Lihir Gold on track to meet guidance

Lihir Gold Ltd says it is on track to meet full year production guidance after achieving quarterly production targets and boosting reserves by 36 per cent at its flagship Lihir Island operation in Papua New Guinea.

The gold miner also says it will begin paying dividends to shareholders due to its strong financial position and positive outlook.

"The improved reliability of production at Lihir Island, coupled with diversified income streams created by operating mines in three countries and the strengthening of the company's balance sheet over recent years have provided the basis for the decision," the company said in a statement on Thursday.

An interim dividend of 1.5 US cents per share will be paid on November 30.

Lihir produced 233,346 ounces of gold in its third quarter to September 30, taking year-to-date production to 845,000 ounces and leaving it on track to meet guidance of one to 1.2 million ounces.

At Lihir, output was 169,000 ounces, lower then the prior quarter because of routine maintenance but above guidance.

The million ounce plant upgrade remains on schedule and on budget, Lihir said.

Lihir Island reserves increased by 7.5 million ounces to 28.8 million ounces.

In Cote d'Ivoire, production on the Bonikro operation was 32,000 ounces for the quarter, which was down on the prior quarter due to the transitioning of mining and processing from oxide ore to fresh, hard rock.

In Australia, the Mount Rawdon operation in Queensland lifted output to 30,400 ounces in the quarter, maintaining its consistent track record.

At Ballarat, Victoria, the process for the sale of the operation proceeded, with a number of attractive indicative offers received to date.

The sale should be completed early in the new year, the company said.

Lihir says it sold 221,000 ounces of gold in the quarter, at an average realised cash price of $US955 an ounce, up from $US900 in the three months to June.

For the nine months to the end of September, 834,000 ounces were sold at an average price of $US906 oz.

Total cash costs per ounce are forecast to remain below $US400 per ounce for the year, excluding the Ballarat mine.

Lihir shares closed down eight cents at $2.98 on Thursday.