more gold "borrowed" for lhg

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    Lihir Gold Limited (LHG.AU) report they have secured a US$216 million gold loan to help expand its operations, refinance an existing loan and restructure its gold hedge book. The loan involves Lihir borrowing 480,000 ounces of gold from a syndicate of 12 Australian and International banks.

    Lihir said it would immediately monetise the gold, and based on spot gold prices of US$449 per ounce, it would raise around US$216 million.

    US$100 million of the funds will be flagged for the addition of a flotation circuit at its Lihir mine in PNG, to help boost its annual gold production by 140,000 ounces.

    The balance of the loan will be used to refinance an existing US$50 million revolving credit facility, and restructure the company's hedge book with gold repayments commencing in 2007 until the loan terminates in June 2011.

    CEO Paul Fulton says the development secures the company's financial strength and underpins future growth.

    "It has been carefully designed to meet our dual requirements of securing an attractive funding package for the plant expansion, while also enabling us to restructure our hedging profile."

    "The restructure will result in an improvement in cash flows in future years while maintaining an appropriate level of revenue protection, commensurate with our rising production and decreasing unit costs," he explained.

    Lihir said the interest rate applying to the loan initially will be about 2.1%, and following the restructure Lihir's hedge book will total 1.22 million ounces, keeping the company's total forward gold commitments steady at 1.7 million ounces.

    The term of the loan is until June 2011, with repayments to be in physical gold, commencing in 2007.

    At 1003 AEST, shares in Lihir were already sitting 1.5c higher at $1.545.
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