LGL - Lihir Gold

[ozrob]

MELBOURNE, Aug 26 (Reuters) - Lihir Gold Ltd (LGL.AX) on Wednesday said its first-half underlying profit more than doubled, beating expectations, and boosted its resource estimates for its mines at Lihir Island and in Cote d'Ivoire.

Lihir said it had increased its indicated resource estimates for the open pit gold deposit at Lihir Island by 31 percent to 43 million ounces.

In Cote d'Ivoire, Lihir lifted its measured and indicated resource estimates for the Hire district to 442,000 ounces from 352,000 ounces.

Lihir is reducing its reliance on its main mine in Papua New Guinea by expanding into West Africa and expects to yield 1.2 million ounces in 2009 after reporting record first-half output last month.

Lihir maintained its group production guidance at 1-1.2 million ounces for the full year.

For the six months to June 30, Lihir said underlying profit rose to $154.9 million from $67.4 million, against analysts' expectations of around $109 million.

The company posted a net loss after one-off charges of $300.9 million, down from a profit of $36.5 million in the prior year.

The one-offs included an impairment charge on the Ballarat gold mine of $409 million.

Total cash costs per ounce for the full year were expected to be below $400 per ounce, after declining to $350 an ounce in the first half. The industry average was $437 per ounce in the March quarter, according to Macquarie Bank data. (Reporting by Victoria Thieberger; Editing by James Thornhill)

Good result and has been reflect in today surge in sp which hit 2.77 and currently trading at 2.74

 

[Sean K]

Great resource upgrades, but would have liked to see even more from Africa. They are really still a one trick pony with Lihir Island, and have failed to spread their risk adequately over the past few years. They've tried to do that by (over)paying for EQI in nice safe Africa, and (dramatically over)paying for BGF, which I could see was a turkey all the way from Peru. Hood's head should roll. Management have cost shareholders a half a billion dollars! They really need a significant bolt on with the potential to produce, or producing up to a third of their ounces, lets say 200-400k pa. PRU looks tastey but a way off production of course.

 

[M34N]

Sitting on 2.72 right now after hitting day high of 2.77, traders pushed this one up a fair bit today (to say the least). Will be interesting to see how much the takeover offer that's made for Sino Gold is and if this also affects the price of Lihir and other gold miners.

Either way, my sell has been moved up to the 2.65 region from 2.40 I had on it the other day, so holding still to ride this one up. Some on other forums have been speculating on a jump to the 2.80 (previous SPP level?) or 3.00 (long-term psychological price) range but I personally feel the 2.75 level should provide a fair bit of resistance especially after today's run up, interested to see if it can hold or break through here.

 

[Sean K]

Sitting on 2.72 right now after hitting day high of 2.77, traders pushed this one up a fair bit today (to say the least). Will be interesting to see how much the takeover offer that's made for Sino Gold is and if this also affects the price of Lihir and other gold miners.

Either way, my sell has been moved up to the 2.65 region from 2.40 I had on it the other day, so holding still to ride this one up. Some on other forums have been speculating on a jump to the 2.80 (previous SPP level?) or 3.00 (long-term psychological price) range but I personally feel the 2.75 level should provide a fair bit of resistance especially after today's run up, interested to see if it can hold or break through here.

The SGX offer will value their ounces at more than $200. Lihir is currently sitting just over $100 and NCM just under $100. SGX has always run at a very high valuation, not sure why. Perhaps the exploration upside and grades. But double?

 

[So_Cynical]

They are really still a one trick pony with Lihir Island, and have failed to spread their risk adequately over the past few years.

Oh but what a pony it is...a 43 million ounce pony is one hell of a pony its impossible to spread risk when u have 43 million ounces in one place, they would have to buy 10 AND's...the top 20 Aussie explorers wouldn't have 43 million ounces between them.

 

[Sean K]

Oh but what a pony it is...a 43 million ounce pony is one hell of a pony

Yes, nice pony!

Why not use the balance sheet to buy another 5-10m oz somewhere for just a few mill? PRU, just sitting there waiting to be taken!

Knowing Hoods record he'll probably go for a turkey like SBM or CTO. He really should be hung drawn and quartered for the Ballarat debarcle, but no. We powerless investors sit back and he gets his multi million dollar salary for losing $500m in investors interest. Unbelievable!

The only thing keeping him alive is $1000 POG.

Here's a 3 year non algo chart with some red, blue and green lines on it. Great support at $2.75, $3.25 potential short term break up, over $3.50 looks very bullish.

Come on Hood, create some value!

 

[swm79]

but with the way things are with LGL they give you the most leverage for an appreciating POG and a depreciating $US... thats EXACTLY what i want at the moment!

if it goes close to $2.75 again in the near future the pony looks more like Makybe Diva to me and i'll be back on board after turning my back on them in pure frustration!

 

[vincent191]

How the hell did they buy a goldmine with no gold for half a billion dollars? If I f-ed up $5,000 I will be joining the dole q. Why is this bloke in LGL still got a job and been paid millions?? For this reason and this reason alone I will not buy LGL.

This is the small shareholders way of protesting same as with RIO, I find it hard to believe in incompetence of their CEO. Buying Alcoa at some fantastic price and then rejecting the BHP offer and nearly stuff it all up with the failed Chinalco saga. Losted something like $20 billion and still have a job paying a multi million salary.

 

[Sean K]

but with the way things are with LGL they give you the most leverage for an appreciating POG and a depreciating $US... thats EXACTLY what i want at the moment!

if it goes close to $2.75 again in the near future the pony looks more like Makybe Diva to me and i'll be back on board after turning my back on them in pure frustration!

This was one of my first investments back in 94, so unfortunately I have some emotion attached here. My dad is still waiting for a dividend before he sells. I think he'll be 180 years old before that happens. The only thing you really want from a gold company is capital growth. Yes, nice if you bought in 00 and added. But for recent holders since 06 it's a dog. Having said that, I'm half invested in this turkey waiting for decent managment to create value, or for a takeover. Have only been waiting 15 years!!!

 

[swm79]

This was one of my first investments back in 94, so unfortunately I have some emotion attached here. My dad is still waiting for a dividend before he sells. I think he'll be 180 years old before that happens. The only thing you really want from a gold company is capital growth. Yes, nice if you bought in 00 and added. But for recent holders since 06 it's a dog. Having said that, I'm half invested in this turkey waiting for decent managment to create value, or for a takeover. Have only been waiting 15 years!!!

aaaahhhhh ok. now it makes sense.

yeah, waiting for the div is going to be a looooong time

someone once said "never get emotionally attached to the stock"

... the opportunity cost you must have lost - i cant fathom

i guess it must be hard to give up the battle of waiting for a return on that one.

good luck... imo if you stick with it, it will reward you - i mean hell, i'm looking at buying it

to quote jesse livermore: “I never hesitate to tell a man that I am bullish or bearish. But I do not tell people to buy or sell any particular stock. In a bear market all stocks go down and in a bull market they go up.”

 

[eddyeagle]

But for recent holders since 06 it's a dog.

Agree with that! Has spent a lot of time aorund the $3 mark.

Gotta be due for a run towards $4 soon with gold above US$1000!

 

[Muschu]

Curious stuff "gold". Can anyone help me to understand why, when the price of gold is heading north -- stocks such as LGL went up today but the price of holding [stock code] GOLD went down?

 

[Sean K]

Now that the've gotten rid of the Ballarat monkey (I say again, heads should roll - $500m down the drain) they might get some traction. However, Lihir Island is still a worry to some degree. While it has a billion ounces or whatever, it's a bloody volcano! Must say, I'm not sure how stable the fault is, must be ok, but....They must diversify more, and much more significantly. One decent tremor close by and you might watch the stock disintigrate rather quickly. Any of you guys researched the geological risk? Maybe there is none since they have developed this whopping mine worth billions.

 

[So_Cynical]

Curious stuff "gold". Can anyone help me to understand why, when the price of gold is heading north -- stocks such as LGL went up today but the price of holding [stock code] GOLD went down?

ETFS PHYSICAL GOLD is traded in Australian dollars...USD gold price going up, Aust dollar
gold price falling, cos our dollar is rallying, as for the stocks ive noticed the miners operating
in USD environments are doing much better than the miners with all Aussie operations.

LGL operates in West Africa and PNG mostly so not that affected by the Aussie dollar.

http://www.asx.com.au/products/pdf/etfs_fact_sheet_physical_gold.pdf

 

[shag]

Now that the've gotten rid of the Ballarat monkey (I say again, heads should roll - $500m down the drain) they might get some traction. However, Lihir Island is still a worry to some degree. While it has a billion ounces or whatever, it's a bloody volcano! Must say, I'm not sure how stable the fault is, must be ok, but....They must diversify more, and much more significantly. One decent tremor close by and you might watch the stock disintigrate rather quickly. Any of you guys researched the geological risk? Maybe there is none since they have developed this whopping mine worth billions.

i just figure if/when a fault reallignment occurs, it will just loosen a few rocks for them, and save a bit of powder.
even if its shaken to hell u would figure it still would b dough out again and mined. like it has such a large resource, at good grades.
and its very, very unlikely the magma would start to flow in its short lifespan-say 100yrs odd.
the beancounters seem overtly worried about downtime if it shakes a bit. it seems such a valuable resource even if it was shut down for a short period(minelifewise).
it would b good if a geo gave us their view. but really seismic risk is like tossing a coin in these short periods, and its still a relatively evolving field.
look at the dramatic change of opinion of seismic risk in wellington-nz, today.
a major fault zone.

 

[Muschu]

ETFS PHYSICAL GOLD is traded in Australian dollars...USD gold price going up, Aust dollar
gold price falling, cos our dollar is rallying, as for the stocks ive noticed the miners operating
in USD environments are doing much better than the miners with all Aussie operations.

LGL operates in West Africa and PNG mostly so not that affected by the Aussie dollar.

http://www.asx.com.au/products/pdf/etfs_fact_sheet_physical_gold.pdf

Helpful reply SC - many thanks. I'll be interested to see which way LGL goes from here.....................

 

[eddyeagle]

Lihir back under 3 bucks today - the world's most annoying gold stock!

Just gotta be patient with this one I guess. I'm sure if I sold out, it would head straight to 4 bucks

 

[eddyeagle]

The gold price has just lept to US $1038 - it has to be time for LGL to do something surely! Get up!

 

[Sean K]

The gold price has just lept to US $1038 - it has to be time for LGL to do something surely! Get up!

Still taking the pain from the BGF debarcle and EQI over priced buy at the top of the market probably, as they should. I'm gobsmacked that directors and management haven't been made to pay for their only two significant decisions over the past 15 years. Quite unbelieveable actually.

 

[swm79]

you'd think these jaws would have to close sometimes soon kenna...

makes me wish i had have jumped aboard around the $2.50 mark in august.... but the again, the amount of pain everyone has had with this one makes me feel like its a bit of a dog