PERTH (miningweekly.com) – Lihir Gold, an Australian miner with operations in Papua New Guinea, West Africa and Queensland, expects total gold output to increase by 40% in the next two years.

CEO Graeme Hunt said in a conference call that expansion plans at its flagship Lihir Island operations, in Papua New Guinea, as well as the expansions on its West African operations, would lift production to 1,45-million ounces a year, compared with the current capacity of one-million ounces a year.

The A$780-million expansion at Lihir Island would increase production with 240 000 oz, and would assist in significantly reducing the overall cost for ounces produced, Hunt said.

The expansion project is 50% completed, and progressive commissioning would start during the second half of 2011, while full production would be reached in 2012.

In Cote d’Ivoire, Hunt said good progress was being made at the development of satellite mines at Hire, close to the company’s existing Bonikro operations. Work on expanding the plant at Bonikro, from two-million tons a year to three-million tons a year, were also progressing well.

The addition of higher-grade ore from the Hire project, and the expanded Bonikro plant was expected to lift output by a further 250 000 oz a year, from 2012.

QUARTERLY PRODUCTION

Meanwhile, Hunt reported that gold production for the first quarter, ended March, was in line with guidance, and reached 230 000 oz. This was 17% lower than production during the fourth quarter of last year, owing mainly to reduced grades.

However, he said that grades were likely to improve during the remainder of the financial year.

Lihir Island produced 180 000 oz, while the Bonikro operations produced 27 000 oz for the quarter, which was higher-than-expected, owing to better grades.

The Mount Rawdon operations, in Queensland, produced 23 000 oz for the quarter, which was in line with production during the previous quarter.

Hunt noted that following the solid performance of the first quarter, full year production for 2010 was now estimated to be between one-million ounces and 1,1-million ounces, from an earlier forecast of between 960 000 oz and 1,06-million ounces.

Lihir Island is expected to produce between 800 000 oz and 870 000 oz, while Bonikro would produce between 110 000 oz and 130 000 oz.

The Mount Rawdon operation would also add between 90 000 oz and 100 000 oz to the yearly production.

NEWCREST OFFER

Hunt refused to be drawn on the Newcrest proposal or strategic alternatives, when questioned by journalist.

Earlier this month, Lihir rejected a A$9,2-billion takeover offer from Australia’s largest gold miner, which is offering one of its own shares for every nine Lihir shares, as well as A$0,225 cash a share.

Following the approach from Newcrest, Lihir appointed independent advisers to assess a range of what Hunt called “strategic alternatives” which could deliver shareholder value.

Hunt told journalists in the conference call that while Lihir and its shareholders appreciated the industrial logic of combining the two gold producers, it was felt that the offer still failed to recognise the strategic value that Lihir would offer to the combined company.

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