Battle for Lihir begins

Placer Dome (PDG-T) and South African giant AngloGold (AU-N) have already been named as possible combatants in the battle for the Lihir gold mine on the island of the same name, northeast of mainland Papua New Guinea, according to the National Post.

Denver-based Newmont Mining announced the sale of its 9.7% equity stake in Lihir Gold to Australian-based Macquarie Equity Capital Markets for US$84 million. Many market-watchers had figured that Rio Tinto (RTP-N) would sell its 16.3% stake to Newmont, which would then seek control of Lihir and its namesake mine.

Lihir pumped out a record 647,942 oz. gold last year. The company has been touted as a takeover target for North American mining companies aiming to boost gold reserves. The company is already owns two projects in Papua New Guinea.

Placer, which has plenty of cash and credit available for such an acquisition, did not comment on its intentions.

At the 50%-owned Porgera mine in Papua New Guinea, open-pit production is expected to average 675,000 oz. per year over the next four years. The company started development of the underground mine on a limited scale, and Placer expects it to add 68,000 oz. gold per year to the operation. At the end of 2001, proven and probable reserves at Porgera stood at 29.2 million tonnes grading 3.5 grams gold, or 3.3 million contained ounces. Measured and indicated resources were pegged at 35.4 million tonnes grading 2.3 grams gold.

Last year, the mine produced 380,311 oz. at a cost of US$179 per oz. This year, Porgera is projected to yield 338,000 oz. at US$245 each.

In late May, production wrapped up at Porgera’s 80%-owned Misima mine. There is a low-grade stockpile, and stockpile milling should continue through to 2004.