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Allied Nevada Gold's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Scott Caldwell

Thank you, Tracy. During the quarter the company achieved outstanding performance in the health safety and environmental areas. This excellent performance is a real credit to the men and women that work at Hycroft and our other development projects in the state. Production is expected to trend upward quarter-over-quarter and our adjusted cash cost per ounce will decline quarter-over-quarter. This is the mine plan that was developed last year and refined as we gained more knowledge on our equipment deliveries, and I’ll talk a little bit about that later.

Gold sales continued to lag production as metal inventories continued to build on carbon and other areas of the process stream. Obviously this build up in inventory adversely affected sales and revenue, and therefore earnings. The company is in discussions with third parties to process carbon offsite and we are also finalizing design [capper] cost estimates and we’ve begun the permitting process of our own modular onsite carbon strip circuit. This circuit could be operational in Q2 2013. Permitting is the critical path on that – it’s not equipment delivery or construction, it really is permitting.

Silver production continues to exceed expectations. The mine produced about 166,000 ounces of silver during the quarter, and that works out to a silver to gold ratio of about 5:1. Costs for the quarter were essentially as expected. The mine was in a high waste stripping phase; [striperation] was approximately 3:1. And as you know we’re a US corporation and therefore Allied is required to dispense all costs associated with production waste stripping.

Due to further delays with shipment of the third large hydraulic shovel, the mine was forced to operate smaller, more expensive loading units, increasing mining costs and adversely affecting our productivity of our [Hollis] fleet as well. The final large hydraulic shovel is due to arrive in Los Angeles this week and management believes the shovel will be operational in Q2 2012 – that’ll be sometime probably in June, so late in Q2 2012.

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