Two weeks after completing a $160 million capital raising, Allied Gold has resolved a dispute with landowners at its PNG gold mine but become embroiled in a legal dispute with its former contractor, Perth-based Intermet Engineers.
In a statement today, Allied's executive chairman Mark Caruso announced that full production had resumed at its PNG mine site.
Minority land owners had staged protests at Allied's mine site by placing a cultural 'gorgor' that symbolises a stop work process. The gorgor has been removed and the dispute resolved allowing production at the site to be fully restored.
Mr Caruso said the stoppage in production was disappointing considering the company was on track for a record quarter of production.
The stoppage deferred at least 3,000 ounces of production; at 21 December 2009 the company had produced approximately 17,800oz of gold for the December quarter.
The company said it remains on track to deliver a significant increase in its annual production profile to in excess of 300,000 ozs by 2012.
Mr Caruso said he remained positive about PNG's development prospects but called for more government support.
"A broader education program is required surrounding the nation's accelerated growth profile by government involving landowners to ensure all stakeholders expectations do not become non commercial or operationally inhibitive thereby depriving the broader landowners and population of a stable royalty and social development framework." he said.
Allied Gold has earmarked a further $200 million for investment in PNG over the coming three years.
Meanwhile, in a writ filed at the Perth Supreme Court last month, Simberi Gold Company, a fully owned subsidiary of Allied Gold, is seeking damages for alleged breach of contract and alleged breaches of the Trade Practices Act by Intermet.
Intermet was contracted to design, procure and manage the construction of gold processing and related facilities for the Simberi Oxide Gold Project located on Simberi Island of PNG.
Simberi claims that Intermet is in breach of the express and implied terms of the contract and that they have engaged in false, misleading and deceptive conduct occasioning loss and damages for Simberi estimated at $12 million.
Intermet, a subsidiary of Sedgman Ltd, denies any liability for the claim and will be strenuously defending the proceedings. Intermet intends to pursue recovery of $1.2 million owed by Simberi to Intermet.
