Lihir Gold Ltd (ASX: LGL) announced today it would undertake an institutional share placement to raise about $US325 million ($A515 M) that would be issued on March 12.
The relative short time span reflects a confidence that this big placement will fill quickly, reflecting the performance of Newcrest last month in raising $A750 million ($US M) - which was over-subscribed - after originally planning to raise $A500 M ($US M).
Lihir said proceeds would be used to accelerate key stages of a process plant expansion on its Lihir Island operations in Papua New Guinea, taking advantage of cheaper equipment and shorter lead-times for components; to position the company for growth opportunities (citing West Africa as an example) and to provide greater financial strength and flexibility.
Following the placement Lihir will offer eligible shareholders the opportunity to subscribe for up to $A5,000 ($US ) shares in a share purchase plan.
Chief executive Arthur Hood said the current market conditions provide an exciting opportunity to advance the million ounce plant upgrade (MOPU).
The accelerated installation of these elements will potentially lead to marginal increases in production in 2010 and 2011 through improvements in processing rates and recoveries.
Importantly, however, they will reduce operational risk by duplicating key parts of the processing chain and enhancing plant reliability.
The MOPU has a forecast capital cost of $US700M in February 2008 dollars plus an estimated $US100m for interim power generation capacity.
Hood said the accelerated construction schedule for MOPU could bring forward about $US50 M in capital expenditure, increasing the forecast capital expenditure to about $US200 M this year.
Hood said that the company has increased its search budget in Cote d'Ivoire (Ivory Coast) to $US28 M for the current year, from $US23 M, following encouraging results.
No reference was made to LIhir's Ballarat goldfield project in Victoria which is being brought into production behind schedule and well below the projected production performance of the Australian company Ballarat Goldfields that was taken over by Lihir.