on schedule

NEW YORK (Dow Jones)--Lihir Gold Ltd. (LGL.AU) Chief Financial Officer Phil Baker said Tuesday the miner's plans to produce 1 million ounces of gold annually at its flagship mine in Papua New Guinea are "on schedule and looking good."

Australia's second-largest gold company is investing heavily in the upgrade of its Lihir Island asset, which it expects to complete in 2011.

"We're well down the path into a big program that's fully funded," Baker told reporters on the sidelines of a Bank of America-Merrill Lynch conference. He said the company had roughly $500 million of net cash at June 30. He said the combination of the company's cash along with the currently high gold prices are funding the project.

Gold has risen from around $700 in early November 2008 to recently retest the $1,000 level.

Lihir has its eye on growing its assets in West Africa and continues to do "a lot" of exploration at Bonikro. "We didn't go (to the Ivory Coast) to run Bonikro at 120,000 ounces a year," said Baker.

Still, Lihir has no immediate plans for acquisitions in West Africa and is rather focusing on building its existing business. "We're working hard to turn around [the perception of Lihir] as an underperformer," said Joe Dowling, general manager of corporate affairs.

To that end, Lihir's Baker said the company has learned some lessons from its failed Ballarat acquisitions, which it is now in the process of selling, and said it now has more resources and internal processes to evaluate potential acquisition opportunities.

In July, the Port Moresby-based miner put the Victoria state asset up for sale after missing production targets and a review that concluded the mine was unlikely to produce more than 100,000 troy ounces a year, as opposed to the planned 200,000 ounces.

"There's alot of interest in the asset," said Baker.

Meanwhile, high gold prices continue to work in the company's favor.

"The fundamentals for gold look strong" said Baker citing "good demand and constrained supply."