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Additional information
Additional Information
Market: ASX
Sector: Gold Mining
Epic: LGL
News: Latest news
Web Site: Lihir Gold Limited
Other Articles: 19-02-201025-01-201020-01-2010

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Lihir Gold Limited

Lihir Gold Limited

Lihir Gold Limited is a gold producer in the Australasian region. The Company’s principal activities consist of the exploration for, development of and mining, processing and sale of gold assets. The company operates gold mines and processing facilities on the island of Lihir, 900 kilometers northeast of Port Moresby in New Ireland province of Papua New Guinea. In March 2007, the Company completed a merger with Victorian gold mining company Ballarat Goldfields NL. Ballarat is building an underground mine and process plant at the historic gold mining centre of Ballarat, 110 kilometers north-west of Melbourne in Victoria. In March 2008, the Company and Equigold NL announced the merger of their businesses.
Thursday, August 27, 2009

Lihir Gold more than doubles H1 underlying earnings, ups gold resources

by Lawrence Williams, Mineweb.net company news image

Australian headquartered Tier 1 gold miner, Lihir Gold (NASDAQ, TSX, ASX: LGL) is following the pattern of several other major mining companies in emphasising what it classifies as its underlying earnings performance - and in this case the figures show a more than healthy 130% increase for the half year ended June 30 compared with the same period a year ago,

beating analyst expectations.  Underlying earnings strip out extraordinary costs and gains and with the massive write-down on the company's Ballarat project, which it is trying to sell, and on which it expended huge amounts of money trying to turn into a viable operation, the overall result for the half year in strictly financial terms was a heavy loss of US$300.9 million (after the $409 million write-down and other abnormal charges and gains) compared with a profit of $36.5 million for the same period a year earlier.

But with Ballarat effectively behind it, it is probably fair to say the company is poised for further growth now that its West African operation in Cote d'Ivoire is running well and contributing nicely to group performance. 

The West African asset is the Bonikro gold operation which was acquired with the take-over of Equigold in 2008.  The company also acquired the Mt Rawdon gold mine in Queensland in the transaction. 

According to Lihir Managing Director, Arthur Hood "...the Equigold acquisition has proven to be an excellent transaction for LGL, bringing immediate gains, strong cashflows and exceptional exploration upside."

Altogether, Lihir's ‘underlying' profit was US$154.9 million for the half year, compared with $67.4 million a year earlier, but since then Bonikro has started up and is now contributing strongly to group gold production.

Overall, revenues rose by 97% to a record $564.1 million for the half year, due to an increase in gold sales, which rose 99% to 614,000 ounces. Also, unit costs declined significantly in the half, with total cash costs down 20% to US$350 per ounce, confirming LGL's position at the lower end of the global cash cost curve.

Lihir has also released significantly increased resource estimates for both Bonikro and for its flagship Lihir Island operation in Papua New Guinea.  At Lihir Island, measured and indicated resources increased 31% to 43 million ounces (a massive gold resource by any standards), and inferred resources are up 62% to 5.5 million ounces. In Côte d'Ivoire, Lihir lifted measured and indicated resources by 22% to 1.7 million ounces.

Total gold production for the group in the half year totalled a record 612,000 ounces, including 466,000 ounces from Lihir Island and 138,000 ounces from the former Equigold assets of Mt Rawdon in Queensland and Bonikro.

According to Mr Hood, the company is looking forward to ‘solid production' from the company's three producing mines (Lihir Island, Bonikro and Mt Rawdon) now that Ballarat is currently only on care and maintenance pending a sale and not producing.  Production is on target for a gold output of between 1 and 1.2 million ounces for the full year.

Providing the gold price at least remains at current levels and good cost controls can be maintained, Lihir should be able to maintain its good earnings growth record (at least in underlying terms!).

 

Mineweb is a web-based international mining publication focusing on mining financial and corporate news and comment.

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