By SHEILA LASIBORI
THE Lihir Gold Ltd will invest at least US$700 million (K2.7 billion) to carry out the million-ounce plant upgrade at its gold mine on Lihir Island, New Ireland province.
This was disclosed by LGL communications manager Josie Brophy, saying that the miner will also have to invest an additional US$160 million (K432 million) on a power plant.
Ms Brophy said the upgrade exercise made good progress last year and remained on schedule and on budget.
She said construction at the mine site has started and would be the main focus until the expansion is commissioned at the end of this year.
“LGL’s upgrade investment is providing a significant boost to the PNG economy, and particularly the New Ireland region.
“Community benefits include higher royalty payments, improved infrastructure, and significant job and business opportunities,” Ms Brophy said, adding the results of the feasibility study were released in February 2008.
Mines Minister and Deputy Prime Minister Sir Puka Temu, who personally gave the approval for LGL to carry out the upgrade, said: “I had given approval … I personally encouraged them (LGL) to do that (upgrade) and that brings money up.”
LGL’s flagship Lihir mine produced 771,000 ounces of gold in 2008 and production guidance for last year was between 770,000oz and 840,000oz (production to the end of the third quarter last year was 635,000 ounces).
LGL will be officially announcing next Friday in its fourth quarter production report last year’s final production result, including output from the final quarter.
Ms Brophy said the upgrade project involves the installation of a range of equipment at the site, increasing ore processing capacity from around 6.5 to seven metric tonnes per annum (mta) to about 10.5mta to 12mta.
She added that an additional autoclave will be installed, along with additional crushing, grinding, thickening, oxygen and leach plant facilities.
“The increased processing capacity will enable the operation to process much more of the ore that it mines each year thus, reducing stockpiling and land pressures,” she said.
Ms Brophy said in late October last year, LGL announced a significant 36% upgrade to the reserves on Lihir Island to 28.8 million ounces.
She said the increase captured the positive cost benefits of the upgrading project and included a rise in the long term gold price assumption from US$675/oz (K1,824) to $800/oz (K2,162).
“The upgraded reserves will enable the operation to continue producing well beyond the next two decades, generating significant wealth for the PNG economy and the Lihirian community, and providing increasing returns to shareholders.
“It is worth noting that gold reserves are regularly reviewed by the company and typically updated annually.