Lihir dashes for cash

AUSTRALIA’S second-largest domestic gold play Lihir Gold is rattling the tin for $US325 million ($A509 million) via an institutional placement.
Lihir dashes for cash Lihir dashes for cash Lihir dashes for cash Lihir dashes for cash Lihir dashes for cash

Lihir announced its hefty raising this morning, saying the proceeds will be used to accelerate the planned plant expansion at its namesake mine in Papua New Guinea, along with other growth plans.

After the institutional placement, Lihir will also be holding a share purchase plan, with existing shareholders able to subscribe for another $5000 in Lihir shares without incurring brokerage or other transaction costs.

Lihir chief executive officer Arthur Hood said market conditions were right for the company to press ahead with its 1 million ounce expansion plan at Lihir Island.

He also said the global slowdown meant equipment, components and steel fabrication costs have waned in past months, while lead times for buying in equipment have also reduced, making the time right for bringing forward the expansion plans.

The company now intends to install its crushing, oxygen production, grinding, leaching and water supply facilities for the 1Moz expansion ahead of schedule, which will lead to only "marginal" increases in production until 2011.

"Importantly, however, they will reduce operational risk by duplicating key parts of the processing chain and enhancing plant reliability," Hood added.

The expansion has a project capital cost of $US700 million plus $100 million for interim power supplies.

The acceleration of the 1Moz development will add $50 million to Lihir's capital expenditure for 2009, taking total capex for the year to around $200 million and $350 million in 2012.

In 2008, Lihir Island produced a record 771,000oz.

The cash injection will also be going towards other "growth opportunities", including in West Africa, where Lihir already operates the Bonikro mine in Cote d'Ivoire.

The company is bumping up spending there on exploration to $28 million, a $5 million increase.

Shares in Lihir were in a trading halt this morning ahead of the raising, but closed yesterday at $3.31.

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