Allied Nevada Defers Hycroft Mill Construction

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

Allied Nevada President and CEO, Randy Buffington said, While we remain confident in the operations team to deliver on the heap leach plan at Hycroft, it has not yet occurred and cash flow from operations remains weak, partly resulting from the sharp gold and silver price declines during the second quarter. These factors, as well as encouraging information on concentrate oxidation from our ongoing metallurgical program, have led to our decision to defer the construction of the mill at Hycroft until an revised feasibility study is completed. We will continue to work on optimizing the milling plan as well as finalizing the environmental permits necessary to operate the mill.

The concentrate oxidation work, which has been ongoing for several months, has focused on oxidizing sulfide concentrate on-site. We believe that this test work is leading us to an economical method of producing dorA on-site. When we first began exploring the potential for a milling scenario for Hycroft, we reviewed conventional oxidation processes, such as autoclaving and roasting. These plans also included concentrate sales to reduce capital spending. While these plans showed positive returns, we continued to review other forms of oxidation with the goal of improving the economics of the project. The first success came from a detailed study of the viability of the BIOX process.

The results of this research revealed that Hycroft concentrate is highly amenable to oxidation and that low oxidation rates yield recoveries of gold and silver in concentrate in the 90% range. This new information led us to evaluate other lower cost conventional methods to treat concentrate on-site, such as chlorination, fine-grind high-intensity cyanidation and ambient pressure alkaline oxidation. All three, along with BIOX, have shown promising results. Results to date have led us to focus on the latter method: ambient pressure alkaline oxidation. Utilization of onsite oxidation will involve reassessment of the flow sheet and will likely result in a significantly simplified mill scenario. To properly assess the benefits of this opportunity, a third party feasibility study will be undertaken once the metallurgical testing is completed, taking advantage of the engineering work completed and equipment purchased to date.

As a result of the decision to defer construction of the mill and to focus on completing optimization of the mill plan, we cannot estimate at this time a revised time frame, scope, or capital cost for different mill scenarios or revised long-term projections and estimates of production. We expect to make a decision on when the mill construction will be resumed once a new feasibility study is completed.

As a heap leach only operation, we expect to be able to mine existing heap leach reserves of approximately 2.0 million ounces of gold and 84.3 million ounces of silver for six years (starting in 2014) and process at a reduced rate through 2021. The average mining rate is expected to be 81.2 million total tons, including 33.5 million ore tons processed per year. Production is expected to average 225,000 ounces of gold and 2.7 million ounces of silver annually, through 2020, assuming heap leach operations only. We have additional heap leach mineralized material and the deposit remains open to the south with the potential for further expansion.

"I want to reiterate, we have done an exceptional amount of work in the past few months to identify and mitigate issues at Hycroft and have ensured the right people and plans are in place so that these issues do not continue. Sound operational performance is imperative and is the foundation of our business plans going forward. We have ample loading and hauling capacity, significant processing infrastructure coming online and a dedicated operating team in place. Postponing the mill build until we have a plan that we believe is the best for this deposit is a prudent decision at this juncture. This is a world-class, multimillion ounce, low-cost deposit located in the right jurisdiction and I am confident that this is a project that will be built, Buffington concluded."