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SECURITIES AND EXCHANGE COMMISSION
o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Port Moresby, NCD, Papua New Guinea
+617 3318 3300
Stuart.MacKenzie@LGLgold.com
Level 9, 500 Queen Street,
Brisbane,
Queensland, Australia 4000
Lihir Gold Limited Ordinary Shares of no par value | NASDAQ Global Market* | |
American Depositary Shares, each of which represents ten Lihir Gold Limited | NASDAQ Global Market | |
Ordinary Shares and which are evidenced by American Depositary Receipts |
* | Not for trading but only in connection with the registration of the American Depositary Shares representing such shares, pursuant to the requirements of the Securities and Exchange Commission. |
None
Lihir Gold Limited Ordinary Shares of no par value: | 2,368,729,935 (including 342,044 Restricted Executive Shares) |
þ Large accelerated filer | o Accelerated filer | o Non-accelerated filer | ||
U.S. GAAPo | International Financial Reporting Standards as issued by theþ Othero International Accounting Standards Board | |||||
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(i) | estimated reserves; | ||
(ii) | certain plans, strategies and objectives of management; | ||
(iii) | anticipated production or construction commencement dates; | ||
(iv) | estimated capital expenditure requirements; | ||
(v) | expected costs or production output; and | ||
(vi) | the anticipated productive lives of projects and mines. |
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2009 | 2008*‡ß | 2007#*ß | 2006#ß | 2005#ß | ||||||||||||||||
Amounts calculated in accordance with IFRS: | ||||||||||||||||||||
Statements of Comprehensive Income data: | ||||||||||||||||||||
Revenue(1) | 1,087.4 | 748.6 | 497.6 | 386.0 | 263.9 | |||||||||||||||
Operating profit before other income/(expense)(2) | 412.9 | 266.4 | 196.1 | 156.2 | 59.7 | |||||||||||||||
Net profit/(loss) after tax from continuing operations | 178.7 | 110.1 | (26.0 | ) | 54.9 | 6.1 | ||||||||||||||
(Loss)/profit from discontinued operation, net of income tax | (412.9 | ) | 0.7 | 1.9 | — | — | ||||||||||||||
Profit for the period(3) | (234.2 | ) | 110.8 | (24.1 | ) | 54.9 | 6.1 | |||||||||||||
Earnings ($) per share, basic(4) | (0.098 | ) | 0.056 | (0.014 | ) | 0.042 | 0.005 | |||||||||||||
Earnings ($) per share, diluted(4) | (0.097 | ) | 0.056 | (0.014 | ) | 0.042 | 0.005 | |||||||||||||
Earnings ($) per share — continuing operations, basic(5) | 0.075 | 0.056 | (0.015 | ) | 0.042 | 0.005 | ||||||||||||||
Earnings ($) per share — continuing operations, diluted(5) | 0.074 | 0.056 | (0.015 | ) | 0.042 | 0.005 | ||||||||||||||
Cash dividends ($) per ordinary share | 0.015 | — | — | — | — | |||||||||||||||
Number of ordinary shares (millions)(6) | 2,368.3 | 2,187.1 | 1,903.9 | 1,284.2 | 1,284.2 |
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2009 | 2008*‡ß | 2007#*ß | 2006#ß | 2005#ß | ||||||||||||||||
Statements of Financial Position data: | ||||||||||||||||||||
Total assets | 3,627.0 | 3,300.1 | 2,304.3 | 1,503.4 | 1,325.7 | |||||||||||||||
Cash and current receivables held | 488.6 | 85.7 | 189.1 | 51.6 | 133.2 | |||||||||||||||
Current liabilities | 146.0 | 165.2 | 77.8 | 177.3 | 80.8 | |||||||||||||||
Long term obligations | 242.3 | 199.1 | 58.0 | 506.8 | 455.1 | |||||||||||||||
Total equity(7) | 3,238.7 | 2,935.8 | 2,168.5 | 819.3 | 789.8 | |||||||||||||||
Paid up capital(8) | 3,420.9 | 3,080.0 | 2,319.7 | 1,027.1 | 1,027.5 | |||||||||||||||
Expenditure and Financing data: | ||||||||||||||||||||
Net cash flow from operating activities | 417.2 | 212.4 | (270.0 | ) | 57.3 | (54.5 | ) | |||||||||||||
Net cash flow from investing activities | (375.6 | ) | (270.9 | ) | (178.6 | ) | (203.3 | ) | (99.0 | ) | ||||||||||
Financing activities: | ||||||||||||||||||||
Issuance of ordinary shares | 340.9 | — | 977.4 | — | — | |||||||||||||||
Drawdown of term debt | 50.0 | — | 22.4 | 65.6 | 245.5 | |||||||||||||||
Repayment of loans | (0.1 | ) | (0.4 | ) | (421.6 | ) | — | (49.5 | ) | |||||||||||
Dividend paid | (35.5 | ) | — | — | — | — | ||||||||||||||
Advance to subsidiaries pre-acquisition | — | (49.7 | ) | — | — | — | ||||||||||||||
Purchase of treasury shares | — | (0.9 | ) | (1.3 | ) | (0.4 | ) | — | ||||||||||||
Net cash flow from financing activities | 355.3 | (51.0 | ) | 576.9 | 65.2 | 139.6 |
(1) | Alternative terminology: “net sales” or “operating revenues”. | |
(2) | Alternative terminology: “income/(loss) from continuing operations”. | |
(3) | Alternative terminology: “Net income/(loss)” or “income/(loss) from operations”. | |
(4) | Alternative terminology: “net income/(loss) from operations per share” | |
(5) | Alternative terminology: “income/(loss) from continuing operations per share”. | |
(6) | As adjusted to reflect changes in capital. | |
(7) | Alternative terminology: “net assets”. | |
(8) | Alternative terminology: “capital stock”. | |
Revised as follows: | ||
#(a) | A revision of deferred tax balances was undertaken in LGL which was attributable to the Lihir operation and was made to reconcile the previously reported tax balances to amendments sought for various income tax returns for the periods 1998-2004. The effect of this revision for each relevant year was: an increase of $10 million in deferred tax benefit in 2004, a decrease in deferred tax benefit of $3.7 million in 2005, an increase in deferred tax benefit of $1.1 million in 2006, an increase of $1.8 million in deferred tax benefit in the year ended December 31, 2007, an increase of $7.4 million in opening retained earnings at January, 1 2007 and an increase of $9.2 million in deferred tax assets. | |
#(b) | Deferred income tax expense increased by $1.8 million to reflect an accounting adjustment in relation to opening deferred tax adjustments in Ballarat Goldfields. | |
#(c) | Finalisation of the Ballarat Goldfields business combination and subsequent adjustments to the provisional accounting values as illustrated in Note 30(b) and translation of these final adjustments to the closing $US rate at December 31, 2007. | |
* | Classification of the Ballarat Goldfields operation profit and loss for the year ended December 31, 2008 and 2007 from continuing operation to discontinued operation. | |
‡ | Finalisation of the Equigold business combination and subsequent adjustments to the provisional accounting values as illustrated in Note 31 to our 2009 financial statements, the amortization and tax effect of these final adjustments and translation of these final adjustments to the closing $US rate at December 31, 2008. | |
ß | The EPS and number of ordinary shares calculations for the 2006 and 2005 financial years have been restated to include the impact of the capital raising undertaken in March 2009 in accordance with accounting standards. These adjusted figures are unaudited. |
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• | risks associated with the gold mining industry; and | ||
• | risks specific to the Company. |
1. | Risks associated with the gold mining industry |
1.1 | The Company’s profitability is dependent on gold prices determined by the market |
The market price for gold may fluctuate as a result of numerous factors beyond the Company’s control, such as: |
• | speculative positions taken by investors or traders in gold; | ||
• | changes in global demand for gold (as an investment and/or for other uses); | ||
• | expectations regarding inflation; | ||
• | the strength of the US dollar (the currency in which gold trades internationally); | ||
• | gold hedging by producers; | ||
• | decisions made by central banks and multilateral organisations to purchase, hold or sell portions of their gold reserves; and | ||
• | changes in production costs in major gold producing nations including South Africa, China and various countries located in the former Soviet Union. |
The potential supply of gold consists of new mine production, plus existing stocks of bullion and fabricated gold held by governments, financial institutions, industrial organizations and individuals. In addition, the central banks of several countries and multilateral organizations sell their gold reserves onto the open market. For this reason a variation in annual gold production may not necessarily have a significant flow on effect onto the supply or price of gold for that particular year and there is no guarantee that additional open market sales of gold will not result in a downward pressure on the global gold price. | |||
If the gold price were to decline over an extended period below the price used by the Company in estimating its reserve calculations, then this could render ore reserves at certain operations uneconomic, and require a re-evaluation and/or downward adjustment of those ore reserves. | |||
In the past, gold mining companies have sought to mitigate, in part, the effect of gold price volatility, through hedging strategies which have included periodic purchases or sales of “put” or “call” options, spot deferred sales and forward sales covering a portion of its gold production at fixed future prices, however as at December 31, 2009, the Company’s gold sales are entirely unhedged. | |||
The following table sets forth the high, low and average afternoon fixing prices for gold on the London Bullion Market (the “London P.M. Fix”) for the periods indicated. |
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Price in $ Per Ounce of Gold | ||||||||||||
Year | High | Low | Average | |||||||||
1988 | 484 | 395 | 437 | |||||||||
1989 | 416 | 356 | 381 | |||||||||
1990 | 424 | 346 | 384 | |||||||||
1991 | 403 | 344 | 362 | |||||||||
1992 | 360 | 330 | 344 | |||||||||
1993 | 406 | 326 | 360 | |||||||||
1994 | 396 | 370 | 384 | |||||||||
1995 | 396 | 372 | 384 | |||||||||
1996 | 415 | 367 | 397 | |||||||||
1997 | 366 | 283 | 331 | |||||||||
1998 | 313 | 273 | 294 | |||||||||
1999 | 326 | 253 | 279 | |||||||||
2000 | 313 | 264 | 279 | |||||||||
2001 | 293 | 256 | 271 | |||||||||
2002 | 349 | 278 | 310 | |||||||||
2003 | 416 | 319 | 363 | |||||||||
2004 | 454 | 375 | 409 | |||||||||
2005 | 537 | 411 | 445 | |||||||||
2006 | 725 | 525 | 603 | |||||||||
2007 | 841 | 608 | 695 | |||||||||
2008 | 1,011 | 712 | 872 | |||||||||
2009 | 1,213 | 810 | 972 | |||||||||
2010 (to February 28, 2010) | 1,153 | 1,058 | 1,107 |
LGL’s profitability is dependent on the price of gold. There are many factors outside the Company’s control which determine the gold price and it is impossible for management to predict future movements in gold prices. |
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1.2 | Exploration and Developmental risk |
Exploration and mining activity is speculative in nature and requires a significant financial investment to fund the exploration drilling necessary to quantify the grades of mineralized material. | |||
If mineralization is discovered, it may take additional time and further financial investment to determine whether an ore reserve exists and commission a feasibility study for the project. Feasibility studies are based on additional assumptions regarding: |
• | gold and other metal prices; | ||
• | anticipated tonnage, grades and the unique characteristic of the ore; | ||
• | anticipated recovery rates; | ||
• | anticipated capital expenditure and cash operating costs; and | ||
• | the estimated return on investment. |
Each assumption introduces an additional element of risk into this feasibility calculation. | |||
Similarly, a Company’s ore reserve estimates are merely expressions of judgment based on knowledge, experience and industry practice, and may require revision when new information becomes available. Changes in the forecast price of commodities, exchange rates, production costs or recovery rates may alter the economic status of the reserves and may result in the restatement of those reserves. Such changes could impact on depreciation and amortisation rates, asset carrying values, deferred stripping calculations and provisions for environmental cleanup costs. | |||
In summary, no assurance can be given that the indicated amount of gold will be recovered or at the rates estimated. |
1.3 | Fluctuations in oil prices |
Oil-based products, fuels and consumables (including chemicals, explosives, heavy fuel oil and diesel) are a large operating cost to any mining company. Diesel fuel is used to power the mining equipment while heavy fuel oil is used to generate electrical power. Whilst the development of alternative power (eg: geothermal) reduces the dependence on heavy fuel oil, the Company remains vulnerable to the impact of increases in oil prices for diesel and for its remaining heavy fuel oil requirements (eg: lubricants). |
1.4 | High demand for input production factors |
Due to the increased demand for most mineral commodities experienced over the last few years, there has been significant demand for many mining and processing inputs. The Company, like most other mining and processing operations worldwide, has faced shortages and delays in the procurement of some required parts and supplies. These market pressures have been reflected in the cost and availability of certain inputs. | |||
The above shortages may also lead to delays in the commissioning of the Company’s operations. Suppliers and contractors appointed by the Company may fail to perform adequately which could lead to further costs, and/or delays, as the Company appoints alternative suppliers and/or contractors. The construction and commissioning schedules will also rely on the timely completion of a number of critical activities any of which, if delayed, could cause construction and commissioning activities to be delayed. | |||
The Company cannot guarantee that no equipment will be rendered inoperative due to lack of parts supply, or that there will be no other adverse effects from the Company’s inability to obtain other mining and processing inputs. |
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1.5 | Insurance may not address all operating risks |
The Company’s mines, processing plants or related facilities could be forced to shut down or operations could otherwise be disrupted by a variety of risks and hazards, some of which may be outside the control of the Company. These include environmental hazards, industrial accidents, technical failures, labour disputes, unusual or unexpected rock formations, geothermal and seismic activity, flooding and extended interruptions due to inclement or hazardous weather conditions, fires, explosions and other accidents at the mine, processing plant or related facilities. These risks and hazards could also result in damage to, or destruction of, mineral properties or production facilities, personal injury, environmental damage, business interruption, monetary losses and possible legal liability. | |||
While the Company can maintain insurance with a range of coverage consistent with industry practice, no assurance can be given that this coverage can be maintained at reasonable rates or that any coverage it arranges will be adequate and available to cover any claims. See “Item 4. Information on the Company — D. Property, Plant and Equipment — Insurance. |
1.6 | Competition with other mining companies for projects and key personnel |
The Company competes with other mining companies on a global basis to attract and retain key human resources. With an increase in mining activity observed in the past few years, there is a global shortage of key mining industry human resource skills including geologists, metallurgists, mining engineers, governance, finance and administrative personnel. In addition there is a high degree of competition for the acquisition of attractive gold mining projects. A failure to attract and retain key personnel or a failure to acquire attractive gold mining projects could have a material adverse effect on the Company’s business and operations. |
2. | Risks specific to the Company | ||
2.1 | The Company is dependent on production from Lihir Island |
The Company’s primary operating mine is on Lihir Island in PNG. Whilst the Company’s operations in Bonikro (Côte d’Ivoire) and Mt Rawdon (Australia) make material contributions to the Company’s gold production, for the year ended December 31, 2009, Lihir Island represented 76% of the Company’s gold production. | |||
As a result, the commercial viability of the Company is currently highly dependent upon the successful operation of its Lihir mine. |
2.2 | The Company is subject to political and community risk |
The Company operates in PNG and Côte d’Ivoire which are developing countries that are subject to political uncertainties including, but not limited to, the risk of civil rebellion, expropriation, nationalization and land ownership disputes. Unpredictable government actions concerning the economy, taxation, or the operation and regulation of facilities deemed important (such as mines) could have a significant adverse effect on the Company. | |||
Specific political and community considerations include the following: |
(a) | Division of powers within government. | ||
In addition to the national PNG government, PNG has a system of 19 provincial level governments, most of which are funded almost entirely by direct grants from the national government. In the past, there have been disagreements between the national government and the provincial level governments of PNG, primarily in relation to power |
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sharing and revenue arrangements. These inter-government disputes could adversely affect the Company’s operations. |
With regards to the Lihir operation, the New Ireland provincial government exchanged its equity participation option in the Lihir operation for undertakings by the national government to provide an annual support grant to the New Ireland province of 3,000,000 Kina per year for expenditure on infrastructure projects. A failure of the national government to fulfil these undertakings could have an adverse effect on the relationship between the national and provincial governments and this could result in the New Ireland provincial government taking steps that may have negative consequences for the Lihir operation. | |||
(b) | Civil unrest | ||
There have been instances of civil unrest within PNG and Côte d’Ivoire. | |||
In September 2002, civil unrest in Côte d’Ivoire resulted in a failed coup attempt. More recently, the elections to be held in November 2008 were postponed to November 2009 due to delays in implementing the identification and voter registration process. The President postponed the November 2009 elections citing irregularities in the compilation of the electoral roll. In February 2010, the President dismissed the government causing minor civil unrest which had no effect on the operations. The government has since been reformed including the electoral commission and it is now anticipated that the elections will occur later in 2010, subject to the electoral roll being finalised. Additional election delays could lead to civil unrest which could adversely affect the Company’s operations in Côte d’Ivoire. | |||
(c) | Landowner compensation issues and community considerations. | ||
The Company devotes a significant amount of time and effort to address the concerns raised by the local communities affected by its mining operations. | |||
At its Lihir operation, the Company has entered into an integrated compensation, relocation and benefits package that covers (in different ways) the affected landowners, future affected generations and Lihirians generally (the “Integrated Benefits Package” or “IBP”). Most recently on May 2, 2007, the Company, the local community of Lihir Island, the PNG national, New Ireland provincial and Lihir local level governments signed a revised Integrated Benefits Package (the “Revised IBP”). The implementation of the IBP commitments has been the key focus of all parties. See “Item 4. Information on the Company — B. Business Overview — Description of Operations — (1) Papua New Guinea: Lihir Operation — 1.12 — Community Affairs”. | |||
In Côte d’Ivoire, the Bonikro operation is located within the boundaries of several local villages including Bonikro, Konankro, Gogobro (as landowners) and Bandamakro. This area was previously farming land and the Company has recently concluded a resettlement and compensation program in accordance with International Finance Corporation (“IFC”) guidelines, whereby landowners are being compensated for loss of land and income by way of three annual instalments, with the final instalment paid in December 2009. Planning for the resettlement of Bandamakro village commenced in the third quarter of 2009 and is scheduled for completion in 2010. Resettlement initiatives are complex and culturally sensitive matters requiring the involvement and co-operation of local communities and various government departments, this adds a further dimension of administrative risk and delays. See “Item 4. Information on the Company — B. Business Overview — Description of Operations — (2) Africa — (2.9) Community Affairs”. | |||
While the Company will continue to spend considerable time, effort and expense to work with the local communities to resolve community issues, no assurance can be given that |
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future community dissatisfaction will not occur and this may lead to disruptions to the Company’s operations. |
2.3 | Geological Risk | ||
(a) | Hydrological and geothermal risks | ||
The success of the Lihir operation depends, in part, upon the implementation of the Company’s engineering solutions to particular hydrological and geothermal conditions. Notwithstanding experience gained since the start of the operation, geothermal and hydrological ground conditions are unique in a mine the size of the Lihir mine. Significant removal of both groundwater and sea water inflow and geothermal control is required before and during mining. While the Company has achieved considerable success to date in addressing these conditions, no assurance can be given that future efforts will be adequate or meet expectations. A failure to resolve any unexpected problems relating to these conditions at a commercially reasonable cost could adversely affect the economics, safety and/or feasibility of the Lihir operation. | |||
The Lihir operation uses geothermal power in order to reduce energy costs of the mine. Whilst Lihir Island contains large potential steam resources, specific reservoirs of steam must be identified and harnessed in order to meet the ongoing needs of the Lihir operation’s geothermal power facilities. The Lihir operation may fail to accomplish this in sufficient time to maintain the power requirements of the geothermal facilities, which could force the Company to rely on other power sources. See “Item 4. — Information on the Company — B. Business Overview — Description of Operations — (1) Papua New Guinea — Lihir Operation — 1.4 Mining”. | |||
(b) | Earthquake seismic activity risks | ||
Lihir Island is a volcanic seamount and the Lihir operation is located within the caldera of a volcano believed to be extinct. In addition, seismic investigations confirmed that Lihir Island is 90 km away from a seismically activity area of PNG. From United States Geological Survey (“USGS”) records of all earthquakes from 1973 to present, the strongest event within a 200 km radius of Lihir Island was a M8.2 earthquake on the Richter scale on November 16, 2000, with an epicentre approximately 109 km south-southwest of Luise Harbour (where mining operations are carried out) and at a depth of 33 km. | |||
The second strongest event on the same USGS record was a M7.7 earthquake on September 9, 2005, centred 190 km south — southeast of Lihir at a depth of 90 km. These and other smaller events have been felt at Lihir Island. | |||
No assurance can be given that operations at the Lihir mine will not be adversely affected by earthquake activity (including resulting tsunami risk) during the life of the Lihir mine. See “Item 4. — Information on the Company — B. Business Overview — Description of Operations — (1) Papua New Guinea — Lihir Operation”. | |||
(c) | Landslide risks | ||
The Lihir mine is located in a high erosion environment with the risk of landslides. Several small landslides have been recorded in the caldera including a significant landslide in October 2005 that disrupted gold processing for almost a month and resulted in the deaths of two employees. Landslides are influenced by natural phenomenon such as rainfall and earthquakes but may also be influenced by the ongoing mining operations. | |||
No assurance can be given that operations at the Lihir mine will not be adversely affected by a significant landslide during the life of the operation. |
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2.4 | Construction, commissioning and other operational risks |
The Company operates in remote locations and this may exacerbate construction, commissioning and operational risk. Specifically, the successful completion of the MOPU project is subject to a number of risks and uncertainties including unforseen geological, physical, economic or environmental conditions that may result in cost over-runs, delays in construction or delivery of equipment resulting in delayed project commissioning. See “Item 4. Information on the Company — B. Business Overview, — Description of Operations — (1) Papua New Guinea — Lihir Operation — (3) Processing — (M) MOPU Project”. |
2.5 | Industrial relations risk |
The Company cannot guarantee that it will not in the future face strikes, work stoppages, work slowdowns, grievances, complaints, claims of unfair practices or other industrial activity. Any such activity can cause production delays, increased costs and negative effects to the Company’s ability to deliver on production forecasts. As a result, operating results may suffer. |
2.6 | The Company has limited financial resources |
The Company successfully raised US$325 million in March 2009 via an institutional placement of its ordinary shares and A$25 million from a share purchase plan and currently has $250million in debt facilities in place. While the Company currently believes that it has, or will have, access to resources sufficient to finance its operations and capital expenditure requirements including the MOPU project, the adequacy of the Company’s financial resources will depend upon its ability to generate sufficient revenues from gold production and to keep its costs and other expenditures within its current estimates. If the Company is unable to generate such revenues, keep its costs and expenditures within such estimates, or if unexpected conditions or developments occur, the Company could require more funds than are currently available to it. |
2.7 | The Company’s operations are subject to environmental obligations |
As a mining company, LGL is required to comply with regulatory frameworks designed to protect the environment. Whilst the Company is in compliance with its environmental obligations, there is no guarantee that an event may not occur to jeopardize LGL’s ability to mine. Specific environmental risks applicable to each of the Company’s operations include the following: |
(a) | Lihir operation | ||
The volumes of waste rock currently produced by the Company’s Lihir operations comply with the levels permitted by the approved environmental impact statement and environment permits for the operations issued by the PNG Department of Environment and Conservation (“DEC”). | |||
The Company’s MOPU project will require a number of permits and approvals, the most important being the environment permit which is being obtained in consultation with the DEC. The Company submitted an Environmental Impact Statement (“EIS”) to the DEC in November 2009 and from December 2009 commenced a formal consultation and assessment period with submissions closing on April 13, 2010. Whilst the Company continues to work with the DEC during this consultation and assessment period there is no guarantee that delays in obtaining the environment permit or other permitting delays will not be encountered and these delays could adversely affect the Company’s MOPU project operating at optimal capacity. |
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(b) | Mt Rawdon operation | ||
At the Mt Rawdon operation’s mine site, there are risks associated with water use and drainage. A proportion of the stored waste rock has been categorized as potential acid forming and has the potential to generate poor quality water following oxidation and washout of the oxidation products following rainfall. The poor quality water is captured and contained in dams and pumped back to the tailings storage facility. The tailings storage facility currently contains elevated cyanide concentrations that have harmed and killed birds. Management practices are in place to minimise avian access to the storage facility. Seepage from the tailings storage facility to groundwater has been observed and the operation has installed pumpback wells and interception trenches directing seepage to reclaim dams and then pumping the seepage back into the tailings storage facility. The Queensland license requirements have included conditions on water quality, discharge and compliance criteria. The Company is currently in compliance with the license conditions. | |||
(c) | Bonikro operation | ||
At the Bonikro operation’s mine site, there are risks associated with water management and drainage. The mine has constructed a series of coffer dams upstream of the open pit in order to redirect natural drainage away from the open pit. There is a risk that, following high intensity rainfall or seismic events, there could be failure of the dams resulting in a water ingress to the open pit. This would cause short term operating inefficiencies whilst the water is removed and coffer dams re-established or alternative bypass systems established. There is also a risk that sediment rich surface water drainage could exit the mine site following high rainfall and flow into local village gardens causing damage to crops. This could result in compensation damage claims from the impacted farmer for loss of crops and vegetation. | |||
Additionally, the communities surrounding the operation have made complaints regarding dust levels and damage to local housing following open pit blasting vibration events. These events have been investigated and dust and noise monitoring equipment sourced. Monitoring commenced in 2009 and the operation is in compliance with Côte d’Ivoire regulatory requirements. | |||
2.8 | The Company’s mining and exploration rights may be suspended or terminated |
As a mining company, LGL is reliant on various governments renewing its existing mining and exploration rights. Specific risks associated with this process are as follows: |
(a) | Lihir operation | ||
The Lihir operation is subject to the provisions of the PNGMining Act1992 which governs the granting of mining rights and the conditions upon which those rights may be terminated. In particular, the Company is party to a Mining Development Contract dated March 17, 1995 with the PNG national government. This sets forth the terms upon which the Company may exercise its rights under the Special Mining Lease which governs the Lihir operation. Under certain limited circumstances, the PNG national government may terminate the Mining Development Contract and, therefore, the Special Mining Lease. Any such termination would prohibit the continued operation of the Lihir operation. | |||
The Company’s Exploration Licence (EL485) has an expiry date of March 31, 2010. An application for renewal of the licence has been made and the Company is now waiting on a decision (extension of the licence is automatic whilst the application for renewal is being considered). A denial of the renewal would terminate the Company’s exclusive right to explore for gold on the remainder of Lihir Island (outside the area of the Special Mining Lease). Despite several subsequent communications with the relevant government |
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department, the Company is yet to receive confirmation that the license has been renewed and accordingly, can provide no assurance that it will be renewed on acceptable terms or at all. |
The MOPU project relies on the PNG national government granting a number of permits, licenses and approvals including environmental, ports, mine safety, electricity and immigration approvals. The Company is working with the PNG national government, in particular the Mineral Resources Authority (“MRA”) and the DEC, to streamline and facilitate the application for and processing of these requested permits and approvals. The EIS was submitted and accepted by the DEC in December 2009 and a four month approval process outlined. However, there is a risk that the necessary permits and approvals will not be granted by the PNG national government, will not be granted in a timely manner, thereby delaying the MOPU project or will be granted but with unexpected and possibly adverse conditions attached. | |||
(b) | Bonikro operation and Côte d’Ivoire exploration licences | ||
The Bonikro operation is subject to the provisions of theMining CodeandMining Decreeof Côte d’Ivoire which governs the granting of mining rights and the conditions upon which those rights may be terminated. A subsidiary of the Company, namely Equigold Mines CI SA (“EMCI”), a company incorporated in Côte d’Ivoire is party to a Mining Investment Convention dated May 3, 2007 with the State of Côte d’Ivoire. The Mining Investment Convention defines the conditions for EMCI’s performance of mining operations within the boundaries of the exploitation permit relating to the Bonikro operation. In certain limited circumstances, the State of Côte d’Ivoire may terminate the Mining Investment Convention. There is a risk that cancellation of the Mining Investment Convention could result in the cancellation of the Bonikro exploitation permit or the Bonikro operation becoming unprofitable. | |||
Exploration licences are granted and are renewable as long as expenditure and work commitments are met as outlined and agreed to at the time of granting the initial exploration licence. There is a negligible risk that the exploration licences would be revoked by the State of Côte d’Ivoire. | |||
(c) | Mt Rawdon operation | ||
Mt Rawdon operates under an approved mining lease issued by the Department of Mines and Energy of Queensland, Australia. There is negligible risk that the mining lease would be withdrawn. | |||
Exploration licences are granted and are renewable as long as expenditure and work commitments are met as outlined and agreed to at the time of granting the initial exploration licence. There is a negligible risk that the exploration licences would be revoked by the Queensland government. |
2.9 | The Company is vulnerable to currency risks and foreign exchange controls |
The PNG national currency, the Kina, is subject to exchange controls. No assurance can be given that the Company will be able to convert its US$ receipts or any Kina funds it has into other currencies at rates comparable to those at which funds were remitted to PNG in the past or at all. In addition, the PNGCentral Banking (Foreign Exchange and Gold) Regulationsrequire the prior approval of the PNG Central Bank to convert funds from Kina into other currencies. These regulations generally require PNG companies to transfer all of their non-Kina revenues to PNG and convert them into Kina, as is ordinarily the case with large mining and petroleum projects in PNG. However, under the Mining Development Contract, the PNG national government has agreed to ensure that the PNG Central Bank will grant the Company permission to retain certain of its funds in currencies other than Kina, and to convert and transfer its Kina funds into offshore |
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accounts outside PNG. This permission is limited to certain proceeds from bank loans, insurance policies, and the sale of gold, in an amount sufficient to cover certain specified purposes during the following three month period. As a result of these limitations, the Company is still exposed to certain exchange rate fluctuations and convertibility risks. There can be no assurance that the Kina will not depreciate from its current position against the U.S. dollar. See “Item 10. Additional Information — D. Exchange Controls”. |
Although the Company reports in a single currency (US dollars), its costs and revenues are exposed to the fluctuations of a number of different currencies. Costs and capital expenditures incurred at the Lihir operation are denominated in US dollars, Australian dollars and PNG Kina. Capital expenditures and future operating costs at the Mt Rawdon operation and the corporate office are (and will be) principally incurred in Australian dollars. Capital expenditures and operating costs at the Bonikro operation are principally incurred in US dollars, Central African CFA, Australian dollars and the Euro. Revenues from the Lihir and Bonikro mines are in US dollars. Revenues from the Mt Rawdon mine are determined by metals prices denominated in US dollars but are currently received in Australian dollars. | |||
Given that a significant portion of the Company’s revenue and a large proportion of expenditures are denominated in US dollars, the Company in 2008 revised its foreign currency hedging policy to enable hedging of known capital expenditure commitments in currencies other than US dollars and again in 2010 to enable hedging of some forecast Kina operating expenses. However, the Company’s non-US dollar costs and capital expenditures may still be subject to changes beyond its control due to fluctuations in these and other currency exchange rates. |
2.10 | Shareholders are subject to different rights under certain circumstances |
The Company’s corporate affairs are governed by its constitution and the laws of PNG. Principles of law applicable to the Company and its shareholders may differ from those that would apply if the Company were incorporated in a jurisdiction in the United States. For example, while in most cases shareholder votes are held by ballot in a manner similar to the practice in the United States, in certain circumstances shareholder votes can be limited to persons actually present at a shareholder meeting (either shareholders or representatives of shareholders), and the quorum for such purposes can be as low as three persons as is provided for by the Company’s constitution. The Board also has the ability to refuse to register transfers of ordinary shares that would breach ASX rules or contravene laws. In addition, the Company’s shareholders may have fewer or less well-defined rights under PNG corporate law with which to protect their interests against actions by its Board or major shareholders than they might have as shareholders of a corporation incorporated in a jurisdiction in the United States. |
2.11 | Difficulty in the pursuit of litigation against the Company |
None of the Company’s executive officers or directors reside in the United States. The Company understands that the general rules in respect of service of process issued out of United States courts requires either: |
• | the presence of the person to be served within the jurisdiction of the relevant court; or | ||
• | the consent of that person to receive service outside the jurisdiction. |
The Company is not aware that any of the individuals concerned have given consent to service outside the jurisdiction. Therefore, for a claimant in United States courts, there may be a risk that such persons cannot be served with process. | |||
Certain judgments of certain foreign courts are recognized and enforceable in PNG by registration under theReciprocal Enforcement of Judgments Act(Chapter 50 of the PNG Revised Laws). This Act is applied generally on the basis of reciprocity to prescribed countries and designated courts within those countries. The United States is a prescribed country under the Act. The designated courts in the United States are the New York State Court of Appeals and any Supreme Court of the |
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State of New York. If a foreign money judgment is not obtained from a designated court, it may nonetheless be recognized and enforced in PNG at common law, by commencing a separate action in the National Court of PNG to sue on the judgment. |
In the Company’s prospectus issued in connection with the global offering of shares in 1995, it was stated that the courts of PNG will not permit original actions for civil liabilities, predicated upon the civil liability provisions of the US federal securities laws. The Company has no reason to believe that PNG courts today would take a different attitude, and allow such actions against the Company, or any of its non-US resident executive officers or directors. This should only be a difficulty for US investors to the extent that such an action cannot be brought in the United States, or a judgment of a United States court cannot be enforced in PNG. |
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(a) | Introduction |
• | Australian Securities Exchange Limited (“ASX”); | |
• | Port Moresby Stock Exchange (“POMSoX”); | |
• | Toronto Stock Exchange (“TSX”); and | |
• | National Association of Security Dealers Automated Quotations (“NASDAQ”). |
• | the Mount Rawdon operation in the State of Queensland in Australia; and | |
• | the Bonikro operation in Côte d’Ivoire in West Africa. |
(1) | Development of the Lihir operation |
The initial exploration and development work on the Lihir operation was conducted by a joint venture beginning in 1982. A subsidiary of Rio Tinto plc (referred to collectively with its subsidiaries and affiliates, as “Rio Tinto”), one of the participants in the joint venture, prepared a feasibility report on the Lihir operation dated March 1992 and amended in September 1993, October 1994 and May 1995, which was reviewed and audited by Micon International Limited. The joint venture, which undertook almost nine years of test drilling and numerous geological and other studies on the Lihir operation, spent a total of $147 million on exploration and pre-development activities in relation to the Lihir operation. In October 1995, the Company acquired the assets relating to the Lihir operation from the joint venture and issued and sold ordinary shares in a global offering. Production of gold from oxide ore commenced in May 1997. In October 1997, the Company completed construction of the processing and related facilities for the Lihir operation and commenced production of gold from sulphide ore. |
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The assets acquired from the joint venture included the Special Mining Lease which gives the Company exclusive mining rights within the leased area of Lihir Island for 40 years from 1995, provisions exist for extending the term of this lease in accordance with the PNG Mining Act 1992. The Lihir operation relates to the mineral deposits located within the area covered by the Special Mining Lease. The Company also holds the Exploration Licence (EL485) which provides the Company with the exclusive right to explore for gold and other minerals on the remainder of Lihir Island for a renewable two year period. The Company currently holds the licence until March 31, 2010. Under the provisions of theMining Act1992, the term of the exploration licence is deemed to be extended automatically pending the making of a decision on the renewal application. | |||
Rio Tinto completed the sale of all of its shares in the Company in 2005 and no longer holds a direct interest in the Company. Niugini Mining Limited (“NML”), an original joint venture participant, was acquired under a scheme of arrangement and is now a wholly-owned subsidiary of the Company. No options over the Company’s shares remain outstanding. See “Item 7. Major Shareholders and Related Party Transactions — A. Major Shareholders — (e) Share Options”. | |||
Until October 2005, the Company was managed by Lihir Management Company Limited (“LMC”), a wholly-owned subsidiary of Rio Tinto, pursuant to a management agreement dated March 17, 1995. Rio Tinto acquired a managing interest in the joint venture in 1989, and the joint venture had been managed by LMC since that time. Since October 2005, the Company has been under independent management following termination of the management agreement. As part of the termination of the management arrangement, the Company acquired all of the shares of LMC. | |||
The Company has entered into two management services agreement with Lihir Services Australia Pty Limited (“LSA”), a wholly owned subsidiary. Under the agreements, the Company engages LSA to provide or procure the provision of various services. The services provided under the management services agreements include: |
• | representation and liaison services; | ||
• | banking and credit arrangements; | ||
• | procurement of goods and services; | ||
• | recruitment; | ||
• | marketing of products; | ||
• | tax returns; | ||
• | strategic services; | ||
• | accounting services; | ||
• | IT and telecommunications; | ||
• | organisational development; | ||
• | administration and travel; and | ||
• | legal. |
LSA charges the Company a fee at normal commercial rates for providing those services under the two agreements. A copy of the management services agreements were previously included in Exhibit 4(w) and (x). The updated agreements are included in Exhibit 4(av) and (aw). |
(2) | Merger with Ballarat Goldfields |
The Company acquired 100% of Ballarat Goldfields in February 2007. Ballarat Goldfields has four wholly owned Australian subsidiaries: New Resources Pty Limited, Berringa Resources Pty Limited, Ballarat West Goldfields Pty Limited and Corpique (No. 21) Pty Limited. Assets acquired included the Ballarat East underground gold development project and the Ballarat West, Ballarat South and Berringa exploration projects located in the vicinity of the town of Ballarat in Victoria, Australia. The Ballarat operation produced 12,565 ounces of gold in 2009. |
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As noted above, this operation is subject to a sale agreement with Castlemaine Goldfields Limited. |
(3) | Merger with Equigold |
The Company acquired 100% of Equigold in June 2008. At the time of acquisition, Equigold had five subsidiary companies, three of which were wholly owned and incorporated in Australia and two of which were majority owned and incorporated in Cote d’Ivoire. As at January 2010, Equigold has seven subsidiary companies, three of which are wholly owned and incorporated in Australia, two of which are wholly owned and incorporated in Cote d’Ivoire, and two of which are majority owned and incorporated in Côte d’Ivoire. The Australian entities are Swindon Holdings Pty Ltd, Stanmines NL (now Stanmines Pty Ltd), and Kim Resources NL (now Kim Resources Pty Ltd) and the Côte d’Ivoire entities are Equigold Mines Côte d’Ivoire SA (“EMCI”) (90% interest effective December 31, 2009), Equigold Côte d’Ivoire SA (98% interest effective December 31, 2009), LGL Exploration CI SA (100% interest effective January 2010), and LGL Development CI SA (100% interest effective January 2010). | |||
Assets acquired included the Mount Rawdon operation located in southeast Queensland, Australia, the Kirkalocka assets located in the Murchison region of Western Australia and the Bonikro operation located in Côte d’Ivoire in West Africa. As part of the acquisition, the Company also acquired 15,351 square kilometres of exploration licenses either granted or under application in Côte d’Ivoire covering in excess of 700 kilometres of highly prospective West African Birimian greenstone belts. The Kirkalocka assets were sold to a third party over the course of 2008-2009. Consideration included a combination of cash and shares in the purchasing company. The Company subsequently disposed of its shares in the purchasing company during 2009. The Company realised a $1.4 million loss on the sale of Kirkalocka assets. |
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(in US$ millions) | 2009 | 2008 | 2007 | |||||||||
Lihir | 279.1 | 153.0 | 156.5 | |||||||||
Ballarat | 35.3 | 118.6 | 65.9 | |||||||||
Bonikro | 49.2 | 29.9 | — | |||||||||
Mount Rawdon | 5.1 | 1.3 | — | |||||||||
Corporate | 4.8 | 1.3 | 0.3 | |||||||||
373.5 | 304.1 | 222.7 | ||||||||||
(a) | Lihir operation ($151.6 million for the MOPU project and $170.2 million for other equipment purchases); | ||
(b) | Bonikro operation ($12.2 million the resource drilling program and other equipment). |
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1. | Papua New Guinea- Lihir operation |
1.1 | Summary | ||
(A) | Introduction |
The Company is the sole owner and licensed holder for gold mining, processing, and associated infrastructure assets on Lihir Island, PNG. The following is a summary of the Company’s current operations on Lihir Island, PNG. Given the size, scope and long remaining production life of the Lihir operation, changes in operations may be made in the future, and these changes could be material. See “Item 3. Key Information — D. Risk Factors” for a discussion of possible risks to Lihir’s operations. |
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(B) | Lihir Island (Niolam Island) |
Niolam Island (also known and commonly referred to as Lihir Island) is the largest of the Lihir group of four islands. It is located 920 kilometres northeast of the PNG capital of Port Moresby. The Lihir Group of islands forms part of the province of New Ireland. |
Lihir Island is a volcanic seamount that rises steeply from sea level to about 600 meters above sea level. It is approximately oval in shape, roughly 22 kilometres long from north to south and 14.5 kilometres from east to west at its widest points. There is a caldera of a volcano, which is believed to be extinct, (the “Luise Caldera”) which adjoins a harbour (the “Luise Harbour”) on the east coast of the island. All the known ore deposits of the Lihir mine are located in the Luise Caldera. | |||
Lihir Island experiences a high level of rainfall, averaging about 3,750 millimetres per year with a range between 2,800 and 5,400 millimetres experienced during operations to date. It has an annual mean relative humidity of about 82%. The temperature generally varies between 20°C and 30°C (68°F and 86°F). Lihir Island is north of the area most affected by cyclones. Natural vegetation is mostly rain forest. | |||
Prior to the development of the Lihir operation, Lihir Island was largely undeveloped. Subsistence agriculture was the principal occupation of most Lihirians, supplemented by some cash crops such as copra. |
(C) | Mining rights |
The Company holds the Special Mining Lease (“SML”) which gives the exclusive right to mine and produce gold from the Luise Caldera area on Lihir Island, including the site of the processing plant on Putput Point. The SML is governed by the Mining Development Contract. The SML can be terminated only if the Mining Development Contract is properly terminated. | |||
Under the PNGMining Act1992, a developer may apply for a lease for mining purposes (“LMP”) to cover ancillary areas required to support a mining operation. A mining lease (“ML”) is required for any quarrying operations outside the SML. The Company has been granted two LMP one which covers the accommodation and commercial centre, the Londolovit reservoir and the Lakunbut dam and the other which covers the airstrip. The Company has also been granted two ML for a hard rock quarry and limestone quarry. These LMP and ML are joined by three mining easements that provide corridors for road access and power line and water supply. | |||
The SML covers 1,739 hectares and includes the Luise Caldera, Luise Harbour and part of Putput Point. As such, it covers the ore body, processing plant, stockpiles and marine facilities. The LMP for the accommodation and commercial centre covers 674 hectares in the Londolovit area and |
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the LMP for the airstrip covers 34 hectares. The ML for the hard rock quarry covers 47.7 hectares while the ML for the limestone quarry covers 23.7 hectares |
(D) | Operations |
The mining of the Lihir Island ore body is based on open pit mining of three main linked pits. Most of the ore is refractory sulphide ore that must be oxidized before the gold can be leached through cyanidation. Pressure oxidation technology licensed from Dynatec Corporation is used to treat the refractory ore. In 2005, construction of an additional 3Mt per year capacity flotation circuit with expanded grinding, flotation and oxygen capacities was approved and commenced. The flotation circuit was commissioned in late 2007. | |||
In February 2008, the Board granted approval for the commencement of the MOPU project. The MOPU project is expected to increase the processing capacity of the plant by approximately 4.0Mt/a by increasing autoclave capacity by two thirds, and by adding crushing, grinding, thickening, oxygen and leach plant capacity. The in-pit reserves with the MOPU project are slightly larger than those for the previous plant configuration. This is due to increased pit volume and reduced cut-off grade, both of which result from reduced processing costs with the expansion. Simplified process flow charts are shown below prior to the MOPU project. |
Until 2004, the main gold-producing pit was Minifie. Production from Minifie has been scaled back since early 2005. The second pit, Lienetz, is being mined in a series of phases to produce the majority of gold ore from 2005 until 2014. The third pit, Kapit, commenced development in 2009 and is expected to produce ore from 2015 onwards and, with further cutbacks during this period to both Minifie and Lienetz, complete the mining period. |
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1.2 | Geology and mineralisation |
Lihir Island is made up of five Miocene-Pleistocene volcanic units, of which three are recognizable volcanic craters (including the Luise Caldera) and two are sequences of mafic volcanic rock that pre-date the three volcanoes. The volcano that formed the Luise Caldera was the most recent major volcanic event on the island. It was formed in the Pleistocene age, up to one million years ago. Remnant geothermal activity is present in the Luise Caldera, evidenced by hot springs and fumaroles. Studies of groundwater circulation indicate there is no magma present below the Luise Caldera. | |||
The Luise Caldera is a well-defined, elliptically shaped caldera, which rises steeply to several peaks over 600 meters above sea level. The caldera is open to the northeast where it is breached by the sea to form Luise Harbour. Luise Caldera measures approximately 5.5 kilometres by 3.5 kilometres. Currently defined gold mineralization occurs within an area of about 2.0 by 1.5 kilometres near the centre of the caldera. | |||
Exploration work since 1982 has defined several adjacent and partly overlapping mineral deposits in the Luise Caldera, the principal ones being Lienetz, Minifie, Coastal, Borefields and Kapit. Of these, the largest is Minifie, which is about 1,000 by 600 meters with mineralization extending from the surface (50 meters above sea level) to 250 meters below sea level. The Lienetz deposit north of Minifie is about 800 by 400 meters, and extends from the surface (140 meters above sea level) to 300 meters below sea level. The smaller Coastal deposit adjoins Lienetz on the northeast, separating it from the sea. The Borefields zone extends to the north-east along the Minifie structure and is an extension of the Minifie mineralization. The Kapit deposit, extending 300 to 400 meters north of Lienetz, is about 450 by 300 meters with mineralization extending from near surface to 250 meters below sea level. Drilling in 2002 and 2003 extended the limits of Lienetz to the northwest, confirmed physical connection between Lienetz and Kapit and extended the current knowledge of the Kapit deposit to establish mineral reserves. The Kapit deposit continues to be explored by drilling, geotechnical, geothermal and economic studies. | |||
The bulk of the known gold mineralization is located in Minifie, Lienetz and Kapit. All of the deposits are connected by areas of low-grade mineralization. An analysis of the structural patterns has led to the hypothesis that the Lienetz, Coastal and Kapit areas are part of a single mineralization system, with a separate feeder system accounting for the Minifie and Borefields mineralization. The Coastal and Borefields pits are not currently included in the defined reserves. |
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Based on exploration work to date, gold appears to be the only metal of economic significance present within the Luise Caldera. Gold occurs primarily as sub-micron size particles in sulphide minerals. The main sulphide material is pyrite, with the marcasite form present as an accessory mineral. Arsenopyrite is rare. Some limited free gold is increasingly apparent. Oxidation layers range in thickness from minimal in low lying areas such as Minifie to a maximum of 70 meters over the higher parts of Lienetz and Coastal and Kapit. | ||
The mineral deposits in the Luise Caldera are hosted by volcanics, intrusives and breccias, and there has been extensive alteration of these rocks within the caldera. Two major alteration episodes have been identified, an earlier and deeper “porphyry style” event resulting in potassic alteration grading laterally to propylitic alteration and a later and higher level epithermal event producing argillic, advanced argillic and phyllic alteration. Because the intensive alteration has destroyed much of the original host rock lithology, the deposits have been classified into a series of ore types based on alteration, hardness, degree of brecciation and similar factors. While this is more a metallurgical classification than a geologic one, it has proved useful in determining many of the mining and processing characteristics of the ore body and host rocks. The ore types are roughly sub-horizontal and form a fairly consistent vertical sequence. The general sequence is that of clay-rich rock, grading into white mica-rock, then felspar-biotite and, at depth, into felspar-biotite-anhydrite. Within and on the boundaries of the ore types, geological structure is also a major influence in the localization of higher grades in the ore body. |
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1.3 | Reserve Estimates |
During 2003 and 2004, an intensive reserve definition and extension drilling program was undertaken at Lihir, which partially converted the Kapit deposit into reserves. Subsequent drilling in 2007 and 2008 has extended the reserves in the Kapit area, and potential remains to further extend these reserves. | ||
Development of the Kapit deposit will require the construction of a coffer dam in the shallows of Luise Harbour. Economic and technical studies have demonstrated the financial and technical viability of the coffer dam, and a preliminary design, cost estimate and construction schedule have been developed. A substantial geothermal depressurization program is also required prior to the mining of the Kapit deposit. Depressurization drilling has been in progress since 2007 with further drilling scheduled for 2010. Depressurisation monitoring in the mining area to date indicates a decreasing trend in reservoir pressure, consistent with timing requirements for the development of Kapit. Development of the Kapit pit will also require the relocation of the current low-grade stockpile situated on this deposit. The Kapit pit development lies within the SML. Subject to due processes of community approvals (such as community consultation and engagement), there currently are no foreseeable regulatory impediments to the granting of necessary approvals and permits for the development of the deposit. | ||
Appropriate reviews and additional studies in the areas of mining, geotechnical, geothermal, groundwater and geological modelling have been carried out to confirm and further develop the assumption base for the mine. Site reviews of mining and processing costs have provided for an improved modelling and optimization base for the latest estimate. | ||
The ore reserves in the table below are based on the Lihir block model developed in December 2008, which was calculated at a gold price assumption of $800 per ounce. The ore reserves are adjusted to take account of mining depletion, to June 30, 2009. |
Contained | ||||||||||||||||
Reserve | Tonnes | Average grade | Ounces | |||||||||||||
Category | (In millions) | (g/t Au) | (millions) | |||||||||||||
Un-mined Ore | Probable | 269.2 | 2.77 | 23.9 | ||||||||||||
Economic Stockpiled Ore | Proven | 61.6 | 2.46 | 4.9 | ||||||||||||
Total Reserves | 330.8 | 2.71 | 28.8 |
Reserves have been reported in accordance with Industry Guide 7. | ||
Un-mined ore reserves quoted are those remaining below the mining surface at June 30, 2009, within the current pit design. | ||
Stockpiled ore comprises mined ore above waste cut-off grade on the stockpiles, as of June 30, 2009. | ||
The number of ounces of contained gold does not indicate the number of ounces that ultimately will be recovered. The number of ounces ultimately recovered and available for sale will depend upon, among other things, mining efficiency and processing efficiency. | ||
The calculation of the average break even cut-off grade of 1.36g/t for mill feed considers gold price, fixed and variable site costs, refining costs, royalty, mining levies, and assumed recovery of the stockpiled lower grade fraction. The costs used are based on life of mine modelled costs broken into two periods, the ‘mine and process period’, and ‘stockpile processing period’. The life of mine costs consider all operating conditions, capital and factors associated with the whole operation for each incremental year of operation. Mill recoveries used are based on current operating experience for both the flotation plant and the autoclave and test work on future ore types. |
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Costs have been split by fixed and variable, to allow a more definitive estimate during the two main periods of ‘mine and process period’, and ‘stockpile processing period’. The components of the cut-off grade plus the incurred mining costs are used in the optimization process to determine the ultimate pit limits and economic ore to be mined. Mining costs will vary and are most dependent on material types, blasting characteristics and haulage distances. | ||
The optimisation process uses a strategy of progressive refinement to develop a pit shell that maximises profit. The final stage of the process uses a scheduler to verify that the reserves contained within the pit can be mined and processed economically. This scheduler is a constraint-based scheduling system that also seeks to maximize NPV. It is capable of optimizing multiple relationships within the mining schedule within specified constraints. | ||
The information in this report regarding ore reserves at Lihir Island is based on information compiled by Mr David Grigg. David Grigg is employed by LGL in the role of Superintendent Mine Planning. |
1.4 | Mining |
(A) | General |
The ultimate pit shell contains approximately 918 million tonnes of material remaining to be mined, of which approximately 269 million tonnes are proven and probable reserves in-pit and 649 million tonnes are waste, for an overall waste/ore stripping ratio of 2.4. Most waste material will be disposed of offshore in deep water within the confines of the SML area. | ||
Mining of sulphide ore commenced in the Minifie area because of its higher grade and shallower depth, and has been extended over time to encompass the Lienetz and Kapit areas. During 2003 and 2004 most of the mine production was from the Minifie pit. Production of ore from the high grade Phase 5 in the Lienetz pit started in the final quarter of 2004 and it was the main ore source in 2005 until mid 2006. Phase 7 and Phase 6, either side of Phase 5, have since been developed and were the main ore source until 2007. Phase 8 development in northern Lienetz started in early 2007 and was the main ore source from 2008 until 2009. Development of Phase 11, the western edge of Lienetz, began in 2008. | ||
Material moved during 2009, 2008 and 2007 is shown in the following table. |
2009 | 2008 | 2007 | ||||||||||
High-grade sulphide ore (K tonnes) | 6,089 | 6,204 | 6,111 | |||||||||
High-grade sulphide ore (g/t Au) | 5.09 | 4.98 | 5.14 | |||||||||
Low-grade sulphide ore (K tonnes) | 6,630 | 8,335 | 4,380 | |||||||||
Low-grade sulphide ore grade (g/t Au) | 2.23 | 2.22 | 2.32 | |||||||||
Total Ore (K tonnes) | 12,719 | 14,539 | 10,491 | |||||||||
Total Ore grade (g/t Au) | 3.60 | 3.4 | 3.96 | |||||||||
Total Waste (K tonnes) | 33,649 | 36,120 | 47,769 | |||||||||
Total Material (K tonnes) | 46,368 | 50,660 | 58,260 |
(B) | Pit design and planning |
The pit design has been developed using a corporate and mine planning framework which guides the ultimate design. Scheduling and policy optimisation work is undertaken using measured and indicated material to define a series of efficient and operational nested shells for mining and an ultimate zero profit shell to define the mining limits. These shells and ultimate pit shape are used to produce detailed designs. | ||
Inter-ramp slope angles range from 10o to 25o in soil-strength material, 32o to 36o in weak rock, and 48-55o in hard rock. Mining is carried out on 12-meter benches. |
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Detailed designs have been developed for all phases (push backs) out to and including the ultimate pit shell. This has resulted in 9 remaining mining phases which have been scheduled to demonstrate that mining is practical and economic over the life of the mine. The mining sequence has been optimised to maximize the life of mine value of the deposit and a variable mill feed cut-off grade for direct process ore has been determined for each year of the mining period. |
(C) | Production scheduling |
In order to maximize project value, the mining production schedule is structured to deliver the highest grade ores to the processing plant as early as possible, consistent with practical and logical pit development. An elevated cut-off grade is therefore established, above which ore is processed immediately, while ore with a lower grade (above the marginal cut-off) is stockpiled for later processing. This high grade cut-off varies on a periodic basis, to maintain a continuous ore supply to the mill. |
(D) | Mill throughput |
The circuit throughput is dictated by the autoclaves, with the operating strategy focussed on ensuring maximum utilisation of the high capital cost items of the plant – primarily the autoclaves and oxygen plants. The limiting factor in autoclave throughput is the amount of sulphur that can be oxidised. Throughput is therefore maximised until such time as the oxidation starts to suffer, indicated by rising autoclave discharge sulphur levels. There is an economic trade-off between increased throughput and reduced gold recovery, as a result of insufficient oxidation. | ||
The additional milling capacity gained through the flotation expansion in 2007 means that the autoclaves are now more often the production bottleneck – with the operating strategy being to ensure that constraints in crushing, milling and leaching are minimised. | ||
The processing facility is currently operating to a target of approximately 1,000 tonnes per operating day of sulphur fed to the autoclaves, depending primarily on the oxidation characteristics of the ore being processed, the feed solids density to the autoclaves and the oxygen available. Material processed then varies according to the sulphur grade. |
(E) | Metallurgical recovery |
The planned metallurgical recovery is determined from current historical operating experience and realistically expected future plant performance. The carbon-in-leach (“CIL”) tail grade is modelled primarily as a function of the circuit gold grade, the autoclave discharge sulphur grade and to a lesser degree the CIL circuit throughput. Test work is being undertaken to further evaluate the varying recovery relationships by material type including stockpile material. | ||
For autoclave feed during the mining period the recovery is approximately 88% to 92% whilst the recovery of material through the stockpile processing period is expected to be approximately 84% to 87%. |
(F) | Sulphide content |
The average sulphide content is highly variable. Therefore, significant effort is committed to controlling blending of plant feed to maximize throughput by sequencing mine development and stockpile feed strategies. The ore blend and sulphur target varies depending primarily on ore type, ore reactivity, and gold grade. Utilisation of the flotation circuit allows the sulphur content of the autoclave feed to be raised closer to the optimum level of around 6.5% sulphur. During processing of stockpiled material after the cessation of mining this grade will drop, but will remain in the range where the autoclave heat balance remains autogenous. |
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(G) | Economic grade ore stockpiles |
All ore grading below the applicable annual mill feed cut-off grade (but above the waste or marginal cut-off grade) will be stockpiled for processing after open pit mining ceases. In the early years of production the PNG Government required that material with a grade above 1.6 g/t be stockpiled. In 2003 the permitted cut-off grade was increased to 2.0 g/t. Stockpiled material is processed either following the completion of the mining period, or earlier as ore supply from the open pit dictates. Throughputs and recovery of stockpiled material are based on current operating practices and test work, but the behaviour of this ore, after being stockpiled for periods in excess of 15 years, is uncertain. | ||
The current mine plan requires a peak of approximately 150 million tonnes of low grade stockpiling capacity, however the capacity to stockpile outside the pit and within the SML is limited by topography to approximately 60 million tonnes. The mine plan therefore relies on in-pit storage to accommodate the balance. |
(H) | Waste rock disposal |
Because of the lack of suitable land, the potential for seismic activity, high rainfall and the potential for acidic run-off, the Company and the PNG Government concluded that land-based disposal of waste rock was not a viable option and that the preferred option, in terms of cost and environmental acceptability, continues to be offshore disposal in deep water within the confines of the SML. The acidic generating characteristics of the waste rock are inhibited in sea water. Soft waste disposal is achieved using a fleet of up to five bottom dump self-propelled barges via two loading docks of three bays each in a single wharf structure. Competent waste material is used for in-pit bench and haulroad sheeting, and as a bulk construction material for ex-pit haulroad construction, slope buttressing and land reclaim. A significant quantity of competent waste rock is expected to be used for the Kapit coffer dam construction. | ||
(I) | Blasting |
The Company engaged DNX PNG Pty Ltd to provide all products, labour and equipment to carry out the required blasting operations. This includes procurement, transport, manufacture, storage and management of all explosive material and the design, provision, repair and maintenance of magazines, manufacturing facilities with a capacity of 50 tonnes of emulsion per day, and mobile explosive delivery units. The contractor measures and records hole data (including temperature), primes holes, loads explosives down the holes, ties-in and initiates the shots, and is responsible for legal compliance during manufacture, and blasting (including post-blast inspection and dealing with misfires and secondary blasting). Since the ground temperatures are typically above 100 degrees Celsius, explosive emulsions used are desensitized to heat by special formulation and blending with glass micro balloons. New formulations are currently under development in anticipation of the need to blast in higher ground temperatures in future. See “Item 10. Additional Information – C. Material Contracts – (f) Lihir operations blasting services contracts”. |
(J) | Mine drainage |
The average annual recorded rainfall at the Lihir operation is approximately 3,750 millimetres and has ranged from 2,800 to 5,400 millimetres with a maximum one-hour intensity of 65 millimetres. For this reason, considerable attention has been paid to the design of appropriate facilities for mine drainage. This includes a system of surface diversion channels designed to intercept storm water flows before they enter the open pit. A 3% inclined bench arrangement, and a system of drainage berms, culverts, sumps and pumps has also been incorporated into the design of each of the phases of pit development. Despite these design provisions, localized mine production sometimes has to be suspended during periods of intense rainfall. |
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(K) | Mining equipment |
The major mining equipment selected for the Lihir operation has been sized for the levels of production and operating conditions contemplated by the current life of mine plan. Most of the mining fleet was purchased from the mining contractor on April 17, 2000 on termination of contract mining arrangements. The transition from operator mining to owner mining was smooth with the majority of the contractor equipment and staff transferring to the Company at this time. The primary excavation fleet now consists of five 23 cubic meter capacity, and one 14 cubic meter capacity, hydraulic shovels. Material haulage utilizes a matching fleet of 36 rear dump haul trucks, each with a capacity of 136 tonnes. In addition to this, a support fleet of smaller shovels, five 100 tonne trucks and ancillary equipment is employed. |
1.5 | Processing |
(A) | General |
A total of 6.5 million tonnes of ore were milled and 4.8 million tonnes were fed through the autoclaves in 2009 to produce 853,391 ounces of gold. | ||
The Company’s processing plant is located in an area known as Putput, close to the mine at the mouth of Luise Harbour. Lihir mine ore is termed refractory, meaning that conventional extraction of gold by cyanidation is not viable without pre-treatment. The Lihir operation’s process plant incorporates a pressure oxidation pre-treatment step using autoclaves to expose the gold. This in turn is followed by conventional cyanidation. | ||
The ore is crushed and then milled through one of two milling circuits, one of which incorporates flotation to allow upgrading of the sulphur and gold grades. The product of these circuits is a slurry with grades optimized to suit the next treatment stage, pressure oxidation in the autoclaves. After the autoclaves the oxidized slurry is washed through counter-current decantation (“CCD”) thickeners to remove acid before continuing through neutralisation, CIL, and tailings disposal. Gold is recovered from the CIL process through carbon stripping, electro-winning and smelting. | ||
The processing plant was initially designed to treat 375 tonnes of ore per hour at a design sulphur grade of 7.2%. A design autoclave operating time of 89% of total time was predicted, resulting in a plant capacity of 2.9 million tonnes per year. The processing plant was upgraded in 1999 to include a second oxygen plant and a small pilot flotation plant. Three autoclave heat recovery vessels, used to pre-heat autoclave feed, were installed in 2001 along with a twelfth power generatoring unit. In 2002, a pebble crushing circuit was installed in the grinding area to increase grinding capacity, and three additional autoclave feed pumps were installed in 2003. In 2004, a new carbon regeneration kiln was installed to increase gold recovery from the CIL circuit. In 2005, a gravity circuit was installed with the intention of recovering any free gravity recoverable gold prior to leaching. Materials transport difficulties combined with a lower than expected occurrence of gravity recoverable gold led to the gravity circuit being decommissioned. | ||
The Company commissioned the 3 Mtpa capacity flotation circuit in 2007 aimed at maximizing autoclave capacity and improving the economics of processing lower sulphur grade ores. The upgrade included a new grinding and flotation plant, increased autoclave feed tank capacity, an additional 10 tph oxygen plant, an additional lime slaker and an additional gold desorption circuit. Ores of lower sulphur content are targeted for treatment in the new circuit which utilizes flotation to upgrade the sulphur and gold content of the concentrate that is produced. This flotation concentrate is mixed with ground ore from the existing grinding circuit to provide more optimal feed for the autoclave circuit. The oxygen supply and gold desorption circuits were upgraded to allow for the increased gold production capability. | ||
Also in 2007, one of the original grinding thickeners was converted to a third CCD wash thickener to reduce the consumption of lime in the gold leaching circuit. |
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During 2008, a new larger soft ore sizer (ABON) was installed as a replacement to the unreliable and low capacity MMD sizer. This allows for increased crushing capacity and improves the capability of crushing softer high clay content ores. In 2008 a mobile crushing plant was commissioned on a hire purchase arrangement to further boost crushing capacity and to provide some insurance against crushing and conveying circuit downtime. This unit was subsequently purchased in 2009. |
(B) | Crushing |
Run-of-mine stockpiling and primary crushing facilities, incorporating a gyratory crusher and the newly installed ABON sizer, are located at the Ladolam Creek area, approximately 500 meters east of the Minifie pit. All other processing facilities are located at Putput, approximately one kilometre southeast of the Ladolam Creek area. |
(C) | Stockpiling and blending |
A series of conveyors transport the crushed ore to a stockpile of approximately 140,000 tonnes capacity located at the Putput processing plant. The stockpile is segregated to allow stockpiling of flotation feed ores (“FGO”) and direct feed ore (“HGO”) for subsequent processing in the respective milling circuits. | ||
Ore is reclaimed from the stockpile via under pile feeders and conveyed into the HGO grinding mills. Ore that does not flow freely through the under pile feeders is reclaimed by front-end loader and fed through a separate feeder. | ||
A loader provides ore to a feed bin which provides ore to the FGO milling circuit. |
(D) | Grinding and thickening |
Water is combined with the ore feeding the HGO Semi-autogeneous grinding (“SAG”) mill to form slurry. Steel balls and the larger rocks in the feed grind the ore down to a fine particle size. Coarse pebbles (scats) rejected from the SAG mill are conveyed and crushed separately in the pebble crushing circuit before returning to the feed conveyor. SAG mill discharge slurry is pumped to cyclone classifiers that separate coarse from fine particles. Coarse material is directed into a ball mill for further fine grinding before reclassification, whilst fine material continues on to a thickener. In the thickener, water is recovered and flocculant is used to assist the settling of solids. Thickened slurry is pumped to the pressure oxidation circuit. A larger thickener was installed early in 2005 to allow the plant to better deal with clay-rich ores from the Lienetz pit. | ||
The FGO grinding circuit operates in a similar manner to the HGO circuit with the exception that there is no scats conveying and crushing circuit, scats from these mills are conveyed back to the coarse ore stockpile by front end loader for processing through the HGO mills and scats crushers. Product from the FGO grinding circuit reports to a rougher flotation circuit which separates and concentrates gold containing sulphide minerals into a flotation concentrate. The flotation concentrate is thickened to 50% solids density prior to blending with thickened HGO ore in the Pressure Oxidation feed tanks. The flotation circuit can be bypassed, allowing the FGO grinding circuit to provide additional direct feed to the autoclave circuit if needed, which has greatly increased the flexibility of the grinding circuits. The operation of the flotation circuit increases throughput and also provides much improved control of sulphur grade to the autoclaves allowing more economic treatment or a wider range of ore types. |
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(E) | Pressure oxidation |
The Lihir operation’s pressure oxidation circuit utilizes Dynatec Corporation’s patented technology and is typical of pressure oxidation autoclave circuits used to treat refractory gold ores elsewhere in the world. Feed slurry with low sulphur grades is first pre-heated to between 60°C and 90°C in heat recovery vessels. High sulphur ore can bypass this heat recovery stage. The feed slurry is then pumped under high pressure into three horizontal, six-compartment autoclave vessels. Inside the autoclave, slurry is subjected to an operating pressure of 2,650 kPa and a temperature of 200°C — 210°C. Pure oxygen added into the autoclaves causes rapid oxidation of sulphide minerals, exposing the contained gold particles. Autoclave discharge slurry is depressurized into a flash vessel where temperature and pressure are reduced closer to atmospheric conditions. Resultant steam produced in the flash vessels can be used in the heat recovery vessels if pre-heating of the feed slurry is required. Carbon dioxide, nitrogen and residual oxygen is vented from the autoclaves into the atmosphere. | ||
High-pressure gaseous oxygen for the pressure oxidization process is provided via three cryogenic oxygen plants located adjacent to the processing plant. These plants have a total production capacity of 82 tph of gaseous oxygen at 98% purity. Liquid oxygen is also produced and stored for backup and emergency requirements. |
(F) | Energy |
Power is supplied by a combination of geothermal and heavy fuel oil generators. There are 12 heavy fuel oil generators, each of 6.3 megawatts. A six megawatt geothermal plant was commissioned in April 2003 and a 30 megawatt plant was commissioned in 2005. Construction and commissioning of a further 20 megawatt geothermal power expansion was completed in February 2007. | ||
The current site power requirement is approximately 76 megawatts of energy to meet all the operating needs and allow for an appropriate spinning reserve (or operating power margin to allow for fluctuations in demand). With the additional geothermal turbines, up to 56 megawatts is sourced from geothermal energy with the remaining 20 megawatts from HFO generators, depending on steam availability. The Company is actively seeking to source additional geothermal steam reserves to further reduce hydrocarbon sourced power generation. |
(G) | CCD washing and neutralization |
Oxidized slurry passes through a three-stage CCD thickener circuit where it is washed with process water to remove the bulk of the sulphuric acid created during the oxidation process. Residual acid is then neutralized by the addition of milk-of-lime, which is prepared from imported quicklime in a slaking circuit. In this way, slurry pH level is increased to an appropriate level for cyanide leaching. Dilution water is added to reduce slurry viscosity in preparation for CIL processing. During 2004, a by-pass line was added to the CCD thickener to allow maintenance activities to occur with minimal production effects. |
(H) | CIL processing |
Gold is recovered from the neutralised slurry in a CIL circuit. The circuit consists of eight large, agitated tanks. The first tank ensures full neutralization and allows the target pH to be reached. In the second tank, sodium cyanide is added to the slurry to begin leaching gold into solution. Coarse, granular carbon is added to subsequent tanks to absorb dissolved gold. Agitation ensures that the slurry, cyanide and carbon are well mixed and suspended so that most gold containing particles are leached with the gold being adsorbed onto carbon. Slurry flow progresses through the tanks whilst carbon, retained by screens, is pumped in a counter-current direction and progressively loads with adsorbed gold. |
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(I) | Gold recovery |
Loaded carbon is recovered from the CIL circuit and stripped of gold in a continuous elution system. This involves soaking gold-loaded carbon in a hot caustic/cyanide solution, causing the gold to desorb from carbon back into solution, and then rinsing the carbon with hot demineralised water. Stripped carbon is then regenerated by heating in an atmosphere of steam, before being returned to the CIL circuit. | ||
Gold bearing solution from the elution process is circulated through electrowinning cells where gold is recovered from solution through electro-plating to produce a gold sludge. Finally, the sludge is dried and smelted in a furnace to produce doré bars. The gold recovery facility was originally designed to treat up to 20 tonnes per day of loaded carbon. This was increased to 28 tonnes per day in 2004 and further increased to 40 tonnes per day with the installation of the second strip circuit as part of the flotation expansion in 2007. | ||
Following the introduction of the flotation expansion the overall ore treatment process was designed to recover between 75% and 90% of contained gold, depending on ore type. Overall plant recovery for 2009 was 81.3%. |
(J) | Tailings disposal |
The tailings from CIL, the acidic wash water from the CCDs and the flotation circuit tailings are combined with power plant and oxygen plant cooling water streams in a junction box. Cyanide detoxification is achieved by mixing of iron-rich CCD liquor with CIL effluent to complex the free cyanide. A mixing tank allows sufficient retention time for the reactions to proceed and the tailings disposal is managed to ensure PNG water quality standards are met. | ||
The combined streams are subsequently discharged into the ocean via a pipeline at a depth of 128 meters, which is below the surface mixed layer of the ocean. The surface mixed layer, which is the uppermost layer of the ocean that is constantly mixed by wind and wave action, varies with location and time, with a maximum depth of 98 meters being recorded to date at the Lihir operation. Being denser than the receiving seawater, tailings discharged below the surface mixed layer move down the steep submarine slope and will not rise to the surface. |
(K) | Economic grade ores |
Lower grade ores from the mine have been stockpiled for future processing. Weathering and natural oxidation of stockpiled ores has the potential to inhibit autoclave throughput by reducing the grade of sulphide in the ore. To mitigate this effect, a number of measures have been taken: |
• | The heat recovery circuit commissioned in the third quarter of 2001 enables the pressure oxidation circuit to treat a lower grade of sulphide in ore feed. | ||
• | Flotation plant capacity provides an opportunity to increase the sulphide grade of stockpile ore. | ||
• | Blending of stockpile ores combined with operation of the flotation circuit enables feeding of the autoclave circuit at the optimum sulphur level. |
(L) | Plans to construct, expand or improve facilities (MOPU project) |
Mined ore production at the Lihir mine significantly exceeds the process plant capacity. Excess ore is currently stockpiled for future processing. Accordingly, during 2006 a scoping study was undertaken to assess options for expanding the Lihir operation process plant. Various technologies and arrangements were considered. The results of the study indicated that the optimum option involved continued use of the mine’s existing pressure oxidation process technology with the additional pressure oxidation throughput processed by a new autoclave having twice the capacity of each of the existing units. Additional crushing, grinding, thickening, oxygen and leach plant facilities are also required to provide for the increased throughput. |
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On February 29, 2008 the Board of Directors announced approval to proceed with a major upgrade of the Lihir operation. The Million Ounce Plant Upgrade (“MOPU”) Project is expected to lift gold production capacity to approximately one million ounces per year from the end of 2011. The MOPU Project was the subject of a 12 month feasibility study in 2007 and 2008which concluded that the upgrade will: |
• | Increase output, lower cash costs in a more reliable and consistent production environment. | ||
• | Increase the rate of gold production by an average 240,000 ounces per year over the life of the operation, with output over the period from 2012 to 2023 raised by 2 million ounces to more than 10 million ounces. | ||
• | Increase overall gold recovered by in excess of 1 million ounces over the life of the operation due to improved processing efficiencies. | ||
• | Reduce costs of production following commissioning in 2011 due to economies of scale associated with the higher annual production levels. | ||
• | Boost operating cash flows and deliver a significant uplift to net present value. | ||
• | Create operational flexibility to ensure more reliable and consistent production. |
Following the upgrade the annual throughput capacity of the process plant is targeted to increase to more than 10 million tonnes, depending on among other things, the sulphur content of the ore feed. The increased throughput is expected to produce an increase in averaged annual gold production of 240,000 ounces. | ||
The increase in gold production is achieved in two ways: |
• | By maximizing direct feed ore to the autoclaves, thereby increasing gold recoveries and consequently total gold production. | ||
• | By optimizing the processing operation and increasing the oxidation of the sulphides contained in the ore. |
The plant upgrade has been developed with the approach of minimizing risk by utilizing the same processes and technology currently in use at the Lihir operation. A conservative approach has been taken to design and equipment specification. | ||
The total capital expenditure requirement for the additional plant and equipment is expected to be approximately $700 million in February 2008 dollars. | ||
The above estimate excludes capital investment required for expansion of power generating capacity. The expanded plant is predicted to increase average power demand from the current demand of 76 MW to 126 MW. The feasibility study has been developed on the basis that the expanded plant will be primarily powered by steam from geothermal sources through an expansion of the geothermal power generating capacity. Existing geothermal power generation capacity on Lihir Island totals 56 MW. Optimisation of the existing plant could lift production to 76 MW through improvements to turbines and addition of binary units to utilize heat from brine, which is currently rejected as waste. The estimated capital cost of this optimisation is approximately $40 million. However, these improvements are subject to verification of steam supply and completion of cost evaluation of other technologies. | ||
Pending definitive geothermal resource exploration and final evaluation, an interim power station (“IPS”) is being installed. A detailed feasibility study for the IPS was completed and approved in 2009. The IPS will meet the power requirement of the expanded plant until the geothermal expansion is effected or some other power generating technology has been established to meet long term power needs. The IPS will be a heavy fuel oil, reciprocating engine power station. It will be barge mounted, providing flexibility for resale. The total cost, including the shore side infrastructure to support the power barge is expected to be approximately $160 million and will provide an additional 70 MW of net generating capacity. |
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The capital expenditure of the expansion projects is expected to be approximately $400 million in 2010. The project is currently on budget and is expected to be completed by the end of 2011. | ||
Regulatory approvals and permits for the upgraded plant include environmental approvals and an additional mining lease to facilitate water supply infrastructure construction. These are required prior to commissioning and will be sought from the relevant authorities progressively over the next 12 to 18 months. | ||
A program of community and government consultation has already commenced. The MOPU Project is expected to deliver a range of benefits for the people of Lihir managed through the Lihir Sustainable Development Plan. It will provide significant investment into the local community at Lihir. Economic benefits will flow to landowners, employees and shareholders. |
(M) | Processing period after 2022 |
The current life of mine plan indicates that up to 150 million tonnes of economic grade material will be on stockpile by the end of mine life in 2023. This stockpile material is projected to have an average gold grade of 2g/t. The ultimate amount of material stockpiled and processed may vary depending on future cut-off grades policies adopted, error estimation inherent with proven and probable reserves categories, and the overall contained sulphur levels of long term stockpiles. |
1.6 | Exploration |
Within the Luise Caldera lie all the reported gold reserves on Lihir Island. Any area within this area which has not yet been systematically drilled remains prospective for the discovery of additional gold mineralization. The following map shows the land leases (shaded in colours) available to the Company for exploration activity. |
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Drilling to December 2009 focused on the North Lienetz, Coastal and Kapit Link zones. A total of 41 holes were completed up until December 31, 2009 for 100,500 m. These results were used to gain better definition of known mineralisation within targeted areas. 2010 drilling is designed to continue investigating the same areas as well as some infill drilling in the Lienetz area. The additional drilling will continue to define the mineralisation which will assist with determining the commercial viability and technical feasibility of this mineralisation. | ||
Early stage exploration is also continuing over other parts of Lihir Island. The Luise Caldera is one of five distinct volcanic remnants which together form Lihir Island. A number of these volcanic remnants display geological similarities to the Luise Caldera, and are therefore considered prospective for gold mineralization. | ||
Exploration programs are planned to explore fully the potential of the remainder of the Island, through a phased program of outcrop mapping, stream sediment and outcrop sampling, soil sampling, and drilling (assuming sufficient encouragement is gained from each phase to justify follow-up investigation). Subject to negotiations for land access, it is anticipated that the whole island will have been mapped and surface sampled within the next five years. Follow up exploration will be dependent upon the results collected from this work. See “Item 3D. Risk Factors – 2.8 The Company’s mining and exploration rights may be suspended or terminated.” | ||
Exploration activities are expected to be funded from operating cash flows. |
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1.7 | Infrastructure |
Little or no infrastructure existed on Lihir Island prior to the commencement of mine related activity and development of the Lihir operation required a significant program of infrastructure construction. In addition to the processing plant and barge loading facilities for waste rock disposal, infrastructure now includes a main administration office, an analytical/environmental laboratory, a training building, a warehouse, plant and mine maintenance workshops and emergency response facilities. | ||
Infrastructure for the workforce includes housing and camp accommodation, and related community facilities such as a school, medical centre, supermarkets, an open market and a police station. Camp infrastructure comprises a mix of accommodation types with a total capacity of approximately 3,000 beds, as well as associated messing and recreation facilities, and plants for water and sewerage treatment. This infrastructure was upgraded during 2006 to meet the additional demand arising from major construction activities on site. In addition, approximately 82 dwellings are in place to house full-time residential personnel. | ||
A wharf has been constructed at Putput for general cargo ships and tankers. An airstrip and terminal facilities have been constructed on the northern portion of the island. The airstrip was certified with the PNG Civil Aviation Authority in 2007 and the airport now operates both domestic and international flights (direct to Cairns, Australia). The existing road connecting the airstrip and the project site was improved and an unsealed ring road around the island was installed. A total of some 30 km of the road has been sealed to date. | ||
Fresh water is required in the processing plant and in the grinding circuit to reduce the chloride content of the ore. Potable water is also required. The nearest available source of water in sufficient quantity is the Londolovit River where a run off weir scheme and associated pumping station has been constructed. A water treatment plant (installed in 2003 and upgraded in 2009) serves to improve water quality. Some makeup water is abstracted for processing and ancillary purposes from the pit area itself. | ||
Communications at the site, across the island and within the PNG mainland and overseas are provided through the national telephone network carrier and internet access for the operation is provided via a dedicated satellite link. Marine and aeronautical radio systems are also installed. An independent provider installed a digital cellular network in 2007 and 2008, with coverage limited to the northern airport and southern regions of the island, which includes the airport, town site and processing plant areas. |
1.8 | Logistics |
Operational consumables, supplies and maintenance parts are sourced from major suppliers within PNG and the Asia Pacific region. Petroleum products are sourced from Singapore, Australia and Fiji, cyanide from Korea, and quicklime from New Zealand. The majority of supplies are consolidated at the Company’s forwarding agency and transported by regular shipments from Brisbane, Australia. Supplies are generally secured through contracts varying between one to five years’ duration. The majority of freight sourced from PNG is consolidated at Lae and then shipped to Lihir Island. |
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1.9 | Personnel |
(A) | Workforce |
At December 2009, the Lihir operation employed some 2,130 people on Lihir Island of which 35% were Lihirian, 55% were other (non-Lihirian) PNG nationals and 10% were expatriates from various other countries. A great deal of work at the site is undertaken by third party contractors, or business partners. During 2009, the workforce (including business partners) totalled some 4,800 people. The Company continues to sponsor regular professional and developmental training, both in-house and externally. See “Item 6 - Directors, Senior Management and Employees — D. Employees.” |
(B) | Occupational health and safety |
The Company operates in a unique and challenging work environment and is committed to having a workforce free of injury and occupational illness. The Company endeavours to do this by ensuring that employees, business partners and the community benefit from the Occupational Health and Safety (“OH&S”) management plans developed for its Lihir operation. |
(C) | Safety performance |
Both lead and lag indicators are used to measure the Company’s safety performance. Some of the lead indicators used are number of audits and inspections completed, percentage of corrective actions closed out, standard operating procedure development and review as well as the number of Job Safety Observations (“JSOs”) completed. JSOs are an integral part of the Company’s behavioural (or cultural) based safety program. Lag indicators used are the traditional measures of injury frequency rates. The Company measures both lost time injuries (“LTI”) and total recordable injuries “TRI”), which is the total of lost time and medical treatable injuries, and restricted work injuries (“TRIFR”). The frequency rates are based on 1,000,000 exposure hours to align with and benchmark the Company against Australian mining companies. | ||
By focusing on the positive performance indicators, the Lihir operation achieved another sound performance with only one recorded LTI in 2009. The LTI frequency rate (“LTIFR”) decreased to 0.08 |
2009 | 2008 | 2007 | 2006 | 2005 | ||||||
LTI | 1 | 3 | 2 | 5 | 12 | |||||
LTIFR | 0.08 | 0.26 | 0.18 | 0.53 | 1.53 |
In 2009, 30 serious injuries were recorded, which resulted in a TRI frequency rate (“TRIFR”) of 2.5. A total of 24 serious injuries were recorded during 2008, compared to a TRIFR rate of 2.1 in 2008. | ||
Comprehensive site wide OH&S safety plans have been developed and cascade down through the business to departmental and sectional levels. Key performance areas and key performance indicators are then benchmarked and reported on using a balanced score card. The scorecards are updated monthly and reported across the departments and site so employees can keep track of the Lihir operation’s safety performance. Employees participate in setting the departmental and sectional targets and then “act like owners” to seek to ensure the operation’s lead indicators are met. | ||
In 2009, the Company’s Fitness For Work programs continued and the development of a Behavioural Based Safety system also commenced. These programs have contributed to the safe workplace. Considerable work was also initiated with the contractors, ensuring that their safety management systems were consistent with Lihir operation’s, or the contractor adopted the Lihir Systems. |
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1.10 | Environmental Considerations |
(A) | Overview |
The existing operations at Lihir mine are conducted in accordance with a range of acts, regulations and regulatory instruments including the original Environmental Plan (“EP”) approved in 1996 (NSR, 1995), and the more recently approved Production Improvement Program Environmental Impact Statement (LGL, 2005). The Company works closely with the government in implementing all statutory monitoring and reporting requirement as specified in its Environmental Monitoring and Management Program (“EMMP”). The recently approved Lihir EMMP (LGL 2009-2012) was prepared in accordance with the above mentioned plans and environment permits issued by the PNG Department of Environment and Conservation (“DEC”). The EMMP provides details of the environmental monitoring requirements and reporting commitments to the PNG DEC, Mineral Resources Authority (“MRA”) and community representatives. | ||
Since the commissioning of the flotation circuit in 2007 which increased the maximum ore-processing throughput from 4.3 Mtpa to 6.7 Mtpa, studies undertaken by LGL have identified that the greatest opportunity to further improve the economics and long-term viability of the Lihir gold mine will be achieved by increasing the process plant throughput to better match the rate of ore mining. LGL mines ore containing approximately 1 million ounces of gold per year but, stockpiles a significant proportion of the ore for processing during and after 2023 when open pit mining is planned to end. The Company prepared and submitted an Environment Impact Statement (EIS) in November 2009 for the MOPU project. | ||
The MOPU Project will result in substantial operational improvements and efficiencies and better use of the gold resource. Environmental and socio-economic considerations for the MOPU Project are governed by the Environment Act 2000, which provides for, and gives effect to, the national goals and principles of the PNG constitution. LGL is waiting on approval of the EIS from the PNG Government. | ||
The final stage of the 50MW geothermal power plant project was commissioned in 2007 increasing total geothermal capacity from an original 6MW steam pilot plant to a nominal 56MW. The 50MW geothermal power plant is registered under the Clean Development Mechanism allowing the company to claim Carbon Emission Reduction Certificates (“CER’s”) under the United Nations Framework Convention on Climate Change and the Kyoto Protocol, to which PNG is a signatory. | ||
The Company obtained full certification of its Environmental Management System (“EMS”) against the ISO14001 standard in May 2004, making the Company the first operation in PNG to do so. In 2007, the Company achieved recertification of its management system against ISO14001 and began working towards a fully integrated management system. |
(B) | Regulation of existing operations |
The existing operations at the Lihir operation are conducted in accordance with a range of acts, regulations and regulatory instruments, including: |
• | Agreed development plans stipulated in the Mining Development Contract for the Lihir Gold Mine, signed in 1995 between the Independent State of Papua New Guinea and LGL. | ||
• | SML 6 issued in 1995 in accordance with theMining Act 1992 and included as Schedule I of the Mining Development Contract. The operation also maintains a number of mining leases, lease for mining purposes and mining easements. | ||
• | The Approved Proposal for Development (“APFD”), approved by the Minister for Mining and Petroleum in 1995, and included as Schedule III of the Mining Development Contract. | ||
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• | Environmental plan (NSR, 1995), approved in 1995 included as an associated plan to the 1995 APFD. The plan was prepared in accordance with theEnvironmental Planning Act 1978,the Water Resources Act 1982 and theEnvironmental Contaminants Act 1978. These acts were repealed following proclamation of theEnvironment Act. However, existing approvals, permits and licences issued under those acts remain valid. | ||
• | The 2005 Production Improvement Program EIS (LGL, 2005a), received in-principle approval by the Minister in March 2008, and new environment permits issued in October 2008. | ||
• | Environmental management and monitoring program EMMP, originally approved in 1997 and subsequent revisions in 2000, 2004, and 2009. | ||
• | Environment permits that regulate the existing operations. These permits were issued to LGL in October 2008 under the Environment Act. Each permit outlines the annual charge, conditions, monitoring and reporting requirements and is valid for 50 years. The permits regulate the following: |
– | Permit number WE-L3 (143) for the extraction of water from Londolovit and Caldera Rivers for use in process water, dust suppression, village water supply and other uses. | ||
– | Permit number WD-L3 (191) for the discharge of wastes into the environment, including waste rock, run-off water, tailing, noise, sulphur dioxide (SO2) and particulate matter (PM10). |
(C) | Existing Environmental Monitoring and Management Program |
The Company’s current EMMP, which was revised in 2009 for the period through 2010, outlines specific monitoring elements designed to monitor the impacts arising from the company’s activities. The two main objectives of the EMMP are to: |
• | Monitor and report on the operation’s environmental impacts and compliance with the operation’s environmental permits. | ||
• | Implement LGL’s environmental management policies and procedures. |
Further to EMMP requirements, the Company retains independent environmental consultants to report on its environmental compliance. The Company is involved in research projects with CSIRO Division of Marine and Atmospheric Research, CSIRO Centre for Mining Environmental Research, CSIRO Division of Land and Water, CSIRO Materials Science & Engineering, Canberra University, and a number of independent consultants in the field of tailing and land management including HayCo, Coffey, IHA Consultants and URS. Projects include studies on the impacts of mine waste disposal on deep and shallow water fish; a shallow water fish and benthic habitat monitoring program; and an ongoing study of trace metal concentrations on selected fish, invertebrates and plants. The Company has also commenced a study investigating the bioaccumulation of mine waste disposal in tropical bentho-pelagic food webs. This latest study is the first detailed assessment worldwide to address the potential impact of bio-magnification of contaminants in the food chain from a DSTP operation. | ||
The PNG Government carries out its own independent audits and monitoring for elements contained in the EMMP to confirm the Company’s results and the Company complies with its own corporate reporting requirements, and continues to liaise and consult with local communities within the framework of the Lihir Sustainable Development Plan (“LSDP”), funded by the Company’s Integrated Benefits Package (“IBP”). |
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(D) | Terrestrial Environment |
The terrestrial biological environment of Lihir was described in the EIS documentation. | ||
The tropical climate of Lihir Island supports a dense and taxonomically diverse terrestrial plant population. Flora populations vary primarily with elevation and topography, although in some areas the presence and distribution of some native species has been significantly altered by human activities including subsistence agriculture, mining and the introduction of invasive plant species. A diverse range of terrestrial fauna exists on Lihir Island, similar to distributions found across the New Ireland region. Common fauna includes marsupials, reptiles, amphibians, birds and mammals, including wild and domesticated pigs and dogs. | ||
Megapodes (Megapodius eremite) are small bush fowl commonly found throughout eastern Asia and the Pacific region. Megapodes were hunted as a food resource prior to the development of the mine at Lihir. The birds make use of the geothermally heated soils within the Luise Caldera to incubate their eggs. The Environmental Plan (NSR, 1995) predicted that up to 80% of the island’s Megapode population would be lost as a result of the loss of the specific incubation habitat within the caldera. Monitoring surveys (EMMP) and research on megapodes are conducted jointly with the Wildlife Conservation Society (WCS) to determine the impact of the habitat reduction from the mine and to undertake research on the potential to develop hatcheries for this species. Surveys have identified previously unknown breeding grounds both within and outside the caldera, which may account for the steady population. |
(E) | Marine Environment |
Lihir Island forms the top of a submerged, steep-sided mountain of volcanic origin and is surrounded by very steep submarine slopes, which rapidly descend from the shore to considerable depths. The widest coastal area of relatively shallow water is Luise Harbour, which is a remnant of the collapsed Luise volcanic crater, beyond which the seafloor drops to depths greater than 1,500 to 2,000 m at distances of 15 to 20 km offshore. Lihir Island is surrounded by a narrow, nearshore fringing reef. | ||
Mining discharges that affect the nearshore marine environment off the east coast of Lihir Island include waste mine rock, processed tailing slurry, surface runoff from the mining area (including suspended sediments in runoff and acid rock drainage (ARD) leachate from the low grade ore stockpiles) and treated effluent from the sewage treatment plants. LGL undertakes routine compliance monitoring in relation to these discharges in accordance with the projects Environment (discharge) permit and EMMP. | ||
LGL disposes of unprocessed waste rock from the mine into Luise Harbour at a maximum permitted annual rate of 30 million bulk cubic metres (Mbcm) in accordance with Environment Permit WD-L3(191) and the project’s EMMP element 4.5. There are no chemicals added to waste rock throughout the excavation and disposal process. However, most waste rock from the Lihir pits is potentially acid generating, but as it is not stockpiled for any length of time before disposal and ocean disposal keeps the rock saturated, effects of waste rock disposal are more physical than chemically related. | ||
The tailing slurry, comprising processed ore, process water and cooling seawater, is discharged via the DSTP system at a depth of 115 m, below the biologically active zone and where the density of the receiving water precludes the tailing floating back to the surface, from which point it flows as a density current or dilute sub-surface plumes to depths mainly between 1,000 and 2,000 m. The Deep sea Tailing Placement discharge is regulated by the conditions specified in Environment Permit WD-L3(191), which details compliance water quality concentrations within the receiving seawater at the Mixing Zone Boundary. | ||
Seabed monitoring, as part of the EMMP into the amount of mine-derived material entering the ocean from the different sources with the actual amount estimated to be on the seafloor has |
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been undertaken using the geochemical signature of sediment core profiles and observed thicknesses. This area is more extensive than was originally predicted, although the originally modelled footprint only represented deposition from the bottom-attached density currents derived from the DSTP, and did not include settled flocs from sub-surface plumes or any of the other sources of mine-derived material other than tailing. Nevertheless, the basis for the prediction of impacts to the seafloor and benthic communities needs to take into account all sources and further tailing dispersion and deposition modelling has been completed to predict progressive deposition for the remainder of mine life. Further work will continue to assess the impact through the studies outlined above. |
(F) | Rehabilitation and decommissioning |
The project’s original 1999 Conceptual Mine Closure Plan (MCP) was updated in December 2004. The 2004 MCP included the planning and financial provision for closure activities, re-assessment of the environmental and biophysical aspects of closure and consideration of socio-economic issues leading up to mine closure and beyond. | ||
The MCP strategy consists of progressive rehabilitation during the operational stages, together with specific rehabilitation activities at the cessation of mining activities and at the end of the low grade stockpile processing period. The main objective of rehabilitation is to leave the site in a physically and geochemically safe and stable condition. Where possible, workforce reductions and the rehabilitation and closure activities will be undertaken progressively prior to the cessation of operations. A further five years after the completion of rehabilitation has been planned for post-closure monitoring and maintenance prior to relinquishment. | ||
The Company considers community involvement and community support throughout the mine life integral to orderly mine closure. This is demonstrated by the fact that Chapter Five of the LSDP includes the agreement reached on mine closure planning aimed at assisting the community to achieve a sustainable future. The next review of the MCP is scheduled in 2010. |
1.11 | Community affairs |
Lihir is the collective name for a group of four islands with a total population, at last count in December 2008, of approximately 14,529 Lihirians, and approximately 4,860 non-Lihirians from other parts of PNG. | ||
Comprehensive land tenure and genealogy studies were conducted prior to the mine’s development and records are updated annually. The people of Lihir share a common language and the clan structure, factors which assisted in the original conduct of the compensation negotiations and project approval by the community. |
(A) | The Original Integrated Benefits Package (IBP) |
In 1995, a comprehensive set of benefits and compensation arrangements known as the Integrated Benefits Package (“IBP”) were agreed between the Company, the three levels of government (National, Provincial and Local) and the people of Lihir (referred to here as the “Original IBP”). The Original IBP details the commitments made by the various stakeholders to the community in terms of infrastructure and support, community development, compensation, and relocation of certain families from within the Special Mining Lease. The Original IBP contains in one volume all of the commitments made to the people in the Lihir group of islands in return for their allowing the project to proceed on their land. | ||
The IBP is based on four chapters including: 1) Destruction (relocation and compensation); 2) Development (royalty payments, equity participation, community infrastructure, facilities and services, business development, human development, village development); 3) Security (trust funds, long term development plans, long term investment plans, training and localization); and 4) Rehabilitation (progressive rehabilitation and mine closure provisions). The Original IBP was |
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signed on Lihir on April 26, 1995, by Lihir Management Company Limited (initially on behalf of the joint venture but with an acknowledgment that it would subsequently be on behalf of the Company), by the three levels of government and by representatives of the various groups of landowners and residents on Lihir Island. It satisfied the requirements of the PNG Mining Act for compensation arrangements to be in place before mining commenced. The Original IBP was endorsed by the PNG Registrar of Mines prior to signature by the parties. | ||
The compensation provisions of the IBP (chapter 1) provided for compensation to be paid to the landowners for cleared, damaged or otherwise affected land, for loss of economic plants, for loss of man-made structures, for loss of marine resources and wildlife, for discoloration or other adverse effects on creek water and seawater, for disturbance of burial grounds and sacred sites and for other miscellaneous effects of the Lihir operation. Additional land use payments and compensation has been, and as required will continue to be, paid to landowners in the Ladolam pit and Putput plant site areas for loss of access to land and loss of other resources as a result of the Lihir operation. In addition, the compensation agreement provides that the landowners will be paid royalties per cubic meter for sand, gravel and coronus material excavated from their land. | ||
Provision of benefits for future generations of landowners and of relocatees was a significant issue during the negotiations. Therefore IBP chapters 2 and 3 provided for the establishment of trusts for the long term benefit of landowners and residents and their children, and contain acknowledgments by the landowners and residents that these agreements properly and adequately provide for their compensation (statutory and otherwise). In the event of a dispute, formal mediation and arbitration procedures are provided for in the agreements. More importantly, the IBP provides for a regular process of review on a five year cycle to provide an opportunity to keep the agreement consistent with the changing circumstances on the island over time. | ||
In June 2001 the Company, the local community of Lihir and the PNG National, New Ireland provincial and Lihir local level governments jointly commenced a full review of the Original IBP to assess its effectiveness and how it might be improved to serve the various parties better in the future. |
(B) | The revised IBP – Lihir Sustainable Development Plan (LSDP) |
In 2006, following lengthy discussions, the Company commenced implementation of a new 100 million Kina, five-year IBP for the Lihirian community (referred to here as the “Revised IBP”). As well as continuing the features of the Original IBP, the Revised IBP facilitates health, education and community development programs on Lihir Island, with the benefits distributed island-wide. The Revised IBP agreement is also referred to as the Lihir Sustainable Development Plan (or “LSDP”) and, was signed in May 2007. It signifies a commitment to a process to develop a series of programs aimed at financial independence and self reliance over the period of mining and that as such each program will require ongoing detailed annual planning to attain these sustainable objectives. | ||
(C) | Equity participation |
Beginning in 1995, MRL Capital Limited (“MRL”), formerly Mineral Resources Lihir Limited has held shares in the Company on trust for the Lihirian Equity Trust, being the Lihirian landowners whose land is impacted by the Lihir operation. | ||
Since 2005, MRL has sold part of its interest in the Company. This was initially done to repay loans that were taken out to fund the purchase of shares by MRL. More recently, further sales were made following MRL obtaining Court orders in November 2006 enabling the terms of the Lihirian Equity Trust to be varied. | ||
After MRL’s initial sell down to fund its loan repayments was complete (but prior to MRL’s most recent sales after the terms of the Trust were amended), the Company stated that it proposed to |
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issue 3,284,499 additional shares (being 0.26% of the Company’s issued capital as at September 30, 2006) to MRL for no consideration in accordance with a commitment given under a non-binding heads of agreement dated March 28, 2003 between the State, the Company, MRL and other Lihirian entities and a commitment in the Revised IBP. Following receipt of the necessary approvals from the Company’s Board and its various market and corporate regulators (in particular, the ASX and TSX have specific requirements for the issue of new capital), the 3,284,499 shares were issued to MRL on March 25, 2008 through a private placement. | ||
As part of an additional commitment in the Revised IBP, the Company has sought to maintain the Lihirian community’s involvement with and interest in the Lihir operation through a proposal that the Company issue a smaller number of additional shares in the future to MRL. Discussions on this proposal are ongoing. | ||
Also under discussion is a greater role by the Lihirian community in other business opportunities. The discussions on this and other issues are continuing within the context of the Original IBP and LSDP agreements which, as noted above, set the framework for ongoing negotiation and discussion. In order to expedite these discussions and sustainable development initiatives a permanent joint stakeholder committee, the LSDP Planning and Monitoring Committee, was established in 2007 to oversee the implementation and administration of the agreements. | ||
The Company has made substantial annual financial contribution by way of compensation, community development, royalties, wages, purchases from local suppliers and other payments to the Lihirian community as shown in the table below. |
2009 | 2008 | 2007 | ||||||||||
Kina millions | 140.2 | 105.5 | 56.4 | |||||||||
$ millions equivalent | 51.5 | 41.2 | 20.1 |
Even though the Company puts significant effort into addressing landowner and community issues, it cannot guarantee that specific disputes will not disrupt operations in the future. See “Item 3. Key Information – D. Risk Factors – 2.2 The Company is subject to political and community risk”. |
(D) | Business development |
Under the terms of the Original IBP the Company provided direct support to the local community for business development through its Business Development Office (“BDO”). BDO assisted the local business community to develop realistic, sustainable commercial opportunities. | ||
The BDO continued to provide advice and assistance to local businesses to assist them in maintaining financial records and to otherwise complying with the PNGCompanies Act 1992 andBusiness Groups Incorporation Act 1974 up until 2008. In 2008 in accordance with the Original IBP agreement, the BDO became an external independently managed company. The new independent holding company, Lihir Business Services, and is a subsidiary of Anitua Ltd, the landowner association’s commercial arm. | ||
Anitua Ltd oversees a group of companies which manage service contracts in the areas of catering, civil works, vehicle maintenance, construction and business services. | ||
Many other local businesses continue to benefit from the Company’s outsourcing program for support and logistics activities by providing goods and services to the Lihir operation. This is undertaken by means of a transparent and formalized tender process. Local business development creates employment and generally contributes to the local economy. |
(E) | Education assistance |
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In 2009, the Company continued to assist Lihirian students through a range of programs. In addition, a major review of the education system aimed at establishing a 20 year education improvement plan is currently underway. This long term project is underpinned by an education baseline survey into the status of numeracy, literacy and infrastructure on Lihir Island. |
(F) | Security |
The Company has supported the establishment by the community of a law and good order committee on Lihir Island. This committee has liaised closely with the Royal PNG Constabulary (Police) and other relevant agencies. Several initiatives on community policing, such as education campaigns on illicit drugs, alcohol abuse and domestic violence, continue to be pursued. There have also been training courses conducted to improve the performance of Village Courts. Village Courts are an important level of the judicial system in the local community. At a District Court level, a resident magistrate continues to be stationed on Lihir Island, and court facilities have been established allowing the hearing of criminal and civil matters without long delays. | ||
Project security encompasses the plant, mine site, commercial area, housing estate, camps, hospital, airport and associated infrastructure. These services are provided by a local security company with security personnel managed and supported by Company personnel. | ||
A police station and cell block were completed and handed over to the Royal PNG Constabulary in late 1997. The Company also provides government housing and other support to the Lihir Island police contingent. External police support can be mobilized from Kavieng or Rabaul if required. Flight distances from both of these centers are less than one hour. |
(G) | Community health |
An important benefit provided to the Lihirian community is improved health care. Currently the Company provides medical services to employees, contractors and their dependents as well as to the local people through the Lihir Medical Centre at Londolovit, which offers outpatient, inpatient and preventative health care services. The Medical Centre also provides support through the provision of drugs and services to all the government and mission run health facilities throughout the Lihir Group of islands. As with the education system a review of the community health program is also currently underway as part of the sustainable development objectives of the LSDP Revised IBP. |
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2. | Africa |
2.1 | Summary | ||
(A) | Introduction |
The Bonikro project is located in central-southern Côte d’Ivoire in West Africa. It is located approximately 67 kilometres south of Yamoussoukro, the capital of Côte d’Ivoire, and approximately 240 kilometres northwest by road from Abidjan, the commercial centre of the country. The nearest regional town is Hire which is approximately 9 kilometres from Bonikro. |
(B) | Mining rights |
The Bonikro gold deposit is located within the area of Exploitation Licence Number PE32, originally granted to Equigold CI SA by Presidential Decree 2007-05 on January 17, 2007. The exploitation license covers an area of 37.12 square kilometres with an extension pending of 264.3 square kilometres and has a term of 8 years. |
(C) | Operations |
Bonikro is a conventional truck and excavator open pit mine free digging the oxide material. When the fresh material is exposed, drill and blast techniques are employed to first break the material before moving it. The deposit provides feed for the mill, a modern CIL gold extraction plant with a 7,500 tonne per day capacity. | ||
Mining operations commenced in prestripping in early 2008 with the plant being commissioned in October 2008, ramping up to full production by the end of 2008. |
2.2 | Geology and Mineralisation | ||
(A) | Geology |
The geology of the Bonikro deposit is dominated by a sub-volcanic porphyry of granitic composition that is present in the subsurface over a strike length of at least 600 m and a width of up to 300 m. The composition, relatively undeformed nature, elongate morphology and small size of the porphyry, strongly suggest that it is a syntectonic intrusive of the Proterozoic Dixcove (belt-type) Suite, which has preferentially intruded a pre-existing shear zone within the Birimian stratigraphy. The porphyry intrudes an extensive sequence of basalts of the Upper Birimian Series that have been metamorphosed to mid greenschist facies. |
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Only two rock types have been identified within the Bonikro deposit. The dominant host of the mineralization is a relatively undeformed granodiorite that is thought to be a syntectonic intrusive of the Proterozoic (belt-type) Suite. These are termed Dixcove granites in nearby Ghana. The unit strike length is over 700 m although the bulk of the mineralization is limited to the southern 400 m. The granodiorite is bound on its eastern and western margins by an extensive suite of basalts metamorphosed to greenschist facies. | ||
The contacts between the two lithologies are characterized by strong foliation and tectonic mélange. The western contact is strongly irregular and appears to dip moderately to the west in the northern half, and becomes almost vertical in the south. The eastern edge dips sub-vertically to the east and swings back towards the west at depth. The granodiorite unit plunges shallowly to the north and south resulting in a domal type character. Two high angle, easterly striking faults have been interpreted from geophysical data to offset this granodiorite unit. | ||
Within the southern portion of the deposit, mineralization is dominated by a north- ing brittle ductile shear zone with the mineralized zone restricted to a well defined, planar lode dipping approximately 30 degrees to the east. Further north, mineralization progressively increases in size and grade as it encroaches on the surfacing granodiorite. Within the granodiorite itself the mineralized zone becomes more brittle and diffuse in nature, and is accompanied by extensive quartz stockwork veins in both the footwall and hanging wall of the primary structure. |
(B) | Mineralisation |
Mineralization within the southern portion of the project area is dominated by a solitary north-trending brittle-ductile shear zone, which dips approximately 30 degrees to the east, oblique to the regional fabric. The mineralized zone within the basalt becomes marginally broader and higher grade as it encroaches on the surfacing porphyry. Within the porphyry, however, the zone becomes more brittle and diffuse in character, and is accompanied by extensive zones of stockwork veining in both the footwall and hangingwall of the primary structure. Although more difficult to identify, there is strong evidence to suggest that several structures of identical style and orientation are preferentially developed throughout the porphyry in an en-echelon array, imparting an overall north-north-easterly trend to the mineralized corridor. The majority of the dilation and mineralization is preferentially developed within the more competent porphyry. Where the major north-trending and shallow east-dipping shears are developed in close proximity, the marginal stockwork veining coalesces to form a broader, more continuous mineralized envelope. | ||
Mineralization associated with the principal shears is developed within both the basalt and the porphyry, while stockwork veining is almost exclusively confined to the porphyry. The veins are variably sulphidic, being dominated by minor pyrite and subordinate pyrrhotite. Molybdenite and scheelite are also present along vein margins and fractures, however these latter species are consistent with the granitic composition of the porphyry and are likely to represent the product of local remobilisation with a genesis unrelated to the gold mineralizing system. Gold is frequently observed in either free form or accompanying sulphides within quartz veins. Minor carbon, frequently accompanied by more abundant molybdenite, is developed along steeply dipping, late stage, slickensided faults. The presence of carbon is insignificant, and no other mineral species are likely to adversely affect analytical results or metallurgy within the mineralized hypogene zone. | ||
The Bonikro deposit provides feed for the mill, a modern CIL gold extraction plant with a 7,500 tonne per day capacity. |
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2.3 | Reserve Estimates |
Appropriate reviews in the areas of mining, geotechnical, and geological modelling have been carried out to confirm and further develop the assumption base for the mine. Site reviews of mining and processing costs have provided for an improved modelling and optimization base for the latest estimate. | ||
The Company acquired the mine at Bonikro in the second quarter of 2008. There has been insufficient work completed to be reporting reserves in accordance with Industry Guide 7. The Company currently intends to establish reserves in accordance with Industry Guide 7 by quarter 32010. |
2.4 | Mining |
The Bonikro mine includes the Bonikro open pit mine, ROM pad, process plant and tailings storage facility. Open pit mining is carried out on a seven day week production basis. Standard drilling and blasting techniques are used in hard rock along with free digging in soft areas. Selected blast holes are sampled and assayed for production grade control purposes in hard rock and trench sampling is conducted in soft areas. Broken and freely dug rock is loaded with an excavator into haul trucks. Depending on the block model determination or grade control results, the mined material is delivered to the ROM pad, primary and secondary crusher, low-grade stockpile, or to waste rock dumps. |
(A) | General |
The open cut operation is currently developing the first and second stages of the Bonikro pit. The operation is a conventional truck and excavator type operation free dig mining the oxide material. When the fresh material is exposed drill and blast techniques are employed to break the material before moving it. |
(B) | Pit design and planning |
The Bonikro operation’s mining department updates a detailed Life of Mine plan (LOM) based on the current technical information available and utilization of the existing available mining fleet. Truck productivity predictions (tph and cycle times) are adjusted to reflect production experience. The proposed haulage profiles are determined for each bench and pit phase, plus the three possible destinations (ROM pad, low-grade stockpile, and waste dumps). Using this data, the truck hours required to move the scheduled tonnage are limited to the actual producing truck hours from the mine fleet (after availability and utilization). | ||
Production scheduling is driven by: |
• | mill feed requirements and capacities; | ||
• | stripping requirements for cutback stages; | ||
• | loading rate constraints, where two excavators and associated trucks can operate; and | ||
• | haulage limits determined by the size and number of trucks and their productivity. |
The LOM uses the following pit design criteria: |
• | 20 m berm intervals with 5 m mining benches; | ||
• | Variable slope angles between 37o and 59.6o inter ramp angles; and | ||
• | 22 m wide haul roads typically 1:10 grade. |
(C) | Mine equipment |
The major mining equipment used at Bonikro during 2009 consists of 2 Terex O&K RH90 excavators and a fleet of 11 Cat 777 dump trucks. The support equipment includes bulldozers, grader, watercarts, and drill rigs. |
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Other equipment includes assorted support equipment and facilities, workshops and maintenance buildings, wash bay, fuelling facilities and site office. |
2.5 | Processing |
The Bonikro operation uses CIL processing, at the rate of approximately 2Mtpa for fresh ore. | ||
A comprehensive metallurgical test work program was carried out on the three ore types within the pit area. The ore can be classified as extremely clean, with no obvious metallurgical problems. Gold recovery by cyanidation is very high (96%) even at a grind of P80 125microns. As a high percentage of the gold is coarse, the gravity circuit recovers approximately 35% of the total gold. | ||
The metallurgical flowsheet followed at Bonikro is simple and robust. The plant design is based upon equipment that is reliable and easy to maintain, arranged in a layout that has proven convenient and efficient to operate in other plants arranged in a similar manner. | ||
The low stripping ratio in the mine lends the mining operation to direct tipping from mine trucks to the crusher, with about 30% rehandling from ROM stockpile. A small ROM pad has been prepared adjacent to the primary crusher feed hopper. The trucks dump directly to the crusher and the immediate ROM pad serves only as a truck marshalling area and emergency dump site in the event of an unacceptably long delay for trucks dumping at the crusher. Low grade ore excess to production capacity is dumped close to the ROM forming an extension of the ROM. | ||
The ore is prepared for grinding with two stages of crushing in closed circuit with a screen to size the product to minus 50mm, and deposited into a large stockpile with sufficient live capacity to feed the grinding circuit for 15 hours. A semi-autogenous grinding (SAG) mill and a pebble crusher grinding circuit reduce the primary crushed ore to a finely ground slurry which is treated by conventional gravity separation techniques and CIL technology to extract the gold and silver from the ore. The primary crusher is located about 600meteres from the mine to avoid flyrock and to minimize the mine haulage costs. The remainder of the treatment plant is more than 600 meters from the mining operations. | ||
The plant has a nominal capacity of 2 Mtpa on hard ore and is designed to extract 94% of the gold from the ore. Based on the varying hardness of the ore, crushing and grinding rates can change significantly within the deposit, having a direct impact on mill throughput and ultimately unit costs. |
2.6 | Infrastructure |
The Bonikro operation moved from the development stage to the production stage in October, 2008. The installed infrastructure includes a process plant, primary and secondary crushers, workshops and administration building. A process water dam provides water for the operation’s needs. Future infrastructure will include a mining office and warehouse facilities. | ||
Process water for the Bonikro operation site is sourced from small dams constructed around the site. A series of bores have been installed to supplement the dams particularly during the dry periods. | ||
The Bonikro operation lies close to the local electrical grid. Power is supplied to the operation’s transformer at the local township of Hiré and then transmitted 15 km to the Bonikro mine site. |
2.7 | Logistics |
Operational consumables, supplies and maintenance parts are sourced from major suppliers within Africa, Europe, Australia and the Asia Pacific region. Petroleum products are sourced from within Africa and cyanide from Ghana and Australia. The majority of supplies are consolidated at a nominated forwarding agency and transported by regular shipments from Europe and Australia.. |
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Local transport companies within West Africa provide transport to the mine site. Supplies are generally secured on normal purchase orders and supply contracts ranging from between one to three years’ duration. |
2.8 | Rehabilitation and Decommissioning |
The Bonikro mine closure plan was part of the approved Environment Impact Statement (Chapter 17). The estimated cost was $3.0 million. Formalised mine closure planning is to commence in mid 2010. |
2.9 | Community affairs |
The social aspects of the Bonikro operation were identified in the project Environmental Impact Study (EIS) and plans developed to address issues like resettlement, land compensation, loss of agricultural land and general social wellbeing. The EIS outlined the requirements and was accepted by the Government of Côte d’Ivoire and community allowing the project to proceed. Implementation of the plans has been progressing and has included resettlement and relocation of the Bonikro village including construction of modern housing, schools, churches, water supply, electrification and other community infrastructure. A compensation package payable in three annual instalments was agreed by the community and two payments have been made. The compensation payments include land required for the development of the Bonikro Project. Where the mine has impacted non compensated land, suitable compensation has been negotiated and payment made to the traditional owners. | ||
Community relation staffing at the Bonikro operation includes three experienced fulltime community liaison officer and two other staff in Abidjan including a community business development officer, who support community based projects. The mine has established a regular consultation forum which has local community representatives, that meets to discuss and resolve issues arising from within the local community. | ||
An experienced external consultant has completed a review of all the community obligations and to provide advice on best practice and business development opportunities. This project has engaged the community, in partnership with the Company, to identify opportunities for improvement in community relations and business development. The program identified at each of the major villages a number of projects that are currently being deployed or are on an implementation plan. A social management system is being developed to provide standards, guidelines and tools to support the mine management and community staff. |
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2.10 | African Exploration | ||
(a) | Cote d’Ivoire Exploration | ||
LGL’s exploration holdings in Côte d’Ivoire are located in some of the most prospective zones of the Birimian greenstone belt. They consist of 17 granted exploration licences covering 11,000 square kilometres and a further 12 licences under application covering 7,500 square kilometres. The greenstone belts in Côte d’Ivoire are similar to, or extensions of, geology in the surrounding countries of Ghana, Mali, Burkina Faso, Niger and Guinea, which have yielded a number of multimillion ounce gold discoveries. Exploration efforts in Côte d’Ivoire were upgraded in 2009 to accelerate assessments of the large exploration acreage held in the country. Exploration activities continued in multiple target areas in Côte d’Ivoire during the year, but drilling activities were focused on Bonikro and Hiré, where eight drill rigs were deployed. LGL is currently drilling in excess of 250,000 metres a year and plans to spend approximately $37 million on exploration in 2010. | |||
(b) | Bonikro | ||
Extensive exploration was carried out at Bonikro during the year. Diamond drilling within the previously identified inferred resource area, below the existing final pit shell design, returned sufficient high grade intersections to warrant the commencement of an infill drilling program. The drill program has commenced and will be completed in the middle of 2010. This is expected to allow the Company to make an updated resources and reserves report in the second half of the year. | |||
(c) | Near Bonikro | ||
Numerous prospects within 30 kilometres of Bonikro offer strong opportunity to supplement the present mine plan. These include the Dougbafla East prospect, approximately 15 kilometres north of the Bonikro deposit and at Hiré, 12 kilometres south-east of Bonikro. Hiré includes individual prospects of Agbalé, Akissi-So, Central, Chappelle and Assondji-So (in order from north to south), all of which contain significant gold mineralisation. | |||
Infill drilling has been undertaken or is planned at Akissi-So, Assondji-So, Agbalé and Chappelle, and some extension drilling will be carried out at Assondji-So and at Chappelle. Infill drilling to date has been focused on areas expected to fall within the perimeter of an optimized pit. Results are pending. | |||
(d) | Hiré Feasibility Study | ||
In 2009 the company commenced a feasibility study for the development of satellite deposits at Hiré, around 10 kilometres from the Bonikro plant. Under the proposed expansion plan, higher grade ore from Hiré (approximately 3 g/t) would be trucked to Bonikro for processing, commencing in 2012 and milling capacity at Bonikro would be increased by the addition of a ball mill. This would potentially increase gold production to an average 250,000 ounces per year, and extend the life of Bonikro. |
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3 | Australia — Mount Rawdon operation |
3.1 | Summary | ||
(A)Introduction | |||
The Mount Rawdon operation is an open pit gold and silver mine and process plan located in south-east Queensland, approximately 80 kilometres south-west of Bundaberg, Queensland, Australia. The Company acquired the Mount Rawdon gold project in June 2008 though the merger with Equigold. | |||
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(B) | Mining rights |
The Company currently maintains six Exploration Permits for Minerals (EPM’s), surrounding the Mount Rawdon mine site. These six EPM’s encompass 604.8 km2. | |
(C) | Operations |
The Mount Rawdon gold deposit is a massive, volcaniclastic hosted, low grade gold deposit that exhibits characteristics conducive to low cost mining and treatment. The surface extent of mineralization forms a roughly ovoid zone of 200 meters x 300 meters at greater than 0.7 g/t gold. | |
The Mount Rawdon deposit provides feed for the mill, a modern carbon-in-leach (“CIL”) gold extraction plant with a 10,000 tonne per day capacity. | |
The operation is a conventional truck and excavator open pit mine. The deposit has produced 25.2 million tonnes of ore containing 859,000 ounces of gold since February 2001. Production has shown that the current mineral reserve model is within an acceptable tolerance of variance for both tonnage and grade of the deposit when compared to surveyed mine production. The reconciliation showed that the block model estimated total ore tonnes and ounces to be slightly less (6.4% and 7.4% respectively) than the actual production figures. |
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3.2 | Geology |
The local geology at Mt Rawdon is dominated by dacite intrusives and dacite-rich volcaniclastics. The two are considered genetically linked and have been intruded by a sequence of acidic to basic dykes and plugs. While many of the rocks present at Mt Rawdon are peculiar to the Mt Rawdon Complex, other lithologies, such as the quartz trachyte dykes, are regional in their extent. | |
The mineralization is considered synchronous to subsequent to most of the intrusive activity and all of the major rock types at the deposit are mineralized to some degree. | |
Two major lineaments in the region are the east-north-east trending Swindon Fault zone and the north-north-west trending Perry Fault zone. The Coastal Block sediments have a layering and a foliation that reflects these trends. | |
The Swindon Fault zone marks the contact between the Aranbanga Volcanic Group and the Curtis Island Group metasediments to the south. Regionally, the Perry Fault zone is a series of upright faults, which are aligned with the eastern margin of the Middle Triassic Esk Trough to the south. The dominant movement along these faults is suggested to be sinistral for the Perry Fault zone and dextral along the Swindon Fault zone. | |
Multiple phases of volcanic and intrusive activity occurred during the Middle to Late Triassic. | |
The first at 235-230 Ma includes granodiorite and diorite intrusives, followed by the eruption of olivine basalt, pyroxene andesites and rhyolitic ignimbrite of the Aranbanga Volcanic Group at 228-223 Ma. The final phase at 218-215 Ma is associated with cauldron collapse and ring fracturing, resurgent doming and sub-volcanic felsic intrusions. | |
Molybdenum, copper, copper-gold and epithermal gold mineralization in the region are closely associated with Triassic magmatism. | |
The Mount Rawdon gold deposit is a massive, volcaniclastic hosted, low grade gold deposit that exhibits excellent characteristics conducive to low cost mining and treatment. The surface extent of mineralization forms a roughly ovoid zone of 200 meters x 300 meters at greater than 0.7g/t gold. | |
The mineralization takes the form of pyrite disseminations in the matrix of a volcaniclastic sequence and as sulphide veinlets. Gold grade generally increases as pyrite alteration and sulphide veining increase. The host volcaniclastic sequence strikes northeast and has a shallow to moderate dip to the southwest. The volcaniclastics are typically massive and poorly sorted. | |
An intrusive dacitic dome feature with associated andesite and trachyandesite dykes occurs south of the main mineralized zone. The contact is steeply dipping and the margins are brecciated. Intrusion of dacitic fragmental rocks occur adjacent and at the intersection of north north-west striking and east-north-east striking structures which are parallel to the major regional Perry Fault (NNW strike) and Swindon Fault (ENE strike). These fragmentals occur at the North West contact of the main dacite body and are compositionally equivalent. The margins are steep dipping. | |
A later stage of trachytic and acid-intermediate intrusion has resulted in a series of four quartz trachyte dykes that intrude the mineralized zone at Mt Rawdon. There are also other associated intrusives present. | |
The mineralization and alteration at Mt Rawdon postdate the volcaniclastic sequence and dacite suite. It is still open at depth to the south west of the main zone and at the contact of the fragmental dacite plug with the main dacite body. |
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3.3 | Reserve Estimate |
Appropriate reviews in the areas of mining, geotechnical, and geological modelling have been carried out to confirm and further develop the assumption base for the mine. Site reviews of mining and processing costs have provided for an improved modelling and optimization base for the latest estimate. | |
The ore reserves in the table below are based on the April 2009 model at $800 per ounce gold price assumption, adjusted to take account of mining depletion, to December 31, 2009. |
Reserve | Tonnes | Average grade | Contained Ounces | Average grade | Contained Ounces | |||||||||||||||||||
Category | (Mt) | (g/t Au) | (Au ,000 ozs) | (g/t Au) | (Ag,000 ozs) | |||||||||||||||||||
Un-mined Ore | Proven | 1.5 | 0.82 | 38 | 2.26 | 105 | ||||||||||||||||||
Probable | 30.1 | 0.81 | 786 | 2.37 | 2,292 | |||||||||||||||||||
Stockpiled Ore | Proven | 0.4 | 0.79 | 10 | 2.79 | 36 | ||||||||||||||||||
Total Reserves | 32.0 | 0.81 | 835 | 2.37 | 2,433 |
Reserves have been prepared in accordance with Industry Guide 7. | |
Un-mined ore reserves quoted are those remaining below the mining surface at December 31, 2009, within the current pit design. | |
Stockpiled ore comprises mined ore above waste cut-off grade on the stockpiles, as of December 31, 2009. | |
The number of ounces of contained gold does not indicate the number of ounces that ultimately will be recovered. The number of ounces ultimately recovered and available for sale will depend upon, among other things, mining efficiency and processing efficiency. | |
The calculation of break even cut-off grade of 0.31g/t for ore considers gold price, fixed and variable site costs, refining costs, royalty, mining levies, and assumed recovery of the stockpile. The life of mine costs consider all operating conditions, capital and factors associated with the whole operation for each incremental year of operation. Mill recoveries used are based on current operating experience. | |
The information in this report regarding ore reserves at Mt Rawdon is based on information compiled by Mr Nick Spicer. Nick Spicer is employed by LGL in the role of Principal Mining Engineer. | |
3.4 | Mining |
(A) | General |
The Mount Rawdon operation includes the Mount Rawdon open pit mine, run of mine (“ROM”) Pads, mill and tailings storage facility. | |
The mine production rate has historically been 13,200 BCM (35,900 tonnes) per day of which 5,200 BCM (14,100 tonnes) per day has been ore. Open pit mining is carried out on a five day week production basis. Standard drilling and blasting techniques are used, and selective blast holes are sampled and assayed for production grade control purposes. Broken rock is loaded with an excavator into haul trucks. Depending on the block model determination or grade control results, the mined material is delivered either to the ROM Pad, primary crusher, low-grade stockpile, or to waste rock dumps. |
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(B) | Pit design and planning |
The operation’s Mining Department updates a detailed LOM based on the available reserves and utilizing the available mining fleet. Truck productivity predictions (“BCM/h” and cycle times) are adjusted to reflect production experience. The proposed haulage profiles are determined for each bench and pit phase, including the three possible destinations (ROM Pad, low-grade stockpile, and waste dumps). Using this data, the truck hours required to move the scheduled tonnage are limited to the actual producing truck hours from the mine fleet (after availability and utilization). | |
Production scheduling is driven by: |
• | mill feed requirements and capacities; | ||
• | stripping requirements for the cutback stages; | ||
• | loading rates constraints, where only two excavators and associated trucks can operate; and | ||
• | haulage limits determined by the size and number of trucks and their productivity. |
The LOM uses the following pit design criteria: |
• | 13 m to 25 m berm width; | ||
• | 30 m bench height; | ||
• | Variable slope angles based on recommendation between 53 o and 63.4 o inter ramp angles; and | ||
• | 25 m wide haul roads typically 1:9 grade. |
The current pit design was designed from an A$800 per ounce pit optimization conducted in October 2009 and was limited by practical pushback size limitations on the south side. |
(C) | Production scheduling |
Production is derived entirely from the Mount Rawdon deposit from 2009 until 2015, at which time the current reserve will be depleted. |
(D) | Mine equipment |
Mt Rawdon utilizes the services of local earthmoving contractors to develop the open pit. The major mining equipment used includes Hitachi EX1900s, Hitachi EX1200s and Komatsu HD 785 haul trucks. This equipment was selected to meet the production needs of the operation. In addition, a support fleet of graders, loaders and other ancillary gear are used. | |
Other equipment includes assorted support equipment and facilities, workshops and maintenance buildings, wash bays, fuelling facilities and site office. |
3.5 | Processing |
(A) | Process plant |
Ore from the Mt Rawdon deposit is processed at the CIP mill located at the Mt Rawdon mine. The Mt Rawdon mill facility was constructed in 2000, with the first doré produced in January 2001. | |
The Mt Rawdon mill initially had a capacity of 300 tonnes per hour (2.44 million tonnes per year at 93% availability). A plant upgrade late in 2002 increased the mill capacity to 420 tonnes per hour (3.44 million tonnes per year at 94% availability). Mill feed is first crushed to minus 150 mm in a 42 x 65 primary gyratory crusher, located near the pit for direct tipping, then conveyed to a Jaques 65 secondary crusher set at 20—30 mm with the facility to bypass lump as needed for the SAG mill. The ore is then stockpiled near the mill. | |
Using a fixed conveyor from a reclaim tunnel, the crushed material is conveyed to a SAG mill which operates in closed circuit with a ball mill and a bank of cyclones for | |
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sizing. A portion of the cyclone underflow is screened and then directed to a gravity recovery circuit. | |
Correctly sized material flows onto two trash screens and then into leach tanks where cyanide is used to dissolve the gold. Activated carbon is used in the CIP circuit to adsorb the gold from the cyanide solution. Carbon particles loaded with gold are removed from the slurry by screening and are transferred to the gold recovery circuit where the gold is stripped from the carbon by a high temperature/pressure cyanide solution. Gold ions in the solution are then plated onto a cathode by electrowinning. The gold is then melted into doré bars for shipment to a refiner. Mill tailings are pumped to the tails storage facility (“TSF”) and decanted solution is recycled back to the mill. |
(B) | Mill recovery |
Gold recoveries at the Mt Rawdon mill have historically ranged from 87 percent to more than 90 percent since production began in 2001. During 2001 to 2004, it was necessary to add lead nitrate and slightly increase the cyanide concentrations to maintain mill recovery rates with some of the feed coming from upper levels of the pit. | |
As the pit was developed to the lower levels, the recoveries became more consistent and the mill is now consistently achieving recoveries of 90% for most of the ore being treated. |
3.6 | Infrastructure |
The existing infrastructure includes a process plant, primary and secondary crushers, workshops and administration building. A large water dam provides water for to the operation’s needs. No further infrastructure is planned to be installed. | |
Process water for the Mount Rawdon operation is sourced from a weir constructed on the Perry River approximately 5 kilometres from the mine site. A water allocation and two option agreements are currently in place for additional water allocations sourced from the nearby Paradise dam, details of which are: |
• | Sunwater — 500 megalitres per annum. | ||
• | Burnett Shire — (Option 1) — 400 megalitres per annum. | ||
• | Burnett Shire — (Option 2) — 400 megalitres per annum. |
A water line has been constructed to the Burnett River which lies approximately 14 kilometres from the mine site and is connected to a pumping facility. | |
The Mount Rawdon mine lies on the Queensland state electrical grid. ERGON Energy has contracted grid energy supply at 66,000V with 10,000kW authorized demand, supplied to the operation’s on-site transformer. The power for the Mt Rawdon operation is sourced from an ISIS to Gayndah ring main transmission on a 66Kv line, together with a separate power line funded by Equigold upon start up of the mine. | |
3.7 | Logistics |
Operational consumables, supplies and maintenance parts are sourced from major suppliers within Australia. The majority of supplies are delivered direct to the site using a local transport company. Petroleum products and general chemicals are purchased within Queensland and other states in Australia to support the mine. Supplies are generally secured through normal purchase orders and supply agreements ranging from one to three year terms. |
3.8 | Rehabilitation and decommissioning |
Mt Rawdon Operation has an approved set of planning documents from the Queensland Government EPA which includes a requirement to submit a 5 year rehabilitation costing, based on current and |
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projected mine development. This rehabilitation costing is then used to set the rehabilitation bond. Mount Rawdon has lodged bonds within the Plan of Operations with the Queensland Government of A$8.4 million for the mine site and A$2.4 million for the easement covering the power line that was constructed to provide power to the operation. | |
The Company is currently reviewing the closure plan strategies and has engaged consultants to facilitate this process and also undertake reviews of waste material acid mine drainage potential and groundwater. These reviews will assist with identifying the current risks and also potential future risks. This information will be used to develop appropriate mine closure strategies. |
3.9 | Community affairs |
The mine operation is serviced from the small township of Mount Perry, which is located 20 kilometres by road north of the mine. The operation is located on a Company owned large pastoral lease and there is little influence on the surrounding population. | |
The mine maintains good relations with the local community with the majority of the operation’s workforce living locally. |
4 | Ballarat Project |
4.1 | Summary |
TheCompany acquired the Ballarat project when it completed the merger (by way of scheme of arrangement) with Ballarat Goldfields in 2007. Following a review in 2009, the Company decided to divest the Ballarat Project and, on March 5, 2010, the Company announced that it had entered into a sale agreement with Castlemaine Goldfields Limited. |
4.2 | Operations in 2009 |
(A) | Mining |
During 2009, the operation was focused on the underground development of the Ballarat East field as well as carrying out exploration activities in the Ballarat East, Ballarat West, Berringa and Ballarat South fields. The 2009 work program focused mainly on accessing ore zones in the central and southern areas of Ballarat East and construction of surface and mine infrastructure including ventilation for the underground mine. Following completion of this underground ventilation infrastructure at the end of 2008, the Company resumed development work to open up the potentially larger ore zones located in the northern areas of the Ballarat East mine. A total of approximately 18 kilometres of workings had been developed to the end of 2009. The project involved the development of a series of declines running along the strike of the Ballarat East field. These are known as the Sulieman, Woah Hawp, Sovereign and Prince declines. | |
Material moved during 2009, 2008 and 2007 is shown in the following table. |
2009 | 2008 | 2007 | ||||||||||
Development (m) | 4061 | 6,093 | 3,819 | |||||||||
Total Ore (tonnes) | 104,995 | 129,282 | 24,998 | |||||||||
Total Ore (g Au/t) | 4.3 | 3.5 | 3.3 | |||||||||
Total Waste (tonnes) | 170,288 | 296,287 | 217,300 | |||||||||
Total Material (tonnes) | 275,283 | 425,569 | 242,298 | |||||||||
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(B) | Processing |
The processing plant was designed by Gekko Systems, a Ballarat based company with expertise in gravity recovery and gold leaching. It was constructed in two phases, the first being gravity-only recovery while the second phase involved the recovery of fine gold and gold associated with sulphides. The power source for the Ballarat operation is from the main grid. There are two major connection points, being a 5MVA 66/11kV substation and a 3.5MVA 22/11kV substation. | |
The plant is located near the portal and surface workshops. The site was designed to minimize earthworks and to minimize noise emissions. The first phase was completed in December 2005 with a design capacity to treat seventy-five tonnes of ore per hour. The intensive leach plant was commissioned in December 2008. |
2009 | 2008 | |||||||
Production (oz) | 12,565 | 10,366 |
4.3 | Divestment |
In 2009, a review of the Ballarat project concluded that it would be unlikely to achieve the desired production and cost outcomes. A decision was made to divest the Ballarat project and a sale process was commenced. On March 5, 2010, the Company announced its entry into a sale agreement with Castlemaine Goldfields Limited for the sale of the Ballarat project. Under the agreement, the Company will receive A$4.5 million in cash plus an additional 2.5% royalty interest (calculated on net smelter return) in future production, capped at A$50 million. The sale is subject to certain conditions including Castlemaine shareholders approving the issue of new equity to raise a minimum of A$20 million. On March 19, 2010, Castlemaine announced that it had received a firm commitment from its existing shareholders and new institutional and sophisticated investors to raise A$30million, in this announcement Castlemaine further advised that the resolution to approve the issue of new equity would be considered by its shareholders at its upcoming annual general meeting. In preparation for the transition to new ownership, the operation was wound down and placed on care and maintenance from March 5, 2010. |
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C. | Organisational Structure |
Lihir Gold Limited was incorporated in 1995 under the laws of PNG and registered under the Companies Act. The registered office of the Company is located at Seventh Floor, Pacific Place, Corner Champion Parade and Musgrave Street, Port Moresby, NCD, PNG whilst the corporate services office is located at 500 Queen Street, Brisbane, Queensland, Australia. | |
Lihir Gold Limited is the parent entity for a global group of companies primarily involved with gold production, exploration, and the development of gold mining properties (the “LGL Group”). The Company’s primary operation is a gold mine located on Lihir Island in the New Ireland province of PNG. The Company also has operations in Mt Rawdon (Queensland, Australia) and Bonikro (Côte d’Ivoire). | |
As at December 31, 2009, the LGL Group consisted of the company and twenty separate entities which are wholly or majority owned by Lihir Gold Limited. | |
The following table illustrates the ownership structure of the LGL Group: |
Country of | Ownership Interest | Voting Power | ||||||||||
Lihir Gold Limited Subsidiaries | Incorporation | (Percent) | (Percent) | |||||||||
Niugini Mining Limited | Papua New Guinea | 100 | 100 | |||||||||
Niugini Mining (Australia) Pty Ltd | Australia | 100 | 100 | |||||||||
Lihir Management Company Limited | Papua New Guinea | 100 | 100 | |||||||||
Lihir Business Development Limited(1) | Papua New Guinea | 100 | 100 | |||||||||
Lihir Services Australia Pty Ltd(2) | Australia | 100 | 100 | |||||||||
Lihir Australian Holdings Pty Ltd(3) | Australia | 100 | 100 | |||||||||
Ballarat Goldfields Pty Ltd(4) | Australia | 100 | 100 | |||||||||
Berringa Resources Pty Ltd | Australia | 100 | 100 | |||||||||
Ballarat West Goldfields Pty Ltd | Australia | 100 | 100 | |||||||||
New Resources Pty Ltd | Australia | 100 | 100 | |||||||||
Corpique(No.21) Pty Ltd | Australia | 100 | 100 | |||||||||
Equigold Pty Ltd(5) | Australia | 100 | 100 | |||||||||
Swindon Holdings Pty Ltd(6) | Australia | 100 | 100 | |||||||||
Stanmines Pty Ltd(7) | Australia | 100 | 100 | |||||||||
Kim Resources Pty Ltd(8) | Australia | 100 | 100 | |||||||||
LGL Holdings CI SA | Côte d’Ivoire | 100 | 100 | |||||||||
Equigold Mines CI SA(9) | Côte d’Ivoire | 90 | 90 | |||||||||
Equigold CI SA(10) | Côte d’Ivoire | 98 | 98 | |||||||||
LGL Exploration CI SA | Côte d’Ivoire | 100 | 100 | |||||||||
LGL Development CI SA | Côte d’Ivoire | 100 | 100 |
(1) | On March 12, 2010 the Directors of Lihir Business Development Limited resolved to change the name of the entity to LGL PNG Holdings Limited | |
(2) | On March 12, 2010 the Directors of Lihir Services Australia Pty Ltd resolved to change the name of the entity to LGL Services Australia Pty Ltd | |
(3) | On March 12, 2010 the Directors of Lihir Australian Holdings Pty Ltd resolved to change the name of the entity to LGL Australian Holdings Pty Ltd | |
(4) | On March 12, 2010 the Directors of Ballarat Goldfields resolved to change the name of the entity to LGL Ballarat Operations Pty Ltd | |
(5) | On March 12, 2010 the Directors of Equigold Pty Ltd resolved to change the name of the entity to LGL Mount Rawdon Operations Pty Ltd | |
(6) | On March 12, 2010 the Directors of Swindon Holdings Pty Ltd resolved to change the name of the entity to LGL Mount Rawdon Property Holdings Pty Ltd | |
(7) | On March 12, 2010 the Directors of Stanmines Pty Ltd resolved to change the name of the entity to LGL CDI Investments Pty Ltd | |
(8) | On March 12, 2010 the Directors of Kim Resources resolved to change the name of the entity to LGL CDI Exploration Pty Ltd | |
(9) | On March 18, 2010 the Directors of Equigold Mines CI SA resolved to change the name of the entity to LGL Mines CI SA | |
(10) | On March 18, 2010 the Directors of Equigold CI SA resolved to change the name of the entity to LGL Resources CI SA | |
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The Company has a comprehensive insurance program which is reviewed on an annual basis to accommodate changing business requirements such as increased asset values, capital works projects and the recent mergers with Ballarat Goldfields and Equigold. The insurance program provides cover for various insurable events including property damage and business interruption (property loss or damage, business interruption (Lihir operation only) and construction risks), combined liability (public, products and errors and omissions), directors and officers liability, marine liability, aviation liability, crime (fidelity guarantee, theft by employees), money (theft by people other than employees) and various employee cover (workers’ compensation, medical and corporate travel). Deductibles apply to any claim, while the insurance program is comprehensive, as outlined in “Item 3. Key information — D. Risk Factors” there is still some risk that insurance coverage may not address all operating risks. In particular the appropriate level of cover takes into account the increasing diversification of cash flows for the Company resulting from the merger with Equigold. |
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(1) | Ballarat impairment |
A comprehensive review of the Ballarat operation was completed in mid June 2009 indicating that mining in bulk production quantities would not be sustainable due to the nature of the ore body. Consequently in July 2009 the Company announced that a process for selling the Ballarat assets had been initiated. The Company is of the view that any future value of the assets will be linked to any sales proceeds. On March 5, 2010, the Company announced its entry into a sale agreement with Castlemaine Goldfields Limited. The net assets of the Ballarat cash generating unit have been impaired and are carried at nil value. An impairment charge of $546 million before tax has been recognised in discontinued operations. This includes $31 million in respect of goodwill allocated to the Ballarat cash generating unit. The tax effect of this impairment charge is $137 million giving rise to a total impairment charge net of tax of $409 million. After allowing for the non-recognition for accounting purposes of deferred tax assets of $18 million in respect of Australian tax losses, deferred tax assets of $51 million remain in the Consolidated Entity’s Statement of Financial Position in respect of Ballarat assets. |
(2) | Issue of additional capital |
In March and April of 2009, the Company raised $340.9 million (net of transaction costs) through a placement of shares to institutional investors and a share purchase plan. A total of 171.7 million shares were issued through the share placement and a further 8.9 million were issued through the share purchase plan. |
(3) | Dividends |
On November 30, 2009 the Company paid an interim dividend of 1.5 cents per share to ordinary shareholders registered at the close of business on November 9, 2009. The total dividend amount paid was $35.5 million. | |||
A further dividend was declared by the Company of 1.5 cents per share to ordinary share holders registered at the close of business on March 2, 2010. Papua New Guinea dividend withholding tax of 10% will be payable by the Company on this dividend. |
(4) | Class B shares |
In accordance with the Company’s constitution and the PNG Companies Act, LGL redeemed all 161,527,405 class B shares previously held by Niugini Mining Limited (“NML”), a wholly owned subsidiary of LGL. the Class B shares represented NML’s shareholding in LGL at the time LGL acquired NML by way of scheme of arrangement in February 2000 when the ordinary shares held by NML in LGL were reclassified as Class B shares. The Class B shares were unlisted and have been redeemed for a payment of Kina 16,152.75 (approximately $6,150) from LGL to NML. |
(5) | Sale of Ballarat operation |
On March 5, 2010, the Company announced that it had entered into an agreement with Castlemaine Goldfields Limited for the sale of the Ballarat project in Victoria. The Company will receive A$4.5 million in cash plus an additional 2.5% royalty interest (calculated on net smelter return) in future production, capped at A$50 million. The sale is subject to certain conditions including Castlemaine shareholders approving the issue of new equity to raise a minimum of A$20 million. On March 19, 2010, Castlemaine announced that it had received a firm commitment from its existing shareholders and new institutional and sophisticated investors to raise A$30million, in this announcement Castlemaine further advised that the resolution to approve the issue of new equity would be considered by its shareholders at its upcoming annual general meeting. In preparation for the transition to new ownership, the operation was wound down and placed on care and maintenance from March 5, 2010. |
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(6) | Reserves |
On February 18, 2010, the Company announced that the total gold reserve at Mt Rawdon was 835,000 ounces. Silver reserve was at 2.433 million ounces. Cut-off grades reduced from 0.495 g/t of gold to 0.31 g/t. The optimised pit design has led to the southern and western sides of the pit being pushed back, wall slopes flattened and the depth of the pit reduced marginally. | |||
On October 29, 2009 the company announced that it had increased reserves at its Lihir Island operation by 7.5 million ounces, taking total ore reserves to 28.8 million ounces at June 30, 2009. This 36% increase in reserves is the net result of the following factors: |
• | Increase in the reserves inventory through expansion and refinement of the proposed pit shell. | ||
• | A rise in the long term gold price assumption from $675/oz to $800/oz. | ||
• | Adjustments to cost assumptions of mining and processing costs offset by the cost benefits from the MOPU project at Lihir Island, currently under construction. | ||
• | Depletion by mining to June 30, 2009. |
(7) | Resignation of Arthur Hood |
On January 17, 2010, The Board of Directors accepted the resignation of the Company’s Chief Executive Officer Arthur Hood. Mr Hood stood down immediately and Chief Financial Officer Phil Baker was appointed as Chief Executive Officer pending a global search for a new chief executive. Mr Hood’s termination package includes a cash payment of A$2.3 million and 3.5 million share rights previously awarded. Mr Hood elected to retain his 2009 share rights for their three year term and to receive the cash equivalent of his pro-rata 2008 share rights. The extent to which his 2009 share rights will vest will remain subject to company performance in accordance with the terms of the shareholder-approved executive share plan. In addition, Mr Hood received a cash payment of A$1.3 million in lieu of share rights that he would have been entitled to in the current year, had his contract run its full term. |
(8) | Hedge book close out |
The acquired Equigold hedge book was closed out in June 2009 for an outlay of $37.9 million. For the period January 1, 2009 to the time of close out, a total of 30,678 ounces were delivered into the hedges at a contract price of approximately A$600/oz and brought to account as a cash hedging loss of $7.7 million in the Statement of Comprehensive Income. The Equigold hedge losses represent the cumulative difference between the prevailing spot price of gold at the time of such delivery and the spot price (A$939/oz) prevailing at the date of completing the merger with Equigold. The close out of the Equigold hedge book followed the closure of the LGL hedge book in April 2007, in accordance with the company’s policy of not hedging gold production. Although the LGL and Equigold hedge books have been closed out, hedge accounting requires the profit or loss on those hedge contracts to be brought to account at the original designation dates. Accordingly, the total hedging loss for the year of $118.7 million includes $111.0 million of non-cash losses. Future periods will continue to report non-cash hedging losses in line with the original designation dates of the closed hedges and these will be brought to account in the Statement of Comprehensive Income. |
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PRELIMINARY | ||||||||||
ASSESSMENT ON THE | ||||||||||
IMPACT OF THE | ||||||||||
CONSOLIDATED | APPLICATION DATE | |||||||||
APPLICATION DATE OF | ENTITY’SFINANCIAL | FOR THE | ||||||||
REFERENCE | TITLE | SUMMARY | STANDARD | REPORT | CONSOLIDATED ENTITY | |||||
IFRS 1 | First-time Adoption of International Financial Reporting Standards | Amendments relating to oil and gas assets and determining whether an arrangement contains a lease | Annual periods beginning on or after 1 January 2010 | Not applicable | Not applicable | |||||
IFRS 2 | Share-based Payment | Amendments relating to group cash-settled share-based payment transactions | Annual periods beginning on or after 1 January 2010 | The Consolidated Entity does not presently have any share-based payment arrangements that will be effected by the amendment | Annual periods beginning on or after 1 January 2010 | |||||
IFRS 3 | Business Combination | Comprehensive revision on applying the acquisition method | Annual periods beginning on or after 1 July 2009 | This amendment will impact the accounting for future business combinations effected after adoption of the revised accounting standard. | Annual periods beginning on or after 1 January 2010 | |||||
IFRS 9 | Financial instruments | Phase 1 of replacing IAS 39. Deals with the classification and measurement of financial assets | Annual periods beginning on or after 1 January 2010 | The group is currently in the process of evaluating the potential effect of this standard. | Annual periods beginning on or after 1 January 2013 | |||||
IFRIC 16 | Hedges of a net investment in a foreign operation | This interpretation provides clarification for the accounting for hedges of a net investment in a foreign operation | Annual periods beginning on or after 1 October 2009 | The amendments are not expected to have any impact on the Consolidated Entity at the present time | Annual periods beginning on or after 1 January 2010 | |||||
IAS 32 | Financial Instruments: Presentation | Amendments relating to classification of rights issues | Annual periods beginning on or after 1 February 2010 | The amendments are not expected to have any impact on the Consolidated Entity at the present time | Annual periods beginning on or after 1 January 2011 | |||||
IAS 39 | Financial Instruments: Recognition and Measurement | Amendments for embedded derivatives when reclassifying financial instruments | Annual periods beginning on or after 30 June 2009 | The amendments are not expected to have any impact on the Consolidated Entity at the present time | Annual periods beginning on or after 1 January 2010 | |||||
Amendments for hedged items | Annual periods beginning on or after 1 July 2009 | The amendments are not expected to have any impact on the Consolidated Entity at the present time | Annual periods beginning on or after 1 January 2010 | |||||||
Amendments to IFRS | Various | Improvements to International Financial Reporting Standards | Annual periods beginning on or after 1 July 2010 | The amendments are not expected to have any impact on the Consolidated Entity at the present time | Annual periods beginning on or after 1 January 2011 |
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$m | ||||||||||||||||
Note | 2009 | 2008(1) | 2007(1) | |||||||||||||
Revenue | 6 | 1,087.4 | 748.6 | 497.6 | ||||||||||||
Cost of sales | 8 | (618.8 | ) | (439.8 | ) | (260.5 | ) | |||||||||
Gross profit from mining operations | 468.6 | 308.8 | 237.1 | |||||||||||||
Corporate expense | (46.2 | ) | (31.9 | ) | (25.3 | ) | ||||||||||
Project studies | (0.1 | ) | (2.6 | ) | (7.5 | ) | ||||||||||
Exploration expense | (9.4 | ) | (7.9 | ) | (8.2 | ) | ||||||||||
Operating profit before other income / (expense) | 412.9 | 266.4 | 196.1 | |||||||||||||
Other income / (expense) | ||||||||||||||||
Hedging loss | 9 | (118.7 | ) | (75.5 | ) | (97.2 | ) | |||||||||
Other income | 10 | 7.2 | 0.3 | — | ||||||||||||
Other expenses | 10 | (21.8 | ) | (31.3 | ) | (13.8 | ) | |||||||||
Operating profit before finance costs | 279.6 | 159.9 | 85.1 | |||||||||||||
Financial income | 11 | 9.1 | 7.3 | 10.4 | ||||||||||||
Financial expenses | 11 | (5.4 | ) | (0.5 | ) | (131.5 | ) | |||||||||
Profit / (loss) before tax | 283.3 | 166.7 | (36.0 | ) | ||||||||||||
Income tax benefit / (expense) | 13 | (104.6 | ) | (56.6 | ) | 10.0 | ||||||||||
Net profit / (loss) after tax from continuing operations | 178.7 | 110.1 | (26.0 | ) | ||||||||||||
Discontinued Operations | ||||||||||||||||
(Loss) / Profit from discontinued operations, net of income tax | 12 | (412.9 | ) | 0.7 | 1.9 | |||||||||||
(Loss) / Profit for the period | (234.2 | ) | 110.8 | (24.1 | ) | |||||||||||
Attributable to equity holders of the Company | (234.0 | ) | 111.0 | (24.1 | ) | |||||||||||
Attributable to minority interests | 29 | (0.2 | ) | (0.2 | ) | — | ||||||||||
(234.2 | ) | 110.8 | (24.1 | ) | ||||||||||||
Other comprehensive income | ||||||||||||||||
Exchange difference on translation of foreign operations | 28 | (a) | 104.6 | (154.9 | ) | 42.6 | ||||||||||
Net change in fair value of cash flow hedges | 28 | (a) | 21.4 | (32.7 | ) | (59.1 | ) | |||||||||
Deferred loss on cash flow hedges | 28 | (a) | 118.7 | 76.7 | 97.8 | |||||||||||
Net change in fair value of available for sale financial assets | 28 | (a) | 3.0 | (2.2 | ) | 1.2 | ||||||||||
Income tax on other comprehensive income | 13 | (30.4 | ) | (27.6 | ) | (4.9 | ) | |||||||||
Other comprehensive income for the period net of tax | 217.3 | (140.7 | ) | 77.6 | ||||||||||||
Total comprehensive income | (16.9 | ) | (29.9 | ) | 53.5 | |||||||||||
Attributable to equity holders of the Company | (16.7 | ) | (29.7 | ) | 53.5 | |||||||||||
Attributable to minority interests | 29 | (0.2 | ) | (0.2 | ) | — | ||||||||||
(16.9 | ) | (29.9 | ) | 53.5 | ||||||||||||
Earnings / (loss) per share | 40 | |||||||||||||||
- Basic (cents/share) | (9.8 | ) | 5.6 | (1.4 | ) | |||||||||||
- Diluted (cents/share) | (9.7 | ) | 5.6 | (1.4 | ) | |||||||||||
Continuing operations | 40 | |||||||||||||||
- Basic (cents/share) | 7.5 | 5.6 | (1.5 | ) | ||||||||||||
- Diluted (cents/share) | 7.4 | 5.6 | (1.5 | ) |
(1) | Revised (refer Note 36 of the financial statements) | |
* | Refer to item 18 Financial Statements |
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Operation | FY 2009 | |||
Lihir, PNG | 853,391 | |||
Mt Rawdon, QLD | 107,780 | |||
Bonikro, Cote d’Ivoire | 150,023 | |||
Ballarat, VIC | 12,565 | |||
Total | 1,123,759 | |||
• | Total revenue for the year rose by 45% to a record $1,087.4 million, driven by a combination of higher gold sales volume (30%) and a higher gold price (13%). Carbon credits added around $1.2 million to revenue. | ||
• | Total cash operating cost, before depreciation and amortisation, totalled $453.2 million, up 26% on the previous year. The increase reflected higher throughput, production and sales volumes, increased fuel prices and adverse exchange rate movements. | ||
• | Mine EBITDA(1) improved strongly for the year, rising 63% to $634.2 million. This increase reflected the strong improvement in operational performance at the Lihir mine and a full year’s contribution from the Bonikro and Mt Rawdon operations. | ||
• | Underlying profit(2) was a record $289.5 million, up 57% on the previous year. | ||
• | Net loss after tax attributable to shareholders of the Company was $234.0 million, down from a profit of $111.0 million in 2008. | ||
• | Cash generated from operations for the year were $450.9 million. | ||
• | An impairment charge for Ballarat of $409 million after-tax, writing down the Ballarat assets. |
(1) | Refer to “Item 18. Financial Statements, Notes to the financial Statements, Note 5” for a reconciliation of Mine EBITDA |
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(2) | Underlying profit is reconciled as follows: |
2009 | 2008 | 2007 | ||||||||||
Profit / (loss) attributable to equity holders of the Company | (234.0 | ) | 111.0 | (24.1 | ) | |||||||
Non cash hedging loss (after tax) | 77.7 | 51.2 | 53.1 | |||||||||
Discontinued Operations (after tax) | 412.9 | — | — | |||||||||
Loss on repayment of gold loan (after tax) | — | — | 82.5 | |||||||||
Write down of power plant and barges (after tax) | — | — | 8.9 | |||||||||
Impairment of listed equity securities (after tax) | — | 2.2 | — | |||||||||
Write down of geothermal and dewatering wells (after tax) | — | 19.7 | — | |||||||||
Loss on disposal of assets following comprehensive asset review (after tax) | 15.2 | — | — | |||||||||
De-recognition of DTA | 17.7 | — | — | |||||||||
Underlying profit / (loss) after tax | 289.5 | 184.1 | 120.4 |
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• | Lihir — $128.3 million including; mining fleet $16.4 million, geothermal projects $23.2 million, camp accommodation / catering $8.6 million, steam wells $7.5 million and near mine exploration $5.3 million |
• | MOPU($123.2 million) and interim power station ($27.6 million) |
• | Ballarat operation infrastructure and development expenditure — $35.3 million (pre impairment loss) |
• | Mt Rawdon — $5.1 million |
• | Bonikro, Côte d’Ivoire — $49.2 million including near mine exploration of $21.3 million (incorporating Oume, Bonikro and Hiré) |
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• | Lihir sustaining capital and Million Ounce Plant Upgrade — $141 million | |
• | Ballarat operation infrastructure and development expenditure — $108 million | |
• | Bonikro, Côte d’Ivoire — $27 million |
• | After completing a review of the Ballarat gold mine in Victoria it was concluded that despite encouraging results from ongoing exploration activities in the north of the Ballarat gold field, the project would be unlikely to achieve the scale required to fit within the LGL portfolio. A decision was made to divest the Ballarat project and a sale process was commenced. On March 5, 2010, the Company announced the entry into a sale agreement with Castlemaine Goldfields Limited for the sale of the Ballarat project. Under the agreement, the Company will receive A$4.5 million in cash plus an additional 2.5% royalty interest (calculated on net smelter return) in future production, capped at A$50 million. The sale is subject to certain conditions including Castlemaine shareholders approving the issue of new equity to raise a minimum of A$20 million. On March 19, 2010, Castlemaine announced that it had received a firm commitment from its existing shareholders and new institutional and sophisticated investors to raise A$30million, in this announcement Castlemaine further advised that the resolution to approve the issue of new equity would be considered by its shareholders at its upcoming annual general meeting. In preparation for the transition to new ownership, the operation was wound down and placed on care and maintenance from March 5, 2010. | |
• | On 17 January 2010, the Board of Directors accepted the resignation of the Company’s Chief Executive Officer Arthur Hood. Mr Hood stood down immediately and Chief Financial Officer Phil Baker was appointed as Chief Executive Officer pending a global search for a new chief executive. Mr Hood’s termination package includes a cash payment of A$2.3million and 3.5 million share rights previously awarded. Mr Hood elected to retain his 2009 share rights for their three year term and to receive the cash equivalent of his pro-rata 2008 share rights. The extent to which his 2009 share rights will vest will remain subject to company performance in accordance with the terms of the shareholder-approved executive share plan. In addition, Mr Hood received a cash payment of A$1.3 million in lieu of share rights that he would have been entitled to in the current year, had his contract run its full term. |
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(in US$ millions) | 2009 | 2008 | 2007 | |||||||||
Lihir | 279.1 | 153.0 | 156.5 | |||||||||
Ballarat | 35.3 | 118.6 | 65.9 | |||||||||
Bonikro | 49.2 | 29.9 | — | |||||||||
Mount Rawdon | 5.1 | 1.3 | — | |||||||||
Corporate | 4.8 | 1.3 | 0.3 | |||||||||
373.5 | 304.1 | 222.7 | ||||||||||
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Later than 1 year | Later than 2 years | |||||||||||||||||||
but not later than | but not later than | |||||||||||||||||||
Total | Less than 1 year | 2 years | 5 years | More than 5 years | ||||||||||||||||
$ m | $ m | $ m | $ m | $ m | ||||||||||||||||
Capital (Finance) Lease Obligations | 0.9 | 0.7 | 0.2 | — | — | |||||||||||||||
Operating Lease Obligations | 21.4 | 1.6 | 1.8 | 5.9 | 12.1 | |||||||||||||||
Capital expenditure commitments(i) | 334.6 | 269.5 | 45.1 | 20.0 | — | |||||||||||||||
Purchase obligations(ii) | 49.9 | 49.9 | — | — | — | |||||||||||||||
Other Liabilities(iii) | 73.4 | 26.9 | 6.1 | 7.7 | 32.7 | |||||||||||||||
Borrowings(iv) | 66.8 | 3.5 | 3.5 | 59.8 | — | |||||||||||||||
Total | 546.3 | 353.2 | 57.3 | 93.5 | 42.3 |
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(i) | The major items of capital commitment are: Lihir Island ($151.6 million for the MOPU Project and $170.2 million for other equipment purchases), and Bonikro ($12.2 million resource drilling program and other equipment). | |
(ii) | Purchase obligations consist of trade creditors of $44.1. million and employee service related liabilities of $5.8 million. | |
(iii) | Other liabilities represents $73.4 million consisting of current and non-current provisions on the consolidated balance sheet which represents certain employee, rehabilitation and other provisions. | |
(iv) | During the year the Company entered into a $50million financing facility (as the borrower) with PNG Sustainable Development Program Limited. The facility is on normal commercial terms and was negotiated on an arms length basis. |
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Name | Age | Year Appointed | ||||||
Dr Ross Garnaut | 63 | 1995 | ||||||
Mr Bruce Brook | 54 | 2005 | ||||||
Dr Peter Cassidy | 64 | 2003 | ||||||
Dr Michael Etheridge | 63 | 2007 | ||||||
Lady Winifred Kamit | 56 | 2004 | ||||||
Mr Geoff Loudon | 67 | 1995 | ||||||
Mr Alister Maitland | 68 | 2007 |
Chairman, Independent Director
Independent Director
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Independent Director
Independent Director
Independent Director
Independent Director
Independent Director
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Name | Age | Position with the Company | Year Joined | |||||||||
Phil Baker | 54 | Chief Executive Officer (effective January, 17 2010)Chief Financial Officer | 2007 | |||||||||
Peter Smith | 51 | Chief Operating Officer (effective March 1, 2010) | 2009 | |||||||||
Noel Foley | 60 | Executive General Manager Lihir Operations | 2006 | |||||||||
Graham Folland | 51 | Executive General Manager Corporate Development | 2006 | |||||||||
Tim Fry | 45 | Executive General Manager West Africa and Corporate Services | 2008 | |||||||||
Michael Sullivan | 52 | Executive General Manager Legal and & General Counsel | 2009 |
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• | Principles used to determine the nature and amount of remuneration | ||
• | Details of remuneration | ||
• | Service agreements | ||
• | Share based compensation |
• | competitive in structure and quantum with comparator organisations so as to attract, retain and motivate appropriately qualified and experienced executives; |
• | acceptability to shareholders; | ||
• | performance linkage / alignment of executive compensation; | ||
• | transparency; and | ||
• | capital management. |
• | has company profit as a core component of plan design; | ||
• | focuses on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering constant return on assets as well as focusing the executive on key non financial drivers of value; and | ||
• | attracts and retains high calibre executives. |
Alignment to program participants’ interests: |
• | rewards capability and experience; | ||
• | reflects competitive reward for contribution to growth in shareholder wealth; and | ||
• | provides a clear structure for earning rewards. |
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(a) | Executive directors |
• | the Chairman of the Board: $300,000 per annum (with no additional fee for service on any committees); and | |
• | for the other non-executive directors: |
• | base fee: $100,000 per annum; | ||
• | fee for serving as Chairman of the Audit Committee: $27,500 per annum; | ||
• | fee for serving as Chair of other committees: $20,000 per annum; and | ||
• | fee for membership of a committee: $10,000 per annum (per committee) |
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• | the Chairman of the Board: $330,000 per annum (with no additional fee for service on any committees); and | |
• | for the other non-executive directors: |
• | base fee: $110,000 per annum; | ||
• | fee for serving as Chairman of the Audit Committee: $30,250 per annum; | ||
• | fee for serving as Chair of other committees: $22,000 per annum; and | ||
• | fee for membership of a committee: $11,000 per annum (per committee) |
2009 | 2008 | |||||||
$ | $ | |||||||
Dr Ross Garnaut(2) (3) | 322,500 | 282,787 | ||||||
Mr Bruce Brook(2) | 137,063 | 118,893 | ||||||
Dr Peter Cassidy(2) | 139,750 | 121,393 | ||||||
Dr Michael Etheridge(2) | 118,250 | 103,306 | ||||||
Lady Winifred Kamit(1) | 139,750 | 121,393 | ||||||
Mr Geoff Loudon(1) | 129,000 | 112,350 | ||||||
Mr Alister Maitland(2) | 118,250 | 103,306 |
(1) | Fees are paid to Lady Kamit and Mr Loudon in PNG Kina. Mr Loudon’s fees are donated to the Port Moresby City Mission. | |
(2) | Fees are paid to Dr Garnaut, Mr Brook, Dr Cassidy, Dr Etheridge and Mr Maitland in Australian dollars equivalent to the amount reported. | |
(3) | The services of Dr Garnaut are provided through Dr Garnaut’s family company, Maccullochella Pty Limited. |
Remuneration and | Safety and | Sustainable | ||||||||||||||||||||||
Nomination | Technical Committee | Development | ||||||||||||||||||||||
Base fees | Audit Committee fees | Committee fees | fees | Committee fees | Total Directors fees | |||||||||||||||||||
Dr Ross Garnaut | $ | 322,500 | — | — | — | — | $ | 322,500 | ||||||||||||||||
Mr Bruce Brook | $ | 107,500 | $ | 29,563 | — | — | — | $ | 137,063 | |||||||||||||||
Dr Peter Cassidy | $ | 107,500 | — | $ | 10,750 | $ | 21,500 | — | $ | 139,750 | ||||||||||||||
Dr Michael Etheridge | $ | 107,500 | — | — | $ | 10,750 | — | $ | 118,250 | |||||||||||||||
Lady Winifred Kamit | $ | 107,500 | — | $ | 10,750 | — | $ | 21,500 | $ | 139,750 | ||||||||||||||
Mr Geoff Loudon | $ | 107,500 | — | — | $ | 10,750 | $ | 10,750 | $ | 129,000 | ||||||||||||||
Mr Alister Maitland | $ | 107,500 | $ | 10,750 | — | — | — | $ | 118,250 |
Remuneration and Nomination Committee — Chairman Dr Ross Garnaut
Safety and Technical Committee — Chairman Dr Peter Cassidy
Sustainable Development Committee — Chairperson Lady Winifred Kamit
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• | base package including superannuation and benefits; | ||
• | short-term performance incentives; and | ||
• | long-term incentives through participation in the Lihir Executive Share Plan (the “LESP”). |
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STI Target Level | Managing Director | Key management personnel | ||||||
Attainment of Target | 60% of Base package | 40% of Base package | ||||||
(before tax) | (before tax) |
• | Phil Baker — Chief Financial Officer | ||
• | Noel Foley — Executive General Manager, Papua New Guinea Operations | ||
• | Graham Folland — Executive General Manager Corporate Development | ||
• | Tim Fry — Executive General Manager West Africa and Corporate Services | ||
• | Peter Smith — Executive General Manager Australia and Africa Operations (appointed April 1, 2009) | ||
• | Michael Sullivan — Executive General Manager Legal & General Counsel (appointed September 1, 2009) |
• | Noel Foley — Executive General Manager, Papua New Guinea Operations |
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Long- | Share- | |||||||||||||||||||||||||||||||
Post-employment | term | based | ||||||||||||||||||||||||||||||
Short-term employee benefits | benefits | benefits | payments | |||||||||||||||||||||||||||||
Cash | ||||||||||||||||||||||||||||||||
salary and | Non | Long | ||||||||||||||||||||||||||||||
fees | Cash | monetary | Super- | service | Share | |||||||||||||||||||||||||||
bonus | benefits(5) | annuation | Other | leave | rights | Total | ||||||||||||||||||||||||||
Name | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Non-executive directors | ||||||||||||||||||||||||||||||||
Dr Ross Garnaut —Chairman | 322,500 | — | — | — | — | — | — | 322,500 | ||||||||||||||||||||||||
Mr Bruce Brook | 137,063 | — | — | — | — | — | — | 137,063 | ||||||||||||||||||||||||
Dr Peter Cassidy | 139,750 | — | — | — | — | — | — | 139,750 | ||||||||||||||||||||||||
Dr Mike Etheridge | 118,250 | — | — | — | — | — | — | 118,250 | ||||||||||||||||||||||||
Lady Winifred Kamit | 139,750 | — | — | — | — | — | — | 139,750 | ||||||||||||||||||||||||
Mr Geoff Loudon | 129,000 | — | — | — | — | — | — | 129,000 | ||||||||||||||||||||||||
Mr Alister Maitland | 118,250 | — | — | — | — | — | — | 118,250 | ||||||||||||||||||||||||
Sub-total non-executive directors | 1,104,563 | — | — | — | — | — | — | 1,104,563 | ||||||||||||||||||||||||
Executive directors | ||||||||||||||||||||||||||||||||
Arthur Hood(1) | 1,440,462 | 631,553 | 10,787 | 57,299 | — | 41,300 | 2,354,982 | 4,536,383 | ||||||||||||||||||||||||
Other key management personnel | ||||||||||||||||||||||||||||||||
Phil Baker(2) | 395,529 | 106,235 | 10,787 | 21,567 | — | 5,307 | 349,423 | 888,848 | ||||||||||||||||||||||||
Noel Foley | 291,442 | 141,387 | — | 57,303 | — | 18,289 | 345,617 | 854,038 | ||||||||||||||||||||||||
Graham Folland | 312,509 | 82,158 | 10,787 | 28,126 | — | 6,567 | 311,886 | 752,033 | ||||||||||||||||||||||||
Tim Fry | 359,371 | 114,686 | 10,787 | 28,043 | 12,508 | (7) | 2,385 | 187,541 | 715,321 | |||||||||||||||||||||||
Peter Smith(3) | 263,973 | 87,849 | 8,514 | 23,758 | — | 1,100 | 119,169 | 504,363 | ||||||||||||||||||||||||
Michael Sullivan(4) | 130,151 | 42,023 | 12,974 | (6) | 4,321 | — | 412 | — | 189,881 | |||||||||||||||||||||||
Total key management personnel compensation | 4,298,000 | 1,205,891 | 64,636 | 220,417 | 12,508 | 75,360 | 3,668,618 | 9,545,430 | ||||||||||||||||||||||||
Notes: | ||
(1) | Mr Hood resigned from the position of Managing Director and Chief Executive Officer on January 17, 2010. | |
(2) | Mr Baker was appointed the Chief Executive Officer on January 17, 2010. | |
(3) | Mr Smith commenced employment with the Consolidated Entity on April 1, 2009. | |
(4) | Mr Sullivan commenced employment with the Consolidated Entity on September 1, 2009. | |
(5) | Non-monetary benefits include car parking, salary continuance and death and total permanent disablement and motor vehicle benefits. | |
(6) | Included in the total non-monetary benefit is a car benefit of $9,021 | |
(7) | Housing assistance |
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Name | Fixed remuneration | At risk - STI | At risk - LTI | |||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |||||||||||||||||||
Executive directors of Lihir Gold Limited | ||||||||||||||||||||||||
Arthur Hood (resigned January 17, 2010) | 20 | % | 20 | % | 12 | % | 12 | % | 68 | % | 68 | % | ||||||||||||
Other key management personnel of Consolidated Entity | ||||||||||||||||||||||||
Phil Baker | 33 | % | 33 | % | 13 | % | 13 | % | 54 | % | 54 | % | ||||||||||||
Noel Foley | 33 | % | 33 | % | 13 | % | 13 | % | 54 | % | 54 | % | ||||||||||||
Graham Folland | 33 | % | 33 | % | 13 | % | 13 | % | 54 | % | 54 | % | ||||||||||||
Tim Fry | 33 | % | 33 | % | 13 | % | 13 | % | 54 | % | 54 | % | ||||||||||||
Peter Smith | 33 | % | — | 13 | % | — | 54 | % | — | |||||||||||||||
Michael Sullivan | 33 | % | — | 13 | % | — | 54 | % | — |
• | the Managing Director’s total fixed remuneration; | ||
• | 60% of the total fixed remuneration (to represent the Short-Term | ||
• | Incentive component of remuneration); and | ||
• | 106.67% of the total fixed remuneration (to represent the Long-Term Incentive component of remuneration). |
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Total fixed remuneration of A$530,400.
Total fixed remuneration of A$442,900.
Total fixed remuneration of A$432,600.
Total fixed remuneration of A$490,000.
Total fixed remuneration of A$450,000.
Total fixed remuneration of A$450,000.
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Name | Number of share rights | Number of share rights vested | ||||||||||||||
granted during the year | during the year | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Directors of Lihir Gold Limited | ||||||||||||||||
Arthur Hood(1) | 1,870,202 | 1,649,164 | Nil | 129,249 | ||||||||||||
Other key management personnel of the Consolidated Entity | ||||||||||||||||
Phil Baker | 317,930 | 192,711 | Nil | 45,074 | ||||||||||||
Noel Foley | 268,059 | 183,644 | Nil | 41,996 | ||||||||||||
Graham Folland | 261,825 | 158,705 | Nil | 33,355 | ||||||||||||
Tim Fry | 356,373 | Nil | n/a | Nil | ||||||||||||
Peter Smith | 210,395 | Nil | n/a | Nil | ||||||||||||
Michael Sullivan | Nil | Nil | n/a | Nil |
(1) | Mr Hood received $3.7 million (before tax) in lieu of share rights that were granted to him in 2008 upon his resignation on 17 January 2010. Mr Hood elected to retain his 2009 share rights for their three year term. |
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(a) | Exercise price: $ nil (2008 — $ nil) | ||
(b) | Expected volatility: 55% (2008 – 46.9%) | ||
(c) | Risk-free interest rate: 3.07% (2008 — 6.8%) | ||
(d) | Expected life of right (years): 10 years (2008 — 10 years) | ||
(e) | Weighted average share price at grant date: $2.08 (2008 — $2.98) | ||
(f) | Expected dividend yield: 0% (2008 — 0%) |
Name | Date of exercise of | Number share rights exercised during | ||||||||||
share rights | the year | |||||||||||
2009 | 2008 | |||||||||||
Directors of Lihir Gold Limited | ||||||||||||
Arthur Hood (resigned January 17, 2010) | — | — | 129,249 | |||||||||
Other key management personnel of the Consolidated Entity | ||||||||||||
Phil Baker | — | — | — | |||||||||
Noel Foley | — | — | 41,996 | |||||||||
Graham Folland | — | — | 33,355 | |||||||||
Tim Fry | — | — | — | |||||||||
Peter Smith | — | — | — | |||||||||
Michael Sullivan | — | — | — |
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• | setting the Company’s values and standards of conduct, including in respect of safe work practices, environmental compliance and social obligations, and ensuring that these are adhered to in the interests of the Company’s shareholders, employees, customers, suppliers and the communities in which it operates; | ||
• | safeguarding the reputation of the Company; | ||
• | providing leadership of the Company within a framework of prudent and effective controls which enable risks to be assessed and managed; | ||
• | setting the Company’s direction, strategies and financial objectives and ensuring that the necessary financial and human resources are in place for the Company to meet its objectives; | ||
• | ensuring that the performance of management, and the Board itself, is regularly assessed and monitored; | ||
• | ensuring monitoring of compliance with regulatory and ethical standards; and | ||
• | appointing, terminating and reviewing the performance of the Managing Director/CEO. |
• | final approval of corporate strategy and performance objectives and reserves and financial plans; | ||
• | capital management, including capital raisings, and the approval and monitoring of significant capital expenditure; | ||
• | monitoring of financial performance, review and approval of significant financial and other reporting; | ||
• | assessing the appropriateness and adequacy of, and monitoring compliance with, corporate governance policies and ethical standards; | ||
• | evaluating the performance of the senior management team; | ||
• | determining the Company’s risk management policies and reviewing and ratifying its risk management and internal control framework, including insurance, corporate security and prudential limits, codes of conduct, and legal compliance; | ||
• | determining the Company’s treasury policies, including gold price hedging, foreign currency and interest rate exposure; and | ||
• | the engagement of auditors to review and report to the Board on the Company’s financial results and reporting systems, internal controls and compliance with statutory and regulatory requirements. |
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• | the Board may, in accordance with the Company’s constitution, be comprised of a minimum of five directors and maximum of twelve; and | ||
• | the roles of the Chairman of the Board and of the Managing Director should be exercised by different individuals. |
Year Appointed | ||||||
Name | Position and Committee Memberships | As Director | ||||
Ross Garnaut | Chairman of the Board, Independent Director Member of the Audit Committee Member of the Sustainable Development Committee Chairman of the Remuneration and Nomination Committee | 1995 | ||||
Geoffrey Loudon | Independent Director Member of the Safety and Technical Committee Member of the Sustainable Development Committee | 1995 | ||||
Peter Cassidy | Independent Director Chairman of the Safety and Technical Committee Member of the Remuneration and Nomination Committee | 2003 |
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Year Appointed | ||||||
Name | Position and Committee Memberships | As Director | ||||
Winifred Kamit | Independent Director Chair of the Sustainable Development Committee Member of the Remuneration and Nomination Committee | 2004 | ||||
Bruce Brook | Independent Director Chairman of the Audit Committee | 2005 | ||||
Michael Etheridge | Independent Director Member of the Safety and Technical Committee | 2007 | ||||
Alister Maitland | Independent Director Member of the Audit Committee | 2007 |
• | Audit; |
• | Remuneration and Nomination; |
• | Sustainable Development (formally Environmental and Lihir Impact Committee); and |
• | Safety and Technical. |
• | Mr Bruce Brook — Committee Chairman |
• | Dr Ross Garnaut |
• | Mr Alister Maitland |
• | determining the appropriateness of accounting principles and disclosure practices adopted by management and monitoring compliance with applicable accounting standards and other requirements; | ||
• | overseeing the preparation and audit of, and verifying and ensuring the integrity of, the Company’s Financial Statements and reports; | ||
• | the appointment, compensation, retention and oversight of the Company’s external auditor or any other public accounting firm engaged for the purpose of performing audit, review or attestation services for the Company; | ||
• | reviewing and evaluating the independence, qualifications and performance of the external auditor and managing the relationship between the Company and its external auditor; |
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• | monitoring the adequacy of the Company’s internal financial controls; | ||
• | overseeing the risk management and compliance systems and processes; | ||
• | overseeing the retention, tasking and resourcing of the Company’s internal auditors, monitoring their progress and evaluating their performance; and | ||
• | reviewing the financial management of the Company generally and undertaking such other tasks as the Board or the Managing Director may request from time to time. |
• | requires that no person may play a significant role in managing the audit for more than five out of any ten successive years; | ||
• | must approve all non-audit work which may be undertaken by the external auditor and exclude them from undertaking such work where it may give rise to a conflict of interest; | ||
• | receives periodic statements, at least annually, from the auditors outlining all work undertaken for the Company, and confirming that the auditor has satisfied all professional regulations relating to auditor independence; | ||
• | meets with the external auditor independently of management; | ||
• | reviews the performance of external auditors at least annually and is responsible for recommending to the Board their appointment, reappointment or termination; | ||
• | reviews the scope of the annual audit plan and approves the scope of the audit services to be provided; | ||
• | reviews any engagement fees or terms proposed by the external auditors; | ||
• | reviews and discusses with external auditors or management any significant matters, problems, difficulties or any other major issues regarding financial reporting issues; | ||
• | considers whether the external auditors provision of non-audit services to the Company and any other relationship between the external auditor and the Company (if any) is compatible with maintaining the independence and objectivity of the external auditor and maintaining the quality of the audit services provided; and | ||
• | if applicable, takes appropriate action in response to the external auditors report to satisfy itself of the external auditor’s independence for the purposes of making a recommendation to the Board. |
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• | Dr Ross Garnaut — Committee Chairman | ||
• | Dr Peter Cassidy | ||
• | Lady Winifred Kamit |
• | reviewing remuneration of non-executive directors, the Managing Director and other senior executives; | ||
• | establishing criteria for membership of the Board and its committees; | ||
• | processes for the identification of suitable candidates; | ||
• | reviewing membership of the Board and its committees; | ||
• | nominating members of the Board and its committees; | ||
• | formulating policies relating to the retirement of non-executive directors; | ||
• | reviewing management succession planning, human resources and remuneration policies for the Company generally; | ||
• | ensuring the Company’s obligations in relation to employee benefits and entitlements, including superannuation, are met; and | ||
• | recruitment, induction, promotion, retention, termination and other general conditions of employment. |
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• | Lady Winifred Kamit — Committee Chairperson |
• | Dr Ross Garnaut |
• | Mr Geoff Loudon |
• | the interaction between the Company’s activities and the local community, and the ways in which these activities contribute to social and economic development; | ||
• | dealings with the local community in relation to land; | ||
• | maintaining and improving community health; | ||
• | the impact and associated risks of the Company’s activities on the natural marine, terrestrial and atmospheric environment; | ||
• | liaising with and monitoring any specialist advisory panels, working groups or committees established for the purposes of sustainable development; and | ||
• | monitoring the Company’s compliance with the applicable regulatory regimes including both the Company’s compliance with the relevant local and international emission standards and the Company’s reporting obligations pursuant to those standards and codes. |
• | Dr Peter Cassidy — Committee Chairman |
• | Mr Geoff Loudon |
• | Dr Michael Etheridge |
• | occupational health and safety standards, policies and issues; |
• | technical issues associated with the Company’s exploration, mining and processing activities, with reference to the standards set by the Company and the standards and norms of the industry more generally; |
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• | review and monitoring of LGL’s reserves and resources (including review of statements made in compliance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the “JORC Code”)); and | ||
• | the status of major capital projects approved by the Board. |
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2009 | 2008 | 2007 | ||||||||||
Lihir Operation | ||||||||||||
Management | 13 | 9 | 10 | |||||||||
Commercial, human resources, towns and site services, community and environment | 591 | 373 | 455 | |||||||||
Mining operations and mine technical | 586 | 582 | 570 | |||||||||
Plant operations and maintenance | 1,017 | 1,055 | 879 | |||||||||
African Operations | ||||||||||||
Management | 18 | 1 | — | |||||||||
Commercial, human resources, towns and site services, community and environment | 328 | 46 | — | |||||||||
Mining operations and mine technical | 313 | 58 | — | |||||||||
Plant operations and maintenance | 156 | 136 | — | |||||||||
Exploration site personnel | 280 | 2 | — | |||||||||
Various corporate support personnel | 10 | 10 | — | |||||||||
Mt Rawdon Operation | ||||||||||||
Management | 1 | 1 | — | |||||||||
Commercial, human resources, towns and site services, community and environment | 10 | 8 | — | |||||||||
Mining operations and mine technical | 7 | 6 | — | |||||||||
Plant operations and maintenance | 41 | 36 | — | |||||||||
Ballarat Operation | ||||||||||||
Management | 6 | 6 | 9 | |||||||||
Commercial, human resources, towns and site | 13 | 23 | 10 | |||||||||
services, community and environment | ||||||||||||
Mining operations and mine technical | 16 | 186 | 83 | |||||||||
Plant operations and maintenance | 68 | 87 | — | |||||||||
Lihir Services Australia — Brisbane | ||||||||||||
Various corporate support personnel | 139 | 99 | 53 | |||||||||
Total Company employees | 3,613 | 2,724 | 2,069 | |||||||||
Total contractors (full-time equivalent) | 2,204 | 1,893 | 1,893 | |||||||||
Total | 5,817 | 4,617 | 3,962 |
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Interest held by directors in shares of the | ||||
Company(1) as at February 18, 2010 | ||||
Ross Garnaut (Director) | 167,148 | (2) | ||
Bruce Brook (Director) | 67,730 | (3) | ||
Peter Cassidy (Director) | 46,074 | (4) | ||
Michael Etheridge (Director) | 73,501 | (5) | ||
Geoffrey Loudon (Director) | 143,840 | |||
Winifred Kamit (Director) | 2,667 | (6) | ||
Alister Maitland (Director) | 82,637 | (7) |
(1) | Since April 1, 2009, the Board adopted a policy that non-executive directors acquire LGL shares equivalent in value to 20% of their annual fees (pre-tax) with the exception of non-executive directors that donate their fees to charity | |
(2) | Held by Maccullochella Pty Limited of which Dr Garnaut is a director and shareholder. | |
(3) | 35,107 of which are held by Eagle’s Rest 156 Pty Limited as trustee of the Brook Family Superannuation Fund and 21,773 of which are held by Mrs GD Brook. | |
(4) | 26,667 of which are held by Cassidy Waters Pty Limited as trustee for the Cassidy Superannuation Fund. | |
(5) | Held by Tectonex Geoconsultants Pty Ltd as trustee for the Etheridge Superannuation Fund. | |
(6) | Held by Kamchild Limited of which Lady Kamit is a director and shareholder. | |
(7) | Held by the Alister Maitland Superannuation Fund. |
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Interest held by key management in shares of | ||||
the Company as at February 18, 2010 | ||||
Phil Baker | 23,773 | |||
Graham Folland | 83,981 | |||
Noel Foley | 152,339 | |||
Tim Fry | 2,457 | |||
Peter Smith | 10,000 | |||
Michael Sullivan | — |
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Percentage/Voting | ||||||||
Substantial Shareholder | Relevant Interest | Power (%) | ||||||
BlackRock Investment Management (Australia) Limited | 287,736,882 | 12.14 | ||||||
Fidelity Management & Research LLC and Fidelity International Limited | 209,367,759 | 8.84 | ||||||
Commonwealth Bank of Australia | 203,827,336 | 8.60 |
(a) | Class B shares — Niugini Mining Limited |
• | did not carry any voting rights or any entitlement to dividends; and | ||
• | were not transferable and were redeemable at the Company’s option. |
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December 31, | December 31, | |||||||
2009 | 2008 | |||||||
US Holders of Ordinary Share | 92 | 78 | ||||||
Total number of shares held | 703,605 | 567,852 |
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• | Dr Garnaut was re-appointed as chairman commencing on May 1, 2004, subject to his continuing to hold office as a director and to certain other termination rights set out in the agreement; | ||
• | No fees or benefits are payable to Dr Garnaut by reason of his retirement or other termination of office; and | ||
• | The Company has agreed to indemnify Dr Garnaut against any liability incurred in defending any proceedings arising from the performance of his duties and responsibilities in which judgment is given in his favor, he is acquitted, or relief is granted to him under the Companies Act. The indemnity does not apply to the extent it would be inconsistent with the Company’s constitution or to the extent the liability is otherwise insured. |
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2009 | 2008 | 2007 | ||||||||||||||
Export sales | $ | M | 977.2 | 683.9 | 492.3 | |||||||||||
Export volume | oz’s | 1,005,893 | 792,346 | 707,339 | ||||||||||||
Export volume as % of total sales volume | % | 90.2 | 91.2 | 99.8 |
(b) | Legal or arbitration proceedings |
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Ordinary Shares | American Depositary Shares | |||||||||||||||
Year | High | Low | High | Low | ||||||||||||
A$ | A$ | $ | $ | |||||||||||||
2005 | 2.35 | 0.99 | 37.01 | 15.30 | ||||||||||||
2006 | 3.64 | 1.98 | 28.37 | 11.46 | ||||||||||||
2007 | 4.42 | 2.74 | 40.95 | 21.70 | ||||||||||||
2008 | 4.37 | 1.53 | 39.95 | 9.81 | ||||||||||||
2009 | 3.73 | 2.44 | 34.75 | 16.72 |
Ordinary Shares | American Depositary Shares | |||||||||||||||||
Quarter Ending | High | Low | High | Low | ||||||||||||||
A$ | A$ | $ | $ | |||||||||||||||
2008 | March 31 | 4.37 | 3.59 | 39.95 | 31.57 | |||||||||||||
June 30 | 3.29 | 2.86 | 31.87 | 26.50 | ||||||||||||||
September 30 | 2.80 | 1.75 | 24.80 | 13.93 | ||||||||||||||
December 31 | 3.13 | 2.25 | 21.93 | 13.98 | ||||||||||||||
2009 | March 31 | 3.29 | 3.20 | 22.79 | 21.97 | |||||||||||||
June 30 | 2.98 | 2.93 | 27.24 | 19.75 | ||||||||||||||
September 30 | 2.85 | 2.79 | 28.06 | 20.40 | ||||||||||||||
December 31 | 3.30 | 3.22 | 34.75 | 24.44 |
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Ordinary Shares | American Depositary Shares | |||||||||||||||
Month | High | Low | High | Low | ||||||||||||
A$ | A$ | $ | $ | |||||||||||||
September 09 | 2.76 | 3.18 | 28.17 | 22.53 | ||||||||||||
October 09 | 2.85 | 3.33 | 30.55 | 24.17 | ||||||||||||
November 09 | 3.04 | 3.70 | 35.00 | 27.38 | ||||||||||||
December 09 | 3.12 | 3.73 | 35.08 | 27.14 | ||||||||||||
January 2010 | 2.77 | 3.46 | 24.25 | 32.09 | ||||||||||||
February 2010 | 2.58 | 2.89 | 23.74 | 26.23 |
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• | the acquisition of, or an agreement to acquire, whether contingent or not, assets the value of which is more than half the value of assets of the company before the acquisition; | ||
• | the disposal of, or an agreement to dispose of, whether contingent or not, assets of the company the value of which is more than half the value of the assets of the company before the disposal; or | ||
• | a transaction which has or is likely to have the effect of the company acquiring rights or interests, or incurring obligations or liabilities, the value of which is more than half the value of the assets of the company before the transaction. |
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• | the power to control the exercise of any right to vote attached to a voting share; | ||
• | the power to acquire or dispose of the voting share; or | ||
• | having the above powers by virtue of any trust, arrangement, agreement or understanding. |
• | reflected changes made under the new Companies Act (for example, the abolition of par value of shares, the increased power for directors to make distributions of money or property to members and the removal of the requirement that a company have specific objects and powers); or | ||
• | took advantage of specific provisions of the new Act which allow the Company to take a course of action (for example, to buy back the company’s shares, to indemnify directors or to pay for D&O liability insurance) if expressly permitted to do so by its constitution. |
• | The Company is incorporated and registered in PNG (Number C1-23423) and is a registered foreign company in Australia (ARBN 069 803 998). Under section 17 of the Companies Act, a company has full capacity to carry on or undertake any business or activity, do any act or enter into any transaction, and in respect of these purposes, it has full rights, powers and privileges. Therefore it is not necessary to list the objects and purposes of the Company in its constitution. | ||
• | In accordance with clause 17, a director may vote on a proposal, arrangement or contract in which he is materially interested provided that he has complied with the Companies Act, the Official Listing Rules of the ASX and provided the board does not otherwise determine. | ||
• | The constitution contains provisions for the remuneration of directors (including reimbursement of expenses), the indemnification of directors in respect of certain liability or for costs incurred in defending or settling any claim or proceedings relating to such liability, and for effecting insurance for directors to the extent permitted under the Act. These are general powers of the Company which may in the normal course be exercised by a resolution of the Board. An interested director |
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who has declared his or her interest would be entitled to vote on any such resolution unless the board has determined that the director should not exercise any power in relation to the matter. The interested director is not entitled to vote on a resolution to make that preliminary determination. | |||
There are no specific provisions relating to borrowing powers in the constitution. Clause 20.1 provides that the Board has all necessary power for managing, and for directing and supervising the management of, the business and affairs of the Company to the exclusion of the Shareholders and in accordance with clause 21.9 every resolution of the board is decided by a majority of votes. Therefore, the borrowing by the Company is determined by a majority decision of the Board. | |||
• | An exercise of the borrowing power may in certain circumstances be subject to the provisions of the Companies Act (section 110) requiring shareholder approval for major transactions. | ||
• | There are no provisions for retirement or non-retirement of directors under an age limit in the constitution. | ||
• | Clause 15.5 provides that a director of the Company need not be a shareholder. | ||
• | Clause 10A.2(b) provides that Class B shares have no entitlement to dividends. | ||
• | Clause 24.1 provides that the Board may declare distributions to the shareholders (other than Class B shareholders) including declaring the property to constitute the distribution and the time of the distribution. Shareholder approval is not required for a distribution. Clause 24.3 provides that where the Board has declared a dividend the obligation of the Company to make the distribution only arises when the Board fixes the time for distribution and that time has arrived. | ||
• | Clause 24.8 provides that each dividend in respect of each share must be distributed according to the amount paid up on that share save to the extent that the terms of issue of a share provide otherwise. The Company does not have any partly paid shares on issue. | ||
• | Clause 24.18 provides that all dividends declared but unclaimed may (in the case of dividends not to be distributed as money) be realized into money and (in any case) be invested for the benefit of the Company until claimed or until required to be dealt with under any applicable law dealing with unclaimed money. | ||
• | Clause 5.6 provides that if a call in relation to a share is due and payable and not paid, the shareholder has no right to receive any dividends and has no right to vote. | ||
• | Clause 10A.2(a) provides that the Class B shareholders do not have any voting rights. | ||
• | Clause 13.2 provides that each shareholder who is entitle to vote on a resolution (where not disqualified from voting pursuant to the Listing Rules or the Act) has one vote on voting by voice or show of hands, and on a poll he has the number of votes equal to the number of fully paid shares held by that person. | ||
• | Under clause 15.3, one third of the directors (excluding the managing director) retire by rotation each year and are eligible for re-election. | ||
• | Clause 27.3 provides that after distribution of assets to repay paid up capital any surplus assets will be distributed to the shareholders in proportion to the amount paid up by the shareholder on each share, save to the extent that the terms of issue of a share provide otherwise. | ||
• | Clause 10A.2(d) provides that the Class B shares are redeemable at the option of the Company for consideration of K100 per million (or part thereof) of those shares. | ||
• | Clause 2.6(b) provides that the Company is authorized to redeem any redeemable shares subject to the provisions of the Listing Rules and the securities clearing house business rules of Australia. | ||
• | There are no provisions in the constitution in relation to sinking funds. |
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• | Clause 5 provides that the Board may make calls on a shareholder in respect of any or all of the amount unpaid on the share unless the terms of issue make that payment payable at a fixed time. The constitution does not expose the shareholders to any liability to further capital calls by the Company. | ||
• | There are no provisions discriminating against any existing or prospective holder of such securities as a result of such shareholder owning a substantial number of shares in the constitution. | ||
• | Under the Companies Act, any provision of the constitution can be altered by special resolution of the shareholders requiring a 75% majority vote of those attending and voting. | ||
• | Clause 8.2 provides that where the Company by ordinary shareholders’ resolution consolidates, divides or sub-divides its shares, the Company may also by special resolution determine that, as between the shares resulting from the consolidation, division or sub-division, one or more of those shares has some preference or special advantage as regards dividends, capital, voting or otherwise over or compared with the other shares. | ||
• | Clause 8.3 provides that if the shares are divided into different classes of shares, the rights attached to any class of shares may only be varied or abrogated with either the written consent of 75% of the shareholders of that class, or, sanction of a special resolution passed at a separate meeting of that class of shareholders. | ||
• | Clause 8.4 provides that the board may do anything to give effect to any resolution authorizing or effecting the alteration of the share capital of the Company, the variation or abrogation of rights attaching to any class of shares, or to adjust the rights of all parties. | ||
• | Clause 11.3 provides that the board may convene a special meeting of the Company at any time. Alternatively, clause 11.4 provides that the shareholders may requisition the holding of a special meeting as provided by section 102(b) of the Companies Act, which requires a written request of shareholders holding shares carrying not less than 5% of the voting rights. | ||
• | Clause 11.2 provides that the Company must hold an annual general meeting in accordance with the Companies Act, which must be held not later than 15 months after the previous annual general meeting. | ||
• | Fourteen days’ written notice of the meeting must be sent to the shareholders, directors and auditor of the Company, stating the nature of the business, the text of any special resolution and, if required by the Official Listing Rules of the ASX, include a form of proxy. | ||
• | All shareholders (including Class B shareholders) may attend a meeting of shareholders either in person, by proxy, by attorney or (in the case of a shareholder which is a body corporate) by a representative. | ||
• | Clause 12.2 provides that no business may be transacted by a meeting of shareholders unless a quorum of three is present. Clause 12.3 provides that, where a quorum is not present within 30 minutes after the time appointed for the meeting, (in the case of a meeting requisitioned by shareholders), the meeting is dissolved, or in the case of any other meeting, it is adjourned to the same time and the same place the following week, and if there is not a quorum within 30 minutes of the appointed time of that meeting, it is dissolved. |
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• | There are no limitations on rights to own securities, including the rights of non-resident or foreign shareholders to hold or exercise voting rights on the securities imposed by foreign law, or by the charter or other constituent document of the Company in the constitution. | ||
• | There are no provisions in the constitution that would have an effect of delaying, deferring or preventing a change in control of the Company, and that would operate only with respect to a merger, acquisition or corporate restructuring involving the Company (or any of its subsidiaries). | ||
• | There are no provisions in the constitution governing the ownership threshold above which shareholder ownership must be disclosed. | ||
• | The Company is incorporated, and has its principal activities, in PNG. As such it is subject to the Companies Act, the Securities Act of PNG and the Takeovers Code under the Securities Act of PNG. The general effect of this legislation is referred to elsewhere in this Annual Report. | ||
• | In relation to an increase in capital by the issue of new shares, clause 2.1 provides that this power is conferred on the board of directors subject to the listing rules of any applicable stock exchange (namely the Australian Securities Exchange, Port Moresby Stock Exchange and the NASDAQ Stock Exchange). The conditions in this regard are no more stringent than is required by law. There are no pre-emptive rights of existing shareholders. |
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• | obtaining approvals from applicable regulatory bodies such as the Foreign Investment Review Board, the Australian Securities and Investments Commission, the ASX, POMSoX, NASDAQ, SEC, PNGSC and the TSX as appropriate; | ||
• | obtaining exchange control approval from the Bank of Papua New Guinea; | ||
• | under decree 96-634 of August 9, 1996 determining the terms of application of Law 95-553 of July 18, 1995 being the Mining Code of the Republic of the Ivory Coast, obtaining the authorization of theAdministration des Minesto implement the Scheme; | ||
• | obtaining Equigold shareholder approval of the Scheme at the scheme meeting by the requisite majorities under theCorporations Act;and | ||
• | obtaining Court approval of the Scheme in accordance with section 411(4)(b) of theCorporations Act. |
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(a) | a contract with dnx Australia Ltd for the supply of products out of Australia; and | |
(b) | a contract with dnx PNG Ltd for the supply of services at the Lihir operation. |
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a) | to comply with any conditions or approvals issued by the Central Bank before September 3, 2007; | |
b) | obtain prior approval from the Central Bank to operate a bank account outside PNG; | |
c) | to obtain prior approval from the Central Bank to give a guarantee or to grant security to a non-resident where there is no direct benefit to the resident entity or its business in PNG; and | |
d) | to report certain transactions (by lodgement of the prescribed forms) to the Central Bank for example reporting any physical commodity exports from PNG. |
a) | proceeds from the sale of mining products; | |
b) | the proceeds of bank loans and insurance policies in an aggregate amount, sufficient to pay three months anticipated loan servicing obligations; | |
c) | payments for goods and services to persons resident outside of PNG; | |
d) | dividends to non-PNG shareholders; and | |
e) | payments for certain approved reductions in share capital. |
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• | a dealer in securities; | |
• | a trader in securities that elects to use a mark-to-market method of accounting for securities holdings; | |
• | a tax-exempt organization; | |
• | a life insurance company; | |
• | a person liable for alternative minimum tax; | |
• | a person that actually or constructively owns 10% or more of our voting stock; | |
• | a person that holds shares or ADSs as part of a straddle or a hedging or conversion transaction; or | |
• | a person whose functional currency is not the U.S. dollar. |
• | a citizen or resident of the United States; | |
• | a domestic corporation; | |
• | an estate whose income is subject to United States federal income tax regardless of its source; or | |
• | a trust if a United States court can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust. |
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• | Code of Conduct; | ||
• | Conflicts of Interest Policy; | ||
• | Whistleblower Policy and Procedure; | ||
• | Market & Shareholder Communication Policy; | ||
• | Continuous Disclosure Policy; and | ||
• | Board Communications Policy. |
• | Compliance with laws | ||
• | Dealing with public officials | ||
• | Giving or receiving gifts or benefits | ||
• | Conflicts of interests | ||
• | Confidentiality | ||
• | Insider Trading | ||
• | Information Systems | ||
• | Financial controls and records | ||
• | Sustainability | ||
• | Equal Opportunity, employee harassment and discrimination | ||
• | Occupational Health and Safety |
• | a definition of what is a “conflict of interest” | ||
• | a procedure to facilitate the disclosure of the conflict of interest | ||
• | a procedure to allow the standing notification of a conflict of interest; and | ||
• | Steps to be taken to handle the conflict of interest. |
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• | a plain English description of the Company’s obligations under ASX Listing Rule 3.1 (the continuous disclosure obligation) and its parallel application on the other markets on which LGL securities are traded (namely POMSoX, NASDAQ and TSX); | ||
• | commitments by LGL to use multiple delivery systems to ensure stakeholders are informed about the business, including email, internet and the LGL website; | ||
• | initiatives to promote shareholder participation at general meetings including advanced notice, multimedia presentations, efficient streamlined proxy appointment processes and information sessions; and | ||
• | a commitment by LGL to self-assess its corporate governance practices against the ASX Corporate Governance Council’s Principles for Good Corporate Governance and report the outcome in the LGL annual report. |
• | a plain English definition of price sensitive information, including several examples; | ||
• | the establishment of a Disclosure Committee which is tasked with deciding what information is to be disclosed to the market, co-ordination of disclosure between the various markets, regulators, analysts and the website, overseeing the education of the business on LGL’s disclosure obligations and monitoring of compliance with this policy. The Disclosure Committee is made up of (a minimum of two of) the CEO, CFO, Group Secretary and GM Corporate Affairs; |
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• | A process to follow for market speculation or rumours, including responding to regulator enquiries; and | ||
• | The policy on release of price sensitive information to analysts, investors and the media. |
(a) | any major events at an LGL’s operation likely to have a material impact on production or the general functioning of that operation (which may trigger the continuous disclosure policy). | ||
(b) | any significant event at an LGL’s operation that may have the effect of reducing or limiting production or result in the urgent need for additional unforseen capital expenditure; | ||
(c) | any event which is likely to impact negatively on a supplier or contractor to LGL requiring LGL to either adopt contingencies or engage alternative suppliers; | ||
(d) | any significant safety, environmental, industrial or community incident; | ||
(e) | financial matters that significantly affect the Company or need to be discussed; | ||
(f) | industrial relations issues (or employment issues generally) that have the short term potential to negatively impact on an LGL operation (such as news of an impending strike); or | ||
(g) | any event that is considered prudent by executive employees or the Group Secretary to inform the Board. |
• | full fair and accurate timely disclosure in all reports and documents including all public communications; | ||
• | commitment to a work environment where the health, safety and well-being of employees, contractors, visitors and other parties affected by the Company’s operations are paramount; | ||
• | compliance with all laws, regulations and other requirements relating to all aspects of business and personal conduct within PNG and the countries with which the Company interacts; | ||
• | integrity, honesty, transparency and respect in all interactions (whether internal or with groups outside the Company) including with Lihirian and other representative groups in relation to issues important to the community; | ||
• | excellence in the management of environmental responsibilities to ensure minimisation of any adverse effects on the environment or impact on the local community; | ||
• | adoption of the highest standards of business administration, accountability and corporate governance, including the ethical use of all Company resources, funds, equipment, information and time; | ||
• | high standards of proprietary when dealing in any tradable securities of the Company, including shares, options and prescribed interests. | ||
• | fairness, within the framework of commitments to local community groups, to potential and existing employees in all areas of recruitment, training and administration of employee benefits; | ||
• | initiative and personal commitment by all employees, contractors and agents working on behalf of the Company, to the highest standards of work performance and the effective achievement of Company objectives; and | ||
• | accountability and willingness to take responsibility. |
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(a) | review the performance of the external auditors at least annually and be responsible for recommending to the Board their appointment, re-appointment or termination; | |
(b) | review the scope of the annual audit program, or audit plan and approve the scope of the audit services to be provided; | |
(c) | review any engagement fees or terms proposed by the external auditors; | |
(d) | consider whether the external auditor’s provision of non-audit services to the Company and any other relationship between the external auditor and the Company (if any) is compatible with maintaining the independence and objectivity of the external auditor and maintaining the quality of the audit services provided; and | |
(e) | if applicable, take appropriate action in response to the external auditor’s report to satisfy itself of the external auditor’s independence for the purposes of making a recommendation to the Board. |
2009 Fees | 2008 Fees | 2007 Fees | ||||||||||
Services provided | $000 | $000 | $000 | |||||||||
Audit fees | 1,177 | 1,197 | 685 | |||||||||
Audit-related fees | 244 | 422 | 642 | |||||||||
Tax fees | 151 | 141 | 54 |
• | comfort letters; | ||
• | statutory audits; | ||
• | attest services; | ||
• | consents; and | ||
• | assistance with and review of documents filed with the SEC. |
• | employee benefit plan audits; | ||
• | due diligence related to mergers and acquisitions; | ||
• | accounting assistance and audits in connection with proposed or consummated acquisitions; | ||
��� | internal control reviews; and | ||
• | consultations concerning financial accounting and reporting standards. |
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• | tax compliance services, including the preparation of original and amended tax returns; | ||
• | tax consultations, such as assistance and representation in connection with tax audits and appeals, tax advice related to mergers and acquisitions, employee benefit plans and requests for rulings or technical advice from taxing authorities; and | ||
• | tax planning services. |
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Total number of | Maximum number (or | |||||||||||||||
shares purchased as | approximate dollar | |||||||||||||||
value) of | ||||||||||||||||
Average price | part of publicly | shares that may yet be | ||||||||||||||
Total number of | paid per share | announced plans or | purchased under the plans | |||||||||||||
Period | shares purchased | (A$) | programs | or programs | ||||||||||||
September 2008 | 546,575 | (1) | $ | 2.74744 | 564,575 | Nil | ||||||||||
2009 | Nil | Nil | Nil | Nil |
(1) | 546,575 shares purchased on market in accordance with the 2007 LESP, announced by invitation letter to all participants dated January, 31 2007. For further information see “Item 6B. Compensation — (d) Share based compensation.” |
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• | In 1995, the Company was granted an exemption with respect to the quorum requirement under NASDAQ Listing Rule 4350(f), now rule 5620, which requires each issuer to provide for a quorum as specified in its by-laws for any meeting of the holders of common stock, which shall in no case be less than 33 1/3% of the outstanding shares of the Company’s common voting stock. The Company complies with the quorum requirements set forth in Item 10.B (b) above. | ||
• | Rule 5605 requires independent directors to have regularly scheduled meetings at which only independent directors are present. During 2009, the Chairman organized two formal non-executive director (NED) meeting sessions to facilitate NED discussions in the absence of management. In addition informal NED sessions are regularly held in conjunction with scheduled Board meetings. |
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“Alteration” | Change in the mineral composition of a rock | |
“Anhydrite” | Mineral form of calcium sulfate | |
“Argillic alteration” | Alteration composed of clay minerals | |
“Arsenopyrite” | A sulfide mineral of iron and arsenic | |
“Autoclave” | Vessel used for chemical reactions at high temperature and pressure; for example, to oxidize sulfide ore | |
“Autogenous threshold” | The level of sulfur feed at which the heat generated by oxidation of the sulfides is sufficient to propagate the reaction. | |
“Ball mill” | A mill using metal balls as the grinding medium | |
“BCM” | Bank Cubic Meter (a volume of material in its insitu state). | |
“Bench” | The horizontal floor along which mining progresses in a pit, also used to describe the horizontal segment between two such floors. The thickness of such a segment is referred to as the “bench height”. As the pit progresses to lower levels, safety benches are left in the walls to catch any rock falling from above. | |
“Brecciation; breccia” | Fracturing of pre-existing rocks by natural forces; a rock type formed in this manner | |
“Bullion” | Gold or silver in bars or ingots | |
“Calcining” | To reduce to a powder or friable state by heat | |
“Caldera” | Large basin shaped, typically circular crater resulting from volcanic activity | |
“Carbon-in-leach” | Method of extracting gold from solution using carbon | |
“Concentrate” | Material that has been processed to increase the content of contained metal or mineral relative to the contained waste | |
“Counter-current decantation” or “CCD” | The clarification and concentration of slurry material by the use of several thickeners in series, with the washing solution flowing in the opposite direction to the slurry | |
“Cut-off grade” | The lowest grade of mineralized material that can be economically extracted | |
“Cyanidation” | A standard method of extracting gold and silver from crushed or ground mineralized rock using sodium cyanide | |
“Cyanide leaching” | The extraction of a precious metal from an ore by its dissolution in a cyanide solution | |
“Dilution” | Waste which is commingled with ore in the mining process |
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“Dore” | A mixture of gold and other metals, mostly silver, usually the raw metal produced from a precious metal mine | |
“Economically” | as used in the definition of reserves, implies that profitable extraction or production under defined investment assumptions has been established or analytically demonstrated. The assumptions made must be reasonable, including assumptions concerning the prices and costs that will prevail during the life of the project | |
“Electro-winning” | The process of removal of gold from solution by the action of electric currents | |
“Elution” | The process of desorption (taking of gold from carbon) | |
“Epithermal” | A term applied to deposits formed at shallow depths from ascending solutions of moderate temperatures | |
“Exsolution” | To be removed from solution | |
“Feasibility study” | A technical and financial study of a project at sufficient level of accuracy and detail to allow a decision as to whether the project should proceed | |
“Flocculant” | An additive introduced to promote aggregation in a solution. | |
“Flotation” | The process of concentrating ground mineral particles by attaching them to air bubbles in a slurry using chemical reagents and recovering the mineralized froth generated by aeration | |
“Free gold” | Gold not chemically or physically entrapped and hence amenable to relatively simple extraction processes. | |
“Friable” | Said of a rock or mineral that crumbles naturally or is easily broken, pulverized, or reduced to powder, such as soft or poorly cemented sandstone. | |
“Fumaroles” | Vents in a volcanic region from which gases and vapors emanate at high temperatures | |
“GAAP” | Generally accepted accounting principles. | |
“Geochemistry” | The study of the variation of chemical elements in rocks and soils; a method of exploration based on this | |
“Geotechnical” | Pertaining to the engineering properties of rocks and soils | |
“Geothermal” | Pertaining to the heat of the earth’s interior | |
“Grade” | The metal (or mineral) content per unit of rock | |
“Grinding” | Reducing mineralized rock to the consistency of fine sand by crushing the abrading in a rotating steel grinding mill |
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“Gyratory Crusher” | A primary crusher consisting of a vertical spindle, the foot of which is mounted in an eccentric bearing within a conical shell. The top carries a conical crushing head revolving eccentrically in a conical maw. | |
“Hydrological” | Pertaining to the science of hydrology | |
“kPa” | A unit of pressure — an abbreviation for “kilopascals, gauge”. | |
“Joint venture” | An arrangement in which two entities unite to form a new, jointly-owned entity to achieve a specific purpose. | |
“Legally” | As used in the definition of reserves, does not imply that all permits needed for mining and processing have been obtained or that other legal issues have been completely resolved. However, for reserves to exist there should not be any significant uncertainty concerning issuance of these permits or resolution of legal issues. | |
“Lime” | Calcium oxide; artificially made from limestone | |
“Limestone” | Rock composed mainly of calcium carbonate | |
“Lithology” | The physical characteristics of rock | |
“Mafic” | Descriptive of rocks containing or made up of ferro-magnesian minerals (usually dark in color) | |
“Magma; magmatic” | Liquid molten rock; pertaining to processes and rocks involving magma | |
“Marcasite” | Iron sulfide mineral (a form of pyrite) | |
“Metallurgy” | The science and technology of metals, usually pertaining to the processing of metals and minerals in mining | |
“Mill feed grade” | The grade of material feed to the mill, equivalent to received at mill | |
“Milling/mill” | The comminution of the ore, although the term has come to cover the broad range of machinery inside the treatment plant where economically valuable minerals are separated from the ore | |
“Mineable” | The portion of a reserve for which extraction is technically and economically feasible | |
“Mineral deposit” | A mineralized underground body which has been intersected by a sufficient number of closely-spaced drill holes and/or underground sampling to support sufficient tonnage and ore grade to warrant further exploration or development; a mineral deposit or mineralized material does not qualify as a commercially mineable ore body (Reserves), as prescribed under standards of the Commission, until a final and comprehensive economic, technical, and legal feasibility study based upon the test results is concluded. | |
“Net smelter returns” | The value received for a mineral after refining, less the cost of transporting the mineral to the refinery and the cost of refining |
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“Open pit” | Surface mining in which the ore is extracted from a pit. The geometry of the pit may vary with the characteristics of the ore body. | |
“Ore” | Material that contains one or more minerals, at least one of which has commercial value and which can be recovered at a profit | |
“Ore body” | A continuous well defined mass of material of sufficient ore content to make extraction economically feasible | |
“Ore grade” | The average amount of the valuable metal or mineral contained in a specific mass of ore; for gold, this is usually expressed as troy ounces per short ton (2,000 pounds avoirdupois) or grams per tonne | |
“Ounces” | Troy ounces of 31.103 grams, or 1.097 Avoirdupois ounces | |
“Outcrop” | That part of a rock formation exposed on surface | |
“Oxide ore” | Gold ore that has been subjected to oxidation through natural weathering and surface water percolation to the extent that the minerals are readily treatable by standard processes | |
“Phyllic alteration” | Hydrothermal alteration of rocks involving the secondary formation of quartz and sericite | |
“Pit shell” | Designed outline of an open pit mine containing all the open pit ore reserves | |
“Pleistocene” | A subdivision of geologic time, about 10,000 — 2 million years before the present | |
“Potassic alteration” | Hydrothermal alteration of rock involving the secondary formation of potash feldspar, commonly the mineral orthoclase, usually with biotite | |
“Pressure oxidation” | A method of processing refractory sulfide ore | |
“Propylitic alteration” | Hydrothermal alteration of basic rocks involving the secondary formation of chlorite, epidote, calcite and sulphide | |
“Probable Reserves” | means reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation. | |
“Proven Reserves” | means reserves for which; (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling; and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well established | |
“Pyrite” | Iron sulfide mineral |
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“RC hole” | A reverse circulation drill hole produced by percussion drilling in which rock cuttings are recovered instead of core. “Reverse circulation” refers to the air flow which flows downward around the outside of the drill pipe, returning with the rock cuttings through the drill bit face and stem. | |
“Reactive sulfur” | In mineral processing involving pressure oxidation, sulfur in the form of sulfide | |
“Refining” | The final stage of metal production in which final impurities are removed from the molten metal by introducing air and fluxes. The impurities are removed as gases or slag | |
“Refractory ore” | Ore not amenable to standard processing techniques | |
“Reserves” | Means that part of a mineral deposit that can be economically and legally extracted or produced at the time of the reserves determination | |
“ROM” | Run of mine pads | |
“Sampling” | Taking small pieces of rock at intervals along exposed mineralization for assay (to determine the mineral content) | |
“SAG” | “Semi-autogenous grinding”, a method of comminution that utilizes the rock fragments to assist in the grinding process | |
“Seismic” | Pertaining to shock waves that pass through the earth | |
“Shotcreting” | Application by pressure spraying of a setting medium with the characteristics of concrete for stabilization of rock faces. | |
“Silt curtain” | A flooding barrier to be deployed offshore from watercourses, which causes temporary ponding of sediment laden fresh water within its confines to enhance settling, and mixing with sea water, as the turbid stream is forced underneath the barrier | |
“Slurry” | A fluid comprising fine solids suspended in a solution (generally water containing additives) | |
“Smelting” | Thermal processing whereby molten metal is liberated from beneficiated ore or concentrate with impurities separating as lighter slag | |
“Stockpile” | A store of unprocessed ore | |
“Stripping” | The process of removing overburden or waste to expose ore | |
“Stripping ratio” | In open pit mining, the ratio of waste material to ore, usually expressed as tonnes waste : tonnes ore | |
“Sulfide ore” | Ore characterized by the inclusion of metal in the crystal structure of a sulfide mineral. This type of ore is often refractory ore | |
“Superannuation fund” | A contributory pension fund. |
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“Surface mixed layer” | Uppermost layer of the ocean that is constantly mixed by wind and wave action | |
“Tailings” | The finely-ground waste product from ore processing | |
“Underground Mine” | Mining of an ore body beneath the earths surface where ore is recovered using trucks via a portal or hoisted via a shaft |
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Units of Measure | ||
“US$/ oz. Gold” | US dollars per troy ounce of gold | |
“US$/ t ore” | US dollars per tonne of ore | |
“C” | Degrees Celsius | |
“g Au/t” | Grams of gold per tonne | |
“ha” | Hectares | |
“kg” | Kilograms | |
“kg Au/t” | Kilograms of gold per tonne | |
“kPa” | kilo Pascals | |
“kt” | kilo tonnes | |
“m2” | Square meters | |
“m3” | Cubic meters | |
“mtpy” | Million tonnes per year | |
“t/d” | Tonnes per day | |
“t/h” | Tonnes per hour | |
Unit Equivalents | ||
“Celsius degrees” | (Fahrenheit degrees minus 32.0) times 5/9 | |
“1 cubic meter” | 35.314 cubic feet | |
“1 gram” | 0.03215 troy ounces | |
“1 gram Au/tonne” | 0.02917 troy ounces gold/short ton | |
“1 hectare” | 2.471 acres | |
“1 kilogram” | 2.205 pounds | |
“1 kilometre” | 0.62 statute miles | |
“1 kilopascal” | 0.145 pounds per square inch | |
“1 kilo tonne” | 1102.31 short tons | |
“1 meter” | 3.281 feet | |
“1 millimetre” | 0.039 inches | |
“1 square kilometre” | 0.3861 square miles | |
“1 square meter” | 10.764 square feet | |
“1 tonne” | 1.1023 short tons |
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FA-1 | ||||
F-1 | ||||
F-3 | ||||
F-5 | ||||
F-7 | ||||
F-8 |
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PricewaterhouseCoopers | ||
ABN 52 780 433 757 | ||
6th Floor Credit House | ||
Cuthbertson Street | ||
PO Box 484 | ||
PORT MORESBY | ||
PAPUA NEW GUINEA | ||
Telephone (675) 321 1500 | ||
Facsimile (675) 321 1428 | ||
Website: www.pwc.com.pg |
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$M | ||||||||||||||||
NOTE | 2009 | 2008(1) | 2007(1) | |||||||||||||
CONTINUING OPERATIONS | ||||||||||||||||
Revenue | 6 | 1,087.4 | 748.6 | 497.6 | ||||||||||||
Cost of sales | 8 | (618.8 | ) | (439.8 | ) | (260.5 | ) | |||||||||
Gross profit from mining operations | 468.6 | 308.8 | 237.1 | |||||||||||||
Corporate expense | (46.2 | ) | (31.9 | ) | (25.3 | ) | ||||||||||
Project studies | (0.1 | ) | (2.6 | ) | (7.5 | ) | ||||||||||
Exploration expense | (9.4 | ) | (7.9 | ) | (8.2 | ) | ||||||||||
Operating profit before other income / (expenses) | 412.9 | 266.4 | 196.1 | |||||||||||||
Other income / (expenses) | ||||||||||||||||
Hedging loss | 9 | (118.7 | ) | (75.5 | ) | (97.2 | ) | |||||||||
Other income | 10 | 7.2 | 0.3 | — | ||||||||||||
Other expenses | 10 | (21.8 | ) | (31.3 | ) | (13.8 | ) | |||||||||
Operating profit / (loss) before finance costs | 279.6 | 159.9 | 85.1 | |||||||||||||
Financial income | 11 | 9.1 | 7.3 | 10.4 | ||||||||||||
Financial expenses | 11 | (5.4 | ) | (0.5 | ) | (131.5 | ) | |||||||||
Profit / (loss) before tax | 283.3 | 166.7 | (36.0 | ) | ||||||||||||
Income tax (expense) / benefit | 13 | (104.6 | ) | (56.6 | ) | 10.0 | ||||||||||
Net profit / (loss) after tax from continuing operations | 178.7 | 110.1 | (26.0 | ) | ||||||||||||
DISCONTINUED OPERATIONS | ||||||||||||||||
(Loss) / Profit from discontinued operation, net of income tax | 12 | (412.9 | ) | 0.7 | 1.9 | |||||||||||
(Loss) / Profit for the period | (234.2 | ) | 110.8 | (24.1 | ) | |||||||||||
(1) | Restated (refer Note 36) |
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STATEMENTS OF COMPREHENSIVE INCOME
Year ended 31 December 2009
$M | ||||||||||||||||
NOTE | 2009 | 2008(1) | 2007(1) | |||||||||||||
OTHER COMPREHENSIVE INCOME | ||||||||||||||||
Exchange difference on translation of foreign operations | 28 | (a) | 104.6 | (154.9 | ) | 42.6 | ||||||||||
Net change in fair value of cash flow hedges | 28 | (a) | 21.4 | (32.7 | ) | (59.1 | ) | |||||||||
Deferred hedging loss transferred to hedging loss expense | 28 | (a) | 118.7 | 76.7 | 97.8 | |||||||||||
Net change in fair value of available for sale financial assets | 28 | (a) | 3.0 | (2.2 | ) | 1.2 | ||||||||||
Income tax on other comprehensive income | 13 | (30.4 | ) | (27.6 | ) | (4.9 | ) | |||||||||
OTHER COMPREHENSIVE INCOME / (LOSS) FOR THE PERIOD NET OF TAX | 217.3 | (140.7 | ) | 77.6 | ||||||||||||
TOTAL COMPREHENSIVE (LOSS) / INCOME | (16.9 | ) | (29.9 | ) | 53.5 | |||||||||||
Total comprehensive income / (loss) for the period is attributable to: | ||||||||||||||||
Owners of the Company | (16.7 | ) | (29.7 | ) | 53.5 | |||||||||||
Non-controlling interests | 29 | (0.2 | ) | (0.2 | ) | — | ||||||||||
(16.9 | ) | (29.9 | ) | 53.5 | ||||||||||||
(Loss) / profit for the period is attributable to: | ||||||||||||||||
Owners of the Company | (234.0 | ) | 111.0 | (24.1 | ) | |||||||||||
Non-controlling interests | 29 | (0.2 | ) | (0.2 | ) | — | ||||||||||
(234.2 | ) | 110.8 | (24.1 | ) | ||||||||||||
Earnings / (loss) per share | 40 | |||||||||||||||
— Basic (cents/share) | (9.8 | ) | 5.6 | (1.4 | ) | |||||||||||
— Diluted (cents/share) | (9.7 | ) | 5.6 | (1.4 | ) | |||||||||||
Continuing operations | 40 | |||||||||||||||
— Basic (cents/share) | 7.5 | 5.6 | (1.5 | ) | ||||||||||||
— Diluted (cents/share) | 7.4 | 5.6 | (1.5 | ) |
(1) | Restated (refer Note 36) |
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$M | ||||||||||||
NOTE | 2009 | 2008(1) | ||||||||||
ASSETS | ||||||||||||
CURRENT ASSETS | ||||||||||||
Cash and cash equivalents | 14 | 473.5 | 64.7 | |||||||||
Receivables | 16 | 15.1 | 21.0 | |||||||||
Inventories | 17 | 162.5 | 139.0 | |||||||||
Derivative financial assets | 25 | (g) | 9.3 | 0.4 | ||||||||
Other assets | 19.7 | 5.1 | ||||||||||
Assets classified as held for sale | 12 | 8.5 | — | |||||||||
Total current assets | 688.6 | 230.2 | ||||||||||
NON-CURRENT ASSETS | ||||||||||||
Receivables | 16 | 0.1 | 0.4 | |||||||||
Inventories | 17 | 333.3 | 255.0 | |||||||||
Derivative financial assets | 25 | (g) | 1.6 | 0.3 | ||||||||
Deferred mining costs | 18 | 299.5 | 257.0 | |||||||||
Property plant and equipment | 19 | 1,888.8 | 2,104.0 | |||||||||
Intangible assets | 20 | 352.0 | 419.3 | |||||||||
Available-for-sale financial assets | 21 | 4.2 | 2.3 | |||||||||
Deferred income tax asset | 13 | 58.9 | 31.6 | |||||||||
Investments in subsidiaries | 30 | — | — | |||||||||
Total non-current assets | 2,938.4 | 3,069.9 | ||||||||||
Total assets | 3,627.0 | 3,300.1 | ||||||||||
(1) | Restated (refer Note 36) |
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STATEMENTS OF FINANCIAL POSITION
Year ended 31 December 2009
$M | ||||||||||||
NOTE | 2009 | 2008(1) | ||||||||||
LIABILITIES | ||||||||||||
CURRENT LIABILITIES | ||||||||||||
Accounts payable & accrued liabilities | 22 | 111.4 | 102.1 | |||||||||
Provisions | 23 | 26.9 | 18.5 | |||||||||
Borrowings and finance facilities | 24 | 0.7 | 0.3 | |||||||||
Derivative financial liabilities | 25 | (g) | — | 33.5 | ||||||||
Deferred settlement payable | 26 | — | 10.8 | |||||||||
Liabilities classified as held for sale | 12 | 7.0 | — | |||||||||
Total current liabilities | 146.0 | 165.2 | ||||||||||
NON-CURRENT LIABILITIES | ||||||||||||
Provisions | 23 | 46.5 | 37.5 | |||||||||
Borrowings and finance facilities | 24 | 50.2 | 0.2 | |||||||||
Derivative financial liabilities | 25 | (g) | — | 18.9 | ||||||||
Deferred income tax liability | 13 | 145.6 | 142.5 | |||||||||
Total non-current liabilities | 242.3 | 199.1 | ||||||||||
Total liabilities | 388.3 | 364.3 | ||||||||||
NET ASSETS | 3,238.7 | 2,935.8 | ||||||||||
EQUITY | ||||||||||||
Contributed equity | 27 | 3,420.9 | 3,080.0 | |||||||||
Reserves | 28 | (a) | (74.2 | ) | (305.9 | ) | ||||||
(Accumulated loss) / retained earnings | 28 | (b) | (139.7 | ) | 129.8 | |||||||
Total equity attributable to owners of the Company | 3,207.0 | 2,903.9 | ||||||||||
Non-controlling interests | 29 | 31.7 | 31.9 | |||||||||
TOTAL EQUITY | 3,238.7 | 2,935.8 | ||||||||||
(1) | Restated (refer Note 36) |
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Year ended 31 December 2009
ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY | ||||||||||||||||||||||||
RETAINED | ||||||||||||||||||||||||
EARNINGS / | NON- | |||||||||||||||||||||||
ISSUED | (ACCUMULATED | CONTROLLING | TOTAL | |||||||||||||||||||||
CAPITAL | RESERVES(1) | LOSS)(1) | TOTAL(1) | INTEREST(1) | EQUITY(1) | |||||||||||||||||||
$M | $M | $M | $M | $M | $M | |||||||||||||||||||
Balance at 1 January 2007 | 1,027.1 | (250.7 | ) | 42.9 | 819.3 | — | 819.3 | |||||||||||||||||
Total comprehensive income / (loss) for the period | — | 77.6 | (24.1 | ) | 53.5 | — | 53.5 | |||||||||||||||||
Transactions with owners in their capacity as owners: | ||||||||||||||||||||||||
— Share based payments to employees | — | 2.9 | — | 2.9 | — | 2.9 | ||||||||||||||||||
— Deferred tax on share based payments to employees | — | 0.2 | — | 0.2 | — | 0.2 | ||||||||||||||||||
— Issue of shares — on acquisition of Ballarat | 316.5 | — | — | 316.5 | — | 316.5 | ||||||||||||||||||
— Issue of shares — rights issue/placement (net of transaction costs) | 977.4 | — | — | 977.4 | — | 977.4 | ||||||||||||||||||
— Purchase of treasury shares | (1.3 | ) | — | — | (1.3 | ) | — | (1.3 | ) | |||||||||||||||
Balance at 31 December 2007 | 2,319.7 | (170.0 | ) | 18.8 | 2,168.5 | — | 2,168.5 | |||||||||||||||||
Balance at 1 January 2008 | 2,319.7 | (170.0 | ) | 18.8 | 2,168.5 | — | 2,168.5 | |||||||||||||||||
Total comprehensive income / (loss) for the period | — | (140.7 | ) | 111.0 | (29.7 | ) | (0.2 | ) | (29.9 | ) | ||||||||||||||
Transactions with owners in their capacity as owners: | ||||||||||||||||||||||||
— Share based payments to employees | — | 4.7 | — | 4.7 | — | 4.7 | ||||||||||||||||||
— Deferred tax on share based payments to employees | — | 0.8 | — | 0.8 | — | 0.8 | ||||||||||||||||||
— Non-controlling interest on acquisition of subsidiaries | — | — | — | — | 50.2 | 50.2 | ||||||||||||||||||
— Purchase of non-controlling interests | — | 4.5 | — | 4.5 | (18.1 | ) | (13.6 | ) | ||||||||||||||||
— Issue of shares — on acquisition of Equigold NL | 756.0 | — | — | 756.0 | — | 756.0 | ||||||||||||||||||
— Issue of shares — Mineral Resources Lihir Limited | 5.2 | (5.2 | ) | — | — | — | — | |||||||||||||||||
— Purchase of treasury shares | (0.9 | ) | — | — | (0.9 | ) | — | (0.9 | ) | |||||||||||||||
Balance at 31 December 2008 | 3,080.0 | (305.9 | ) | 129.8 | 2,903.9 | 31.9 | 2,935.8 | |||||||||||||||||
(1) | Restated (refer to note 36) |
F-5
Table of Contents
Year ended 31 December 2009
ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY | ||||||||||||||||||||||||
RETAINED | ||||||||||||||||||||||||
EARNINGS / | NON- | |||||||||||||||||||||||
ISSUED | (ACCUMULATED | CONTROLLING | TOTAL | |||||||||||||||||||||
CAPITAL | RESERVES(1) | LOSS)(1) | TOTAL(1) | INTEREST(1) | EQUITY(1) | |||||||||||||||||||
$M | $M | $M | $M | $M | $M | |||||||||||||||||||
Balance at 1 January 2009 | 3,080.0 | (305.9 | ) | 129.8 | 2,903.9 | 31.9 | 2,935.8 | |||||||||||||||||
Total comprehensive income / (loss) for the period | — | 217.3 | (234.0 | ) | (16.7 | ) | (0.2 | ) | (16.9 | ) | ||||||||||||||
Transactions with owners in their capacity as owners: | ||||||||||||||||||||||||
— Share based payments to employees | — | 9.3 | — | 9.3 | — | 9.3 | ||||||||||||||||||
— Deferred tax on share based payments to employees | — | 5.1 | — | 5.1 | — | 5.1 | ||||||||||||||||||
— Issue of shares — placement and share purchase plan (net of transaction costs) | 340.9 | — | — | 340.9 | — | 340.9 | ||||||||||||||||||
— Dividends paid | — | — | (35.5 | ) | (35.5 | ) | — | (35.5 | ) | |||||||||||||||
Balance at 31 December 2009 | 3,420.9 | (74.2 | ) | (139.7 | ) | 3,207.0 | 31.7 | 3,238.7 | ||||||||||||||||
(1) | Restated (refer Note 36) |
F-6
Table of Contents
Year ended 31 December 2009
$M | ||||||||||||||||
NOTE | 2009 | 2008 | 2007 | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||||||
Receipts from customers | 1,085.5 | 747.7 | 472.4 | |||||||||||||
Payments arising from suppliers & employees | (634.6 | ) | (539.7 | ) | (365.9 | ) | ||||||||||
Cash generated from operations | 450.9 | 208.0 | 106.5 | |||||||||||||
Insurance recoveries | 4.5 | — | — | |||||||||||||
Close out of hedge book | (37.9 | ) | — | (368.5 | ) | |||||||||||
Income tax refund received | — | 4.6 | — | |||||||||||||
Interest and finance charges paid | (0.3 | ) | (0.2 | ) | (8.0 | ) | ||||||||||
Net cash flow from operating activities | 15 | 417.2 | 212.4 | (270.0 | ) | |||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||||||
Interest received | 2.4 | 3.5 | 9.7 | |||||||||||||
Purchase of property plant and equipment | (370.8 | ) | (277.9 | ) | (206.7 | ) | ||||||||||
Interest and financing charges capitalised | (2.7 | ) | (2.9 | ) | — | |||||||||||
Proceeds on disposal of share investments | 4.7 | — | — | |||||||||||||
Proceeds on disposal of property, plant & equipment | 2.0 | 0.1 | — | |||||||||||||
Payments for investments | — | — | (1.2 | ) | ||||||||||||
Payments for acquisition of non-controlling interests | (10.8 | ) | (2.8 | ) | — | |||||||||||
Acquisition of subsidiary net of cash acquired | 31 | (0.4 | ) | 9.1 | 19.6 | |||||||||||
Net cash flow used in investing activities | (375.6 | ) | (270.9 | ) | (178.6 | ) | ||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||||||
Dividends paid | (35.5 | ) | — | — | ||||||||||||
Drawdown of debt | 50.0 | — | 22.4 | |||||||||||||
Repayment of debt | (0.1 | ) | (0.4 | ) | (88.2 | ) | ||||||||||
Repayment of gold loan | — | — | (333.4 | ) | ||||||||||||
Proceeds of equity issue | 348.5 | — | 989.0 | |||||||||||||
Underwriting expenses | (7.6 | ) | — | (11.6 | ) | |||||||||||
Advance to subsidiary pre acquisition | — | (49.7 | ) | — | ||||||||||||
Payment for treasury shares | — | (0.9 | ) | (1.3 | ) | |||||||||||
Net cash flow from / (used in) financing activities | 355.3 | (51.0 | ) | 576.9 | ||||||||||||
Net increase / (decrease) in cash and cash equivalents | 396.9 | (109.5 | ) | 128.3 | ||||||||||||
Cash and cash equivalents at beginning of year | 64.7 | 174.2 | 47.0 | |||||||||||||
Effects of exchange rate changes to cash held | 11.9 | — | (1.1 | ) | ||||||||||||
Cash and cash equivalents at end of year | 14 | 473.5 | 64.7 | 174.2 | ||||||||||||
F-7
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1. | derivative financial instruments are measured at fair value | |
2. | financial instruments at fair value through profit and loss are measured at fair value | |
3. | available for sale financial assets are measured at fair value |
F-8
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
F-9
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
F-10
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F-11
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F-12
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F-13
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
APPROXIMATE PERCENTAGE | ||||||||||||
DEPRECIATED AS UNIT-OF- | APPROXIMATE PERCENTAGE | |||||||||||
FIXED ASSET CLASSIFICATION | PRODUCTION | DEPRECIATED AS STRAIGHT-LINE | DEPRECIATION RATE | |||||||||
Deferred Development | 100 | % | — | Based on applicable reserves | ||||||||
Land & buildings | 100 | % | — | Based on | ||||||||
applicable reserves | ||||||||||||
Plant & equipment | 86 | % | 14 | % | 2 – 20 years for | |||||||
straight-line assets | ||||||||||||
Based on | ||||||||||||
applicable reserves | ||||||||||||
for UOP | ||||||||||||
Total average | 90 | % | 10 | % | ||||||||
F-14
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
F-15
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F-16
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F-17
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F-18
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F-19
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
F-20
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
F-21
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
F-22
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
1. | hedges of the fair value of recognised assets, liabilities or firm commitments (fair value hedge); | |
2. | hedges of a particular cash flow risk associated with a recognised asset, liability or highly probable forecast transaction (cash flow hedge); or | |
3. | hedges of a net investment in a foreign operation (net investment hedge). |
F-23
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
F-24
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
F-25
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F-26
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
1. | The Lihir Executive Share Plan (the “LESP”), which provides benefits to the executives of the Company; and |
2. | Share issues made to local Lihirian landowners through Mineral Resources Lihir Limited (“MRL”) |
F-27
Table of Contents
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
1. | the product is in a form suitable for delivery and no further processing is required by, or on behalf of, the Consolidated Entity; |
2. | the quantity and quality (grade) of the product can be determined with reasonable accuracy; |
3. | the product has been dispatched to the customer and is no longer under the physical control of the Consolidated Entity (or property in the product has earlier passed to the customer); |
4. | the selling price can be measured reliably; |
F-28
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
5. | it is probable that the economic benefits associated with the transaction will flow to the Consolidated Entity; and | |
6. | the costs incurred or to be incurred in respect of the transaction can be measured reliably. |
F-29
Table of Contents
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
1. | cash on hand and at call deposits with banks or financial institutions, net of bank overdrafts; and |
2. | investments in money market instruments with less than 90 days to maturity from the date of acquisition. |
F-30
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
F-31
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F-32
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
F-33
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
F-34
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
1. | Assets and liabilities for each Statements of Financial Position presented are translated at the closing rate at the end of the reporting period |
2. | Income and expenses for each Statements of Comprehensive Income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and |
3. | All resulting exchange differences are recognised in the other comprehensive income. |
F-35
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F-36
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F-37
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F-38
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F-39
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F-40
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F-41
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
PRELIMINARY | ||||||||||
ASSESSMENT ON THE | ||||||||||
IMPACT OF THE | ||||||||||
CONSOLIDATED | APPLICATION DATE | |||||||||
APPLICATION DATE OF | ENTITY’S FINANCIAL | FOR THE | ||||||||
REFERENCE | TITLE | SUMMARY | STANDARD | REPORT | CONSOLIDATED ENTITY | |||||
IFRS 1 | First-time Adoption of International Financial Reporting Standards | Amendments relating to oil and gas assets and determining whether an arrangement contains a lease | Annual periods beginning on or after 1 January 2010 | Not applicable | Not applicable | |||||
IFRS 2 | Share-based Payment | Amendments relating to group cash-settled share-based payment transactions | Annual periods beginning on or after 1 January 2010 | The Consolidated Entity does not presently have any share-based payment arrangements that will be effected by the amendment | Annual periods beginning on or after 1 January 2010 | |||||
IFRS 3 | Business Combination | Comprehensive revision on applying the acquisition method | Annual periods beginning on or after 1 July 2009 | This amendment will impact the accounting for future business combinations effected after adoption of the revised accounting standard. | Annual periods beginning on or after 1 January 2010 | |||||
IFRS 9 | Financial instruments | Phase 1 of replacing IAS 39. Deals with the classification and measurement of financial assets | Annual periods beginning on or after 1 January 2010 | The group is currently in the process of evaluating the potential effect of this standard. | Annual periods beginning on or after 1 January 2013 |
F-42
Table of Contents
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
PRELIMINARY | ||||||||||
ASSESSMENT ON THE | ||||||||||
IMPACT OF THE | ||||||||||
CONSOLIDATED | APPLICATION DATE | |||||||||
APPLICATION DATE OF | ENTITY’S FINANCIAL | FOR THE | ||||||||
REFERENCE | TITLE | SUMMARY | STANDARD | REPORT | CONSOLIDATED ENTITY | |||||
IFRIC 16 | Hedges of a net investment in a foreign operation | This interpretation provides clarification for the accounting for hedges of a net investment in a foreign operation | Annual periods beginning on or after 1 October 2009 | The amendments are not expected to have any impact on the Consolidated Entity at the present time | Annual periods beginning on or after 1 January 2010 | |||||
IAS 32 | Financial Instruments: Presentation | Amendments relating to classification of rights issues | Annual periods beginning on or after 1 February 2010 | The amendments are not expected to have any impact on the Consolidated Entity at the present time | Annual periods beginning on or after 1 January 2011 | |||||
IAS 39 | Financial Instruments: Recognition and Measurement | Amendments for embedded derivatives when reclassifying financial instruments | Annual periods beginning on or after 30 June 2009 | The amendments are not expected to have any impact on the Consolidated Entity at the present time | Annual periods beginning on or after 1 January 2010 | |||||
Amendments for hedged items | Annual periods beginning on or after 1 July 2009 | The amendments are not expected to have any impact on the Consolidated Entity at the present time | Annual periods beginning on or after 1 January 2010 | |||||||
Amendments to IFRS | Various | Improvements to International Financial Reporting Standards | Annual periods beginning on or after 1 July 2010 | The amendments are not expected to have any impact on the Consolidated Entity at the present time | Annual periods beginning on or after 1 January 2011 |
F-43
Table of Contents
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
F-44
Table of Contents
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
• | Interest revenue | |
• | Finance costs | |
• | Hedging gains or losses | |
• | Income taxes | |
• | Corporate expenses |
• | Cash and cash equivalents | |
• | Current and deferred tax balances | |
• | Interest bearing loans and borrowings | |
• | Derivative financial instruments | |
• | Assets and liabilities of the corporate office |
F-45
Table of Contents
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
AUSTRALIA | ||||||||||||||||||||||||
AUSTRALIA | TOTAL CONSOLIDATED | (BALLARAT) | ||||||||||||||||||||||
PROFIT AND LOSS | PAPUA NEW GUINEA | (MT RAWDON) | AFRICA | UNALLOCATED | ENTITY | (DISCONTINUED)(1) | ||||||||||||||||||
YEAR ENDED 31 DECEMBER 2009 | US$M | US$M | US$M | US$M | US$M | US$M | ||||||||||||||||||
Revenue from external customers | 828.9 | 108.5 | 150.0 | — | 1,087.4 | — | ||||||||||||||||||
Cost of sales (excluding depreciation and amortisation) | (342.1 | ) | (46.2 | ) | (64.9 | ) | — | (453.2 | ) | — | ||||||||||||||
Mine EBITDA | 486.8 | 62.3 | 85.1 | — | 634.2 | — | ||||||||||||||||||
Non-cash cost of sales | ||||||||||||||||||||||||
Depreciation and amortisation of Mine properties | — | (22.3 | ) | (40.9 | ) | — | (63.2 | ) | — | |||||||||||||||
Other depreciation and amortisation | (91.1 | ) | (5.3 | ) | (23.8 | ) | (1.0 | ) | (121.2 | ) | — | |||||||||||||
(91.1 | ) | (27.6 | ) | (64.7 | ) | (1.0 | ) | (184.4 | ) | — | ||||||||||||||
Change in inventories and deferred waste | 16.6 | 0.4 | 1.8 | 18.8 | — | |||||||||||||||||||
Gross profit / (loss) from mining operations | 412.3 | 35.1 | 22.2 | (1.0 | ) | 468.6 | — | |||||||||||||||||
Corporate expense | — | — | (5.5 | ) | (40.7 | ) | (46.2 | ) | — | |||||||||||||||
Project studies | (0.1 | ) | — | — | (0.1 | ) | — | |||||||||||||||||
Exploration expense | (0.3 | ) | (0.2 | ) | (8.9 | ) | (9.4 | ) | — | |||||||||||||||
Operating profit / (loss) before other income / (expense) | 411.9 | 34.9 | 7.8 | (41.7 | ) | 412.9 | — | |||||||||||||||||
Hedging profit / (loss) | — | — | — | (118.7 | ) | (118.7 | ) | — | ||||||||||||||||
Other income and (expenses) | (12.2 | ) | (0.2 | ) | (0.1 | ) | (2.1 | ) | (14.6 | ) | — | |||||||||||||
Net financial income | — | — | — | 3.7 | 3.7 | — | ||||||||||||||||||
Profit / (loss) before income tax | 399.7 | 34.7 | 7.7 | (158.8 | ) | 283.3 | — | |||||||||||||||||
Income tax expense | — | — | — | (104.6 | ) | (104.6 | ) | — | ||||||||||||||||
Net profit / (loss) after tax | 399.7 | 34.7 | 7.7 | (263.4 | ) | 178.7 | — | |||||||||||||||||
Profit / (loss) from discontinued operation, net of income tax | — | — | — | — | — | (412.9 | ) | |||||||||||||||||
Capital expenditure | 279.1 | 5.1 | 49.2 | 4.8 | 35.3 | |||||||||||||||||||
(1) | Refer to Note 12 |
F-46
Table of Contents
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
AUSTRALIA | AUSTRALIA | |||||||||||||||||||||||
(MT RAWDON/ | TOTAL(1) | (BALLARAT/ | ||||||||||||||||||||||
PROFIT AND LOSS | PAPUA NEW GUINEA | KIRKALOCKA) | AFRICA | UNALLOCATED | CONSOLIDATED ENTITY | (DISCONTINUED)(2) | ||||||||||||||||||
YEAR ENDED 31 DECEMBER 2008 | US$M | US$M | US$M | US$M | US$M | US$M | ||||||||||||||||||
Revenue from external customers | 667.1 | 60.0 | 21.5 | — | 748.6 | — | ||||||||||||||||||
Cost of sales (excluding depreciation and amortisation) | (322.3 | ) | (33.2 | ) | (5.0 | ) | 1.0 | (359.5 | ) | — | ||||||||||||||
Mine EBITDA | 344.8 | 26.8 | 16.5 | 1.0 | 389.1 | — | ||||||||||||||||||
Non-cash cost of sales | ||||||||||||||||||||||||
Depreciation and amortisation of mineral reserves | — | (11.2 | ) | (10.0 | ) | — | (21.2 | ) | — | |||||||||||||||
Other depreciation and amortisation | (66.0 | ) | (2.4 | ) | (7.7 | ) | (0.9 | ) | (77.0 | ) | — | |||||||||||||
(66.0 | ) | (13.6 | ) | (17.7 | ) | (0.9 | ) | (98.2 | ) | — | ||||||||||||||
Change in inventories and deferred waste | 15.2 | — | 2.7 | — | 17.9 | — | ||||||||||||||||||
Gross profit from mining operations | 294.0 | 13.2 | 1.5 | 0.1 | 308.8 | — | ||||||||||||||||||
Corporate expense | — | — | (0.9 | ) | (31.0 | ) | (31.9 | ) | — | |||||||||||||||
Project studies | (2.6 | ) | — | — | — | (2.6 | ) | — | ||||||||||||||||
Exploration expense | (5.8 | ) | — | (2.1 | ) | — | (7.9 | ) | — | |||||||||||||||
Operating profit / (loss) before other income / (expense) | 285.6 | 13.2 | (1.5 | ) | (30.9 | ) | 266.4 | — | ||||||||||||||||
Hedging profit / (loss) | — | — | — | (75.5 | ) | (75.5 | ) | — | ||||||||||||||||
Other income and (expenses) | (28.0 | ) | — | — | (3.0 | ) | (31.0 | ) | — | |||||||||||||||
Net financial income | — | — | — | 6.8 | 6.8 | — | ||||||||||||||||||
Profit / (loss) before income tax | 257.6 | 13.2 | (1.5 | ) | (102.6 | ) | 166.7 | — | ||||||||||||||||
Income tax expense | — | — | — | (56.6 | ) | (56.6 | ) | — | ||||||||||||||||
Net profit / (loss) after tax | 257.6 | 13.2 | (1.5 | ) | (159.2 | ) | 110.1 | — | ||||||||||||||||
Profit / (loss) from discontinued operation, net of income tax | — | — | — | — | — | 0.7 | ||||||||||||||||||
Capital expenditure | 141 | 1 | 27 | 1 | 108.8 | |||||||||||||||||||
(1) | Restated (refer Note 36) | |
(2) | Refer to Note 12 |
F-47
Table of Contents
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
AUSTRALIA | AUSTRALIA | |||||||||||||||||||||||
(MT RAWDON/ | TOTAL(1) | (BALLARAT/ | ||||||||||||||||||||||
PROFIT AND LOSS | PAPUA NEW GUINEA | KIRKALOCKA) | AFRICA | UNALLOCATED | CONSOLIDATED ENTITY | (DISCONTINUED)(2) | ||||||||||||||||||
YEAR ENDED 31 DECEMBER 2007 | US$M | US$M | US$M | US$M | US$M | US$M | ||||||||||||||||||
Revenue from external customers | 497.6 | — | — | — | 497.6 | — | ||||||||||||||||||
Cost of sales (excluding depreciation and amortisation) | (224.5 | ) | — | — | — | (224.5 | ) | — | ||||||||||||||||
Mine EBITDA | 273.1 | — | — | — | 273.1 | — | ||||||||||||||||||
Non-cash cost of sales | ||||||||||||||||||||||||
Depreciation and amortisation of mineral reserves | — | — | — | — | — | — | ||||||||||||||||||
Other depreciation and amortisation | (50.3 | ) | — | — | (0.1 | ) | (50.4 | ) | — | |||||||||||||||
Change in inventories and deferred waste | 14.4 | — | — | — | 14.4 | — | ||||||||||||||||||
Gross profit from mining operations | 237.2 | — | — | (0.1 | ) | 237.1 | — | |||||||||||||||||
Corporate expense | — | — | — | (25.3 | ) | (25.3 | ) | — | ||||||||||||||||
Project studies | (7.5 | ) | — | — | — | (7.5 | ) | — | ||||||||||||||||
Exploration expense | (8.2 | ) | — | — | — | (8.2 | ) | — | ||||||||||||||||
Operating profit / (loss) before other income / (expense) | 221.5 | — | — | (25.4 | ) | 196.1 | — | |||||||||||||||||
Hedging profit / (loss) | — | — | — | (97.2 | ) | (97.2 | ) | — | ||||||||||||||||
Other income and (expenses) | (13.0 | ) | — | — | (0.8 | ) | (13.8 | ) | — | |||||||||||||||
Net financial income | — | — | — | (121.1 | ) | (121.1 | ) | — | ||||||||||||||||
Profit / (loss) before income tax | 208.5 | — | — | (244.5 | ) | (36.0 | ) | — | ||||||||||||||||
Income tax expense | — | — | — | 10.0 | — | |||||||||||||||||||
Net profit / (loss) after tax | (26.0 | ) | — | |||||||||||||||||||||
Profit / (loss) from discontinued operation, net of income tax | — | — | — | — | — | 1.9 | ||||||||||||||||||
Capital expenditure | 149 | — | — | — | 58 | |||||||||||||||||||
(1) | Restated (refer Note 36) | |
(2) | Refer to Note 12 |
F-48
Table of Contents
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
AUSTRALIA | ||||||||||||||||||||||||
AUSTRALIA | (BALLARAT) | |||||||||||||||||||||||
PAPUA NEW GUINEA | (MT RAWDON/ KIRKALOCKA) | AFRICA | UNALLOCATED | (DISCONTINUED)(2) | GROUP | |||||||||||||||||||
BALANCE SHEET | US$M | US$M | US$M | US$M | US$M | US$M | ||||||||||||||||||
As at 31 December 2009 | ||||||||||||||||||||||||
Assets and liabilities | ||||||||||||||||||||||||
Segment assets | 2,052.0 | 232.7 | 773.3 | 560.5 | 8.5 | 3,627.0 | ||||||||||||||||||
Segment liabilities | (129.9 | ) | (17.0 | ) | (15.5 | ) | (218.9 | ) | (7.0 | ) | (388.3 | ) | ||||||||||||
As at 31 December 2008(1) | ||||||||||||||||||||||||
Assets and liabilities | ||||||||||||||||||||||||
Segment assets | 1,745.1 | 189.9 | 611.3 | 277.2 | 476.6 | 3,300.1 | ||||||||||||||||||
Segment liabilities | (85.0 | ) | (24.6 | ) | (13.0 | ) | (222.5 | ) | (19.2 | ) | (364.3 | ) | ||||||||||||
As at 31 December 2007(1) | ||||||||||||||||||||||||
Assets and liabilities | ||||||||||||||||||||||||
Segment assets | 1,578.6 | — | — | 243.8 | 481.9 | 2,304.3 | ||||||||||||||||||
Segment liabilities | (79.2 | ) | — | — | (45.0 | ) | (11.6 | ) | (135.8 | ) | ||||||||||||||
(1) | Restated (refer Note 36) | |
(2) | Refer to Note 12 |
F-49
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
2009 | ||||
CUSTOMER | $M | SEGMENT REPORTING REVENUE | ||
1 | 193.0 | Papua New Guinea / Australia | ||
2 | 184.4 | Papua New Guinea / Africa | ||
3 | 106.4 | Papua New Guinea | ||
4 | 104.6 | Papua New Guinea |
2008 | ||||
CUSTOMER | $M | SEGMENT REPORTING REVENUE | ||
1 | 89.1 | Papua New Guinea / Africa | ||
2 | 82.7 | Papua New Guinea | ||
3 | 79.2 | Papua New Guinea | ||
4 | 77.5 | Papua New Guinea |
2007 | ||||
CUSTOMER | $M | SEGMENT REPORTING REVENUE | ||
1 | 86.6 | Papua New Guinea | ||
2 | 55.1 | Papua New Guinea | ||
3 | 52.3 | Papua New Guinea | ||
$M | ||||||||||||
2009 | 2008(1) | 2007(1) | ||||||||||
Gold sales | 1,083.0 | 742.7 | 492.2 | |||||||||
Silver sales | 3.2 | 1.4 | 0.1 | |||||||||
Other revenue(2) | 1.2 | 4.5 | 5.3 | |||||||||
1,087.4 | 748.6 | 497.6 | ||||||||||
(1) | Restated (refer Note 36) | |
(2) | Other revenue includes certified emission reduction certificate credits |
F-50
Table of Contents
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
$M | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Equity settled share-based payment compensation | (9.3 | ) | (4.7 | ) | 2.9 | |||||||
Defined contribution superannuation expense | (8.2 | ) | (7.3 | ) | 9.8 | |||||||
Other personnel expenses | (110.8 | ) | (80.8 | ) | 56.2 | |||||||
(128.3 | ) | (92.8 | ) | 68.9 | ||||||||
$M | ||||||||||||
2009 | 2008(1) | 2007(1) | ||||||||||
Operating costs | (528.7 | ) | (452.5 | ) | (303.8 | ) | ||||||
Royalties, levies & production taxes | (25.6 | ) | (17.8 | ) | (13.2 | ) | ||||||
Refining costs | (4.3 | ) | (3.6 | ) | (0.5 | ) | ||||||
Depreciation & amortisation | (184.4 | ) | (98.2 | ) | (50.4 | ) | ||||||
Deferred mining costs | 41.2 | 40.0 | 70.0 | |||||||||
Changes in inventories | 88.2 | 94.2 | 41.2 | |||||||||
Stores inventories obsolescence | (1.0 | ) | (0.1 | ) | (0.8 | ) | ||||||
Foreign exchange loss | (4.2 | ) | (1.8 | ) | (3.0 | ) | ||||||
(618.8 | ) | (439.8 | ) | (260.5 | ) | |||||||
(1) | Restated (refer Note 36) |
$M | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Cash hedging loss | (7.7 | ) | (9.9 | ) | (21.4 | ) | ||||||
Non-cash hedging loss | (111.0 | )(1) | (65.6 | ) | (75.8 | ) | ||||||
(118.7 | ) | (75.5 | ) | (97.2 | ) | |||||||
(1) | Reflecting $102.4 million from the closed-out LGL hedge book in 2007 and $8.6 million from the closed-out Equigold hedge book. |
F-51
Table of Contents
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
$M | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Other income | ||||||||||||
Insurance recovery | 4.0 | — | — | |||||||||
Profit on sale of available for sale assets | 3.1 | — | — | |||||||||
Other income | 0.1 | 0.3 | — | |||||||||
7.2 | 0.3 | — | ||||||||||
Other expenses | ||||||||||||
Impairment of listed equity securities(1) | — | (3.2 | ) | — | ||||||||
Net property, plant and equipment loss on disposal | (17.2 | ) | (28.1 | ) | (13.8 | ) | ||||||
Provision for rehabilitation | (1.0 | ) | — | — | ||||||||
Other expense | (3.6 | ) | — | — | ||||||||
(21.8 | ) | (31.3 | ) | (13.8 | ) | |||||||
(1) | Listed share investments with a significant or prolonged decline in fair value below cost have been impaired. The impairment loss is equivalent to the difference in the listed market valuation at 31 December 2008 and the cost of the respective securities. |
F-52
Table of Contents
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
$M | ||||||||||||
2009 | 2008(1) | 2007(1) | ||||||||||
Financial income | ||||||||||||
Interest income | 2.4 | 3.0 | 9.2 | |||||||||
Foreign exchange gain | 6.7 | 4.2 | — | |||||||||
Gold lease rate fees | — | — | 0.3 | |||||||||
Other income | — | 0.1 | 0.9 | |||||||||
9.1 | 7.3 | 10.4 | ||||||||||
Financial expenses | ||||||||||||
Loss on repayment of gold loan | — | — | (117.9 | ) | ||||||||
Foreign exchange loss | — | — | (5.8 | ) | ||||||||
Interest expense on debt facilities | — | — | (4.8 | ) | ||||||||
Accretion expense on rehabilitation | (4.3 | ) | (0.4 | ) | — | |||||||
Other interest & financing | (1.1 | ) | (0.1 | ) | (3.0 | ) | ||||||
(5.4 | ) | (0.5 | ) | (131.5 | ) | |||||||
(1) | Restated (refer Note 36) |
F-53
Table of Contents
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
$M | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Revenue | 15.1 | 7.0 | 0.8 | |||||||||
Expenses | (46.3 | ) | (7.0 | ) | (0.8 | ) | ||||||
Gross loss | (31.2 | ) | — | — | ||||||||
Exploration expense | — | (0.6 | ) | (0.2 | ) | |||||||
Other income | 0.5 | — | 0.5 | |||||||||
Other expenses | — | — | (0.1 | ) | ||||||||
Impairment | (546.1 | ) | — | — | ||||||||
Financial income | — | 0.5 | — | |||||||||
Financial expenses | — | (0.1 | ) | — | ||||||||
(Loss)/ income before tax from discontinued operation | (576.8 | ) | (0.2 | ) | 0.2 | |||||||
Income tax benefit | 163.9 | 0.9 | 1.7 | |||||||||
Net (loss) / profit after tax from discontinued operation | (412.9 | ) | 0.7 | 1.9 | ||||||||
$M | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Net cash used in operating activities | (33.5 | ) | (1.7 | ) | (5.1 | ) | ||||||
Net cash used in investing activities | (23.4 | ) | (108.1 | ) | (58.0 | ) | ||||||
Net cash used in financing activities | (0.3 | ) | (0.4 | ) | (0.2 | ) | ||||||
Net cash used in discontinued operation | (57.2 | ) | (110.2 | ) | (63.3 | ) | ||||||
F-54
Table of Contents
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
2009 | ||||||
$M | ||||||
BALANCE SHEET | ||||||
Assets classified as held for sale | ||||||
Trade and other receivables | 0.1 | |||||
Inventories | 2.1 | |||||
Other assets | 0.3 | |||||
Property plant and equipment | 6.0 | |||||
Deferred income tax asset | — | |||||
Assets classified as held for sale | 8.5 | |||||
Liabilities classified as held for sale | ||||||
Accounts payable & accrued liabilities | 1.4 | |||||
Provisions | 5.3 | |||||
Borrowings and finance facilities | 0.3 | |||||
Deferred income tax liability | — | |||||
Liabilities classified as held for sale | 7.0 | |||||
Net assets classified as held for sale | 1.5 | |||||
F-55
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
F-56
Table of Contents
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
$M | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Income Tax Expense | ||||||||||||
Current tax | — | — | — | |||||||||
Under / (over) provided in prior years | — | — | — | |||||||||
— | — | — | ||||||||||
Deferred tax | (60.4 | ) | 56.2 | (10.1 | ) | |||||||
Under / (over) provided in prior years | 1.1 | (0.5 | ) | (1.6 | ) | |||||||
Total income tax (benefit) / expense | (59.3 | ) | 55.7 | (11.7 | ) | |||||||
Income tax expense from continuing operation | 104.6 | 56.6 | (10.0 | ) | ||||||||
Income tax benefit from discontinued operation | (163.9 | ) | (0.9 | ) | (1.7 | ) | ||||||
The tax on the Consolidated Entity’s profit before tax differs from the theoretical amount that would arise using the tax rate applicable to profits of the Company as follows: | ||||||||||||
Numerical reconciliation of income tax expense / (benefit) to prima facie tax payable | ||||||||||||
Profit / (loss) before tax from continuing operations | 283.3 | 166.7 | (36.0 | ) | ||||||||
Adjust Côte d’Ivoire profit tax holiday | (8.9 | ) | (4.4 | ) | — | |||||||
274.4 | 162.3 | (36.0 | ) | |||||||||
Loss before tax from discontinued operations | (576.8 | ) | (0.2 | ) | 0.2 | |||||||
(302.4 | ) | 162.1 | (35.8 | ) | ||||||||
Prima facie income tax expense / (benefit) on before tax profit at 30% | (90.7 | ) | 48.7 | (10.7 | ) | |||||||
Tax effect of amounts which are not deductible (taxable) in calculating taxable income | ||||||||||||
— Expenses not deductible for tax purposes | 7.9 | 7.6 | 1.0 | |||||||||
— Tax losses not recognised from Côte d’Ivoire (Exploration) | 2.7 | — | — |
F-57
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
$M | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
— De-recognition of deferred tax assets(1) | 20.3 | — | — | |||||||||
— Application of capital losses | (0.2 | ) | — | — | ||||||||
— Recognition of tax losses not previously recognised | — | — | (0.2 | ) | ||||||||
— Section 72A double deductions | (0.4 | ) | (0.1 | ) | (0.2 | ) | ||||||
(60.4 | ) | 56.2 | (10.1 | ) | ||||||||
Adjustment for current tax of prior periods | ||||||||||||
Under / (Over) provided in prior years | 1.1 | (0.5 | ) | (1.6 | ) | |||||||
Tax (benefit) / expense | (59.3 | ) | 55.7 | (11.7 | ) | |||||||
(1) | De-recognition of deferred tax assets includes tax losses de-recognised of $20.3 million |
$M | ||||||||||||
2009 | 2008(1) | 2007(1) | ||||||||||
(b) Deferred Income Tax | ||||||||||||
Deferred tax assets: | 208.3 | 226.6 | 244.4 | |||||||||
Deferred tax liabilities: | (295.0 | ) | (337.5 | ) | (185.3 | ) | ||||||
(86.7 | ) | (110.9 | ) | 59.2 | ||||||||
The gross movement of the deferred tax account is as follows: | ||||||||||||
Balance at beginning of year | (110.9 | ) | 59.1 | 93.5 | ||||||||
Credited / (charged) to profit and loss | 18.6 | (55.7 | ) | 11.7 | ||||||||
Included in discontinued operation | 61.0 | — | — | |||||||||
Acquired on business combination | — | (112.4 | ) | (37.5 | ) | |||||||
De-recognised losses charged to P&L(2) | (20.3 | ) | — | — | ||||||||
Translation adjustments | (9.8 | ) | 24.9 | (3.8 | ) | |||||||
Tax charged to equity | (25.3 | ) | (26.8 | ) | (4.7 | ) | ||||||
Balance at end of year | (86.7 | ) | (110.9 | ) | 59.2 | |||||||
Deferred tax (liability) / asset – PNG | (78.6 | ) | 31.6 | 101.3 | ||||||||
Deferred tax (liability) / asset – CÔTE D’IVOIRE | (67.0 | ) | (64.2 | ) | — | |||||||
Deferred tax asset / (liability) – Australia | 58.9 | (78.3 | ) | (42.1 | ) | |||||||
Balance at end of year | (86.7 | ) | (110.9 | ) | 59.2 | |||||||
(1) | Restated (refer Note 36) | |
(2) | The Company has carry forward tax losses of $135.3 million ($40.5 million at the applicable 30% tax rate) recognised as an asset as at balance date as part of the Deferred tax asset recognised for Australia noted above with losses amounting to $67.6 million ($20.3 million at the applicable 30% tax rate) that are not currently recognised. |
F-58
Table of Contents
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
PROVISIONS | ||||||||||||||||||||
DEFERRED TAX ASSETS | AGAINST ASSETS | DERIVATIVES | TAX LOSSES(1) | OTHER(2) | TOTAL(4) | |||||||||||||||
At 1 January 2008 | 12.0 | — | 227.7 | 4.7 | 244.4 | |||||||||||||||
Credited / (charged) to profit and loss | (1.2 | ) | — | (13.1 | ) | (16.1 | ) | (30.4 | ) | |||||||||||
Translation adjustment | (0.3 | ) | (3.8 | ) | — | 11.0 | 6.9 | |||||||||||||
Acquired on business combination | 4.8 | 15.8 | — | 1.6 | 22.2 | |||||||||||||||
Charged to equity | — | 6.7 | (23.2 | ) | — | (16.5 | ) | |||||||||||||
At 1 January 2009 | 15.3 | 18.7 | 191.4 | 1.2 | 226.6 | |||||||||||||||
Credited / (charged) to profit and loss | 11.5 | (14.0 | ) | (66.4 | ) | 69.4 | 0.5 | |||||||||||||
Translation adjustment | 1.2 | 1.6 | 4.4 | 6.3 | 13.5 | |||||||||||||||
Acquired on business combination | — | — | — | — | — | |||||||||||||||
Credited / (charged) to equity | — | (6.3 | ) | (30.7 | ) | 4.7 | (32.3 | ) | ||||||||||||
At 31 December 2009 | 28.0 | 0.0 | 98.7 | 81.6 | 208.3 | |||||||||||||||
F-59
Table of Contents
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
ACCELERATED | CONSUMABLE | DEFERRED | PREPAID | MINING | ||||||||||||||||||||||||||||
DEFERRED TAX LIABILITIES | TAX DEPRECIATION | STORES | MINING | INSURANCE | TENEMENTS | DERIVATIVES | OTHER(3) | TOTAL(4) | ||||||||||||||||||||||||
At 1 January 2008 | (38.1 | ) | (6.4 | ) | (66.0 | ) | (0.8 | ) | (66.8 | ) | — | (7.2 | ) | (185.3 | ) | |||||||||||||||||
Credited / (charged) to profit and loss | (20.3 | ) | (8.3 | ) | (10.0 | ) | — | 3.3 | — | 10.0 | (25.3 | ) | ||||||||||||||||||||
Translation adjustment | 1.0 | — | 0.1 | — | 12.9 | — | 4.0 | 18.0 | ||||||||||||||||||||||||
Acquired on business combination | (4.0 | ) | — | (1.0 | ) | — | (128.7 | ) | — | (0.9 | ) | (134.6 | ) | |||||||||||||||||||
Charged to equity | — | — | — | — | — | (0.4 | ) | (9.9 | ) | (10.3 | ) | |||||||||||||||||||||
At 1 January 2009 | (61.4 | ) | (14.7 | ) | (76.9 | ) | (0.8 | ) | (179.3 | ) | (0.4 | ) | (4.0 | ) | (337.5 | ) | ||||||||||||||||
Credited / (charged) to profit and loss | (13.2 | ) | 3.2 | (12.8 | ) | 0.7 | 85.8 | — | (4.9 | ) | 58.8 | |||||||||||||||||||||
Translation adjustment | (0.2 | ) | — | (0.4 | ) | — | (21.4 | ) | 0.2 | (1.5 | ) | (23.3 | ) | |||||||||||||||||||
Acquired on business combination | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Credited / (charged) to equity | — | — | — | — | — | (3.1 | ) | 10.1 | 7.0 | |||||||||||||||||||||||
At 31 December 2009 | (74.8 | ) | (11.5 | ) | (90.1 | ) | (0.1 | ) | (114.9 | ) | (3.3 | ) | 0.3 | (295.0 | ) | |||||||||||||||||
(1) | Includes tax losses recognised amounting to $40.5 million for Australia and $58.2 million for Papua New Guinea | |
(2) | Other includes deferred tax assets associated with the discontinuance of the Ballarat operation | |
(3) | Other includes share-based payments | |
(4) | Restated (refer Note 36) |
F-60
Table of Contents
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
$M | ||||||||||||
2009 | BEFORE TAX | TAX EFFECT | NET OF TAX | |||||||||
Exchange difference on translation of foreign operations | 104.6 | 10.3 | 114.9 | |||||||||
Deferred loss on cash flow hedges | 140.1 | (40.1 | ) | 100.0 | ||||||||
Net change in fair value of available for sale financial assets | 3.0 | (0.6 | ) | 2.4 | ||||||||
Other comprehensive income | 247.7 | (30.4 | ) | 217.3 | ||||||||
$M | ||||||||||||
2008 | BEFORE TAX | TAX EFFECT | NET OF TAX | |||||||||
Exchange difference on translation of foreign operations | (154.9 | ) | (11.7 | ) | (166.6 | ) | ||||||
Deferred loss on cash flow hedges | 44.0 | (16.5 | ) | 27.5 | ||||||||
Net change in fair value of available for sale financial assets | (2.2 | ) | 0.6 | (1.6 | ) | |||||||
Other comprehensive income | (113.1 | ) | (27.6 | ) | (140.6 | ) | ||||||
$M | ||||||||||||
2007 | BEFORE TAX | TAX EFFECT | NET OF TAX | |||||||||
Exchange difference on translation of foreign operations | 42.6 | — | 42.6 | |||||||||
Deferred loss on cash flow hedges | 38.7 | (4.5 | ) | 34.2 | ||||||||
Net change in fair value of available for sale financial assets | 1.2 | (0.4 | ) | 0.8 | ||||||||
Other comprehensive income | 82.5 | (4.9 | ) | 77.6 | ||||||||
F-61
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
$M | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Cash at bank and on hand | 82.0 | 39.6 | 44.7 | |||||||||
Short term deposits with financial institutions | 391.5 | 25.1 | 129.5 | |||||||||
473.5 | 64.7 | 174.2 | ||||||||||
F-62
Table of Contents
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
$M | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
Reconciliation of cash flow from operating activities to operating profit after tax | ||||||||||||
Net (loss) / profit after tax | (234.2 | ) | 110.8 | (24.1 | ) | |||||||
Hedge book restructure payments and receipts | ||||||||||||
Purchase of gold to close out hedge book | (37.9 | ) | — | (368.5 | ) | |||||||
Add back non-cash items: | ||||||||||||
Depreciation and amortisation | 184.4 | 98.2 | 50.4 | |||||||||
Provision for doubtful debts | (1.0 | ) | 0.7 | 1.3 | ||||||||
Fair value losses | — | — | 0.4 | |||||||||
Non-cash hedging loss | 111.0 | 65.6 | 75.4 | |||||||||
Impairment losses | 546.1 | 3.2 | — | |||||||||
Other non-cash items | 1.8 | (0.8 | ) | (0.7 | ) | |||||||
Share based payment expenses | 9.3 | 4.7 | 2.9 | |||||||||
Add back items presented in investing or financing | ||||||||||||
Loss on disposal of assets | 14.1 | 27.9 | 13.8 | |||||||||
Interest income | (2.4 | ) | (3.5 | ) | (9.7 | ) | ||||||
Interest and financing costs | (0.3 | ) | 0.2 | 117.9 | ||||||||
Change in operating assets and liabilities net of purchase of subsidiary and translation differences | ||||||||||||
(Increase) / decrease in debtors and prepayments | (6.9 | ) | (8.0 | ) | (6.0 | ) | ||||||
(Increase) / decrease in inventories | (102.1 | ) | (107.4 | ) | (54.3 | ) | ||||||
(Increase) / decrease in deferred mining costs | (40.8 | ) | (36.4 | ) | (70.0 | ) | ||||||
Increase / (decrease) in operating payables | 21.5 | (1.8 | ) | 12.7 | ||||||||
Increase / (decrease) in operating provisions | 13.9 | (1.3 | ) | 7.1 | ||||||||
Increase / (decrease) in provision for income taxes payable | — | 4.6 | (0.3 | ) | ||||||||
(Decrease) / increase in provision for deferred income tax | (59.3 | ) | 55.7 | (18.3 | ) | |||||||
Net cash flow from operating activities | 417.2 | 212.4 | (270.0 | ) | ||||||||
F-63
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
$M | ||||||||
2009 | 2008 | |||||||
| | | ||||||||
CURRENT | ||||||||
Other amounts receivable from third parties | 21.1 | 25.9 | ||||||
Less: Provision for doubtful accounts | (6.0 | ) | (4.9 | ) | ||||
Other debtors — related parties and controlled entities | — | — | ||||||
15.1 | 21.0 | |||||||
NON-CURRENT | ||||||||
Other debtors — related parties and controlled entities | — | — | ||||||
Other amounts receivable from third parties | 0.1 | 0.4 | ||||||
0.1 | 0.4 | |||||||
$M | ||||||||
2009 | 2008(1) | |||||||
CURRENT | ||||||||
Stores | 86.5 | 74.2 | ||||||
Ore stockpiles | 57.7 | 46.7 | ||||||
Gold in circuit | 7.4 | 7.9 | ||||||
Finished goods | 10.9 | 10.2 | ||||||
162.5 | 139.0 | |||||||
NON-CURRENT | ||||||||
Ore stockpiles | 333.3 | 255.0 | ||||||
333.3 | 255.0 | |||||||
(1) | Restated (refer Note 36) |
F-64
Table of Contents
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
$M | ||||||||
2009 | 2008(1) | |||||||
NON-CURRENT | ||||||||
Deferred mining costs | 299.5 | 257.0 | ||||||
299.5 | 257.0 | |||||||
(1) | Restated (refer Note 36) |
$M | ||||||||
2009 | 2008(1) | |||||||
Carrying amount at start of year | 257.0 | 218.3 | ||||||
- Cash waste costs attributable to current year mining activity | (20.2 | ) | (7.7 | ) | ||||
- Non-cash waste costs attributable to current year mining activity(2) | (2.6 | ) | (1.0 | ) | ||||
- Total cash costs of material mined during the period (cash) | 54.0 | 41.7 | ||||||
- Total non-cash costs of material mined during the period(2) | 10.0 | 6.2 | ||||||
- Translation adjustments | 1.3 | (0.5 | ) | |||||
Carrying amount at end of year | 299.5 | 257.0 | ||||||
(1) | Restated (refer Note 36) | |
(2) | Non-cash costs comprise depreciation and amortisation on operating property, plant and equipment. |
F-65
Table of Contents
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
$M | ||||||||||||
Note | 2009 | 2008(1) | ||||||||||
LAND AND BUILDINGS | ||||||||||||
Cost brought forward | 133.9 | 125.7 | ||||||||||
Transfers from capital works in progress | 9.9 | 9.5 | ||||||||||
Assets acquired through business combination | 31 | — | 1.5 | |||||||||
Reclassification | (4.5 | ) | — | |||||||||
Disposals | (0.1 | ) | (1.9 | ) | ||||||||
Translation adjustments | 0.3 | (0.9 | ) | |||||||||
Cost carried forward | 139.5 | 133.9 | ||||||||||
Depreciation brought forward | (35.6 | ) | (31.6 | ) | ||||||||
Charge for the year | (5.3 | ) | (4.2 | ) | ||||||||
Reclassification | 5.6 | — | ||||||||||
Disposals | — | 0.2 | ||||||||||
Impairment for the year(2) | (0.9 | ) | — | |||||||||
Depreciation carried forward | (36.2 | ) | (35.6 | ) | ||||||||
Net book value | 103.3 | 98.3 | ||||||||||
PLANT AND EQUIPMENT | ||||||||||||
Cost brought forward | 1,176.6 | 965.9 | ||||||||||
Additions | 18.6 | 11.5 | ||||||||||
Transfers from capital works in progress | 77.7 | 217.4 | ||||||||||
Transfers to assets held for sale | (6.0 | ) | ||||||||||
Assets acquired through business combination | 31 | — | 31.8 | |||||||||
Reclassification | (2.9 | ) | — | |||||||||
Disposals | (54.9 | ) | (42.1 | ) | ||||||||
Translation adjustments | 22.5 | (7.9 | ) | |||||||||
Cost carried forward | 1,231.6 | 1,176.6 | ||||||||||
Depreciation brought forward | (329.8 | ) | (283.0 | ) | ||||||||
Charge for the year | (88.5 | ) | (64.4 | ) | ||||||||
Reclassification | 1.5 | — | ||||||||||
Disposals | 38.5 | 17.7 | ||||||||||
Impairment for the year(2) | (58.7 | ) | — | |||||||||
Translation adjustments | (14.0 | ) | (0.1 | ) | ||||||||
Depreciation carried forward | (451.0 | ) | (329.8 | ) | ||||||||
Net book value | 780.6 | 846.8 | ||||||||||
(1) | Restated (refer Note 36) | |
(2) | Refer to Note 12 |
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$M | ||||||||||||
Note | 2009 | 2008(1) | ||||||||||
DEFERRED DEVELOPMENT | ||||||||||||
Cost brought forward | 703.7 | 639.1 | ||||||||||
Additions | 17.3 | 105.1 | ||||||||||
Transfers from capital works in progress | 14.1 | 42.0 | ||||||||||
Assets acquired through business combination | 31 | — | 6.4 | |||||||||
Reclassification | (24.6 | ) | — | |||||||||
Disposals | (1.2 | ) | (2.1 | ) | ||||||||
Translation adjustments | 36.8 | (86.8 | ) | |||||||||
Cost carried forward | 746.1 | 703.7 | ||||||||||
Depreciation brought forward | (113.8 | ) | (101.3 | ) | ||||||||
Charge for the year | (21.0 | ) | (12.9 | ) | ||||||||
Reclassification | 19.3 | — | ||||||||||
Impairment for the year(2) | (407.6 | ) | — | |||||||||
Disposals | 0.5 | 0.4 | ||||||||||
Translation adjustments | 1.0 | — | ||||||||||
Depreciation carried forward | (521.6 | ) | (113.8 | ) | ||||||||
Net book value | 224.5 | 589.9 | ||||||||||
MINE PROPERTIES | ||||||||||||
Cost brought forward | 487.6 | — | ||||||||||
Assets acquired through business combination | 31 | — | 544.3 | |||||||||
Translation adjustments | 45.4 | (56.7 | ) | |||||||||
Cost carried forward | 533.0 | 487.6 | ||||||||||
Depreciation brought forward | (21.2 | ) | — | |||||||||
Charge for the year | (63.2 | ) | (21.2 | ) | ||||||||
Translation adjustments | (3.8 | ) | — | |||||||||
Depreciation carried forward | (88.2 | ) | (21.2 | ) | ||||||||
Net book value | 444.8 | 466.4 | ||||||||||
(1) | Restated (refer Note 36) | |
(2) | Refer to Note 12 |
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$M | ||||||||||||
Note | 2009 | 2008(1) | ||||||||||
PRE-DEVELOPMENT | ||||||||||||
Cost brought forward | 4.3 | — | ||||||||||
Additions | 28.3 | 4.3 | ||||||||||
Reclassification | 3.8 | — | ||||||||||
Disposals | — | — | ||||||||||
Translation adjustments | — | — | ||||||||||
Cost carried forward | 36.4 | 4.3 | ||||||||||
Depreciation brought forward | — | — | ||||||||||
Charge for the year | 0.4 | — | ||||||||||
Reclassification | (1.7 | ) | ||||||||||
Translation adjustments | (1.2 | ) | — | |||||||||
Depreciation carried forward | (2.5 | ) | - | |||||||||
Net book value | 33.9 | 4.3 | ||||||||||
Cost brought forward | 87.1 | 107.7 | ||||||||||
Additions | 298.7 | 183.2 | ||||||||||
Transfers | (101.7 | ) | (268.9 | ) | ||||||||
Assets acquired through business combination | 31 | — | 80.3 | |||||||||
Reclassification | 3.5 | — | ||||||||||
Translation adjustments | 0.1 | (15.2 | ) | |||||||||
Costs carried forward | 287.7 | 87.1 | ||||||||||
Net book value | 287.7 | 87.1 | ||||||||||
(1) | Restated (refer Note 36) |
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
$M | ||||||||||||
NOTE | 2009 | 2008(1) | ||||||||||
REHABILITATION | ||||||||||||
Cost brought forward | 14.1 | 5.2 | ||||||||||
Additions | 5.4 | 6.7 | ||||||||||
Assets acquired through business combination | 31 | — | 2.2 | |||||||||
Disposals | (2.1 | ) | ||||||||||
Translation adjustments | 0.4 | — | ||||||||||
Cost carried forward | 17.8 | 14.1 | ||||||||||
Amortisation brought forward | (2.9 | ) | (2.7 | ) | ||||||||
Charge for the year | (0.6 | ) | (0.2 | ) | ||||||||
Disposals | 2.1 | |||||||||||
Impairment for the year(2) | (2.4 | ) | — | |||||||||
Translation adjustments | — | — | ||||||||||
Amortisation carried forward | (3.8 | ) | (2.9 | ) | ||||||||
Net book value | 14.0 | 11.2 | ||||||||||
Total property, plant & equipment | 1,888.8 | 2,104.0 | ||||||||||
(1) | Restated (refer Note 36) | |
(2) | Refer to Note 12 |
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
$M | ||||||||||||
NOTE | 2009 | 2008(1) | ||||||||||
MINING INFORMATION | ||||||||||||
Cost brought forward | 55.9 | 49.2 | ||||||||||
Acquired through business combination | 31 | — | 23.2 | |||||||||
Translation adjustments | 9.6 | (16.5 | ) | |||||||||
Cost carried forward | 65.5 | 55.9 | ||||||||||
Amortisation brought forward | (1.0 | ) | — | |||||||||
Charge for the year | (2.4 | ) | (1.2 | ) | ||||||||
Impairment for the year(2) | (43.6 | ) | — | |||||||||
Translation adjustments | �� | (0.4 | ) | 0.2 | ||||||||
Amortisation carried forward | (47.4 | ) | (1.0 | ) | ||||||||
Closing net book value | 18.1 | 54.9 | ||||||||||
EXPLORATION RIGHTS | ||||||||||||
Cost brought forward | 148.8 | 1.9 | ||||||||||
Acquired through business combination | 31 | — | 147.2 | |||||||||
Translation adjustments | 0.1 | (0.3 | ) | |||||||||
Cost carried forward | 148.9 | 148.8 | ||||||||||
Amortisation brought forward | — | — | ||||||||||
Charge for the year | — | — | ||||||||||
Impairment for the year | (1.7 | ) | — | |||||||||
Translation adjustments | — | — | ||||||||||
Amortisation carried forward | (1.7 | ) | — | |||||||||
Closing net book value | 147.2 | 148.8 | ||||||||||
LICENSES | ||||||||||||
Cost brought forward | — | 0.1 | ||||||||||
Acquired through business combination | 31 | — | — | |||||||||
Translation adjustments | — | (0.1 | ) | |||||||||
Cost carried forward | — | — | ||||||||||
Closing net book value | — | — | ||||||||||
(1) | Restated (refer Note 36) | |
(2) | Refer to Note 12 |
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
$M | ||||||||||||
NOTE | 2009 | 2008(1) | ||||||||||
GOODWILL | ||||||||||||
Cost brought forward | 195.7 | 35.3 | ||||||||||
Acquired through business combination | 31 | — | 168.1 | |||||||||
Translation adjustments | 3.6 | (7.7 | ) | |||||||||
Cost carried forward | 199.3 | 195.7 | ||||||||||
Amortisation brought forward | — | — | ||||||||||
Charge for the year | — | — | ||||||||||
Impairment for the year(2) | (31.2 | ) | — | |||||||||
Translation adjustments | — | — | ||||||||||
Amortisation carried forward | (31.2 | ) | — | |||||||||
Closing net book value | 168.1 | 195.7 | ||||||||||
OTHER INTANGIBLE ASSETS | ||||||||||||
Cost brought forward | 22.3 | 7.7 | ||||||||||
Acquired through business combination | 31 | — | 14.8 | |||||||||
Transferred from capital works in progress | 2.0 | — | ||||||||||
Disposals | — | (0.2 | ) | |||||||||
Additions | — | — | ||||||||||
Translation adjustments | (0.1 | ) | — | |||||||||
Cost carried forward | 24.2 | 22.3 | ||||||||||
Amortisation brought forward | (2.4 | ) | (0.7 | ) | ||||||||
Charge for the year | (3.8 | ) | (1.7 | ) | ||||||||
Translation adjustments | 0.6 | — | ||||||||||
Amortisation carried forward | (5.6 | ) | (2.4 | ) | ||||||||
Closing net book value | 18.6 | 19.9 | ||||||||||
Total intangible assets | 352.0 | 419.3 | ||||||||||
(1) | Restated (refer Note 36) | |
(2) | Refer to Note 12 |
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
$M | ||||
Ballarat CGU | — | |||
Mount Rawdon CGU | — | |||
African CGU | 168.1 | |||
168.1 | ||||
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
(a) | Gold price per ounce used for long-term forecast sale cash flows was US$1,100 for 2010 to 2014, US$900 for 2015 and beyond. | |
(b) | Production schedule assuming a progressive ramp up during the eight years from 2012 to 2019. | |
(c) | Total production over the life of the mine of between 2.9 million ounces and 4.8 million ounces (weighted over a number of strategic business cases). |
(a) | The real cash flows for each SBP case with varying lives ranging from 8 years to 14 years; |
(b) | A real post-tax discount rate of 7%. |
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AFRICA CGU | ||||
CHANGE IN NPV | ||||
$M | ||||
Increase of real post-tax discount rate by1% | (67 | ) | ||
Decrease of real post-tax discount rate by 1% | 74 | |||
Reduction in gold price from 2010 by $100/oz and $200/oz for 2011 - 2014 | (136 | ) | ||
Increase gold price from 2014 and beyond by $200 per ounce | 173 | |||
$M | ||||||||
2009 | 2008 | |||||||
At beginning of the year | 2.3 | 2.5 | ||||||
Additions(1) | — | 0.2 | ||||||
Disposals(2) | (2.1 | ) | — | |||||
Acquired through business combination(3) | — | 6.8 | ||||||
Translation | 1.1 | (1.8 | ) | |||||
Impairment | — | (3.2 | ) | |||||
Revaluation surplus / (deficit) transfer to Equity | 2.9 | (2.2 | ) | |||||
At end of the year | 4.2 | 2.3 | ||||||
(1) | During 2008, the Consolidated Entity acquired 1 million shares of Rex Minerals Limited as consideration for the North Creswick exploration licence. | |
(2) | During 2009, the Consolidated Entity disposed of its holdings in Rex Minerals Limited and Mount Magnet South NL respectively. | |
(3) | During 2008, the Consolidated Entity acquired 12 million shares of Mount Magnet South NL and 10.4 million shares of Adamus Resources Limited on acquisition of Equigold Pty Limited (formerly Equigold NL). |
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
$M | ||||||||
2009 | 2008 | |||||||
CURRENT | ||||||||
Trade creditors and accruals | 111.4 | 102.1 | ||||||
111.4 | 102.1 | |||||||
$M | ||||||||
2009 | 2008 | |||||||
CURRENT | ||||||||
Employee provisions | 26.0 | 18.5 | ||||||
Rehabilitation provision | 0.9 | — | ||||||
26.9 | 18.5 | |||||||
NON CURRENT | ||||||||
Employee provisions | 3.0 | 4.4 | ||||||
Rehabilitation provision | 30.1 | 23.6 | ||||||
Other provisions(1) | 13.4 | 9.5 | ||||||
46.5 | 37.5 | |||||||
(1) | Includes an amount of $10.1 million for the following: In attributing value to the potential exploration projects acquired, it has been assumed that through the realisation of these projects the Côte d’Ivoire government will take a 10% stake on any projects that proceed to operate as mining projects. This potential 10% interest has been recognised as an ‘other provision’. |
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
(a) | Current employee provisions relate to the following short-term benefits which are payable within 12 months: |
$M | ||||||||
Employee provisions current | 2009 | 2008 | ||||||
Annual leave | 9.5 | 8.1 | ||||||
Sick leave | 1.6 | 1.4 | ||||||
Service bonus | 5.0 | 3.1 | ||||||
Short term incentives | 6.1 | 3.3 | ||||||
Long service leave current | 2.6 | 1.3 | ||||||
Other employee provisions | 1.2 | 1.3 | ||||||
26.0 | 18.5 | |||||||
(b) | Non-current employee provisions relate to the non-current portion of service bonuses and long-service leave entitlements that are determined in accordance with the requirements for other long-term employee benefits. |
$M | ||||||||
2009 | 2008 | |||||||
Employee provisions non-current | ||||||||
Long service leave | 2.0 | 2.7 | ||||||
Service bonus | 1.0 | 1.7 | ||||||
3.0 | 4.4 | |||||||
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
(c) | Movements in each class of provision, excluding employee provisions, during the financial year are set out below: |
$M | ||||||||||||
2009 | ||||||||||||
Rehabilitation | ||||||||||||
provision | Other | Total | ||||||||||
Carrying amount at start of year | 23.6 | 9.5 | 33.1 | |||||||||
— Utilised during the year | (0.1 | ) | — | (0.1 | ) | |||||||
— additional / (reduction in) provision for changes in estimated cash outflows | (1.7 | ) | — | (1.7 | ) | |||||||
— additional provision due to ground disturbance | 1.1 | — | 1.1 | |||||||||
— change in discount & inflation rate | 7.1 | — | 7.1 | |||||||||
— acquisition of subsidiaries | — | — | — | |||||||||
— interest charge / accretion | 4.3 | — | 4.3 | |||||||||
— reclassed to current asset held for sale | (3.3 | ) | — | (3.3 | ) | |||||||
— disposal of tenements | (1.4 | ) | — | (1.4 | ) | |||||||
— transfer to discontinued operation | — | — | — | |||||||||
— onerous contract | — | 3.1 | 3.1 | |||||||||
— translation adjustment | 1.4 | 0.8 | 2.2 | |||||||||
Carrying amount at end of year | 31.0 | 13.4 | 44.4 | |||||||||
Current | 0.9 | — | 0.9 | |||||||||
Non-current | 30.1 | 13.4 | 43.5 | |||||||||
31.0 | 13.4 | 44.4 | ||||||||||
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
$M | ||||||||
2009 | 2008 | |||||||
CURRENT | ||||||||
Borrowings | — | — | ||||||
Finance leases (Note 38) | 0.7 | 0.3 | ||||||
0.7 | 0.3 | |||||||
NON CURRENT | ||||||||
Borrowings | 50.0 | — | ||||||
Finance leases (Note 38) | 0.2 | 0.2 | ||||||
50.2 | 0.2 | |||||||
F-78
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
1. | Credit risk | |
2. | Liquidity risk | |
3. | Market risk- consisting of: |
• | Foreign exchange risk | ||
• | Interest rate risk | ||
• | Commodity price risk |
F-79
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
2009 | ||||||||
$M | ||||||||
CARRYING AMOUNT | FAIR VALUE | |||||||
Financial assets | ||||||||
Available for sale financial assets | 4.2 | 4.2 | ||||||
Receivables | 15.2 | 15.2 | ||||||
Cash and cash equivalents | 473.5 | 473.5 | ||||||
Derivative financial assets | 10.9 | 10.9 | ||||||
Financial liabilities | ||||||||
Derivative financial liabilities | — | — | ||||||
Finance lease liabilities | 0.9 | 0.9 | ||||||
Accounts payable & accrued liabilities | 111.4 | 111.4 | ||||||
Deferred settlement payable | — | — | ||||||
Borrowings | 50.0 | 50.0 |
2008 | ||||||||
$M | ||||||||
CARRYING AMOUNT | FAIR VALUE | |||||||
Financial assets | ||||||||
Available for sale financial assets | 2.3 | 2.3 | ||||||
Receivables | 21.4 | 21.2 | ||||||
Cash and cash equivalents | 64.7 | 64.7 | ||||||
Derivative financial assets | 0.7 | 0.7 | ||||||
Financial liabilities | ||||||||
Derivative financial liabilities | 52.4 | 52.4 | ||||||
Finance lease liabilities | 0.5 | 0.5 | ||||||
Accounts payable & accrued liabilities | 102.1 | 102.1 | ||||||
Deferred settlement payable | 10.8 | 10.8 | ||||||
Borrowings | — | — | ||||||
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
2009 | LEVEL 1 | LEVEL 2 | LEVEL 3 | TOTAL | ||||||||||||
Financial assets | ||||||||||||||||
Available for sale financial assets | 4.2 | — | — | 4.2 | ||||||||||||
Derivative financial assets | 10.9 | — | — | 10.9 | ||||||||||||
Financial liabilities | ||||||||||||||||
Derivative financial liabilities | — | — | — | — | ||||||||||||
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
2008 | LEVEL 1 | LEVEL 2 | LEVEL 3 | TOTAL | ||||||||||||
Financial assets | ||||||||||||||||
Available for sale financial assets | 2.3 | — | — | 2.3 | ||||||||||||
Derivative financial assets | 0.7 | — | — | 0.7 | ||||||||||||
Financial liabilities | ||||||||||||||||
Derivative financial liabilities | 52.4 | — | — | 52.4 | ||||||||||||
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
• | has a policy for establishing credit limits for the entities with which it deals; | ||
• | may require collateral where appropriate; and | ||
• | monitors the overall financial strength of customers through publicly available credit information. |
PAST DUE BUT NOT IMPAIRED | ||||||||||||||||||||||||
CARRYING | NEITHER PAST DUE | LESS THAN | BETWEEN 30 AND 90 | GREATER THAN 90 | PAST DUE AND | |||||||||||||||||||
AMOUNT | NOR IMPAIRED | 30 DAYS | DAYS | DAYS | IMPAIRED | |||||||||||||||||||
$M | $M | $M | $M | $M | $M | |||||||||||||||||||
2009 | ||||||||||||||||||||||||
Other amounts receivable from third parties (current) | 15.1 | 13.8 | 0.3 | 0.4 | 0.6 | 6.0 | ||||||||||||||||||
Other amounts receivable from third parties (non-current) | 0.1 | — | — | — | 0.1 | — | ||||||||||||||||||
2008 | ||||||||||||||||||||||||
Other amounts receivable from third parties (current) | 21.0 | 4.7 | 0.6 | 1.0 | 14.7 | 4.9 | ||||||||||||||||||
Other amounts receivable from third parties (non-current) | 0.4 | — | — | — | 0.4 | — | ||||||||||||||||||
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F-84
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
TOTAL | TOTAL | |||||||||||||||||||||||
LESS THAN | BETWEEN 1 | BETWEEN 2 | OVER 5 | CONTRACTUAL | CARRYING | |||||||||||||||||||
1 YEAR | & 2 YEARS | & 5 YEARS | YEARS | CASH FLOWS | AMOUNT | |||||||||||||||||||
2009 | ||||||||||||||||||||||||
Accounts payable and accrued liabilities | 111.4 | — | — | — | 111.4 | 111.4 | ||||||||||||||||||
Finance lease liabilities | 0.7 | 0.2 | — | — | 0.9 | 0.9 | ||||||||||||||||||
Derivative financial liabilities | — | — | — | — | — | — | ||||||||||||||||||
Deferred settlement payable | — | — | — | — | — | — | ||||||||||||||||||
Borrowings | 3.5 | 3.5 | 59.8 | — | 66.8 | 50.0 |
TOTAL | TOTAL | |||||||||||||||||||||||
LESS THAN | BETWEEN 1 | BETWEEN 2 | OVER 5 | CONTRACTUAL | CARRYING | |||||||||||||||||||
1 YEAR | & 2 YEARS | & 5 YEARS | YEARS | CASH FLOWS | AMOUNT | |||||||||||||||||||
2008 | ||||||||||||||||||||||||
Accounts payable and accrued liabilities | 102.1 | — | — | — | 102.1 | 102.1 | ||||||||||||||||||
Finance lease liabilities | 0.3 | 0.2 | — | — | 0.5 | 0.5 | ||||||||||||||||||
Derivative financial liabilities | 33.5 | 18.9 | — | — | 52.4 | 52.4 | ||||||||||||||||||
Deferred settlement payable | 10.8 | — | — | — | 10.8 | 10.8 | ||||||||||||||||||
Borrowings | — | — | — | — | — | — |
F-85
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
1. | translational exposure in respect of non-functional currency monetary items |
2. | transactional exposure in respect of non-functional currency expenditure and revenues |
F-86
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOREIGN EXCHANGE RISK | ||||||||||||||||||||
-10% | +10% | |||||||||||||||||||
PROFIT | PROFIT | |||||||||||||||||||
CARRYING | BEFORE | BEFORE | ||||||||||||||||||
AMOUNT | EQUITY | TAX | EQUITY | TAX | ||||||||||||||||
2009 | $M | $M | $M | $M | $M | |||||||||||||||
Australian dollar denominated balances | ||||||||||||||||||||
Cash and cash equivalents | 41.5 | — | (4.2 | ) | — | 4.2 | ||||||||||||||
Receivables | 3.8 | — | (0.4 | ) | — | 0.4 | ||||||||||||||
Derivative financial assets | 6.3 | (5.3 | ) | — | 5.3 | |||||||||||||||
Finance lease liabilities | (0.3 | ) | — | 0.0 | — | (0.0 | ) | |||||||||||||
Accounts payable | (25.1 | ) | — | 2.5 | — | (2.5 | ) | |||||||||||||
Euro denominated balances | ||||||||||||||||||||
Derivative financial assets | 0.6 | (6.3 | ) | — | 6.3 | — | ||||||||||||||
Accounts payable | (0.6 | ) | — | 0.1 | — | (0.1 | ) | |||||||||||||
PNG kina denominated balances | ||||||||||||||||||||
Cash and cash equivalents | (0.7 | ) | — | 0.1 | — | (0.1 | ) | |||||||||||||
Receivables | 12.0 | — | (1.2 | ) | — | 1.2 | ||||||||||||||
Derivative financial assets | 0.0 | (1.1 | ) | — | 1.1 | — | ||||||||||||||
Accounts payable | (0.8 | ) | — | 0.1 | — | (0.1 | ) | |||||||||||||
CFA franc denominated balances | ||||||||||||||||||||
Cash and cash equivalents | 1.5 | — | (0.2 | ) | — | 0.2 | ||||||||||||||
Receivables | 0.5 | — | (0.1 | ) | — | 0.1 | ||||||||||||||
Finance lease liabilities | (0.9 | ) | — | 0.1 | — | (0.1 | ) | |||||||||||||
Accounts payable | (2.0 | ) | — | 0.2 | — | (0.2 | ) | |||||||||||||
Total (decrease) / increase | (12.7 | ) | (3.0 | ) | 12.7 | 3.0 | ||||||||||||||
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FOREIGN EXCHANGE RISK | ||||||||||||||||||||
-10% | +10% | |||||||||||||||||||
CARRYING | PROFIT | PROFIT | ||||||||||||||||||
AMOUNT | EQUITY | BEFORE TAX | EQUITY | BEFORE TAX | ||||||||||||||||
2008 | $M | $M | $M | $M | $M | |||||||||||||||
Australian dollar denominated balances | ||||||||||||||||||||
Cash and cash equivalents | 4.3 | — | (0.4 | ) | — | 0.4 | ||||||||||||||
Receivables | 0.1 | — | — | — | — | |||||||||||||||
Derivative financial liabilities | (51.7 | ) | 5.2 | — | (5.2 | ) | — | |||||||||||||
Finance lease liabilities | (0.5 | ) | — | 0.1 | — | (0.1 | ) | |||||||||||||
Accounts payable | (5.4 | ) | — | 0.5 | — | (0.5 | ) | |||||||||||||
PNG kina denominated balances | ||||||||||||||||||||
Cash and cash equivalents | 1.9 | — | (0.2 | ) | — | 0.2 | ||||||||||||||
Receivables | 8.9 | — | (0.9 | ) | — | 0.9 | ||||||||||||||
Accounts payable | (6.1 | ) | — | 0.6 | — | (0.6 | ) | |||||||||||||
CFA franc denominated balances | ||||||||||||||||||||
Cash and cash equivalents | 0.6 | — | (0.1 | ) | — | 0.1 | ||||||||||||||
Accounts payable | (2.1 | ) | — | 0.2 | — | (0.2 | ) | |||||||||||||
Total increase / (decrease) | 5.2 | (0.2 | ) | (5.2 | ) | 0.2 | ||||||||||||||
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INTEREST RATE RISK | ||||||||||||||||||||
-10BPS | +10BPS | |||||||||||||||||||
CARRYING | PROFIT | PROFIT | ||||||||||||||||||
AMOUNT | EQUITY | BEFORE TAX | EQUITY | BEFORE TAX | ||||||||||||||||
$M | $M | $M | $M | $M | ||||||||||||||||
2009 | ||||||||||||||||||||
Cash and cash equivalents | 473.5 | — | (0.4 | ) | — | 0.4 | ||||||||||||||
Borrowings | (50.0 | ) | — | — | — | — | ||||||||||||||
Total (decrease) / increase | — | (0.4 | ) | — | 0.4 | |||||||||||||||
2008 | ||||||||||||||||||||
Cash and cash equivalents | 64.7 | — | (0.1 | ) | — | 0.1 | ||||||||||||||
Borrowings | — | — | — | — | — | |||||||||||||||
Total (decrease) / increase | — | (0.1 | ) | — | 0.1 | |||||||||||||||
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FUEL AND OIL PRICE RISK | ||||||||||||||||||||
+10% | -10% | |||||||||||||||||||
CARRYING | PROFIT | PROFIT BEFORE | ||||||||||||||||||
AMOUNT | EQUITY | BEFORE TAX | EQUITY | TAX | ||||||||||||||||
2009 | $M | $M | $M | $M | $M | |||||||||||||||
Derivative financial asset/(liability) | 4.0 | 5.7 | — | (5.7 | ) | — | ||||||||||||||
Total increase / (decrease) | 5.7 | — | (5.7 | ) | — | |||||||||||||||
EQUITY PRICE RISK | ||||||||||||||||||||
+10% | -10% | |||||||||||||||||||
CARRYING | PROFIT BEFORE | PROFIT BEFORE | ||||||||||||||||||
AMOUNT | EQUITY | TAX | EQUITY | TAX | ||||||||||||||||
2009 | $M | $M | $M | $M | $M | |||||||||||||||
Available-for-sale financial assets | 4.2 | 0.4 | — | (0.4 | ) | — | ||||||||||||||
Total increase / (decrease) | 0.4 | — | (0.4 | ) | — | |||||||||||||||
EQUITY PRICE RISK | ||||||||||||||||||||
+10% | -10% | |||||||||||||||||||
CARRYING | PROFIT BEFORE | PROFIT BEFORE | ||||||||||||||||||
AMOUNT | EQUITY | TAX | EQUITY | TAX | ||||||||||||||||
2008 | $M | $M | $M | $M | $M | |||||||||||||||
Available-for-sale financial assets | 2.3 | 0.2 | — | (0.2 | ) | — | ||||||||||||||
Total increase / (decrease) | 0.2 | — | (0.2 | ) | — | |||||||||||||||
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$M | ||||||||
DERIVATIVE FINANCIAL INSTRUMENTS | 2009 | 2008 | ||||||
Current assets | ||||||||
— Fuel oil swaps | 2.5 | — | ||||||
— Forward currency contracts | 6.8 | 0.4 | ||||||
9.3 | 0.4 | |||||||
Non-current assets | ||||||||
— Fuel oil swaps | 1.5 | — | ||||||
— Forward currency contracts | 0.1 | 0.3 | ||||||
1.6 | 0.3 | |||||||
Current liabilities | ||||||||
— Forward commodity contracts | — | 33.5 | ||||||
— | 33.5 | |||||||
Non-current liabilities | ||||||||
— Forward commodity contracts | — | 18.9 | ||||||
— | 18.9 | |||||||
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LESS THAN 1 | BETWEEN 1 & | BETWEEN 2 & | OVER 5 | TOTAL CARRYING | ||||||||||||||||
YEAR | 2 YEARS | 5 YEARS | YEARS | VALUE | ||||||||||||||||
2009 | ||||||||||||||||||||
Assets | ||||||||||||||||||||
— Forward currency contracts ($A) | 6.3 | — | — | — | 6.3 | |||||||||||||||
— Forward currency contracts (EURO) | 0.5 | 0.1 | — | — | 0.6 | |||||||||||||||
— Fuel oil swaps (metric tonnes) | 1.2 | 0.8 | — | — | 2.0 | |||||||||||||||
— Gas oil swaps (barrels) | 1.3 | 0.7 | — | — | 2.0 |
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GROSS PRE-TAX | NET POST-TAX | |||||||||||
NON-CASH HEDGING LOSS | TAX EFFECT | NON-CASH HEDGING LOSS | ||||||||||
DESIGNATION YEAR | $M | $M | $M | |||||||||
2010 — 1st half-year | 45.6 | (13.4 | ) | 32.2 | ||||||||
2010 — 2nd half-year | 43.2 | (12.8 | ) | 30.4 | ||||||||
2011 — 1st half-year | 41.3 | (12.3 | ) | 29.0 | ||||||||
2011 — 2nd half-year | 2.9 | (0.9 | ) | 2.0 | ||||||||
2012 — 1st half-year | 2.9 | (0.8 | ) | 2.1 | ||||||||
2012 — 2nd half-year | 2.9 | (0.9 | ) | 2.0 | ||||||||
2013 — 1st half-year | 3.0 | (0.9 | ) | 2.1 | ||||||||
2013 — 2nd half year | 3.0 | (0.9 | ) | 2.1 | ||||||||
144.8 | (42.9 | ) | 101.9 | |||||||||
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$M | ||||||||
2009 | 2008 | |||||||
CURRENT | ||||||||
Deferred settlement payable | — | 10.8 | ||||||
— | 10.8 | |||||||
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$M | ||||||||
2009 | 2008 | |||||||
(a) Issued and paid up capital | ||||||||
Ordinary shares | ||||||||
Opening balance | 3,080.0 | 2,319.7 | ||||||
New issues — Mineral Resources Lihir Limited | — | 5.2 | ||||||
New issues — Equigold acquisition | — | 756.0 | ||||||
New issues — placement and share purchase plan | 348.5 | — | ||||||
Less: Transaction costs | (7.6 | ) | — | |||||
Shares reclassified as treasury shares(1) | — | (0.9 | ) | |||||
Closing balance | 3,420.9 | 3,080.0 | ||||||
NUMBER OF SHARES ’000 | ||||||||
2009 | 2008 | |||||||
(b) Issued and paid up capital | ||||||||
Opening balance | 2,187,140 | 1,903,912 | ||||||
New issues — placement and share purchase plan | 180,543 | — | ||||||
New issues — Mineral Resources Lihir Limited | — | 3,284 | ||||||
New issues — Equigold acquisition | — | 280,405 | ||||||
Shares reclassified as treasury shares(1) | — | (546 | ) | |||||
Treasury shares reclassified as ordinary shares(1) | 575 | 85 | ||||||
Closing balance | 2,368,258 | 2,187,140 | ||||||
(1) | The treasury restricted executive shares are shares purchased for the LESP (see Note 32). On consolidation, shares held under the LESP are offset against contributed equity. |
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$M | ||||||||
2009 | 2008(1) | |||||||
(a) Reserves | ||||||||
Foreign currency translation reserve | (9.1 | ) | (124.0 | ) | ||||
Hedging reserve — cash flow hedges | (94.4 | ) | (194.4 | ) | ||||
Fair value reserve | 1.6 | (0.8 | ) | |||||
Employee share based payments reserve | 23.2 | 8.8 | ||||||
Landowner share based payments reserve | — | — | ||||||
Other reserves | 4.5 | 4.5 | ||||||
(74.2 | ) | (305.9 | ) | |||||
Movements: | ||||||||
Foreign currency translation reserve | ||||||||
Opening balance | (124.0 | ) | 42.6 | |||||
Currency translation differences arising during the year | 104.6 | (154.9 | ) | |||||
Deferred tax | 10.3 | (11.7 | ) | |||||
(9.1 | ) | (124.0 | ) | |||||
Hedging reserve — cash flow hedges | ||||||||
Opening balance | (194.4 | ) | (221.9 | ) | ||||
Fair value of cash flow hedges | 21.4 | (32.7 | ) | |||||
Deferred hedging gains / (losses) transferred to hedging loss expense | 118.7 | 76.7 | ||||||
Deferred taxation | (40.1 | ) | (16.5 | ) | ||||
(94.4 | ) | (194.4 | ) | |||||
Fair value reserve | ||||||||
Opening balance | (0.8 | ) | 0.8 | |||||
Fair value of available for sale financial assets | 3.0 | (2.2 | ) | |||||
Deferred tax | (0.6 | ) | 0.6 | |||||
1.6 | (0.8 | ) | ||||||
Employee share based payments reserve | ||||||||
Opening balance | 8.8 | 3.3 | ||||||
Share rights expensed | 9.3 | 4.7 | ||||||
Deferred taxation | 5.1 | 0.8 | ||||||
23.2 | 8.8 | |||||||
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$M | ||||||||
2009 | 2008(1) | |||||||
Landowners share based payments reserve | ||||||||
Opening balance | — | 5.2 | ||||||
Shares issued | — | (5.2 | ) | |||||
— | — | |||||||
Other reserve | ||||||||
Opening balance | 4.5 | — | ||||||
Purchase of non-controlling interests | — | 4.5 | ||||||
4.5 | 4.5 | |||||||
(b) Retained Profits(1) | ||||||||
Movements in (accumulated losses)/retained profits were as follows: | ||||||||
Opening balance | 129.8 | 18.8 | ||||||
Net (loss) / profit for the year | (234.0 | ) | 111.0 | |||||
Paid dividends | (35.5 | ) | — | |||||
(139.7 | ) | 129.8 | ||||||
(1) | Restated (refer Note 36) |
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• | the fair value of share rights issued to employees but not exercised | |
• | in the parent entity — the fair value of shares and share rights issued to employees of subsidiaries |
• | the fair value of shares issued to local landowners |
$M | ||||||||
2009 | 2008 | |||||||
| | | ||||||||
Non-controlling interest in Equigold Mines Côte d’Ivoire SA and Equigold Côte d’Ivoire SA | ||||||||
Contributed equity | 32.1 | 32.1 | ||||||
Accumulated loss | (0.4 | ) | (0.2 | ) | ||||
Total non-controlling interests | 31.7 | 31.9 | ||||||
Movements in non-controlling interest in retained earnings: | ||||||||
Balance at the beginning of the year | (0.2 | ) | — | |||||
Interest in loss after tax | (0.2 | ) | (0.2 | ) | ||||
(0.4 | ) | (0.2 | ) | |||||
F-99
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
NAME OF SUBSIDIARY | % OWNERSHIP INTEREST | COUNTRY OF INCORPORATION | ||||
Niugini Mining Limited | 100 | % | Papua New Guinea | |||
Niugini Mining Australia Pty Ltd | 100 | % | Australia | |||
Lihir Management Company Limited | 100 | % | Papua New Guinea | |||
Lihir Business Development Limited(1) | 100 | % | Papua New Guinea | |||
Lihir Services Australia Pty Limited(2) | 100 | % | Australia | |||
Lihir Australian Holdings Pty Ltd(3) | 100 | % | Australia | |||
Ballarat Goldfields Pty Ltd(4) | 100 | % | Australia | |||
New Resource Pty Ltd | 100 | % | Australia | |||
Berringa Resources Pty Ltd | 100 | % | Australia | |||
Ballarat West Goldfields Pty Ltd | 100 | % | Australia | |||
Corpique No. 21 Pty Ltd | 100 | % | Australia | |||
Equigold Pty Limited(5) | 100 | % | Australia | |||
Swindon Holdings Pty Ltd(6) | 100 | % | Australia | |||
Stanmines Pty Limited(7) | 100 | % | Australia | |||
Kim Resources Pty Limited(8) | 100 | % | Australia | |||
LGL Holdings CI SA | 100 | % | Côte d’Ivoire | |||
Equigold Mines CI SA(9) | 90 | % | Côte d’Ivoire | |||
Equigold CI SA(10) | 98 | % | Côte d’Ivoire | |||
LGL Exploration CI SA | 100 | % | Côte d’Ivoire | |||
LGL Development CI SA | 100 | % | Côte d’Ivoire | |||
(1) | On March 12, 2010 the Directors of Lihir Business Development Limited resolved to change the name of the entity to LGL PNG Holdings Limited | |
(2) | On March 12, 2010 the Directors of Lihir Services Australia Pty Ltd resolved to change the name of the entity to LGL Services Australia Pty Ltd | |
(3) | On March 12, 2010 the Directors of Lihir Australian Holdings Pty Ltd resolved to change the name of the entity to LGL Australian Holdings Pty Ltd | |
(4) | On March 12, 2010 the Directors of Ballarat Goldfields resolved to change the name of the entity to LGL Ballarat Operations Pty Ltd | |
(5) | On March 12, 2010 the Directors of Equigold Pty Ltd resolved to change the name of the entity to LGL Mount Rawdon Operations Pty Ltd | |
(6) | On March 12, 2010 the Directors of Swindon Holdings Pty Ltd resolved to change the name of the entity to LGL Mount Rawdon Property Holdings Pty Ltd | |
(7) | On March 12, 2010 the Directors of Stanmines Pty Ltd resolved to change the name of the entity to LGL CDI Investments Pty Ltd | |
(8) | On March 12, 2010 the Directors of Kim Resources resolved to change the name of the entity to LGL CDI Exploration Pty Ltd | |
(9) | On March 18, 2010 the Directors of Equigold Mines CI SA resolved to change the name of the entity to LGL Mines CI SA | |
(10) | On March 18, 2010 the Directors of Equigold CI SA resolved to change the name of the entity to LGL Resources CI SA | |
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Provisional | ||||||||||||
fair value as | ||||||||||||
previously reported | Adjustments | Final | ||||||||||
$M | $M | |||||||||||
Cash and cash equivalents | 14.4 | 14.4 | ||||||||||
Receivables | 8.3 | 8.3 | ||||||||||
Inventories | 18.6 | (1.0 | ) | 17.6 | ||||||||
Other assets | 0.3 | 0.3 | ||||||||||
Deferred mining costs | 2.9 | (2.9 | ) | — | ||||||||
Property, plant & equipment | 745.1 | (78.8 | ) | 666.3 | ||||||||
Intangible Assets | 178.5 | 6.6 | 185.1 | |||||||||
Available for sale financial asset | 6.8 | 6.8 | ||||||||||
Accounts payable & accrued liabilities | (16.8 | ) | (16.8 | ) | ||||||||
Noncurrent provisions(1) | (23.1 | ) | (0.9 | ) | (24.0 | ) | ||||||
Derivative financial instruments | (52.8 | ) | (52.8 | ) | ||||||||
Deferred income tax assets / (liabilities) | (188.0 | ) | 75.6 | (112.4 | ) | |||||||
Borrowings | (49.0 | ) | (49.0 | ) | ||||||||
Net assets | 645.2 | (1.4 | ) | 643.8 | ||||||||
Goodwill arising on business combination | 165.2 | 2.9 | 168.1 | |||||||||
Minority interests | (49.1 | ) | (1.1 | ) | (50.2 | ) | ||||||
Total cost | 761.3 | 0.4 | 761.7 | |||||||||
(1) | Includes an amount of $10.1 million for the following: In attributing value to the potential exploration projects acquired, it has been assumed that through the realisation of these projects the Côte d’Ivoire government will take a 10% stake on any projects that proceed to operate as mining projects. This potential 10% interest has been recognised as an ‘other provision’. |
$M | ||||
| | ||||
Purchase consideration | ||||
Shares issued (280,405,288 shares at A$2.87 at rate of US$0.9394 per A$1) | 756.0 | |||
Direct costs relating to the acquisition | 5.7 | |||
761.7 | ||||
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
YEAR ENDED | ||||
31 DECEMBER 2008 | ||||
US$M | ||||
Acquisition of subsidiary net of cash acquired: | ||||
Cash balances acquired | 14.4 | |||
Less: direct cash costs of acquisition (1) | (5.7 | ) | ||
Net cash inflow | 8.7 | |||
(1) | An additional $0.4 million of direct costs have been attributed to the acquisition since 31 December 2008. |
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F-104
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PER SHARE | NUMBER | NUMBER | NUMBER | |||||||||||||||||||||||||||||||||
RIGHT | NUMBER | EXERCISED | FORFEITED | ADJUSTED | NUMBER | NUMBER | ||||||||||||||||||||||||||||||
EXERCISE | INDICATIVE | PERFORMANCE | NUMBER AT | GRANTED DURING | DURING | DURING | DURING | OUTSTANDING AT | EXERCISABLE AT | |||||||||||||||||||||||||||
PRICE | VALUE | CONDITIONS | 1-JAN-09 | PERIOD | PERIOD | PERIOD | THE PERIOD | 31-DEC-09 | 31-DEC-09 | |||||||||||||||||||||||||||
— | 2.529 | 1 | 33,344 | — | — | — | (17,449 | ) | 15,895 | 15,895 | ||||||||||||||||||||||||||
— | 2.602 | 2 | 11,551 | — | — | — | (6,386 | ) | 5,165 | 5,165 | ||||||||||||||||||||||||||
— | 1.928 | 3 | 61,429 | — | — | — | (32,004 | ) | 29,425 | 29,425 | ||||||||||||||||||||||||||
— | 1.978 | 4 | 61,431 | — | — | — | (32,005 | ) | 29,426 | 29,426 | ||||||||||||||||||||||||||
— | — | 5 | 6,411 | — | — | — | (2,843 | ) | 3,568 | 3,568 | ||||||||||||||||||||||||||
— | 1.408 | 6 | 3,946,875 | 3,709,419 | — | (2,045,510 | ) | — | 5,610,784 | — | ||||||||||||||||||||||||||
— | 1.387 | 7 | 3,946,922 | 3,709,441 | — | (2,045,536 | ) | — | 5,610,827 | — | ||||||||||||||||||||||||||
Total | 8,067,963 | 7,418,860 | — | (4,091,046 | ) | (90,687 | ) | 11,305,090 | 83,479 | |||||||||||||||||||||||||||
NUMBER EXERCISED | EXERCISE DATE | WEIGHTED AVERAGE PRICE AT EXERCISE DATE | ||
n/a | n/a | n/a |
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PER SHARE | NUMBER | NUMBER | NUMBER | |||||||||||||||||||||||||||||||||
RIGHT | GRANTED | EXERCISED | FORFEITED | NUMBER | ||||||||||||||||||||||||||||||||
EXERCISE | INDICATIVE | PERFORMANCE | NUMBER AT | DURING | DURING | DURING | OTHER | NUMBER OUTSTANDING | EXERCISABLE | |||||||||||||||||||||||||||
PRICE$ | VALUE | CONDITIONS | 1-JAN-08 | PERIOD | PERIOD | PERIOD | CHANGES | AT 31-DEC-08 | AT 31-DEC-09 | |||||||||||||||||||||||||||
— | 2.529 | 1 | 163,183 | — | (114,133 | ) | (46,944 | ) | 31,238 | 33,344 | 33,344 | |||||||||||||||||||||||||
— | 2.602 | 2 | 167,192 | — | (4,459 | ) | — | (151,182 | ) | 11,551 | 11,551 | |||||||||||||||||||||||||
— | 1.928 | 3 | 250,763 | — | (213,395 | ) | — | 24,061 | 61,429 | 61,429 | ||||||||||||||||||||||||||
— | 1.978 | 4 | 250,775 | — | (213,396 | ) | — | 24,052 | 61,431 | 61,431 | ||||||||||||||||||||||||||
— | — | 5 | 7,603 | — | (1,192 | ) | — | — | 6,411 | 6,411 | ||||||||||||||||||||||||||
— | 1.542 | 6 | 1,840,903 | 2,154,285 | — | (48,313 | ) | — | 3,946,875 | — | ||||||||||||||||||||||||||
— | 1.507 | 7 | 1,840,928 | 2,154,307 | — | (48,313 | ) | — | 3,946,922 | — | ||||||||||||||||||||||||||
Total | 4,521,347 | 4,308,592 | (546,575 | ) | (143,570 | ) | (71,831 | ) | 8,067,963 | 174,166 | ||||||||||||||||||||||||||
NUMBER EXERCISED | EXERCISE DATE | WEIGHTED AVERAGE PRICE AT EXERCISE DATE(1) | ||||||
546,575 | 23 — 29 Sep 2008 | A$2.75 |
(1) | Purchased over a 7 day period due to restrictions on the volume that could be traded on any one day. |
$M | ||||||||
2009 | 2008 | |||||||
Executive share plan | 9.3 | 4.7 | ||||||
9.3 | 4.7 | |||||||
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1. | Individuals are set key performance indicators (KPI’s) based around the Company’s performance in line with Board policies to raise the long-term value of the Company. The performance conditions were assessed by the Board. | |
2. | This performance condition was assessed by the Board against changes in the net present value of the Company. This assessment was to have regard to the amount and timing of net expected cash flows, as indicated by reserves, costs and other relevant factors. Certain potential sources of change in the Company’s net present value were not included in the assessment of this performance condition as they have been assessed by the Board to be beyond the individuals’ control and the control of the management team generally. | |
3. | This performance condition was assessed by the Board by reference to the performance of the: |
— | Company’s “total shareholder return” or TSR over the performance period from the VWAP Month Employed until the testing date using the VWAP (volume weighted average share price); and | ||
— | Average “total shareholder return” of the Comparator Group using the Comparator Group’s VWAP for the same time periods as applicable above. |
Average Total shareholder return or TSR is, broadly, share price growth and dividends reinvested, excluding the impacts of franking credits and taxations. | ||
4. | This performance condition was assessed to the extent to which the Company’s TSR increased over the performance period using the VWAP Month for each participant as the starting share value for the TSR until the testing date VWAP. | |
5. | This grant was made to existing participants who held share rights at the time of the 3 for 1 Entitlement offer and were unable to participate in the offer due to trading restrictions leading up to the capital raising. In recognition of Participants in the LESP not being eligible to participate in the Entitlement Offer, the directors resolved that the number of share rights vested for each Participant be adjusted to take into account each Participant’s entitlement to share rights had they been eligible to participate. The grant is subject to the same three year service period restrictions. | |
6. | This performance measure will be assessed on the extent to which Company’s TSR increases over the performance period compared to growth in the TSX Global Gold Index (“Index”) over the performance period. | |
7. | This performance measure will be assessed on the extent to which the Company’s TSR increases over the performance period compared to the TSR growth of companies in a comparator group of peers over the performance period. |
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Dr Peter Cassidy
Dr Michael Etheridge
Lady Winifred Kamit
Mr Geoff Loudon
Mr Alister Maitland
F-108
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NAME | POSITION | EMPLOYER | ||
Phil Baker(1) | Chief Financial Officer | Lihir Services Australia Pty Ltd | ||
Graham Folland | Executive General Manager, Corporate Development | Lihir Services Australia Pty Ltd | ||
Noel Foley | Executive General Manager, PNG Operations | Lihir Gold Limited | ||
Tim Fry | Executive General Manager, West Africa and Corporate Services | Lihir Services Australia Pty Ltd | ||
Peter Smith | Executive General Manager, Australia and Africa Operations (appointed 1 April 2009) | Lihir Services Australia Pty Ltd | ||
Michael Sullivan | Executive General Manager, Legal & General Counsel (appointed 1 September 2009) | Lihir Services Australia Pty Ltd |
(1) | In addition to the role as Chief Financial Officer, Mr Baker was appointed the Chief Executive Officer on 17 January 2010, refer to note 42. |
NAME | POSITION | EMPLOYER | ||
Phil Baker | Chief Financial Officer | Lihir Services Australia Pty Ltd | ||
Stuart MacKenzie | Group Secretary and General Counsel | Lihir Services Australia Pty Ltd | ||
Graham Folland | Executive General Manager, Corporate Development | Lihir Services Australia Pty Ltd | ||
Noel Foley | Executive General Manager, PNG Operations | Lihir Gold Limited | ||
Mark Clark | Executive General Manager, West Africa and Corporate Services (appointed 17 June 2008, resigned 31 October 2008) | Lihir Services Australia Pty Ltd | ||
Morgan Hart | Executive General Manager, Australia and Africa Operations (appointed 17 June 2008, resigned 31 December 2008) | Lihir Services Australia Pty Ltd | ||
Tim Fry | Executive General Manager, West Africa and Corporate Services (appointed 1 November 2008) | Lihir Services Australia Pty Ltd |
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
$ | ||||||||
2009 | 2008 | |||||||
Short-term employee benefits | 5,581,035 | 4,887,335 | ||||||
Post-employment benefits | 220,417 | 308,711 | ||||||
Termination benefits | — | — | ||||||
Long-term benefits | 75,360 | 26,517 | ||||||
Share-based payments | 3,668,618 | 2,650,240 | ||||||
9,545,430 | 7,872,803 | |||||||
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
Details of share rights granted under the LESP are:
BALANCE AT | EQUITY | FORFEITED/ | BALANCE AT | |||||||||||||||||||||||||
2009 | START OF | SETTLED | OTHER | END OF | VESTED AND | |||||||||||||||||||||||
NAME | THE YEAR | COMPENSATION | EXERCISED | CHANGES | THE YEAR | EXERCISABLE | UNVESTED | |||||||||||||||||||||
Directors of Lihir Gold Limited | ||||||||||||||||||||||||||||
Mr Arthur Hood (resigned 17 January 2010) | 3,102,611 | 1,870,202 | — | (1,453,441 | ) | 3,519,372 | — | 3,519,372 | ||||||||||||||||||||
Other key management personnel of the Consolidated Entity | ||||||||||||||||||||||||||||
Phil Baker | 444,497 | 317,930 | — | (206,712 | ) | 555,715 | 45,074 | 510,641 | ||||||||||||||||||||
Noel Foley | 382,602 | 268,059 | — | (198,960 | ) | 451,701 | — | 451,701 | ||||||||||||||||||||
Graham Folland | 329,242 | 261,825 | — | (170,537 | ) | 420,530 | — | 420,530 | ||||||||||||||||||||
Tim Fry | — | 356,373 | — | — | 356,373 | — | 356,373 | |||||||||||||||||||||
Peter Smith | — | 210,395 | — | — | 210,395 | — | 210,395 | |||||||||||||||||||||
Michael Sullivan | — | — | — | — | — | — | — | |||||||||||||||||||||
4,258,952 | 3,284,784 | — | (2,029,650 | ) | 5,514,086 | 45,074 | 5,469,012 | |||||||||||||||||||||
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
2008 | BALANCE AT START OF | EQUITY SETTLED | FORFEITED/OTHER | BALANCE AT END OF | VESTED AND | |||||||||||||||||||||||
NAME | THE YEAR | COMPENSATION | EXERCISED | CHANGES | THE YEAR | EXERCISABLE | UNVESTED | |||||||||||||||||||||
Directors of Lihir Gold Limited | ||||||||||||||||||||||||||||
Mr Arthur Hood | 1,667,724 | 1,649,164 | (129,249 | ) | (85,028 | ) | 3,102,611 | — | 3,102,611 | |||||||||||||||||||
Other key management personnel of the Consolidated Entity | ||||||||||||||||||||||||||||
Phil Baker | 251,786 | 192,711 | — | — | 444,497 | 45,074 | 399,423 | |||||||||||||||||||||
Mark Clark | — | — | — | — | — | — | — | |||||||||||||||||||||
Noel Foley | 242,342 | 183,644 | (41,996 | ) | (1,388 | ) | 382,602 | — | 382,602 | |||||||||||||||||||
Graham Folland | 204,343 | 158,705 | (33,355 | ) | (451 | ) | 329,242 | — | 329,242 | |||||||||||||||||||
Tim Fry | — | — | — | — | — | — | — | |||||||||||||||||||||
Morgan Hart | — | — | — | — | — | — | — | |||||||||||||||||||||
Stuart MacKenzie | 179,821 | 136,033 | (30,989 | ) | — | 284,865 | — | 284,865 | ||||||||||||||||||||
2,546,016 | 2,320,257 | (235,589 | ) | (86,867 | ) | 4,543,817 | 45,074 | 4,498,743 | ||||||||||||||||||||
RECEIVED DURING THE | ||||||||||||||||
YEAR ON THE | ||||||||||||||||
2009 | BALANCE AT THE | EXERCISE OF SHARE | OTHER CHANGES | BALANCE AT THE END | ||||||||||||
NAME | START OF THE YEAR | RIGHTS | DURING THE YEAR | OF THE YEAR | ||||||||||||
Directors of Lihir Gold Limited | ||||||||||||||||
Dr Ross Garnaut | 113,523 | — | 53,625 | 167,148 | ||||||||||||
Mr Arthur Hood (resigned 17 January 2010) | 517,953 | — | 1,773 | 519,726 | ||||||||||||
Mr Bruce Brook | 53,334 | — | 14,396 | 67,730 | ||||||||||||
Dr Peter Cassidy | 44,301 | — | 1,773 | 46,074 | ||||||||||||
Dr Michael Etheridge | 61,728 | — | 11,773 | 73,501 | ||||||||||||
Lady Winifred Kamit | 2,667 | — | — | 2,667 | ||||||||||||
Mr Geoff Loudon | 143,840 | — | — | 143,840 | ||||||||||||
Mr Alister Maitland | 80,864 | — | 1,773 | 82,637 |
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
RECEIVED DURING THE | ||||||||||||||||
YEAR ON THE | ||||||||||||||||
2009 | BALANCE AT THE | EXERCISE OF SHARE | OTHER CHANGES | BALANCE AT THE END | ||||||||||||
NAME | START OF THE YEAR | RIGHTS | DURING THE YEAR | OF THE YEAR | ||||||||||||
Other key management personnel of the Consolidated Entity | ||||||||||||||||
Phil Baker | 22,000 | — | 1,773 | 23,773 | ||||||||||||
Graham Folland | 83,981 | — | — | 83,981 | ||||||||||||
Noel Foley | 150,566 | — | 1,773 | 152,339 | ||||||||||||
Tim Fry | 2,457 | — | — | 2,457 | ||||||||||||
Peter Smith | — | — | 10,000 | 10,000 | ||||||||||||
Michael Sullivan | — | — | — | — | ||||||||||||
RECEIVED DURING THE | ||||||||||||||||
YEAR ON THE | ||||||||||||||||
2008 | BALANCE AT THE | EXERCISE OF SHARE | OTHER CHANGES DURING | BALANCE AT THE END | ||||||||||||
NAME | START OF THE YEAR | RIGHTS | THE YEAR | OF THE YEAR | ||||||||||||
Directors of Lihir Gold Limited | ||||||||||||||||
Dr Ross Garnaut | 101,523 | — | 12,000 | 113,523 | ||||||||||||
Mr Arthur Hood | 353,704 | 129,249 | 35,000 | 517,953 | ||||||||||||
Mr Bruce Brook | 33,334 | — | 20,000 | 53,334 | ||||||||||||
Dr Peter Cassidy | 44,301 | — | — | 44,301 | ||||||||||||
Dr Michael Etheridge | 61,728 | — | — | 61,728 | ||||||||||||
Lady Winifred Kamit | 2,667 | — | — | 2,667 | ||||||||||||
Mr Geoff Loudon | 143,840 | — | — | 143,840 | ||||||||||||
Mr Alister Maitland | 30,864 | — | 50,000 | 80,864 | ||||||||||||
Other key management personnel of the Consolidated Entity | ||||||||||||||||
Phil Baker | 10,000 | — | 12,000 | (1) | 22,000 | |||||||||||
Noel Foley | 97,070 | 41,996 | 11,500 | 150,566 | ||||||||||||
Graham Folland | 47,651 | 33,355 | 2,975 | (1) | 83,981 | |||||||||||
Tim Fry | — | — | 2,457 | 2,457 | ||||||||||||
Morgan Hart | 1,386,000 | — | (389,510 | ) | 996,490 | |||||||||||
Stuart MacKenzie | 14,969 | 30,989 | — | 45,958 |
(1) | Adjustment made to prior year movement to reflect correct closing balance as at 31 December 2008. |
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
NUMBER OF EMPLOYEES | ||||||||||||
REMUNERATION AND BENEFIT BAND | 2009 | 2008 | 2007 | |||||||||
$30,001 — $40,000 | 42 | 13 | 37 | |||||||||
$40,001 — $50,000 | 99 | 74 | 27 | |||||||||
$50,001 — $60,000 | 75 | 55 | 24 | |||||||||
$60,001 — $70,000 | 65 | 75 | 20 | |||||||||
$70,001 — $80,000 | 82 | 77 | 26 | |||||||||
$80,001 — $90,000 | 45 | 55 | 13 | |||||||||
$90,001 — $100,000 | 43 | 45 | 11 | |||||||||
$100,001 — $110,000 | 30 | 29 | 15 | |||||||||
$110,001 — $120,000 | 39 | 30 | 17 | |||||||||
$120,001 — $130,000 | 30 | 41 | 36 | |||||||||
$130,001 — $140,000 | 33 | 30 | 24 | |||||||||
$140,001 — $150,000 | 31 | 25 | 29 | |||||||||
$150,001 — $160,000 | 22 | 16 | 21 | |||||||||
$160,001 — $170,000 | 17 | 21 | 20 | |||||||||
$170,001 — $180,000 | 17 | 17 | 37 | |||||||||
$180,001 — $190,000 | 18 | 10 | 10 | |||||||||
$190,001 — $200,000 | 10 | 15 | 2 | |||||||||
$200,001 — $210,000 | 12 | 8 | 2 | |||||||||
$210,001 — $220,000 | 4 | 6 | 4 | |||||||||
$220,001 — $230,000 | 5 | 3 | 1 | |||||||||
$230,001 — $240,000 | 4 | 2 | 1 | |||||||||
$240,001 — $250,000 | 2 | 3 | 3 | |||||||||
$250,001 — $260,000 | 1 | 4 | 3 | |||||||||
$260,001 — $270,000 | 2 | 2 | 4 | |||||||||
$270,001 — $280,000 | 1 | 2 | 1 | |||||||||
$280,001 — $290,000 | 1 | 3 | — | |||||||||
$300,001 — $310,000 | 7 | 1 | — | |||||||||
$310,001 — $320,000 | — | 4 | — | |||||||||
$340,001 — $350,000 | 2 | 2 | — |
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
NUMBER OF EMPLOYEES | ||||||||||||
REMUNERATION AND BENEFIT BAND | 2009 | 2008 | 2007 | |||||||||
$350,001 — $360,000 | 2 | 3 | 1 | |||||||||
$360,001 — $370,000 | 1 | 1 | 1 | |||||||||
$450,001 — $460,000 | — | — | 1 | |||||||||
$470,001 — $480,000 | 1 | — | 1 | |||||||||
$480,001 — $490,000 | 1 | — | 1 | |||||||||
$530,001 — $540,000 | 2 | 1 | — | |||||||||
$610,001 — $620,000 | 1 | — | 1 | |||||||||
$640,001 — $650,000 | 1 | 1 | 1 | |||||||||
$650,001 — $660,000 | — | — | 1 | |||||||||
$660,001 — $670,000 | — | 1 | — | |||||||||
$730,001 — $740,000 | — | 1 | — | |||||||||
$820,001 — $830,000 | 1 | — | — | |||||||||
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
2008 | 2008 | |||||||||||||||
Comparative period adjustments to | $M | BALLARAT(1) | PPA(2) | $M | ||||||||||||
income statement items | AS REPORTED | ADJUSTMENT | ADJUSTMENT | AS RESTATED | ||||||||||||
Revenue | 755.6 | (7.0 | ) | — | 748.6 | |||||||||||
Cost of sales | (451.3 | ) | 7.0 | 4.5 | (439.8 | ) | ||||||||||
Exploration expense | (8.5 | ) | 0.6 | (7.9 | ) | |||||||||||
Financial income | 7.8 | (0.5 | ) | — | 7.3 | |||||||||||
Financial expenses | (0.6 | ) | 0.1 | — | (0.5 | ) | ||||||||||
Income tax expense | (51.8 | ) | (0.9 | ) | (3.9 | ) | (56.6 | ) | ||||||||
Profit from discontinued operation | — | 0.7 | ||||||||||||||
Other comprehensive income | ||||||||||||||||
Foreign currency translation | (127.6 | ) | — | 3.6 | (124.0 | ) | ||||||||||
Hedging | (197.4 | ) | — | 3.0 | (194.4 | ) | ||||||||||
Other | 4.4 | — | 0.1 | 4.5 | ||||||||||||
Earnings / (loss) per share | ||||||||||||||||
— Basic (cents/share) | 5.3 | — | — | 5.2 | ||||||||||||
— Diluted (cents/share) | 5.3 | — | — | 5.2 | ||||||||||||
Continuing operations | ||||||||||||||||
— Basic (cents/share) | 5.3 | — | — | 5.2 | ||||||||||||
— Diluted (cents/share) | 5.3 | — | — | 5.2 |
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
Comparative period adjustments to balance items | 2008 | 2008 | ||||||||||||||
$M | BALLARAT(1) | PPA(2) | $M | |||||||||||||
AS REPORTED | ADJUSTMENT | ADJUSTMENT | AS RESTATED | |||||||||||||
Current inventories | 140.0 | — | (1.0 | ) | 139.0 | |||||||||||
Deferred mining costs | 259.5 | — | (2.5 | ) | 257.0 | |||||||||||
Property, plant and equipment | 2,166.2 | — | (62.2 | ) | 2,104.0 | |||||||||||
Intangible assets | 417.3 | — | 2.0 | 419.3 | ||||||||||||
Non-current provisions | (36.8 | ) | — | (0.7 | ) | (37.5 | ) | |||||||||
Deferred income tax liability | (215.2 | ) | — | 72.7 | (142.5 | ) | ||||||||||
Reserves | 312.6 | — | (6.7 | ) | 305.9 | |||||||||||
Retained earnings | (128.1 | ) | — | (1.7 | ) | (129.8 | ) | |||||||||
Non-controlling interest | (32.0 | ) | — | 0.1 | (31.9 | ) |
(1) | Classification of the Ballarat operation profit and loss for the year ended 31 December 2008 from continuing operation to discontinued operation. | |
(2) | Finalisation of the Equigold business combination and subsequent adjustments to the provisional accounting values as illustrated in Note 31, the amortization and tax effect of these final adjustments and translation of these final adjustments to the closing $US rate at 31 December 2008. |
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
Comparative period adjustments to income | ||||||||||||||||
statement items | 2007 | 2007 | ||||||||||||||
$M | BALLARAT(1) | PPA(2) | $M | |||||||||||||
AS REPORTED | ADJUSTMENT | ADJUSTMENT | AS RESTATED | |||||||||||||
Revenue | 498.4 | (0.8 | ) | — | 497.6 | |||||||||||
Cost of sales | (261.3 | ) | 0.8 | — | (260.5 | ) | ||||||||||
Exploration expense | (8.4 | ) | 0.2 | — | (8.2 | ) | ||||||||||
Financial income | 10.9 | (0.5 | ) | — | 10.4 | |||||||||||
Financial expenses | (131.6 | ) | 0.1 | — | (131.5 | ) | ||||||||||
Income tax benefit | 11.7 | (1.7 | ) | — | 10.0 | |||||||||||
Profit from discontinued operation | — | 1.9 | — | |||||||||||||
Earnings / (loss) per share | ||||||||||||||||
- Basic (cents/share) | (1.4 | ) | — | — | (1.4 | ) | ||||||||||
- Diluted (cents/share) | (1.4 | ) | — | — | (1.4 | ) | ||||||||||
Continuing operations | ||||||||||||||||
- Basic (cents/share) | (1.4 | ) | — | — | (1.5 | ) | ||||||||||
- Diluted (cents/share) | (1.4 | ) | — | — | (1.5 | ) |
(1) | Classification of the Ballarat operation profit and loss for the year ended 31 December 2008 from continuing operation to discontinued operation. | |
(2) | Finalisation of the Equigold business combination and subsequent adjustments to the provisional accounting values as illustrated in Note 31, the amortization and tax effect of these final adjustments and translation of these final adjustments to the closing $US rate at 31 December 2008. |
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
$ | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(a) Assurance services | ||||||||||||
Audit services | ||||||||||||
PricewaterhouseCoopers, PNG Firm | 235,301 | 239,420 | 154,843 | |||||||||
PricewaterhouseCoopers, Other Overseas Firms | 941,205 | 957,680 | 530,295 | |||||||||
Total remuneration for audit services | 1,176,506 | 1,197,100 | 685,138 | |||||||||
Other assurance services | ||||||||||||
PricewaterhouseCoopers, PNG Firm | — | — | 16,026 | |||||||||
PricewaterhouseCoopers, Other Overseas Firms | 244,204 | 422,752 | 625,664 | |||||||||
Total remuneration for other assurance services | 244,204 | 422,752 | 641,690 | |||||||||
Total remuneration for assurance services | 1,420,710 | 1,619,852 | 1,326,828 | |||||||||
(b) Taxation services | ||||||||||||
PricewaterhouseCoopers | 151,350 | 141,453 | 53,598 | |||||||||
Total remuneration for taxation services | 151,350 | 141,453 | 53,598 | |||||||||
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
$ | ||||||||
2009 | 2008 | |||||||
Payable | ||||||||
- not later than one year | 1.6 | 2.2 | ||||||
- later than one year but not later than 2 years | 1.8 | 0.9 | ||||||
- later than two years but not later than 5 years | 5.9 | 1.2 | ||||||
- later than 5 years | 12.1 | 0.1 | ||||||
21.4 | 4.4 | |||||||
$ | ||||||||
2009 | 2008 | |||||||
Payable | ||||||||
- not later than one year | 0.7 | — | ||||||
- later than one year but not later than 2 years | 0.3 | — | ||||||
Total minimum lease payments | 1.0 | — | ||||||
Future finance charges | (0.1 | ) | — | |||||
Total finance lease liability | 0.9 | — | ||||||
Representing lease liabilities: | ||||||||
Current | 0.7 | — | ||||||
Non-current | 0.2 | — | ||||||
0.9 | — | |||||||
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
$ | ||||||||
2009 | 2008 | |||||||
Capital expenditure commitments contracted for: | ||||||||
Payable – not later than one year | 269.5 | 83.7 | ||||||
Payable – not later than two year | 45.1 | 13.2 | ||||||
Payable – not later than three years | 20.0 | — | ||||||
334.6 | 96.9 | |||||||
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
• | gold production commencing (in any quantity) from the Kirkalocka processing plant; and | |
• | MMS entering into any unconditional dealing or agreement to deal (including sale, lease, mortgage or other Encumbrance) in relation to the Kirkalocka processing plant (whether in whole or in part), or any such dealing or agreement becoming unconditional. |
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
$ | ||||||||||||
2009 | 2008(1)(2) | 2007(1)(2) | ||||||||||
Net profit / (loss) attributable to ordinary shareholders from continuing operations | 178.7 | 110.1 | (26.0 | ) | ||||||||
Net (loss) / profit attributable to ordinary shareholders from discontinued operations | (412.9 | ) | 0.7 | 1.9 | ||||||||
(234.2 | ) | 110.8 | (24.1 | ) | ||||||||
Weighted average number of ordinary shares (millions) | 2,388.9 | 1,965.1 | 1,758.9 | |||||||||
Basic EPS (cents/share) — continuing operations | 7.5 | 5.6 | (1.5 | ) | ||||||||
Basic EPS (cents/share) — discontinued operations | (17.3 | ) | — | 0.1 | ||||||||
Basic EPS (cents/share) — total | (9.8 | ) | 5.6 | (1.4 | ) | |||||||
Diluted number of ordinary shares (millions) | 2,403.1 | 1,968.3 | 1,762.6 | |||||||||
Diluted EPS (cents/share) — continuing operations | 7.4 | 5.6 | (1.5 | ) | ||||||||
Diluted EPS (cents/share) — discontinued operations | (17.1 | ) | — | 0.1 | ||||||||
Diluted EPS (cents/share) — total | (9.7 | ) | 5.6 | (1.4 | ) | |||||||
2009 | 2008(2) | 2007(2) | ||||||||||
Weighted average number used in calculating basic earnings per share (in millions) | 2,388.9 | 1,965.1 | 1,758.9 | |||||||||
Adjustments for calculation of diluted earnings per share: | ||||||||||||
Contingently issuable shares | — | — | 3.3 | |||||||||
Effect of share rights on issue | 14.2 | 3.2 | 0.4 | |||||||||
Weighted average number used in calculating diluted earnings per share (in millions) | 2,403.1 | 1,968.3 | 1,762.6 | |||||||||
(1) | Restated (refer Note 36) | |
(2) | The EPS and number of ordinary shares calculations for the 2008 and 2007 financial years have been restated to include the impact of the capital raising undertaken in March 2009. |
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
CENTS PER | ||||||||
SHARE | TOTAL AMOUNT | |||||||
$M | ||||||||
Declared and paid during 2009 | ||||||||
Interim 2009 ordinary (record date 9 November 2009) | 1.5 | 35.5 | ||||||
35.5 | ||||||||
F-124
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NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
F-125
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LIHIR GOLD LIMITED (Registrant) | ||||
By /s/ Phil Baker | ||||
Title: Chief Executive Officer |
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Exhibit 1 * | Constitutionof Lihir Gold Limited, effective as of April 28, 1998 (incorporated by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2000). | |
Exhibit 4 (a) * | Syndicated Facilities Agreementbetween Lihir Gold Limited, ABN AMRO Australia Limited, ABN AMRO Bank N.V. (Australia Branch), Australia and New Zealand Banking Group Limited, Bayerische Hypo-und Vereinsbank AG, BNP Paribus, Bank of Western Australia Limited, Commonwealth Bank of Australia, Macquarie Bank Limited, National Australia Bank Limited, Natexis Banques Populaires, Societe General, Société Génerale Australia Branch, WestLB AG, and Westpac Banking Corporation dated September 13, 2005 incorporated by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2005). | |
Exhibit 4 (b) * | Refinancing Coordination Deed 2005between Lihir Gold Limited, ABN AMRO Australia Limited, ABN AMRO Bank NV, Commonwealth Bank of Australia, Macquarie Bank Limited, Société Génerale and Société Génerale Australia Branch, dated September 13, 2005. (incorporated by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2005). | |
Exhibit 4 (c) * | Amending Deed (Security Trust Deed)between Lihir Gold Limited, Niugini Mining Limited, Niugini Mining (Australia) Pty Ltd, ABN AMRO Australia Limited, ABN AMRO Bank NV, Commonwealth Bank of Australia, Macquarie Bank Limited, Société Génerale and Société Génerale Australia Branch, Mitsui & Co. Precious Metals Inc., and J. Aron & Company dated September 13, 2005 (incorporated by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2005). | |
Exhibit 4 (d) * | Lihir Gold Security Trust Deedbetween Lihir Gold Limited, Niugini Mining Limited, Niugini Mining (Australia) Pty Ltd, ABN AMRO Australia Limited, ABN AMRO Bank NV, Citibank N.A., and J. Aron & Company dated November 22, 2000 (incorporated by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2000). | |
Exhibit 4 (e) * | Lihir Gold Limited Offshore Chargebetween Lihir Gold Limited and ABN AMRO Australia Limited dated September 13, 2005 (incorporated by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2005). | |
Exhibit 4 (f) * | Lihir Gold Deed of Security (PNG) 2005between Lihir Gold Limited and ABN AMRO Australia Limited dated September 13, 2005 (incorporated by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2005). | |
Exhibit 4 (g) * | Lihir Gold Mortgage of Bullion Accountbetween Lihir Gold Limited and ABN AMRO Australia Limited dated September 13, 2005 (incorporated by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2005). | |
Exhibit 4 (h) * | Special Mining Lease, dated as of March 17, 1995, between Lihir Gold Limited and the PNG Government (incorporated by reference to Lihir Gold Limited’s Form F-1 filed September 6, 1995). |
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Exhibit 4 (i) * | Mining Development Contract, dated as of March 17, 1995, between Lihir Gold Limited and the PNG Government (incorporated by reference to Lihir Gold Limited’s Form F-1 filed September 6, 1995). | |
Exhibit 4 (j) * | Share Sale and Purchase Agreementbetween Rio Tinto Western Holdings Limited and Lihir Gold Limited dated October 10, 2005 (incorporated by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2005). | |
Exhibit 4 (k) * | Technical and Procurement Services Agreementbetween Technological Resources Pty Ltd, Rio Tinto Services Limited and Lihir Gold Limited dated October 10, 2005 (incorporated by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2005). | |
Exhibit 4 (l) * | General Termination and Release Deedbetween Lihir Gold Limited, Lihir Management Company Ltd, Rio Tinto Western Holdings Ltd and Rio Tinto plc dated October 10, 2005 (incorporated by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2005). | |
Exhibit 4 (m) * | Compensation Agreement for Land, Crops, Water and Air, dated as of April 26, 1995, between Lihir Management Company, Lihir Mining Area Landowners Association Incorporated, Block Executives (for and on behalf of the Landowners), Catholic Mission (Kavieng Property Trust) and the United Church in PNG and the Solomon Islands (incorporated by reference to Lihir Gold Limited’s Form F-1 filed September 6, 1995). | |
Exhibit 4 (n) * | Putput and Ladolam Relocation Agreementdated as of April 26, 1995, between Lihir Management Company, Lihir Mining Area Landowners Association Incorporated and the persons named in various schedules to the agreement (incorporated by reference to Lihir Gold Limited’s Form F-1 filed September 6, 1995). | |
Exhibit 4 (o) * | Integrated Benefits Package Review Status Statement between Nimamar Rural Local Level Government, Lihir Mining Area Landowners Association, the State of Papua New Guinea, New Ireland Provincial Government and Lihir Gold Limited dated November 9, 2005 (incorporated by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2005). | |
Exhibit 4 (p) * | Amended and Restated Lihirian Equity Settlement Agreementdated January 27, 2006 between Mineral Resources Development Company Limited, MRL Capital Limited (Formerly Mineral Resources Lihir Limited) and the European Investment Bank (incorporated by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2005). | |
Exhibit 4 (q) * | Patent and Know-How License Agreementdated August 5, 1995 between Sherritt Inc and Lihir Management Company Limited for and on behalf of Lihir Gold Limited, together with amendment thereto dated August 18, 1995 (incorporated by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2003). | |
Exhibit 4 (r) * | Number not used | |
Exhibit 4 (s) * | Agreement for the Servicesof Dr Ross Garnaut as Chairman of Lihir Gold Limited, dated April 26, 2004 between Lihir and Maccullochella Pty Ltd. (incorporated by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2003). |
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Exhibit 4 (t) * | Facility Agreementbetween Lihir Australian Holdings Pty Limited and Australia and New Zealand Banking Group Limited dated October 17, 2006. (incorporate by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2006); | |
Exhibit 4 (u) * | Deed of Chargebetween Lihir Australian Holdings Pty Limited and Australia and New Zealand Banking Group Limited dated October 19, 2006. (incorporate by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2006); | |
Exhibit 4 (v) * | Parent Deposit Agreementbetween Lihir Gold Limited and Australia and New Zealand Banking Group Limited dated February 12, 2007. (incorporate by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2006); | |
Exhibit 4 (w) * | Management Services Agreement (PNG)between Lihir Services Australia Pty Limited and Lihir Gold Limited dated May 9, 2006. (incorporate by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2006); | |
Exhibit 4 (x) * | Management Services Agreement (Australia) between Lihir Services Australia Pty Limited and Lihir Gold Limited dated May 9, 2006. (incorporate by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2006); | |
Exhibit 4 (y) * | Merger Implementation Agreementbetween Lihir Gold Limited, Lihir Australian Holdings Pty Limited and Ballarat Goldfields NL dated October 17, 2006. (incorporate by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2006); | |
Exhibit 4 (z) * | Share Subscription Agreementbetween Lihir Australian Holdings Pty Limited and Ballarat Goldfields NL dated October 17, 2006. (incorporate by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2006); | |
Exhibit 4 (aa) * | Deed Pollbetween Lihir Gold Limited the holders of fully paid ordinary shares in Ballarat Goldfields NL dated December 12, 2006. (incorporate by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2006); | |
Exhibit 4 (ab) * | DNX (Australia) Contractbetween Lihir Gold Limited and DNX Australia Pty Ltd dated January 2, 2008. (incorporate by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2007); and | |
Exhibit 4 (ac) * | DNX (PNG) Contractbetween Lihir Gold Limited and DNX Papua New Guinea Ltd dated January 2, 2008. (incorporate by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2007); and | |
Exhibit 4 (ad) * | Revised IBP (Integrated Benefits Package Review Status Statement “LSDP”)between Lihir Gold Limited and the People of Lihir represented by the Mining Area landowners Association Inc and the Nimamer Rural Local-Level Government dated May 2, 2007 (incorporate by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2007); and | |
Exhibit 4 (ae) * | Gekko Contractbetween Ballarat Goldfields NL and Gecko Systems Pty ltd made on March 26, 2007. (incorporate by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2007); and | |
Exhibit 4 (af) * | Spinefex Contractbetween Ballarat Goldfields NL and Spinefex Projects Pty Ltd made on or about May 12, 2005. (incorporate by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2007); and | |
Exhibit 4 (ag) * | Pybar Contractbetween Ballarat Goldfields NL and Pybar Mining Services Pty Ltd made on October 18, 2004. (incorporate by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2007); and | |
Exhibit 4 (ah) * | Washingtons Drilling Contractbetween Lihir Gold Limited and Washingtons Drilling (international) Limited NZ made on August 2, 2007. (incorporate by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2007); and | |
Exhibit 4 (ai) * | Merger Implementation Agreementbetween Lihir Gold Limited, Lihir Australian Holdings Pty Ltd and Equigold NL made on March 20, 2008. (incorporate by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2007); and | |
Exhibit 4 (aj) * | Lihir Executive Share Plan (LESP)for Lihir Gold Limited approved by shareholders on April 24, 2007. (incorporate by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2007); and | |
Exhibit 4 (ak)* | Spinefex Projects Pty Ltd & Gekko Systems Pty Ltd amendment letter dated June 2008 to the Spinefex Contract between Ballarat Goldfields NL and Spinefex Projects Pty Ltd made on or about May 12, 2005. (incorporate by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2008). |
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Exhibit 4 (al)* | AGR Matthey Gold Refining Contractbetween Lihir Gold Limited and AGR Matthey (a partnership between the Western Australian Mint, Australian Gold Alliance Pty Ltd and Johnson Matthey (Aust.) Ltd) made on March 1 2008. (incorporate by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2008). | |
Exhibit (am)* | Metalor Gold Refining Contractbetween Equigold Mines CI SA and Metalor Technologies SA made on August 28, 2008. (incorporate by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2008). | |
Exhibit (an)* | Oxygen Plant Contractbetween Lihir Gold Limited and Air Products PLC made on May 2, 2008. (incorporate by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2008). | |
Exhibit (ao)* | Autoclave Contractbetween Lihir Gold Limited and WE Smith Engineering Pty Ltd made on October 10, 2008. (incorporate by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2008). | |
Exhibit (ap)* | Grinding Mills Agreementbetween Lihir Gold Limited and FLSmidth Minerals Pty Limited made on May 8, 2008. (incorporate by reference to Lihir Gold Limited’s annual report on Form 20-F for the fiscal year ended December 31, 2008). | |
Exhibit (aq) | Interim Power Solution Barge Contractbetween Lihir Gold Limited and Wartsilla Finland OY made on August 26, 2009. | |
Exhibit (ar) | Community compensation packagebetween Lihir Gold Limited and Lihir Mining Area Landowners Association dated August 27, 2009. | |
Exhibit (as) | Grinding and oxidation feed and detailed designbetween Lihir Services Australia Pty Limited ABN 33 116 067 611 and Lycopodium Minerals Qld Pty Ltd ABN: 37 124757 384 on September 11, 2008. | |
Exhibit (at) | Autoclave Internals Contractbetween Lihir Gold Limited and Koch Australia Pty Ltd made on July 27, 2009 | |
Exhibit (au) | MOPU Contract for Low Voltage MCC’s and Switchrooms between Lihir Gold Limited and Plummer Industries Pty Ltd ACN 008 9o7 784 made on June 25, 2009. | |
Exhibit (av) | Management Services Agreement (PNG)between Lihir Services Australia Pty Limited and Lihir Gold Limited dated July 23, 2009. | |
Exhibit (aw) | Management Services Agreement (Australia) between Lihir Services Australia Pty Limited and Lihir Gold Limited dated July 23, 2009. | |
Exhibit 8 | Significant subsidiaries | |
Exhibit 12 | 302 Certification by Chief Executive Officer | |
Exhibit 13 | 906 Certification by Chief Executive Officer | |
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