Allied Focuses On Hycroft Operations And Expansion

RENO, NV - Allied Nevada Gold Corp. reported financial and operating results for the three and nine months ended September 30, 2013.

The company is now producing gold and silver from the new 21,500 gallon per minute ("gpm") capacity Merrill-Crowe plant, which began processing in mid-October at a rate of 7,000 gpm and was fully commissioned by the end of October. Gold ounces sold in the third quarter of 2013 increased 51% to 52,713 ounces, compared to 34,851 ounces sold in the same period of 2012. The 52,713 gold ounces sold in the third quarter is an all-time quarterly record and represents an increase of 27%, or 11,201 gold ounces, from the second quarter of 2013. Hycroft mine produced 52,198 ounces of gold and 184,070 ounces of silver in the third quarter of 2013. Expected production and sales guidance for 2013 remains 175,000-200,000 ounces of gold and 0.9 to 1.1 million ounces of silver. Adjusted cash costs per ounce of $905 in the third quarter of 2013 were higher than anticipated primarily resulting from lower silver ounces sold and additional external refining costs for metal on carbon. While mining production costs on a unit basis have decreased in the last couple of months, the company expects that the effect of the reduction in workforce, and an increased silver to gold ounce production ratio with the operation of the new Merrill-Crowe refinery, will begin to benefit adjusted cash costs in the future.

The efforts of the operations team at Hycroft, combined with the increased ore under leach and additional processing capacity from the carbon columns have resulted in record gold sales and production for the third quarter of 2013. Silver ounces sold during the third quarter and first nine months of 2013 did not increase proportionate to the increase in gold ounces sold as approximately 62% and 44%, respectively, of gold ounces sold were recovered from solution processed through the carbon columns, which have low silver recoveries. The average silver ounces to gold ounces sold ratios for the third quarter and first nine months of 2013 were approximately 3.5:1 and 4.2:1, respectively, which Allied expects to increase to over 6.0:1 during the fourth quarter when solution is primarily processed through the new Merrill-Crowe plant. The new Merrill-Crowe plant began processing approximately 7,000 gpm of solution in mid-October and by the end of October was fully commissioned and capable of processing solution at its nameplate capacity of 21,500 gpm.

The total tons mined during the first nine months of 2013 increased approximately 57% from the 2012 period as a result of the expanded mobile mine equipment fleet. The company was able to achieve the third quarter 2013 target mining rate through efficiencies gained with the mobile equipment dispatch system and increased loading capacity of the two 73 cubic-yard electric rope shovels, all while operating with an approximately 24% leaner mine-site workforce. During the third quarter of 2013 our average mining cost per ton and average processing cost per ore ton decreased by 22% and 14%, respectively, from second quarter 2013 per ton amounts. Allied expects such efficiencies in mining and processing costs to continue during the remainder of 2013 which the company believes will positively impact the future production costs and adjusted cash costs per ounce.

As of September 30, 2013, the company had approximately 11.4 million square feet under leach, an increase of approximately 4.3 million square feet from June 30, 2013. The North leach pad continued to perform well during its first five months of operations as the overall metal recoveries, and timing thereof, remained consistent with expectations. During the third quarter of 2013 the company continued remediation efforts of the Lewis leach pad and received permits, which allowed it to begin introducing solution into wells that have been drilled into dry areas of the pad. Test work is ongoing to determine the timing of solution penetration and the rate in which metal production is expected to occur.

Although the third quarter 2013 mining and processing unit costs improved from previous periods, our adjusted cash costs per ounce were negatively impacted by lower silver ounces sold, increased production costs incurred during the first half of 2013, and additional external refining costs for carbon in-process inventories sold during the third quarter of 2013. Further, during the third quarter and first nine months of 2013 the average realized price per ounce of silver sold decreased by approximately $9 (30%) and $6 (19%), respectively, compared to the same periods of 2012, resulting in increases to the adjusted cash costs per ounce.

During the third quarter of 2013, the company continued construction on the crushing system, including the primary, secondary, and tertiary crushers, which it expects to commission in the fourth quarter of 2013. Assuming there are no delays in commissioning the crushing system, the company expects that the heap leach expansion project will be considered largely complete by the end of 2013.

In 2013, Allied expects to sell approximately 175,000 to 200,000 ounces of gold and 0.9 million to 1.1 million ounces of silver. The company expects to move 76.3 million tons of material, including 41.0 million tons of ore at average grades of 0.012 oz/ton gold and 0.25 oz/ton silver. The overall strip ratio for 2013 is expected to be 0.6:1. Adjusted cash costs per ounce for 2013 projected to be in the range of $800 to $825 (with silver as a byproduct credit).

Net income decreased 64% to $5.0 million or $0.05 per share in the third quarter of 2013 compared with $13.4 million or $0.15 per share in the same quarter in 2012. Net income in 2013 benefitted from additional ounces sold, but was negatively impacted by increased production costs, and lower realized metal prices. Net cash provided by operating activities in the third quarter of 2013 totaled $6.5 million, net cash used in investing activities was $88.1 million and net cash used in financing activities was $10.9 million, resulting in a net cash decrease of $92.5 million in the third quarter and a cash balance of $154.5 million at September 30, 2013.

Allied expects to continue to generate positive cash flow from operations in the fourth quarter of 2013.