Lihir announces public offering

A registration statement has been filed with the U.S. Securities and Exchange Commission relating to the sale of shares in newcomer Lihir Gold.

The company, newly incorporated in Papua New Guinea, plans an initial public offering of its shares to raise US$450 million. The transaction also includes an over-allotment option equivalent to US$40 million of the shares.

Proceeds will be applied to cost of constructing the Lihir gold mine, which is expected to exceed US$670 million.

Another US$300 million in debt financing is already in place through a consortium of five banks, reportedly headed by United Bank of Switzerland and Citibank.

Lihir Gold is making the necessary arrangements to begin the sale, and has already registered its prospectus to the Australian Securities Commission. And just prior to the offering, the company will acquire from the current partners all the assets to the gold project on Lihir Island, 370 miles northeast of mainland Papua New Guinea.

The sale is scheduled for early October, when the shares will be available in a global offering, including offerings in PNG, Australia, the U.S. and internationally.

Corporate ownership stands at: 40% for Bahamas-based Southern Gold (itself owned 75% by New York-listed RTZ and 25% by Toronto-listed Vengold); 30% for Niugini Mining (51% of which is owned by New York-listed Battle Mountain Gold); and 30% for the Papua New Guinea government and landowners.

The offering should dilute the partners’ interest by as much as 33%.

Lihir Gold will operate the 620,000-oz.-per-year gold project, though mining will be contracted out to RTZ. Construction is under way, and startup is expected by the end of 1997.

The funds raised through the offering and debt financing will go towards construction of the mine facilities, a 54-MW power station, an airstrip and wharf facilities.

In a press conference in Sydney, Australia, the company announced its plan to hedge 1 million oz. gold over the next 12 months.