Lihir says gold output jumps 87% with new mines

29-Jan-2009 Intellasia | Bloomberg | 7:01 AM Print This Post

Lihir Gold Ltd, the second-largest gold mining company on the Australian Stock Exchange, said fourth-quarter production rose 87% to a record after acquiring mines last year.

Output was 315,484 ounces in the three months ended December 31, the Port Moresby-based company said today in a statement. That compares with 168,370 ounces a year earlier and a UBS AG estimate of 278,000 ounces.

Lihir, which bought Equigold NL last year to add mines in Australia and the Ivory Coast, is also expanding its namesake Papua New Guinea mine to boost output after bullion prices rose the past eight-years. Gold may average higher for each of the next three-years, driven by rising demand and a declining dollar, Morgan Stanley said January 21.

“We expect the gold price will remain very strong and there’s every possibility it will rise again this year,” Chief Executive Officer Arthur Hood said on a conference call, citing a weak dollar and investors’ need to seek a haven amid the global recession.

Lihir rose as much as 5.3% in Sydney before closing 1.7% higher at A$3.08, giving it a market value of A$6.74 billion (US$4.49 billion).

Production may rise 13% to more than 1 million ounces this year, Hood said. The Lihir Islandmine may produce between 770,000 and 840,000 ounces, he said.

Lihir is also benefiting from the decline in the Australian dollar as it cuts production costs, Chief Financial Officer Phil Baker said on the call. It has no plans to hedge against the currency, it said.

The Australia dollar had its biggest annual decline on record in 2008 after reaching the highest level against the US currency in more than 20 years. A declining Australian dollar helps boost earnings at companies such as Lihir that incur costs in the local currency and earn revenue in dollars.

The Australian dollar slid 0.5% to 66.31 US cents as of 8:09 a.m. in Sydney from 66.61 cents in Asia late yesterday.

To contact the reporters on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net, Jason Scott in Perth at Jscott14@bloomberg.net.

 


Category: ResourceAsia

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