Lihir Gold Limited
ASX : LGL
NASDAQ : LIHR
TSX : LGG

Lihir Gold Limited

March 03, 2009 17:43 ET

LGL (Lihir Gold Limited): LGL Launches US$325 Million Institutional Placement

PORT MORESBY, PAPUA NEW GUINEA--(Marketwire - March 3, 2009) -

NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS

Lihir Gold Limited (TSX:LGG) (NASDAQ:LIHR) (ASX:LGL) ("LGL") has launched an institutional share placement to raise approximately US$325 million(1).

The proceeds will be used for the following purposes:

1) to accelerate key stages of the planned process plant expansion at Lihir Island in PNG, taking advantage of changing market conditions that have led to reduced prices and shorter lead-times for components;

2) to position the company for further growth opportunities that emerge, including in West Africa; and

3) to provide continued financial strength and flexibility for the group.

The placement will be conducted by way of an institutional bookbuild and will be made available only to accredited or sophisticated investors. The new shares will be issued to participants on 12 March 2009 and will rank equally with existing LGL shares.

Following the placement, LGL will offer eligible shareholders the opportunity to participate in a non-underwritten Share Purchase Plan ("SPP"). The SPP will provide shareholders with the opportunity to subscribe for up to A$5,000 worth of LGL shares without incurring brokerage or other transaction costs. Further details of the SPP will be provided in due course.

LGL CEO Arthur Hood said the current market conditions provided LGL with an exciting opportunity to advance the Million Ounce Plant Upgrade (MOPU) project at Lihir Island.

"The recent downturn in global commodity markets has significantly reduced demand for mining industry equipment, process plant components and steel fabrication, which has led to more competitive pricing and created the opportunity for some stages of the Lihir Island expansion to be brought forward. These include earlier installation of crushing, oxygen production, grinding, leaching and water supply facilities," he said.

"The accelerated installation of these elements will potentially lead to marginal increases in production in 2010 and 2011 through improvements in processing rates and recoveries. Importantly however, they will reduce operational risk by duplicating key parts of the processing chain and enhancing plant reliability. They also will help to ensure the MOPU project is completed on time and within budget."

"In addition, the company will be well placed to proceed with expansion opportunities that are developing in West Africa, where our extensive exploration campaign recently led to increases in resources," he said.

Following the capital raising, the company will have significant cash reserves and strong operating cashflows available to underpin capital commitments. In addition, the company intends to increase its existing debt facilities (currently undrawn) when market conditions become more attractive, providing further financial flexibility to pursue other growth opportunities as they arise.

The MOPU project has a forecast capital cost of approximately US$700 million (February 2008 dollars) plus an estimated US$100 million for interim power generation capacity. A feasibility study is being conducted to identify a long term power supply solution.

The accelerated construction schedule for MOPU is expected to bring forward approximately US$50 million in capital expenditure into 2009, increasing the forecast capital expenditure to approximately US$200 million this year. The project capital expenditure in 2010 is estimated to be approximately US$350 million.

In Cote d'Ivoire, LGL has increased its exploration budget in the current year to US$28 million, from US$23 million previously, following encouraging results from recent exploration in the company's extensive tenements.

"LGL has a strong growth profile and this capital raising will ensure the company has the financial resources available to deliver strong results," Mr Hood said.

Caliburn Partnership is acting as financial adviser to LGL.

(1) Equivalent to approximately A$515m based on a US$/A$ exchange rate of 0.63.

This announcement does not constitute an offer of securities for sale in the United States or to "US persons" (as defined in Regulation S under the US Securities Act of 1933, as amended (the "Securities Act"))("U.S. Person") and may not be sent or disseminated in, directly or indirectly, the United States or to any US Person or any person acting for the account or benefit of any U.S. Person in any place. LGL's shares have not been and will not be registered under the Securities Act or the securities laws of any state of the United States and may not be offered, sold or otherwise transferred in the United States or to or for the account or benefit of any US Person except in compliance with the registration requirements of the Securities Act and any other applicable state securities laws or in a transaction exempt from, or not subject to, the registration requirements of the Securities Act and applicable state securities laws.

Some statements in this announcement are forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws, including those relating to size and timing of completion of the institutional placement and SPP, MOPU project capital cost estimates, and production increases in 2010 and 2011. Forwardlooking statements also include those containing such words as "anticipate", "estimates", "should", "will", "expects", "plans" or similar expressions. Such forwardlooking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond LGL's control, which may cause actual results to differ materially from those contained in this announcement. Important factors that could cause actual results to materially differ from the forwardlooking statements in this announcement include, but are not limited to, the market price of gold, anticipated ore grades, tonnage, recovery rates, production and equipment operating costs, the impact of foreign currency exchange rates on cost inputs, the activities of governmental authorities in Papua New Guinea and elsewhere, results of feasibility studies, changes in market rates for capital equipment, construction and labour delays, and normal risks associated with mine development, operations and expansion. Forwardlooking statements that reference past trends or activities should not be taken as a representation that such trends or activities will necessarily continue in the future. LGL does not undertake any obligation to update or revise any forwardlooking statements, whether as a result of new information, future events or otherwise.

Contact Information

  • Lihir Gold Limited
    Joel Forwood
    Manager Investor Relations
    +61 438 576 879