Allied Nevada Gold Corp. to begin Operational Activities at Hycroft Mine

Allied Nevada Gold Corp has recently published a report saying that mining and leaching activities at the Company’s Hycroft Mine have commenced. Ore is being loaded on existing pads, with new pad construction scheduled for completion in the third quarter of 2008. Construction of a new site refinery has begun and is scheduled for completion late in the third quarter. The project will begin gold production in the fourth quarter of 2008, achieving full production capacity in 2009.

The Hycroft reactivation project near Winnemucca, Nevada, involves reopening the Brimstone oxide open pit mine which has been on care and maintenance since 1998. The plan will involve the mining and processing of ore with the heap leach extraction process. Gold and silver will be produced by utilizing a “run of mine” heap leach process and a Merrill Crowe gold recovery plant. Based upon historic gold recovery of Brimstone ores, gold recovery is estimated to average 56.6%.

On April 8, 2008, Allied Nevada completed a public offering of its common stock. The Company sold and issued 12,500,000 common shares and received total gross proceeds of CDN$ 65.6 million or approximately $64.6 million based upon the U.S./Canadian dollar exchange rate on the closing date. On April 18, 2008, Allied Nevada sold and issued an additional 1,875,000 common shares and received total gross proceeds of CDN$ 9.8 million or approximately $9.8 million based upon the U.S./Canadian exchange rate on the closing date pursuant to an over-allotment option exercised by the Company’s underwriters. Aggregate net cash proceeds from the common shares issued pursuant to the public offering and exercise of over-allotment option were approximately $69.0 million. These funds were obtained primarily for the reactivation of the Hycroft mine.

Total capital, working capital and operating costs of attaining full production capacity at Hycroft are expected to be approximately $56 million:

Approximately $22 million of these expenditures have been incurred to date, leaving approximately $34 million of expenditures remaining to achieve full production capacity.

The total capital expenditures of $33.5 million include the following major expenditures:

- $24.8 million for the purchase of a mining fleet and ancillary equipment. These expenditures include the costs of purchasing, transporting, and rebuilding the used Komatsu mining fleet, the lease of a production drill and a Komatsu dozer, and associated service vehicles and other ancillary equipment to operate a mine. The Komatsu dozer and the production drill have been acquired through capital leases.

- $3.0 million related to the mining of overburden. Total costs of removing the overburden from the brimstone deposit are expected to be approximately $10.0 million. Under US GAAP guidance, $3.0 million of this total expenditure will be capitalized and the remainder will be treated as an operating expense.

- $2.8 million for the expansion of the Brimstone leach pad. The expansion of the Brimstone leach pad has been split into three phases with the first phase being completed prior to the attainment of commercial production. The remaining two phases will be completed in 2009 and 2010 and will be funded from operating cash flows.

- $1.3 million for the construction of a new refinery.

- $1.6 million required for general site improvements and other capital.

The working capital requirements of $14.0 million include the work-in-process inventories maintained on the heap leach pad and the supplies inventory to operate the mine. The operating expenses of $8.0 million effectively represent the start-up expenditures and the mining of the overburden that must be expensed prior to attainment of commercial production. All of the information above can be found in the Company’s technical report entitled ” Technical Report – Hycroft Mine” dated June 18, 2008 prepared by Scott E. Wilson Consulting Inc.

“I am very excited about the team of professionals working at Hycroft. The construction and mining activities are going well, and we are on track to achieve our goal of gold production in the fourth quarter of this year, moving into commercial production in 2009. This is a real credit to the team working at Hycroft,” says Mike Doyle, Vice President of Allied Nevada Gold Corp.

Contacts:
Allied Nevada Gold Corp.
Scott Caldwell
(775) 358-4455

Source: Allied Nevada Gold Corp.