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| Lihir sets K2b mine upgrade | |
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By FRANK ASAELI LIHIR Gold Ltd (LGL) will spend a record K2 billion for an expansion that will see the mine produce over one million ounces a year from 2011. The expansion, which was approved by the Lihir board last Friday, was estimated to cost US$696 million (K2.062 billion) over the next four years. The largest part of the planned expenditure would occur over the next two years with K409 million budgeted for this year and K794 million next year. Another big budget of K557 million would be spent in 2010 with K302 million planned for 2011. These costs exclude capital investment required for expansion of the geothermal power supply, which cost approximately US$150 million (K445 million), including costs of drilling and proving up the steam resource. LGL chief executive officer Arthur Hood said the decision to proceed with the expansion represented a major step in the development of the company. He said this upgrade would lift the Lihir Island operations to the appropriate scale to extract full value from the 23 million ounce gold deposit. The feasibility study concluded the upgrade would increase production by an average 240,000 ounces to 1.1 million ounces annually over the life of the operation that would lift output over the period from 2011 to 2021 by 2.35 million ounces to more than 10 million ounces. The costs for the upgrade were significantly higher than the earlier US$550 million (K1.630 billion) estimate. The biggest individual cost of K480 million would be spent on pressure oxidation and oxygen plant to deal with refracting of the ore. Other direct costs for the project over the four-year period included K193 million for primary crushing and conveying, K130 million for grinding and classification, grinding thickeners and reagent handling at K95 million, cyanidation and absorption, gold recovery at K160 million, water supply will cost LGL K107 million and K130 million would be spent on other costs. Overheads, project management, engineering and design, freight and so on are indirect and contingency costs that will cost the company US$259 million (K768 million). |
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