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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.
Wednesday, January 20, 2010

Shares up as Lihir Gold starts trawling for new CEO

by Mineweb.net company news image

While a lot cannot be read into that sort of minor price movement it was certainly against the reverse trend for shock announcements of chief executives going. Some analysts suggested that Hood should have fallen on his sword earlier.

Lihir Gold Ltd (ASX: LGL) has been able to generate strong profit from its epithermal gold mining operations on Lihir Island in Papua New Guinea and this has been a feather in Hood's cap. However his decision in 2006 to buy Ballarat Gold which held the old Ballarat goldfield in Victoria proved one of the worst gold investments by an Australian company in the past few years, if not the worst.

If the performance of Newcrest Mining Ltd on further mine developments in the Cadia region of New South Wales could be considered an Oscar, then the $A350 million ($US323.9 M) purchase of Ballarat in 2006 would stand out as the Golden Turkey Award.

Hood quit immediately on being informed his contract would not be renewed next September and the quest to find a replacement has begun. In the meantime, chief financial officer Phil Baker will be interim CEO.

Lihir has shed most of its workforce in Ballarat and the project is on the auction block but the company has not been stampeded with offers for an operation in modern timers that has also failed to perform for predecessor companies.

For all the problems with that project Lihir's overall performance in recent years has been good enough to withstand the Ballarat setback and its market valuation was currently about A$7.8 billion (US$7.21 billion).

Some analysts quoted after yesterday's tele-conference claimed Lihir should diversify away from a large dependence on PNG, however, Lihir stands out as one of the best gold projects in the Oceana region.

Hood's termination package includes A$3.6 million (US$3.33 million) in cash, including $1.3 million in lieu of share rights he would have been entitled to this year had his contract run its full term, and the right to 3.5 M shares.

While brickbats were thrown in the past year at Hood for Ballarat, the same should not apply to Lihir's purchase of Australian gold miner Equigold for A$1 billion (US$925 M) to move into the Ivory Coast with the operating Bonikro mine, and the Mount Rawdon mine in Queensland. He also led the $US860 M plant expansion at Lihir that lifted output capacity by 240,000 oz per annum.

Group production in 2009 was a record 1.2 million oz, which was above expectations.


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

 

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