Profits up but Ballarat leads to Lihir loss

STRONG gold prices, reduced costs and increased production has seen Lihir Gold post a record full-year underlying profit of $US290 million ($A323 million), a 57% jump on 2008’s result.
Profits up but Ballarat leads to Lihir loss Profits up but Ballarat leads to Lihir loss Profits up but Ballarat leads to Lihir loss Profits up but Ballarat leads to Lihir loss Profits up but Ballarat leads to Lihir loss


Kristie Batten

However, the company reported $413 million in impairment charges and operational losses associated with the Ballarat operation, leading to an overall loss of $234 million.

Thanks to a 30% increase in gold sales to 1.11 million ounces and a 12% rise in the realised gold price to $956 per ounce, revenues jumped 45% to a record $1.09 billion.

Operating profit before tax rose 55% to $412.9 million, while mine earnings before interest tax, depreciation and amortisation rose 63% to $634.2 million.

Some increases can be attributed to Lihir’s acquisition of Equigold in mid-2008.

Equigold’s Bonikro and Mt Rawdon mines contributed 23% of the company’s total production of 1.12 million ounces of gold, generating $147 million of the mine EBITDA across the group.

Overall cash costs in 2009 fell slightly to $397/oz from $400/oz in 2008.

Lihir is forecasting production for 2010 to be in the range of 960,000oz to 1.06Moz at below $450/oz.

New chief executive officer Phil Baker said the company entered 2010 with a strong balance sheet and borrowings of just $50 million.

“We are also completely unhedged, enabling us to take full advantage of the rising gold price,” he said.

“As the million-ounce plant upgrade expansion at Lihir Island and the feasibility study to expand Bonikro proceed on schedule, LGL is on track to increase production by 30 per cent to 1.3 million ounces by the end of next year.”

In a separate announcement this morning, Lihir announced an increase in reserves at its Mt Rawdon mine in Queensland.

Mt Rawdon has proven and probable reserves of 32 million tonnes grading 0.81 grams per tonne gold for 835,000oz.

Baker said the increase will ensure the mine will run for another 8-9 years, producing 80,000-100,000oz per annum.

Shares in Lihir – Australia’s second-largest listed gold producer – fell A8c this morning to $2.81.