LGL anticipates K71.8mil in tax

LIHIR Gold Ltd(LGL) is expected to pay about K71.8  million (US$26 million) in tax to the Papua New Guinea government by the end of this year.
In an interview yesterday with LGL chairman Dr Ross Garnaut after the LGL annual general meeting in Port Moresby, he said: “By next year, we are likely to be the second largest taxpayer in Papua New Guinea, after Ok Tedi.”
LGL made its inaugural payment of corporate income tax to the PNG government last month, in which the amount in tax could not be disclosed.
 “Before now, LGL has not been required to pay corporate tax in PNG because our operation at Lihir, New Ireland, has not been profitable for tax purposes and you only pay tax on profits,” Garnaut said.
“The company and shareholders have invested significant funds in Lihir since operations began in 1997.
“These investments have enabled us to increase gold production, lower costs and increase margins, which combined has made the Lihir operation profitable, and we are now able to pay corporate tax in PNG and dividends to shareholders,” he said.
The chairman reiterated that LGL was now investing US$900 million (about K2.5 billion) at Lihir Island to increase annual gold production to more than one million ounces by 2012.
This will make the operation more profitable, and increase the amount of corporate tax LGL pays to the PNG government.
He said having not paying tax for the past years did not mean that LGL was not investing or putting money into the country.
“While we’ve not previously been required to pay corporate tax, LGL pays other taxes such as royalties, duties and levies and makes a very significant and direct contribution to PNG’s economy every year.
“In 2009 alone, we contributed more than K768 million to PNG through the payment of royalties, levies and production taxes, payments to the local community, salaries to our employees and payments to PNG suppliers,” he said.