PERTH (miningweekly.com) – TSX-, Aim- and ASX-listed Allied Gold would spend $32-million to increase its gold production at the Simberi mine, in Papua New Guinea, to 100 000 oz/y, it announced on Wednesday.

The company reported that it would expand the oxide processing circuit at the Simberi operation from its current two-million tons a year capacity to 3,5-million tons a year, by December 2011.

Although a number of options have been considered to increase production at the project, Allied said that the expansion of the oxide processing circuit to 3,5-million tons a year would be the most efficient in terms of immediate project delivery, incremental capital spend and investment payback.

The design work being conducted also ensured further expansion to five-million tons a year could be reconsidered in the future.

Allied noted that the expanded throughput to a nameplate capacity of 3,5-million tons a year would occur incrementally over the next 12 months, and added that oxide expansion construction works have already started on site.

Meanwhile, further reconnaissance exploration would also be conducted over the largely unexplored western area of the Simberi Island, for both oxide and sulphide mineralisation.

Allied said that it would consider an expansion of up to five-million tons capacity at the plant as part of a future combined oxide and sulphide processing circuit.

The gold miner was also nearing the finalisation of a prefeasibility study (PFS) examining options to mine the significant sulphide ore resources at Simberi. The sulphide PFS would deliver the investment basis for a decade-long production at Simberi, and development optionality.

Allied noted that the PFS has suggested a signed stage roaster treating 1,5-million tons of ore a year. A combined 3,5-million ton oxide, and 1,5-million ton sulphide circuit would produce around 200 000 oz/y of gold, providing confidence that Simberi could sustain a gold output of more than 200 000 oz/y for a minimum of ten years.

The miner said that a formal investment decision into the sulphide development would be subject to a bankable feasibility study, which is scheduled for 2012, with a two-year development time frame thereafter.