By BIBIAN BARRENG
LIHIR Gold’s poor production in the third quarter along with reduced yearly output of 750,000 ounces from a projected 800,000 to 830,000 ounces have forced share prices to drop A$0.31 (K0.82) to A$4.11 (K10.80).
The third quarter result saw gold production at 156,468oz, down from 182,428oz in the second quarter.
Arthur Hood, Lihir’s managing director, noted the output in the quarter was significantly below expectations following an industrial action at the operations in Lihir.
He added that while workers resumed work last Sept 7, the process plant did not return to full production until Sept 14 causing delay in restarting oxygen production.
“This was the first extended industrial action to have taken place in Lihir since the operation begun production in 1997.
“It comes after very significant and necessary change that had been occurring over the past two years as new operating disciplines were put in place … we strongly recognised the need for an engaged and committed workforce,” Mr Hood said.
He reported the industrial action in September reduced annual production by approximately 35,000 ounces due to the week-long stop work and then the seven-day delay in resuming normal production.
“The interruption to mining operations meant that dewatering in the pit fell behind schedule, exacerbated by recent heavy rainfall,” Mr Hood commented.
He added that this would mean access to high grade ore was delayed in the fourth quarter with ore grade during October to be significantly below noted.
Moreover, production in the fourth quarter had also been reduced by problems with SAG mill in the direct feed circuit as the ore currently being treated was harder than usual.
“As a consequence of these setbacks, production in the fourth quarter was expected to be about 220,000oz,” Mr Hood said.
He said that with the quarter production, the final quarter production was expected to increase significantly that would lead to rapid improvement in unit costs.
The company noted that despite the industrial action some good progress had been achieved during the quarter with the flotation circuit beginning operation and the expanded 50MG geothermal power plant being put in place.
In its other operation, the Ballarat Gold operations for the first time contributed to the production with 15,371 tonnes of low grade pre-production ore that was processed and 523oz of gravity recovered gold smelted.