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Lihir Gold posts loss in first half
But miner sees solid improvement in annual earnings
as production soars and gold prices stay high: CEO

PERTH: Lihir Gold Ltd has posted a first half loss, but still expects to generate a solid improvement in annual earnings as production continues to rise and the gold price remains high.
Lihir Gold did not declare an interim dividend.
The company’s full year gold production is forecast to be a record of between 800,000 and 830,000 ounces, including projected second half production of 424,000 to 454,000 ounces.
Gold production for first half was a record 375,730 ounces, 27% higher than same period last year, as the company made efficiency improvements.
Lihir’s net loss for the first half of calendar 2007 was US$53.1 million (K161.89 million) compared to a profit of US$23.1 million (K70.43 million) last year.
The negative result came after Lihir booked losses related to the close-out of its gold hedge book and made an early repayment of a gold loan.
But its operating profit rose 45% to US$94.7 million (K288.72 million), on the back of strong gold production and higher realised gold prices.
“Assuming stable gold prices and foreign exchange rates, I remain confident of reporting a solid improvement in operating cash flows and after tax profit for this year,” chief executive Arthur Hood said.
Hood said Lihir was now unhedged, which was important as investors favoured unhedged gold companies in order to benefit from the current high gold price.
Revenues for the first half rose 32% to US$235.3 million (K717.38 million).
Looking ahead, Hood said it expected to lift gold production further next year, to more than 900,000 ounces.
The company expects to boost production at its flagship Lihir Island mine in Papua New Guinea to as much as one million ounces a year by 2010, which it claims would make it one of the world’s biggest gold producers.
The company is proceeding with a feasibility study of the mine, which is expected to be completed early in 2008.
Capital expenditure in the first half totalled US$108.1 million (K329.57 million), including US$86.9 million (K264.94 million) at Lihir Island and US$21.2 million (K64.64 million) at its Ballarat operations in Victoria.
The plan is to get the Ballarat East project into commercial production in 2008, with production expected to ramp up to a rate of 200,000 ounces by the end of that year.
Lihir Gold is also applying for a compliance listing on the Toronto Stock Exchange in the next month or two to attract more North American institutional investors to its shareholders currently comprise less than 3% of the total. – AAP