Lihir back in action (November 28, 2005)

Full production has resumed at Lihir Gold‘s (LIHRY-Q, LHG-A) Lihir Island pressure-oxidation and carbon-in-leach processing plant in Papua New Guinea.

Gold production was halted in mid-October after a landslide swept away two workers, damaged the access road to the mine, and destroyed a portion of the water pipeline supplying the plant. Limited production with one autoclave was restored later in the month with water temporarily derived from within the mine’s open pit.

The damaged portion of the permanent water pipeline feeding the plant was replaced by Oct. 31, with production scaled up to full steam over a subsequent two days. All three of the operation’s autoclaves have since been restarted and successfully tested.

Lihir says the interruption will shave around 100,000 oz. gold from its 2005 production goal of 700,000 oz. Full-year cash costs are pegged at around US$270 per oz. The company’s fourth quarter production estimate has been lowered to 175,000 oz.

Lihir produced a record 193,031 oz. gold during the third quarter, exceeding its previous guidance of 190,000 oz. Total cash costs came in at US$217, down from US$380 per oz. during the previous quarter. The company realized an average of US$413 for each ounce sold.

The record production is mostly attributed to a 62% increase in head grade to 7.15 grams gold per tonne. The increase in grades more than offset a slight reduction in tonnes milled and a planned shutdown of two autoclaves for rebricking.

Some 128,500 oz. of the quarter’s production were sold at an average spot price of US$447 per oz., while another 65,757 oz. were delivered into hedge commitments at an average price of US$328 per oz.