valuation

This from my analyst

Lihir Gold Limited

Underlying result in-line, resources lifted

**** Event: CY09 Interim result – underlying in-line
The underlying interim profit of US$155m was in-line with the UBSe of US$158m after stripping out prior hedge losses and the Ballarat write down, which at $546m was above our estimated write down of $500m. No dividend was declared, as
expected. Cash on hand at the end of the period was $489m. The company also announced measured and indicated resource upgrades of 31% at Lihir to 42Moz and 22% in Cote d’Ivoire to 1.7Moz. Guidance remains unchanged.

**** Impact: Minor NPAT changes, potential positives from resource upgrades Reconciling for the interim result and adjustments to the way we account for the previous hedging losses has resulted in minor changes to our adjusted EPS
forecasts with a 12% upgrade to CY10e and 6% to CY11e. The resource upgrades are likely to result in more mined ounces from both Lihir and the Cote d’Ivoire; however, we have not yet incorporated any additional output.

**** Action: Upgraded to Buy – More value to come from Lihir and Africa We have upgraded to a Buy on the back of a small NPV upgrade and due to the recent slide in the LGL share price. On UBS estimates, the stock is trading on a
P/NPV multiple of 1.26x, towards the bottom end of the cyclical range of 1.0 – 2.5x. Our model assumes only reserve depletion across all assets and no additional
conversion of resources into reserve. In our view, the additional resources at both Lihir and Cote d’Ivoire will ultimately result in more mined ounces and value.

**** Valuation: $2.16 (DCF, 7% discount rate)
Our valuation has been increased 5% to $2.16 and our target price 3% to $3.20 (from $3.10). Our target price is NPV based. Highlights (US$m) 12/07 12/08 12/09E 12