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BRISBANE explorer Lihir Gold Ltd (LGL) will sell its Ballarat gold mine in Victoria after completing a review of the project.
The project is unlikely to achieve the scale required to fit within the LGL portfolio. A re-assessment of historical mining records and more recent experience has determined that the project will not sustain large scale bulk mining techniques, with production unlikely to exceed 100,000 ounces per year.
Total staff numbers will be reduced by 200 to around 100 in order to maintain operations during a transition to new ownership. This follows a further 200 that were sacked in May after its gold resource had been over estimated.
The sell-off represents a write off of about $350 million for the company.
LGL managing director Arthur Hood (pictured), says LGL has received expressions of interest from a number of potential acquirers, which will be further pursued in coming weeks. The sale process is expected to be completed early in the New Year.
“The Ballarat project unfortunately will not fit our preferred investment criteria. The disposal of the asset will enable management to focus on growth opportunities being developed in West Africa and at our Lihir Island operations in PNG,” he says.
“I would like to thank the employees at Ballarat for their efforts over recent months and the Ballarat community members for their strong support. LGL will be making every effort to preserve as many jobs as possible during the sale process, while reducing cash costs.”
Total production at Ballarat in the current year is expected to be up to 20,000 ounces and the forthcoming interim profit results will include an impairment charge associated with the Ballarat assets in the range of US$250-350 million after tax.
Overall expected LGL group gold production in the current year remains unchanged at between 1 million and 1.2 million ounces.
The company recorded profit of $109.3 million (Y/E 2008). A second quarter production report will be released on July 30.
LGL shares are today trading at $2.92.
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