Lihir Gold (LHG) Share Trading Recommendation

Submitted by Craig Strzelecki on 22 February, 2007 - 22:58

Lihir Gold (LHG) have a Neutral 2 share trading recommendation and a price target of $3.60 and valuation of $1.61 per share from analyst UBS. Lihir have had their 06 preliminary financials audited and have commented that: 2006 NPAT was $53.8m vs the $53.4m reported on 30 Jan with the production result. There was no change to the cashflow statement, operating cashflow $58.7m, cash balance $47m. Net debt has increased to $234m from $87.7m pcp largely due to the $171m of capex over the period related to the flotation and geothermal power plants. Gearing is up to 22% from 10% pcp. Flotation and geothermal power expansion projects remain on track for commissioning in early 07. FY07 production guidance remains 800-830koz at total cash costs of US$250/oz. Expansion project metrics remain US$500-550m for 300koz incremental capacity starting in 2010. Production guidance of 800+koz for 2008 - 2011 has been given but this excludes expansion plans to >1Moz and Ballarat production. They like the expansion proposal as it provides opportunities for economies of scale and further reserves upgrades; however, the question remains how it will be funded with only a $47m cash balance. LHG remains the analysts' preferred gold exposure of the majors.

Lihir Gold Limited is listed on the Australian Stock Exchange (ASX) under stock code LHG. You can view their investor website here. Ross Garnaut is the Chairman of Lihir Gold and the CEO is Arthur Hood. LHG was listed on the ASX on 9 October, 1995. Lihir Gold is involved in mining and production of Gold on Lihir Island in Papua New Guinea (PNG). Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade LHG. Check your charts and good luck with your share trading!

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