Allied Gold of Australia has been granted a $US35 million or $A40 million loan by the World Bank to finance the redevelopment of the Gold Ridge Mine in Solomon Islands, which was abandoned following a violent ethnic fighting 10 years ago.

The loan from World Bank's International Finance Corporation, along with equity funding from Allied Gold, would be utilised to revive the idle mining site on the island of Guadalcanal and the $A150 million redevelopment fund would be the island nation's largest private sector investment and would be integrated on its national government's economic development plan.

The mining site delivered about 50 percent of Solomon's gross domestic product (GDP) when it first operated in 1998 but owner Delta Gold was forced to close down the site after only two years of production when violence and killings erupted between immigrant Malta Island villagers and the local islanders.

The violence escalated in 2003 and Australia had to send a contingent of its army force to pacify and stabilise the island.

Allied acquired the mining site in 2009 and projected that production would commence by the middle part of 2011 with an expected output of 943,000 ounces of gold over an eight-year period.

Solomon Islands Prime Minister Derek Sikua and Allied Gold chairman Mark Caruso held a ground-breaking earlier this year to formalise the start of the gold project.

Mr Caruso gave assurance on the island nation that his company would be responsible for the project site, stressing that he himself "will be responsible for the actions going forward and my company and all actions taken in the redevelopment."

The prime minister said that "the mine site has left fond memories of vibrant commercial activities before the destruction of this facility during the sad period of our country's history."

Allied Gold is currently operating a gold mine site in Papua New Guinea though the project is presently beset by conflicts with local landowners and the company has been accused of using Fijian mercenaries for its security.