Lihir Gold (LGG-T, LGL-A, LIHR-Q) has decided to put its Ballarat gold mine in Victoria state, Australia, up for sale.
The company says the mine’s production won’t be nearly robust enough to meet its production portfolio goals.
After reassessing the historical mining records and the more recent mining results, Lihir has learned that the project wouldn’t be able to exceed 100,000 oz. gold per year, as it would like.
The company originally thought the mine would be able to start production at the end of last year at a rate of 200,000 oz. gold per year over a 20-year mine life.
Lihir expects Ballarat to produce about 20,000 oz. gold in 2009. Total production from all of its mines should total 1-1.2 million oz. gold.
“The Ballarat project unfortunately will not fit our preferred investment criteria,” Lihir’s managing director, Arthur Hood said in a statement. “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 Papua New Guinea.”
Lihir says it already has a few interested buyers. The company will look more into making a deal in the coming weeks.
As a result of this decision, Lihir says its upcoming financial results will include an impairment charge associated with the Ballarat assets in the range of US$250-350-million, after tax.
The mine has an indicated resource of 300,000 oz. gold contained in 900,000 tonnes of ore grading 10 grams gold per tonne, and an inferred resource of 1.2 million oz. gold contained in 3 million tonnes grading 12.4 grams gold per tonne.
Lihir acquired the mine in March 2007 when it merged with Ballarat Goldfields.
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