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Allied Gold in Agreed Takeover of Australia’s ASG will Create an Emerging Producer in Pacific Rim

Australian based Allied Gold (AIM: AGLD; ASX: ALD) announced an agreed offer to take over Australian Solomon Gold (TSX: SGA), saying the deal will create a company with 2.2 million ounces of reserves and 6.7 million ounces of resources. Investors have reacted positively to the news with shares rising in both Australia and London, with the AIM listed developer gaining almost 5% this morning in London.

The stock offer will see ASG shareholders receiving 0.85 Allied Gold shares for every one share in ASG and implies a value of C$0.403 per ASG share based on the closing price of Allied Gold shares on 16 September 2009. From Allied Gold’s perspective the offer represents 23% of Allied Gold's Issued Share Capital.

Following the takeover, Allied Gold intends to seek a listing on the Toronto Stock Exchange in addition to its current listing on London’s AIM market and the Australian Stock Exchange.

In today’s statement Allied Gold's executive chairman, Mark Caruso, commented on the increased value the potential new company would add to both sets of shareholders and highlighted the new company’s increasing foot-print “through Allied Gold's planned organic oxide and sulphide expansions and the Gold Ridge project development. Investors will have exposure to a portfolio of high quality gold assets with exploration upside and significant production within the Pacific Rim.”

Strategically an increasingly diversified portfolio of assets will enhance their joint production profile throughout their large reserve and resource base. The operating synergies gained along with its increased size will increase the new company’s capability to finance ASG’s Gold Ridge project and other future projects.

ASG’s board are unanimously in support of the proposed takeover along with ASG’s major shareholder, Resource Capital Fund III LP.

In summary Allied Gold’s Mark Caruso was confident that the proposed takeover would be successful, stating: “Given the unanimous support of the ASG board for the transaction and the pre-bid agreement entered into with RCF, a 49% shareholder in ASG, we are extremely confident Allied Gold will achieve majority ownership of ASG... We encourage all ASG shareholders to accept the offer, which provides a number of strong benefits to ASG shareholders.