Vengold reduces Lihir stake

To alleviate its US$115-million debt load, Vengold (VEN-T) has sold 25 million shares of Lihir Gold (LIHRY-Q).

The proceeds, which tally to about $25 million (Australian), will reduce Vengold’s outstanding debt with ANZ Investment Bank to $52 million (Australian).

The sale cuts the company’s interest in Lihir Gold to 15.8%, a reduction of 2.7%.

“Vengold does not expect any further reductions in its Lihir interest,” says Ian Telfer, president of Vengold. The company now holds a total of 148.9 million shares of Lihir Gold, directly and indirectly.

Vengold’s debt obligation with Orogen Minerals remains unchanged at $78.2 million (Australian).

The struggling miner dumped 5.9 million shares of Australian-based Niugini Mining in early March in order to pay debts (T.N.M., March 22-29/99), thereby reducing its interest in Lihir to 18.5% from 19.3%. The company then tabled a first-quarter loss of US$16.7 million, which it attributed to interest expense payments, foreign exchange losses and a loss on the disposition of its 5% interest in Australian-based Niugini Mining.

The Lihir mine is owned by Papua New Guinea-based Lihir Gold. The main stakeholders include Vengold, with a 15.8% interest, and Rio Tinto (RTP-N) and Niugini Mining, each of which has 17.1%. The public holds a 41.8% share, and local landowners, the remaining 8.2%.

Battle Mountain Gold (BMG-N) owns 50.5% of Niugini, whereas Placer Dome (PDG-T) holds a 16.5% interest in Vengold.

At the end of 1998, Lihir’s total proven and probable reserves stood at 96.3 million tonnes averaging 3.81 grams gold, equivalent to a contained resource of 11.8 million oz. The measured, indicated and inferred resource weighs in at 500 million tonnes averaging 2.65 grams gold, or 42.6 million contained ounces.