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Production To Increase More Than 25% At Hycroft

7 February 2011

Wed Feb 2, 2011

RENO, NV – Allied Nevada Gold Corp. reported the final drill results from the 2010 exploration program at its wholly owned Hycroft mine located near Winnemucca, Nevada. Highlights from the remaining holes include Vortex infill hole 3461 with an interval of 134 meters of grading 2.63 g/t AuEq (1.16 g/t Au and 78.83 g/t Ag) and North Brimstone infill hole 3440 with an interval of 18 meters of material grading 2.30 g/t AuEq (1.56 g/t Au and 34.17 g/t Ag). The North Brimstone interval appears to be oxide mineralization and the Vortex interval appears to be within the oxide/sulfide transitional zone and carries into the sulfide material.

The results of 20 step out holes drilled in the Central Pit area indicate continuity of the oxide mineralization to the west of the pit. The intervals are similar to and potentially extend the current oxide resource. Highlights include hole 4110 with a 31 meter interval grading 2.26 g/t AuEq (1.68 g/t Au and 33.00 g/t Ag) and hole 3555 with a 47 meter interval grading 0.76 g/t AuEq (0.67 g/t Au and 5.03 g/t Ag).

The company previously reported the metallurgical test results of 38 additional composite samples from Hycroft mine. The Company has compiled these additional results into its metallurgical model for milling oxide and sulfide mineralization.

The model, which is now comprised of 137 composites including these new results, indicates average recoveries of 87% for gold and 82% for silver through a grind-flotation (to create a concentrate)-cyanidation of tailings circuit.

“We are confident that the ongoing positive test results indicate that we have completed a sufficient amount of testing to be comfortable with the flowsheet for the milling study,” commented Scott Caldwell, President & CEO.

“Management believes that, as we continue to optimize the metallurgical process, we should see improved metallurgical results for this project.”

Test work on the flotation concentrate from the first bulk sample (Brimstone mineralization) have shown: 30% gold and 83% silver recovery by direct cyanidation (leaching) of the flotation concentrate cleaned at a fine grind passing 325 mesh; 85% gold and 75% silver from roasting followed by cyanidation of the calcine – optimization of the reagent scheme and energy requirements are expected to improve recoveries; 98% gold and 93% silver from autoclaving followed by cyanidation; Improved concentration ratio of 33:1.

The results have not been optimized for reagent requirements, particle grind size and, in the case of roasting, energy requirements. Management expects that further test work and optimization of the oxidation processes may improve recoveries.

Management estimates that approximately 70% of the required metallurgical testing has been completed for the initial milling feasibility study, expected mid-2011.

The Company exceeded its guidance for 2010 gold sales with 102,000 ounces sold in 2010.

“Following a successful year in 2010, the Company looks forward to another exciting year in 2011 as the Company is expected to undergo a period of significant growth. “

“Plans for 2011 include advancing the Hycroft oxide operation as the company approaches its goal of producing over 250,000 ounces of gold per year by 2012 and completing the feasibility study for the Hycroft milling project. Outside of Hycroft, Allied Nevada intends to introduce a new property, Hasbrouck, to the project status with a preliminary economic assessment,” commented Caldwell.

“The paths we laid in 2010 form the strong financial and operational foundation from which we expect to transform the Company from a single asset junior mining company, to a fast growing mid-tier producer with a world-class flagship property and a pipeline of development projects and exploration properties. Allied Nevada has a strong balance sheet and an aggressive, staged growth profile which does not exist among many of our peers.”

“In 2011, we expect Hycroft to mine approximately 40 million tonnes of material, including 22 million tonnes of ore at average grades of 0.47 g/t gold. The average grades in 2011 are expected to be lower than the average grades mined in 2010 as the mine moves through a lower grade phase of mining of the Brimstone pit. The silver to gold production ratio is expected to be 2.5 ounces of silver for each ounce of gold,” Caldwell said.

Gold sales for 2011 are expected to be 125,000-135,000 ounces at an expected cost of sales per ounce of gold sold of $460-$490 (with silver as a byproduct credit). Production is expected to be weaker in the first half of 2011 and increase through the remainder of the year as the impact of mining more tonnes and placing more ore begins to take effect. The overall strip ratio for 2011 is expected to be less than 1:1. The strip ratio for the first quarter of 2011 is expected to be higher than 1:1, and will decline through the remainder of the year as the mine completes the stripping program commenced in 2010 to remove waste and allow access to an area of ore in the Brimstone pit and a new mining area, Cut 5. Cost of sales per ounce of gold sold is expected to be higher in 2011 as compared to 2010 due to higher commodity price expectations, the lower grade mining phase and an increased mining rate as the mine continues to ramp up the oxide expansion. Cost of sales per ounce of gold sold is calculated assuming a fuel price of $100/barrel. It is expected that a $10/barrel change in the world fuel price would results in a $1.8 million change in operating expense.

Caldwell said that company-wide exploration expense is expected to be $18.0 million with an additional $4.5 million being capitalized. The exploration program at Hycroft includes 60,000 meters of planned drilling with work in the first quarter focused on infill and engineering drilling for the milling feasibility study utilizing a fleet of eight to ten core and reverse circulation rigs. For the remainder of the year, we expect to use two to three rigs to test additional targets outside of the current known mineralization at Hycroft.

At Hasbrouck, exploration plans are focused on advancing the project along the development path with a goal of completing a preliminary economic assessment in early 2011. An exploration program has been designed at Wildcat to test a number of encouraging targets identified through the successful 2010 field program. Updated resource estimates for Hycroft and Hasbrouck are expected in February 2011.

The company’s address is 9790 Gateway Drive, Suite 200, Reno, NV 89521, (775) 358-4455, fax: (775) 358 4458, email: info@alliednevada.com.

Article from The Mining Record, www.miningrecord.com