Lihir Gold Research

Record gold production and rising gold prices have enabled LGL to report a net after tax profit of $109.3 million for the year to December 2008. The Company reported its third successive year of record production, at 882,000 ounces, which was up 26% from 702,000 ounces in 2007. The increase was due to significantly higher output at the cornerstone Lihir Island operation in PNG, and because of the inclusion of production from the Bonikro mine in Ivory Coast and the Mt Rawdon mine in Queensland. These mines were acquired by LGL as part of its acquisition of Equigold NL in June 2008. Revenues increased by 52% to a record US$756 million, driven by a 23% increase in gold sales volume and a 29% rise in the gold price. For the full year 868,927 ounces of gold were sold at an average cash price of US$850 an ounce, up from US$666 an ounce in 2007.




Source: Lihir Gold Limited Website (23 February 2009)

Total cash costs were US$400 per ounce in 2008, which continues to position the company at the lower end of the global gold production cost curve. Unit costs trended lower over the course of 2008, with total cash costs reducing to $353 per ounce in the December quarter. Aggregate operating costs for the year totalled $463 million, up from $306 million in 2007, as a result of continuing cost pressures across the mining sector, higher oil prices for most of the year and because of higher throughput at Lihir Island.

LGL Managing Director Arthur Hood said the solid 2008 result reflected an outstanding performance from the cornerstone Lihir Island operation and the benefits of the merger with Equigold NL. "Going into 2009 LGL's financial position is very secure. We have healthy operating cashflows 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 percent to in excess of one million ounces. Falling oil prices and favourage exchange rate movements are expected to drive a reduction in total cash costs in 2009 to less than US$400 per ounce.

2009 Outlook

Total gold production is forecast to increase to another record of more than one million ounces. Production at Lihir is forecasted to be between 770,000 and 840,000 oz for the year. Bonikro is expected to contribute approximately 130,000 – 160,000 oz in its full year of production. Mt. Rawdon is expected to continue its reliable and consistent performance to deliver around 90,000 – 100,000 oz for the year. At Ballarat, production is forecast to be between 50,000 – 100,000 oz in 2009.

Falling oil prices and favourable exchange rate movements in the final quarter of 2008 are expected to have a beneficial impact on costs in the current year. Total cash costs for the group are expected to be less than $400 per ounce for the full year, excluding Ballarat.

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