Allied Nevada Gold Executive Insights: Mine Plan, Sales

On Monday, Allied Nevada Gold Corp (AMEX:ANV) reported its first quarter earnings and discussed the following topics in its earnings conference call. Take a look.

Mine Plan

Sam Crittenden – RBC Capital Markets: You guys mentioned that the tons mined this quarter were a little bit lower than what you were expecting in the mine plan. Could you give us a bit more color on what happened there?

Scott Caldwell – President, CEO and Director: Sure. The primary reason was the continued delay in the shovel, so we mined less over tons, less waste tons. With a higher unit cost we are forced to run the smaller loading units and it hurts all of your productivity and obviously your costs when you are running the old loaders as opposed to the new shovel. We have brought in a contractor who is operating now to get us back caught up and his real focus is on the capital program, the crusher excavation. April was a good month. We are basically back on plans for us, total tons moved which was up around 5 million – little under 5 million for the months and that’s kind of our target. We slowly creep up once we get this next large shovel and again the shovel supposed to dock in LA this week, takes about 10 days to get it on the site and another 10 days to two weeks to put it together and commission. So we are hoping that that thing is running sometime in June.

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Sam Crittenden – RBC Capital Markets: Can you tell us where your per ton mining costs was that these days?

Scott Caldwell – President, CEO and Director: May be you can – I don’t have the number with me but may be you could call Tracey she could talk to you a little bit about that. They are adverse and they are high because of the smaller loading and higher than what we like to see of course (indiscernible). So that Tracey can go through the details with you Sam. The effects fuel oil price being over a $100 a barrel although its below today, I hear its about $97 or so, I’m talking West Texas and also having to operate the older loading units has really impaired or adversely affected our unit mining cost.

Sam Crittenden – RBC Capital Markets: Just a question on the grades. This isn’t the first time that silver grades have come in higher than expected is this could you comment on why we might be seeing that and what’s going on there?

Scott Caldwell – President, CEO and Director: We are not quite sure, we know that we are seeing better than expected grades and it also certainly appears that we are seeing better than expected recoveries on the silver on the heat, we are running a series of column tests right now focusing of course on gold. But really focusing on silver, our typical column test. When you look at gold only we only run them for about 90 days and then we know have the material is going to behave with gold. With silver we are going to have to run them out over a year and we are about half way through those tests. And we are hoping that, maybe we got these series of columns who let us know what’s really going on with silver recovery, but personally I think it’s a function of both better than expected grades and better than expected recoveries. But we’ll know a lot more on the recovery in other six months or so. good news but just continues to get better and better we are also operating the heap a little bit differently than did in the past. They had no interest in recovering silver so we are keeping areas under leach, adding cyanide much, much longer than they did historically and the silver just keeps coming out of this or the gold is depleted after little less than a year but the silver keeps pouring out of the thing well over a year later.

Sam Crittenden – RBC Capital Markets: What percentage are you crushing right now?

Scott Caldwell – President, CEO and Director: We are crushing just around 10% we have two small crushers operating out there and that 10% material that’s crushed, we crush it to 80% minus 0.75 inch. That material is really used for construction on the heap. Essentially it is placed as over line or as we construct the leach paths so we are crushing all that material and using it in the construction process. So we lay the plastic down we put a meter of this crushed over line or over the plastic so the large rocks and the run of mine material don’t puncture the plastic.

Sales

Brian Christie – Desjardins Securities: Scott, maybe you could run through the ounces in inventory, went by pretty quick, and just wondering if I kind of do the quick math, it looks like there was about 27,000 ounces not on carbon. Just wondering when you expect that to kind of hit the sales line?

Stephen Jones – EVP & CFO: I’ll give the ounces, yeah. We do have 11,500 ounces on carbon and 331 and a total of 28,570, so your numbers were right, Brian.

Scott Caldwell – President, CEO and Director: On the sales part of the thing, the carbon worst case would be 12 months and that inventory could continue to grow by about 2,000 ounces, and I say worst case that’s how long it will take us to construct the permit, the design permit and construct our own carbon strip. So, if you do the math another 12 months and about 2,000 ounces a month, so that inventory could increase by 24,000 or so from where it is today sort of the 30,000 or 40,000. The other ounces that are in various stages along the processes line, we should start to pour those ounces and then sell those ounces later this quarter and continuing out for the rest of the quarter, so we are hoping to get those ounces sold or at least (Indiscernible) over the next nine months, so the rest, the remainder of the year.