Encouraging Results For The Hycroft Mill Expansion

RENO, NV - Allied Nevada Gold Corp. reported gold and silver production of 60,114 ounces and 412,506 ounces, respectively, in the first quarter of 2014, were in-line with expectations. Gold and silver ounces sold in the first quarter of 2014 were more than double that of the same period last year, up 118% and 132%, respectively. Adjusted cash costs per ounce of $808 in the first quarter of 2014 was as expected and below the annual guidance range. Net income was $0.3 million. Cash flow provided by operating activities was $23.8 million. Cash and cash equivalents at March 31, 2014, were $49.2 million, excluding the $19.5 million received from West Kirkland Mining in the second quarter.

In April, Allied released encouraging results for the Hycroft mill expansion prefeasibility study. Results of the prefeasibility study indicate an internal rate of return of 26.5% and a net present value of $1.7 billion. The prefeasibility study assumes a two-phase construction plan for the mill expansion and includes the ability to create dore onsite using the Ambient Alkaline Oxidation process to oxidize sulfide concentrate (as compared with the previous plan of selling concentrate).

Allied announced that it completed the sale of a 75% controlling interest in the Hasbrouck and Three Hills properties in April, to West Kirkland Mining for $20 million (including the US$500,000 non-refundable deposit received in the first quarter of 2014) pursuant to the Letter Agreement signed by the companies in January 2014.

Tons mined, ounces produced, and ounces sold during the first quarter of 2014 significantly increased from the comparable 2013 quarter. Operational increases were attributable to the heap leach expansion projects completed during the second half of 2013, which included a 21,500 gallons per minute ("gpm") Merrill-Crowe plant, the North leach pad, and the addition of two electric wire rope shovels. The 59,470 gold ounces sold during the first quarter of 2014 represented the third consecutive quarter Allied has met, or exceeded, its guidance as Hycroft continued to operate within its steady-state heap leach capacity. During the first quarter of 2014, silver ounces sold increased 132% as a result of increasing the use of the Merrill-Crowe process which yields higher silver recoveries and a higher concentration of silver in the dore when compared to that in the carbon columns. As a result, the silver to gold ounces sold ratio improved to 6.8:1 from the full-year 2013 ratio of 4.7:1.

During the first quarter of 2014, the company mined 10.8 million tons of production ore, which exceeded our planned ore tons and our waste to ore strip ratio was in line with the plan. Allied began a push back of the Brimstone pit in the first quarter of 2014 and, as the company prepared the area for mining, we assayed the blast holes to confirm waste versus ore. The results of the assays indicated that some of the tonnage that was originally designated as waste, due to the anticipated lower grade of the material in the block model, was found to have ore-grade material and thus was mined and placed on the leach pad. While this switch from waste to ore resulted in increased ore tonnage, it decreased the average grade of the ore mined in the first quarter of 2014. Overall, the costs per gold ounce placed on the leach pads during the first quarter of 2014 were just under expectation.

The crushing system was run intermittently through April 2014, until being shut down to enable the manufacturer to resolve an engineering design issue on the secondary and tertiary crushers. Allied is working with the manufacturer to implement a temporary solution, while the redesign is being completed and new mantles are cast, that will enable the company to begin crushing again by the end of the second quarter. However, Allied does not have a definitive date that they expect to restart the crushing system. The company has developed a modified mine plan that it believes could still enable it to meet our 2014 sales guidance, should Allied not be able to crush ore for the remainder of 2014.

Adjusted cash costs per ounce during the first quarter of 2014 was as expected, and below the annual guidance range. Allied anticipates costs to increase through the year and to average within its guidance range due to higher waste movement expected to be mined in the second, third and fourth quarters of 2014. Adjusted cash costs per ounce was higher than the first quarter of 2013 due to the negative impacts of a lower average silver price and increased production costs incurred during 2013 as the company ramped up production.

Allied continues to expect its 2014 full year metal sales will approximate 230,000 to 250,000 ounces of gold and 1.7 million to 2.0 million ounces of silver, despite the possibility that the company is not able to operate the crusher for the remainder of the year. Allied expects ounces sold in the second quarter of 2014 to approximate those in first quarter of 2014. Adjusted cash costs per ounce for 2014 are expected to be in the previously stated range of $825 to $850 per ounce (with silver as a byproduct credit).