Lihir Gold Reports Decline in Production

The Australia based gold mining company Lihir Gold (LGL) has posted a 20 percent decline in production for the third quarter offset by an unexpected increase of reserves and commitment to go for paying out regular dividend. According to Arthur Hood, the managing director of the company, Lihir would make a payment of US1.5c dividend at the end of November; the first dividend the company would be paying since 2003. It is to be mentioned that Lihir made a 2c payout per share in 2003. The decision is considered as a significant mile stone for the company as far as the progress over the last four years is taken under consideration, Mr. Hood added. The managing director also stated that the gold miner is looking forward to go for regular dividend payments in the future.

Lihir Gold has boosted its reserves by as much as 7.5 million ounces, touching the 28.8 ounces mark in the Lihir Island mine which is located at Papua New Guinea. The upgrade was motivated by a mixture of drilling and a boost in the long term gold price assumptions which was increased to $US800 per ounce. 233,346 ounces of gold was produced by Lihir during the third quarter which is about 60678 ounces lower from what it produced in the earlier quarter. The third quarter production brought its year-to-date total to as much as 845,368 ounces. Lihir didn’t change its guidance for the year which was set at 1 million to 1.2 million ounces.

The miner claimed that it had received several lucrative indicative offers for the Ballarat mine which is located in Victoria. It is to be mentioned that Lihir wrote down the Ballarat mine by $US409 million in the previous year because of the production expectations being low. The mine was purchased for $360 million under a deal which was declared in 2006. According to Lihir, the Ballarat mine was tipped to be sold at the beginning of the next year and was expected to generate 14,000 ounces of gold in the current year. Although the reserve got upgraded and capital return is in the horizon, Lihir shares dropped by 2.6 percent or 8c to $2.98.