As usual when a company has bad news to announce, it tries to add some good news to the announcement to refocus the attention of the market.
That's what goldminer, Lihir Gold did yesterday, to great effect.
Lihir revealed a $US301 million loss in the first half of fiscal 2009, but has maintained its guidance for production in the full year.
The loss was expected after it abandoned its adventure into the difficult Ballarat goldfields.
But the company also revealed a sharp increase in its gold reserves, firstly at Lihir, where it announced a 31% rise, and in the Côte d’Ivoire, where a 20% increase was revealed.
That saw the market look through the loss to the lure of more gold, and the shares rose strongly, up 20 cents, or 7.8%, to $2.76.
The reported loss was down from $US36.5 million in the first-half of fiscal 2008 (when the company took a hit as it restructured its gold hedge book)..
Lihir said underlying profit was a record $US154.9 million for the six months, however, up 130% from the prior corresponding period.
The latest result was affected by the one-off after-tax charge of $US409.1 million associated with writing down the Ballarat operation, which is now on the market.
Lihir maintained its production guidance for the full year at one to 1.2 million ounces of gold, and said total cash costs per ounce for the full year would be below $US400.
Lihir managing director and chief executive officer, Arthur Hood, said the strong underlying results "reflect a continued outstanding performance at the cornerstone asset of Lihir Island in the half year."
"It also confirmed the benefits of the Equigold acquisition completed in June of 2008, with the former Equigold assets of Mt Rawdon in Queensland and Bonikro in Cote d'Ivoire contributing 138,000 ounces to production for the period," Mr Hood said.
"The acquisition has now established LGL as a diversified gold producer with quality assets in three countries and strong growth opportunities in development."
Mr Hood said the outlook was for "continued solid production from our three producing mines, taking full year production to between 1.0 and 1.2 million ounces."
At Lihir Island, Lihir's flagship mine in Papua New Guinea, production of between 770,000 and 840,000 ounces for the year has been forecast; Bonikro was expected to contribute approximately 130,000-160,000 ounces in its first full year of production, following 84,000 ounces in the first half; Mt Rawdon was expected "to continue its reliable and consistent performance" to deliver around 90,000 - 100,000 oz for the year.
And Ballarat production was forecast around 20,000 ounces in 2009 as available ore is processed.
In the separate statement, Lihir said "LGL has increased its Indicated Resource estimates for Lihir Island by 31% to 43 million ounces, confirming its quality as one of the world’s greatest open pit gold deposits. In addition, Inferred Resources have increased by 62% to 5.5 million ounces.
In Côte d’Ivoire, LGL has increased its Measured and Indicated Resource estimates in the Hiré district from 352,000 ounces to 442,000 ounces, with Inferred Resources rising from 148,000 ounces to 450,000 ounces.
“The Million Ounce Plant Upgrade project, which we launched in February last year after two years of Feasibility Studies and evaluations, will lift production capacity at Lihir Island to approximately 1 million ounces per year from the end of 2011, and will lead to a significant reduction in unit costs as well as more reliable and consistent production.
"This will result in further significant increases in reserves and an extension of project life, the company said.
LGL Price at posting:
$2.72 Sentiment: None Disclosure: Not Held
