18th Feb 2010
Lihir Gold Ltd has beaten expectations with a big jump in its underlying profit on the back of record prices and production.
Australia's second largest gold miner reported a net loss for the year of $US234 million ($A260.09 million), after writing off its troubled Ballarat mine.
But the miner revealed its output exceeded one million ounces for the first time, and it achieved a record underlying profit of $US289.5 million ($A322.33 million), up 57 per cent from $US184 million ($A204.51 million) in 2008.
The company's acting chief Phil Baker told a teleconference that while energy costs had increased during the year and the Australian dollar had strengthened, record gold prices helped buoy the results.
"Higher margins, coupled with the higher volumes that we are producing and selling these days, are what is adding to very massively increased cashflow from operations and the underlying profitability of the group," Baker said.
While refusing to speculate on where gold prices could head, he said the average price in 2009 was $US956 per ounce but more recently it had been above $US1,100 per ounce.
IG Markets analyst Ben Potter said the company's results easily beat analysts' expectations, which were for underlying earnings to be $US268 million.
"It was quite a significant increase there," Potter said.
The company declared a final dividend of 1.5 US cents per share.
Shares in the company finished down 10 cents, or 3.46 per cent, at $2.79, which Potter said may have related to uncertainty over the company's post-2012 production profile and its lack of a permanent chief executive.
Revenue was $US1.0874 billion ($A1.21 billion), up 45 per cent on the prior year, and mine earnings before interest, tax, depreciation and amortisation were 63 per cent higher at $US634 million ($A704.68 million).
Lihir said it mined 1.12 million ounces of gold in 2009, a record for the company, and expected to produce between 960,000 and 1,060,000 ounces in 2010.
Total cash costs per ounce fell from $US400/oz in 2008 to $US397/oz in 2009, while the average price received for gold rose by 12 per cent from $US850/oz to $US956/oz.
Senior resources analyst with Mine Life, Gavin Wendt, said the report looked very solid.
"You have to look past the bottom line because of the write-down at Ballarat, so if you compare the underlying profit it was a very strong result," Wendt said.
"That was above market consensus for sure," he said.
Baker, who took the reins last month, said the production guidance included 770,000-840,000 ozs from Lihir Island, approximately 110,000-130,000 ozs from Bonikro and 80,000-90,000 ozs from Mt Rawdon.
"Production in the second half of the year will be higher than the first half, due to planned maintenance at Lihir Island," Baker said.
"As our expansion projects proceed on schedule, LGL's production capacity will rise to 1.3 million ounces by the end of next year."
Source: AAP NewsWire
Copyright 2009 Cintellate