NEWS - Resources & Energy
Published 9:07 AM, 29 Oct 2009
Last update 4:25 PM, 29 Oct 2009
Lihir Q3 gold production slips 7%, maintains full year guidance
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By a staff reporter, with Reuters
Lihir Gold Ltd reported a seven per cent fall in third quarter gold production, citing routine maintenance work at its flagship gold mine.
Australia's second-biggest gold company, with mines in Papua New Guinea and Africa, recorded third quarter output of 233,346 ounces, lower than the 250,110 ounces produced in the same period last year.
It maintained its full-year production guidance of between 1 million and 1.2 million ounces in 2009.
Shares in Lihir closed 2.61 per cent weaker at $2.98 against a 2.35 per cent fall in the benchmark index.benchmark index.
Strong production, rising cashflows
Lihir managing director, Arthur Hood, said the miner had enjoyed a strong production performance and rising cashflows.
He said Lihir's solid financial position and positive outlook for the future had enabled the company to commence payment of dividends to shareholders.
"The decision marks a major milestone in the development of the group, and reflects the strong progress achieved in rebuilding and reshaping the company over the past four years," Mr Hood said.
Lihir said an interim dividend of US1.5 cents per share will be paid on November 30, and the company aims to sustain dividend payments into the future.
"The improved reliability of production at Lihir Island, coupled with diversified income streams created by operating mines in three countries and the strengthening of the company’s balance sheet over recent years have provided the basis for the decision."
The miner also said that in the wake of the global financial crisis, Lihir is progressing with the establishment of long-term core debt facilities that will allow some financial flexibility and may enable a return of capital to shareholders in the future.
At the company's Lihir Island operations, material movements for the quarter totalled 11 million tonnes, which was nine per cent lower than the prior quarter due to unusually heavy rainfall in July.
Lihir said the rain affected haul road conditions and reduced bench turnover rates. Low drill availability in the quarter also caused shortages of blasted stock and led to lower tonnages of high grade ore.
The Lihir Island operation recorded a 36 per cent increase in ore reserves, up 7.5 million ounces to 28.8 million ounces, based on successful resource drilling and a rise in the long-term gold price assumption from $675 to $800 an ounce.
Mr Hood said the increase would lead directly to an increase in the value of the project for all Lihir shareholders.
Output
In Cote d'Ivoire, production the Bonikro operation was 32,000 ounces for the quarter, which was down on the prior quarter due to the transitioning of mining and processing from oxide ore to fresh, hard rock.
In Australia, the Mount Rawdon operation in Queensland lifted output to 30,400 ounces in the quarter, maintaining its consistent track record.
And at Ballarat, the process for the sale of the operation proceeded, with a number of attractive indicative offers received to date.
The sale should be completed early in the New Year.
Lihir says it sold 221,000 ounces of gold in the quarter, at an average realised cash price of $US955 and ounce, up from $US900 in the three months to June.
For the nine months to the end of September, 834,000 ounces were sold at an average price of $US906 oz.
Total cash costs per ounce are forecast to remain below $US400 per ounce for the year, excluding Ballarat.
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