Value of Lihir output tops K17b

LIHIR gold mine total aggregate revenue since the start of gold production in 1997 has reached an astounding US$6.1 billion (K17.1 billion), according to statistics released by the Mineral Resource Authority (MRA).
This is good news for Lihir gold mine developer and Australia’s largest gold producer Newcrest Mining Ltd, which is poised for another increase in gold revenue over the next five years with 28.8 million ounces in gold reserves and 43moz in measured and indicated resources.
The royalty compensation and other benefits package reached through agreement with the landowners and the government, however, presents a much less favourable picture.
The MRA statistics shows that total gold production by Lihir Gold Ltd, Newcrest’s PNG subsidiary, and the revenue from that production have increased very significantly in comparison to the landowner benefits through the Special Support Grant (SSG) and the 2% royalty payments, from 1997 to 2011.
Royalties and SSG are two components that make up the integrated benefits package (IBP).
MRA’s statistics reveal that more than 9.5moz of gold have been taken from Lihir Island since the start of operations, producing ever increasing revenues for LGL, while only a portion of that revenue has trickled down over the years to the landowners through compensation and other benefits.
Total royalty and SSG payments since the operations began amounted to only K433 million while the total revenue from the Lihir Gold project over the same period exceeded K17 billion.
MRA’s statistics show annual gold production and sales including the gold price and the revenue from gold sales in US dollars and PNG kina.
The statistics also show the value of the 2% royalty and the amount of the annual SSG payments, including the cumulative SSG payments outstanding, from June of 1997 up to December last year.
MRA’s statistics reveal that since 1997 Lihirian landowners have received K340 million in total royalty payments and K94.5 million through SSG contributions.
K80 million of the SSG contributions has actually been paid to landowners while K14.5 million is still outstanding.
This compares with total revenue of K10. 6 billion generated by the Lihir gold mine in the last five years.
Over the same period the landowners received royalties of K203.7 million and SSG contributions of K27.8 million.
Revenue from the Lihir gold mine was K1.2 billion in 2007 and K2.7 billion last year due largely to the increase in gold prices.
Over the same period royalty payments increased from K25.8 million to K54 million.
In short, revenue increased by K1.5 billion in five years while royalty payments increased by only K29 million.