by Jason Oxenbridge
BRISBANE-based Lihir Gold
Limited (LGL) has unearthed record profit of $109.3 million (Y/E 2008) with managing director Arthur Hood describing the gold market as a ‘true flight to quality’.
Record gold production and rising gold prices have enabled the company to report a 54 per cent increase ands its third successive year of record production, at 882,000 ounces, an increase of 26 per cent from 2007.
Hood attributes the increase to significantly higher output at the cornerstone Lihir Island operation in PNG and because of the inclusion of production from the Bonikro mine in Cote d’Ivoire and the Mt Rawdon mine in Queensland. The mines were acquired by LGL as part of its acquisition of Equigold NL in June 2008.
Revenues increased by 52 per cent to a record $1.79 billion, driven by a 23 per cent increase in gold sales volume and a 29 per cent rise in the gold price. For the full year 868,927 ounces of gold were sold at an average cash price of $1326 an ounce, up from $1039 an ounce in 2007.
Despite a mining halt at its Lihir mine in PNG due to landowner disputes last year, the company resumed mining on January 30 and is this year anticipating record gold output from Lihir Island at between 770,000 and 840,000 ounces.
“The result is not just a function of price, but volume,” says Hood.
“Going into 2009, LGL’s financial position is very secure. We have healthy operating cash flows and widely diversified revenue and production sources. The company has a strong foundation to enable future investment in growth opportunities and to deliver maximum value for shareholders.”
In 2009 group-wide gold production is forecast to increase by more than 10 per cent to in excess of one million ounces. Falling oil prices and favourable exchange rate movements are expected to drive a reduction in total cash costs in 2009 to less than US$400 per ounce.
Hood says he is happy for the gold price to stay ‘exactly where it is’ in a volatile market where $50 per ounce fluctuations are possible.
“In 2008 we firmly established LGL as a global gold producer with growing production and exciting exploration opportunities. I’m confident the next 12 months will see a continuation in the group’s exciting growth journey,” says Hood.
The company has also completed an institutional placement of new fully paid ordinary shares to raise around US$325 million.
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