PERTH (miningweekly.com) – Australian gold producer Lihir on Thursday reported that it had, for the fourth year in a row, delivered a record annual production and said that it would sell the Ballarat project in Victoria.

Interim CEO Phil Baker said that total output exceeded one-million ounces for the first time, rising by 27% to 1,124-million ounces in the year ended December 31, compared with the previous financial year.

The Lihir Island operations in Papua New Guinea produced a record 853 000 oz in 2009, Baker reported, adding that benefits from the Equigold acquisition, completed in 2008, had started to flow through.

“The Lihir Island operation delivered a fourth consecutive year of record production, with output increased by more than 40% since 2005.

“Importantly, the operational performance is now much more consistent and reliable owing to numerous improvements which have been made during the past few years,” said Baker.

He said that the Equigold acquisition brought to Lihir the Mount Rawdon operation in Queensland and the Bonikro project, in the Côte d'Ivoire, which together produced 258 000 oz in 2009, equal to 23% of the group's gold output.

“The excellent production outcomes, combined with rising gold prices, to translated into record revenues, which surpassed $1-billion for the first time in the history of the company,” Baker added.

BALLARAT REVIEW

Meanwhile, Baker said that a fundamental review of the Ballarat project, in Victoria, had concluded that it would not achieve its desired production and cost outcomes, owing to the fragmented nature of the orebody.

The group had decided to write down fully the carrying value of the Ballarat assets and to sell the project.

The sale process was likely to be completed in the first quarter of this year.

WEST AFRICA GROWTH

Baker further noted, that with some 18 000 km² of exploration acreage in the most highly prospective areas of Côte d’Ivoire, Lihir had the opportunity to grow in that region, during the coming years.

In 2009, the gold-miner lifted the measured and indicated resources in Cote d’Ivoire by 22% to 1,7 million ounces, and further drilling was expected to deliver additional reserves and resources in the current year.

Exploration success already has identified sufficient new mineral resources for the company to conduct a feasibility study into an expansion of Bonikro. With the study to run throughout 2010, it is planned to raise production at Bonikro from 120 000 oz/y, to more than 200 000 oz/y by the end of next year.

Baker added that, beyond this, exciting exploration results offered the prospect of new standalone mines being developed on the company’s tenements elsewhere in the country.

PAPUA NEW GUINEA

At Lihir Island, the company was on schedule and within budget for construction of the million ounce plant upgrade (MOPU) project, which will lift production capacity there to more than one-million ounces a year by the end of next year.

The project will dramatically improve the economics of the Lihir Island operation by increasing operating flexibility and efficiency and driving down unit costs, Baker said.

At Lihir Island in 2009, measured and indicated resources increased 31% to 43-million ounces, and inferred resources rose 62% to 5,5-million ounces, owing in part to the impact of the MOPU project.

Further infill drilling and extension drilling is being undertaken at Lihir Island again this year to convert more ounces into reserves and increase the resource base.

“So you can see that we are making good progress. We remain focused on achieving our goals in a disciplined way, and the company is developing as a strong, dynamic organisation to generate and sustain strong returns for shareholders,” Baker added.

Full-year production for 2010, is expected to be in the range of between 960 000 oz and 1,06-million ounces. This will include between 770 000 oz and 840 000 oz from Lihir Island, between 110 000 oz and 130 000 oz from Bonikro and between 80 000 oz and 90 000 oz from Mount Rawdon.

Baker noted that as Lihir’s expansion projects proceed on schedule, the company’s production capacity would rise to 1,3-million ounces by the end of next year.

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.