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Lihir Gold Ltd. is Australia’s second-largest gold company

PORT MORESBY, Papua New Guinea (PNG Post-Courier, January, 29, 2009) – LIHIR Gold Ltd has forecast another large jump in output, to more than one million ounces this year.

The 2009 forecast came after Australia’s second biggest gold company said it delivered record production in the fourth quarter of calendar 2008.

Output for the three months to December 31 rose 87.8 per cent on the previous corresponding quarter to 315,484 ounces due to improved production at the company’s namesake mine on Lihir Island in Papua New Guinea, and the acquisition of Equigold NL in June.

The $A1.1 billion purchase of Equigold delivered the Mt Rawdon and Kirkalocka mines in Australia and the Bonikro operation in Ivory Coast, West Africa into the Lihir portfolio.

"The acquisition of Equigold enabled significant diversification of group production, with some 22 per cent of group gold output in the fourth quarter sourced from Australia and Ivory Coast operations," managing director Arthur Hood said in a statement yesterday.

Lihir shares gained 13 cents, or 4.29 per cent to $3.16 [US$1.24] by 1515 AEDT.

Lihir said full year output for calendar 2008 was 26 per cent higher than the previous year at a record 882,000 ounces, with the company forecasting gold production over one million ounces this year.

Lihir sold 323,000 ounces of gold during the December quarter at an average price of $US792 per ounce compared with 179,510 ounces at $US794 in the prior corresponding quarter of 2007.

Credit Suisse analysts led by Michael Slifirski have forecast a gold price of $US900 an ounce for 2009, saying that the supply and demand fundamentals remain intact for a long-term upswing in the price.

"I think it (the gold price) will remain very strong and has every possibility of going higher from here," Mr Hood told reporters on a conference call.

Total cash costs decreased 6.4 per cent during the quarter to $US353 per ounce due to the inclusion of low-cost operations, increased output at Lihir Island, a lower oil price and a stronger US dollar.

Cash costs for the full year increased by 32.9 per cent on the previous year to $US400 an ounce.

Capital expenditure in 2008 totalled about $US264 million ($A398 million) and the company expects to spend about $US400 million ($A603.05 million) across its projects this year.

Lihir had about $US64 million ($A96.49 million) cash on hand at the end of 2008, with no debt drawn down on the $US250 million ($A376.9 million) lines of credit established with its banks.

Papua New Guinea Post-Courier:

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