PERTH (miningweekly.com) – Gold miner Newcrest Mining’s outgoing chairperson Don Mercer on Thursday defended the company’s 2010 acquisition of Lihir Gold, saying that shareholders would still see value from the transaction.

The Australian gold miner reported a loss of A$5.7-billion for the year ended June, on the back of an asset impairment and write-downs of some A$6.2-billion, as the gold price collapsed.

Mercer said at the company’s annual general meeting on Thursday that addressing the challenges presented by Lihir’s major project, the Lihir project, in Papua New Guinea, had also taken longer than expected.

However, he stated that despite the challenges and the financial implications of the merger during the current economic conditions, Lihir was still considered to be a quality asset.

“The Lihir asset at the time of the merger comprised around 32% of the combined company’s value, and it remains around the same level today. Shareholders have yet to see the full financial benefit of the Lihir merger, but I believe they will,” he added.

“To have a gold mine with a mine life exceeding 30 years and a gold endowment averaging 2.1 g/t is enormously valuable to shareholders over time. Contrast this with another of our mines, Cadia East, where the gold grades average 0.5 g/t.”

Mercer added that Newcrest was well placed to tackle the complexity and challenges of the Lihir operation, and pointed out that much had been done in this regard.

However, he acknowledged that the project still presented some challenges, including the negotiation of a new landowner agreement, and the remaining nine months of old plant refurbishment activity while the new plant was ramping up.

Lihir recently reported a 3% quarter-on-quarter decline in gold production, during the three months ended September, as lower grades and recoveries affected operations.

However, plant throughput during the quarter increased by 18%, reflecting the ongoing optimisation and refurbishment of the plant.