,480,053 Sulphide Process—Reagents, Consumables and Services ...... (A$ per t ore) $ 9.5671 $ 9.5671 Sulphide Process—Miscellaneous Processing Costs ...... (A$ p. a. @ 1.5 Mtpa) $ 200,000 $ 200,000 Oxide Process—Miscellaneous Processing Costs ...... (A$ per t ore) $ 9.25 $ 9.25 Sulphide Dore Transport ...... (US$ per pa) $ 120,000 $ 120,000 Haul Road Haulage Cost—Owned Fleet . . (US$ per DMT, real) $ 0.40 $ 0.40 Additional Contract Haulage Operating Cost ...... (A$ per DMT, real) $ — $ — Additional Contract Haulage Mobilisation Cost ...... (A$) $ — $ — G&A, Transport and Infrastructure— Sulphide ...... (A$ per pa) $ 3,000,000 $ 3,000,000 G&A, Transport and Infrastructure—Oxide . (A$ per pa) $ 13,650,000 $ 13,650,000 Processing Labour Fixed Cost ...... (%) 75.00% 75.00% Processing Maintenance Materials Fixed Cost ...... (%) 50.00% 50.00% Royalty and Mining Levy ...... (%) 2.25% 2.25% Contingency ...... (%) 0.00% 0.00% Material Handling Assumptions Existing Rope Conveyor Capacity ...... (tonnes pa) 3,500,000.0 3,500,000.0 New Owned and Operated Truck Fleet Capacity ...... (tonnes pa) 9,000,000.0 9,000,000.0 Total ...... (tonnes pa) 12,500,000.0 12,500,000.0 Figure 18-11: NPV Inputs and Assumptions

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18.9.2 Financial Model Outputs Key outputs are shown in Table 18-10.

Table 18-10: Financial modelling outputs

Parameter Value NPV at 10% discount factor (pre-Tax) ...... $334 M Cash Costs ...... $678/oz Note that the NPV includes the value of the current 2 Mtpa oxide operation. IRR’s for the combined expanded oxide and sulphide project have not been reported because BatteryLimits considers IRR is not a valid financial performance indicator given of the contribution of the existing operation. Figure 18-12 shows cumulative net cash flows for the combined project.

Cumulative Net Cash Flows $800.0

$700.0 Millions $600.0

$500.0

$400.0

$300.0 (A$)

$200.0 Net Cash Flow

$100.0

$(100.0)

$(200.0) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Year

Cumulative Net Cash Flows Before Tax Cumulative Net Cash Flows After Tax 21APR201104532780 Figure 18-12: Cumulative Net Cash Flows

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18.9.3 Sensitivity Analysis The sensitivity of the financial performance of the production profile of the 3.5 Mtpa oxide and 1.5 Mtpa sulphide project to variations in key assumptions is detailed Figure 18-13 and Figure 18-14. The sensitivity of the project to variable gold price movements is shown in Figure 18-13. The sensitivity analysis indicates that the project is reasonably sensitive to variations in mining expenditure, processing expenditure (excluding power) and capital expenditure assumptions. The analysis of the production profile’s sensitivity to the US$ gold price indicates that the project is strongly leveraged to gold price movements. Due to the strong financial performance of the project, decreases in the US$ gold price of more than 20% can be sustained with the project maintaining a positive NPV @ 10% (nominal, before tax). This would indicate a favourable risk versus reward assessment of the project in terms of its exposure to the key variable of US$ gold prices. However, it must again be noted that the financial performance of the project includes the impact of cash flows from the existing oxide plant operation.

Sensitivity Analysis Net Present Value Before Tax $700.0

Millions $600.0 Exchange Rate Gold Price $500.0

$400.0 $333.8 (A$) $300.0

$200.0 Net Present Value Before Tax

$100.0

$- -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% Sensitivity Exchange Rate Gold Price Sulphide TCRC Capital Expenditure Mining Expenditure Processing Expenditure (excl. power) Selling and Marketing Expenditure Power Expenditure Additional Contract Haulage21APR201104531794 Cost Figure 18-13: Sensitivity Analysis to variable gold price movements

Sensitivity Analysis Net Present Value Before Tax $410.0

Millions $390.0

$370.0

$350.0 $333.8 (A$) $330.0

$310.0 Net Present Value Before Tax

$290.0

$270.0 -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% Sensitivity Sulphide TCRC Capital Expenditure Mining Expenditure Processing Expenditure (excl. power) Selling and Marketing Expenditure Power Expenditure Additional Contract Haulage Cost 21APR201105374817 Figure 18-14: Sensitivity Analysis

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18.10 Mine Life Under the combined 3.5 Mtpa oxide and 1.5 Mtpa sulphide operating scenario, current reserves will support a 13-14 year mine life commencing 2012 as Year 1.

18.11 Payback Payback for the combined project is estimated at 7 years from 2011 on an after tax basis.

18.12 Historical Production and Cost Performance The historical production performance statistics for Simberi are summarised in Table 18-11.

Table 18-11: Historical Production and Cost Statistics Item Units 31-Mar-08 30-Jun-08 30-Sep-08 31-Dec-08 31-Mar-09 30-Jun-09 30-Sep-09 31-Dec-09 31-Mar-10 30-Jun-10 30-Sep-10 31-Dec-10 Ore Mined ...... kt no data no data 356.4 502.6 378.1 445.9 469.9 503.1 439.3 548.0 566.0 615.0 Waste Mined ...... kt no data no data 22.2 69.0 36.0 57.2 63.0 150.1 179.9 241.3 535.2 528.0 Mill Scats ...... kt no data no data 15.7 12.2 19.3 0.0 0.0 0.0 0.0 0.0 28.5 40.3 Tonnes Mined ...... kt no data no data 394.3 583.9 433.3 503.1 533.0 653.3 619.2 789.2 1 129.7 1 183.3 Head Grade ...... g/t 3.42 2.64 1.90 1.93 1.62 1.27 1.04 1.26 1.22 1.16 1.09 1.14 Ore Milled ...... kt 164.9 251.8 336.4 426.3 413.2 446.8 485.2 486.9 439.3 538.2 570.5 583.0 Plant Au Recovery ...... % 81.87% 82.78% 87.12% 78.00% 78.57% 88.66% 87.02% 88.52% 85.63% 90.04% 91.29% 88.52% Gold Production ...... oz 15 125 17 943 17 732 20 682 17 495 16 739 14 072 17 456 14 738 18 109 18 206 18 921 Cash Costs / OZ (Reported) . . . USD$M 551 401 428 586 755 736 754 614 660 652 Cash Costs—Value ...... USD$M 9.77 8.29 7.49 9.81 10.62 12.85 11.11 11.12 12.02 12.34 FX ...... AUD/USD 0.89 0.8987 0.6678 0.6688 0.7686 0.8320 0.9155 0.9037 0.8550 0.9057 0.9917 Cash Costs—Value ...... AUD$M 10.87 12.42 11.20 12.76 12.77 14.03 12.30 13.00 13.27 12.44 AUD COST Mining ...... AUD$M 2.75 2.46 1.77 2.91 2.94 3.14 2.92 2.72 3.05 1.12 Processing ...... AUD$M 4.74 6.13 6.21 6.40 6.39 7.39 5.45 6.19 6.20 6.98 Site General and Admin ...... AUD$M 3.38 3.83 3.23 3.46 3.43 3.51 3.93 4.10 4.01 4.33 TOTAL ...... AUD$M 10.87 12.42 11.21 12.77 12.77 14.03 12.30 13.00 13.26 12.43 Cash Cost / OZ ...... AUD 613 601 641 763 907 804 834 718 729 657 USD COST Mining ...... USD$M 2.29 2.05 1.47 2.42 2.45 2.87 2.64 2.32 2.76 1.11 Processing ...... USD$M 3.94 5.10 5.17 5.33 5.31 6.77 4.92 5.29 5.62 6.92 Site General and Admin ...... USD$M 2.81 3.18 2.69 2.88 2.86 3.21 3.56 3.51 3.63 4.30 TOTAL ...... USD$M 9.05 10.34 9.32 10.63 10.62 12.85 11.11 11.12 12.01 12.33 Cash Costs / oz ...... USD 551 401 428 586 755 736 754 614 660 652 USD UNIT COST Mining ...... USD/t ore 6.80 4.81 3.56 5.42 5.05 5.90 6.00 4.32 4.84 1.90 Processing ...... USD/t ore 11.72 11.97 12.50 11.92 10.95 13.90 11.20 9.83 9.85 11.88 SG&A ...... USD/t ore 8.36 7.47 6.50 6.44 5.89 6.59 8.09 6.51 6.37 7.37 TOTAL ...... USD/t ore 26.89 24.25 22.56 23.78 21.89 26.39 25.30 20.66 21.06 21.14 Sale Price USD ...... USD 0 984 787 775 838 714 862 872 1 113 1 150 1 235 1 371 Sale Price AUD ...... AUD 762 1 105 876 1 160 1 253 929 1 036 953 1 231 1 345 1 363 1 382 Gold Sold ...... oz 10 463 28 339 13 342 17 674 23 391 16 681 15 420 17 971 14 065 16 526 16 935 16 620

18.13 Expertise of Technical Staff Having spent a considerable amount of time working with Allied Gold staff at Simberi and corporate level, the authors have formed the view that the management and technical teams employed Simberi, as well as the technical staff employed at corporate level by Allied Gold, have sufficient expertise to enable them to effectively manage the operations on a day-to-day and ongoing basis.

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19.0 OTHER RELEVANT DATA AND INFORMATION 19.1 Regional Exploration There are no adjacent properties on Simberi Island (Figure 19-1) or the other Tabar Islands however there are other exploration stage prospects within EL609.

21APR201103005351 Figure 19-1 Simberi Island

19.1.1 Simberi Island 19.1.1.1 Patan The Patan deposit is covered by a 250 m by 50 m gold-in-soil anomaly defined by a 0.2 g/t Au contour. Drilling by Kennecott in 1990 intersected gold mineralisation in two out of ten holes but did not adequately test the area. An IP gradient array geophysical survey was completed in 1997 but identified no anomaly. Allied drilled 11 RC holes in 2007 with poor results.

19.1.1.2 Adora Drilling at Adora in 1997 intersected anomalous oxide mineralisation in two holes. During 2007 and 2008 Allied drilled five diamond holes and 16 RC holes and encountered no significant mineralisation.

19.1.1.3 Kekenminda Drilling at Kekenminda to the west of Sorowar was targeting a radiometric (potassium count) anomaly by Nord. Drill holes intersected weakly mineralised zones with best intersection of 3 m at 2.13 g/t from RC870 received, from 6 RC of holes totalling 621 m drilled.

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19.1.2 Tatau Island 19.1.2.1 Daramba Daramba is a copper prospect located on the east coast of Tatau Island (refer to Figure 19-1). Diamond core drilling of a 1.1 km long by 600 m wide north-south trending copper-in-soil anomaly was completed in June 1996 with poor results. An IP gradient array geophysical survey completed in June 1997 identified a 1.2 km long by 200 m wide north-south striking chargeability anomaly which coincides with the greater than 300 ppm Cu soil anomaly.

19.1.2.2 Tugi Tugi Gold was initially discovered at Tugi Tugi on the east coast of Tatau Island in the 1930s. Several small hard rock and alluvial workings occur within the prospect. Soil sampling and trenching by the Tabar Joint Venture (TJV) and Nord identified a broad gold anomaly defined by a 0.2 g/t Au contour. Narrow zones of gold mineralisation were intersected by the 32 holes that have been drilled by Kennecott and Nord.

19.1.2.3 Talik and Talik West In late-1995, a soil auger program first identified the Talik and Talik West prospects in central Tatau Island. Bulldozer benching at these prospects has defined copper and gold anomalies. An IP gradient array geophysical survey was completed over the Talik prospect in July 1997 and identified a broad, strong chargeability anomaly that strikes north-east for 350 m.

19.1.2.4 Kupo A copper-gold anomaly was originally identified by TJV near Kupo, on the west coast of Tatau Island. Nord confirmed this anomaly with samples taken from Pakinapote Creek and other westward flowing creeks draining the central and north-west areas of Tatau. Detailed rock chip sampling, hand dug benching, limited bulldozer benching and a Wacker drilling program was carried out at the Kupo prospect by Nord in 1997.

19.1.2.5 West Tatau Prospects The TJV identified numerous gold prospects in the south-west corner of Tatau. These prospects had strong surface gold geochemical anomalies identified by soil sampling and benching, and several of them were drilled. Drilling results were erratic with many zones of anomalous gold intersected. Limited IP surveys were also completed over specific prospect areas. Nord has not undertaken any exploration work over this area.

19.1.3 Tabar Island (also see Barrick) 19.1.3.1 Banesa Exploration at the Banesa copper-gold prospect, in the south of Tabar Islands, by the TJV comprised rock chip channel sampling, hand dug benching, auger sampling and one diamond core hole. In November 1997 Nord sampled a shallow auger grid over the prospect, and confirmed a copper anomaly (>500 ppm Cu) covering a 450 m by 200 m area centred on Mt Fotombar, partially coincident with a 250 m long by 100 m wide gold anomaly (>0.10 g/t Au).

19.1.3.2 Tupinda Some soil and rock chip sampling was carried out by Kennecott together with an airborne geophysical survey. Nord carried out benching aimed at opening up areas of identified gold anomalism.

19.1.3.3 Fotombar All exploration work to date was carried out by Kennecott. Reconnaissance work and soil and chip sampling identified a 170 m by 70 m zone of anomalous gold and arsenic defined by the 1.0 g/t Au contour and coincident 100 ppm As anomaly. Bulldozer benching and drilling intersected zones of mineralisation.

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Table 19-1: Drilling on Tabar/Tatau

Island Prospect ID Year Company Drill Company Hole Type Total Tabar ..... BANESA BAN 1996 Nord PNG Drillers DD 379 2009 Barrick Capital DD 1,409 DAR 1996 Nord PNG Drillers DD 849 TUPINDA TUP 2008 Barrick Capital DD 701 2009 Barrick Capital DD 1,130 FOTOMBAR FOT 1989 Kennecott PNG Drillers and Wallis Drilling DD 63 RC 182 1990 Kennecott PNG Drillers and Wallis Drilling DD 333 RC 129 Total RC 129 Total DD 5,175 Tatau ..... DURAMBA DAR 1996 Nord PNG Drillers DD 849 LAB 1989 Kennecott PNG Drillers and Wallis Drilling RC 961 LET 1989 Kennecott PNG Drillers and Wallis Drilling RC 530 1990 Kennecott PNG Drillers and Wallis Drilling DD 235 RC 34 MAOKOEN MAK 1990 Kennecott PNG Drillers and Wallis Drilling DD 214 NALU NAL 1989 Kennecott PNG Drillers and Wallis Drilling RC 922 PEPEWO PEP 1989 Kennecott PNG Drillers and Wallis Drilling RC 1,085 1990 Kennecott PNG Drillers and Wallis Drilling DD 76 RC 109 SERARO SER 1989 Kennecott PNG Drillers and Wallis Drilling RC 1,508 SIRO SIR 1989 Kennecott PNG Drillers and Wallis Drilling RC 617 TALIK TAL 2006 Allied Zenex DD 1,190 RC 465 MT TIRO TIR 1989 Kennecott PNG Drillers and Wallis Drilling RC 1,409 1989 Kennecott PNG Drillers and Wallis Drilling DD 271 TUGI TUGI TUG 1989 Kennecott PNG Drillers and Wallis Drilling RC 1,114 1996 Nord PNG Drillers DD 535 RC 246 WARBARIAH WAR 1990 Kennecott PNG Drillers and Wallis Drilling DD 107 RC 49 Total RC 9049 Total DD 3477 Tabar/Tatau . Total RC 9360 Total DD 7492 Grand Total 16,852

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19.1.4 Kennecott Table 19-2: Kennecott RC Drilling Results—Pepewo, Tatau Island

TIG TIG RL From To Intercept Au Grade Hole North East (m) Dip/Azi⍭ (m) (m) (m) (g/t) RC1016 ...... 188728.8 37747.8 167.4 ᎈ60/045 Pepewo ...... 48 67 19 9.43 inc. 53 67 14 12.32 and 53 60 7 22.99 and 54 59 5 29.78 69 96 27 1.25 inc. 71 73 2 3.01 and 80 87 7 2.11 and 89 92 3 1.54 103 105 2 1.15 RC1029 ...... 188744.1 37743.0 157.9 ᎈ60/045 Pepewo ...... 14 30 16 5.65 inc. 14 27 13 6.41 and 15 18 3 4.44 and 15 16 1 6.50 20 27 7 9.58 and 21 27 6 10.5 and 23 24 1 33.0 47 72 25 1.38 inc. 47 57 10 2.08 and 50 52 2 2.77 and 54 56 2 2.87 RC1098 ...... 188702.3 37774.7 ᎈ90/007 Pepewo ...... 34 50 16 2.84 inc. 34 44 10 4.02 and 38 44 6 5.67 and 38 40 2 8.73

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Table 19-3: Kennecott RC Drilling Results—Seraro, Tatau Island

TIG TIG RLo` From To Intercept Au Grade Hole North East (m) Dip/Azi⍭ (m) (m) (m) (g/t) RC1027 ...... 189326.5 36428.0 186.8 ᎈ60/225 Seraro ...... 22 33 11 1.53 inc. 22 27 5 2.60 and 22 24 2 4.74 and 23 24 1 5.05 46 52 6 37.1 inc. 47 50 3 57.7 56 60 4 1.26 112 114 2 0.88 118 128 10 0.86 RC1020 ...... 189429.6 36308.9 139.6 ᎈ60/225 Seraro ...... 0 4 4 11.9 inc. 1 4 3 15.6 and 1 3 2 20.3 130 136 6 0.93 RC1043 ...... 189312.5 36261.7 100.0 ᎈ60/225 Seraro ...... 0 2 2 0.62 50 52 2 7.57 50 51 1 14.0 55 59 4 1.97 75 84 9 2.68 inc. 75 79 4 4.92 and 75 78 3 5.94 and 75 76 1 12.7 inc. 81 83 2 1.30 93 95 2 1.81 RC1050 ...... 189322.5 36437.7 187.0 ᎈ60/315 Seraro ...... 75 78 3 0.77 95 101 6 0.80 104 109 5 8.28 inc. 104 108 4 9.60 and 105 107 2 11.0

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Table 19-4: Kennecott RC Drilling Results—Mt Tiro, Tatau Island

TIG TIG RL From To Intercept Au Grade Hole North East (m) Dip/Azi⍭ (m) m) (m) (g/t) RC1037 ...... 188417.3 37270.0 280.7 ᎈ60/045 Mt Tiro ...... 0 4 4 2.23 inc. 0 3 3 2.75 and 1 3 2 3.38 47 53 6 2.26 inc. 47 52 5 2.58 and 50 51 1 5.67 86 100 14 3.23 inc. 88 98 10 4.14 and 88 92 4 5.28 and 96 98 2 5.34 104 124 20 3.08 inc. 110 120 10 5.71 and 116 120 4 11.4 and 118 120 2 14.2 128 140 12 0.61 143 150 7 1.37 inc. 147 150 3 2.31 DDHT1 ...... 188413.9 37233.5 292.5 ᎈ90/007 Mt Tiro ...... 0 16 16 2.26 inc. 1 6 5 1.68 and 9 15 6 3.94 and 10 11 1 8.06 41 47 6 0.66 50 52 2 0.75 66 70 4 0.57 86 89 3 3.20 inc. 87 88 1 8.07 109 111 2 1.15 116 122 6 2.57 inc. 117 122 5 2.91 and 121 122 1 10.2 125 131 6 0.96 inc. 126 130 4 1.09 134 147 13 2.06 inc. 134 136 2 1.40 inc. 138 139 1 5.63 inc. 141 145 4 3.69 172 174 2 1.28 176 183 7 1.09 inc. 179 181 2 2.31 193 199 6 0.77

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19.1.5 Barrick Under the terms of a letter of intent, effective from May 2008 to Feb 2010, Barrick (PNG) explored within those blocks of Allied Gold’s exploration licence EL609 covering the adjacent Tatau (EL609 Block B) and Big Tabar (EL609 Block C) Islands. Barricks activities included: • Completion of 4 diamond core holes totalling 1,927 m at the Tupinda Prospect, Big Tabar • Completion of 6 diamond core holes totalling 2,625 m at the Banesa Prospect, Big Tabar, and • Reconnaissance geological mapping and rock-chip sampling of the alkaline intrusive complex on central Tatau Island.

19.1.5.1 Banesa Prospect A six hole diamond drilling program at Banesa was completed in May 2009. Holes BND2, and BND4-7 intersected zones of Cu/Au alkaline porphyry style mineralisation. Significant intersections using a 0.5 g/t Au equivalent cut off and maximum of 2 m internal dilution are summarised in Table 19-5. Logged Cu/Au mineralisation in hole BND2 (best intercept 22 m at 1.58 g/t Au and 0.32% Cu from 54 m) is associated with a potassic altered micromonzonite porphyry between 20 and 211 m.

21APR201103042937 Figure 19-2 Plan view geology and location map of Banesa target area on Tabar Island Hole BND5 (best intercept 69 m at 0.83 g/t Au and 1.13% Cu from 50 m) intersected a brecciated feldspar-hornblende monzodiorite that, from 99 to 140 m, hosts sheeted quartz veinlets (up to 10% of rock volume) with phyllic (sericite-silica) alteration over-printing earlier potassic alteration. Hole BND6 (best intercept 77 m at 0.46 g/t Au and 0.95% Cu from 62 m) commenced in phyllic altered polymictic breccia before entering a porphyritic monzodiorite between 74 m and 118 m. The monzodiorite shows phyllic overprinting potassic alteration is locally brecciated and contains a sheeted quartz vein zone between 74 m to 95 m, similar to that intersected in BND5. The hole re-enters altered polymictic breccia to 158 m with 1% disseminated pyrite. A contact between an upper pyroxene- porphyritic monzodiorite and a lower plagioclase-biotite-horneblende monzodiorite occurs at 235 m (9.8 m at 0.69 g/t Au from 235.2 m).

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From 237 m to 435 m, hole BND7 (collared 200 m SW of BND2, best intercept 18 m at 1.38 g/t Au and 0.36% Cu from 398 m) intersected medium grained plagioclase-pyroxene monzodiorite. Copper mineralisation, as fracture controlled chalcopyrite with minor bornite, appears at 240 m and continues sporadically to the end of hole. Barrick are assessing whether coherent zones of potassic alteration are likely along strike of or below the Banesa drilling.

Table 19-5: Banesa drill hole geochemistry (Note BND1 is a Kennecott 1989 drill hole)

Utm Utm Utm From To Intercept Au Grade Cu Grade Hole ID North East RL Dip/Azim (m) (m) (m) (g/t) (%) BND2 ...... 393355 9674385 147 ǁ60o/129 0.0 521.0 54.0 76.0 22.0 1.58 0.32 incl 62.0 63.6 1.6 5.08 0.83 100.0 112.0 12.0 0.87 0.33 134.0 142.0 8.0 1.75 0.30 146.0 150.0 4.0 1.18 0.50 180.2 184.1 3.9 1.01 0.29 203.6 207.6 4.0 0.90 0.37 BND3 ...... 393208 9673872 112 ǁ60o/125 0.0 164.3 No significant intercepts BND4 ...... 393208 9673871 112 ǁ60o/080 0.0 485.6 210.0 215.2 5.2 0.94 0.37 227.0 245.0 18.0 1.29 0.56 368.0 372.3 4.3 0.79 0.24 458.0 464.0 6.0 0.52 0.11 BND5 ...... 393376 9673921 207 ǁ60o/090 0.0 483.6 *** 50.0 119.0 69.0 0.83 1.13 incl 61.0 83.0 22.0 1.05 1.22 incl 63.0 67.0 4.0 2.74 1.75 and 103.0 119.0 16.0 1.59 1.54 121.7 125.0 3.3 0.90 0.09 127.6 138.4 10.8 1.20 0.14 BND6 ...... 393376 9673922 207 ǁ60o/050 0.0 535.4 40.0 44.0 4.0 0.63 0.11 *** 62.0 139.0 77.0 0.46 0.95 incl 88.0 116.8 28.8 0.91 1.31 235.2 245.0 9.8 0.69 0.06 BND7 ...... 393246 9674196 146 ǁ60o/135 0.0 435.1 130.0 133.0 3.0 0.67 356.0 363.6 7.6 1.33 0.26 398.0 416.0 18.0 1.38 0.36

NOTE: Except where indicated by ***, downhole intercepts are determined using an Au cut-off of 0.5 g/t Au and minimum 2 m length. Such intercepts may include material below cut-off but no more than 2 sequential metres of such material and except where the average drops below the cut-off. Selvage is only included where its average grade exceeds 0.5g/t. Using the same criteria for included sub-grade, supplementary cut-offs of 2.5 g/t, 5.0 g/t and 10 g/t are used to highlight higher grade zones and spikes. Single assays intervals are reported only where >5.0 g/t and >=1 m downhole. The limit of detection for gold is <0.005 g/t. A sample, with a reported below detection grade, is assigned a grade of half the detection limit, in this case 0.0025 g/t. Intercept grades are calculated using sample grades weighted by sampled length divided by interval length. This results in any included core loss being assigned zero grade. Cu grade is its weighted average over the same intervals as those defined by the Au intercepts. The Cu detection limit is 1 ppm and is determined by Aqua Regia digest of a 0.5g charge followed by ICP AES analysis. Where indicated (***), the intercept is defined by using a Cu cut-off of 0.5% Cu and minimum 2 m length.

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19.1.5.2 Tupinda Assay results received for four holes drilled at the Tupinda Prospect showed weak Cu-Mo-Au mineralisation in TPD1, TPD3 and TPD4 (Figure 19-3 and Table 19-6).

21APR201103051703 Figure 19-3: Tupinda project alteration and drilling

Table 19-6: Tupinda drill hole geochemistry

Utm Utm Utm From To Intercept Au Grade Cu Grade Hole ID North East RL Dip/Azim (m) (m) (m) (g/t) (%) TPD001 ...... 384670 9681262 72 ǁ88o/332 0.0 491.9 *** 229.0 236.0 7.0 0.14 0.42 TPD002 ...... 384344 9681516 63 ǁ90o/170 0.0 279.4 no significant intersections TPD003 ...... 384859 9681664 162 ǁ89o/226 0.0 500.0 356.0 359.5 3.5 1.17 0.19 TPD004 ...... 384868 9681383 141 ǁ90o/105 0.0 655.6 *** 297.1 299.0 1.9 0.25 0.38

NOTE: Except where indicated by ***, downhole intercepts are determined using an Au cut-off of 0.5 g/t Au and minimum 2 m length. Such intercepts may include material below cut-off but no more than 2 sequential metres of such material and except where the average drops below the cut-off. Selvage is only included where its average grade exceeds 0.5 g/t. Using the same criteria for included sub-grade, supplementary cut-offs of 2.5 g/t, 5.0 g/t and 10 g/t are used to highlight higher grade zones and spikes. Single assays intervals are reported only where >5.0 g/t and >=1 m downhole. The limit of detection for gold is <0.005 g/t. A sample, with a reported below detection grade, is assigned a grade of half the detection limit, in this case 0.0025 g/t. Intercept grades are calculated using sample grades weighted by sampled length divided by interval length. This results in any included core loss being assigned zero grade. Cu grade is its weighted average over the same intervals as those defined by the Au intercepts. The Cu detection limit is 1 ppm and is determined by Aqua Regia digest of a 0.5g charge followed by ICP AES analysis. Where indicated (***), the intercept is defined by using a Cu cut-off of 0.5% Cu and minimum 2 m length.

19.1.5.3 Tatau Island First pass mapping of Tatau Island (70% complete) identified a broad area of medium grained equigranular monzodiorite, underlying most of the Cu-Mo anomalous area defined by soil and surface rock chip sampling. Zones of propylitic and phyllic alteration are mapped out within the monzodiorite that is also intruded by N and NE-striking feldspar porphyry and mafic dykes. A previously identified strong Cu-Au surface rock chip sampling anomaly was traced to an outcrop of a 10 m wide feldspar porphyry dyke in the upper Talik drainage. The dyke shows strong silica-sericite alteration with quartz-chalcopyrite-magnetite veinlets. Other feldspar porphyry dykes in the Talik area show variable intensities of chlorite-carbonate alteration with rare chalcopyrite-galena-pyrite fracture fill.

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Within the area mapped, neither convincing alteration zonation, quartz stockwork veining or porphyry style mineralisation was encountered.

19.2 Infrastructure 19.2.1 Overview This section is included to show that much of the infrastructure required for the Simberi combined oxide/ sulphide project is currently in place as part of the Simberi oxide operations. The oxide processing plant (centre right), the aerial rope conveyor (top right), warehouse and exploration laboratory (centre front), wharf and Company vessel ‘‘Lady Geraldine’’ (left) are shown in Figure 19-4. Figure 19-4 shows an overview of the infrastructure and process plant already existing at the coast.

21APR201102501486 Figure 19-4: Coastal Infrastructure Simberi Gold

19.2.2 Power 19.2.2.1 Historical The existing power station is operated by Aggreko under contract number 183-EC-02. The power station is diesel fired and rated to a maximum demand of 6 MW. The power plant normally operates at a load of between 3 MW and 3.5 MW. Up to 10% of the total demand is provided by the aerial rope conveyor, which generates power while moving the ore down from Sorowar over a vertical fall of about 230 m. Power is distributed from the power station at 11 000 V to the main transformers adjacent to the motor control centres within the process plant, the Sorowar mining area and via two overhead powerlines to the warehouse, wharf and the accommodation village. The individual generator sets are Aggreko NHC20/KTA50G3 units having a peak rating of 1250 kVA at 50 Hz and a continuous load rating of 850 kW. The units operate coupled to dedicated step-up transformers (415 V to 11 kV) that feed the main power station distribution and control switchboard. The output

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terminals of the distribution and control switchboard constitute the metering and energy transfer point under the contract. The basis of the BOO Contract with Aggreko is comprised of three pricing components: • Base facilities charges that also include the generation charges for the first 500 kW/d of load. • Generation charges made on the basis of metered kWh for all load above 500 kW/d. • Maintenance consumables. Allied provides diesel fuel, freight for equipment, consumables required for power plant operation and accommodation and messing for the Aggreko power plant attendants. The average power load for the existing Simberi project is estimated at 3070 kW. Power output from the power plant was 3250 kW. Allied Gold has assessed the diesel consumption for 2009, which amounted to A$0.9864/kWh. Cost of power based on usage of 1800 MWh/month is A$0.37/kWh. For the expanded oxide case of 3.5 Mtpa, cost is estimated at $0.34/kWh, based on average load of 4090 kW and maximum demand of 6000 kW under the same type of contract. HFO is under consideration as an alternative fuel source for power supply for the combined oxide expansion and sulphide project.

19.2.2.2 Combined Oxide/Sulphide Expansion Project Power demand, which is based on the estimated motor load and plant utilisation, of 8 MW is required for the sulphide plant, with a total power demand of 14 MW for the combined oxide and sulphide plant. Installed power will be 25 MW for the sulphide and the proposed oxide plant expansion. The installed power does not account for energy recovered from the roaster, and is calculated based on maximum load and 100% plant utilisation for all plant equipment. A study has been completed by GRES, ‘‘Simberi Gold Project—HFO and Power Options Study’’, that investigates power supply for the project, particularly HFO. Recent political development in PNG has removed the opposition by the government for the use of HFO in mining facilities within PNG. It is proposed to utilise HFO for power generation and this choice has predominately been driven by the large power requirement for the sulphide plant and subsequent substantial operating cost for this entity. Lihir Gold Mine currently operates its power station using HFO and subsequently the vessel that delivers the fuel to Lihir can also be used for Simberi, allowing the potential delivery to site via a submersible pipeline. HFO costs are based on capital cost for additional wharfage and pylons, as well as tankage of $7.6 M. Operating cost is based on a BOO response received by GRES from D&G Energy for a HFO power station contract supply that calculated to A$0.2235/kWh. Although this was based on a lower power supply for 8 MW, it is considered a reasonable estimate to use for power costs for the PFS. The roaster design incorporates waste heat recovery from the roaster off-gas of approximately 3 MW. This is based on the assumption that the roaster operates at 700⍭C and the thermal to electrical energy ratio is 3:1, resulting in 45% of the energy from the roaster bed and 55% by heat recovery from the exhaust gas. The waste heat recovery system consists of a waste heat boiler, a steam drum and bed coils, which allows efficient use of the numerous and critical steam/roaster interfaces, from a mechanical, process control and operational perspective. The use of coils in the steam system eliminates the need for a gas cooler and reduces the volume of water in the system, consequently reducing the roaster freeboard diameter, duct sizes, Electrostatic Precipitator (ESP), scrubber vessel sizes and ID Fan.

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21APR201102564481 Figure 19-5: shows the current power station at Simberi

19.2.3 Water Potable water for the camp and the main treatment plant is obtained from a spring and from a water bore. Water is filtered through a sand and UV filtration system. Rainwater is harvested from rooftops of some of the main buildings and stored in poly tanks with bottled potable water supplied for drinking. Raw water supply for the main treatment plant was initially sourced from the ocean via a pump station located on the western side of the wharf. In 2009, process water has been sourced from surface water that has ponded in a pit that was formed during construction to win coronus. This pond is located about 500 m south-west of the process plant and the water is pumped to the process raw water pond and is augmented with sea water when required. Adjacent to this, lies a smaller pond with fresh water which is used as process water. Simberi Gold holds extraction licenses for creek water (Monun and Darum Creeks) and groundwater (Pigiput Plantation) and Monun Creek catchment although currently none of these sources are being used. Additional water will be provided from a silt collection pond downstream of the pits and in later years from pit dewatering pumps. Additional water for the expanded 3 5 Mtpa case and the sulphide plant will be mainly sea water.

19.2.4 Buildings Process plant buildings, located at 10 m RL, include the site administration office, mill operations offices and training rooms, site assay laboratory, plant maintenance workshop and stores, and site security buildings. Simberi Island is located in a Category 2 earthquake zone and the engineering design of the process plant and associated buildings and infrastructure has taken this into account. No additional buildings are required for the expanded oxide or sulphide case.

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19.2.5 Camp Accommodation The accommodation centre has current capacity of 208 beds, which includes a mix of single rooms with ensuites or shared adjoining bathrooms, single room dormitories with central bathroom and bunk houses with common ablutions. New single room blocks with bathroom ensuites (15 rooms) are currently being installed in the new accommodation centre and an additional five single room blocks are being installed in the old exploration camp (50 beds), which already has shared and single rooms with a common ablutions block (32 beds). The accommodation centre has a kitchen and dining area and wet mess, which was upgraded in Q3 2009. A laundry facility caters for washing residents’ clothes, towels and linen and catering for the camp is contracted. Sewage and waste water from the camp is pumped into the tailings discharge line for subsea disposal at a depth of 115 m below sea level. Additional camp capacity will include a 100 man construction camp to facilitate the construction crew for the sulphide project, and upon completion of the construction phase, 50 beds will be removed leaving 50 additional beds for the sulphide plant operations team. Figure 19-6 shows the Simberi Camp with the operation in the background.

21APR201102493957 Figure 19-6: Simberi Camp

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19.2.6 Airstrip and Wharf 19.2.6.1 Airstrip Simberi Gold has constructed a 1400 m long class ‘‘Y’’ airstrip within the Company’s Pikung Plantation that is located on the south coast of Simberi Island approximately 3 km from the process plant site (Figure 19-7). This facility can accommodate aircraft up to Dash 8 size and citation jets. It is planned to upgrade the airstrip for night operation to allow 24 hour medivac access. Non-local workforce is rostered on a fly in fly out (FIFO) operation that currently has two rosters of 16/12 (days on/ days off) and 28/14. PNG nationals are flown back to their points of hire and expatriates are flown back to Australia to their points of hire. The aircraft (Dash 8) is under a charter contract with PNG carrier Airlines of PNG, and services ports of Kavieng in New Ireland Province, Rabaul in East New Britain, and Port Moresby.

21APR201102481030 Figure 19-7: Simberi Airstrip

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19.2.6.2 Wharf A 20 m long concrete wharf constructed by Simberi Gold is located on the northern side of Pigiput Bay (Figure 19-8). It is proposed to install dolphins off the wharf, which will allow one vessel to berth onshore while the other vessel is tied up. There is an option to construct the dolphins using the coronus limestone reserves on the island. This will also facilitate the off-loading of HFO, which will be delivered from the supply vessel to site via a submersible pipeline, while also increasing the capacity of the Lady G LCT vessel to transport other reagents and consumables. Ships with up to 6.5 m draft can be received and offloaded at the wharf. A 110 t crawler crane capable of unloading 25 t containers at 12 m reach operates at the wharf. The Company owned landing barge, MV Lady Geraldine, services the operation with regular sailings to Lae (three return trips per month) and Rabaul (one to two trips as required). The vessel has a capacity of 450 t of cargo and can hold 500 kL of diesel, and has greater capacity for transportation of other reagents and consumables required for the plant, given that HFO fuel will be delivered via a submersible pipe. A barge ramp is located at the head of Pigiput Bay and used to discharge roll on roll off cargo.

21APR201103060244 Figure 19-8: Simberi Wharf

19.2.6.3 Roads and Communications The existing perimeter road (26 km) at Simberi was upgraded during construction and is used to transport local employees to and from their villages to work, using man-hauls that are either owned by the company or contracted from local clan business groups. All weather internal mine access roads have been constructed as well as a 1500 m long haul road from the Samat pits to the process plant and a 500 m long haul road from the Sorowar pit to the Ropecon tip head. Site communications including voice and data are provided through a VSat system operating on a band width of 1500 kbyte down and 280 kbyte up. A PNG Telikom VSat provides six incoming (five phones and one fax) lines. Phone extensions link the camp, treatment plant and infrastructure facilities and allow for two payphones with one being located in the camp and the other for public use. A PNG Telikom mobile phone tower has been installed on Simberi and provides mobile service to the island. A new haul road will need to be constructed from the Pigiput Mine down to the coast for transportation of ore and waste material.

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20.0 INTERPRETATION AND CONCLUSIONS 20.1 Resources The Simberi resource is a robust and proven gold deposit. The current resource models show a positive reconciliation in the mined pits. This issue should be investigated with the objective of optimising production and potentially increasing the mine life. The historical resources at Botlu, Pigibo are accepted as Inferred based on the Author’s validations. The resource models should be re-estimated using the current data set and understanding of the deposits’ geology. The Sulphide resource appears to have potential and should be included in all future deposit assessments Beyond the Simberi mining lease the exploration ground held by Allied over the Island group is all very prospective.

20.2 Reserves The reserves at Simberi, being based on the resource are also proven and robust. Improvements to the reserve position come directly from improvements and increases in the resource. The development of some of the satellite deposits will add to the reserve base. Inclusion of more Sulphide material has the potential to significantly increase reserves.

20.3 Processing • The current oxide processing plant is operating well and achieving good oxide recoveries. • The infrastructure that is in place at Simberi Gold is adequate for the 2 Mtpa operation, and with limited upgrading including the wharf facility, will be adequate for the 3.5 Mtpa oxide plus the 1.5 Mtpa sulphide operation. • The estimated capital cost for the oxide plant expansion to 3.5 Mtpa by GRES of $32 M is reasonable for the modifications and additions proposed. • The estimated capital cost for the sulphide plant by GRES of $188 M is reasonable for the plant proposed. • Operating costs for the expanded oxide plant of $9.25/t are based on operating costs for the current six month operating period with a reduction associated with fixed costs for the expanded plant. • Operating costs for the sulphide plant of $23.29/t have been calculated based on first principles and the use of HFO. This cost has been benchmarked against a comparable operation, and is considered reasonable. • The gold grades which will be fed to the oxide process plant average 1.01 g/t. Sulphide gold grades average 2.41 g/t. Maintaining low operating costs will be critical to project viability. • The 3.5 Mtpa oxide case in conjunction with the 1.5 Mtpa sulphide case is commercially viable with pre-tax NPV of $334 M at 10% discount factor (this includes the current 2 Mtpa operation). Cash cost is $678/oz.

21.0 RECOMMENDATIONS • The remaining historical resources should be re-estimated incorporating the current geological understanding of the island, recent drilling and other geological data and any updated topographical information. Outsourced this is estimated to cost AUD$50 K. • The positive mining reconciliation should be investigated. This could be done in-house or outsourced at an estimated cost of AUD$30 K. • A critical review of current mining operations should be undertaken and any revisions applied to the optimisation, pit design and scheduling. This could be done in-house or outsourced at an estimated cost of AUD$40 K.

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• Optimisation of the resource and reserve calculations, final pit designs and scheduling should be revisited on a regular basis. The pit optimisations need to be updated to reflect more recent increasing trend in the gold price. • Exploration drilling to investigate the nature of the sulphide mineralisation beneath the current Sorowar pit design should proceed as a matter of priority. There appears to be significant potential to increase the sulphide resource and reserve base at Simberi, and thus improve the overall economics of the project, through improving the understanding of the sulphide mineralisation in the Sorowar area. • Expansion of the oxide plant to 3.5 Mtpa should proceed. Estimated cost is $32 M. • Allied Gold should consider a Bankable Feasibility Study, in conjunction with additional drilling, that will provide greater confidence to the combined oxide and sulphide project. The cost of a Bankable Study is estimated at $6-$10 M. The total cost of the combined oxide and sulphide project is estimated at $278 M including the $32 M oxide plant expansion. • Allied should closely manage its operating costs to keep its costs within budget estimates.

22.0 REFERENCES Documents referenced and reviewed during the compilation of the Technical Report

Author Date Title Allied Gold (a) ...... 2003 A Brief Report on Simberi Mining Area Association Project Development Issues and Simberi Village Survey, R. Hastings 30 September 2003 Allied Gold (b) ...... 2009 Project to Date Met Accounting Spreadsheet Allied Gold (c) ...... 2009 SIM Mine Input Model—Final Budget 17 July 2009 Allied Gold (d) ...... 2009 Battery08_09 Spreadsheet Operating Cost Data Allied Gold (e) ...... 2009 Email Frank TerraNova 2 Sep 2009 with Hedging Information Allied Gold (f) ...... 2009 Emails Ross Hastings Simberi NI43-101 Infrastructure 25 Aug 2009 Allied Gold (g) ...... 2009 Application for Extension of Term of EL609, 2 February 2009 Allied Gold (h) ...... 2009 EL609 Graticule Map Behre Dolbear Australia ...... 1996 Independent Technical Review of the Geology, Data Collection and Resource Estimation for The Simberi Gold Project— PNG Nord Resources (Pacific) Pty Ltd, 12 July 1996 Coffey (a) ...... 2008 Compliance_Monitoring Report (2008), Coffey Natural Systems Pty Ltd, October 2008 Coffey (b) ...... 3 Mtpa Expansion Environmental Assessment Proposal DEC (a) ...... 2005 Approval of Environmental Management Program for Dimberi Gold Mine, Department of Environment & Conservation, 26th January, 2005 DEC (b) ...... 2006 Grant of Environmental Permits, 17 July 2006

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Author Date Title Dept of Attorney General ...... 1996 Memorandum of Agreement relating to the Simberi Mining Project between The Independent State of Papua New Guinea and the New Ireland Interim Provincial Government and Simberi Gold Company Pty Ltd and Simberi Landowners Association and Tabar Community Government, 21/11/1996 Deputy Registrar of Companies ...... 1996 Certificate of Incorporation—Simberi Gold Company Pty Ltd, 8 November 1996 Enesar (a) ...... 2004 Supplementary Baseline Study, Eneasr Consulting Pty Ltd, April 2004 Enesar (b) ...... 2005 Supplementary Baseline Study No. 2, Eneasr Consulting Pty Ltd, August 2005 Enesar (c) ...... 2006 Waste Management Plan, Eneasr Consulting Pty Ltd, September 2006 Enesar (d) ...... 2006 Conceptual Mine Closure Plan, Eneasr Consulting Pty Ltd, May 2006 GRES (a) ...... 11551 - 0009 Power Study Options A GRES (b) ...... 11551 - 0021 3 Mtpa Study GRES (c) ...... 11550 - 0086 Debottlenecking Study Actions Rev E Investment Promotion Authority ...... 1997 Certificate Permitting a Foreign Enterprise to Carry on Business in an Activity 0 Certificate No 1655, 6 January 1997 Lycopodium ...... 2003 Feasibility Study Simberi Mining Joint Venture, Simberi Oxide Gold Project, August 2003. Lycopodium Pty Ltd. MRA (a) ...... 2007 Renewal—Mining Lease No 136, PNG MRA Office of the Registrar of Mineral Tenements, 4 May 2007 MRA (b) ...... 2009 Notice of Application for extension of a term of a tenement for exploration licence No 609 under section 106 (A) (D) Mining Act, 1992, 23 February 2009 MRA (c) ...... 2008 Notification of Grant of Extension of Term— EL 609, 3 June 2008 NSR (a) ...... 2003 Simberi Oxide Gold Project, Environmental Baseline Study, December 2003, NSR Environmental Consultants Pty Ltd NSR (b) ...... 2008 Simberi Oxide Gold Project Environmental Plan, September 1996, NSR Environmental Consultants Pty Ltd Oakvale Capital Limited ...... 2009 Simberi Gold Company Hedging Position, 30/6/2009 Office of Civil Aviation ...... 1999 Aerodrome Licence, 16 March, 1999 Pangtel ...... 2007 PNG Radio and Telecommunications Authority—Issue of Corporate licences— Land Mobile Repeater Station, 4/07/2007 PNG ...... 1992 Mining Act 1992 and Regulation, Independent State of Papua New Guinea. QSA Global ...... 2007 Certificate for Sealed Radioactive Sources No 109179-OV726, 22 May 2007

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Author Date Title Registrar of Tenements ...... 2009 Consent to Export Geological Samples and Specimens, 30 July 2009 Registrar of Titles (a) ...... 1938 Land (ownership of Freeholds) ACT 1976— Lease—Pikung Plantation Registrar of Titles (b) ...... 1985 Land (ownership of Freeholds) ACT 1976— Lease—Pigiput Plantation Simberi Gold Company Ltd ...... 2005 Understanding on Issues for the Simberi Project Tabar Islands Group, N.I.P. PNG between Simberi Mining Joint Venture and The Landowners of Simberi Island, 6/4/2005 Sode, D...... 2005 Tax Exemption Letter, Internal Revenue Commission, Port Moresby, PNG Contract documents referenced and reviewed during the compilation of the Technical Report

Author Date Title Allied Gold Limited c1 ...... 16/10/2008 Property Lease Level 1, 15 Mallon St Bowen Hills Qld 4006, 24/11/2008—3 yrs + 3mnths Allied Gold Limited c2 ...... 14/09/2004 Transfer of Nord Pacific Limited stock to Allied Simberi Gold Company Ltd c1 ...... 2007 Oxide Pit Clans Limited—Bulldozer Hire— 01/11/2007 to 31/10/2009 Simberi Gold Company Ltd c2 ...... 2007 Sordar Clan—Rubbish Collection and Small Tipper Truck Services—01/3/2007 to 28/2/2009 Simberi Gold Company Ltd c3 ...... 2008 Manhaul Services by Berar Clan 01/11/2008 to 31/10/2009 Simberi Gold Company Ltd c4 ...... 2008 Manhaul Services by Lavamadeis Clan 01/11/2008 to 31/10/2009 Simberi Gold Company Ltd c5 ...... 2008 Perivot Clan—Provision of Stone Pitching on Simberi Island—one year—dated 18/01/2008 Simberi Gold Company Ltd c6 ...... 2009 Airport Ground Clearing—Wuitgamgam Clan—3 months ending 31 march 2009 Simberi Gold Company Ltd c7 ...... 2009 Various documents relating to export/import of geological core for geochemical analysis by ALS Chemex Simberi Gold Company Ltd c8 ...... 2009 Camp Grass Clearing—Sitchium Clan— 3 months ending 31 March 2009 Simberi Gold Company Ltd c9 ...... 2009 ELTA Construction and Engineering Limited—Day Labour Services—one year ending 30 June 2010 Simberi Gold Company Ltd c10 ...... 2009 Lane Investments—Ground Clearing— 3 months ending 31 March 2009 Simberi Gold Company Ltd c11 ...... 2009 Kaparak Clan—Maintenance of Air Conditioning—3 months ending 31 March 2009 Simberi Gold Company Ltd c12 ...... 2009 Rumarik Clan—Provision of Day Labour— one year to 28 February 2010 Simberi Gold Company Ltd c13 ...... 2009 Oxide Pit Clans Limited—Day Labour Services—one year ending 30 June 2010 Simberi Gold Company Ltd c14 ...... 2009 Oxide Pit Clans Limited—Wet Hire Trucking Services—one year ending 9 April 2010

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Author Date Title Simberi Gold Company Ltd c15 ...... 2009 Shunammite Engineering Ltd—Wet Hire of Plant—12 months ending April 2010 Simberi Gold Company Ltd c16 ...... 2009 Simberi Resources Development Company Limited—Labour Hire for the Light Vehicle Workshop—12 months ending 1/3/2010 Simberi Gold Company Ltd c17 ...... 2009 JT & Sons Tyre Service—provision of tyre service on Simberi Island for one year— dated 29/11/2008 Simberi Gold Company Ltd c18 ...... 2/12/1996 Compensation Agreement for the Simberi Project Tabar Island Group, N.I.P. PNG between Simberi Gold Company Pty Ltd and The Landowners (revised march 2005 and 29/6/2005) Simberi Gold Company Ltd c19 ...... 7/10/2005 Mine Site Construction services—Cat D6R LGP Dozer Simberi Gold Company Ltd c20 ...... Dec-06 Catering Contract between Simberi Gold Company Limited and Eurest (PNG) Catering and Services Limited Simberi Gold Company Ltd c21 ...... 21/12/2006 Telikom PNG Installation and Hire telecommunications services + various documents/communications Simberi Gold Company Ltd c22 ...... 18/04/2007 Contract for Power Generation Services between Simberi Gold Company and Aggreko Generator Rentals Pty Ltd Simberi Gold Company Ltd c23 ...... 5/12/2007 Refining Agreement—Simberi Gold Company Limited and AGR Matthey Simberi Gold Company Ltd c24 ...... 18/01/2009 ADT 740 Ejector Hire—Hastings Deering (PNG) Limited and Simberi Gold Company (B1R00478) Simberi Gold Company Ltd c25 ...... 1/03/2009 Offers by Islands Petroleum Ltd to supply petroleum products to Simberi Gold Ltd Simberi Gold Company Ltd c26 ...... 11/06/2009 Aircraft Charter Agreement between Simberi Gold Company and Airlines of Papua New Guinea Limited Simberi Gold Company Ltd c27 ...... 13/06/2009 Diamond Drilling Contract between Capital Drilling Limited and Simberi Gold Company Limited Simberi Gold Company Ltd c28 ...... 17/07/2009 Special Lease and Dry Hire agreement with Mrs Linus Vunagoi and Mr Danny Maris on behalf of BIK Tabar Island for Fork Lift Hire 1/3/2009 to 30/11/2011 Simberi Gold Company Ltd c29 ...... 1/12/2009 ADT 740 Ejector Hire—Hastings Deering (PNG) Limited and Simberi Gold Company (B1R00477)

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23.0 QUALIFIED PERSONS STATEMENTS CERTIFICATE OF QUALIFIED PERSON I, Stephen Godfrey, of Perth, Australia do hereby certify that: • I am a Principal Resource Geologist with Golder Associates Pty Ltd., 1 Havelock Street, West Perth, Australia. • I am a graduate of The University of New England, NSW, Australia, B.Sc.(Hons), 1982. • I am a member in good standing of the Australian Institute of Mining and Metallurgists. • I have practiced my profession for 26 years since graduation. • My relevant experience with respect to the Simberi Gold Project includes 17 years resource modelling of a variety of metalliferous projects including 8 years working with greenstone gold deposits. • I have read the definition of ‘‘qualified person’’ set out in National Instrument 43-101—Standards of Disclosure for Mineral Projects (‘‘NI 43-101’’) and certify that, by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I am a ‘‘qualified person’’ for the purposes of NI 43-101. • I am responsible for the preparation of Sections 1.0-15.0, 17.1-19.0, 19.1, 20.1, 21.0, 22.0 and 23.0 of the Competent Persons Report titled ‘‘Simberi Gold Project, Simberi Island, Papua New Guinea’’, dated April 2011. • I most recently personally inspected the Simberi Gold Project in January 2011. • I have been involved with the Simberi Gold Project since 2004, as an independent geological consultant with Golder Associates Pty Ltd. • As of the date of this certificate, to the best of my knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading. • I am independent (as defined by Section 1.4 of NI 43-101) of Allied Gold Limited • I have read NI 43-101 and 43-101F1 and the Technical Report has been prepared in compliance with that instrument and form. Signed and dated this 17th day of June, 2011 at Perth, Australia

signed Stephen Godfrey

Signature

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CERTIFICATION OF QUALIFIED PERSON I, Phil Hearse, do hereby certify that: • I am a graduate from University of South Australia, Australia, with a Bachelor of Applied Science degree in Primary Metallurgy in 1973 and a graduate from Hull University United Kingdom with a Master of Business Administration degree in 1994. I have continually practiced the profession of metallurgist since 1973. • I am a Fellow of The Australasian Institute of Mining and Metallurgy. • I am Managing Director of BatteryLimits Pty Ltd, a firm of consulting metallurgists and process and risk engineers which has been practicing in this profession since 2004. I hold office at 140 Hay St, Subiaco, WA 6008, Australia and have been employed as such since 2004. Prior to this time I was Director Advisory and Principal Consultant for the engineering company GRD Minproc Ltd for four years and before that Managing Director of the metallurgical consultancy Normet Pty Ltd for 18 years. • I have held technical and operational roles at Broken Hill in silver lead zinc flotation, at Bougainville Copper in copper/gold flotation and heap leaching, at Queensland Nickel in nickel and cobalt hydrometallurgy and at Gove alumina in alumina processing. With 35 years mining industry experience, I have provided operational and consultancy services to many mining projects and operations. • I have provided consultancy services to numerous gold projects. • I have read the definition of ‘‘qualified person’’ as set out in National Instrument 43-101 (‘‘NI 43-101’’) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfil the requirements to be a qualified person for the purpose of NI 43-101. • I have prepared Sections 16.0, 18.2-18.11, 19.2, 20.3, 21.0, 22.0 and 23.0 of the Competent Persons Report titled ‘‘Simberi Gold Project, Simberi Island, Papua New Guinea, dated April 2011. • I have visited the Simberi Gold site in February 2009 and most recently in June 2009. • I have no personal knowledge, as of the date of this Certificate, of any material fact or change, which is not reflected in this report, the omission to disclose that would make this report misleading. • Neither I, nor any affiliated entity of mine is at present, or under an agreement, arrangement or understanding expects to become, an insider, associate, affiliated entity or employee Allied Ltd, and/or any associated or affiliated entities. • A related party to me does hold securities in Allied Gold Ltd, amounting to less than 0.01% of the company’s total securities. Allied Gold Ltd has advised that it does not consider this material in compromising my independence. As such, I am independent (as defined by Section 1.5 of NI43-101) of Allied Gold Ltd. • I have read the NI 43-101 and Form 43-101F1, and CIM Standards on Mineral Resources and Reserves, and have prepared the technical report in compliance with NI 43-101 and Form 43-101F1. Signed and dated this 17th day of June, 2011 at Perth, Australia

signed Phil Hearse

Signature

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CERTIFICATE OF QUALIFIED PERSON I, John Battista, of Perth, Australia do hereby certify that: • I am a Principal Mining Engineer with Golder Associates Pty Ltd., 1 Havelock Street, West Perth, Australia. • I am a graduate of the Western Australian School of Mines, Kalgoorlie, Western Australia (a branch of Curtin University of Technology), B.Eng.(Mining). • I am a member and Chartered Professional in good standing of the Australasian Institute of Mining and Metallurgy (AusIMM). • I have practiced my profession for 21 years since graduation. • My relevant experience with respect to the Simberi Gold Project includes approximately 11 years’ experience in technical, mine operations and management positions in open pit gold mines, including two years as Senior Mine Planning Engineer at the Martha Hill gold mine in New Zealand, which is mining an epithermal gold deposit having similar mineralisation style to the Simberi deposits. • I have read the definition of ‘‘qualified person’’ set out in National Instrument 43-101—Standards of Disclosure for Mineral Projects (‘‘NI 43-101’’) and certify that, by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I am a ‘‘qualified person’’ for the purposes of NI 43-101. • I am responsible for the preparation of Sections 17.20, 18.1, 20.2, 21.0, 22.0 and 23.0 of the Competent Persons Report titled ‘‘Simberi Gold Project, Simberi Island, Papua New Guinea’’, dated November, 2011. • I most recently personally inspected the Simberi Gold Project between 28th October 2008 and 31st October 2008. • I have been involved with the Simberi Gold Project since 2004, as an independent mining consultant with Golder Associates Pty Ltd. • As of the date of this certificate, to the best of my knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading. • I am independent (as defined by Section 1.4 of NI 43-101) of Allied Gold Limited. • I have read NI 43-101 and 43-101F1 and the Technical Report has been prepared in compliance with that instrument and form. Signed and dated this 17th day of June, 2011 at Perth, Australia

Signed John Battista

Signature

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At Golder Associates we strive to be the most respected global company Africa +27 11 254 4800 providing consulting, design, and construction services in earth, environment, and Asia +86 21 6258 5522 related areas of energy. Employee owned since our formation in 1960, our focus, Australasia +61 3 8862 3500 unique culture and operating environment offer opportunities and the freedom to Europe +356 21 42 30 20 excel, which attracts the leading specialists in our fields. Golder professionals take North America +1 800 275 3281 the time to build an understanding of client needs and of the specific environments South America +55 21 3095 9500 in which they operate. We continue to expand our technical capabilities and have experienced steady growth with employees who operate from offices located [email protected] throughout Africa, Asia, Australasia, Europe, North America, and South America. www.golder.com

Golder Associates Pty Ltd Level 3, 1 Havelock Street West Perth, Western Australia 6005 Australia T: +61 8 9213 7600

21APR201110390875

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SECTION C—GOLD RIDGE PROJECT COMPETENT PERSON’S REPORT

20APR201122215417

REPORT

17 June 2011

COMPETENT PERSONS’ REPORT Gold Ridge Gold Project, Guadalcanal, Solomon Islands

Submitted to: Allied Gold Limited Royal Bank of Canada Europe Ltd 34 Douglas Street 71 Queen Victoria Street PO Box 2019 London EC4V 4DE MILTON QLD 4064 United Kingdom

Authors and Competent Persons

Stephen Godfrey ...... BSc(Hons)(UNE), DipEd(QU), MAusIMM, MAIG Associate, Principal Resource Geologist, Golder Associates Pty Ltd John Battista ...... B.Eng.(Mining), MAusIMM, Associate, Principal Mining Engineer, Golder Associates Pty Ltd Tony Showell ...... BAppSc, FAusIMM, Principal Consultoing Metallurgist, Battery Limits Pty Ltd

Report Number. 117641009-003-R-RevB-Draft-1100

Distribution: Allied Gold RBC Europe Ltd

11JAN200602133027 21APR201110390875

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COMPETENT PERSONS’ REPORT—GOLD RIDGE 20APR201122215417

AUTHOR COMPANY ADDRESS Stephen Godfrey Golder Associates Pty Ltd Level 2, 1 Havelock Street 21APR201110390875 WEST PERTH WA 6872

John Battista Golder Associates Pty Ltd Level 2, 1 Havelock Street 21APR201110390875 WEST PERTH WA 6872

23APR201114252950 Tony Showell Battery Limits Pty Ltd Level 1, 140 Hay Street SUBIACO WA 6008

Author Section Responsibility Stephen Godfrey ...... 1.0-15.0, 17.1-17.2, 20.1, 21.1, 22.0, 23.0 John Battista ...... 17.3, 20.2, 21.2, 22.0, 23.0 Tony Showell ...... 16.0, 18.0, 19.0, 20.3, 21.3, 22.0, 23.0

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Table of Contents

1.0 SUMMARY ...... 484 1.1 Scope ...... 484 1.2 Property Description and Location ...... 484 1.3 History ...... 484 1.4 Geology ...... 485 1.5 Metallurgy ...... 485 1.6 Mineral Resources ...... 485 1.7 Mineral Reserves ...... 486 2.0 INTRODUCTION AND TERMS OF REFERENCE ...... 486 3.0 RELIANCE ON OTHER EXPERTS ...... 488 4.0 PROPERTY DESCRIPTION AND LOCATION ...... 488 4.1 Area and Location ...... 488 4.2 Title ...... 489 4.3 Property Boundaries ...... 489 4.4 Location of Mineralisation and Mine Workings ...... 489 4.5 Royalties and Encumbrances ...... 489 4.6 Environmental Liabilities ...... 489 4.7 Required Permits ...... 490 4.8 Surface Rights ...... 490 4.8.1 SPL ...... 490 4.8.2 Mining Lease ...... 490 5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ...... 491 5.1 Access ...... 491 5.2 Physiography ...... 491 5.3 Climate ...... 492 5.4 People and Infrastructure ...... 492 5.4.1 People ...... 492 5.4.2 Infrastructure ...... 492 6.0 HISTORY ...... 492 6.1 Early History ...... 492 6.2 Modern Exploration ...... 493 7.0 GEOLOGICAL SETTING ...... 494 7.1 Regional Geology ...... 494 7.2 Prospect Geology ...... 494 8.0 DEPOSIT TYPES ...... 496 9.0 MINERALISATION ...... 497 10.0 EXPLORATION ...... 498 11.0 DRILLING ...... 498 12.0 SAMPLING METHOD AND QUALITY CONTROL MEASURES ...... 508 12.1 Twinned Diamond versus Reverse Circulation Assay Results ...... 509 12.1.1 Issues relating to the pre-Ross Mining RC drilling include: ...... 510 13.0 SAMPLE PREPARATION, ANALYSES AND SECURITY ...... 515 13.1 Sampling Procedures ...... 517 13.2 Bulk Densities ...... 517 13.3 Allied Gold ...... 517 14.0 DATA VERIFICATION ...... 518 14.1 Drilling and Data Sources ...... 518 14.1.1 Quality Control ...... 518 14.1.2 Drilling Completed by ASG 2005-2006 ...... 521

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14.1.3 Drilling Completed by ASG 2007-2008 ...... 524 14.2 Grade Control Data and Production Reconciliation ...... 527 14.3 Author’s Verification ...... 529 14.3.1 Site Visit ...... 529 15.0 ADJACENT PROPERTIES ...... 529 16.0 MINERAL PROCESSING AND METALLURGICAL TESTING ...... 530 16.1 Metallurgical Testing ...... 530 16.1.1 Introduction ...... 530 16.1.2 Summary of 2005/2006 Testwork Results ...... 531 16.2 Arsenic and Recovery Variability Testwork ...... 532 17.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES ...... 534 17.1 Mineral Resource ...... 534 17.1.1 Methodology ...... 534 17.1.2 Data Analysis ...... 535 17.1.2.1 Geological Domains ...... 535 17.1.2.2 Valehaichichi ...... 538 17.1.2.3 Namachamata ...... 539 17.1.2.4 Kupers ...... 541 17.1.2.5 Dawsons ...... 543 17.1.3 Spatial Continuity Analysis ...... 545 17.1.3.1 Valehaichichi ...... 545 17.1.3.2 Namachamata ...... 554 17.1.3.3 Kupers ...... 555 17.1.3.4 Dawsons ...... 557 17.1.4 Resource Estimation ...... 558 17.1.4.1 Valehaichichi Resource Estimate ...... 559 17.1.4.2 Valehaichichi Resource Estimate versus Grade Control Model ...... 559 17.1.4.3 Namachamata Resource Estimate ...... 560 17.1.4.4 Kupers Resource Estimate ...... 560 17.1.4.5 Dawsons Resource Estimate ...... 561 17.1.5 Comparison and Reconciliation to Previous Resource Estimates ...... 561 17.1.5.1 Valehaichichi ...... 561 17.1.5.2 Namachamata ...... 562 17.1.5.3 Kupers ...... 562 17.1.5.4 Dawsons ...... 563 17.1.5.5 Reconciliation with previous Resource Estimate ...... 563 17.2 Authors Validation—Mineral Resource ...... 566 17.2.1 Introduction ...... 566 17.2.2 Background Information ...... 566 17.2.3 Data ...... 566 17.2.4 Models ...... 567 17.2.5 Data Provided to Golder ...... 568 17.2.6 Block Model Validation: Assumptions ...... 569 17.2.7 Block Model Validation: Methodology ...... 569 17.2.8 Block Model Validation: Results ...... 570 17.2.8.1 Kupers ...... 570 17.2.8.2 Valehaichichi ...... 573 17.2.8.3 Namachamata ...... 575 17.2.8.4 Dawsons ...... 578 17.2.9 Resource Classification ...... 580 17.2.10 Conclusions and Recommendations ...... 581 17.3 Mineral Reserves ...... 582 18.0 MINING AND MINERAL PROCESSING OPERATIONS ...... 585 18.1 Mining ...... 585 18.1.1 Operations ...... 585 18.1.2 Life of Mine Schedule ...... 585 18.1.3 Reconciliation ...... 585

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18.2 Mineral Processing ...... 585 18.2.1 Introduction ...... 585 18.2.2 Plant Improvements ...... 586 18.2.3 Current Plant Design ...... 586 18.2.4 Current Plant Status ...... 587 18.2.5 Processing Operating Costs ...... 588 18.2.6 General and Administration Costs ...... 588 18.3 Expertise of Technical Staff ...... 588 19.0 OTHER RELEVANT DATA AND INFORMATION ...... 589 19.1 Infrastructure ...... 589 19.1.1 Introduction ...... 589 19.1.2 Power ...... 589 19.1.3 Water and Sewerage ...... 590 19.1.4 Administration Office and Site Buildings ...... 590 19.1.5 Accommodation Village ...... 590 19.1.6 Village Relocation ...... 591 19.2 Environmental and Social Review Summary ...... 591 19.2.1 External/Independent Compliance Monitoring ...... 591 19.2.2 External/Independent Compliance Monitoring Approach ...... 592 20.0 INTERPRETATION AND CONCLUSIONS ...... 592 20.1 Resources ...... 592 20.2 Reserves ...... 592 20.3 Metallurgy and Processing ...... 592 21.0 RECOMMENDATIONS ...... 593 21.1 Resource ...... 593 21.2 Reserve ...... 593 21.3 Metallurgy and Processing ...... 593 22.0 REFERENCES ...... 593 23.0 QUALIFIED PERSONS STATEMENTS ...... 597

TABLES Table 1-1: Gold Ridge Mineral Resources ...... 485 Table 1-2: Gold Ridge Mineral Reserves ...... 486 Table 2-1: Glossary of Terms ...... 486 Table 11-1: 2007-2008 Diamond Drilling ...... 498 Table 11-2: 2007-2008 Diamond Drilling—Hole Locations ...... 499 Table 11-3: 2007-2008 Diamond Drilling Results ...... 502 Table 12-1: Drilling meterage by campaign and drill type for each deposit ...... 508 Table 12-2: RC Drilling and Sampling Proportions ...... 509 Table 13-1: Historical Sample Preparation Protocols ...... 515 Table 13-2: Sample Preparation Protocols, 2005-2006 ...... 516 Table 13-3: Valehaichichi Bulk Density Values ...... 517 Table 13-4: Bulk Density Values ...... 518 Table 14-1: Arimco Assay Confidence Levels ...... 519 Table 14-2: Repeat Pulp Assay Results by Primary Assay laboratory ...... 519 Table 14-3: Duplicate Sample and Repeat Pulp Assay Results by Independent Laboratory . . . 520 Table 14-4: Field Duplicate Results from Ross Mining ...... 520 Table 14-5: Reported Assay Standard Averages Grades ...... 521 Table 14-6: Reported Assay Standard Averages Grades (2007-08) ...... 525 Table 14-7: Valehaichichi Monthly Mill Grade vs. Grade Control Grade ...... 528 Table 16-1: Average Gold Recovery by Ore Type and Pit ...... 532 Table 16-2: Preliminary Gold Recovery Testwork Results ...... 533 Table 17-1: Valehaichichi—Data Composites ...... 538 Table 17-2: Valehaichichi—Summary Statistics ...... 539 Table 17-3: Namachamata—Data Composites ...... 540 Table 17-4: Namachamata—Summary Statistics ...... 541

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Table 17-5: Kupers—Data Composites ...... 541 Table 17-6: Kupers—Summary Statistics ...... 542 Table 17-7: Dawsons—Data Composites ...... 543 Table 17-8: Dawsons—Summary Statistics ...... 544 Table 17-9: Indicator Grade Thresholds and Class Means: Grade Control Data ...... 545 Table 17-10: Valehaichichi—Indicator Variogram Models—High Grade: Oxide\Trans ...... 552 Table 17-11: Valehaichichi—Indicator Variogram Models—High Grade: Fresh ...... 552 Table 17-12: Valehaichichi—Indicator Variogram Models—Low Grade: Oxide\Trans ...... 552 Table 17-13: Valehaichichi—Indicator Variogram Models—Low Grade: Fresh ...... 553 Table 17-14: Valehaichichi—Gold Variograms ...... 554 Table 17-15: Namachamata—Indicator Grade Thresholds and Class Means ...... 554 Table 17-16: Namachamata—Indicator Variogram Models—Oxide\Transitional ...... 554 Table 17-17: Namachamata—Indicator Variogram Models—Fresh ...... 555 Table 17-18: Namachamata—Gold Variogram Models ...... 555 Table 17-19: Kupers—Indicator Grade Thresholds and Class Means ...... 555 Table 17-20: Kupers—Indicator Variogram Model Parameters—Oxide\Transitional ...... 556 Table 17-21: Kupers—Indicator Variogram Model Parameters—Fresh ...... 556 Table 17-22: Kupers—Gold Variogram Models ...... 556 Table 17-23: Dawsons—Indicator Grade Thresholds and Class Means ...... 557 Table 17-24: Dawsons—Indicator Variogram Models—Oxide\Transitional ...... 557 Table 17-25: Dawsons—Indicator Variogram Models—Fresh ...... 558 Table 17-26: Dawsons—Gold Variogram Models ...... 558 Table 17-27: Resource Model Parameters ...... 558 Table 17-28: MIK Panel Search and Data Configuration Parameters ...... 558 Table 17-29: Estimated Recoverable Resource Remaining at Valehaichichi ...... 559 Table 17-30: Comparison between the Current MIK Model and MP3 Model ...... 560 Table 17-31: Comparison between the Current MIK Model and MP3 Model after modifying the Block Support Adjustment to 96% ...... 560 Table 17-32: Estimated Recoverable Resource at Namachamata ...... 560 Table 17-33: Estimated Recoverable Resource at Kupers ...... 561 Table 17-34: Estimated Recoverable Resource at Dawsons ...... 561 Table 17-35: Valehaichichi Estimates Compared to Previous Estimates ...... 561 Table 17-36: Namachamata Resource Compared to Previous Estimates ...... 562 Table 17-37: Kupers Resource Compared to Previous Estimates ...... 562 Table 17-38: Dawsons Resource Compared to Previous Estimates ...... 563 Table 17-39: Current Resource Estimates Compared to Ross Mining Estimates ...... 563 Table 17-40: Tonnage Proportions of Current Resource Estimates Compared to Ross Mining Estimates ...... 564 Table 17-41: All Prospects Measured and Indicated Resource (at 0.80 g/t cut-off) Compared to Ross Mining Estimates ...... 564 Table 17-42: Pre-Ross Mining RC Drilling ...... 565 Table 17-43: Pre-Ross Mining RC Drilling ...... 565 Table 17-44: MIK Search Strategy for the Kupers, Namachamata and Dawsons Models . . . . . 567 Table 17-45: MIK Search Strategy for the Valehaichichi Model ...... 568 Table 17-46: Database Provided to Golder ...... 568 Table 17-47: Models Provided to Golder ...... 568 Table 17-48: Model’s Description Files ...... 568 Table 17-49: Global Statistical Assessment—Kupers ...... 571 Table 17-50: Global Statistical Assessment—Valehaichichi ...... 573 Table 17-51: Global Statistical Assessment—Namachamata ...... 575 Table 17-52: Global Statistical Assessment (declustered)—Namachamata ...... 575 Table 17-53: Global Statistical Assessment—Dawsons ...... 578 Table 17-54: Global Statistical Assessment (declustered)—Dawsons ...... 578 Table 17-55: Key Whittle Optimisation Parameters ...... 582 Table 17-56: Gold Ridge Mineral Reserves by Category ...... 584 Table 17-57: Gold Ridge Mineral Reserves by Pit ...... 584 Table 18-1: Gold Ridge Life of Mine Schedule Summary ...... 585 Table 18-2: Processing Costs ...... 588 Table 18-3: General and Administration Costs ...... 588

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FIGURES Figure 7-1: Tectonic Setting of the Solomon Islands ...... 494 Figure 7-2: Structural setting of the Gold Ridge Deposits ...... 495 Figure 7-3: Stratigraphy of the Central Guadalcanal ...... 495 Figure 7-4: Gold Ridge Project Geology ...... 496 Figure 9-1: Gold Ridge Mineralisation Model ...... 498 Figure 11-1: Location of Gold Ridge Gold Deposits ...... 501 Figure 12-1: Scatter Plot of pre-Ross Mining RC and Diamond Assays ...... 511 Figure 12-2: QQ Plot of pre-Ross Mining RC and Diamond Assays ...... 511 Figure 12-3: Scatter Plot of pre-Ross Mining RC and all Diamond Assays ...... 512 Figure 12-4: QQ Plot of pre-Ross Mining RC and all Diamond Assays ...... 512 Figure 12-5: Scatter Plot of Ross Mining RC and all Diamond Assays ...... 513 Figure 12-6: QQ Plot of Ross Mining RC and all Diamond Assays ...... 513 Figure 12-7: Scatter Plot of pre-Ross Mining RC and DDH001-103 ...... 514 Figure 12-8: QQ Plot of pre-Ross Mining RC and DDH001-103 ...... 514 Figure 14-1: Reported Assay Standard Results versus Time—for all Standards ...... 521 Figure 14-2: Reported Assay Standard Results versus Time—for each Standard ...... 522 Figure 14-3: Reported Assay Blank Results vs. Time ...... 522 Figure 14-4: Reported Duplicate Assay Results—Scatter Plot ...... 523 Figure 14-5: Reported Duplicate Assay Results—QQ Plot ...... 523 Figure 14-6: Reported Duplicate Assay Results—Precision Plot ...... 524 Figure 14-7: Gold Grade vs. Recovery DDH001-103 ...... 524 Figure 14-8: Reported Assay Standard Results vs. Time—for all Standards (2007-08) ...... 525 Figure 14-9: Reported Assay Blank Results vs. Time 2007/08 ...... 525 Figure 14-10: Reported Duplicate Assay Results—Scatter Plot (2007/08) ...... 526 Figure 14-11: Reported Duplicate Assay Results—QQ Plot (2007/08) ...... 526 Figure 14-12: Reported Duplicate Assay Results—Precision Plot (2007/08) ...... 526 Figure 14-13: QQ Plot of Grade Control RC and Exploration DDH and Ross RC Assays Fresh Samples ...... 527 Figure 14-14: QQ Plot of Grade Control RC and Exploration DDH and Ross RC Assays Oxide Samples ...... 527 Figure 14-15: Valehaichichi Monthly Mill Grade vs. Grade Control Grade...... 528 Figure 15-1: Solomon Island Mineral Tenements ...... 529 Figure 16-1: Ross Mining Process Plant Performance ...... 530 Figure 16-2: Comparison of Test Results and Predicted Recovery ...... 533 Figure 17-1: Valehaichichi Pit Floor Geology—with Grade Control Composites ...... 535 Figure 17-2: Namachamata Base of Complete Oxidation Surface (yellow) ...... 536 Figure 17-3: Namachamata Base of Transitional Oxidation Surface (green) ...... 536 Figure 17-4: Kupers Base of Complete Oxidation Surface (yellow) ...... 537 Figure 17-5: Kupers Base of Transitional Oxidation Surface (green) ...... 537 Figure 17-6: Plan—All Valehaichichi Drill Hole Assay Composite Data ...... 538 Figure 17-7: Cross Section—Valehaichichi 40,975N ...... 539 Figure 17-8: Cross Section—Valehaichichi 41,025N ...... 539 Figure 17-9: Plan—Namachamata Drill Hole Assay Composite Data ...... 540 Figure 17-10: Cross Section—Namachamata 40725N ...... 540 Figure 17-11: Plan—Kupers Drill Hole Assay Composite Data ...... 541 Figure 17-12: Cross Section—Kupers 40,100N ...... 542 Figure 17-13: Cross Section—Kupers 40,150N ...... 542 Figure 17-14: Plan—Dawsons Drill Hole Assay Composite Data ...... 543 Figure 17-15: Cross Section—Dawsons 39,300N ...... 544 Figure 17-16: Cross Section—Dawsons 39,650N ...... 544 Figure 17-17: Valehaichichi Indicator Variogram maps High Grade Domain: Oxide\Trans . . . . . 546 Figure 17-18: Valehaichichi Indicator Variogram maps High Grade Domain: Fresh ...... 547 Figure 17-19: Valehaichichi Indicator Variogram maps Low Grade Domain: Oxide\Trans . . . . . 548 Figure 17-20: Valehaichichi Indicator Variogram maps Low Grade Domain: Fresh ...... 549 Figure 17-21: Valehaichichi Indicator Variogram High Grade Domain: Oxide\Trans ...... 550 Figure 17-22: Valehaichichi Indicator Variogram High Grade Domain: Fresh ...... 550 Figure 17-23: Valehaichichi Indicator Variogram Low Grade Domain: Oxide\Trans ...... 551 Figure 17-24: Valehaichichi Indicator Variogram Low Grade Domain: Fresh ...... 551

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Figure 17-25: Valehaichichi Median Indicator Variogram Models ...... 553 Figure 17-26: Valehaichichi—Resource Model vs. MP3 Grade Control Model ...... 559 Figure 17-27: Plan View of the Gold Ridge Project Models showing the Drill Hole Data and the Model Limits (Valehaichichi = Blue, Namachamata = Green, Kupers = Cyan, Dawsons = Red) ...... 569 Figure 17-28: Visual Assessment of Grades Estimates of Kupers Model on Section 40160 mN Facing N (Clipping of Ǆ20 m)...... 570 Figure 17-29: Grade-Tonnage Curves of the Data (red) and Block Model (blue) for Kupers using a Variance Adjustment Factor of 0.1 (left) and 0.04 (right) ...... 571 Figure 17-30: Swath Validation Plots for Kupers ...... 572 Figure 17-31: Visual Assessment of Grades Estimates of Valehaichichi Model on Section 23995 mN Facing N (Clipping of Ǆ20 m) ...... 573 Figure 17-32: Grade-Tonnage Curves of the Data (red) and Block Model (blue) for Valehaichichi using a Variance Adjustment Factor of 0.1 (left) and 0.04 (right) ...... 573 Figure 17-33: Swath Validation Plots for Valehaichichi ...... 574 Figure 17-34: Visual Assessment of Grades Estimates of Namachamata Model on Section 40615 mN Facing N (Clipping of Ǆ20 m) ...... 575 Figure 17-35: Grade-Tonnage Curves of the Data (red) and Block Model (blue) for Namachamata using a Variance Adjustment Factor of 0.1 (left) and 0.01 (right) ...... 576 Figure 17-36: Swath Validation Plots for Namachamata ...... 577 Figure 17-37: Visual Assessment of Grades Estimates of Dawsons Model on Section 39600 mN Facing N (Clipping of Ǆ20 m) ...... 578 Figure 17-38: Grade-Tonnage Curves of the Data (red) and Block Model (blue) for Dawsons using a Variance Adjustment Factor of 0.1 (left) and 0.04 (right) ...... 578 Figure 17-39: Swath Validation Plots for Dawsons ...... 579 Figure 17-40: Section 40160 mN (facing N) showing the Discontinuous Measured Resource Classification at Kupers Model (Clipping of Ǆ20 m, Measured=red, Indicated=yellow, Inferred=blue) ...... 580 Figure 17-41: Section 40520 mN (facing N) showing some Isolated and Discontinuous Measured Resource Classification Blocks at Namachamata Model (Clipping of Ǆ20 m, Measured=red, Indicated=yellow, Inferred=blue) ...... 580 Figure 17-42: Section 39655 mN (facing N) showing some Isolated and Discontinuous Measured Resource Classification Blocks at Dawsons Model (Clipping of Ǆ20 m, Measured=red, Indicated=yellow, Inferred=blue) ...... 581 Figure 17-43: Section 40690 mN (facing N) showing the Continuity of the Measured and Indicated Resources, when Viewed as a Single Unit, at Namachamata Model (Clipping of Ǆ20 m, Measured=red, Indicated=yellow, Inferred=blue) ...... 581 Figure 17-44: Detailed Pit Designs—Oblique view ...... 582 Figure 17-45: Detailed Pit Designs—Plan View ...... 583 Figure 18-1: SAG Mill and Cyclone Classification Circuits ...... 587 Figure 18-2: Leach Circuit View Showing New Tanks and Tails Thickener ...... 588 Figure 19-1: Aggrekko Generation Plant in Operation ...... 589 Figure 19-2: Newly Constructed Senior and Junior Accommodation Blocks ...... 590 Figure 19-3: Newly Constructed Houses Ready for Use ...... 591

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1.0 SUMMARY 1.1 Scope Golder Associates Pty Ltd (‘‘Golder’’, the ‘‘Mineral Expert’’) has been requested by the Allied Gold Limited (‘‘the Company’’) to prepare a Mineral Experts’ Report (the ‘‘MER’’) on the mineral assets of the Company. The MER will be reproduced in a Prospectus being produced by the Company in connection with its proposed admission of ordinary shares to the premium listing segment of the Official List of the United Kingdom Listing Authority (‘‘UKLA’’) maintained by the Financial Services Authority (the ‘‘FSA’’) and admission (the ‘‘Admission’’) to trading on the Main Market of the London Stock Exchange plc (the ‘‘Exchange’’). The Company is currently listed on AIM, the Australian Stock Exchange and the Toronto Stock Exchange. Royal Bank of Canada Europe Limited (‘‘RBC’’) has been appointed as the Company’s sponsor in support of the Admission. The mineral assets of Allied Gold are primarily two gold operations: the Simberi project on Simberi Island in the New Ireland Province of Papua New Guinea (‘‘the Simberi Project’’) and the Gold Ridge project on the island of Guadalcanal in the Solomon Islands (‘‘the Gold Ridge Project’’). This report presents the Competent Persons’ Report for the Gold Ridge Project. For the purposes of Prospectus Rule 5.5.3R(2)(f) Golder Associates accepts responsibility for the information contained in this section of the Prospectus and those sections of the Prospectus which include references to the information in this section. Golder Associates declares that to the best of its knowledge and belief, having taken all reasonable care to ensure that such is the case, the information contained herein is in accordance with the facts and does not omit anything likely to affect the import of such information. For the purposes of Prospectus Rule 5.5.3R(2)(f) BatteryLimits accepts responsibility for the information contained in this section of the Prospectus and those sections of the Prospectus which include references to the information in this section. BatteryLimits declares that to the best of its knowledge and belief, having taken all reasonable care to ensure that such is the case, the information contained herein is in accordance with the facts and does not omit anything likely to affect the import of such information.

1.2 Property Description and Location The Gold Ridge Project is located on the island of Guadalcanal, the central island of the Solomon Islands, approximately 30 km south-east of the capital city Honiara. The project is accessed from Honiara by approximately 40 km of varying quality road. The mine area is located on the lower northern slopes of Mount Chaunapaho in the central ranges of Guadalcanal Island. The project area is extremely rugged, with very steep gradients and is heavily forested. The area has a north-south aspect and an approximate average elevation of 550 m. The gold deposits are situated in the Chovohio and Charivungo river catchments in the headwaters of the Matepono River. Both these rivers have steep gradients with a combined catchment area of 17.4 km2 above their confluence. The river system falls from 1200 m (Chovohio) and 800 m (Charivungo) to the sea in 20 kilometres. The property consists of Special Prospecting License (SPL) #194 covering an area of 130 km2 which surrounds a 30 km2 Mining Lease (No 1/1997).

1.3 History Serious exploration has been undertaken at the site since 1939. The Project was an operating mine from 1998 until June 2000, when it was shut down during the period of civil unrest. During the 22 months that the Valehaichichi mine was actively operating the total gold production amounted to approximately 210,000 ounces. After the shutdown, the camp and office buildings were destroyed by people taking usable construction material. The refurbishment of the plant by GRML is expected to be completed in March 2011. The Gold Ridge project is managed by Gold Ridge Mining Limited (GRML), a subsidiary of Australian Solomons Gold (ASG), which is in turn a wholly owned subsidiary of Allied Gold Limited. Allied Gold has held effective control of the property since March 2010.

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1.4 Geology Gold Ridge is located within the central part of Guadalcanal Island which lies between the North Solomon Plate and the San Cristobal Trench. Rock-types occurring on Guadalcanal range from ultramafic to diorite intrusives, felsic to mafic and marine sedimentary rocks to fluvial sediments. The Gold Ridge deposits are hosted by the Lower Pliocene Gold Ridge Volcanics. The Gold Ridge deposits are concentrations of low-sulphidation intrusion related epithermal gold mineralisation. Mineralisation is related mainly to alteration and veining and to a lesser extent lithology. Although alteration assemblages are similar throughout Gold Ridge, the relative abundance and intensity of alteration is different for each deposit. Valehaichichi hosts the most intense and concentrated argillic and silica-pyrite alteration. Propylitic alteration survived at Kupers and Dawsons where argillic and silica- pyrite alteration is less intense. Primary porosity of shallow dipping lithologies as well as moderate to shallow dipping fractures and veins combine to impart a strong sub-horizontal distribution to gold mineralisation. The Gold Ridge project comprises four separate gold deposits called, from north to south, Valehaichichi, Namachamata, Kupers and Dawsons. To date only Valehaichichi has seen any significant mining, mostly by Ross Mining (August 1998 to June 2000). GRML under Allied Gold has recently re-commenced mining operations in the Valehaichichi pit. Numerous artisan workings can be found throughout the mining lease area.

1.5 Metallurgy The Gold Ridge processing plant treated 4.4 million tonnes of ore from the Valehaichichi pit from August 1998 until the plant was shut down due to escalating civil unrest in June 2000. The plant produced approximately 210,000 ounces of gold at a mean gold recovery of around 78%. Gold recovery generally trended downwards during the period of operations ranging from a high of 86% in May 1999 to a low of 68% in April 2000 In 2005 ASG initiated a metallurgical testwork programme to resolve the reasons for the poor metallurgical performance within segments of the deposits. The Gold Ridge ores were considered to range from ‘‘free-milling’’ to refractory. Processing by conventional cyanidation resulted in a range of gold recoveries. Gold recovery was shown to correlate with the arsenic content for the fresh and transition ores, but was independent of it in oxide ores. Average gold recoveries by ore type and by pit, are calculated from the arsenic head grade using a regression algorithm developed from the testwork.

1.6 Mineral Resources A recoverable resource estimation was undertaken by Hellman and Schofield Limited in 2008. The method used was Multiple Indicator Kriging (MIK). The estimation is based on sample data from Diamond and Reverse Circulation drill holes The resource at a cut off grade of 0.5 g/t Au is as shown in Table 1-1

Table 1-1: Gold Ridge Mineral Resources

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1.7 Mineral Reserves The latest Ore Reserves estimation for Gold Ridge was completed by IMC in June 2010. Based on a USD$850 per ounce gold price the current reserves are as shown in Table 1-2.

Table 1-2: Gold Ridge Mineral Reserves

In situ Predicted Au Recovered Au Tonnage Grade Au Recovery Grade Mineral Reserve Category dry Mt g/t % g/t Proved ...... — — — — Probable ...... 23.2 1.71 0.82 1.40 Proved + Probable ...... 23.2 1.71 0.82 1.40 Waste ...... 33.4 The Mineral Reserves are included in the Mineral Resources stated above.

2.0 INTRODUCTION AND TERMS OF REFERENCE Golder Associates Pty Ltd (Golder) has been retained by Allied Gold Limited (Allied) to prepare an independent Competent Persons’ Report on Allied’s Gold Ridge Gold Project in the Solomon Islands. This report is prepared to conform to both Australian JORC and Canadian National Instrument 43-101 standards. The technical report is required to document the mineral resource estimates, mineral reserve estimates, metallurgy and processing at the Gold Ridge Project. The Gold Ridge Project is part of Allied’s Solomon Islands holdings and is located on Guadalcanal approximately 40 km south-east of the Solomon Islands capital, Honiara. The prospect has been systematically explored by a number of parties since 1939 and has been wholly owned by Allied since 2010. Stephen Godfrey, Associate, Principal Resource Geologist, with Golder Associates, visited Gold Ridge between 27 January 2011 and 30 January 2011. John Battista, Associate, Principal Mining Engineer, with Golder Associates, visited Gold Ridge between 27 January 2011 and 30 January 2011. Tony Showell, Principal Consulting Metallurgist, with Battery Limits Pty Ltd, visited Gold Ridge between 27 January 2011 and 30 January 2011.

Table 2-1: Glossary of Terms

Term Description Accuracy ...... The ability to obtain the correct result ALD ...... Allied Gold Limited ALS ...... ALS Laboratory Group, ALS Chemex is the groups Mineral Division ALS ...... ALS Laboratory Group—Australian Laboratory Services ASG ...... Australian Solomons Gold Limited ASX ...... Australian Stock Exchange BFS ...... Bankable Feasibility Study Blank ...... Sample without metal content to check possible contamination during assaying (e.g. crushed glass) cm...... centimetres CRM ...... Certified Reference Material—see Standard Sample Cut off ...... Grade above which mineralised material is considered to be ore. DD/DDH ...... Diamond Drill/Diamond Drill Hole

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Term Description DTM ...... Digital terrain model—Electronic computer model of topography Duplicate ...... Sample that has been split from another to check the field sampling or laboratory’s precision EOM ...... End Of Month g/t ...... grams per tonne (=ppm) GC ...... Grade Control GRCLA ...... Gold Ridge Community and Landowners Association GRML ...... Gold Ridge Mining Limited GRV ...... Gold Ridge Volcanics H&S ...... Hellman and Schofield Pty Ltd HQ ...... Diamond core 63.5 mm IFC ...... International Finance Corporation IP ...... Induced Polarisation—geophysical exploration technique JORC ...... Australasian Joint Ore Reserves Committee Koz ...... Thousands of Ounces Kriging ...... Grade estimation technique incorporating variability by distance KTDA ...... Kolobosi Tailings Dam Association m...... metres MIK ...... Multiple Indicator Kriging—Estimation of grades into block model using probabilistic grade estimation techniques incorporating variability by distance ML...... Mining Lease mm...... millimetres Mt...... Millions of Tonnes NQ ...... Diamond core 47.6 mm OK...... Ordinary Kriging—Estimation of grades into block model using a grade estimation technique incorporating variability by distance Ore ...... Mineralised material that can be economically mined ppb ...... Parts Per Billion ppm ...... Parts Per Million (10,000 ppm = 1%) PQ...... Diamond core 85.0 mm Precision ...... The ability to obtain the same result each time QAQC ...... Quality Control Quality Assurance RAB ...... Reverse Air Blast RC...... Reverse Circulation SPL ...... Special Prospecting Licence Standard Sample ...... Specially prepared sample whose metal grade is very accurately known and certified Strip Ratio ...... Ratio of waste that needs to be mined to obtain a unit of ore expressed as tonnes of waste to tonnes of ore. Tailings ...... The reject material from the processing plant

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Term Description tambu ...... Forbidden or taboo TSX ...... Toronto Stock Exchange Variogram ...... Mathematical and graphical way of representing variation of data as a function of separation distance Vulcan ...... Computer program by Maptek that is used to carry out resource estimation and mine planning—www.vulcan3D.com.

4.0 PROPERTY DESCRIPTION AND LOCATION 4.1 Area and Location

21APR201114544324 The Gold Ridge Project is located on the island of Guadalcanal, the central island of the Solomon Islands, approximately 30 km south-east of the capital city Honiara. The Property is centred at Latitude 9⍭30’S, Longitude 160⍭10’E (plant site: 8,942,000N 624,400E UTM-WGS84). The property consists of Special Prospecting License (SPL) #194 covering an area of 130 km2 which surrounds a 30 km2 Mining Lease (No 1/1997). Applicants for an SPL receive a letter of intent to issue the license from the Ministry of Mines and then have a two year period in which to negotiate access with the local land owners during which time the tenement area is secure. Once documentation of the granted access is submitted to the Ministry of Mines and the SPL proper granted. The Prospecting License was initially granted on 21 September 1995 for a period of three years this expired on 21 September 1998. This was subsequently renewed for 2 years with minor relinquishments and would have expired by 21 September 2000. The Civil unrest or tensions commencing 5 June 2000 cause a Force Majeure and all leases and agreements were suspended 5 July 2000. The Solomon Islands Ministry of Mines granted GRML a 12 month extension of the Mt Vunusa (SPL #194) LOI on 25 November 2010

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An SPL, when granted, is valid for an initial period of three years with the possibility of renewal for two two-year extensions as long as the area is reduced by 50% each time. The Mining Lease No 1/1997 was granted March 12, 1997 and is valid for a period of 25 years with a 10-year renewal option.

4.2 Title The Gold Ridge project is managed by Gold Ridge Mining Limited (GRML), a wholly owned subsidiary of Allied Gold limited (Allied).

4.3 Property Boundaries The property boundaries are described in detail in the SPL and Mining lease documentation. The original property survey included wooden and steel pegs marking the lease corners, however over time these have disappeared. Currently the site surveyors use a Real Time Kinematic Global Positioning System (RTK-GPS) which provides centimetre level accuracy in locating points on the ground. The author considers this system to be more accurate than the original survey for locating the property boundaries when required.

4.4 Location of Mineralisation and Mine Workings The Gold Ridge project is comprised four separate gold deposits called, from north to south, Valehaichichi, Namachamata, Kupers and Dawsons. To date only Valehaichichi has seen any significant mining, mostly by Ross Mining (August 1998 to June 2000). GRML under Allied Gold has recently commenced mining operations in the Valehaichichi pit. Access and earthworks have commenced at Namachamata. Throughout the Gold Ridge area there is extensive evidence of artisan mining in and around the creeks. Rivers and mine workings. Under the mining act section 53 (3) in areas subject to a prospecting licence or mining lease, there shall be no alluvial mining without the consent in writing of the holder of the prospecting licence or mining lease, as the case may be. As such mining in and around the pit areas would pose a significant safety issue the artisan miners have been denied access. All of these workings are within the GRML mining lease (1/1997).

4.5 Royalties and Encumbrances The Gold Ridge Mining Agreement specifies the following royalties and taxes: • Gross Royalty Payment of 1.5% on all production, of which 1.2% is held by the Landowners and 0.3% is held by the Guadalcanal Provincial Government. • Export duty of 1.5% of gross value of all production payable to the Solomon Islands Government • Corporate Income Tax—not exceed 35%. Standard Deductions apply. • Additional Profits Tax of 30% on net cash receipts (gross income less income tax and exploration, development, and production expenses) which are greater than a 25% rate of return.

4.6 Environmental Liabilities Before the development of the Gold Ridge Mine, the mine area had been extensively disturbed by humans through subsistence gardening, logging, gold panning and settlement. Heavy logging in the Chovohio River catchment occurred in 1974 and again during the last few years up to 1997. In addition there are the areas disturbed by Ross mining. GRML, as part of the mining lease agreement, have in place a AUD$1,530,000 environmental security guarantee (23/5/1997) whereby Macquarie Bank will pay any amount up to AUD$1,530,000 to compensate environmental damage not satisfactorily managed by GRML. (Gold Ridge Mining agreement, Annex H). The tailings storage facility (TSF) which had been abandoned in 2000 has been rehabilitated and structure confirmed sound and useable. All collected water has been treated and discharged to the local river systems to lower the water in the dam as part of this work. GRML has ongoing monitoring of contaminants in the dam and discharge waters. Two minor breaches were recorded during treatment/ drainage process however no recent sampling has shown any problems.

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4.7 Required Permits In addition to the Mining and Exploration lease GRML hold permits for Timber removal (23/5/97 - 25 yrs) and Electricity generation on site (7/3/97—duration of mining lease). In addition to the regulatory agreements numerous memorandums of understanding and agreements exist between GRML and individuals or groups with respect to things such as use of the land, relocation and service provision. The references in Section 22.0 list those reviewed by the author.

4.8 Surface Rights 4.8.1 SPL Under The Mines and Minerals Act (1990 section 20.-(1)) each application for a prospecting licence shall be made to the Director in the prescribed form and shall state: • a proposed programme for the acquisition of surface access rights and the names of the individuals to be in charge thereof • the applicant’s intentions regarding environmental protection. GRML is in the negotiation process for access to the SPL at present. By 25 November 2011 where there is no dispute and agreement is reached with the landowners, the agreement will be documented including • the names of the landowners or land holding groups having rights over the land in the prospecting area, and • the amount of surface access fees or compensation for damage. The agreed surface access fees are to be paid into a trust account for the benefit of landowners in the prospecting area. The holder of a prospecting licence shall pay, in addition to surface access fees, compensation for any damage caused by him as a result of prospecting, to any live or dead stock, crops, trees, buildings, works, water supplies or tambu places at such rates as may have been agreed With the agreement reached the Minister can issue to the applicant a prospecting licence as specified in section 22 of the act.

Rights of Prospecting Licence holders Subject to the provisions of any other law relating to buildings, drainage, aviation, land, protection of the natural environment and to control of natural water supplies, including river water, the holder of a prospecting licence together has the exclusive right to enter any land in the prospecting area and carry out prospecting which include any or all of the following activities: • drill, trench, pit and make excavations • build roads, helicopter pads, erect camps and construct temporary buildings • install or fix machinery, and • take or direct any public water from any lake, river or water course.

4.8.2 Mining Lease Applicants for a mining lease must secure land access rights in a similar manner to that for an SPL. In addition where a commercial discovery has been made, the Director (Ministry of Mines) may, in consultation with the applicant, enter into negotiations with the landowners or any person or groups of persons having an interest in the land to acquire surface access rights for mining and make arrangements for the payment by the applicant to the landowners of: • a surface rental, and • compensation for any damage caused by the mining to any live or dead stock, crops, trees, buildings, works or tambu sites. Where an agreement with landowners is not forthcoming and it is deemed in the best interest of the country The Mines and Minerals Act (1990) has provision for compulsory acquisition of land if required.

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Rights of Mining Licence holders Subject to the any other law relating to buildings, drainage, land, protection of the natural environment and the control of natural water supplies, including river waters, the mining company may, in the exercise of its rights under its lease, enter upon the mining area to carry out mining, including the right to— • make all necessary excavations to mine the mineral deposit or deposits in the mining area and to re-work mine tailings and dumped materials • erect, construct and maintain in the mining area such machinery and buildings, workshops and other production facilities as may be necessary or convenient for the purpose of mining, storing, transporting, dressing, treating, smelting or refining the mineral recovered in the course of mining • stack products or dump any waste products of mining or mineral processing • erect, construct and maintain houses and buildings for the use of the mining company, its contractors, agents and their employees and their immediate families • lay pipes, make water races, ponds, dams and reservoirs and divert and use any water necessary, provided that the needs of users of river water downstream of the mining area, are taken into account • construct and maintain all such passageways, communications facilities and conveniences as may be necessary for carrying out mining operations, and • engage in all such other activities as may be reasonably necessary for carrying out mining operations.

5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY 5.1 Access The Gold Ridge Project is located on the island of Guadalcanal, the central island of the Solomon Islands, approximately 30 km south-east of the capital city Honiara. The project is accessed from Honiara by approximately 40 km of varying quality road. The initial 20 km are paved, and the remainder a gravel road. Honiara has a fully serviced international airport and deep sea port, both legacies of the American occupation during the Second World War. International air flights to Honiara are available from Brisbane, Australia, Port Moresby, Papua New Guinea, Port Vila, Vanuatu and Nadi, Fiji. Travel between individual islands in the Solomon Islands is possible by outboard motor and canoe, inter- island traders and ferries and some limited air services.

5.2 Physiography The Islands are situated in the south-west Pacific, about 1,800 km east of North Australia. The country is a double chain archipelago including Papua New Guinea and Vanuatu. About 350 of the Islands are populated, and the total land area is over 30,000 square kilometres. The Islands stretch across 1,300 km of the Pacific Ocean. This expansive spread of its islands gives the Islands an exclusive economic zone of 1.3 million square kilometres in total. The mine area is located on the lower northern slopes of Mount Chaunapaho in the central ranges of Guadalcanal Island. The project area is extremely rugged, with very steep gradients and is heavily forested. The area has a north-south aspect and an approximate average elevation of 550 m. The gold deposits are situated in the Chovohio and Charivungo river catchments in the headwaters of the Matepono River. Both these rivers have steep gradients with a combined catchment area of 17.4 km2 above their confluence. The river system falls from 1200 m (Chovohio) and 800 m (Charivungo) to the sea in 20 kilometres. Locally the topography is steep with incised stream valleys. Elevation ranges from 350 m to 600 masl. The steep ridges can cause logistical problems for drill access. The vegetation consists of grasses and various tropical trees and can be quite dense, except where cleared by the local villagers for crops. Water is readily available in the streams and rivers.

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5.3 Climate The Islands have a tropical equatorial climate with high humidity but modified by trade winds from the sea. Temperature ranges 22⍭C to 33⍭C with relative humidity between 72-92%. There is little seasonal variation in temperature but the period from November to March generally experiences higher humidity and rainfall Rain falls in short, heavy bursts most of the year round, although the months between November and April are known as the rainy season. Annual rainfall is around 4 m. Daily sunshine averages seven hours, with sunrise at approximately 5:30 to 6:00 a.m. and sunset at approximately 6:00 to 6:30 p.m.

5.4 People and Infrastructure 5.4.1 People The population of the Solomon Islands exceeds 500,000 with 93,613 people on the Island of Guadalcanal (2009 population census, www.solomonstarnews.com, 10 November 2010). Some 49,000 people live in Honiara with the remainder scattered over the rest of the Island in varying sized villages and towns. The Gold Ridge mine will employ approximately 500 local people in the mining and processing operations, drawing the work force from as far away as Honiara. Most of the local work force is unskilled. GRML have programs in place training pit and plant operators.

5.4.2 Infrastructure The Project was an operating mine from 1998 until June 2000, when it was shut down during the period of civil unrest. After the shutdown, the camp and office buildings were destroyed by people taking usable construction material. The plant, shop, and garage buildings had intact steelwork, but all cladding was removed. The refurbishment of the plant was essentially completed in March 2011, with first gold being poured from the upgraded plant during that month. In addition to repairing the damaged facilities the plant has been extended and improved in a number of areas (see Section 18.0). The mine produces its own electricity from diesel generators and draws water from the local catchments. Roads and bridges between Honiara and the Gold Ridge area were repaired and upgraded with the assistance of international aid programs allowing heavy haulage access from Honiara. Honiara provides a deep water port for importation of equipment and supplies and the normal facilities of a large urban community. Regular commercial air services fly in and out of Henderson airport outside Honiara. Locally there is limited infrastructure apart from the mine. Approximately 2,000 local people are being relocated from villages within the mining lease to new hosing being constructed by GRML. Some of these people do or will work for the mine. GRML as part of the relocation program is encouraging the development of small businesses by the local people.

6.0 HISTORY 6.1 Early History In 1568, the Spanish explorer, Sr Alvaro de Mendana recorded the presence of alluvial gold at the mouth of the Matepono River, downstream from the Gold Ridge area. Gold was again discovered in the Gold Ridge catchment in 1931 by the Botanist, Kajewski, in the Matepono and Balasuna rivers and some of their tributaries. Gold was traced to soils and bedrock at Gold Ridge in 1936 by H.J. Ault who identified deposits of alluvial and eluvial gold in the gullies and hillsides. In 1939 a prospecting licence was granted to the Balasuna Syndicate who constructed numerous pits, adits and hydraulic sluicing systems at Gold Ridge until all operations were halted by the Japanese invasion in 1942. Attempts to restart the operation after the war ended were unsuccessful and the Balasuna Syndicate lease lapsed in 1949. After the war, the Syndicate still held the prospecting licences, but the destruction of the equipment hindered restart efforts. Mapping by the British Solomon Islands Geological Survey was carried out in

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the 1950s, and, in 1955, the Syndicate obtained a prospecting licence and carried out additional studies. No major lodes were found and the prospect was abandoned. In 1965, the United Nations completed an airborne geophysical survey. No anomalies were reported over the Gold Ridge area. In 1968, the Geological Survey of the Solomon Islands carried out stratigraphic mapping, stream sediment sampling, and soil auger sampling. In 1972, the Geological Institute of London carried out detailed investigations including stream sediment sampling, soil sampling, detailed soil augering, pitting, and Winkie drilling. Arsenic anomalies were defined over the Dawsons, Kupers, Valehaichichi, and Namachamata areas. High gold values were found in several of the pits, and the drilling indicated that the mineralised zones were gently dipping. In 1974, the government invited tenders for the exploration of the area and CRA Exploration Pty Ltd. (CRA) was the successful bidder. CRA constructed a road to the area, completed sampling, and drilled five holes totalling 496 m. Although re-sampling of the pits returned gold values 35% higher than the previous sampling, only low gold values were obtained in the drill holes, with the overall tenor being 0.25 g/t to 2.0 g/t Au and local concentrations 2.0 g/t to 3.0 g/t Au. CRA decided that no further work was warranted and surrendered the permit. Following the withdrawal of CRAE the Solomon Islands Government renewed calls for tenders for exploration of Gold Ridge in 1982.

6.2 Modern Exploration Amoco Minerals Solomons Ltd successfully tendered for Gold Ridge SPL130 in 1983 and completed almost 3,000 m of diamond drilling. Cyprus Minerals Solomons Ltd farmed into the project and finally purchased 100% from Amoco in 1985. In the following year they drilled over 10,000 m of diamond drilling for gold mineralisation in previously defined and new soil auger geochemical anomalies. Cyprus entered into a joint venture with Arimco NL in August 1986 completing close to 43,000 m of drilling in the following four years. Two feasibility studies were commissioned by the joint venture, one in 1990, the other in 1992, with some 56,000 m of drilling data available in the assay database. Gold Resources were estimated using only diamond drilling results (about 32,000 m or 57% of the available data) and at a relatively high cut off grades (up to 1.5 g/t Au). Contained gold in these estimates ranged between 300,000-500,000 ounces, well below the deposits real potential due to overly conservative assumptions. The joint venture pulled out of the project in 1992 having spent in excess of US$13 million. Gold Ridge was again tendered by the Solomon Islands Government in 1994 with Saracen Minerals Ltd being the successful bidder. Saracen recalculated the gold resources using a cut-off grade of 1.0 g/t Au and estimated a resource of close to one million of ounces gold. Saracen sold their entire metals property portfolio, which included gold prospects in Australia, Vanuatu and Solomon Islands (Gold Ridge) to Ross Mining in March 1995 after deciding to refocus on their core business, petroleum exploration. At the time of the Ross Mining purchase the project was held entirely as Customary Land, a complex system of collective ownership, by the Bahomea people of Gold Ridge. Access and other agreements shortly after acquisition enabled the evaluation of Gold Ridge Special Prospecting License 185. In June 1995 an evaluation program commenced that included diamond core and RC drilling and a metallurgical appraisal of the Gold Ridge ore types. After a cumulative total of about 32,000 m of drilling, a feasibility study was completed in 1996. Construction of the 2 Mt per annum open cut mine started in 1997 with mining commencing in August 1998. The project was shut down in June 2000 as a result of escalating civil unrest on the Solomon Islands. During the 22 months that the mine was actively operating the total gold production amounted to approximately 210,000 ounces. One month prior to shutdown, Delta Gold Pty Ltd took over Ross Mining, and was the legal owner at the time of shutdown. Delta Gold abandoned the mine in June 2000 because of civil unrest in Guadalcanal, and in January 2002. Subsequently Delta merged with Goldfields to form Aurion Gold, which was taken over by Placer Dome Asia Pacific. In December 2002, insurers paid out on the political risk policy to Delta Gold and in return, received ownership of the mine through a new holding company, JV Mine. An international bidding process saw ASG acquire Gold Ridge in 2005. Allied Gold bid for ASG in October 2009 and compulsorily acquired ASG and hence 100% ownership of Gold Ridge in March 2010.

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7.0 GEOLOGICAL SETTING 7.1 Regional Geology The Solomon Islands are part of the Circum-Pacific ‘‘Ring of Fire’’ containing active volcanoes and are located above an active subduction zone. Gold Ridge is located within the central part of Guadalcanal Island which lies between the North Solomon Plate and the San Cristobal Trench, Figure 7-1. Rock-types occurring on Guadalcanal range from ultramafic to diorite intrusives, felsic to mafic and marine sedimentary rocks to fluvial sediments.

21APR201114550341 Figure 7-1: Tectonic Setting of the Solomon Islands

7.2 Prospect Geology The Gold Ridge deposits are hosted by the Lower Pliocene Gold Ridge Volcanics (GRV)—a distinctive, 800 m thick, shallow dipping volcanoclastic facies at the base of the more widely distributed Toni Formation (Figure 7-1 and Figure 7-2). The GRV are restricted to a small fault-bounded basin at a stepover in the Melango—Chovohio structure, which is an arc-normal fault interpreted to have formed as a transfer fault structure. The shape, position and structural setting of the GRV suggest it formed as a pull-apart basin above a jog in the Melango—Chovohio transfer structure during strike-slip reactivation. The abundance of andesite clasts in the GRV indicates proximity to a now buried and eroded andesitic volcanic centre. The GRV facies consist mainly of conglomeratic material, clastic breccias and minor amounts of inter-bedded siltstones and gritty sandstones, in a series of poorly defined, upward fining cycles of volcanoclastic debris. The sequence is poorly sorted and characterised by lateral and vertical facies variations.

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Overall the GRV sequences are not significantly disrupted by faulting. Surface mapping and core orientation measurements have been interpreted as indicating broad, open folding caused by compressional tectonics.

22APR201116061252 Figure 7-2: Structural setting of the Gold Ridge Deposits

22APR201116055939 Figure 7-3: Stratigraphy of the Central Guadalcanal

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22APR201108060549 Figure 7-4: Gold Ridge Project Geology The local geologic setting of the Gold Ridge deposits is presented in Figure 7-3 on which the broad limits to the hydrothermal alteration is indicated by the closed dashed line.

8.0 DEPOSIT TYPES The four Gold ridge deposits are low-sulphidation intrusion related epithermal gold deposits and as such display many similarities with other Pacific Rim intrusion related epithermal gold deposits. Other examples of this type of deposit include Waihi in the North Island of New Zealand, the Lihir Gold deposit on Lihir Island in Papua New Guinea and the Las Crucitas Gold deposit in Costa Rica.

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9.0 MINERALISATION Gold mineralisation at Gold Ridge is related mainly to alteration and veining and to a lesser extent lithology. Early quartz-pyrite-gold mineralisation is overprinted by later carbonate-base metal sulphide-gold and epithermal quartz-gold-arsenic mineralisation. The Gold Ridge deposits are quartz and arsenic poor relative to typical low sulphidation epithermal systems. Sulphide mineralogy is dominated by pyrite-marcasite with progressively lesser amounts of arsenopyrite, sphalerite, galena and chalcopyrite. Gold appears to be present as electrum in association with pyrite; coarse gold is common, particularly in oxide zones and has often been observed in quartz-carbonate veins particularly where base metal sulphides are present. Veins are not usually abundant even within gold mineralised zones and generally of millimetre scale up to one or two centimetres. Very rarely, multi-phase veins of 10 cm thickness or greater have been observed. Of the controls on mineralisation, alteration relationships are the most significant; high intensity alteration usually correlates with strong mineralisation. Most of the economic gold mineralisation relates to argillic alteration associated with pervasive low order silica-pyrite occurrences. High grade mineralisation is most frequently observed in zones of strong silica-pyrite and intense argillic alteration. Unaltered, or weakly propylitic altered zones are seldom economically mineralised. Although alteration assemblages are similar throughout Gold Ridge, the relative abundance and intensity of alteration is different for each deposit. Valehaichichi hosts the most intense and concentrated argillic and silica-pyrite alteration. Propylitic alteration survived at Kupers and Dawsons where argillic and silica-pyrite alteration is less intense. Primary porosity of shallow dipping, clast supported lithologies was an important factor in the lateral dispersion of gold mineralising fluids away from subvertical, narrow fissures that provided the conduits. A combination of compressional and strike-slip deformation produced most of the moderate to shallow dipping fractures and veins. Shallow dipping lithological controls as well as moderate to shallow dipping fractures and veins combine to impart a strong sub-horizontal distribution to gold mineralisation. A schematic cross sectional representation of alteration is also shown in the Gold Ridge mineralisation model in Figure 9-1. A brief description of the alteration types at Gold Ridge is given below. Near surface supergene mineralisation style is characterised by strongly kaolinitic and often strongly ferruginous saprolite or highly weathered volcanoclastics. With increasing depth, iron oxides are restricted to fracture coatings. Lower limits of oxidation extend up to 40 m (vertical depth) within fracture zones. The thickness of the supergene enriched zone usually varies from 0-20 m. Pervasive propylitic alteration is characterised by a chlorite-quartz-carbonate assemblage. Hornblende is altered to dark green chlorite with minor quartz and calcite, while plagioclase changes to a fine mixture of smectite and chlorite. Quartz occurs in the ground mass within areas of chlorite-carbonate alteration, together with common grains of unaltered primary magnetite. Argillic alteration within the GRV is characterised by pervasive carbonate-micaceous clay (illite- smectite)-pyrite+titanite ranging to micaceous clay + carbonate-pyrite assemblages. Argillic alteration overprinted the earlier and more widespread propylitic alteration event. Argillic alteration is host to narrow alteration zones of strongly developed micaceous clay Ǆ kaolinite-pyrite, kaolinite-pyrite-silica, kaolinite-micaceous clay, and kaolinite carbonate. These zones often host higher gold grades as do veinlets of carbonate-pyrite and quartz-carbonate-sulphide. Abundant kaolinite frequently forms part of the argillic-carbonate alteration assemblage or with carbonate and pyrite as narrow, intensively altered zones. Pyrite usually takes the form of coarse euhedral grains or aggregations disseminated throughout the micaceous clay altered volcanoclastics. Silica-pyrite alteration within the GRV is a quartz-illite-pyrite-carbonate mineral assemblage. Silica-pyrite alteration usually occurs as matrix infill in conjunction with the formation of dark grey reaction rims around adjacent clasts. Matrix replacement by semi-massive pyrite and kaolinite occurs in some areas of intense silica-pyrite alteration.

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22APR201116051860 Figure 9-1: Gold Ridge Mineralisation Model

10.0 EXPLORATION The exploration history of Gold Ridge has been described in Section 6.0. Section 11.0 summarises the activities and results of the modern exploration programs

11.0 DRILLING Since the completion of the Gold Ridge Feasibility study in 2007 a further seventy seven additional diamond drill holes (DDH104-172) were drilled at Gold Ridge (Table 11-1, Table 11-2 and Figure 11-1). These holes were drilled at Valehaichichi, Namachamata and Kupers and in the deep gorge between Kupers and Namachamata (Charivunga Gorge).

Table 11-1: 2007-2008 Diamond Drilling

Area Holes Metres Valehaichichi ...... 31 3,091 Namachamata ...... 14 1,979 Kupers ...... 5 498 Dawsons ...... 1 80 Charivunga Gorge ...... 26 7,052 Total ...... 77 11,904 To date no resource estimates have been completed for Charivunga Gorge although some of Charivunga drill holes have been used in the Namachamata and Kupers updates.

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Table 11-2: 2007-2008 Diamond Drilling—Hole Locations

Local Local Total Local HoleID East North Elevation Depth Dip Azimuth Area DDH104 ...... 24198.58 40846.31 317.27 129.5 ǁ60 270 Valehaichichi DDH105 ...... 24110.07 40870.58 319.88 154.8 ǁ60 270 Valehaichichi DDH106 ...... 24181.05 40828.91 317.09 126 ǁ60 269.5 Valehaichichi DDH107 ...... 24182.05 40875.84 315.24 100.8 ǁ60 270 Valehaichichi DDH108 ...... 24119.74 40778.36 313.86 100 ǁ61 272 Valehaichichi DDH109 ...... 24119.33 40802.09 315.67 96.2 ǁ60 269 Valehaichichi DDH110 ...... 24042.56 40779.07 324.11 108.2 ǁ60 270 Valehaichichi DDH111 ...... 24138.19 40802.54 317.52 84 ǁ60 270 Valehaichichi DDH112 ...... 24169.21 40777.03 297.71 53 ǁ60 270 Valehaichichi DDH113 ...... 24043.86 40828.25 334.62 145.6 ǁ60 270 Valehaichichi DDH114 ...... 24173.44 40951.6 308.48 76 ǁ60.7 267.3 Valehaichichi DDH115 ...... 24165.16 41049.87 307.8 110.6 ǁ59.4 272.6 Valehaichichi DDH116 ...... 23971.74 40949.09 323.66 68.3 ǁ60.3 271 Valehaichichi DDH117 ...... 23982.98 40926.19 325.61 106.6 ǁ55 270 Valehaichichi DDH118 ...... 24278.4 41110.86 307.29 65 ǁ60.6 270.9 Valehaichichi DDH119 ...... 24200 41057.44 305.71 94.6 ǁ59 268 Valehaichichi DDH120 ...... 23971.97 40619.02 314.7 277.6 ǁ49 268 Valehaichichi DDH121 ...... 23931.25 40773.11 336.98 61.7 ǁ60 270.5 Valehaichichi DDH122 ...... 24119.03 40824.66 314.86 42.6 ǁ60 270 Valehaichichi DDH123 ...... 24191.57 40999.63 307.48 99.1 ǁ60 266 Valehaichichi DDH124 ...... 24120.54 40825.93 314.85 160.6 ǁ60.4 269.1 Valehaichichi DDH125 ...... 24206.75 40958.01 308.02 55.4 ǁ60 268 Valehaichichi DDH126 ...... 24322.3 41064.05 305.93 63.1 ǁ60.3 270.4 Valehaichichi DDH127 ...... 23965.89 40974.28 321.93 76.4 ǁ50 268 Valehaichichi DDH128 ...... 24016.68 41277.11 365.26 87.1 ǁ60 274 Valehaichichi DDH129 ...... 23904.81 41023.39 359.9 67.8 ǁ75 270.5 Valehaichichi DDH130 ...... 23652.81 40678.99 422.11 85.6 ǁ60 269 Valehaichichi DDH131 ...... 23671.02 40322.99 421.79 160.7 ǁ59 268 Namachamata DDH132 ...... 23600.83 40477.67 438.76 69.2 ǁ60 267.5 Namachamata DDH133 ...... 23601.67 40478.06 438.53 153.2 ǁ90 0 Namachamata DDH134 ...... 23572.47 40459.76 431.23 89.8 ǁ60 271 Namachamata DDH135 ...... 23656.12 40351.26 418.11 176.1 ǁ90 0 Namachamata DDH136 ...... 23619.2 40392.32 420.82 84.1 ǁ60 269 Namachamata DDH137 ...... 23600.95 40499.03 439.15 84.1 ǁ55 272 Namachamata DDH138 ...... 23817.3 40324.63 400.4 316.6 ǁ60 270 Charivunga Gorge DDH139 ...... 23909.56 40370.19 386.83 304.8 ǁ50 268 Charivunga Gorge DDH140 ...... 23981.15 40463.47 379.51 400.6 ǁ50.2 268.2 Charivunga Gorge DDH141 ...... 23974.74 41007.74 318.93 102 ǁ60 270 Valehaichichi DDH142 ...... 24021.49 40955.24 323.14 96.2 ǁ60 270 Valehaichichi DDH143 ...... 24092 40805.01 316.9 85.6 ǁ61 269 Valehaichichi DDH144 ...... 24077.95 40775.77 317.06 111 ǁ60.4 269.3 Valehaichichi DDH145 ...... 23444.41 40720.71 488.86 170.6 ǁ50 268 Namachamata DDH146 ...... 23666.45 40867.45 443.98 66.2 ǁ60 270 Namachamata DDH147 ...... 23650.54 40717.27 421.14 106.3 ǁ49.3 269 Namachamata DDH148 ...... 23625.44 40519.25 429.51 85.3 ǁ50 270 Charivunga Gorge DDH149 ...... 23665.39 40562.31 430.26 358.2 ǁ55 91 Namachamata DDH150 ...... 23624.06 40510.55 427.98 350.2 ǁ50 91 Namachamata DDH151 ...... 23529.08 40249.55 446.19 349.7 ǁ60 90 Charivunga Gorge DDH152 ...... 23529.41 40240.01 446.37 51.2 ǁ50 360 Charivunga Gorge DDH153 ...... 23529.41 40240.01 446.37 268.8 ǁ55 359 Charivunga Gorge DDH154 ...... 23777.78 40406.46 393.38 319.8 ǁ50 270 Charivunga Gorge DDH155 ...... 23806.2 40367.29 396.49 323 ǁ54.3 270.5 Charivunga Gorge DDH156 ...... 23830.06 40389.75 382.49 407.2 ǁ51 268 Charivunga Gorge DDH157 ...... 23830.5 40389.75 382.49 254.7 ǁ72 268 Charivunga Gorge DDH158 ...... 23831 40389.25 382.49 293 ǁ50.5 312.5 Charivunga Gorge

499

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: MW11601A.;18 MERRILL CORPORATION PHARDIM//16-JUN-11 04:33 DISK106:[11ZBG1.11ZBG11601]MW11601A.;18 mrll_0909.fmt Free: 3280D*/5840D Foot: 0D/ 0D VJ RSeq: 4 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 26418

Local Local Total Local HoleID East North Elevation Depth Dip Azimuth Area DDH159 ...... 23813.68 40328.58 399.14 398.2 ǁ50 270 Charivunga Gorge DDH160 ...... 23731.85 40242.02 414.48 353.6 ǁ60.5 271 Charivunga Gorge DDH161 ...... 23867.82 40213.74 460.93 403.6 ǁ50.5 270.5 Charivunga Gorge DDH162 ...... 23596.58 40183.11 438.32 48.9 ǁ45 90 Charivunga Gorge DDH163 ...... 23596 40183.11 438.32 52.6 ǁ65.2 90.5 Charivunga Gorge DDH164 ...... 23834.99 40397.79 376.12 492.3 ǁ62 270 Charivunga Gorge DDH165 ...... 23835.5 40397.79 376.12 361 ǁ90 0 Charivunga Gorge DDH166 ...... 23867.54 40306.45 401.96 448.8 ǁ60 270 Charivunga Gorge DDH167 ...... 23968.84 40485.17 368.5 401 ǁ55 268 Charivunga Gorge DDH168 ...... 23656.16 40351.25 416.17 323 ǁ72 270 Charivunga Gorge DDH169 ...... 23548.04 40722.31 458.33 60 ǁ60 270 Namachamata DDH170 ...... 23609.45 40800.47 437.389 50 ǁ60 270 Namachamata DDH171 ...... 24097.44 40302.96 475.37 115.7 ǁ60 265.4 Kupers DDH172 ...... 24197.4 40248.9 446.82 60 ǁ60 264.1 Kupers DDH172 ...... DDH172 ...... DDH172 ...... DDH172 ...... DDH172 ...... DDH172 ...... DDH172 ...... DDH172 ...... DDH173 ...... 24048.06 40254.17 483.97 120.7 ǁ70 271 CHAR DDH174 ...... 23907.49 40065.46 518.895 73.9 ǁ90 360 CHAR DDH175 ...... 23953.71 40097.69 508.49 130 ǁ90 30 CHAR DDH176 ...... 23853.03 39195.03 580.95 80 ǁ60 281 CHAR DDH177 ...... 23530.35 40226.7 446 299.9 ǁ60 268 DAW DDH178 ...... 23358.42 40290.52 447.549 199.8 ǁ60 257 KUP DDH179 ...... 23410.73 40388.81 446.383 200.3 ǁ60 273 KUP DDH180 ...... 23455.96 40485.29 471.127 283.3 ǁ90 269 KUP

500

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: MW11601A.;18 MERRILL CORPORATION PHARDIM//16-JUN-11 04:33 DISK106:[11ZBG1.11ZBG11601]MW11601A.;18 mrll_0909.fmt Free: 1220DM/0D Foot: 0D/ 0D VJ RSeq: 5 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 24282

(Red ASG Drill Holes 2007-08, Blue ASG Drill Holes 2005-06, Black Historical Drill Holes)

22APR201106474848 Figure 11-1: Location of Gold Ridge Gold Deposits

501

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: MW11601A.;18 MERRILL CORPORATION PHARDIM//16-JUN-11 04:33 DISK106:[11ZBG1.11ZBG11601]MY11601A.;20 mrll_0909.fmt Free: 60D*/120D Foot: 0D/ 0D VJ RSeq: 1 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 11696

Holes drilled at Valehaichichi, Namachamata and Kupers represent infill holes. Drilling results have been summarised as mineralised intercepts at a cut-off grade of 0.5 g/t gold with a maximum of two metre internal waste included and are presented in Table 11-3.

Table 11-3: 2007-2008 Diamond Drilling Results

HoleID From (m) To (m) Interval Au g/t HoleID From (m) To (m) Interval Au g/t DDH104 . . . . . 9 10 1 1.24 DDH114 . . . . . 22 23 1 1.16 20 21 1 1.23 DDH115 . . . . . 7 25 18 1.79 30 31 1 5.89 49 54 5 0.8 34 35 1 8.21 59 60 1 1.75 54 56 2 0.96 67 68 1 13.65 69 73 4 2.42 94 98 4 1.26 81 82 1 2.73 DDH116 ..... 5 6 1 1.54 100 105 5 1.53 14 15 1 1.02 106 108 2 11.52 17 21 4 3.92 DDH105 . . . . . 35 39 4 0.75 25 26 1 1.11 62 68 6 2.82 30 31 1 4.72 78 85 7 0.64 38 41 3 2.61 109 112 3 0.86 45 56 11 1.39 128 132 4 3.61 61 63 2 0.98 DDH106 . . . . . 44 51 7 3.48 DDH117 . . . . . 32 35 3 1.14 74 75 1 2.16 42 43 1 2.37 106 111 5 26.1 46 49 3 0.91 DDH107 . . . . . 3 26 23 4.11 60 61 1 1.17 64 67 3 2.85 74 75 1 1.06 89 91 2 15.02 81 84 3 0.61 95 97 2 1.47 97 104 7 7.94 DDH108 ..... 0 7 7 3.04 DDH118 ..... 0 3 3 0.88 47 55 8 5.74 13 17 4 1.27 73 78 5 2.12 DDH119 . . . . . 12 26 14 11.2 82 95 13 1.3 61 62 1 1.24 96 100 4 1.15 64 71 7 14 DDH109 ..... 0 4 4 1.42 75 76 1 1.69 22 26 4 0.78 DDH120 ..... 0 3 3 2 32 41 9 2.27 8 12 4 0.85 45 58 13 1.22 61 72 11 4.87 59 66 7 1.16 88 89 1 1.06 DDH110 . . . . . 40 42 2 3.77 98 103 5 0.81 47 48 1 24 109 116 7 0.64 70 74 4 1.99 117 119 2 0.69 92 100 8 1.2 122 125 3 0.68 DDH111 . . . . . 18 20 2 1.19 134 137 3 0.56 72 81 9 3.38 141 142 1 0.75 DDH112 . . . . . 43 44 1 1.92 148 153 5 0.86 DDH113 . . . . . 0 11 11 2.48 194 199 5 0.84 52 59 7 1.96 207 209 2 23.68 66 69 3 1.2 217 221 4 0.87 100 103 3 1.39 232 233 1 0.54 110 111 1 1.93 247 248 1 0.82 120 121 1 1.31 250 251 1 0.89 123 131 8 1.21 260 261 1 1.84 133 139 6 0.79 264 272 8 0.86 DDH121 . . . . . 18 20 2 10.56 DDH130 . . . . . 48 50 2 1.21 30 33 3 1.25 59 65 6 13.66 45 49 4 0.62 69 78 9 1.44 57 61.7 4.7 0.79 80 81 1 0.6 DDH122 . . . . . 37 39 2 1.51 DDH131 . . . . . 17 23 6 0.72

502

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: MY11601A.;20 MERRILL CORPORATION PHARDIM//16-JUN-11 04:33 DISK106:[11ZBG1.11ZBG11601]MY11601A.;20 mrll_0909.fmt Free: 0D*/120D Foot: 0D/ 0D VJ Seq: 2 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 50793

HoleID From (m) To (m) Interval Au g/t HoleID From (m) To (m) Interval Au g/t DDH123 ..... 6 8 2 1.23 25 26 1 1.83 37 38 1 1.51 30 31 1 0.6 57 60 3 0.8 33 42 9 0.81 84 86 2 2.25 43 44 1 1.4 DDH124 . . . . . 8 15 7 0.82 48 51 3 0.56 21 22 1 0.6 54 59 5 0.94 40 44 4 1.23 62 67 5 24.65 47 52 5 1.26 73 74 1 0.66 75 80 5 0.55 78 80 2 0.89 117 118 1 6.5 89 91 2 0.79 124 125 1 1.17 97 109 12 1.7 130 133 3 0.92 110 111 1 2.28 136 137 1 0.91 113 114 1 1.3 145 152 7 1.75 117 121 4 1.8 DDH125 ..... 2 6 4 1.05 124 130 6 2.31 18 24 6 0.85 131 139 8 1.16 29 30 1 0.96 DDH132 ..... 0 2 2 1.16 34 36 2 0.83 9 12 3 1.2 44 45 1 0.54 DDH133 . . . . . 6 11 5 1.66 DDH126 . . . . . 1 10 9 2.91 22 26 4 0.77 27 29 2 1.32 30 32 2 1.22 31 32 1 0.63 49 56 7 1.43 36 39 3 0.51 82 86 4 1.7 41 47 6 0.84 92 106 14 4.72 53 54 1 0.59 111 116 5 0.65 DDH127 ..... 0 1 1 0.59 135 139 4 1.12 5 20 15 0.99 DDH134 ..... 0 4 4 1.13 24 27 3 1.94 13 14 1 6.46 30 31 1 0.66 18 30 12 1.83 35 38 3 0.6 65 68 3 0.96 47 49 2 4.29 DDH135 . . . . . 17 19 2 0.81 54 64 10 6.2 23 24 1 1.55 68 69 1 1.04 29 32 3 1.17 72 76.4 4.4 3.06 45 58 13 1.41 DDH128 ..... 0 1 1 0.65 59 62 3 0.58 7 9 2 1.88 75 82 7 1.44 40 43 3 4.21 94 95 1 13.35 72 73 1 2.91 117 126 9 1.42 75 78 3 1.43 130 131 1 0.93 DDH129 ..... 0 4 4 1.71 150 164 14 1.43 17 30 13 1.63 166 167 1 0.6 34 45 11 1.12 171 176.1 5.1 0.56 46 48 2 83.28 DDH136 . . . . . 23 25 2 0.83 55 59 4 1.3 30 32 2 1.26 62 63 1 0.68 55 58 3 0.7 DDH130 ..... 1 2 1 0.85 65 66 1 2.98 18 19 1 0.62 76 79 3 0.84 38 46 8 1.43 DDH137 ..... 0 2 2 2.03 DDH142 . . . . . 9 14 5 1.17 8 11 3 3.88 27 31 4 0.72 16 18 2 0.9 35 45 10 3.38 31 35 4 1.41 69 71 2 0.74 46 52 6 1.04 81 82 1 4.62 66 69 3 0.93 95 96.2 1.2 1.08 DDH138 ..... 0 3 3 2.87 DDH143 . . . . . 10 28 18 1.76 6 10 4 2.04 41 45 4 1.2 16 46 30 1.62 55 57 2 1.01 58 67 9 2.14 74 83 9 1.42

503

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: MY11601A.;20 MERRILL CORPORATION PHARDIM//16-JUN-11 04:33 DISK106:[11ZBG1.11ZBG11601]MY11601A.;20 mrll_0909.fmt Free: 0D*/120D Foot: 0D/ 0D VJ Seq: 3 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 5054

HoleID From (m) To (m) Interval Au g/t HoleID From (m) To (m) Interval Au g/t 79 96 17 1.08 DDH144 ..... 0 8 8 1.02 111 114 3 2.02 21 24 3 1.94 126 148 22 1.8 46 51 5 1.13 151 159 8 1.75 63 66 3 2.55 175 183 8 1.43 69 75 6 1.34 192 232 40 2.15 79 82 3 0.92 239 258 19 1.31 99 104 5 0.93 268 316.6 48.6 3.04 DDH145 . . . . . 62 64 2 0.7 DDH139 . . . . . 14 17 3 1.54 152 153 1 1.33 43 46 3 1.41 DDH146 . . . . . 22 29 7 1.04 147 148 1 3.65 DDH147 . . . . . 0 2 2 4.2 157 161 4 0.86 60 62 2 4.25 164 173 9 3.62 65 67 2 3.92 218 224 6 4.37 73 78 5 0.91 227 240 13 1.05 81 83 2 0.91 242 254 12 1.26 90 92 2 1.94 255 266 11 1.71 101 104 3 0.69 270 272 2 5.28 DDH148 . . . . . 0 17 17 1.17 276 304.8 28.8 1.57 49 53 4 1.56 DDH140 . . . . . 9 10 1 2.19 58 63 5 1.05 114 121 7 0.63 66 77 11 1.97 179 181 2 0.52 DDH149 . . . . . 0 1 1 1.2 211 212 1 1.2 74 81 7 0.9 224 225 1 1.13 127 131 4 0.66 232 239 7 21.94 176 180 4 0.77 240 244 4 2.09 208 213 5 1.05 247 251 4 1.55 245 250 5 1.54 256 261 5 0.52 267 274 7 0.59 278 288 10 0.7 275 287 12 4.82 293 300 7 0.77 303 312 9 0.77 304 310 6 1.4 320 328 8 0.81 314 340 26 6.25 346 350 4 1.15 342 381 39 2.29 DDH150 ..... 0 5 5 0.92 382 399 17 1.44 10 18 8 0.65 DDH141 ..... 5 9 4 1.77 24 25 1 1.1 19 23 4 0.53 31 33 2 2.84 25 26 1 1.45 43 48 5 0.56 30 34 4 0.75 55 56 1 1.36 36 38 2 1.06 59 77 18 1.42 42 43 1 1.35 82 83 1 7.19 46 49 3 1.03 88 90 2 1.34 53 55 2 0.94 93 98 5 0.78 68 69 1 3.63 127 128 1 3.43 96 98 2 1.05 135 141 6 0.9 143 152 9 0.92 127 131 4 1 153 163 10 0.73 151 156 5 1.3 169 171 2 1.02 159 173 14 1.11 187 189 2 1.16 176 177 1 0.66 211 212 1 1.04 182 184 2 0.7 274 281 7 2.49 187 225 38 4.78 283 294 11 1.09 229 233 4 0.9 296 303 7 0.77 235 239 4 0.91 304 318 14 0.63 242 265 23 1.92 326 332 6 56.51 266 288 22 3.09 336 343 7 0.77 289 291 2 1.48 DDH151 . . . . . 13 17 4 0.95 294 295 1 0.64 21 22 1 0.51 DDH155 . . . . . 37 38 1 1.14 30 33 3 0.6 48 54 6 1.18

504

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: MY11601A.;20 MERRILL CORPORATION PHARDIM//16-JUN-11 04:33 DISK106:[11ZBG1.11ZBG11601]MY11601A.;20 mrll_0909.fmt Free: 0D*/120D Foot: 0D/ 0D VJ Seq: 4 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 6746

HoleID From (m) To (m) Interval Au g/t HoleID From (m) To (m) Interval Au g/t 36 40 4 0.92 63 64 1 25.2 50 52 2 1.33 79 92 13 0.84 55 56 1 1.14 93 106 13 3.2 61 63 2 6.28 108 113 5 0.82 87 93 6 0.74 115 118 3 0.89 94 94 1 1.25 134 138 4 0.74 112 116 4 1.14 150 152 2 2.18 120 121 1 0.96 155 162 7 2.08 125 126 1 2.12 168 170 2 1.49 138 149 11 1.35 192 201 9 1.4 160 161 1 0.63 210 215 5 1.29 179 180 1 0.62 219 222 3 1.07 183 191 8 0.97 225 227 2 1.36 194 200 6 0.57 233 249 16 1.69 201 210 9 1.44 250 266 16 1.97 213 230 17 1.1 268 285 17 1.6 DDH153 . . . . . 10 11 1 0.86 286 323 37 4.05 39 40 1 0.6 DDH156 . . . . . 52 53 1 2.6 63 64 1 0.51 64 70 6 1.16 119 124 5 1.24 83 95 12 1.65 127 128 1 0.66 102 105 3 1.18 139 140 1 0.95 108 120 12 3.29 146 149 3 1 121 127 6 0.5 214 215 1 0.63 150 157 7 1.71 218 219 1 0.7 163 165 2 1.66 244 246 2 2.7 180 181 1 84 DDH154 . . . . . 6 11 5 1.45 191 217 26 2.71 12 13 1 0.66 218 222 4 0.53 20 29 9 4.68 225 227 2 1.4 31 33 2 1.99 230 232 2 1.42 41 42 1 1.01 235 248 13 1.1 46 56 10 0.91 250 254 4 0.6 60 64 4 0.64 256 306 50 7.77 65 70 5 1.032 307 351 44 3.52 71 82 11 0.71 358 362 4 1.22 86 88 2 0.86 372 377 5 1.15 92 93 1 0.52 404 405 1 41.9 105 106 1 0.79 DDH157 . . . . . 26 32 6 5.07 112 113 1 0.59 34 38 4 0.62 118 119 1 0.94 48 54 6 1.21 DDH157 . . . . . 101 105 4 1.22 DDH159 . . . . . 275 297 22 2.56 120 124 4 23.34 300 304 4 11.5 138 147 9 1.22 307 349 42 3.35 153 159 6 1.16 DDH160 . . . . . 0 18 18 1.1 162 168 6 1.02 58 65 7 1.28 169 173 4 0.62 69 74 5 0.75 174 185 11 0.99 76 82 6 0.74 192 214 22 1.89 83 90 7 1.77 216 230 14 1.14 94 95 1 0.62 234 254 20 2 106 109 3 1.5 DDH158 . . . . . 22 24 2 1.34 116 120 4 0.94 66 67 1 3.11 126 129 3 0.66 77 78 1 0.92 132 133 1 1.61 84 85 1 0.82 152 154 2 0.76 89 93 4 0.58 159 161 2 4.13 104 105 1 0.63 164 165 1 0.56 113 118 5 0.53 173 183 10 0.77 143 146 3 1.21 185 193 8 0.95

505

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: MY11601A.;20 MERRILL CORPORATION PHARDIM//16-JUN-11 04:33 DISK106:[11ZBG1.11ZBG11601]MY11601A.;20 mrll_0909.fmt Free: 0D*/120D Foot: 0D/ 0D VJ Seq: 5 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 53378

HoleID From (m) To (m) Interval Au g/t HoleID From (m) To (m) Interval Au g/t 155 161 6 1.98 196 200 4 1.08 170 171 1 0.54 208 213 5 4.16 172 173 1 0.57 214 223 9 0.94 187 188 1 1.66 225 231 6 0.72 212 213 1 0.79 235 237 2 1.01 217 218 1 0.55 240 251 11 3.96 233 241 8 0.94 253 260 7 1.68 243 253 10 0.76 270 281 11 1.69 254 261 7 1.08 DDH160 . . . . . 291 294 3 1.05 263 264 1 0.66 297 302 5 1.96 274 279 5 0.95 306 325 19 2.44 281 286 5 0.63 328 334 6 1.71 288 290 2 1.56 337 339 2 2.01 DDH159 ..... 0 3 3 0.87 342 351 9 1.32 9 31 22 2.02 353 353.6 0.6 1.13 43 44 1 1.51 DDH161 . . . . . 5 7 2 0.9 48 57 9 1.49 14 16 2 3.29 62 64 2 0.89 47 48 1 1.18 70 71 1 17.05 69 73 4 0.79 79 83 4 1.03 75 77 2 1.14 88 102 14 2.09 80 89 9 1.39 104 111 7 0.73 105 115 10 1.03 113 114 1 1.77 118 131 13 0.94 123 127 4 0.9 134 135 1 1.07 133 134 1 8.26 142 148 6 1.31 140 141 1 1.33 151 163 12 1.44 146 148 2 1.09 175 188 13 1.22 152 158 6 0.83 215 226 11 1.1 165 168 3 0.68 232 237 5 1.19 170 171 1 0.75 250 255 5 1.11 174 176 2 4.92 256 264 8 2.43 185 186 1 2.32 268 276 8 3.53 191 192 1 0.86 281 294 13 1.97 196 232 36 2.29 296 302 6 0.59 236 249 13 1.7 317 321 4 0.61 251 272 21 1.54 347 352 5 0.75 372 377 5 0.66 292 299 7 2.17 393 398 5 2.51 300 304 4 1.12 402 403.6 1.6 1.04 307 310 3 1.37 DDH162 . . . . . 14 15 1 23 311 313 2 3.54 31 34 3 25.52 314 318 4 1.96 38 42 4 2.01 329 336 7 3.07 45 46 1 2.5 344 346 2 3.45 DDH163 . . . . . 16 23 7 0.64 DDH166 ..... 0 1 1 0.57 24 31 7 1 6 8 2 0.61 32 34 2 1.38 13 25 12 1.06 38 43 5 0.67 27 30 3 0.66 DDH164 . . . . . 73 75 2 1.9 32 33 1 0.79 94 101 7 0.83 39 53 14 0.97 103 107 4 0.98 66 70 4 1.56 111 127 16 2.36 81 82 1 0.63 130 135 5 1.14 134 139 5 0.67 137 142 5 0.8 149 152 3 1.1 149 159 10 0.92 157 167 10 4.24 172 182 10 1.12 169 182 13 1.21 185 199 14 1.41 183 189 6 0.54 203 207 4 0.72 190 191 1 0.66 211 224 13 1.8 198 200 2 7.84

506

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: MY11601A.;20 MERRILL CORPORATION PHARDIM//16-JUN-11 04:33 DISK106:[11ZBG1.11ZBG11601]MY11601A.;20 mrll_0909.fmt Free: 240DM/0D Foot: 0D/ 0D VJ RSeq: 6 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 6364

HoleID From (m) To (m) Interval Au g/t HoleID From (m) To (m) Interval Au g/t 226 231 5 1.41 205 210 5 0.96 237 249 12 1.34 211 213 2 0.75 251 256 5 0.54 217 230 13 1.69 260 269 9 1.73 231 247 16 1.92 272 286 14 2.41 249 250 1 0.9 291 306 15 1.61 253 261 8 1.1 308 316 8 1.88 263 302 39 2.02 315 334 19 1.8 303 320 17 0.86 341 348 7 0.89 322 354 32 2.86 350 360 10 1.37 356 358 2 0.59 361 374 13 0.93 362 370 8 2.54 384 407 23 1.81 373 377 4 1.16 408 417 9 0.94 380 395 15 1.72 424 428 4 0.63 397 401 4 2.42 438 440 2 0.85 414 417 3 1.15 450 455 5 0.6 420 427 7 1.14 460 461 1 2.13 DDH167 . . . . . 101 102 1 1.04 478 485 7 0.71 143 145 2 0.76 DDH165 . . . . . 25 27 2 0.77 152 153 1 1.69 88 92 4 1.12 203 210 7 0.69 160 164 4 0.84 213 215 2 2.82 168 170 2 1.8 218 229 11 18.6 190 194 4 0.64 259 267 8 0.8 197 203 6 1.8 271 282 11 2.74 DDH165 . . . . . 207 217 10 0.93 284 309 25 2.46 222 227 5 0.66 310 336 26 2.16 232 237 5 0.63 342 352 10 1.63 261 262 1 0.85 355 356 1 0.84 268 269 1 0.63 361 368 7 1.14 271 272 1 0.86 370 386 16 6.85 280 284 4 1.23 387 391 3 1.72 284 291 7 2 393 394 1 1.56 DDH168 . . . . . 10 11 1 0.85 DDH169 ..... 15 16 1 8.9 DDH170 ..... 6 7 1 0.51 29 35 6 1.48 DDH171 . . . . . 39 40 1 0.51 45 47 2 0.61 64 66 2 0.88 52 82 30 2.58 73 74 1 0.64 84 88 4 0.8 DDH172 ..... 1 3 2 0.62 114 117 3 0.82 14 16 2 0.65 119 126 7 1.25 31 33 2 2.68 131 133 2 0.7 55 56 1 12.6 140 147 7 0.93 149 151 2 0.71 154 159 5 0.57 160 169 9 0.98 170 194 24 1.89 195 212 17 3.21 215 216 1 1.45 219 225 6 2.09 227 230 3 2.44 233 240 7 2.35 241 242 1 0.95 246 247 1 0.88 259 260 1 0.63 282 283 1 0.78 285 286 1 0.61

507

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: MY11601A.;20 MERRILL CORPORATION PHARDIM//16-JUN-11 04:33 DISK106:[11ZBG1.11ZBG11601]NA11601A.;26 mrll_0909.fmt Free: 1200DM/0D Foot: 0D/ 0D VJ RSeq: 1 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 54516

12.0 SAMPLING METHOD AND QUALITY CONTROL MEASURES Data used in the estimation of gold resources at Gold Ridge has been derived from samples collected from diamond core (DDH) and reverse circulation (RC) drilling programs. The total Gold Ridge exploration drill hole dataset comprises 449 diamond drill holes and 755 RC holes. This data set was acquired collectively by Cyprus-Arimco, Ross Mining and Australian Solomons Gold from the late 1980s to 2006. In addition to the exploration drilling a total of 2,672 grade control RC holes have been drilled. The drill-hole meterage for various campaigns is summarised in Table 12-1 below:

Table 12-1: Drilling meterage by campaign and drill type for each deposit Cyprus—Arimco Mining

Deposit Diamond Drilling RC Drilling Total holes metres holes metres holes metres Valehaichichi ...... 66 7,465 133 11,537 199 19,002 Kupers ...... 131 15,574 41 2,810 172 18,384 Dawsons ...... 102 9,437 81 5,570 183 15,007 Namachamata ...... 19 2,788 20 1,179 39 3,967 Total ...... 318 35,264 275 21,096 593 56,360

Ross Mining

Deposit Diamond Drilling RC Drilling Total holes metres holes metres holes metres Valehaichichi ...... 9 960 173 9,566 182 10,386 Kupers ...... 10 765 117 7,600 127 8,365 Dawsons ...... 9 984 134 8,314 143 9,299 Namachamata ...... 56 3,575 56 3,575 Total ...... 28 2,709 480 29,055 508 31,625

Australian Solomons Gold

Deposit Diamond Drilling RC Drilling Total holes metres holes metres holes metres Valehaichichi ...... 32 1,9566.6 32 1,9566.6 Kupers ...... 20 1,580.8 20 1,580.8 Dawsons ...... 39 2,431.1 39 2,431.1 Namachamata ...... 12 880.6 12 880.6 Total ...... 103 6,849.1 0 0 103 6,849.1

Grade Control RC Drilling

Deposit holes metres Valehaichichi ...... 2,443 62,142 Kupers ...... 78 2,311 Dawsons ...... 0 0 Namachamata ...... 151 7,042 Total ...... 2,672 71,495

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Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: NA11601A.;26 MERRILL CORPORATION PHARDIM//16-JUN-11 04:33 DISK106:[11ZBG1.11ZBG11601]NA11601A.;26 mrll_0909.fmt Free: 500DM/0D Foot: 0D/ 0D VJ RSeq: 2 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 5730

12.1 Twinned Diamond versus Reverse Circulation Assay Results The ability to provide good quality and representative samples for analysis is an aspect of RC drilling that needs to be established for each drilling program and monitored by means of appropriate checks. Good quality RC drilling can provide better sample lots for assaying than diamond drilling because the sample mass can be much larger. This would generally be considered advantageous in low grade gold deposits particularly if there are problems relating to coarse gold. However, unlike core samples, from which geologists can accurately measure sample recovery and, where applicable, evaluate problems relating to differential recovery of separate components of the same sample interval, RC samples are mixed loose cuttings, from which approximate evaluation of total sample recovery is possible but little or no quantitative information can be obtained about differential sample recovery. Diamond drilling, hopefully, maintains an intact sample until material is first cut for sample preparation on the surface, whilst RC drilling is destructive and sample loss and segregation commences at the drill face. Drilling technique, skill and ground conditions all impact on the quality or representivity of the sample recovered at the surface. The most visibly obvious occurrence of sample segregation is the loss of fines to the air, via the by-pass hose and through the top of the sampling cyclone. If the grade of this fine grained material is different to the grade on coarser particles retained in the sample then the reported assay values will not be the true grade of the sample interval. The degree of error will depend on the difference in grade of the fine and coarse components and their relative proportions. Sample segregation is made worse when drilling conditions are wet as the in flow of water into a hole can wash away a larger proportion of material. Sample loss downhole into fractures and cavities is also likely to occur as is ‘over’ drilling through interval of less robust material. Drilling techniques such as the use of large compressors that keep holes drier to greater depths are generally considered advantageous. Sub-sampling RC material to produce assay samples can also be problematical. Individual sample intervals can weigh as much as 30 kg (or more) with a typical sample sent to the assay laboratory being 3-5 kg. This represents a considerable reduction in sample mass and needs to be done with the utmost care. Sub-samples are usually split using a riffle splitter and commonly several riffle splitters in a tiered structure. These devices work reasonably well with free-flowing dry material but they do not work at all well for wet or damp material, particularly if material is clay rich and binds together in lumps. There is no practicable and effective way to sample wet material. It must be dried first. Concerns were raised by Cyprus-Arimco in 1989 as to the reliability of the assay data derived from RC drilling at Gold Ridge. Diamond holes, targeting economic intersections in RC holes, drilled to collect samples for metallurgical test work often failed to re-produce the same degree or intensity of mineralisation. Typically the RC holes reported higher grade and longer intersections of mineralised material. For the Gold Ridge data, drill holes/samples can be placed in one of two populations, one where holes were drilled by Ross Mining (owners and operators of the Gold Ridge mine as Gold Ridge Mining Ltd) or the other drilled by previous project owners, referred to as pre-Ross Mining. In total 72% of all holes and 60% of all samples are from RC holes although only 22% of all holes and samples are pre-Ross Mining (Table 12-2). The distribution of holes across the project is not even with the greatest proportion being drilled at Valehaichichi and the lowest at Kupers.

Table 12-2: RC Drilling and Sampling Proportions

pre-Ross Deposit Total RC% Mining RC% holes metres holes metres Valehaichichi ...... 80% 71% 35% 39% Kupers ...... 53% 39% 14% 11% Dawsons ...... 66% 57% 25% 23% Namachamata ...... 92% 81% 8% 8% Total ...... 72% 60% 22% 22%

(Namachamata data includes RC grade control holes)

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12.1.1 Issues relating to the pre-Ross Mining RC drilling include: • Rigs equipped with low capacity air compressors, which affects the ability to keep water out of the hole. • The use of ‘cross-over subs’ rather than face sampling bits. • Supervisory personnel had little experience of RC drilling/sampling. • Holes were drilled even when hole conditions were wet. • Water injection was used to facilitate drilling. • Some RC holes were in fact ‘open-hole percussion’. • Grab sampling used for wet sample intervals. Several programs of twinned diamond holes have been carried out to evaluate the potential problem of grade bias in the RC holes. The data was re-evaluated by H&S as part of the resource estimation work in 2005. In this analysis the statistical properties of the pre-Ross Mining RC drilling are compared to the other drilling types using subsets of data generated by searching the total dataset to locate pairs of samples that were spatially adjacent. The implicit assumption is that the pairs of sample grades, so generated, represent the same mineralisation style. The search parameters used to identify adjacent pairs were 5 m ǂ 5 m horizontally and 3 m vertically. The results of the analysis are presented in the form of scatter plots and quantile-quantile (QQ) plots with accompanying univariate and bivariate statistics. The scatter plots and bivariate statistics provide some indication of the relationship or correlation between adjacent sample pairs. The QQ plots provide a way of comparing the histograms of the data forming the pairs. In most gold deposits, data pairs separated by even a few meters tend to show only weak to moderate correlation reflecting the high short scale variability that occurs in gold mineralisation and sometimes referred to erroneously as high ‘‘nugget effect’’. However, even with the high short scale variability, sample populations of spatially adjacent samples should tend to show similar univariate statistics and histograms. QQ plots showing points aligned close to the 45 degree bisector of the plot indicate the paired data have similar histograms with similar univariate statistics.

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Pre-Ross Mining RC versus pre-Ross Mining Diamond The pre-Ross Mining RC and diamond paired data show no correlation and major differences in the histograms (Figure 12-1 and Figure 12-2). The average grades of each set differ significantly with the RC average grade being by about twice the diamond average.

22APR201102430803 Figure 12-1: Scatter Plot of pre-Ross Mining RC and Diamond Assays

22APR201102412654 Figure 12-2: QQ Plot of pre-Ross Mining RC and Diamond Assays

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Pre-Ross Mining RC versus All Diamond Drilling Analyses of the paired assay data from pre-Ross Mining RC assays and those from all diamond drilling show similarly poor results. There is no significant correlation between the two data sets and significant differences in the two histograms (Figure 12-3 and Figure 12-4). The difference between the means of the two datasets is extreme.

22APR201102431911 Figure 12-3: Scatter Plot of pre-Ross Mining RC and all Diamond Assays

22APR201102413673 Figure 12-4: QQ Plot of pre-Ross Mining RC and all Diamond Assays

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Ross Mining RC versus All Diamond Drilling Conversely similar comparisons between Ross Mining RC and diamond drilling show much closer agreement. The correlation between the two datasets is very weak but there is some similarity between the histograms and the difference between the average grades is less than 10% (Figure 12-5 and Figure 12-6).

22APR201102432990 Figure 12-5: Scatter Plot of Ross Mining RC and all Diamond Assays

22APR201102414859 Figure 12-6: QQ Plot of Ross Mining RC and all Diamond Assays Statistical analysis of the paired diamond and RC from Gold Ridge show that the older pre-Ross mining RC data has statistical properties that are incompatible with the other datasets. The mean grade of the older RC drilling is significantly higher than the other datasets.

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Data acquired during work programs recently completed by ASG shows a similar relationship between assay from diamond holes and assays from the older pre-Ross Mining RC. Two graphs below show the QQ plots of diamond-RC pairs from holes DDH001-103 (Figure 12-7 and Figure 12-8).

22APR201102425940 Figure 12-7: Scatter Plot of pre-Ross Mining RC and DDH001-103

22APR201102411375 Figure 12-8: QQ Plot of pre-Ross Mining RC and DDH001-103 The results from the more recent diamond holes, though not as extreme as earlier data suggested, do confirm that the pre-Ross RC data consistently report higher grades than diamond holes drilled in the same areas. The differences between the grades obtained from the pre-Ross Mining RC drilling and diamond drilling indicates a serious problem with the old RC data. These differences cannot be explained by the difference in sample volume. Assuming sampling and assaying of the two populations was equally good the variance of the two populations would differ but the mean grade of the samples should be the same. The difference between the two populations cannot be explained by short scale spatial continuity. This would require that the RC holes were consistently drilled into higher grade zones of mineralisation, whilst the diamond holes were drilled into weakly mineralised hangingwall and footwall zones. Drilling RC holes under wet drilling conditions and ‘‘grab’’ sampling wet RC sample bags indicate strongly that the problem is in the RC data. Wet drilling will remove fine grained particles from the sample. At Gold Ridge where clay alteration is well developed loss of clay fines will likely result in upgrading of the recovered sample. Subsequent ‘‘grab’’ sampling further degrades the quality of the sample sent for assay. All RC designated as pre-Ross Mining, drilled before 1996, have been removed from the dataset used for resource estimation. To reduce the impact on the final resource estimates a number of pre-Ross Mining RC holes have been re-drilled using diamond core.

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13.0 SAMPLE PREPARATION, ANALYSES AND SECURITY (after Hellman and Schofield, 2008) Exploration and resource drilling activities have been carried out Gold Ridge since 1983. Over that time various sampling protocols have been used. Protocols used prior to the drilling programs completed by ASG are summarised in Table 13-1 below.

Table 13-1: Historical Sample Preparation Protocols

Method 1 2 3 4 5 6 7 8 Program Cyprus— Ross Mining Arimco (1996-2000) (pre-1996)

Drill holes GRV1-9 GRV1-9 GR7-57 GR57-246 GR342-567 RC247-529 GR568-595 RC596-1102 GRN1-7 GRN1-7 GR1-567 GR1-6

Comments Visible Au only

Material whole core half core half core half core half core RC chips half core RC chips

Crush jaw crush dolly Mill 85% jaw crush 2 jaw crush 2 jaw crush 2 — jaw crush 4-6 — 1.5 mm kg 8 mm kg 8 mm kg 8 mm kg

Split riffle 600 gm riffle riffle — 2-4 kg, dry — riffle 5-9 kg riffle, wet grab

Fine Crush hammer mill — hammer mill disk mill hammer mill disk mill disc mill ǁ1 disc mill ǁ1 1 kg ǁ180 um mm mm

Fine Crush 2 ring mill — — — — — — —

Split riffle — riffle riffle riffle — —

Pulveriser ring mill 1 kg ring mill roll — disk mill 1 kg ring mill 1 kg ring mill 1 kg — — ǁ75 um mix ǁ180 um ǁ75 um ǁ75 um

Split — riffle riffle riffle riffle riffle riffle riffle

Pulveriser — ring mill 500 ring mill 500 ring mill 200 ring mill 200 ring mill 200 ring mill LM5 ring mill LM5 gm ǁ180 um gm ǁ100 um gm ǁ75 um gm ǁ75 um gm ǁ75 um 2 kg ǁ75 um 2 kg ǁ75 um

Assay 2 ǂ 50 gm FA 50 gm FA 30 gm 50 gm FA 50 gm FA 50 gm FA 50 gm FA 50 gm FA +75 um AqRegia/AAS —75 um

Primary Laboratory ALS, ALS Amachem Analabs Sol Is Analabs Sol Is Analabs Sol Is Analabs BNE Analabs BNE BNE BNE BNE Tech 313 Tech 313 Tech 313 PM212 PM209, FA2

Check Laboratory Amachem, Analabs Analabs Sol Is Analabs Sol Is ALS, ALS, FA6 Tech313 Tech 315 Tech 315 BNE BNE Analabs Sol Is Amachem Tech315 FA2

Assay Laboratories: • Analabs, Brisbane • Analabs, Solomon Islands • Analabs is now part of the SGS Group of companies. • ALS—Australian Assay Services (Now ALS-Chemex), Brisbane • Amachem, Brisbane. Details unknown. Hellman and Schofield were not involved with the project prior to 2005 and could not comment on the sample handling and security measures used during these drilling and sampling programs. A total of 103 diamond drill holes have been drilled by ASG during 2005 and 2006. On-site sample preparation facilities were re-commissioned in 2005 with all sample preparation being completed in the Solomon Islands and pulps dispatched to ALS in Brisbane for analysis. The sample preparation protocol used is shown in Table 13-1.

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The on-site sample preparation facility utilised a jaw crusher, riffle splitter and a pulveriser. Work was completed by employees of ASG. The sample drying facility was a converted cargo container. The original LM1 pulveriser was replaced in 2006 by a LM5 pulveriser. This was done after recognition that the LM1 sample preparation protocol was inferior to previous protocols used Table 13-2 and the LM5 provided the means to pulverise a larger sample volume.

Table 13-2: Sample Preparation Protocols, 2005-2006

Protocol 1 2 Year ...... 2005 2006 Drill Holes ...... DDH001-036 DDH037-103 Material ...... Quarter Core Half core Crush ...... Jaw crush Jaw crush Split ...... 1.5 kg 3 kg Pulveriser ...... LM1 - 1.5 kg LM5 - 3 kg Split ...... 500 gm 500 gms Assay ...... 30 gm FA 50 gm FA Laboratory ...... ALS ALS Method—Au ...... AA25u AA26 Elements—other ...... 1—Ag Cu Pb Zn (selected samples only) Ag As Ca Cu Fe S 2—Multi element (selected intervals only) 3—Leachwell Gold (selected intervals only) Method—other ...... 1—ME—OG46 ME-ICP41s 2—ME—ICP41s 3—Au-AA15k

Assay Laboratory: ALS, Brisbane, Operating Std ISO 17025. For drill programs completed by ASG in 2005 and 2006 the following sample handling and security protocols were in place: • Company personnel or approved contractors are the only people allowed on the drill site. • Company or approved personnel will be present at all times on the drill site. • Drill core is only removed from the drill site for transport to the Gold Ridge Mining Limited core logging/ processing facility in Honiara. • Once drill core is placed in the core box, the only persons allowed to handle the core are company geologists. • Core boxes must only be placed on stable level ground within the confines of the drill site. • Metal lids are placed over each core box on completion of on-site geotechnical logging. Lids are secured by rope and core boxes stacked ready for transport. • On completion of a drill hole, core is to be transported to Honiara at the earliest opportunity by the supervising geologist or senior field technician. If for any reason core cannot be removed promptly, security is to be maintained by the presence, on site of a company representative. • During drilling operations, core boxes are transported to Honiara daily. More frequent pickups are done during periods of high core production. Core boxes are transported on the tray back of a light 4WD vehicle. • Core boxes are delivered directly to the GRML core logging/sample preparation facility at Honiara, which is in a secured compound with 24 hour security personnel. • Only GRML geologists and sample technicians are allowed to handle core or samples. • Samples are dispatched to ALS in Brisbane usually on a weekly basis via a Pacific Aircargo charter flight. Samples are packed in sealed, labelled cardboard cartons • Samples are delivered to Pacific Aircargo by GRML Geology Dept. staff the day before departure to enable the processing of required documentation.

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• The PacAircargo facility is a secure cargo warehouse, located only 300 m from the GRML compound. • On arrival in Brisbane the sample shipment is held in PacAircargo’s secure warehouse until inspected by Aust. Govt Quarantine and Customs officials. • Once cleared by Quarantine and Customs staff, the shipment is road transported to the ALS laboratory for analysis.

13.1 Sampling Procedures 13.2 Bulk Densities Bulk densities have been determined on the basis of oxidation type. The Gold Ridge data base contains 7,249 bulk density data values from Cyprus-Arimco diamond drill holes. Ross Mining carried out 664 bulk density determinations on samples the metallurgical drilling program, although the raw data is no longer available. The method used for bulk density determination was the water immersion method. Check determinations on the Ross Mining samples, by AMMTEC metallurgical laboratory in Perth, at the time showed that values for air dried samples were generally about 8% higher than oven dried samples. The procedure of determining bulk density was modified to include oven drying. The data acquired by Cyprus-Arimco used air dried samples and so was not used in the 1996 resource estimates. Monthly Mine Production reports have revealed a reconciliation problem between the bulk densities determined from exploration samples and those back-calculated from mill weightometer and survey volumes (Table 13-3).

Table 13-3: Valehaichichi Bulk Density Values

Bulk Density Data Source Oxide Transitional Fresh Diamond core ...... 1.72 2.00 2.26 Mill weightometer ...... 1.72 1.90 2.10 % Difference ...... 0% ǁ5% ǁ7% A number of potential causes were suggested including: • Inappropriate density determination techniques • Incorrect survey volumes • Biased truck counts • Inconsistent loading of trucks • Inaccurate weightometer calibration • Inaccurate moisture determination. Investigations at the time apparently found no obvious cause. Updated resource estimates by Delta (Abbott 2000, unreported), used modified bulk density values for Valehaichichi but maintained the original Ross Mining bulk density values for the other resource areas. Values used in the current feasibility study (Table 13-4) for Valehaichichi, Kupers and Dawsons are those determined by Ross Mining (James 1996) and for Namachamata are from Abbott 2000. Because of the uncertain cause of the discrepancy between mine and mill data from Valehaichichi this has not been accounted for in the current study.

13.3 Allied Gold Under the management of Allied Gold the Gold Ridge operation will be adopting all the drilling and sampling procedures that are currently in place at Allied’s Simberi Gold Project. The Author has reviewed and documented these procedures in the Revised Technical Report ‘‘Simberi Gold Project, Simberi Island, Papua New Guinea’’. These procedures are considered to be of industry standard or better and applicable the Gold Ridge geological environment.

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The Author recommends a review of the drilling and sampling procedures at Gold Ridge approximately six months after commencement to ensure they have been implemented appropriately and correctly.

Table 13-4: Bulk Density Values

Ross Mining Valehaichichi data B.D. Oxide ...... 12 1.72 Transitional ...... 21 2.00 Fresh ...... 204 2.26

Ross Mining Kupers data B.D. Oxide ...... 6 1.67 Transitional ...... 10 1.94 Fresh ...... 146 2.33 Dawsons Oxide ...... 5 1.64 Transitional ...... 25 2.06 Fresh ...... 227 2.31

Namachamata Delta Oxide ...... unknown 1.80 Transitional ...... unknown 2.20 Fresh ...... unknown 2.30

14.0 DATA VERIFICATION 14.1 Drilling and Data Sources (after Hellman and Schofield, 2008)

Historical data (pre-2005) used for the resource estimates was retrieved from four Gemcom format access databases supplied by ASG:

GCDBGR.mdb Gold Ridge exploration drill hole database. GCDBKG.mdb Kupers grade control drill hole database. GCDBNG.mdb Namachamata grade control drill hole database. GCDBVG.mdb Valehaichichi grade control drill hole database. These drill hole databases have not been rigorously verified by the author due to the lack of available data originals. Data acquired by ASG in 2005 and 2006 was collated and managed by the author using a new MS-Access database built and customised for the Gold Ridge project.

14.1.1 Quality Control No pre-2005 QA/QC data is available for analysis, at the present time and no relevant sample material exists for check assaying. Therefore evaluation of the assay data quality for all data acquired pre-2005 is based on discussions and data presented in previous feasibility and resource reports.

Arimco 1990, Evaluation of the Gold Resources at Gold Ridge (Reveleigh 1990) Concerns about poor reproducibility of duplicate and replicate assay results, obtained from Analabs and Fox Anamet laboratories, led to an investigation by Australian Geostandards. The outcome of this investigation, based on regression analysis, was a ranking of the confidence attributable to the assay results according to analytical method (Table 14-1). Five ranked levels of confidence were defined:

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Table 14-1: Arimco Assay Confidence Levels

Level Explanation Complete . . . . . No variations or significant departures from true grade Reasonable . . . Few variations from true gold values. Limited ...... Occasional highly inaccurate values, but most assays show reasonable correlation Poor ...... Some correlation but considerable variation, including some extreme values No ...... No relationship between grades shown and true values. At Valehaichichi 3% of assays, available at that time, were considered to have complete confidence, 53% of assays limited confidence and the remaining being poor or no confidence. At Kupers only 14% of the assays, available at that time, were considered to have limited confidence or better. At Dawsons 81% of assays, available at that time, were considered to have poor to limited confidence with no confidence in the remaining assays. Without access to the original data and the Australian Geostandards reports, it is not possible to assess the reliability or validity of this analysis. It is not known which assays in the current database were assigned to which confidence category. Concerns were based primarily on the reproducibility of duplicate assays and do not indicate that any grade bias exists. Australian Geostandards also concluded that problems with sampling and sample preparation contributed to most of the analytical problems. Consequently improvements were made to the on-site sample preparation facilities with the introduction of a hammer mill to reduce the jaw crusher products from a nominal particle size of 8 mm to 1.5 mm prior to splitting and dispatch to the assay laboratory. As a result of this study the use of assay standards and routine replicate check assaying was introduced (from hole GR342 and RC247 onwards). However data from these check programs is not available.

Ross Mining NL, Geology and Resource Evaluation 1996 (James 1996) Ross Mining carried out a number of routine checks to monitor and ensure assay quality. Unfortunately, as with the earlier drilling programs discussed above the quality control data derived from these programs is not available. The checks included: • Repeat assays of pulps by the (same) laboratory (Analabs, Brisbane) • Duplicate assaying of re-split samples by independent laboratory (ALS). • Repeat assaying of pulps samples by independent laboratory (ALS). • The use of assay standards. • Coarse Blanks. The results of the repeat assaying program are summarised in Table 14-2 below.

Table 14-2: Repeat Pulp Assay Results by Primary Assay laboratory

Type data Assay Mean difference precision Au_original Au_repeat DDH ...... 933 2.81 2.72 3% 55% RC ...... 1,680 2.60 2.50 4% 87% The differences between the means are not significant but the levels of precision are extremely poor for duplicate assays of the same pulps. A precision of between 10 and 20% would be more consistent with industry outcomes. Checks completed by the independent laboratory included duplicate assay results of re-split samples (181 data) and repeat assaying of pulps from entire ‘economic’ intersections. The duplicate assay results of Table 14-3 show a reasonably large difference between the means of the two populations (~10%) and a level of precision that is similar to or better than that achieved between

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repeat pulps assays (Table 14-2). The repeat pulp analysis of complete intersections produced a very good result in terms of the comparison of overall grade and grade distribution but the scatter of data was very broad, with a correlation of only 0.79 and a precision of 245%. It is not immediately obvious why the pulp assay precision from the independent laboratory should be so much worse than the precision for the re-split duplicates from the same laboratory, which should theoretically be the higher of the two values.

Table 14-3: Duplicate Sample and Repeat Pulp Assay Results by Independent Laboratory

Type data Assay Mean difference precision Au_original Au_duplicate Duplicates ...... 181 1.38 1.24 10% 46% Repeat (intersections) ...... 523 3.78 3.77 0% 245% Two assay standards, supplied by ORE Laboratories, were used. These were referred to as the ‘‘Red’’ standard (Au = 2.48 g/t) and the ‘‘Yellow’’ standard (Au = 1.37 g/t). Standards were inserted into the sample stream at a rate of 1 in 40. The results are not well presented but it appears that the mean grade actually reported by the primary laboratory (Analabs) was 3.00 g/t for the Red standard and 1.65 g/t for the Yellow standard. These differences are substantial being about 20% higher than the recommended values for both standards. Check assaying of left over standard material by neutron activation analysis reported values of 2.98 g/t for the Red standard and 1.65 g/t for the Yellow standard and appears to have verified the higher grades, suggesting that the recommended grades were not correct. Further check assaying by the independent assay laboratory for a sub-set of 57 Red and 59 Yellow standards, produced results very close to the recommended values (Red standard = 2.51 g/t, Yellow standard = 1.37 g/t). These two sets of check results conflict with each other and it is unfortunate that it is not possible to investigate and resolve this dilemma retrospectively. It would seem unlikely however that the recommended values of two standards are incorrectly reported, to the same degree of difference, by the supplier of the standards.

Ross Mining NL, Geology and Mineral Resource Estimate—Dawsons and Kupers (James & Hague 1999) Duplicate assay data from two laboratories (ALS and the on-site Gold Ridge Mining Lab) are compared. For Dawsons the Gold Ridge lab produced better precision than ALS (37% compared to 60%) but was less accurate with a global difference of 6% between duplicate pairs. ALS data showed a difference of only 1.5% after removing a single outlier pair. For Kupers both labs reported small differences between the means of duplicate pairs (3-4%) but similar levels of precision to those reported for Dawsons. Standards and blanks were not routinely used. Results for an internal laboratory standard were analysed but this data is not a very useful check on laboratory performance as the true values and location of the samples are known to the lab. Not surprisingly the results showed only a small (2%) deviation from recommended values. Data from a large number of field duplicates are presented. Duplicates of samples originally analysed at ALS were sent to the Gold Ridge lab and vice versa. The results showed surprisingly good repeatability considering that different labs were used (Table 14-4).

Table 14-4: Field Duplicate Results from Ross Mining

Original Lab ALS GRML ALS GRML ALS Data Range ...... All data 0.3 to 10 ppm Data ...... 141 100 Mean Au ...... 3.13 2.47 1.33 1.31

Original Lab GRML GRML ALS GRML ALS Data Range ...... All data 0.3 to 10 ppm Data ...... 720 531 Mean Au ...... 2.68 2.72 1.67 1.66

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Estimation of Recoverable Resources, Valehaichichi Gold Deposit, Solomon Islands (Hellman & Schofield 1998) Sample recovery versus gold grade and sampling precision were discussed in this report. Although no statistical relationship could be seen between sample recovery and gold grade, a tendency for higher gold grades to occur in samples with higher recovery was raised as a concern. It was suggested that either some natural tendency for lower grade material to generate lower recoveries or some flaw in the sampling method was the cause of this. This analysis is related to RC sampling. Sample precision of repeat assays showed very poor precision of 106%. The data was strongly affected by very poor precision for samples below about 0.3 g/t Au and at high grades. A subset of the data trimmed to the range of 0.3 g/t to 6 g/t gold showed a precision of about 23%. There was no indication of global bias in the assaying for this range. Field sampling precision, derived from the first split and therefore representative of the entire sample preparation and assaying process, was also analysed, A precision of 63% was determined from 116 samples. The average gold grade of the repeat assays was also about 10% less than the original. The problems were considered to be consistent with the observations of coarse gold, particularly in oxide zones. It was suggested that better results would be obtained by processing larger sample volumes.

14.1.2 Drilling Completed by ASG 2005-2006 Data acquired by ASG from 2005 onwards has included appropriate quality control measures such as the use of blank samples, assay standards and crusher duplicate samples as well as laboratory replicate fire assay samples. Four different assay standards covering a range of grades from 0.7 to 4.5 g/t were used. Summary statistics and trend graphs, showing the percentage difference between reported standard values and accepted values over time are shown below (Table 14-5, Figure 14-1 and Figure 14-2). A small number of standards showed large differences that were clearly labelling problems, and were corrected. The average results are very close to the accepted values for all four standards used. The two graphs show the differences plotted as a percentage of the accepted value. Most values fall within the +/-5% limits shown but there are some extreme differences. An interesting feature of Figure 14-2 is that there is clearly greater spread of data in the results from the 30 gm fire assays reported in 2005 compared to the 50 gm fire assay results from 2006.

Table 14-5: Reported Assay Standard Averages Grades

Accepted value Average Reported Value oreas 50P ...... 0.73 0.72 oreas 6Pb ...... 1.43 1.4 oreas 60P ...... 2.6 2.57 oreas 61Pa ...... 4.46 4.47

Gold Ridge: Assay Standards

21APR201111582068 Figure 14-1: Reported Assay Standard Results versus Time—for all Standards

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Gold Ridge: Assay Standards

21APR201112031223 Figure 14-2: Reported Assay Standard Results versus Time—for each Standard Assay standards are a measure of the accuracy of the final assay values reported by the laboratory. They have not been subjected to the same sample protocol as the actual samples and so provide no information as to the quality of the sub-sampling and sample preparation. All standards behave in a similar way and there are no problematic trends in the data that give cause for concern. Most of the results outside the +/-5% limits report low and it is therefore highly unlikely that the analytical results over-state the grade of the material sampled. Blanks (coarse material) are used to clean the sample preparation circuit, to check for cross- contamination between samples and also to provide a very low (below detection) grade assay standard. Material used was river pebbles sourced from a location away from known mineralisation. Blanks were inserted at the beginning of each hole and at selected intervals, where alteration and mineralogy was indicative of possible high grade gold or where visible gold was recorded. The reported results (Figure 14-3) show some low level gold grades, with only one result reporting greater than 0.1 g/t Au (0.22 g/t). Again there is a tendency to greater scatter in the results from the 30 gram fire assay batches compared to the 50 gram fire assay results.

Gold Ridge Blank Sample Assays

21APR201111583962 Figure 14-3: Reported Assay Blank Results vs. Time The data reported shows there is no evidence of a problem caused by cross-contamination of samples. The existence of low levels of gold in the original blank material cannot be ruled out without exhaustive assaying and testing. A useful and practical way to determine whether reported gold is from the blank itself or from contamination is to prepare blanks as numbered pairs. Coarse crush the material to be used, split into two identical halves using the riffle splitter and label each half with the same sample number. Use one half as a routine blank. When results are reported, for any samples above a specified grade threshold, the retained half can be prepared and sent for assaying as a discreet batch without any normal samples (that could provide a source of contamination). If these samples also report similar low level gold grades then the gold is almost certainly not from sample cross-contamination.

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Sample duplicates are used to provide a measure of the error in the assay data attributable to sample preparation. Mineralised materials are generally not homogeneous and usually the commodity of interest (gold in this case) is only present in low concentrations. The process of reducing the volume of material from one metre of half-core to 50 gm of pulp requires the reduction of sample volume in several discrete stages. In general the rule is always to reduce sample particle size before reducing sample volume. Hence the half-core fragments are crushed (nominally to 2 mm) before splitting. The split fraction is then pulverised to 75 um before the separation of 500 gm of pulp, from which the 50 gm fire assay charge is taken, is sent to the laboratory. The sample error (or difference between grades of split fractions) is greatest between splits of coarse material, as the gold is present in fewer particles, compared to very fine grained pulp material where the gold is (hopefully) more evenly spread though the material in many particles. Therefore the maximum sample error is between duplicate samples taken at the jaw crusher stage, rather than two fire assay charges taken from the same sample pulp. A total of 336 jaw crusher duplicates have been assayed during the 2005 and 2006 drill programs. Analysis of these results is by simple evaluation of summary statistics, scatter plots, QQ plots and precision plots (Figure 14-4 to Figure 14-6). The data has been trimmed to 10 g/t removing three sample pairs because they have considerable impact on the analysis. The mean of the two data sets are effectively identical indicating that there is no obvious global bias produced as a result of splitting the sample at the relatively coarse size after crushing. The correlation coefficient between the two datasets as shown on the scatter plot is only 0.8 and there is an obvious deterioration in the relationship above 2 g/t gold. The QQ plot, which is a direct comparison of the histograms of the two datasets, shows the two histograms are very similar. The level of precision between the two datasets is relatively poor at +/-42% at the 78% confidence interval. This level of precision between crusher duplicates, though significantly higher than recommended, is not uncommon in gold deposits particularly where visible gold is present.

22APR201102422240 Figure 14-4: Reported Duplicate Assay Results—Scatter Plot

22APR201102421030 Figure 14-5: Reported Duplicate Assay Results—QQ Plot

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22APR201102420061 Figure 14-6: Reported Duplicate Assay Results—Precision Plot There is no evidence to suggest that the new assay data collected from the 2005 and 2006 drilling programs is in any way compromised due to poor sampling or analytical practices. However it is important to understand that the new drilling, completed as part of the current feasibility study, still only represents 9% of the total diamond and RC meters drilled on the project (after excluding the pre-Ross RC holes). Sample recovery, as a percentage of the total assay interval has been recorded routinely for the diamond drill holes completed in 2005 and 2006. A plot of gold versus core recovery (Figure 14-7) shows no significant correlation between the two variables. There is however a tendency for higher grade samples to have higher recovery.

22APR201102410284 Figure 14-7: Gold Grade vs. Recovery DDH001-103

14.1.3 Drilling Completed by ASG 2007-2008 Assay results of Standards used during drilling programs in 2007/08, on average, show very close agreement with the accepted values (Table 14-6) with the mean value of all seven standards used being within +/-3% of the accepted value.

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Table 14-6: Reported Assay Standard Averages Grades (2007-08)

Accepted value Average Reported Value oreas 15Pa ...... 1.02 1 oreas 6Pc ...... 1.52 1.56 oreas 15Pc ...... 1.61 1.56 oreas 60B ...... 2.57 2.55 oreas 60P ...... 2.6 2.62 oreas 61Pa ...... 4.46 4.39 oreas 61D ...... 4.76 4.87 There is though more scatter in the data with a larger proportion of outliers being reported than in the earlier drilling programs in 2005 and 2006 (Figure 14-8).

Gold Ridge: Assay Standards 2007-2008

21APR201111582970 Figure 14-8: Reported Assay Standard Results vs. Time—for all Standards (2007-08) There are no obvious or problematic trends in the data that give cause for concern. Most of the results that fall well outside +/-5% limits report lower than the accepted value and it is therefore highly unlikely that the analytical results over-state the grade of the material sampled. The results of Blanks inserted into the sample stream are again more variable that previous programs (Figure 14-9). The blanks used by ASG are collected from local sources and may from time to time report low level gold values. It would be worthwhile ensuring that the source is appropriate so that the results are more meaningful.

Gold Ridge Blank Sample Assays—2007/08

21APR201111585067 Figure 14-9: Reported Assay Blank Results vs. Time 2007/08

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The results of duplicate analyses show similar levels of repeatability. The original values are on average 7% lower than the duplicate values after removal of one high grade outlier pair (Figure 14-10 and Figure 14-11). The level of precision is poor but similar to that previously reported at ~+/-50% at the 76% confidence interval (Figure 14-12).

22APR201102425039 Figure 14-10: Reported Duplicate Assay Results—Scatter Plot (2007/08)

22APR201102424104 Figure 14-11: Reported Duplicate Assay Results—QQ Plot (2007/08)

22APR201102423156 Figure 14-12: Reported Duplicate Assay Results—Precision Plot (2007/08)

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14.2 Grade Control Data and Production Reconciliation In the absence of appropriate and comprehensive QA/QC data for the Cyprus-Arimco and Ross Mining drilling programs, the validity of the reported assay data, which still comprises the majority of data used in the estimation of the gold resources, can be indirectly assessed by comparing directly against assay data acquired from RC grade control drilling, during active mining operations and the subsequent reconciliation of grade control gold grades with mill production gold grades. In the view of H&S, this ability to use production outcomes to assess the overall accuracy and spatial distribution of gold grades mitigates the problem of appropriate resource classification, under the CIM Standards, that would otherwise have arisen as a result of the lack of QA/QC data. To compare the exploration data with the grade control data the same approach was used as described for comparing the twinned diamond and RC holes. The exploration and grade control datasets for the Valehaichichi were searched for paired data with 5 m ǂ 5 m horizontal and 3 m vertical search radii. Comparison of paired data from these two data sets shows that for both oxide and fresh samples both grade control and exploration samples have similar histograms and mean gold values (Figure 14-13 and Figure 14-14). For fresh samples the mean grades of the two sample types are very similar.

22APR201102404283 Figure 14-13: QQ Plot of Grade Control RC and Exploration DDH and Ross RC Assays Fresh Samples

22APR201102405259 Figure 14-14: QQ Plot of Grade Control RC and Exploration DDH and Ross RC Assays Oxide Samples Although comparison to the grade control data is meaningful in itself the validity of this comparison is enhanced by subsequent reconciliation of mill production versus grade control. Data compiled from monthly mine production reports shows that for all but four of the 22 months of production the back-calculated mill head grade was higher than the grade control predicted head grade by an average of 9% (Table 14-7 and Figure 14-15).

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Although it is beyond the scope of this study to investigate the discrepancy between the grade control predicted grade and mill grade, there are a number of possible reasons for this apparent under- estimation of grade by grade control, which include: • Poor sampling for grade control (loss of high grade) • Grade control assays reported low by the laboratory • Poor modelling of GC data • Ore loss and or dilution during mining • Error in the mill back-calculated grades due to under reporting of tonnes or overstating of tails grade.

Table 14-7: Valehaichichi Monthly Mill Grade vs. Grade Control Grade GC % Month tonnes Mill GC Difference Aug-98 ...... 127,901 1.87 1.89 1% Sep-98 ...... 184,671 2.15 1.84 ǁ17% Oct-98 ...... 201,198 2.38 2.06 ǁ16% Nov-98 ...... 185,091 1.75 1.63 ǁ7% Dec-98 ...... 211,445 1.81 1.53 ǁ18% 910,306 2.00 1.78 ᎈ12% Jan-99 ...... 184,485 1.82 1.79 ǁ2% Feb-99 ...... 179,006 1.69 1.61 ǁ5% Mar-99 ...... 206,903 1.90 1.99 5% Apr-99 ...... 218,818 2.03 1.80 ǁ13% May-99...... 229,889 1.90 1.55 ǁ23% Jun-99 ...... 185,758 1.59 1.52 ǁ5% Jul-99 ...... 193,400 1.40 1.35 ǁ4% Aug-99 ...... 214,641 1.53 1.53 0% Sep-99 ...... 222,934 1.96 1.81 ǁ8% Oct-99 ...... 224,047 1.56 1.55 ǁ1% Nov-99 ...... 229,879 1.57 1.51 ǁ4% Dec-99 ...... 240,297 1.85 1.70 ǁ9% 2,530,057 1.74 1.64 ᎈ6% Jan-00 ...... 238,380 2.45 2.19 ǁ12% Feb-00 ...... 179,828 2.74 2.09 ǁ31% Mar-00 ...... 196,791 1.87 1.91 2% Apr-00 ...... 175,771 1.65 1.78 7% May-00...... 175,231 2.31 1.88 ǁ23% 966,001 2.21 1.98 ᎈ12% Total ...... 4,406,364 1.90 1.75 ᎈ9%

Mill vs Grade Control Head Grade 3.00 2.80 2.60 2.40 2.20 g/t 2.00 1.80 1.60 1.40 1.20 Mill GC 1.00

Jul-99 Aug-98Sep-98Oct-98Nov-98Dec-98Jan-99Feb-99Mar-99Apr-99May-99Jun-99 Aug-99Sep-99Oct-99Nov-99Dec-99Jan-00Feb-0021APR201114530101Mar-00Apr-00May-00 Figure 14-15: Valehaichichi Monthly Mill Grade vs. Grade Control Grade.

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On the basis of this analysis it is reasonable to conclude that the exploration assay data is reasonably accurate and representative of the Gold Ridge mineralisation.

14.3 Author’s Verification 14.3.1 Site Visit The Authors visited Gold Ridge between 27 January 2011 and 30 January 2011. The current grade drilling and sampling operations were observed and sample storage facilities visited. The mining operation and plant facilities were also inspected. Mining operations have recently recommenced and an ore stockpile is being built on the ROM pad in anticipation of the processing plant’s recommissioning late in the first quarter of 2011.

15.0 ADJACENT PROPERTIES The Solomon Islands is positioned in geologically favourable settings for mineralisation and exploration companies have continued for decades to be interested in the mineral potential of the Solomon Islands. The South Pacific Applied Geoscience Commission has referred to the Solomons as ‘perhaps the most prospective Pacific Island Country for Minerals after PNG’. There are 18 other prospecting licenses, or applications for licences, held by eight mining/exploration companies, besides Gold Ridge, on Guadalcanal Island. Five tenements are adjacent to the Gold Ridge SPL (Figure 15-1). In addition Newmont are reported to have reconnaissance permits over most of Guadalcanal. Newmont works in the Solomon Islands through Australian Resource Management.

22APR201119330316 Figure 15-1: Solomon Island Mineral Tenements

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16.0 MINERAL PROCESSING AND METALLURGICAL TESTING Section 16.0 has been prepared by Battery Limits Pty Ltd under the supervision of Tony Showell.

16.1 Metallurgical Testing 16.1.1 Introduction The Gold Ridge processing plant treated 4.4 million tonnes of ore from the Valehaichichi pit from August 1998 until the plant was shut down due to escalating civil unrest in June 2000. The plant produced approximately 210,000 ounces of gold at a mean gold recovery of around 78%. Gold recovery generally trended downwards during the period of operations ranging from a high of 86% in May 1999 to a low of 68% in April 2000 as shown in Figure 16-1.

250,000 100.0% 95.0% 200,000 90.0% 85.0% 150,000 80.0% 75.0% 100,000 70.0% 65.0% 50,000 60.0% Tonnes Treated 55.0% Gold Recovery 0 50.0% Aug-98 Nov-98 Feb-99 May-99 Sep-99 Dec-99 Mar-00 Month 21APR201114534725 Figure 16-1: Ross Mining Process Plant Performance A review of plant operating data undertaken by ASG highlighted a number of plant operating problems contributing to the low gold recoveries during the period of plant operations. These included low plant availability, high viscosity and associated low slurry density, increased grind particle size and reduced leach retention time, both resulting from higher than design plant throughput. ASG also concluded that the refractory nature of some of the fresh (sulphidic) ore was primarily responsible for decreased recovery in latter operations. In 2005 ASG initiated a metallurgical testwork programme to resolve the reasons for the poor metallurgical performance within segments of the deposits. Other aims of this phase of testwork were to provide leach performance criteria for treatment of ores from the Namachamata, Kupers and Dawsons deposits. This included comminution, cyanide detoxification, viscosity, agitation and thickening testwork. Ammtec Laboratory (Ammtec) in Perth was selected as the testing facility to conduct the comminution, gravity-leaching and cyanide detoxification testwork programmes. Selected head samples were sent to Roger Townend & Associates (Roger Townend) for mineralogical examination. Selected leach residue samples were sent to vendors: GL&V for thickening testwork and to Lightning Mixers for agitation testwork. In consultation, ASG and Ausenco engineers selected the testwork samples from new PQ diamond drill core from the Namachamata, Kupers, Dawsons and Valehaichichi deposits. The sample selection was divided into three alterations, based on surface weathering effects—oxide, transition and fresh. Leachwell analyses were conducted to provide an indication of cyanide extractable gold. This, along with lithology, was used to further subdivide the samples into characterisation categories. Characterisation composites were subsequently selected based on alteration, grade, lithology and the cyanide extractable gold indicator. A supplementary metallurgical testwork program (2006) was conducted on additional drill core from the 2006 drilling campaign together with some remaining core from the 2005 drilling. The aim of the testwork from the combined 2005 and 2006 drilling campaign was to generate additional data for further ore characterisation in order to determine metallurgical recoveries of the resource domains or sections of the domains.

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16.1.2 Summary of 2005/2006 Testwork Results Conclusions and observations from the testwork programmes on samples from the ASG 2005/2006 testwork campaigns were as follows: • The Gold Ridge ores were considered to range from ‘‘free-milling’’ to refractory. Processing by conventional cyanidation resulted in a range of gold recoveries. • Head analyses of each prepared composite showed considerable variability in repeat gold fire assay results suggesting the presence of coarse gold. • Mineralogical examinations of subsamples from each of the oxide composites showed that the dominant component observed in the heavy fraction was generally goethite, titanium oxides and manganese oxides. Gold observed in the samples was generally liberated or attached to gangue or goethite. • Mineralogical examinations of the transition and fresh samples showed the dominant component observed in the heavy fraction was pyrite, generally as crystals and often as aggregates. Minor marcasite was also present. Arsenopyrite was found to be commonly present in accessory to trace proportions and often occurred as clusters of rhombs in gangue and gangue-ridden pyrite. Arsenopyrite was also shown to rim pyrite and marcasite. Electrum (gold + silver) and free gold were often observed and at a range of sizes from 1 micron to over 200 microns. Other trace minerals often included galena, sphalerite and chalcopyrite. • Mineralogical studies indicated that the dominant gangue component in the light fraction for all samples is generally quartz, often followed by kaolin, muscovite, feldspar, ankerite and chlorite. • The comminution results indicated the fresh and transitional samples tested were soft to moderately hard, with low abrasiveness indicating low energy demand and media consumption per tonne of ore treated. A relatively high ball charge would therefore be required to achieve grinding in the low aspect SAG mill as installed at Gold Ridge. The comminution parameters indicated a potential for mild scat production or critical size build-up in the SAG mill when treating ore typical of fresh material from Kupers. • A significant variability was observed between the metallurgical testwork results for the oxidised and fresh/transitional classifications of the four ore deposits. The variance suggested that the degree of weathering has significant impact on the metallurgical performance of the ores. • A significant variance was observed within the gold recovery testwork results for the fresh/transitional material from the four deposits. • Grind sensitivities on selected composites from Kupers, Dawsons and Valehaichichi indicated little

benefit in decreasing the grind size from a P80 of 125 microns to 75 microns. • Gravity-leach test kinetic curves were shown to be variable. Leaching of the oxide samples was generally complete after eight hours. A portion of the fresh and transitional samples were still leaching beyond 24 and 32 hours. • Oxide samples consumed more cyanide and lime than transition and fresh samples. The lime consumption for the oxide material was found to be comparable to previous plant operating conditions. Cyanide consumption indicated from the testwork was higher than experienced in operations. • Oxygen uptake testwork indicated that the samples tested were not high oxygen consumers. • Viscosity testwork conducted at densities ranging from 38 wt% to 55 wt% solids confirmed the viscous nature of oxide slurry of the Gold Ridge ore. • Tailings thickening testwork indicated an optimum tailings density of 47 to 50 wt% solids. • The INCO air/SO2 process for cyanide destruction was shown to be effective in removal of weak acid

dissociable cyanide (CNWAD) from the CIL tailings. • Investigations of each deposit by drill hole, sample location and gold recovery indicated that gold recovery does not necessarily reduce with increasing pit depth. • Residue leach diagnostic tests conducted on selected characterisation composite samples showed that the cyanide soluble gold loss in the oxide samples (typically <10%) is mainly attributed to gold

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associated with carbon. This may be gold locked in carbonaceous material in the ore or gold being absorbed by preg-robbing carbonaceous material. Gold loss for the fresh and transitional material (typically 15-35%) is mainly attributed to gold associated with sulphides (>70%), with over 40% being attributed to arsenopyrite. • Gold recovery was shown to correlate with the arsenic content for the fresh and transition ores. It was therefore proposed that arsenic head assays be used as the basis for estimating gold recovery within the resource domains. A relationship between the arsenic head grade and gold recovery for transition and fresh ores was developed from the test data: • if the arsenic value is <200 ppm then recovery = 89% • if arsenic is >200 ppm and <1000 ppm then gold recovery is 1094.2 times the arsenic head grade raised to the power of ǁ0.4607 • if arsenic is >1000 ppm then recovery = 34%. • Gold recovery was shown to be independent of arsenic grade in the oxide ore samples tested and therefore the relationship developed for transition/fresh ore types does not apply to oxide ores. • An analysis of the assay data showed that a higher proportion of arsenic and gold mineralisation occurs in high grade arsenic areas for the Valehaichichi and Namachamata pits, than for the Dawsons and Kupers pits. • The gold recovery relationship was used in a method developed by IMC to estimate gold recoveries in their Whittle program. IMC developed a polygonal method for calculation of volumes within each pit. Polygons were generated according to the spatial density of the drilling and their location within the proposed pits. A weighted average arsenic value for each polygon was calculated which then allowed a calculation of the gold recovery for each polygon. The average arsenic values ranged from a high of 900 ppm for a polygon within the Namachamata pit, to (several) polygon areas with arsenic values below 200 ppm. Average gold recoveries by ore type and by pit, as calculated from the arsenic head grade regression algorithm developed from testwork and used in IMC polygon method, are summarised in Table 16-1.

Table 16-1: Average Gold Recovery by Ore Type and Pit Gold Recovery by Ore Type Pit Oxide Transitional Fresh Valehaichichi ...... 90 73 73 Namachamata ...... 91 68 68 Kupers ...... 89 81 81 Dawsons ...... 95 85 85 104 holes within the drill data base of 1254 holes contained arsenic assay data used to develop the polygons and estimate the arsenic distribution in the resource. This is less than 10% of the drilling data for the project. This low reference data base was identified in the risk analysis as a high project risk area for short term ore supply to the mill. Mitigation steps identified for mine operations were to identify arsenic grades in ore ahead of mining by grade control drilling well in advance of mining operations. This method provides an ability to limit any potential high grade arsenic ore supply by addressing ore production planning.

16.2 Arsenic and Recovery Variability Testwork A further review of the previous feasibility testwork results, and the arsenic/gold recovery relationship, was undertaken by BatteryLimits in January 2010. The main conclusion made from this review was that there is a degree of uncertainty in application of the Ausenco predictive metallurgical models for recovery due to: • The limited number of gravity/leach samples in the data base • The high variability in arsenic and GRG assays • Use of a single population to model global ore recoveries from four deposits.

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BatteryLimits recommended further variability testwork be undertaken to develop more confidence in prediction of gold recovery for each ore deposit, taking in to account carbonaceous material content, arsenic content and content of other trace elements including copper, nickel, mercury and zinc. GRML has since commissioned a new phase of testwork to further investigate recovery variability. Representative composite Namachamata drill samples of varying arsenic levels were selected by site geologists for the testwork. Three types of tests were conducted on each sample: • Cyanide (CN) Soluble Gold—this test is conducted at very high cyanide concentration and Leachwellᓼ reagent addition to determine the maximum amount of cyanide soluble gold in each sample • Plant Simulated Conditions—this test is conducted at similar grind size, gravity recovery, and leaching parameters in accordance with the design of the refurbished plant • Improved Plant Conditions—this test is conducted with conditions simulating potential improvements that could be made to the current process plant by installing a new ball mill to decrease grind size, and additional leaching tank capacity to increase leach time The preliminary results from this initial phase of testing are presented in Table 16-2.

Table 16-2: Preliminary Gold Recovery Testwork Results

Au Recovery % CN Soluble Simulated Improved Ausenco Head Grade Test Current Plant Model Sample Au g/t As ppm Leachwellᓼ Plant Potential Calculated 1—Low As ...... 1.71 130 91 80 86 89 2—Med As ...... 2.52 560 86 80 84 59 3—High As ...... 2.88 2060 75 61 69 34 4—Low As ...... 2.11 130 95 91 92 89 5—Med As ...... 2.88 580 85 80 80 58 6—High As ...... 3.08 1930 81 65 77 34 The testwork results are plotted in Figure 16-2.

Predicted Recovery and Testwork Gold Recovery 100

90 y = -0.0075x + 92.112 R2 = 0.86 80 y = -0.0084x + 88.955 70 R2 = 0.8132 60 y = -0.012x + 86.953 50 R2 = 0.9017

40 CN Soluble

30 Predicted Plant Simul 20 Plant Improved 10

0 01020 30 40 50 60 70 80 90 10 11 12 13 14 15 16 17 18 19 20 21 22 0 0 0 0 0 0 0 0 0 00 00 00 00 00 00 00 00 00 00 00 00 0021APR201111590746 Figure 16-2: Comparison of Test Results and Predicted Recovery The results of these initial tests suggest that the Ausenco gold recovery predictive model which was developed during the Feasibility Study is very conservative for high arsenic ore. It is noted that for both medium and high arsenic ore, the metallurgical test results exceeded the recovery predicted from the model. It must also be noted, however, that only six composite samples from one deposit were tested in the program. Further testing of mined ore and drill samples from all deposits will be required to produce sufficient data to refine the gold recovery predictive model.

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17.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES 17.1 Mineral Resource The mineral resources for Gold Ridge have most recently been updated by Hellman and Schofield. The following section is extracted from their report on the resource update.

17.1.1 Methodology The method used for resource estimation is Multiple Indicator Kriging (MIK) for recoverable resource estimation. The use of MIK requires the detailed analysis of gold assay data as well as detailed analysis and modelling of the spatial continuity of gold grades. This is achieved through the derivation and modelling of a set of indicator variograms for a number of indicator thresholds which partition the global histogram of gold grades into a set of indictor classes. The creation of the resource model with this method then proceeds in two steps: 1) The histogram of grades based on sampling support is calculated for each panel in the model for which there is sufficient data available. The average histogram of grades is a direct result of indicator kriging using the indicator variogram models together with the indicator class statistics created for each indicator threshold. 2) An appropriate method of block support correction is then used to calculate the histogram of grades within each panel, from which the proportion and grade of the panel above a particular cut-off grade is estimated. The choice of block support correction method depends primarily on the proportional change in dispersion variance that occurs when changing from sample size support to the size of a mining block. The block support adjustment is completed separately for each panel because the conditional histogram of sample grades within each panel is different and consequently the actual variance adjustment may be different for each panel. The variance adjustment will generally be composed of two components: 1) The first component of the variance adjustment is calculated from the variogram of gold grades. 2) The second is gauged from the variance of the estimated block grades used for ore selection in grade control. It is therefore essential to have an understanding of the likely sample pattern and what procedures will be used in grade control to select ore during production. In this study a grade control pattern and smu size of 5 m ǂ 5 m ǂ 3 m vertically was assumed. This is tighter than the 12.5 m ǂ 8 m ǂ 1 m used by Ross Mining. Once the estimated histograms of block grades within each panel using MIK with a block support correction have been determined the results of the calculations are presented as estimates of two parameters of the histograms: 1) The proportion of the panel that will be recovered as ore, assuming that the entire panel is mined, at a particular cut-off grade. 2) The grade of the proportion that is recovered as ore using the assumed ore selection parameters. An implicit assumption in the use of such models for pit optimisation is that all of the panel must be mined to recover the proportion of the panel that is ore. This assumption is necessary as no estimation method is able to identify which part of the panel will be recovered as ore prior to grade control sampling and modelling. Hellman & Schofield proprietary Software, GS3Mᓻ, has been used for data analysis and grade estimation. For the purposes of statistical analysis, spatial continuity analysis and grade estimation assay data has been composited into equal two metre lengths. Grade data is composited to ensure that each assay value used in the grade estimation process is of equal weight. At Gold Ridge a variety of sample lengths were used at different times although most holes were sampled using either 1 m (75%) or 2 m (20%) sample intervals. As a ‘‘rule of thumb’’, composite lengths should be about half the bench height used in

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the resource estimate. Bench heights of three metres were used during mining operations and this height has been maintained in the current resource estimates. Consequently it was decided that two metre composites were appropriate for Gold Ridge. Data from deeper holes that extend well beyond the depths of adjacent drill holes have been excluded from the data used as they are effectively redundant for the purposes of grade estimation.

17.1.2 Data Analysis 17.1.2.1 Geological Domains Primary geological domains have only been identified at Valehaichichi where the observations from pit mapping have allowed two broad domains based on primary lithology to be defined. One domain is comprised of sedimentary breccia whilst the other by volcanic breccia (Figure 17-1). These primary domains are effectively coincident with areas of high and lower grade gold values. Despite considerable time and effort put in to understanding the geology of the deposit it has not been possible to define similar domains at the other deposits. Consequently the resource estimation process has been completed unconstrained by geological boundaries and structures. Data has however been categorised according to oxidation type into one of three sub-domains: • Oxide • Transitional (partially oxidised) • Fresh (or primary). Three dimensional surfaces have been used to define these sub-domains.

22APR201119334714 Figure 17-1: Valehaichichi Pit Floor Geology—with Grade Control Composites At Valehaichichi the existing surfaces created and used by the previous owners have again been used in the current resource estimates. At Namachamata and Kupers new oxidation surfaces were created from metallurgical characterisation logging completed whilst the mine was operating. These surfaces were created using MineSight 3Dᓻ software produced by Mintec Inc, Tuscon Arizona.

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In the diagrams below (Figure 17-2 and Figure 17-3) of the Namachamata oxidation surfaces, yellow drill hole traces represent complete oxidation whilst red and blue traces transitional or varying degrees of oxidation.

22APR201119333243 Figure 17-2: Namachamata Base of Complete Oxidation Surface (yellow)

22APR201119332447 Figure 17-3: Namachamata Base of Transitional Oxidation Surface (green)

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Similarly in the diagrams below of the Kupers oxidation surfaces (Figure 17-4 and Figure 17-5), yellow drill hole traces represent complete oxidation whilst blue traces are transitional and green fresh material.

22APR201119314428 Figure 17-4: Kupers Base of Complete Oxidation Surface (yellow)

22APR201119313076 Figure 17-5: Kupers Base of Transitional Oxidation Surface (green) Metallurgical logging data was not available for all Dawson drill holes so the original surfaces used in earlier resource estimates were again used in the current resource estimates. Oxide and transitional domains have been combined in the following statistical and spatial continuity analysis.

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17.1.2.2 Valehaichichi Assay data used in the Valehaichichi resource estimate includes samples from Arimco and Ross Mining exploration diamond holes, Ross Mining exploration RC holes and newly acquired samples from the ASG diamond drill holes (Table 17-1). In addition these samples have been supplemented by (1) additional samples from 27 deep exploratory grade control (GC) RC holes and (2) a number of GC samples selected by pairing, the now excluded, pre-Ross RC samples with nearest neighbour GC samples.

Table 17-1: Valehaichichi—Data Composites

Data Source Data Exploration diamond & RC (excl pre-Ross RC) ...... 7,653 ASG Diamond ...... 2,599 Deep Exploratory GC ...... 771 GC (replacing pre-Ross RC) ...... 2,757 Total ...... 13,780 A plan of the data from Valehaichichi (Figure 17-6) shows a broad well dispersed zone of mineralisation. It is evident from the plan view of data composites that there is an area of higher grade mineralisation that has been more densely sampled. The data overall shows a gentle dip to the east and poor continuity between adjacent drill holes (Figure 17-7 and Figure 17-8). As indicated above for the purposes of spatial continuity analysis and grade estimation this higher grade area of mineralisation has been defined as a separate geologic domain.

21APR201112023389 Figure 17-6: Plan—All Valehaichichi Drill Hole Assay Composite Data

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21APR201111593363 Figure 17-7: Cross Section—Valehaichichi 40,975N

21APR201111592214 Figure 17-8: Cross Section—Valehaichichi 41,025N Summary statistics of gold grades at Valehaichichi are shown Table 17-2.

Table 17-2: Valehaichichi—Summary Statistics

Domain Sedimentary Domain Volcanic Domain Sub-domain oxide-Trans Primary oxide-Trans Primary No. Data ...... 1,019 3,372 1,900 7,489 mean...... 1.64 1.29 0.87 0.59 variance ...... 12.25 7.92 5.44 5.89 CV...... 2.14 2.19 2.67 4.14 Minimum ...... 0.00 0.00 0.00 0.00 Q1...... 0.13 0.14 0.11 0.05 Median ...... 0.47 0.49 0.34 0.16 Q3...... 1.53 1.36 0.94 0.47 Maximum ...... 39.78 52.15 69.59 89.00 IQR...... 1.41 1.22 0.83 0.42

17.1.2.3 Namachamata Assay data used in the Namachamata resource estimate (Table 17-3) includes samples from Arimco and Ross Mining exploration diamond holes, Ross Mining exploration and grade control RC holes and newly acquired samples from the ASG diamond drill holes.

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Table 17-3: Namachamata—Data Composites

Data Source Data Exploration diamond & RC (excl pre-Ross RC) ...... 1,046 ASG Diamond ...... 661 Grade Control RC ...... 3,277 Total ...... 4,585 A plan of the data from Namachamata (Figure 17-9) shows a narrow well dispersed zone of mineralisation that trends NNE-SSW. The sample grades overall shows a gentle dip of the mineralisation to the east and poor continuity between adjacent drill holes (Figure 17-10, Figure 17-11).

22APR201119302949 Figure 17-9: Plan—Namachamata Drill Hole Assay Composite Data

Section Plot of gold Northings: 40712.5 to 40737.5 gold range

point data

0.00 - 0.500 480 0.500 - 1.00

1.00 - 3.00

3.00 - 5.00

5.00 - 100.00

460 0.00 - 0.00

440

420 elev

400

Univariate Statistics

mean: 1.00546 380 variance: 9.04456

coef varn: 2.99108

minimum: 0.0100

360 1st quart: 0.11500

median: 0.3500

3rd quart: 0.9700

maximum: 52.75500 340 no. of data:

23520 23540 23560 23580 23600 23620 23640 23660 508 / 4585 east 20MAY201116591534 Figure 17-10: Cross Section—Namachamata 40725N

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Summary statistics of gold grades of two metre composites at Namachamata are shown below (Table 17-4).

Table 17-4: Namachamata—Summary Statistics

Sub-domain oxide-Trans Fresh No. Data ...... 786 4,131 mean...... 1.39 1.12 variance ...... 25.23 18.57 CV...... 3.63 3.85 Minimum ...... 0.01 0.01 Q1...... 0.14 0.09 Median ...... 0.46 0.26 Q3...... 1.27 0.83 Maximum ...... 97.45 99.55 IQR ...... 1.12 0.74

17.1.2.4 Kupers Assay data used in the Kupers resource estimate (Table 17-5) includes samples from Arimco and Ross Mining exploration diamond holes, Ross Mining exploration RC holes, limited amount of RC grade control (oxide material only) and newly acquired samples from the ASG diamond drill holes.

Table 17-5: Kupers—Data Composites

Data Source Data Exploration diamond holes ...... 5,214 Exploration RC holes (excl pre-Ross RC) ...... 2,694 ASG Diamond holes ...... 1,199 Grade Control RC (oxide only) ...... 1,166 Total ...... 10,273 A plan of the data from Kupers (Figure 17-11) shows a broad well dispersed zone of mineralisation that trends ENE-WSW. No obvious or consistent dip to the mineralisation is seen and there is generally poor continuity of grade between drill holes on section and between sections (Figure 17-12, Figure 17-13).

21APR201123362772 Figure 17-11: Plan—Kupers Drill Hole Assay Composite Data

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21APR201114522686 Figure 17-12: Cross Section—Kupers 40,100N

21APR201112074328 Figure 17-13: Cross Section—Kupers 40,150N Summary statistics of gold grades of two metre composites at Kupers are shown below (Table 17-6).

Table 17-6: Kupers—Summary Statistics

Sub-domain Oxide-Trans Fresh No. Data ...... 3,457 6,816 mean...... 1.09 0.78 variance ...... 11.83 8.91 CV...... 3.16 3.84 Minimum ...... 0.00 0.01 Q1...... 0.13 0.09 Median ...... 0.38 0.23 Q3...... 0.99 0.62 Maximum ...... 90.89 115.92 IQR ...... 0.86 0.54

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17.1.2.5 Dawsons Assay data used in the Dawsons resource estimate (Table 17-7) includes samples from Arimco and Ross Mining exploration diamond holes, Ross Mining exploration RC holes and newly acquired samples from the ASG diamond drill holes.

Table 17-7: Dawsons—Data Composites

Data Source Data Exploration diamond holes ...... 3,647 Exploration RC holes (excl pre-Ross RC) ...... 3,815 ASG Diamond holes ...... 1,236 Total ...... 8,698 A plan of the data from Dawsons (Figure 17-14) shows a broad well dispersed zone of mineralisation that trends NNW-SSE. The sample grades overall shows a gentle dip of the mineralisation to the east and poor continuity between adjacent drill holes.

21APR201112001742 Figure 17-14: Plan—Dawsons Drill Hole Assay Composite Data

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21APR201111594475 Figure 17-15: Cross Section—Dawsons 39,300N

21APR201111595416 Figure 17-16: Cross Section—Dawsons 39,650N Summary statistics of gold grades of two metre composites at Dawsons are shown below (Table 17-8).

Table 17-8: Dawsons—Summary Statistics

Sub-domain oxide-Trans Fresh No. Data ...... 2,050 6,648 mean ...... 1.018 0.806 variance ...... 36.202 16.184 CV...... 5.912 4.99 Minimum ...... 0 0 Q1...... 0.105 0.1 Median ...... 0.31 0.265 Q3...... 0.76 0.63 Maximum ...... 238.6 222 IQR ...... 0.655 0.53 In all four deposits the oxide/transitional sub-domains have average gold grades 20-25% higher than the fresh or primary material of the same deposit.

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17.1.3 Spatial Continuity Analysis Spatial continuity has been analysed using indicator variogram maps and directional indicator variograms. Indicator variogram maps are two-dimensional contour maps of the variogram surfaces. Full details are presented below for the Valehaichichi deposit as examples of the process followed. For the other three deposits data is limited to summary tables.

17.1.3.1 Valehaichichi At Valehaichichi the grade control data has been used to analyse and model spatial continuity of grade. The grade control holes are more closely and regularly spaced compared to the exploration holes and therefore allow better description of continuity over the shorter sample lags (separation). The indicator grade thresholds corresponding to a set of constant cumulative proportions are shown in Table 17-9.

Table 17-9: Indicator Grade Thresholds and Class Means: Grade Control Data

High Grade High Grade Low Grade Low Grade Oxide/Tran Fresh Oxide/Tran Fresh Indicator Cum Grade Class Grade Class Grade Class Grade Class threshold Prob Threshold Mean Threshold Mean Threshold Mean Threshold Mean 0.50 0.10 0.030 0.013 0.040 0.018 0.030 0.015 0.015 0.009 1.50 0.20 0.090 0.058 0.100 0.067 0.080 0.052 0.035 0.025 2.50 0.30 0.175 0.130 0.190 0.145 0.140 0.108 0.060 0.049 3.50 0.40 0.290 0.227 0.320 0.251 0.225 0.185 0.100 0.082 4.50 0.50 0.470 0.375 0.490 0.393 0.335 0.278 0.160 0.128 5.50 0.60 0.775 0.606 0.740 0.599 0.495 0.409 0.240 0.197 6.50 0.70 1.240 0.997 1.120 0.912 0.740 0.605 0.380 0.305 7.50 0.75 1.530 1.382 1.360 1.240 0.935 0.831 0.465 0.419 8.50 0.80 2.076 1.808 1.690 1.518 1.165 1.041 0.600 0.526 9.50 0.85 2.730 2.354 2.140 1.900 1.460 1.305 0.800 0.686 10.50 0.90 4.020 3.220 2.820 2.448 1.935 1.667 1.145 0.949 11.50 0.95 7.260 5.460 4.640 3.544 2.950 2.397 2.000 1.499 12.50 0.97 9.875 8.467 6.850 5.574 4.090 3.380 3.080 2.482 13.50 0.99 16.100 12.854 12.500 9.185 7.390 5.357 6.600 4.274 1.00 39.780 24.872 52.150 21.741 69.585 16.956 89.000 16.725 The plots of Indicator Variogram maps that follow (Figure 17-17 to Figure 17-20) show grade variance in plan, cross-section and long-section for indicator thresholds 4.5 and 10.5 (refer to Table 17-19 for equivalent grade levels). Similar maps are presented for the other deposits in following sections. The maps reveal that in plan view there is no strongly preferred direction of continuity. The maps in section show that spatial continuity is predominantly flat with a gentle dip (10-20 degrees) to the east. There is an obvious decrease in spatial continuity as the grade increases as shown by the difference between the lower grade indicator (threshold 4.5) and the higher grade indicator (threshold 10.5).

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A—Plan

22APR201119304550

B—Cross-section

22APR201119305681

C—Long-section

22APR201119311074 Figure 17-17: Valehaichichi Indicator Variogram maps High Grade Domain: Oxide\Trans

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A—Plan

22APR201119303866

B—Cross-section

22APR201119305143

C—Long-section

22APR201119310430 Figure 17-18: Valehaichichi Indicator Variogram maps High Grade Domain: Fresh

547

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: NM11601A.;21 MERRILL CORPORATION PHARDIM//16-JUN-11 04:33 DISK106:[11ZBG1.11ZBG11601]NO11601A.;21 mrll_0909.fmt Free: 880DM/0D Foot: 0D/ 0D VJ RSeq: 1 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 22290

A—Plan

22APR201119320491

B—Cross-section

22APR201119322340

C—Long-section

22APR201119324271 Figure 17-19: Valehaichichi Indicator Variogram maps Low Grade Domain: Oxide\Trans

548

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: NO11601A.;21 MERRILL CORPORATION PHARDIM//16-JUN-11 04:33 DISK106:[11ZBG1.11ZBG11601]NO11601A.;21 mrll_0909.fmt Free: 880DM/0D Foot: 0D/ 0D VJ RSeq: 2 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 50606

A—Plan

22APR201119321379

B—Cross-section

22APR201119323337

C—Long-section

22APR201119325345 Figure 17-20: Valehaichichi Indicator Variogram maps Low Grade Domain: Fresh

549

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: NO11601A.;21 MERRILL CORPORATION PHARDIM//16-JUN-11 04:33 DISK106:[11ZBG1.11ZBG11601]NO11601A.;21 mrll_0909.fmt Free: 117D*/0D Foot: 0D/ 0D VJ RSeq: 3 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 51941

Directional sample variograms and their fitted models (Figure 17-21 to Figure 17-25) are shown below for the median indicator (indicator threshold 4.5) for each sub-domain.

Variogram: rank_azm0pln-10_Ind_4.50 Variogram: rank_azm90pln0_Ind_4.50 1.2 1.2

9999 9999 1.0 1.0 9999 8877 7702 9999 9999 9999 9999 9999 9999 9999 0.8 0.8 9999 9999 9999 9999

9999 0.6 0.6 Variogram Y(h) Variogram Variogram Variogram Y(h) 0.4 0.4

0.2 0.2

0 0 08162432404856647280 012243648607284 lag distance (h) lag distance (h)

Variogram: rank_azm180pln-60_Ind_4.50 1.2

1.0 1439 2042 3003 4386 5839 0.8 4793 7253 4610

4983 0.6

5421

Variogram Y(h) 0.4

0.2

0 024681012141618 lag distance (h) 20MAY201116591112 Figure 17-21: Valehaichichi Indicator Variogram High Grade Domain: Oxide\Trans

Variogram: rank_azm0pln-10_Ind_4.50 Variogram: rank_azm90pln0_Ind_4.50 1.2 1.2

9999 9999 1.0 9999 1.0 9999 9999 9999 9999 9999 9999 9999 9999 9999 9999 9999 0.8 0.8 9999 9999 9999

0.6 0.6 Variogram Y(h) Variogram Variogram Y(h) Variogram 0.4 0.4

0.2 0.2

0 0 08162432404856647280 012243648607284 lag distance (h) lag distance (h)

Variogram: rank_azm180pln-60_Ind_4.50 1.2

1.0 9999 9999 9999 9999 9999 9999 9999 0.8 9999 9999

0.6 9999

Variogram Y(h) Variogram 0.4

0.2

0 02468101214161820 lag distance (h) 20MAY201116590965 Figure 17-22: Valehaichichi Indicator Variogram High Grade Domain: Fresh

550

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: NO11601A.;21 MERRILL CORPORATION PHARDIM//16-JUN-11 04:33 DISK106:[11ZBG1.11ZBG11601]NQ11601A.;26 mrll_0909.fmt Free: 76D*/2100D Foot: 0D/ 0D VJ RSeq: 1 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 21766

Variogram: rank_azm0pln-10_Ind_4.50 Varogram: rank_azm90pln0_Ind_4.50 1.2 1.2

9999 9999 9999 8725 9999 9999 1.0 9999 9813 1.0 9999 9999 9999 9999 9999 9999 9999 9999 0.8 0.8 9999

0.6 0.6 Variogram Y(h) Variogram Variogram Y(h) Variogram 0.4 0.4

0.2 0.2

0 0 081624324048566472 012243648607284 lag distance (h) lag distance (h)

Variogram: rank_azm180pln-60_Ind_4.50 1.2

941 1.0 2362 1545 4710 3444 4610 5924

4302 0.8 4380

0.6 4684

Variogram Y(h) 0.4

0.2

0 024681012141618 lag distance (h) 20MAY201116591381 Figure 17-23: Valehaichichi Indicator Variogram Low Grade Domain: Oxide\Trans

Variogram: rank_azm0pln-10_Ind_4.50 Variogram: rank_azm90pln0_Ind_4.50 1.2 1.2

9999 9999 9999 6859 9999 9999 1.0 8043 1.0 9999 9999 9999 5620 9177 9999 9999 9999 9999 0.8 0.8 9999

0.6 0.6 Variogram Y(h) Variogram 0.4 Variogram Y(h) 0.4

0.2 0.2

0 0 08162432404856647280 012243648607284 lag distance (h) lag distance (h)

Variogram: rank_azm180pln-60_Ind_4.50 1.2

1.0 2805 3493 4394 5352 6405 4875 7314 0.8 4565

4671

0.6

5029

Variogram Y(h) 0.4

0.2

0 024681012141618 lag distance (h) 20MAY201116591243 Figure 17-24: Valehaichichi Indicator Variogram Low Grade Domain: Fresh The complete set of indicator variogram models for each sub-domain are shown in Table 17-10 to Table 17-13.

551

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: NQ11601A.;26 MERRILL CORPORATION PHARDIM//16-JUN-11 04:33 DISK106:[11ZBG1.11ZBG11601]NQ11601A.;26 mrll_0909.fmt Free: 920D*/2030D Foot: 0D/ 0D VJ RSeq: 2 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 57046

Table 17-10: Valehaichichi—Indicator Variogram Models—High Grade: Oxide\Trans

Structure 1 : Structure 2 : Structure 3 : Cum. Nugget Exponential Exponential Spherical Rotations Prob. C0 C1 Ax Ay Az C2 Ax Ay Az C3 Ax Ay Az x y z 0.1 0.06 0.62 7 25 53 0.15 33 187 29 0.17 70 558 62 ǁ29 ǁ43 31 0.2 0.06 0.49 5 43 10 0.28 26 84 129 0.17 82 652 86 ǁ43 ǁ51 35 0.3 0.06 0.5 5 13 4 0.27 51 97 298 0.17 26 261 117 ǁ15 74 ǁ76 0.4 0.06 0.47 4 29 4 0.25 133 58 42 0.22 109 300 32 9 21 60 0.5 0.06 0.48 4 27 4 0.18 89 44 39 0.28 96 289 29 10 14 62 0.6 0.08 0.48 2 5 4 0.23 351 113 37 0.21 47 219 25 ǁ13 12 5 0.7 0.08 0.5 2 13 3 0.16 112 42 56 0.26 135 195 24 9 14 76 0.75 0.12 0.48 18 2 3 0.19 119 45 47 0.21 226 230 24 4 16 65 0.8 0.14 0.5 15 2 3 0.16 191 38 42 0.19 129 248 25 1 13 62 0.85 0.2 0.55 8 2 4 0.11 477 164 47 0.14 53 286 28 ǁ17 10 ǁ5 0.9 0.24 0.58 3 14 4 0.1 341 46 34 0.08 169 270 28 ǁ13 18 ǁ80 0.95 0.36 0.25 25 4 13 0.09 188 99 34 0.31 14 19 2 14 17 80 0.97 0.38 0.2 9 8 44 0.05 63 340 52 0.38 3 13 29 14 ǁ61 4 0.99 0.4 0.45 2 9 2 0.04 81 101 10 0.11 6 61 30 ǁ10 6 ǁ19

Table 17-11: Valehaichichi—Indicator Variogram Models—High Grade: Fresh

Structure 1 : Structure 2 : Structure 3 : Cum. Nugget Exponential Exponential Spherical Rotations Prob. C0 C1 Ax Ay Az C2 Ax Ay Az C3 Ax Ay Az x y z 0.1 0.1 0.31 126 57 16 0.43 2 2 5 0.16 79 751 623 ǁ17 26 ǁ16 0.2 0.1 0.21 138 66 16 0.51 10 9 6 0.18 74 741 84 7 21 23 0.3 0.1 0.22 178 178 18 0.51 41 4 6 0.17 71 508 54 0 24 28 0.4 0.13 0.16 92 279 27 0.52 13 6 5 0.19 96 119 38 ǁ17 13 ǁ32 0.5 0.13 0.1 428 49 497 0.51 4 12 4 0.25 99 181 18 16 4 63 0.6 0.15 0.17 158 75 16 0.5 4 24 4 0.17 84 398 40 2 5 58 0.7 0.18 0.25 231 219 23 0.51 8 5 4 0.05 43 397 60 ǁ1 20 32 0.75 0.2 0.25 169 103 18 0.49 2 7 5 0.05 34 331 163 ǁ95ǁ22 0.8 0.24 0.18 109 54 13 0.47 2 6 3 0.11 88 276 28 ǁ39ǁ65 0.85 0.25 0.09 206 55 26 0.52 5 4 3 0.13 44 131 13 ǁ88ǁ6 0.9 0.3 0.53 2 9 3 0.06 40 140 22 0.11 120 47 12 ǁ15 ǁ4 ǁ76 0.95 0.34 0.56 7 4 3 0.03 151 36 15 0.06 42 85 9 ǁ43 1 0.97 0.37 0.53 18 7 3 0.04 81 81 8 0.05 7 44 11 11 6 62 0.99 0.45 0.51 5 18 2 0.02 71 70 7 0.01 52 16 15 ǁ27 6 ǁ78

Table 17-12: Valehaichichi—Indicator Variogram Models—Low Grade: Oxide\Trans

Structure 1 : Structure 2 : Structure 3 : Cum. Nugget Exponential Exponential Spherical Rotations Prob. C0 C1 Ax Ay Az C2 Ax Ay Az C3 Ax Ay Az x y z 0.1 0.1 0.29 25 10 22 0.32 75 163 19 0.28 29 3 4 ǁ16 16 64 0.2 0.1 0.4 67 61 15 0.38 3 25 5 0.12 37 380 110 8 44 54 0.3 0.1 0.39 54 53 16 0.42 5 3 5 0.09 40 279 91 11 32 60 0.4 0.1 0.06 177 17 155 0.58 8 17 6 0.26 161 89 16 ǁ25 4 ǁ38 0.5 0.1 0.16 35 14 7 0.5 9 10 6 0.24 47 230 23 ǁ8 ǁ5 ǁ64 0.6 0.1 0.2 21 52 12 0.51 10 5 5 0.19 224 51 23 ǁ18 15 ǁ14 0.7 0.14 0.02 50 24 62 0.66 13 11 6 0.18 46 232 26 ǁ13 7 ǁ70 0.75 0.14 0.09 14 53 103 0.27 90 61 18 0.5 9 22 3 ǁ19 10 15 0.8 0.2 0.16 51 114 21 0.16 38 276 27 0.47 22 11 3 23 38 75 0.85 0.24 0.24 117 151 17 0.06 59 143 20 0.46 13 7 3 ǁ17 44 23 0.9 0.24 0.18 152 40 17 0.11 119 125 16 0.47 36 37 3 41 14 33 0.95 0.28 0.16 147 71 15 0.03 10 101 31 0.54 19 22 3 ǁ17 32 ǁ70 0.97 0.32 0.17 101 101 10 0.03 51 34 23 0.49 30 15 3 ǁ15 33 ǁ63 0.99 0.36 0.08 42 29 5 0.54 31 26 3 0.03 22 140 14 22 40 60

552

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: NQ11601A.;26 MERRILL CORPORATION PHARDIM//16-JUN-11 04:33 DISK106:[11ZBG1.11ZBG11601]NQ11601A.;26 mrll_0909.fmt Free: 857D*/1100D Foot: 0D/ 0D VJ RSeq: 3 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 40245

Table 17-13: Valehaichichi—Indicator Variogram Models—Low Grade: Fresh

Structure 1 : Structure 2 : Structure 3 : Cum. Nugget Exponential Exponential Spherical Rotations Prob. C0 C1 Ax Ay Az C2 Ax Ay Az C3 Ax Ay Az x y z 0.1 0.15 0.3 67 22 22 0.47 3 31 5 0.08 41 110 65 2 36 ǁ22 0.2 0.15 0.05 278 58 28 0.66 12 25 8 0.13 31 237 59 ǁ31 13 ǁ65 0.3 0.12 0.17 306 34 31 0.41 12 119 33 0.3 5 9 2 ǁ75 ǁ67 ǁ38 0.4 0.1 0.23 226 26 129 0.36 138 138 13 0.3 36 40 3 ǁ46 32 ǁ30 0.5 0.07 0.13 56 46 12 0.62 6 11 21 0.18 29 263 34 71 ǁ65 24 0.6 0.07 0.63 10 10 4 0.1 111 11 117 0.2 106 233 24 ǁ40 29 26 0.7 0.1 0.7 16 11 6 0.05 21 55 37 0.15 28 281 30 6 ǁ3 80 0.75 0.1 0.53 34 4 38 0.25 21 33 4 0.12 75 197 22 ǁ12 53 70 0.8 0.15 0.55 50 5 51 0.2 31 31 3 0.1 183 199 21 26 53 ǁ53 0.85 0.15 0.08 47 46 7 0.62 28 3 24 0.15 153 102 17 ǁ5 42 75 0.9 0.2 0.64 3 31 28 0.11 121 121 12 0.05 80 101 15 ǁ45 ǁ12 ǁ12 0.95 0.25 0.58 31 31 3 0.07 145 14 141 0.09 8 11 90 ǁ57 27 ǁ24 0.97 0.28 0.45 11 5 2 0.23 4 34 22 0.04 118 113 11 ǁ22 43 51 0.99 0.35 0.51 2 16 18 0.05 3 30 17 0.09 64 78 8 16 ǁ46 49 The indicator variogram models shown are reasonably consistent with the structure shown in the sample variogram maps. Typical 3D variogram ellipsoids, produced at the 0.7 variogram contour, for the median indicator variogram are shown in Figure 17-25 below.

High Grade Domain—Oxide\Transitional—Fresh

22APR201119473772

Low Grade Domain—Oxide\Transitional—Fresh

22APR201119495690 Figure 17-25: Valehaichichi Median Indicator Variogram Models Estimation of the recoverable resource proportions requires the variogram of gold grade in order to calculate the change in variance for the block support correction. Gold variogram model parameters are shown in Table 17-14 below.

553

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: NQ11601A.;26 MERRILL CORPORATION PHARDIM//16-JUN-11 04:33 DISK106:[11ZBG1.11ZBG11601]NQ11601A.;26 mrll_0909.fmt Free: 340D*/2100D Foot: 0D/ 0D VJ RSeq: 4 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 8550

Table 17-14: Valehaichichi—Gold Variograms

Nugget Structure 1 : Exponential Structure 2 : Exponential Rotations Domain Sub Domain C0 C1 Ax Ay Az C2 Ax Ay Az x y z High Oxide/Trans 0.2 0.13 71 71 7 0.67 6 9 2 ǁ59ǁ32 Grade Fresh 0.2 0.06 22 221 122 0.74 2 2 6 56 ǁ80 ǁ31

Low Oxide/Trans 0.2 0.09 25 215 23 0.71 2 3 6 29 ǁ26 38 Grade Fresh 0.2 0.15 138 14 118 0.65 5 19 11 36 ǁ20 ǁ16

17.1.3.2 Namachamata The indicator grade thresholds corresponding to a set of constant cumulative proportions are shown in Table 17-15.

Table 17-15: Namachamata—Indicator Grade Thresholds and Class Means

Indicator Oxide/Trans Fresh threshold Cum Prob Grade Threshold Class Mean Grade Threshold Class Mean 0.50 0.10 0.035 0.019 0.025 0.014 1.50 0.20 0.095 0.064 0.060 0.043 2.50 0.30 0.180 0.140 0.110 0.085 3.50 0.40 0.300 0.237 0.175 0.140 4.50 0.50 0.460 0.380 0.260 0.214 5.50 0.60 0.685 0.571 0.400 0.326 6.50 0.70 1.010 0.838 0.625 0.501 7.50 0.75 1.265 1.135 0.825 0.717 8.50 0.80 1.595 1.412 1.060 0.929 9.50 0.85 2.080 1.853 1.435 1.222 10.50 0.90 2.725 2.352 2.100 1.736 11.50 0.95 4.530 3.401 3.505 2.711 12.50 0.97 5.475 4.959 5.700 4.400 13.50 0.99 11.880 8.831 16.400 8.538 1.00 97.450 36.698 99.550 35.672 The plots of Indicator Variogram maps reveal that in plan view there is a weakly preferred direction of continuity striking approximately north-south. In section the maps show that spatial continuity is predominantly flat with a gentle dip to the east. The complete set of indicator variogram models for each sub-domain are shown in Table 17-16 and Table 17-17 below. Variograms of gold are shown in Table 17-18.

Table 17-16: Namachamata—Indicator Variogram Models—Oxide\Transitional

Structure 1 : Structure 2 : Structure 3 : Cum. Nugget Exponential Exponential Spherical Rotations Prob. C0 C1 Ax Ay Az C2 Ax Ay Az C3 Ax Ay Az x y z 0.1 0.06 0.17 31 3 30 0.29 2 19 2 0.48 20 181 69 ǁ30 74 ǁ46 0.2 0.05 0.29 4 3 31 0.07 7 4 43 0.59 26 240 112 65 ǁ58 28 0.3 0.05 0.02 169 18 79 0.44 6 9 5 0.49 135 171 22 ǁ1 30 ǁ28 0.4 0.07 0.43 3 38 8 0.32 81 79 8 0.18 47 433 477 5 8 32 0.5 0.08 0.09 51 53 9 0.69 49 43 6 0.15 39 322 390 11 21 31 0.6 0.08 0.01 52 413 116 0.71 40 44 5 0.19 55 44 166 33 7 80 0.7 0.1 0.14 5 49 19 0.5 9 39 4 0.26 116 54 16 ǁ2 21 ǁ4 0.75 0.1 0.16 129 52 15 0.44 16 51 13 0.3 12 29 2090 0.8 0.14 0.1 101 10 11 0.45 19 17 2 0.31 9 63 30 ǁ17 ǁ15 0.85 0.18 0.1 242 25 36 0.46 15 21 2 0.25 16 51 21 ǁ290 0.9 0.22 0.01 61 15 12 0.52 2 19 17 0.25 21 15 136 74 ǁ80 ǁ2 0.95 0.26 0.06 18 10 3 0.62 28 22 4 0.05 16 131 21 ǁ3 23 ǁ2 0.97 0.28 0.06 3 3 32 0.18 2 16 19 0.48 5 45 39 29 ǁ59 ǁ12 0.99 0.35 0.5 21 30 2 0.01 25 21 2 0.13 26 29 2 2 32 4

554

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: NQ11601A.;26 MERRILL CORPORATION PHARDIM//16-JUN-11 04:33 DISK106:[11ZBG1.11ZBG11601]NQ11601A.;26 mrll_0909.fmt Free: 840DM/0D Foot: 0D/ 0D VJ RSeq: 5 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 47984

Table 17-17: Namachamata—Indicator Variogram Models—Fresh

Structure 1 : Structure 2 : Structure 3 : Cum. Nugget Exponential Exponential Spherical Rotations Prob. C0 C1 Ax Ay Az C2 Ax Ay Az C3 Ax Ay Az x y z 0.1 0.06 0.34 25 3 18 0.28 17 36 131 0.32 34 341 36 ǁ62 43 ǁ1 0.2 0.06 0.52 36 9 5 0.12 47 13 88 0.3 37 352 48 10 21 26 0.3 0.06 0.45 44 5 5 0.19 36 27 11 0.3 38 380 57 ǁ36 22 ǁ16 0.4 0.1 0.53 22 23 5 0.09 99 14 27 0.28 39 260 48 17 31 ǁ17 0.5 0.1 0.07 175 17 20 0.55 37 9 5 0.28 43 226 44 15 14 29 0.6 0.1 0.13 73 36 14 0.28 43 95 58 0.5 25 20 3 ǁ8 13 ǁ13 0.7 0.14 0.32 18 147 47 0.11 200 20 118 0.43 3 30 23 ǁ40 ǁ73 14 0.75 0.14 0.2 65 7 17 0.46 4 25 3 0.2 66 266 31 ǁ27 35 ǁ19 0.8 0.16 0.45 14 31 3 0.25 57 8 15 0.14 39 391 49 22 31 1 0.85 0.2 0.12 101 10 27 0.56 3 28 36 0.13 36 358 106 0 ǁ34 ǁ20 0.9 0.2 0.64 18 7 4 0.11 129 12 33 0.05 35 332 81 5 40 ǁ11 0.95 0.25 0.65 6 10 3 0.09 141 16 157 0.01 486 116 1100 ǁ34 56 ǁ55 0.97 0.28 0.67 29 29 3 0.03 165 16 168 0.02 178 1656 1570 ǁ32 41 ǁ80 0.99 0.35 0.62 17 2 2 0.01 10 14 2 0.01 85 25 8 10 17 ǁ1

Table 17-18: Namachamata—Gold Variogram Models

Structure 1 : Structure 2 : Structure 3 : Sub- Nugget Exponential Exponential Spherical Rotations Domain C0 C1 Ax Ay Az C2 Ax Ay Az C3 Ax Ay Az x y z Oxid/Trans 0.3 0.62 19 25 2 0.01 61 85 8 0.07 48 484 405 0 10 0 Fresh 0.3 0.05 4 8 8 0.16 18 9 11 0.49 11 12 2 ǁ13 26 4

17.1.3.3 Kupers The indicator grade thresholds corresponding to a set of constant cumulative proportions are shown in Table 17-19.

Table 17-19: Kupers—Indicator Grade Thresholds and Class Means

Indicator Oxide/Trans Fresh threshold Cum Prob Grade Threshold Class Mean Grade Threshold Class Mean 0.50 0.10 0.050 0.027 0.035 0.020 1.50 0.20 0.100 0.072 0.070 0.051 2.50 0.30 0.160 0.128 0.110 0.086 3.50 0.40 0.250 0.201 0.157 0.131 4.50 0.50 0.380 0.312 0.230 0.192 5.50 0.60 0.570 0.466 0.340 0.284 6.50 0.70 0.825 0.688 0.510 0.419 7.50 0.75 0.989 0.897 0.620 0.566 8.50 0.80 1.236 1.103 0.780 0.703 9.50 0.85 1.575 1.391 1.000 0.882 10.50 0.90 2.120 1.813 1.380 1.169 11.50 0.95 3.601 2.656 2.320 1.761 12.50 0.97 5.140 4.377 3.690 2.873 13.50 0.99 10.820 7.650 9.450 5.808 1.00 90.890 26.323 115.918 22.980 The plots of Indicator Variogram show that in plan view the overall ENE-WSW trend of the mineralisation but there is no obvious preferred direction of continuity over short sample lag distances. The maps in section show that spatial continuity is predominantly flat lying.

555

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: NQ11601A.;26 MERRILL CORPORATION PHARDIM//16-JUN-11 04:33 DISK106:[11ZBG1.11ZBG11601]NS11601A.;41 mrll_0909.fmt Free: 1760DM/0D Foot: 0D/ 0D VJ RSeq: 1 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 7238

The complete set of indicator variogram models for each sub-domain are shown in Table 17-20 and Table 17-21 below. Gold variogram model are shown in Table 17-22 below.

Table 17-20: Kupers—Indicator Variogram Model Parameters—Oxide\Transitional

Structure 1 : Structure 2 : Structure 3 : Cum. Nugget Exponential Exponential Spherical Rotations Prob. C0 C1 Ax Ay Az C2 Ax Ay Az C3 Ax Ay Az x y z 0.1 0.2 0.14 545 62 622 0.62 50 15 6 0.04 67 672 665 16 25 14 0.2 0.12 0.08 7 31 63 0.55 17 11 5 0.25 92 420 42 ǁ71ǁ79 0.3 0.12 0.47 55 7 5 0.26 263 196 27 0.27 231 2294 689 ǁ23 ǁ15 ǁ63 0.4 0.1 0.52 22 35 6 0.16 181 18 29 0.22 98 911 94 ǁ17 ǁ11 ǁ65 0.5 0.1 0.52 4 8 6 0.24 355 83 179 0.14 83 171 17 ǁ8 7 33 0.6 0.1 0.15 8 33 14 0.48 4 4 5 0.27 92 365 36 20 ǁ19 ǁ80 0.7 0.1 0.12 10 30 10 0.53 6 4 4 0.25 29 274 117 ǁ80 63 ǁ47 0.75 0.14 0.05 9 91 91 0.64 31 29 3 0.16 306 38 125 ǁ54 25 6 0.8 0.18 0.09 46 5 44 0.62 7 52 5 0.11 244 241 24 18 ǁ20 78 0.85 0.2 0.2 52 61 6 0.54 16 51 5 0.05 651 65 316 ǁ13 23 35 0.9 0.24 0.03 38 380 95 0.38 2 20 2 0.35 26 49 6 ǁ18 ǁ9 ǁ52 0.95 0.24 0.39 5 22 6 0.04 28 281 101 0.33 26 31 3 ǁ17 ǁ17 ǁ55 0.97 0.28 0.43 41 6 4 0.14 21 19 2 0.15 4 19 6 16 10 ǁ3 0.99 0.3 0.16 8 21 2 0.1 3 22 27 0.44 21 21 2 39 30 79

Table 17-21: Kupers—Indicator Variogram Model Parameters—Fresh

Structure 1 : Structure 2 : Structure 3 : Cum. Nugget Exponential Exponential Spherical Rotations Prob. C0 C1 Ax Ay Az C2 Ax Ay Az C3 Ax Ay Az x y z 0.1 0.2 0.12 83 10 101 0.49 26 31 3 0.2 192 370 50 27 ǁ19 47 0.2 0.2 0.09 76 7 74 0.44 3 31 14 0.27 36 362 139 71 ǁ74 80 0.3 0.2 0.24 216 161 259 0.47 38 41 4 0.09 41 4 41 ǁ12 7 ǁ19 0.4 0.2 0.11 11 12 47 0.46 18 28 4 0.23 127 1241 129 22 18 71 0.5 0.2 0.13 7 34 67 0.46 17 29 4 0.21 137 1104 117 16 8 59 0.6 0.2 0.22 9 6 24 0.35 29 4 3 0.23 115 1009 108 8 34 50 0.7 0.24 0.05 1669 296 430 0.53 10 15 4 0.17 81 783 100 ǁ20 36 27 0.75 0.26 0.53 45 8 4 0.05 362 266 349 0.16 74 744 83 ǁ6 27 35 0.8 0.26 0.2 672 86 69 0.02 92 700 270 0.52 19 12 3 ǁ28 ǁ7 ǁ51 0.85 0.28 0.05 1402 140 1013 0.11 53 524 81 0.56 20 22 3 2 25 54 0.9 0.3 0.13 6 61 62 0.12 151 83 15 0.45 20 21 2 0 13 63 0.95 0.34 0.02 461 46 133 0.2 4 16 13 0.44 21 18 2 ǁ10 13 41 0.97 0.34 0.11 8 24 16 0.01 160 30 68 0.53 22 23 2 17 24 80 0.99 0.36 0.03 4 42 41 0.56 21 15 2 0.05 26 3 4 ǁ34 26 ǁ27

Table 17-22: Kupers—Gold Variogram Models

Structure 1 : Structure 2 : Structure 3 : Sub- Nugget Exponential Exponential Spherical Rotations Domain C0 C1 Ax Ay Az C2 Ax Ay Az C3 Ax Ay Az x y z Oxid/Trans 0.2 0.09 75 10 14 0.69 21 6 2 0.03 213 211 21 7 8 ǁ4 Fresh 0.2 0.05 53 42 79 0.5 5 9 2 0.25 21 23 2 ǁ9 34 40

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17.1.3.4 Dawsons The indicator grade thresholds corresponding to a set of constant cumulative proportions are shown in Table 17-23.

Table 17-23: Dawsons—Indicator Grade Thresholds and Class Means

Indicator Oxide/Trans Fresh threshold Cum Prob Grade Threshold Class Mean Grade Threshold Class Mean 0.50 0.10 0.030 0.016 0.0400 0.020 1.50 0.20 0.075 0.053 0.0750 0.056 2.50 0.30 0.135 0.105 0.1300 0.101 3.50 0.40 0.205 0.168 0.1900 0.156 4.50 0.50 0.310 0.254 0.2650 0.225 5.50 0.60 0.435 0.370 0.3600 0.313 6.50 0.70 0.625 0.526 0.5200 0.437 7.50 0.75 0.760 0.689 0.6300 0.569 8.50 0.80 0.975 0.861 0.7800 0.698 9.50 0.85 1.310 1.140 1.0050 0.892 10.50 0.90 1.830 1.539 1.3800 1.170 11.50 0.95 3.095 2.288 2.4300 1.800 12.50 0.97 4.235 3.542 3.4350 2.809 13.50 0.99 8.690 6.017 9.4350 5.494 1.00 238.6 34.305 222.0 25.102 The plots of Indicator Variogram show that in plan view there is no obvious preferred direction of continuity and that in section show that spatial continuity is predominantly flat at a high proportion of the total variance although a weak easterly dip is also apparent in the oxide map of the median indicator. The complete set of indicator variogram models for each sub-domain is shown in Table 17-24 and Table 17-25 below. Gold variogram model are shown in Table 17-26 below.

Table 17-24: Dawsons—Indicator Variogram Models—Oxide\Transitional

Structure 1 : Structure 2 : Structure 3 : Cum. Nugget Exponential Exponential Spherical Rotations Prob. C0 C1 Ax Ay Az C2 Ax Ay Az C3 Ax Ay Az x y z 0.1 0.1 0.61 15 4 2 0.12 779 1321 144 0.17 21 124 20 30 17 59 0.2 0.1 0.43 10 36 3 0.25 662 365 77 0.22 20 25 18 16 11 78 0.3 0.1 0.52 9 8 4 0.33 384 374 41 0.05 1527 2635 301 9 20 64 0.4 0.1 0.33 189 44 18 0.41 2 3 3 0.17 1367 1444 145 ǁ21 26 ǁ1 0.5 0.12 0.28 362 59 36 0.49 5 8 3 0.11 694 691 71 5 19 ǁ3 0.6 0.12 0.22 118 12 30 0.49 5 2 3 0.17 327 322 32 4 10 ǁ5 0.7 0.15 0.3 69 44 7 0.33 17 2 2 0.22 120 308 37 ǁ9 22 46 0.75 0.16 0.06 18 40 87 0.58 16 3 4 0.2 174 231 25 ǁ12 13 79 0.8 0.16 0.68 8 5 4 0.01 133 661 68 0.14 111 521 54 0 28 57 0.85 0.17 0.62 20 4 3 0.06 789 988 116 0.15 14 136 29 33 6 ǁ5 0.9 0.19 0.66 6 3 4 0.04 2703 2705 271 0.12 29 26 22 26 19 ǁ37 0.95 0.24 0.6 13 8 2 0.03 36 370 359 0.13 27 105 11 ǁ18 21 ǁ80 0.97 0.27 0.68 5 5 2 0.02 340 40 336 0.03 18 171 174 ǁ27 28 ǁ31 0.99 0.27 0.13 15 20 2 0.46 21 10 2 0.14 64 16 7 14 3 80

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Table 17-25: Dawsons—Indicator Variogram Models—Fresh

Structure 1 : Structure 2 : Structure 3 : Cum. Nugget Exponential Exponential Spherical Rotations Prob. C0 C1 Ax Ay Az C2 Ax Ay Az C3 Ax Ay Az x y z 0.1 0.1 0.19 194 209 47 0.51 3 16 4 0.2 25 32 251 ǁ15 ǁ9 ǁ55 0.2 0.1 0.23 48 60 21 0.44 5 6 2 0.23 88 832 816 ǁ52 ǁ7 ǁ23 0.3 0.1 0.28 301 121 30 0.44 10 3 3 0.19 27 269 119 ǁ40 7 ǁ80 0.4 0.12 0.24 42 11 32 0.44 4 38 3 0.2 105 861 96 ǁ14 46 13 0.5 0.14 0.23 22 36 32 0.47 4 39 4 0.16 87 663 809 8 ǁ25 25 0.6 0.16 0.22 17 79 18 0.49 5 6 3 0.13 89 885 863 ǁ38 ǁ21 ǁ27 0.7 0.18 0.18 54 7 20 0.54 5 38 4 0.1 81 569 818 ǁ1 5 25 0.75 0.2 0.22 13 29 14 0.47 2 22 3 0.11 61 451 419 ǁ4 ǁ10 21 0.8 0.2 0.18 248 38 24 0.58 2 4 3 0.04 15 148 129 ǁ49 8 ǁ80 0.85 0.22 0.05 97 9 91 0.62 4 19 3 0.12 43 221 22 2 41 10 0.9 0.24 0.12 14 127 29 0.62 16 33 3 0.02 79 769 764 15 ǁ7 15 0.95 0.27 0.16 4 2 8 0.53 20 6 2 0.05 68 244 26 3 5 ǁ2 0.97 0.28 0.24 13 4 3 0.47 31 22 3 0.01 30 60 68 3 3 72 0.99 0.28 0.42 16 20 2 0.2 14 20 2 0.1 4 41 11 ǁ1 19 ǁ1

Table 17-26: Dawsons—Gold Variogram Models

Structure 1 : Structure 2 : Structure 3 : Sub- Nugget Exponential Exponential Spherical Rotations Domain C0 C1 Ax Ay Az C2 Ax Ay Az C3 Ax Ay Az x y z Oxid/Trans 0.3 0.01 180 70 17 0.66 14 23 2 0.02 105 67 10 0 ǁ20 Fresh 0.3 0.05 19 164 101 0.63 19 20 2 0.05 31 50 12 ǁ5 17 ǁ15

17.1.4 Resource Estimation The choice of model panel size depends mainly on the drill hole spacing and the dimension of the expected minimum mining unit (smu) or mining block. It is usually sufficient to make the panel dimensions about the same as the broad drill hole spacing. At Gold Ridge drill hole spacing is quite variable but for Valehaichichi, Kupers and Dawsons a 25 metres by 25 metres panel is sensible and is consistent with previous models, whilst at Namachamata, due to the closer spaced RC grade control data, a smaller panel size is more appropriate. A panel height of 3 metres was used in all cases.

Table 17-27: Resource Model Parameters

Valehaichichi, Kupers, Dawsons X Y Z Panel Size ...... 25 m 25 m 3 m Block Size ...... 5 m 5 m 3 m Discretisation Pts ...... 6 6 1 Namachamata XYZ Panel Size ...... 8 m 25 m 3 m Block Size ...... 4 m 5 m 3 m Discretisation Pts ...... 2 6 1 The Resource Classification that each panel is assigned is based on the search ellipse radii applied and the resulting number and configuration of the data used in the panel estimate. Search and data configuration parameters used are shown in Table 17-28 below.

Table 17-28: MIK Panel Search and Data Configuration Parameters

Measured Indicated Inferred Minimum Data ...... 16 16 8 Maximum Data ...... 48 48 48 Minimum Octants ...... 4 4 2 Search Parameters X ...... 30 m 45 m 45 m (X Namachamata) ...... (10 m) (15 m) (15 m) Y ...... 30 m 45 m 45 m Z ...... 5 m 7.5 m 7.5 m

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17.1.4.1 Valehaichichi Resource Estimate Table 17-29 shows the estimates of Measured, Indicated and Inferred resources at Valehaichichi for a range of cut-offs. These estimates take into account the distribution of oxide, transitional and primary or fresh ore types and their specific bulk densities (discussed previously). The grade of the Measured material is notably higher than either the Indicated or Inferred category which is consistent with the fact that drilling density tends to be higher in areas where the grade is higher. More than 50% of the resource is classified as Indicated. The similarity between the Indicated and Inferred grade suggests that outside the central higher grade area of the deposit, the style of mineralisation is consistently lower grade.

Table 17-29: Estimated Recoverable Resource Remaining at Valehaichichi

Cut-off Measured Indicated Inferred Meas & Ind Total g/t Mt grade Mt grade Mt grade Mt grade Mt grade 0.5 2.04 1.38 10.56 1.14 4.83 1.21 12.60 1.18 17.43 1.19 0.6 1.78 1.50 8.62 1.28 3.85 1.38 10.41 1.32 14.26 1.33 0.7 1.59 1.60 7.13 1.41 3.14 1.54 8.72 1.45 11.87 1.47 0.8 1.42 1.70 5.97 1.54 2.60 1.71 7.39 1.57 9.99 1.61

17.1.4.2 Valehaichichi Resource Estimate versus Grade Control Model The RC grade control (GC) data can be used to construct alternate model using MP3 grade control optimisation software against which the current resource model can be compared. The MP3 software, based on conditional simulation methodology, was used for grade control when the mine was operating. For this reconciliation it is important that as close to the same volume of material is compared from both models, therefore only those panels of the current resource that are at least 80% populated with grade control blocks are considered (Figure 17-26). The reconciliation between the two models can also be used to determine a more accurate block support adjustment to apply. RL 380.5 RL 335.5

22APR201119331422 Figure 17-26: Valehaichichi—Resource Model vs. MP3 Grade Control Model MIK panels that are not well populated (<80%) with grade control blocks are discounted. They represent areas where RC grade control drilling was either incomplete or absent. These panels include those at the edge of the RC drilling coverage, panels that are effected by topography as well as areas within the pit volume that were, for unknown reasons, un-drilled (Figure 17-26).

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Global comparisons of the current MIK resource and the MP3 resource estimate at a cut-off 0.5 g/t gold, using the calculated block support adjustment (~99% of the total sample variability) are shown in Table 17-30.

Table 17-30: Comparison between the Current MIK Model and MP3 Model

@0.50 g/t cut off Mt g/t MIK estimate ...... 6.40 1.48 MP3 estimate ...... 6.09 1.54 Difference ...... ǁ4.7% 4.1% The reconciliation is extremely good, the MIK resource overstates tonnes but understates grade relative to the MP3 resource in the order of 4% difference in both instances. However, on the basis of the reconciliation data above the MIK model grades were re-estimated after modifying the block support adjustment from 99% to 96% and the reconciliation process repeated (Table 17-31).

Table 17-31: Comparison between the Current MIK Model and MP3 Model after modifying the Block Support Adjustment to 96%

@0.50 g/t cut off Mt g/t MIK estimate ...... 6.10 1.54 MP3 estimate ...... 6.09 1.54 Difference ...... 0.2% 0.0% On the basis of this process and outcome a block support correction of 96% has been used for the resource estimates at Kupers and Dawsons. This was not applied at Namachamata due to the tighter drill hole spacing and smaller panel dimension.

17.1.4.3 Namachamata Resource Estimate Table 17-32 shows the estimates of Measured, Indicated and Inferred resources at Namachamata for a range of cut-offs. These estimates take into account the distribution of oxide, transitional and fresh or fresh ore types and their specific bulk densities (discussed previously). The grade of the Measured material is notably higher than either the Indicated or Inferred category which is consistent with the fact that drilling density tends to be higher in areas where the grade is higher. There are similar proportions of Measured and Indicated categories and only about 10-12% inferred resource consistent with the close spaced pre-grade control RC drilling completed at Namachamata.

Table 17-32: Estimated Recoverable Resource at Namachamata

Cut-off Measured Indicated Inferred Meas & Ind Total g/t Mt grade Mt grade Mt grade Mt grade Mt grade 0.5 1.15 1.92 1.46 1.43 0.43 1.28 2.61 1.64 3.04 1.59 0.6 1.05 2.05 1.21 1.60 0.34 1.49 2.26 1.81 2.60 1.77 0.7 0.98 2.15 1.02 1.78 0.27 1.75 2.00 1.96 2.26 1.94 0.8 0.90 2.26 0.88 1.95 0.22 1.96 1.78 2.11 2.00 2.09

17.1.4.4 Kupers Resource Estimate Table 17-33 shows the estimates of Measured, Indicated and Inferred resources at Kupers for a range of cut-offs. These estimates take into account the distribution of oxide, transitional and fresh ore types and their specific bulk densities (discussed previously). The resource has been classified as 55% Indicated and 20% Measured which reflects the often erratic and wide spaced drill hole spacing. As was seen at Dawsons the grade of the Measured material is notably higher than either the Indicated or Inferred category which is consistent with the fact that drilling density tends to be higher in areas where the grade is higher.

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Table 17-33: Estimated Recoverable Resource at Kupers

Cut-off Measured Indicated Inferred Meas & Ind Total g/t Mt grade Mt grade Mt grade Mt grade Mt grade 0.5 3.95 1.54 10.97 1.23 4.30 1.26 14.92 1.31 19.22 1.30 0.6 3.60 1.64 9.17 1.36 3.47 1.43 12.77 1.44 16.24 1.44 0.7 3.22 1.76 7.71 1.50 2.87 1.60 10.93 1.57 13.80 1.58 0.8 2.87 1.88 6.50 1.64 2.42 1.76 9.38 1.71 11.80 1.72

17.1.4.5 Dawsons Resource Estimate Table 17-34 shows the estimates of Measured, Indicated and Inferred resources at Dawsons for a range of cut-offs. These estimates take into account the distribution of oxide, transitional and fresh or fresh ore types and their specific bulk densities (discussed previously). The resource falls predominantly into the indicated category (~70%) which reflects the often erratic and wide spaced drill hole spacing. For the same reasons only 4-5% of the resource has been classified as Measured although the grade of the Measured material is notably higher than either the Indicated or Inferred category which is consistent with the fact that drilling density tends to be higher in areas where the grade is higher.

Table 17-34: Estimated Recoverable Resource at Dawsons

Cut-off Measured Indicated Inferred Meas & Ind Total g/t Mt grade Mt grade Mt grade Mt grade Mt grade 0.5 1.09 1.40 17.91 1.27 5.47 1.34 19.00 1.28 24.48 1.29 0.6 0.96 1.52 14.91 1.42 4.45 1.52 15.87 1.43 20.32 1.45 0.7 0.82 1.67 12.36 1.58 3.66 1.71 13.18 1.58 16.84 1.61 0.8 0.69 1.84 10.26 1.75 3.06 1.90 10.95 1.75 14.01 1.79

17.1.5 Comparison and Reconciliation to Previous Resource Estimates 17.1.5.1 Valehaichichi To compare the current Valehaichichi resource estimate against the previous Ross Mining estimate the current model has been re-calculated using the original topographic surface. In terms of combined Measured and Indicated as well as total resource the current model understates both tonnes (ǁ15%) and grade (ǁ10%) compared to the Ross Mining estimate (Table 17-35). There is also a significant reduction in the proportion of Measured resource in the current model.

Table 17-35: Valehaichichi Estimates Compared to Previous Estimates

Measured Indicated Inferred Meas & Ind Total Current Mt grade Mt grade Mt grade Mt grade Mt grade 0.5 5.02 1.64 11.99 1.14 4.42 1.09 17.01 1.29 21.43 1.25 0.6 4.64 1.73 9.96 1.26 3.44 1.24 14.60 1.41 18.04 1.38 0.7 4.31 1.81 8.31 1.39 2.76 1.39 12.62 1.53 15.38 1.51 0.8 3.98 1.90 6.98 1.51 2.25 1.53 10.96 1.65 13.21 1.63

Ross 1999 Mt grade Mt grade Mt grade Mt grade Mt grade 0.5 10.69 1.65 8.76 1.18 4.78 1.17 20.15 1.38 24.22 1.38 0.6 9.65 1.77 7.24 1.32 3.88 1.31 16.98 1.54 20.76 1.52 0.7 8.72 1.88 5.99 1.46 3.11 1.47 14.29 1.70 17.81 1.67 0.8 7.91 2.00 4.99 1.60 2.50 1.65 12.90 1.84 15.39 1.81

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17.1.5.2 Namachamata The current resource is compared to the 1998 Ross Mining resource estimate (FSSI 1998) and the 2000 Delta resource (Abbott 2000) in Table 17-36. In terms of total resource and total measured and indicated categories the three models all compare very well. The minor variations are due to differences in the modelling parameters and data used.

Table 17-36: Namachamata Resource Compared to Previous Estimates

Measured Indicated Inferred Meas & Ind Total Current Mt grade Mt grade Mt grade Mt grade Mt grade 0.5 1.15 1.92 1.46 1.43 0.43 1.28 2.61 1.64 3.04 1.59 0.6 1.05 2.05 1.21 1.60 0.34 1.49 2.26 1.81 2.60 1.77 0.7 0.98 2.15 1.02 1.78 0.27 1.75 2.00 1.96 2.26 1.94 0.8 0.90 2.26 0.88 1.95 0.22 1.96 1.78 2.11 2.00 2.09

Ross 1998 Mt grade Mt grade Mt grade Mt grade Mt grade 0.5 1.49 1.85 0.67 1.34 0.56 1.44 2.16 1.69 2.72 1.64 0.6 1.36 1.97 0.57 1.49 0.43 1.72 1.93 1.83 2.36 1.81 0.7 1.23 2.12 0.48 1.64 0.35 1.94 1.71 1.96 2.06 1.98 0.8 1.13 2.23 0.41 1.79 0.29 2.20 1.54 2.11 1.83 2.13

Delta 2000 Mt grade Mt grade Mt grade Mt grade Mt grade 0.5 1.86 1.73 0.48 1.42 0.60 1.51 2.34 1.67 2.94 1.63 0.6 1.68 1.86 0.39 1.63 0.51 1.68 2.07 1.82 2.57 1.79 0.7 1.50 2.01 0.31 1.87 0.42 1.88 1.81 1.99 2.23 1.97 0.8 1.34 2.15 0.26 2.11 0.35 2.10 1.60 2.14 1.95 2.14

17.1.5.3 Kupers The current resource is compared to the 1998 Ross Mining resource estimate (James and Hague 1999) and the 2000 Delta resource (Abbott 2000) (Table 17-37). In terms of total resource and total Measured and Indicated categories the three models all compare well with respect to tonnes but there is clear difference in grade, with the Ross 1999 having much higher grade than either the current model (+15%) and the Delta model (+9%). The other obvious difference is the proportion of different resource classifications. In the current model only 23% is measured resource compared 46% for both the previous models. Combined Measured and Indicated resource proportions are however similar.

Table 17-37: Kupers Resource Compared to Previous Estimates

Measured Indicated Inferred Meas & Ind Total Current Mt grade Mt grade Mt grade Mt grade Mt grade 0.5 3.95 1.54 10.97 1.23 4.30 1.26 14.92 1.31 19.22 1.30 0.6 3.60 1.64 9.17 1.36 3.47 1.43 12.77 1.44 16.24 1.44 0.7 3.22 1.76 7.71 1.50 2.87 1.60 10.93 1.57 13.80 1.58 0.8 2.87 1.88 6.50 1.64 2.42 1.76 9.38 1.71 11.80 1.72

Ross 1999 Mt grade Mt grade Mt grade Mt grade Mt grade 0.5 8.40 1.53 7.70 1.39 3.41 1.50 16.10 1.46 19.51 1.47 0.6 7.24 1.69 6.30 1.57 2.78 1.71 13.54 1.64 16.32 1.65 0.7 6.25 1.86 5.24 1.76 2.25 1.97 11.49 1.81 13.74 1.84 0.8 5.43 2.03 4.44 1.94 1.86 2.22 9.87 1.99 11.73 2.02

Delta 2000 Mt grade Mt grade Mt grade Mt grade Mt grade 0.5 8.31 1.43 8.79 1.30 2.44 1.30 17.10 1.36 19.54 1.35 0.6 7.28 1.55 7.32 1.45 2.00 1.47 14.60 1.50 16.93 1.50 0.7 6.20 1.71 5.99 1.63 1.57 1.70 12.19 1.67 13.76 1.67 0.8 5.33 1.87 4.96 1.82 1.27 1.93 10.28 1.84 11.55 1.85

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17.1.5.4 Dawsons The current resource is compared to the 1999 Ross resource (James and Hague 1999) and the 2000 Delta resource (Abbott 2000). In terms of total resource and total Measured and Indicated categories the three models all compare reasonably well (Table 17-38). The current model is more conservative than the 1999 Ross Mining estimates by about ǁ3% to ǁ6% in terms of both tonnes and grade whilst compared to the 2000 Delta estimates the current model predicts slightly more tonnes at very similar grades. There is a clear difference between the proportion of Measured resource in the current model and either of the previous models. Only 5% of the current model is considered measured, whilst 23% was classified as Measured in the Delta model and 49% in the Ross model. Combined Measured and Indicated resources are more similar.

Table 17-38: Dawsons Resource Compared to Previous Estimates

Measured Indicated Inferred Meas & Ind Total Current Mt grade Mt grade Mt grade Mt grade Mt grade 0.5 1.09 1.40 17.91 1.27 5.47 1.34 19.00 1.28 24.48 1.29 0.6 0.96 1.52 14.91 1.42 4.45 1.52 15.87 1.43 20.32 1.45 0.7 0.82 1.67 12.36 1.58 3.66 1.71 13.18 1.58 16.84 1.61 0.8 0.69 1.84 10.26 1.75 3.06 1.90 10.95 1.75 14.01 1.79

Ross 1999 Mt grade Mt grade Mt grade Mt grade Mt grade 0.5 11.54 1.48 10.31 1.27 3.20 1.2 21.85 1.38 25.05 1.36 0.6 9.92 1.63 8.46 1.42 2.63 1.35 18.38 1.53 21.01 1.51 0.7 8.48 1.79 6.96 1.59 2.15 1.51 15344 1.70 17.59 1.68 0.8 7.29 1.96 5.78 1.76 1.75 1.68 13.07 1.87 14.82 1.85

Delta 2000 Mt grade Mt grade Mt grade Mt grade Mt grade 0.6 4.42 1.56 10.85 1.39 4.92 1.31 15.28 1.44 20.19 1.41 0.7 3.67 1.74 8.55 1.59 3.90 1.49 12.22 1.64 16.12 1.60 0.8 3.06 1.94 6.77 1.81 3.15 1.66 9.82 1.85 12.97 1.81

17.1.5.5 Reconciliation with previous Resource Estimate In the discussion and tables below, the current Valehaichichi model data that is based on the post-mining topographic surface have been replaced with equivalent data based on the original pre-mining surface. Table 17-39 below compares the current resource estimates with Ross Mining estimates at a cut-off grade of 0.80 g/t Au. Table 17-40 shows the varying tonnage proportions of the different estimates. Overall the combined current models for all resource classifications show, at a cut-off grade of 0.80 g/t Au, a net loss of 7% of tonnes and 8% of grade compared to the Ross Mining estimates. For combined Measured and Indicated resources the current models contain 13% fewer tonnes at 9% lower grade. Importantly also is the different distribution of the resource between the resource classification categories. Notably there is a large drop in the amount and proportion of Measured resource in the current models compared to the Ross Mining models, whilst the amount and proportions of both the Indicated and Inferred resource categories increases.

Table 17-39: Current Resource Estimates Compared to Ross Mining Estimates

Current Measured Indicated Inferred Meas & Ind Total @0.80g/t Au Mt g/t Mt g/t Mt g/t Mt g/t Mt g/t Valehaichichi ...... 3.98 1.9 6.98 1.51 2.25 1.53 10.96 1.65 13.21 1.63 Namachamata ...... 0.90 2.26 0.88 1.95 0.22 1.96 1.78 2.11 2.00 2.09 Kupers ...... 2.87 1.88 6.50 1.64 2.42 1.76 9.38 1.71 11.80 1.72 Dawsons ...... 0.69 1.84 10.26 1.75 3.06 1.9 10.95 1.75 14.01 1.79 Total ...... 8.44 1.93 24.63 1.66 7.95 1.75 33.07 1.72 41.02 1.73

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Measured Indicated Inferred Meas & Ind Total Ross 1999 Mt g/t Mt g/t Mt g/t Mt g/t Mt g/t Valehaichichi ...... 7.91 2.00 4.99 1.60 2.50 1.65 12.90 1.84 15.39 1.81 Namachamata ...... 1.13 2.23 0.41 1.79 0.29 2.20 1.54 2.11 1.83 2.13 Kupers ...... 5.43 2.03 4.44 1.94 1.86 2.22 9.87 1.99 11.73 2.02 Dawsons ...... 7.29 1.96 5.78 1.76 1.75 1.68 13.07 1.87 14.82 1.85 Total ...... 21.76 2.01 15.62 1.76 6.40 1.85 37.38 1.90 43.77 1.89 Measured Indicated Inferred Meas & Ind Total Differences Mt g/t Mt g/t Mt g/t Mt g/t Mt g/t Valehaichichi ...... ǁ50% ǁ5% 40% ǁ6% ǁ10% ǁ7% ǁ15% ǁ10% ǁ14% ǁ10% Namachamata ...... ǁ21% 2% 115% 9% ǁ24% ǁ11% 16% 0% 9% ǁ2% Kupers ...... ǁ47% ǁ7% 46% ǁ15% 30% ǁ21% ǁ5% ǁ14% 1% ǁ15% Dawsons ...... ǁ91% ǁ6% 78% ǁ1% 75% 13% ǁ16% ǁ6% ǁ5% ǁ3% Total ...... ᎈ61% ᎈ4% 58% ᎈ6% 24% ᎈ5% ᎈ12% ᎈ9% ᎈ6% ᎈ8%

Table 17-40: Tonnage Proportions of Current Resource Estimates Compared to Ross Mining Estimates Measured Indicated Inferred Meas & Ind Current Mt Mt Mt Mt Valehaichichi ...... 0.30 0.53 0.17 0.83 Namachamata ...... 0.45 0.44 0.11 0.89 Kupers ...... 0.24 0.55 0.21 0.79 Dawsons ...... 0.05 0.73 0.22 0.78 Total ...... 0.21 0.60 0.19 0.81 Ross 1999 Valehaichichi ...... 0.51 0.32 0.16 0.84 Namachamata ...... 0.62 0.22 0.16 0.84 Kupers ...... 0.46 0.38 0.16 0.84 Dawsons ...... 0.49 0.39 0.12 0.88 Total ...... 0.50 0.36 0.15 0.85 Differences Valehaichichi ...... ǁ41% 63% 5% ǁ1% Namachamata ...... ǁ27% 97% ǁ30% 6% Kupers ...... ǁ47% 46% 29% ǁ6% Dawsons ...... ǁ90% 88% 85% ǁ11% Total ...... ᎈ59% 68% 33% ᎈ6% The net effect of these differences for combined Measured and Indicated Resources are summarised in terms of tonnes, grade and contained gold (Koz) in Table 17-41 below:

Table 17-41: All Prospects Measured and Indicated Resource (at 0.80 g/t cut-off) Compared to Ross Mining Estimates Current Models Ross Mining Difference Mt g/t Koz Mt g/t Koz Mt g/t Koz Valehaichichi ...... 10.96 1.65 581.4 12.9 1.84 763.1 ǁ1.94 ǁ0.19 ǁ181.7 Namachamata ...... 1.78 2.11 120.6 1.54 2.11 104.5 0.24 0.00 16.1 Kupers ...... 9.38 1.71 515.5 9.87 1.99 631.5 ǁ0.49 ǁ0.28 ǁ116.0 Dawsons ...... 10.95 1.75 616.1 13.07 1.87 785.8 ǁ2.12 ǁ0.12 ǁ169.7 Total ...... 33.07 1.72 1833.6 37.38 1.9 2285 ǁ4.31 ǁ0.18 ǁ451.3 These arise for a number of reasons, most importantly: The exclusion of the pre-Ross Mining RC holes from all current resource estimates 1) A change in a key kriging estimation parameter, the minimum data required to produce a Measured or Indicated panel estimate. 2) Differences in the Block Support Correction.

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The justification for removing the pre-Ross RC holes (PRRC) has been discussed previously. The effect of removing these holes varies from prospect to prospect because the proportion of PRRC holes in each prospect also varies (Table 17-42). Clearly Valehaichichi and Dawsons will be most affected by the removal of these holes.

Table 17-42: Pre-Ross Mining RC Drilling

All Holes PRRC PRRC % Valehaichichi ...... 12,864 5,614 44% Kupers ...... 5,224 445 9% Dawsons ...... 10,533 2,761 26% Namachamata ...... 9,808 805 8% The net effect of removing these holes is to reduce both tonnes and grade. A loss of tonnes is expected therefore simply due to the lack of data but at specific cut-off grades tonnes will also be lower due to the loss of higher grades caused by removing these holes. A summary table of mean gold grades of data populations with and without PRRC holes shows the affect on overall grade of each deposit (Table 17-43).

Table 17-43: Pre-Ross Mining RC Drilling

Incl PRRC Excl PRRC change data mean data mean grade % Valehaichichi ...... 12,864 1.02 12,165 0.90 0.12 ǁ12% Namachamata ...... 5,224 1.10 4,585 1.20 ǁ0.10 9% Kupers ...... 9,808 0.90 9,767 0.90 0.00 0% Dawsons ...... 10,535 0.91 8,698 0.86 0.05 ǁ6% At Valehaichichi and Dawsons there is a net drop in average sample grade by 12% and 6% respectively, Consequently it would be expected that resource estimates determined without these holes would be lower at these prospects. Conversely at Kupers there is no change in average grade and at Namachamata the average grade actually increases. In these areas the PRRC holes are peripheral to the main areas of mineralisation and the resource estimates excluding these data would be expected to be similar or higher grade. The minimum data required to allow a grade estimate to be determined is a key kriging parameter. The 1998 and 1999 MIK resource estimates of Ross Mining used a minimum of 8 data for all resource categories, although 14 MIK indicator bins were defined. This is not considered best practice as it allows for panel estimates based on poor or incomplete grade histograms. A minimum of 16 data is more appropriate and has been used in the current resource estimates for Measured and Indicated categories and 8 data for Inferred. The affect of increasing the minimum data requirement to 16 has been, in the case of Gold Ridge, to decrease the amount and proportion of Measured resource and to reduce the grade of the Measured resource. The cause of this outcome is reasonably clear to understand. Tonnes will decrease in the Measured category simply because fewer blocks will satisfy the minimum data requirement. Grade of the Measured resource decreases because drill hole density tends to be higher in areas of higher grade, so a panel that is classified as Measured with a data minimum of 8 will, with the higher data minimum of 16, be re-classified as Indicated. In the first (8 data) scenario the grade data used are likely to be biased towards the higher grade well drilled area compared to the same panel estimated using a minimum of 16 data from an expanded search that is likely to incorporate more lower grade data from outside the well drilled higher grade areas. Differences in the block support correction are only applicable to the Kupers because at the other prospects similar Block Support corrections were used in both the current and Ross Mining estimates. At Dawsons, Namachamata and Valehaichichi and block support correction of 96% of the total sample variability was used. This is less than the calculated 99% adjustment but consistent with reconciliation between the Valehaichichi MIK model and MP3 grade control model. At Kupers however the 1999 model used a block support correction of 91%. This has resulted in a higher grade at Kupers compared to Dawsons. The two deposits have similar grade distributions and there does not appear to be any more structure or continuity of grade at Kupers so the higher grade outcome looks unreasonable.

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17.2 Authors Validation—Mineral Resource 17.2.1 Introduction Golder completed estimation validations for four models at Gold Ridge: Kupers, Valehaichichi, Namachamata and Dawsons. These models were estimated using the Multiple Indicator Kriging (MIK) method by Hellman & Schofield Pty Ltd (H&S) in April 2008. This memorandum documents the block model validation carried by Golder on the models. It focuses on the adopted procedures and results.

17.2.2 Background Information H&S was engaged by Australian Solomons Gold Limited (ASG) to prepare new estimates of the gold resources for the four deposits of the Gold Ridge Project, Solomon Islands. The approach taken by H&S followed closely that used by H&S in the 1998 and 1999 resource estimates (Schofield 1998a, 1998b, James & Hague 1999). In completing the 2006 models, as in the previous resource estimates, no constraints were placed on the estimation process using primary geological domains. Secondary oxidation domains (oxide, transitional and fresh) are important criteria as they are directly related to metallurgical recovery and so were used as the control to sub-divide data for statistical analysis, variography and grade estimation. The Gold Ridge resource estimates were originally completed in 2006 and the associated report (H&S, 2006) describes in detail the methodology used for those estimates. The estimates were then updated in 2008 (H&S, 2008) after a limited amount of additional diamond drilling had been completed. The methodology and parameters used in 2008 were the same as in 2006.

17.2.3 Data The total Gold Ridge exploration drill hole dataset comprises 449 diamond drill holes (DDH) and 755 Reverse Circulation (RC) holes. This data set was acquired collectively by Cyprus-Arimco, Ross Mining and Australian Solomons Gold from the late 1980’s to 2006. In addition to the exploration drilling a total of 2,672 grade control RC holes have been drilled. According to the latest H&S report, the differences between the grades obtained from the pre-Ross Mining RC drilling (historical) and diamond drilling indicates a significant bias on the historical RC data. These differences cannot be explained by the difference in sample volume. Assuming sampling and assaying of the two populations was equally good the variance of the two populations would differ but the mean grade of the samples should be the same. The difference between the two populations cannot be explained by short scale spatial continuity. This would require that the RC holes were consistently drilled into higher grade zones of mineralisation, whilst the diamond holes were drilled into weakly mineralised hangingwall and footwall zones. Drilling RC holes under wet drilling conditions and ‘‘grab’’ sampling wet RC sample bags indicate strongly that the problem is in the RC data. Wet drilling will remove fine grained particles from the sample. At Gold Ridge where clay alteration is well developed loss of clay fines will likely result in upgrading of the recovered sample. Subsequent ‘‘grab’’ sampling further degrades the quality of the sample sent for assay. It was recommended by H&S (H&S, 2008) that the old pre-Ross Mining RC data be removed from the data set used for resource modelling. Inclusion of the RC data would result in higher grade in the resource model than would otherwise be reported. The effect on the resource models of removing these RC holes will be greatest in Dawsons and Valehaichichi, where the proportion of this poor quality data is 23% and 39% of data respectively. It was also recommended by H&S (H&S, 2008) that the pre-Ross Mining RC holes should be selectively re-drilled with diamond drill core, and this was approved by ASG.

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17.2.4 Models The four models were estimated via the Multiple Indicator Kriging (MIK) method for recoverable resource. The method involves two steps: i) The histogram of grades based on composited sample support is calculated for each panel in the model for which there is sufficient data available. This histogram of grades is a direct result of Indicator Kriging using the indicator variogram model for multiple thresholds. This process is well described in Isaaks and Srivastava (1989, chapter 18). ii) An appropriate method of block support correction is used to calculate the histogram of grades within each panel, reflecting block support. The choice of panel size depends mainly on the drill hole spacing and the dimension of the expected minimum mining unit (SMU). It is usually sufficient to make the panel dimensions about the same as the broad drill hole spacing. With exception of Namachamata, a panel of 25 m ǂ 25 m ǂ 3 m was used. A panel of 8 m ǂ 25 m ǂ 3 m was used for Namachamata. For all models but Namachamata, the variance adjustment factor applied by H&S was 0.04 (96% of variance reduction). According to H&S, this factor accounts also for the information effect and was determined based on reconciliations with the grade control models. For Namachamata, a variance reduction factor of 0.01 (99% of variance reduction) was applied. No primary geological or structural domains have been used in the resource estimates for Namachamata, Kupers or Dawsons. At Valehaichichi, pit mapping has enabled a division of the assay data into two broad domains based on host rock lithology with well-bedded sedimentary breccias forming one domain and massive volcanic breccias another. This division also corresponds well to high and low grade assay populations. No constraints based on elevated grade cut-offs have been applied. Geological sub-domains based on oxidation types have been applied. Three sub-domains have been used, oxide, transitional and fresh. These sub-domains are important as they relate directly to metallurgical recovery. New surfaces defining these sub-domains have been created for Kupers and Namachamata from recovered ore characterisation logs. Only incomplete data was retrieved for Dawsons, so the original Ross Mining sub-domain surfaces were used. At Valehaichichi, most of the oxide and transitional material has been previously mined. The estimation of Au using MIK was performed in three passes. The first pass was designed to yield high confidence estimates as these were estimated from data relatively close to the blocks. The blocks estimated in the first pass were assigned as Measured resources. The second pass was set to estimate blocks which were not estimated in first pass due to their average distance from the neighbouring samples and/or due to the minimum number of samples required. The search ellipsoid of the second pass was wider than the one of the first pass. Blocks estimated in the second pass were set as Indicated resources. The remaining un-estimated blocks were estimated by the third pass, which used broader search distances and defined Inferred resources. No top-cutting or high-grade restraining strategies were applied. The MIK search strategy used for the Kupers, Namachamata and Dawsons models are presented in Table 17-44 while the one applied for the Valehaichichi model is presented in Table 17-45.

Table 17-44: MIK Search Strategy for the Kupers, Namachamata and Dawsons Models

Measured Indicated Inferred Minimum Data ...... 16 16 8 Maximum Data ...... 48 48 48 Minimum Octants ...... 4 4 2 Search Parameters X ...... 30 m 45 m 45 m Y ...... 30 m 45 m 45 m Z ...... 5 m 7.5 m 7.5 m

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Table 17-45: MIK Search Strategy for the Valehaichichi Model

Measured Indicated Inferred Minimum Data ...... 16 16 8 Maximum Data ...... 48 48 48 Minimum Octants ...... 4 4 2 Search Parameters X ...... 10 m 15 m 15 m Y ...... 30 m 45 m 45 m Z ...... 5 m 7.5 m 7.5 m

17.2.5 Data Provided to Golder The drill hole database encompassing the four deposits was provided to Golder in electronic format. The database consisted of three Microsoft Excel files including the drill holes performed prior to 2008, the 2008 drilling campaign and grade control data from the Valehaichichi deposit (Table 17-46). The four models were provided to Golder in Surpac format and as CSV files (Table 17-47). The CSV file for the Dawsons model was not contained in the data package provided to Golder. A description of the Surpac models was also provided, which contained the model limits, number of blocks along easting, northing and RL, block size, and field descriptions (Table 17-48). Figure 17-27 shows the drill hole data as well as the model extents for the Valehaichichi, Namachamata, Kupers and Dawsons models.

Table 17-46: Database Provided to Golder

File Size (KB) Date Time Resource_Database_pre2008.xls ...... 11,184 22/04/2008 9:36 PM Resource_Database_2008only.xls ...... 5,560 26/11/2008 5:34 PM Valehaichichi_ GC database.xls ...... 16,759 23/06/2000 10:07 AM

Table 17-47: Models Provided to Golder

File Size (KB) Date Time Kuper_Resmod_Nov08.csv ...... 1,183 26/11/2008 5:56 PM Namachamata_Resmod_2008.csv ...... 465 26/11/2008 5:57 PM Valhaichichi_Resmod_April2008.csv ...... 1,462 26/11/2008 6:01 PM val_hs_2010.mdl ...... 16,644 22/10/2010 4:14 PM nam_hs_2010.mdl ...... 3,225 08/11/2010 3:02 PM kupers_hs_2010.mdl ...... 9,531 06/01/2011 12:32 PM dawsons_hs_2010.mdl ...... 11,159 06/01/2011 12:34 PM

Table 17-48: Model’s Description Files

File Size (KB) Date Time dawsons_hs_2010.pdf ...... 10 20/01/2011 12:17 PM kupers_hs_2010.pdf ...... 10 20/01/2011 12:19 PM nam_hs_2010.pdf ...... 10 20/01/2011 12:22 PM val_hs_2010.pdf ...... 10 20/01/2011 12:23 PM

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21APR201112021176 Figure 17-27: Plan View of the Gold Ridge Project Models showing the Drill Hole Data and the Model Limits (Valehaichichi = Blue, Namachamata = Green, Kupers = Cyan, Dawsons = Red)

17.2.6 Block Model Validation: Assumptions The block model validation carried out by Golder is based on a number of factors and assumptions: • The block model validation was carried out globally as no weathering coding or surfaces were available. • The modelling area domaining in the database was carried out by using the easting and northing coordinates limits, as the database provided to Golder presented no flagging for the modelling areas.

17.2.7 Block Model Validation: Methodology Statistical and visual assessment of the block models were undertaken to assess successful application of the grade estimation throughout the various estimation passes. This validation was performed to ensure that the model estimates performed as expected. As a general comment, the validations generally only determine whether the kriging has performed as expected. Acceptable validation results do not necessarily mean the model is correct or derived from the right estimation approach. It only means the model is a reasonable representation of the data used and the estimation method applied. Other issues such as the relationship between the model selectivity assumptions and mining practices are equally as important when determining the appropriateness of the resource estimate. For the four models, visual and statistical validations were undertaken. The block model validation procedure included four steps: • on-screen visual validation (E-type, i.e. the average block grade) • global statistical assessment of grade estimates (E-type) • semi-local statistical assessment of grade estimates (E-type) through swath analysis, and • grade-tonnage curves comparison between the MIK models and data at multiple grade cut-offs through the Discrete Gaussian change of support model.

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The sections below present a brief description of the methodology involved in each step of the block model validation carried out on the Gold Ridge models.

On-screen Visual Validation (E-type) An on-screen validation between samples and blocks was performed on each model. The on-screen validation process involved comparing block estimates (E-type) and composites grades in sections.

Global Statistical Assessment of Grade Estimates (E-type) The global mean grade of block model estimates (E-type) was checked to assess reproduction of the declustered mean grade of the data (2 m composites) and also to validate for obvious interpolation errors such as incorrect sample selection for estimation of individual domains.

Semi-local Statistical Assessment of Grade Estimates (E-type) through Swath Analysis Swath plots are used to assess the block model estimates (E-type) for global bias. The estimates should have a close relationship to the drill hole composite data used for estimation. The plots are useful for assessing average grade conformance, and also to detect for any obvious interpolation issues. The relationship between model and sample panel averages was assessed in the form of scatter plots and Q-Q plots. This allows some assessment of the smoothing effect of the performed interpolation. The process involved averaging both the blocks and samples in panels of 25 m (easting) by 25 m (northing) by 6 m RL. Conformance of the model and sample average grades was assessed in the form of easting, northing and RL swaths of the panel averages. In the plots, the curves represent the average grades from samples (orange) and model (blue) across easting, northing and RL. The bar graphs correspond to the number of samples (orange) and blocks (blue) across those main directions. Graphs for the four models are presented in the following sections.

Grade-tonnage Curve Comparison between the MIK Models and Data through the Discrete Gaussian Change of Support Model Grade-tonnage curves were generated from the declustered sample data using the Discrete Gaussian (DG) change of support model. The block model grade-tonnage curve was compared to the DG-derived curve for various variance reduction factors. In these graphs, the MIK-derived curves (blue) should overprint the data-derived curves (red). Grade-tonnage curves for the four models are presented in the following sections.

17.2.8 Block Model Validation: Results The following sections present a summary of the block model validation results for each model.

17.2.8.1 Kupers No significant issues were observed during the visual model validation as shows the example section of Figure 17-28.

21APR201114523380 Figure 17-28: Visual Assessment of Grades Estimates of Kupers Model on Section 40160 mN Facing N (Clipping of Ǆ20 m)

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Table 17-49 presents the global statistical assessment for Kupers. This assessment checks the reproduction of the mean (declustered) grade of the composite data against the E-type (ave_au) of the MIK model over the global domain. This is shown by MIK/DH (%) and should be close to 100%. This provides an indication that the estimates are not globally biased. On average, the model is within acceptable conformance as it overstates the Au grade by around 9%, which is within acceptable limits.

Table 17-49: Global Statistical Assessment—Kupers

2 m Composites (declustered) Block Model Actual Variance Mean Variance Variance Count Mean (g/t) (g/t)2 Count (g/t) (g/t)2 MIK/DH (%) Adjustment 15293 0.68 6.50 42388 0.74 0.60 109.44 0.092 For Kupers, the declustered 2 m composites were modelled via the DG change of support model using variance reduction factors of 0.1 and 0.04. The resulting grade-tonnage curves were plotted against the grade-tonnage curve from the MIK model (Figure 17-29). For Kupers, the MIK model does not reflect the variance reduction factor applied by H&S (0.04). Instead, the MIK model reflects reasonably well the data after the DG change of support using an adjustment factor of 0.1.

21APR201123393845 Figure 17-29: Grade-Tonnage Curves of the Data (red) and Block Model (blue) for Kupers using a Variance Adjustment Factor of 0.1 (left) and 0.04 (right) The swath validation plots for Kupers are displayed in Figure 17-30. The model appears to follow reasonably well the trends of the data apart from some high-grade spikes in the data observed along the RL direction.

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17.2.8.2 Valehaichichi No significant issues were observed during the visual model validation as shown in the example section of Figure 17-31.

21APR201114551536 Figure 17-31: Visual Assessment of Grades Estimates of Valehaichichi Model on Section 23995 mN Facing N (Clipping of Ǆ20 m) Table 17-49 presents the global statistical assessment for Valehaichichi. In this case, on average the model presents good conformance with the declustered data with the MIK/DH = 99.83%.

Table 17-50: Global Statistical Assessment—Valehaichichi

2 m Composites (declustered) Block Model Actual Mean Variance Mean Variance MIK/DH Variance Count (g/t) (g/t)(2) Count (g/t) (g/t)(2) (%) Adjustment 11230 0.58 5.37 49185 0.58 0.37 99.83 0.070 For Valehaichichi, the declustered 2 m composites were modelled via the DG change of support model using variance reduction factors of 0.1 and 0.04. The resulting grade-tonnage curves were plotted against the grade-tonnage curve from the MIK model (Figure 17-32). For Valehaichichi, the MIK model does not reflect the variance reduction factor applied by H&S (0.04). Instead, the MIK model reflects reasonably well the data after the DG change of support using an adjustment factor of 0.1.

21APR201123400513 Figure 17-32: Grade-Tonnage Curves of the Data (red) and Block Model (blue) for Valehaichichi using a Variance Adjustment Factor of 0.1 (left) and 0.04 (right) The swath validation plots for Valehaichichi are displayed in Figure 17-33. The model appears to follow reasonably well the trends of the data apart from some high-grade peaks in the data observed along the RL direction (230 m RL and 380 m RL)

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17.2.8.3 Namachamata No significant issues were observed during the visual model validation, as shown in Figure 17-34.

21APR201123354016 Figure 17-34: Visual Assessment of Grades Estimates of Namachamata Model on Section 40615 mN Facing N (Clipping of Ǆ20 m) Table 17-49 present the global statistical assessment for Namachamata. In this case, on average the model understates the data by around 4%. For Namachamata, no declustering weights were applied since the declustered mean grade was considerably lower than the MIK average grade (Table 17-52). For that reason, all the remaining validation checks were carried out without using declustering weights.

Table 17-51: Global Statistical Assessment—Namachamata

2 m Composites (declustered) Block Model Actual Mean Variance Mean Variance MIK/DH Variance Count (g/t) (g/t)2 Count (g/t) (g/t)2 (%) Adjustment 6813 0.91 14.55 9511 0.87 1.26 96.03 0.086

Table 17-52: Global Statistical Assessment (declustered)—Namachamata

2 m Composites (declustered) Block Model Actual Mean Variance Mean Variance MIK/DH Variance Coun (g/t) (g/t)2 Count (g/t) (g/t)2 (%) Adjustment 6813 0.49 9.62 9511 0.87 1.26 177.55 0.087

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For Namachamata, the 2 m composites (non-declustered) were modelled via the DG change of support model using variance reduction factors of 0.1 and 0.01. The resulting grade-tonnage curves were plotted against the grade-tonnage curve from the MIK model (Figure 17-32). For Namachamata, the MIK model does not reflect the variance reduction factor applied by H&S (0.01). Instead, the MIK model reflects reasonably well the data after the DG change of support using an adjustment factor of 0.1.

21APR201112033013 Figure 17-35: Grade-Tonnage Curves of the Data (red) and Block Model (blue) for Namachamata using a Variance Adjustment Factor of 0.1 (left) and 0.01 (right) The swath validation plots for Namachamata are displayed in Figure 17-33. The model seems to follow reasonably well the trends of the data apart from one high-grade spike in the data observed along the Northing direction.

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17.2.8.4 Dawsons No significant issues were observed during the visual model validation as displays the example section of (Figure 17-37).

21APR201112011361 Figure 17-37: Visual Assessment of Grades Estimates of Dawsons Model on Section 39600 mN Facing N (Clipping of Ǆ20 m) Table 17-49 present the global statistical assessment for Dawsons. On average, the model presents good conformance being the MIK/DH = 101.79%. For Dawsons, no declustering weights were applied since the declustered mean grade was considerably lower than the MIK average grade (Table 17-54). For that reason, all the remaining validation checks were carried out without using declustering weights.

Table 17-53: Global Statistical Assessment—Dawsons

2 m Composites (declustered) Block Model Actual Mean Variance Mean Variance MIK/DH Variance Count (g/t) (g/t)(2) Count (g/t) (g/t)(2) (%) Adjustment 10499 0.79 33.67 49525 0.80 0.83 101.78 0.025

Table 17-54: Global Statistical Assessment (declustered)—Dawsons

2 m Composites (declustered) Block Model Actual Mean Variance Mean Variance MIK/DH Variance Count (g/t) (g/t)(2) Count (g/t) (g/t)(2) (%) Adjustment 10499 0.66 15.82 49525 0.80 0.83 121.21 0.052 For Dawsons, the 2 m composites were modelled via the DG change of support model using variance reduction factors of 0.1 and 0.04. The resulting grade-tonnage curves were plotted against the grade- tonnage curve from the MIK model (Figure 17-29). For Dawsons, the MIK model does reflect the variance reduction factor applied by H&S (0.04). MIK Validation: SMU Support MIK Validation: SMU Support

25APR201111363231 25APR201111380928 Figure 17-38: Grade-Tonnage Curves of the Data (red) and Block Model (blue) for Dawsons using a Variance Adjustment Factor of 0.1 (left) and 0.04 (right) The swath validation plots for Dawsons are displayed in Figure 17-30. The model follows reasonably well the trends of the data.

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17.2.9 Resource Classification The classification approach applied for the Gold Ridge Mineral Resource was purely quantitative. It was fully based on the kriging strategy parameters such as distance and minimum number of samples, as shown in Table 17-44 and Table 17-45 Because of that, there are some isolated Measured resource blocks amongst Indicated resource blocks, which affects the continuity of Measured resource (Figure 17-40). Blocks were classified as Measured resource as long as the first pass search criteria was met. As the search criteria did not consider a maximum number of samples per drill hole, there were cases where a couple (or a single) drill holes defined Measured resources (Figure 17-41 and Figure 17-42). As mentioned above, this resulted in odd looking models in terms of continuity and logic for the Measured resources. However, the Indicated and Inferred resources look reasonable in terms of continuity, and drilling density. For engineering purposes, when considering Measured or Indicated resources (amongst many other parameters) to define the optimum pit design, the resource classification should be adequate at most cases (Figure 17-43).

21APR201112013091 Figure 17-40: Section 40160 mN (facing N) showing the Discontinuous Measured Resource Classification at Kupers Model (Clipping of Ǆ20 m, Measured=red, Indicated=yellow, Inferred=blue)

21APR201112014834 Figure 17-41: Section 40520 mN (facing N) showing some Isolated and Discontinuous Measured Resource Classification Blocks at Namachamata Model (Clipping of Ǆ20 m, Measured=red, Indicated=yellow, Inferred=blue)

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21APR201114522105 Figure 17-42: Section 39655 mN (facing N) showing some Isolated and Discontinuous Measured Resource Classification Blocks at Dawsons Model (Clipping of Ǆ20 m, Measured=red, Indicated=yellow, Inferred=blue)

21APR201114521570 Figure 17-43: Section 40690 mN (facing N) showing the Continuity of the Measured and Indicated Resources, when Viewed as a Single Unit, at Namachamata Model (Clipping of Ǆ20 m, Measured=red, Indicated=yellow, Inferred=blue)

17.2.10 Conclusions and Recommendations The models appear to be a consistent and a reasonable representation of the data. However, according to the validation checks, the amount of SMU variance reduction stated to be applied in three of the models does not correspond to the theoretical tests carried out using the DG change of support model. The variance reduction included in the Valehaichichi, Kupers and Namachamata models appear to be less than reported by H&S. According to the theoretical tests, the variance reduction of these models is more likely to be 90% instead of 96% (Valehaichichi and Kupers) or 99% (Namachamata). Additionally, the variance reduction factors incorporated in the models seems to be too harsh, leading to less selective models than they should be. From calculations using the reported variograms (for some selected models and cases), as well as the SMU size and the information effect, the variance reduction is likely to be between 0.3 and 0.2 (70% to 80% variance reduction). This is corroborated by Golder’s experience with similar types of mineralisation and grade variability. On the grade estimation side, Golder notes that no top-cut or high-grade restraining techniques were applied. The high-grade restraining approach would prevent smearing high-grade across the volume defined by the search ellipsoid. The top-cutting would affect the conditional cumulative distribution function (ccdf) when back transforming the probabilities (of being greater than the selected cut-offs, output of MIK) to grades. This would attenuate the estimated grade on the vicinity of extreme high-grade samples. With regards to the resource classification, the resource classification was fully based on geometric parameters and no mention was made to other important components such as QAQC and metallurgical factors. The Measured resource is discontinuous in parts of the models. However, for engineering purposes when considering Measured or Indicated resources (amongst many other parameters) to define the optimum pit design, the resource classification should be adequate at most cases. The Indicated and Inferred resources look reasonable in terms of continuity, and drilling density

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17.3 Mineral Reserves Section 17.3 has been prepared by Golder Associates under the supervision of John Battista, Associate, Principal Mining Engineer. The latest Ore Reserves estimation for Gold Ridge was completed by IMC in June 2010, in accordance with JORC standards. The JORC Probable Ore Reserves have been directly transferred to Probable Mineral Reserves as prescribed by National Instrument 43-101. The Mineral Reserves at Gold Ridge are based on detailed pit designs for each of the four deposits which comprise the current project (Valehaichichi, Namachamata, Kupers and Dawsons). These pit designs were completed using optimised pit shells as a guide. The pit shells were derived from the geological block models for each deposit, with economic, cost, pit slope and metallurgical modifying factors applied. Industry standard Whittle Four-X software was used to complete the pit optimisation process. The key parameters used for the Whittle optimisations are summarised in Table 17-55:

Table 17-55: Key Whittle Optimisation Parameters

Parameter Unit Quantity Gold Price ...... US$/oz 850 Mining Cost (Ore & Waste) ...... US$/t 3.51 Processing Costs ...... US$/t 16.35 Mining Recovery ...... % 95% Overall Pit Slope (including ramps) ...... Degrees 47.5 Royalty ...... % of revenue 3% Selling Cost ...... US$/gram 0.105 Discount Rate ...... % 10% Mill throughput ...... Dry Mt per annum 2.5

The detailed pit designs for the four pits are shown in Figure 17-44.

22APR201119333878 Figure 17-44: Detailed Pit Designs—Oblique view

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Figure 17-45 shows a plan view of the four pits together with the planned access roads between the pits. In North to South order the pits are Valehaichichi, Namachamata, Kupers and Dawsons).

21APR201114540035 Figure 17-45: Detailed Pit Designs—Plan View

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Overall pit slopes range from a minimum of around 35 degrees to a maximum of around 55 degrees including batters, safety berms and ramps. Recovered Au grade is calculated into the block model and is dependent on in situ Au grade, material type (oxide/transitional/fresh) and arsenic content. The economic cut-off grade has been determined by applying the appropriate mining costs, mining recovery, mill recovery, process costs and gold price. The cut-off grades used for the Mineral Reserves are between 0.7 g/t Au and 0.9 g/t Au, depending on pit and material type. There is some allowance for dilution inherent within the block modelling process for all of the models and therefore no additional dilution factors were used in the optimisation process. The Mineral Reserves for Gold Ridge are summarised by Reserve category in Table 17-56.

Table 17-56: Gold Ridge Mineral Reserves by Category

In situ Predicted Au Recovered Au Tonnage Grade Au Recovery Grade Mineral Reserve Category dry kt g/t % g/t Proved ...... — — — — Probable ...... 23 253 1.71 0.82 1.40 Proved + Probable ...... 23 253 1.71 0.82 1.40 Waste ...... 33 443 The stated Mineral Reserves are included in the Mineral Resources as detailed in Section 17.1. Although there are both Measured and Indicated Mineral Resources for Gold Ridge, the economically recoverable portion of the Measured Mineral Resources has not been converted to Proven Mineral Reserves at this point in time. The economically mineable portion of the Measured Mineral Resources has instead been included as Probable Mineral Reserves. This is due to the relatively limited metallurgical testwork that had been completed at the time of the Mineral Reserves estimation in June 2010, with resultant uncertainty in the gold recovery assumptions used. In particular, the effects of arsenic on gold recovery were not considered to be sufficiently understood for Proven Mineral Reserves (as discussed further in Section 16.0). Further metallurgical testwork and mineralogical analysis has been completed since the Mineral Reserves were published and it is anticipated that once the processing plant is commissioned and actual metallurgical recoveries can be better assessed, the level of confidence in metallurgical recovery predictions will be sufficient for the economically recoverable portion of the Measured Mineral Resources to be converted to Proven Mineral Reserves. Table 17-57 summarises the individual Mineral Reserves for each for the four pits that currently comprise the Gold Ridge project.

Table 17-57: Gold Ridge Mineral Reserves by Pit

Waste Ore In situ Predicted Au Recovered Au Tonnage Tonnage Grade Au Recovery Grade Pit dry kt dry kt g/t % g/t Valehaichichi ...... 7 813 5 003 1.66 76% 1.25 Namachamata ...... 2 283 1 269 2.27 70% 1.59 Kupers ...... 11 137 6 847 1.76 82% 1.44 Dawsons ...... 12 210 10 134 1.65 87% 1.43 Total ...... 33 443 23 253 1.72 82% 1.40

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18.0 MINING AND MINERAL PROCESSING OPERATIONS 18.1 Mining 18.1.1 Operations Mining operations re-commenced at Gold Ridge in November 2010, Access to the Valehaichichi pit has been re-established and a new access road to the Namachamata pit has been installed. Ore mined from the pits since re-commencement has been stockpiled on the ROM pad in preparation for feeding into the processing plant once commissioning of the plant commences. As at February 2010 over 130 kt of ore had been stockpiled on the ROM pad. The mining fleet at Gold Ridge consists of the following major items of equipment: • Cat 345 excavators • Cat 385 excavators • Cat 740 Articulated Haul Trucks • Cat 775 Rigid Body Haul Trucks • Sandvik Pantera DP1500 blasthole drill rigs.

18.1.2 Life of Mine Schedule A Life of Mine production schedule has been prepared by Allied Gold staff, based on the 2010 Mineral Reserves pits. A summary of this schedule is shown in Table 18-1.

Table 18-1: Gold Ridge Life of Mine Schedule Summary

Item Units Q4 ‘10 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 LoM Total Total Tonnes to Mill ... dry kt 0 1 953 2 500 2 500 2 501 2 502 2 502 2 503 2 503 2 461 1 329 23 254 Total Tonnes to/from RoM ...... dry kt 101 0 0 0 0 0 0 0 0 0 ǁ101 0 Total Grade ...... g/t 1.55 1.80 1.83 1.88 1.64 1.60 1.68 1.73 1.64 1.73 1.58 1.72 Total Recovered Grade . g/t 1.15 1.30 1.49 1.62 1.39 1.33 1.42 1.37 1.31 1.41 1.28 1.40 Recovery ...... % 74% 72% 81% 86% 85% 83% 85% 79% 80% 81% 81% 82% Total Recovered Metal .. koz 0 82 120 130 112 107 114 110 105 111 55 1 046 Total Waste Moved .... dry kt 300 2 492 3 310 3 371 3 446 3 665 3 604 3 606 3 504 3 636 2 509 33 443 Total Material Moved ... dry kt 400 4 445 5 810 5 871 5 947 6 167 6 107 6 109 6 007 6 097 3 838 56 798

18.1.3 Reconciliation The processing plant has not yet been commissioned so a detailed reconciliation of mined/grade control to mill tonnes and grades is not yet possible.

18.2 Mineral Processing 18.2.1 Introduction The Gold Ridge processing plant operated from August 1998 until the plant was shut down due to civil unrest in June 2000. The process plant flowsheet was developed by Ross Mining Limited (RML), and the process plant detailed design and construction was undertaken by JR Engineering. Ore treated in the plant was all sourced from an open cut mining operation at Valehaichichi, one of the four gold resources identified. The other known deposits consisting of Kupers, Dawson and Namachamata, were not developed during this period. The plant was designed to treat 2.0 Mtpa. In the last 12 months of operation the plant treated above design throughput achieving a throughput of 2.47 Mt

at an average grind size of P80 114 microns. As part of the feasibility studies to re-open the mine, process reviews were undertaken by ASG and Ausenco personnel to highlight opportunities and problem areas within the process plant. A number of improvements were identified in the studies for inclusion in the refurbished plant design. In 2010 GRES commenced an EPC design and construct contract with GRML for upgrading and refurbishment of the Gold Ridge plant and associated facilities. The basis for developing the refurbishment scope of work was to reinstate the plant to its original configuration and standard of

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operability and maintainability, and also to include some upgrading and improvements as to reflect current best practice technology.

18.2.2 Plant Improvements Process design changes and plant improvements included in the refurbished plant design include. • Plant Throughput. Based on the comminution results obtained in feasibility studies, and previous plant performance data, the design capacity of the process plant was increased to an ore

throughput rate of 2.5 Mtpa for a coarser design grind size of P80 125 microns using the existing SAG mill. • Crushing. The ROM bin was modified to produce steeper sidewalls in order to better handle sticky, clayey ore, and the crushed ore conveyor width was increased to minimise spillage and handle the increased throughput. • Gravity Recovery. The method of upgrading gravity concentrate was changed from physical separation methods using shaking tables, to intensive leaching using an Acacia intensive cyanidation reactor circuit equipped with a dedicated electrowinning cell. • Leaching Capacity. The total CIP leaching capacity was increased by installation of three new tanks to increase the total retention time in the leach and adsorption circuits from 24 hours to 30 hours at the increased design throughput. • Tailings Thickening. A tailings thickener for leached tailings was included in the circuit. The use of a tailings thickener has the following advantages: • Reduction in the quantity of return water to be pumped up-hill from the return water dam, and therefore reduced power consumption • Better utilisation of cyanide by recycling overflow containing free cyanide direct back to the grinding circuit

• Reduction in the weak acid dissociable cyanide (CNWAD) load to the cyanide detoxification circuit resulting in a reduction of the quantity of cyanide detoxification reagents necessary for achieving

target CNWAD levels. • Detoxification of Leached Tailings. A detoxification circuit was deemed necessary to meet internationally accepted cyanide levels for tailing discharge and associated environmental impacts. • Lime slaking. Installation of a lime slaking mill was included to provide better utilisation of quicklime in leaching, and to prepare lime in a suitable reagent form for the detoxification circuit.

18.2.3 Current Plant Design The refurbished process plant is designed to treat 2.5 Mtpa of open cut ore at a design milling rate of 313 t/h. The plant comprises of the following main process areas and equipment: • Direct dump and loader reclaim to a ROM ore bin with subsequent scalping by vibrating grizzly feeder ahead of a 1400 ǂ 1050 mm primary jaw crusher. Crushed product will direct feed by conveyor to the grinding circuit • Single stage 5490 mm (inside shell diameter) ǂ 8650 mm (effective grinding length) SAG mill with 4700 kW variable speed, slip energy recovery drive operating in closed circuit with cyclones • A gravity recovery circuit treating a screened bleed from cyclone underflow in a 48 inch centrifugal concentrator • A gravity concentrate treatment circuit consisting of an intensive cyanidation reactor equipped with a dedicated electrowinning cell for gravity gold recovery • Eight stage CIP circuit consisting of three leach tanks and six adsorption tanks, each tank measuring 16.1 m diameter ǂ 12.1 m high and an average effective volume of 2,240 m3 per tank • Tailings thickening in a 28 m diameter high rate thickener

• Detoxification of thickened tailings in a one stage reactor using air/SO2 technology with additions of copper sulphate, sodium metabisulphite and lime

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• Anglo American Research Laboratory (AARL) carbon stripping circuit with 6.0 t batch capacity in separate acid wash and elution columns with dual pregnant eluate tanks and four electrowinning cells fitted in parallel • Final gold recovery from cathode sludge using filtration, calcination, and then smelting in a LPG fired tilting barring furnace • Carbon regeneration in a 500 kg/h vertical LPG fired reactivation kiln • Reagent facilities for mixing, storage and distribution for quicklime, cyanide, caustic, hydrochloric acid, sodium metabisulphite and copper sulphate • Other facilities included storage and distribution for oxygen, compressed air, LPG and diesel, and • Water management and reticulation systems for raw, potable, fire and process water.

18.2.4 Current Plant Status The plant construction schedule is very near completion. Wet ore commissioning of the process plant commenced on 28th February 2011. First gold was poured on 8th March 2011. Remaining critical construction items required for ore commissioning are planned to be completed in the first half of February 2011.

22APR201103082254 Figure 18-1: SAG Mill and Cyclone Classification Circuits As part of the GRES contract, process performance guarantees are in place for: • Ore handling system throughput. • Wet plant throughput and adsorption efficiency. • Tailings thickener and detoxification system throughput. • Elution circuit capacity Approximately 130,000 tonnes of mined Valehaichichi ore have been stockpiled on the ROM pad to commence ore treatment.

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22APR201119315384 Figure 18-2: Leach Circuit View Showing New Tanks and Tails Thickener

18.2.5 Processing Operating Costs Predicted mean unit processing costs as extracted from the GRML budget for a treatment rate of 2.5 Mt/a post-ramp up are presented in Table 18-2.

Table 18-2: Processing Costs

Processing Cost Cost Centre A$/t milled Personnel ...... 1.04 Reagents and Consumables ...... 5.43 Admin and Equipment Hire ...... 0.15 Maintenance ...... 2.30 Power Station Contract ...... 1.14 Power Station Fuel and Other ...... 4.70 Total Processing ...... 14.75

18.2.6 General and Administration Costs Predicted mean G&A unit costs as extracted from the GRML budget for a treatment rate of 2.5 Mt/a post-ramp up are presented in Table 18-3

Table 18-3: General and Administration Costs

G&A Cost Cost Centre A$/t milled Personnel Salaries and On-Costs ...... 0.94 Personnel Accommodation & Other ...... 0.21 Warehouse and Supply ...... 0.67 Site Security Services ...... 0.62 Insurance, Refining, Transport, Other ...... 1.97 Corporate Office ...... 3.47 Total General and Administration ...... 7.87

18.3 Expertise of Technical Staff Having spent a considerable amount of time working with Allied Gold staff at Gold Ridge and corporate level, the authors have formed the view that the management and technical teams employed at Gold Ridge, as well as the technical staff employed at corporate level by Allied Gold, have sufficient expertise to enable them to effectively manage the operations on a day-to-day and ongoing basis.

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19.0 OTHER RELEVANT DATA AND INFORMATION 19.1 Infrastructure 19.1.1 Introduction The infrastructure and site services at the mine experienced significant damage from vandalism and neglect following closure of the plant as a result of civil unrest in year 2000. Most of the cladding, flooring and electrical components were removed from plant buildings. All infrastructure items required by the mine and process plant have been refurbished or replaced over the last eighteen months in order to be ready for commencement of full production from the mine in 2011. On-site infrastructure and site services include: power supply and distribution; tailings and tailings decant water storage and management; LPG storage and supply; diesel fuel storage and supply; air supply and processing reagent services; administration office and site buildings; warehouse and workshops; communications; accommodation village, water and sewerage treatment and security fencing. Off-site infrastructure includes site access roads, raw water supply, and village relocation.

19.1.2 Power Power is supplied to the mine from a diesel fired power station under a Build Own and Operate (BOO) power generation contract with Aggreko Generated Rentals Pty Ltd (Aggreko). The contract is based on a power supply of 8,150 kW for the mine operation and infrastructure. The cost of power to GRML is based on a fixed monthly fee for rental, and a variable fee per kWh for power consumed. Diesel fuel, fuel storage, potable water and other consumables required for power generation are supplied by GRML. The power generation plant consists of twelve 1250 kVA 3 phase, 415 Volt generator sets with two 6.3 MVA 415/11 KV transformers and an 11 KV HV switch room. The power plant is now fully operational and the plant is supplying the pre-commissioning base power load to the site.

21APR201114520899 Figure 19-1: Aggrekko Generation Plant in Operation Production of hydropower as an energy source for Guadalcanal is under consideration by the International Finance Corporation (IFC). The Gold Ridge mine would be a potential customer for this alternative power source should it be implemented, and therefore there is a possibility that power costs at the mine site will be reduced in long term future operations.

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19.1.3 Water and Sewerage The previous raw water pump station was found to be of suitable capacity for the upgraded plant requirements but the system required extensive electrical refurbishment as well as minor repairs to pipe work. This work is near complete and is expected to be ready for plant commissioning. The previous water treatment plant has been refurbished and commissioned. The process water pond is located adjacent to the process plant and was relined and pumps and pipework refurbished and replaced as required. The potable water supply for the accommodation village is gravity fed from the Mbita water source.

19.1.4 Administration Office and Site Buildings A new administration office was constructed on previous building foundations and is now in service. Other buildings installed or refurbished, dependent on quality of remaining structures, were laboratory, plant control, crib room and ablution, environmental, training and site security. The previous plant workshop and warehouse was re-clad and the overhead crane refurbished as part of the early refurbishment budget. The previous heavy vehicle workshop located opposite the crushing plant was refurbished and is currently in use to support mining operations. A new larger heavy vehicle workshop is being installed closer to the plant which will allow the current area near the crusher to be utilised for future ore storage. The previous office and workshop facilities near Honiara were closed and all administration is now conducted in site facilities.

19.1.5 Accommodation Village The remaining structures at the accommodation village from previous operations were demolished and replaced with new buildings. Where possible, the new buildings were positioned on the original footings and foundations to minimise construction, plumbing and electrical installation costs. Other new buildings were installed in the village to increase the size of the original camp. Senior accommodation consists of ensuite style rooms in blocks of four bedrooms, while junior accommodation consist of blocks of five bunkhouse style bedrooms with adjacent common ablution and laundry facilities. Total sleeping accommodation is over 200 beds to accommodate the peak manpower during plant commissioning. A quality kitchen and messing facility capable of catering up to 250 persons has been installed and is operated GRML. A wet-mess building is under construction.

22APR201119302130 Figure 19-2: Newly Constructed Senior and Junior Accommodation Blocks

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19.1.6 Village Relocation In May 2006 an agreement was reached between ASG and the Gold Ridge communities and landowners for the relocation of all communities and artisan miners within the mine lease to new areas outside the lease. This agreement allowed for adequate local style accommodation in the resettlement villages with suitable roads for pedestrian and vehicle access to main roads to the new villages. The village relocation program is underway and local personnel are relocating from the mine lease areas as the new houses are completed and handed over. The program is well behind schedule due to delays by the contractor but a total of 287 houses are planned to be completed by mid year 2011. The delays are not expected to affect commissioning and ramp up of the operation.

22APR201119311833 Figure 19-3: Newly Constructed Houses Ready for Use

19.2 Environmental and Social Review Summary An Environmental and Social Review Summary (ESRS) report for the project was prepared by the International Finance Corporation (IFC) as part of its environmental and social due diligence ahead of its investment as part of the project financing arrangements being originally made by ASG. The IFCs involvement requires post-finance project assurance related to the Social, Environmental, and Health and Safety IFC Safeguard Policies relevant to the project. As part of the financing agreement, the IFC requires frequent monitoring of compliance to the IFC Performance Standards along with the previously disclosed GRML Economic and Social Action Plans on an ongoing basis.

19.2.1 External/Independent Compliance Monitoring GRML has committed to external/independent environmental, and health and safety compliance monitoring and reporting in order to provide an additional level of transparency to the implementation of environmental and health and safety management programs. All the IFC Performance Standards apply except PS7 (Indigenous Peoples). PS7 is not considered to apply as the ethnic Melanesian groups living in the vicinity of the mine are integrated into the social fabric and political structure of Guadalcanal Island and the Solomon Islands more generally, and are not considered to be especially marginalised or vulnerable vis-a-vis` other social groupings on the Island. Social, Environmental Health and Safety Guidelines applicable to this investment include Mining Guidelines (2007) and General Guidelines (2007). The specific standards which form the basis for external/independent compliance monitoring are presented in the Environmental and Social Impact documentation disclosed in 2009. Specific IFC Policies are described in detail on the IFC Website www.ifc.org/sustainability In addition, GRML has committed to external/independent compliance monitoring of environmental and health and safety compliance and performance as described below.

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19.2.2 External/Independent Compliance Monitoring Approach The overall approach to external/independent compliance monitoring is to use a risk based approach where the ultimate goal is to improve social, environmental, and health and safety performance and management. The external process will be implemented primarily to achieve the following: • Identify areas and degrees of compliance or non-compliance with the IFC’s Performance Standards and Guidelines and the project’s commitment to culturally appropriate informed consultation. • Provide practical guidance and advice to the projects’ internal field teams on how to solve any problems identified. To identify areas and degrees of compliance or non-compliance with the applicable IFC Performance Standards and guidelines. • Identify specific issues and/or conduct follow-up and closure of issues identified in previous compliance monitoring visits. The external independent compliance monitoring will be conducted by international social, environmental and health and safety experts. The compliance monitoring schedule will allow for multiple visits each year through to the end of calendar year 2012. At that point in time, a determination will be made by GRML and IFC, based on recommendations from the external monitors, on the appropriate future frequency of visits. GRML have committed to develop and manage a detailed internal monitoring system related to social, environmental and health and safety performance. The monitoring systems along with the key indicators, reporting, and corrective action management systems will serve as a critical external/ independent compliance monitoring information resource. External assessors may advise GRML from time to time regarding recommended internal monitoring system changes in order to continuously improve internal monitoring data applicability and utility for managing social, environmental and health and safety risks.

20.0 INTERPRETATION AND CONCLUSIONS 20.1 Resources The shortcomings of early drilling and sampling have been addressed adequately and the drill sample database used in the resource estimation seems robust. The current resource estimation is a reasonable reflection of the sample database and geological understanding of the deposit. There is potential to improve the selectivity of the resource by reconsidering the variance reductions applied to the models.

20.2 Reserves The mining fleet installed at Gold Ridge is considered appropriate for the application and should provide sufficient capacity to achieve the production rates set out in the Life of Mine plan. In reporting the Mineral Reserves, appropriate account has been taken of the uncertainty associated with the plant recovery, by converting Measure Mineral Resources within the pit design to Probable Mineral Reserves, rather than Proven Mineral Reserves.

20.3 Metallurgy and Processing The Gold Ridge processing plant operated from August 1998 until the plant was shut down due to civil unrest in June 2000. The plant has recently been refurbished and upgraded. A number of process design changes and plant improvements have been incorporated in the refurbished plant design to increase plant capacity, and mitigate previous operational issues. Ore commissioning of the upgraded plant commenced in March 2011. Metallurgical testwork on Gold Ridge fresh and transitional ore samples has shown that the ore types are partially refractory, and that gold recovery is dependent on arsenic grade of feed. Further variability testing will be required to confirm the gold recovery relationship. Gold recovery in initial operations is predicted to be in the range 72-74% with ore from the Valehaichichi and Namachamata pits. Recovery is then predicted to increase to 80-85% as increasing amounts of Kupers and Dawsons are processed.

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21.0 RECOMMENDATIONS 21.1 Resource When the exploration and mine drilling is again fully operational the drilling and sampling processes should be reviewed to ensure they have been implemented as documented and are applicable to the Gold Ridge geology and environment. New drilling should be routinely validated against the current models and trigger updates where changes are noted. An investigation into the variance reductions applied in modelling should be considered as a possible path to improving the selectivity of the models and consequently any mine planning based on these models.

21.2 Reserve Once the mine is again fully operational the optimisation parameters used in the reserve definition, especially recovery, should be validated against production data.

21.3 Metallurgy and Processing Variability metallurgical testing should be undertaken on drill samples and plant feed samples to further develop gold recovery prediction relationships, and minimise variations in plant metallurgical recovery.

22.0 REFERENCES The following documents were reviewed during the Authors’ research.

Author Date Title ALD ...... 11.01.2011 ASG_GR_dhdb_plot_plusGC.rar (exploration and grade control) ALS ...... 2011 A4COA_BR10126073_62097-13161996.pdf ALS ...... 2012 A4COA_TV10127213_62097-13135682.pdf ALS ...... 2013 A4COA_TV10140183_62097-13272803.pdf ALS ...... 2014 A4COA_TV10144630_62097-13868325.pdf ALS ...... 2015 A4COA_TV10148852_62097-13809187.pdf ALS ...... 2016 A4COA_TV10153449_62097-13679902.pdf ALS ...... 2017 A4COA_TV10154387_62097-13758508.pdf ALS ...... 2018 A4COA_TV10162267_62097-13844457.pdf ALS ...... 2019 A4QC_BR10126073_62097-13162000.pdf ALS ...... 2020 A4QC_TV10127213_62097-13135686.pdf ALS ...... 2021 A4QC_TV10134792_62097-13135191.pdf ALS ...... 2022 A4QC_TV10140183_62097-13272807.pdf ALS ...... 2023 A4QC_TV10154387_62097-13758512.pdf ALS ...... 2010 A4QC_TV10162267_62097-13844461.pdf ASG ...... 27.11.2009 091127 TSF Dewatering Approval.pdf ASG ...... 20.9.1998 55 ASG—SPL 194.pdf (prospecting licence) ASG ...... 31.5.2006 Agreement between GRML and MDA4[1].pdf ASG ...... 2000 DGD_GRML GRM—Mining Department Reopening Plan— 2000 Jun.pdf ASG ...... 23.5.1997 Environmental Security Performance Guarantee.pdf ASG ...... 26.5.1997 F & P Guarantee.pdf ASG ...... 2004 Final SPA 171204.DOC (sale document) ASG ...... 2004 Gold Ridge CDC Agm (17 Dec 04 ASG Exec).pdf (sale document) ASG ...... 9.5.2006 Goldridge db maintenance.doc ASG ...... 2005 GreenHillsBFS_Proposal_Jan2005_FINAL.pdf (Ausenco BFS proposal) ASG ...... 31.5.2006 Kolobisi Agreement May 31 2006.pdf ASG ...... 12.3.2010 Letter from Minister of mines on Status of Approvals, licenses, Permits.pdf

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Author Date Title ASG ...... 1.4.1997 Mining Royalty (Gold Ridge) Fund Directions 1997.pdf ASG ...... 26.9.2006 MoU between GRML and Chavuchavu Tribe.pdf ASG ...... 23.5.1997 MoU between GRML and Guadalcanal Province.pdf ASG ...... 18.11.2005 MOU with Ngailibiu Tribe[1].pdf ASG ...... 6.8.2007 Permit to Divert Water.pdf ASG ...... 14.3.1997 Road Access Licence.pdf ASG ...... 7.3.1997 Solomon Islands Electricity Authority Licence.pdf ASG ...... 31.5.2006 Subsidiary Agreement between GRML and GRCLA.pdf ASG ...... 31.5.2006 Subsidiary Agreement between GRML and GRCLA[1].pdf ASG/H&S ...... 37803 DRILLMANUAL.doc ASG/H&S ...... 7.2003 HandS_logging_codes.pdf (Diamond Drill Core and Reverse Circulation Logging Manual) Ausenco ...... 39232 Gold Ridge Project Feasibility Study Central Bank SI ...... 22.8.1997 Central Bank Export System Offshore Accounts.pdf Delta Gold ...... 7.7.2000 Force Majeure Notice Gold Ridge.pdf Delta Gold ...... 27.9.2000 Gold Ridge Resource Report GRCLA ...... 22.12.2009 Agreement Bita Water.pdf GRCLA ...... 2010 Agreement for Sale of Ravua Land.pdf GRCLA ...... — Attachment 1 to MOU for Chavuchavu.doc GRCLA ...... 1.5.2006 Catering Agreement between GRML and Jericho community.pdf GRCLA ...... 4.10.1996 Development Agreement of GRM between Ross Mining GRML GRCLA.pdf GRCLA ...... 1.5.2006 Draft Agreement May 2006.doc (GOLD RIDGE MINING LIMITED (GRML) AND GOLD RIDGE COMMUNITY AND LANDOWNER ASSOCIATION (GRCLA)) GRCLA ...... 12.7.2000 GRML_Memo_Gold Ridge Community Relations to June 9 2000_20000712.pdf GRCLA ...... 12.7.2000 GRML_Memo_Issues to be resolved with Government & Landowners prior to restart of operations 20000712.pdf GRCLA ...... 6.2006 GRML-GRCLA Agreement ANNEXURE C June 2006.xls (tambu sites) GRCLA ...... 12.2005 Heads of agreement GRML, GRCLA December 15 2005.doc GRCLA ...... 6.2004 Landowners Report 2004.pdf GRCLA ...... 28.6.1996 MOU between RM & GRCLA 1996.pdf GRML ...... 16.11.2010 Agenda—Women’s Taskforce Meeting GRML ...... 2008 Agreement for Bubulake Relocation Village.pdf GRML ...... 4.6.1999 Gold Ridge Headlease.pdf GRML ...... 10.3.1997 Gold Ridge Sub Lease Lot 1-14.pdf GRML ...... 10.3.1997 Gold Ridge Sub Lease Lot 15.pdf GRML ...... 22.5.1997 Grant of A Fixed Term Estate 22 May 1997.pdf GRML ...... 23.5.1997 Memorandum of Understanding 1997 May 23.pdf GRML ...... 9.6.2005 MOU with Jericho (Obu Obu)Community GRML ...... 15.11.2010 Relocation Agreement Dam Village GRML ...... 13.11.2010 Sample—DAILY PRESTART REPORT.doc GRML ...... 14.11.2010 Sample—Safety Prestart GRML ...... 15.9.2010 Sample -Joint Meeting GRML and GR community Landowners Council H&S ...... 5.201 HS_Summary_Resource_Report_May2010.doc H&S? ...... 2003? Mill to model reconciliation 1998 to 2000_im.xls H&S ...... 2008 Estimation of Recoverable Gold Resources Gold Ridge Project H&S ...... 39753 Estimation of Recoverable Gold Resources Gold Ridge Project (update) IMC ...... 23.6.2010 20100623_Gold Ridge_Final_Pit_Design.pdf IMC ...... 30.6.2010 20100630_Gold_Ridge_Ore_Reserves.pdf

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Author Date Title KTDA ...... 23.8.2009 260809 Service Contract Agreement.pdf (Kolobosi Tailings Dam Association) KTDA ...... 2.2.2010 Service Contract—Independent Environmental Auditor signed final.pdf MDA ...... 31.5.2006 Agreement between GRML and MDA.pdf MDA ...... 12.12.2005 Heads of agreement GRML, Matepono Downstream Association December 12 2005.doc Metcon ...... 11.2008 Metcon Charivunga Sample Report.pdf OREAS ...... 7.2005 OREAS_15Pa.pdf OREAS ...... 5.2007 OREAS_60b.pdf OREAS ...... 5.2007 OREAS_61d.pdf Ross ...... 25.6.1996 Ross Mining_GRP Geology_and_ Resource Evaluation.pdf RPA ...... 1.5.2006 TECHNICAL REPORT ON THE GOLD RIDGE PROJECT, SOLOMON ISLANDS SI Electricity Authority . . . 1997 Electricity Licence.pdf SIG ...... 1981 Employment Act 1981[1].pdf SIG ...... 1998 Environment Act 1998[1].pdf SIG ...... 1980 Environmental Health Act 1980[1].pdf SIG ...... 1964 Explosives Act 1964 and Regs[1].pdf SIG ...... 1969 Forest Resources and Timber Utilisation Act 1969[1].pdf SIG ...... 1960 Labour Act 1960[1].pdf SIG ...... 1968 Land and Titles Act 1968[1].pdf SIG ...... 6.1996 Land Valuation Report.tif SIG ...... 1996 Mines and Minerals Act 1996[1].pdf SIG ...... 2008 Mines and Minerals Amendment Act 2008[1].pdf SIG ...... 1939 Petroleum Act 1939 and Rules[1].pdf SIG ...... 1964 River Waters Act 1964[1].pdf SIG ...... 1982 Safety at Work Act 1982[1].pdf SIG ...... 1979 SI 50K Geology_GU_09_Gold Ridge.pdf SIG ...... 22.5.1997 Tetre Headlease Agreement.pdf (50 yr lease Port and Landing) SIG ...... 1990 The Mines and Minerals Act 1990.pdf SIG ...... 23.5.1997 Timber Licence.pdf SIG/GRML ...... 4.10.1996 Agreement Relating to the Development of GRM between SIG and GRCLA.pdf SIG/GRML ...... 12.5.2005 Assignment Agreement SIG Ross Mining GRML ASG.pdf SIG/GRML ...... 7.3.1997 Gold Ridge Mine Agreement.pdf SIG/GRML ...... 12.3.1997 Mining Lease 1-1997.pdf SIG/GRML ...... 23.7.2005 MoU reinstatement of Import Duties Good Tax Exemptions SIG and ASG.pdf SIG/GRML ...... 23.5.1997 Security Performance Guarantee (Environmental) & Parent (1).pdf SIG/GRML ...... 2005(?) Salons Ref 36 Legal Notice No. 41.pdf (extract income tax act) SIG/GRML ...... 18.7.2006 Upstream Ngalimbiu Bridge Demolition Agreement.pdf TerraSearch ...... 40299 SolomonIslandsTenements.pdf

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Key to authors: ALD ...... Allied Gold Ltd ALS ...... Australian Laboratory Services ASG ...... Australian Solomon Gold Ltd Central bank SI ...... Central Bank Solomon Islands GRCLA ...... Gold Ridge Committee and Landowners Association GRML ...... Gold Ridge Mining Limited H&S ...... Hellman and Schofield IMC...... International Mining Consultants KTDA ...... Kolobosi Tailings Dam Association MDA...... Matepono Downstream Association Metcon ...... Metcon Laboratories OREAS ...... Ore research and Exploration (Assay Standards) Ross ...... Ross Mining RPA...... Roscoe Postle Associates Inc SI Electricity Authority ...... Solomon Islands Electricity Authority SIG ...... Solomon Islands Government

Websites accessed during the Authors’ research: http://www.ifc.org accessed 15 February 2011 http://www.solomonsgold.com.au accessed February 2011 http://www.alliedgold.com.au accessed February 2011 http://www.solomonstarnews.com/news/national/8929-we-hit-half-a-million accessed February 2011 http://www.paclii.org/sb/legis/num_act/ accessed 13 February 2011

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23.0 QUALIFIED PERSONS STATEMENTS CERTIFICATION OF QUALIFIED PERSON I, Antony Showell, do hereby certify that: • I am a graduate from Adelaide University, Australia, with a Bachelor of Applied Science degree in Metallurgy in 1969. • I have practiced my profession of metallurgist for 38 years since graduation. • I am a Fellow of The Australasian Institute of Mining and Metallurgy. • I am currently Principal of Tony Showell and Associates Pty Ltd, and I am also Principal Consulting Metallurgist of BatteryLimits Pty Ltd, 5/162 Colin St, West Perth, Australia. Prior to my current positions I was Manager Optimisation for the engineering company GRD Minproc Ltd for two years, and before that Principal Consultant and Operations Manager of the metallurgical consultancy Normet Pty Ltd for 13 years. • My relevant experience with respect to the Gold Ridge Gold Project includes metallurgical and processing consulting to numerous gold projects in Australia and South East Asia. • I have read the definition of ‘‘qualified person’’ as set out in National Instrument 43-101 (‘‘NI 43-101’’) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfil the requirements to be a qualified person for the purpose of NI 43-101. • I have prepared Sections 16.0, 18.0, 19.0, 20.3, 21.3, 22.0, 23.0 of the of the Competent Persons’ Report titled ‘‘Gold Ridge Gold Project, Guadalcanal, Solomon Islands’’, dated April 2011. • I have visited the Gold Ridge Project site in January 2011. • I have no personal knowledge, as of the date of this Certificate, of any material fact or change, which is not reflected in this report, the omission to disclose that would make this report misleading. • Neither I, nor any affiliated entity of mine is at present, or under an agreement, arrangement or understanding expects to become, an insider, associate, affiliated entity or employee Allied Ltd, and/or any associated or affiliated entities. • I have read the NI 43-101 and Form 43-101F1, and CIM Standards on Mineral Resources and Reserves, and have prepared the Competent Persons’ report in compliance with NI 43-101 and Form 43-101F1. Signed and dated this 17th day of June, 2011 at Perth, Australia

signed Antony Showell

Signature

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CERTIFICATE OF QUALIFIED PERSON I, Stephen Godfrey, of Perth, Australia do hereby certify that: • I am a Senior Resource Geologist with Golder Associates Pty Ltd., 1 Havelock Street, West Perth, Australia. • I am a graduate of The University of New England, NSW, Australia, B.Sc.(Hons), 1982. • I am a member in good standing of the Australian Institute of Mining and Metallurgists. • I have practiced my profession for 28 years since graduation. • My relevant experience with respect to the Gold Ridge Gold Project includes 20 years resource modelling of a variety of metalliferous projects including 8 years working with greenstone gold deposits. • I have read the definition of ‘‘qualified person’’ set out in National Instrument 43-101—Standards of Disclosure for Mineral Projects (‘‘NI 43-101’’) and certify that, by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I am a ‘‘qualified person’’ for the purposes of NI 43-101. • I am responsible for the preparation of Sections 11.0-15.0, 17.1-17.2, 20.1, 21.1, 22.0, 23.0 of the Competent Persons’ Report titled ‘‘Gold Ridge Gold Project, Guadalcanal, Solomon Islands’’, dated April 2011. • I have visited the Gold Ridge Mine site in January, 2011. • I have been involved with Allied Gold Limited since 2004, and the Gold Ridge Mine since 2010 as an independent geological consultant with Golder Associates Pty Ltd. • As of the date of this certificate, to the best of my knowledge, information and belief, the Competent Persons’ Report contains all scientific and technical information that is required to be disclosed to make the Competent Persons’ Report not misleading. • I am independent (as defined by Section 1.4 of NI 43-101) of Allied Gold Limited • I have read NI 43-101 and 43-101F1 and the Competent Persons’ Report has been prepared in compliance with that instrument and form. Signed and dated this 17th day of June, 2011 at Perth, Australia

signed Stephen Godfrey

Signature

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Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: OK11601A.;24 MERRILL CORPORATION PHARDIM//16-JUN-11 04:34 DISK106:[11ZBG1.11ZBG11601]OK11601A.;24 mrll_0909.fmt Free: 1960DM/0D Foot: 0D/ 0D VJ RSeq: 3 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 28335

CERTIFICATE OF QUALIFIED PERSON I, John Battista, of Perth, Australia do hereby certify that: • I am a Principal Mining Engineer with Golder Associates Pty Ltd., 1 Havelock Street, West Perth, Australia. • I am a graduate of the Western Australian School of Mines, Kalgoorlie, Western Australia (a branch of Curtin University of Technology), B.Eng.(Mining). • I am a member and Chartered Professional in good standing of the Australasian Institute of Mining and Metallurgy (AusIMM), Member number 105584. • I have practiced my profession for 21 years since graduation. • My relevant experience with respect to the Gold Ridge Project includes approximately 11 years’ experience in technical, mine operations and management positions in open pit gold mines, including two years as Senior Mine Planning Engineer at the Martha Hill gold mine in New Zealand, which is mining an epithermal gold deposit having similar mineralisation style to the Gold Ridge deposits. • I have read the definition of ‘‘qualified person’’ set out in National Instrument 43-101—Standards of Disclosure for Mineral Projects (‘‘NI 43-101’’) and certify that, by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I am a ‘‘qualified person’’ for the purposes of NI 43-101. • I am responsible for the preparation of Sections 17.3, 20.2, 21.2, 22.0, 23.0 of the Competent Persons’ Report titled ‘‘Gold Ridge Gold Project, Guadalcanal, Solomon Islands’’, dated April 2011. • I most recently personally inspected the Gold Ridge Gold Project in January 2011. • I have been involved with Allied Gold Limited since 2004, and the Gold Ridge Mine since 2010 as an independent mining engineering consultant with Golder Associates Pty Ltd. • As of the date of this certificate, to the best of my knowledge, information and belief, the Competent Persons’ Report contains all scientific and technical information that is required to be disclosed to make the Competent Persons’ Report not misleading. • I am independent (as defined by Section 1.4 of NI 43-101) of Allied Gold Limited. • I have read NI 43-101 and 43-101F1 and the Competent Persons’ Report has been prepared in compliance with that instrument and form. Signed and dated this 17th day of June, 2011 at Perth, Australia

signed John Battista

Signature

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Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: OK11601A.;24 MERRILL CORPORATION PHARDIM//16-JUN-11 04:34 DISK106:[11ZBG1.11ZBG11601]OO11601A.;3 mrll_0909.fmt Free: 3750DM/0D Foot: 0D/ 0D VJ RSeq: 1 Clr: 0 DISK024:[PAGER.PSTYLES]UNIVERSAL.BST;91 8 C Cs: 30047

At Golder Associates we strive to be the most respected global company Africa +27 11 254 4800 providing consulting, design, and construction services in earth, environment, and Asia +86 21 6258 5522 related areas of energy. Employee owned since our formation in 1960, our focus, Australasia +61 3 8862 3500 unique culture and operating environment offer opportunities and the freedom to Europe +356 21 42 30 20 excel, which attracts the leading specialists in our fields. Golder professionals take North America +1 800 275 3281 the time to build an understanding of client needs and the specific environments in South America +55 21 3095 9500 which they operate. We continue to expand our technical capabilities and have experienced steady growth with employees who operate from offices located [email protected] throughout Africa, Asia, Australasia, Europe, North America, and South America. www.golder.com

Golder Associates Pty Ltd Level 3, 1 Havelock Street West Perth, Western Australia 6005 Australia T: +61 8 9213 7600

21APR201110390875

Shiraz Prospectus Proj: P10616LON11 Job: 11ZBG11601 (11-10616-1) Page Dim: 8.250⍯ X 11.750⍯ Copy Dim: 38. X 62. File: OO11601A.;3