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Lihir Gold Limited issued thefollowing news release in Australia earlier today. All dollar amounts are in Australian currency. Rio Tinto held a 16.3% interest in LihirGold prior to this announcement.
Lihir Gold Limited (Lihir) announcesthat it is raising A$210 million (approximately equivalent to $US150 millionand PGK525 million) in new capital by way of an underwritten institutionalplacement to Australian and offshore investors (the Placement). The Companyalso intends to implement a Share Purchase Plan (SPP) for existing shareholdersin Australia, New Zealand and Papua New Guinea which would raise a further$US10-20 million assuming usual participation rates.
The Placement will be conducted by wayof an overnight underwritten book build and will be managed and underwritten byGoldman Sachs JBWere. The Company proposes to place 140 million fully paidordinary shares, or approximately 12.3% of the Companys issued capital. The underwritten price for the Placement isA$1.50 per share. Details of the final Placement price and funds raised will beannounced tomorrow. Shares issuedpursuant to the Placement will rank equally with the Companys existingordinary shares.
The Placement will strengthen Lihirsfinancial position, enabling implementation of efficiency and cost reductioninitiatives and facilitating access to accelerated growth opportunities.
The funds raised from the Placementand the SPP are intended for:
n Geothermal power plant - Lihirs Board hasrecently committed to the construction of a new 30MW geothermal powerplant. The power plant is estimated tocost US$45 - US$50 million and expected to be operational in the first quarterof 2005. Once operational, the Company anticipates the plant will deliversubstantial cost savings of around US$10 million per annum on a cash operatingbasis, based on current fuel prices. Inaddition, Lihir intends to pursue the potential for further capacity, possibly upto an additional 20MW above the 30MW already approved.
n Retirement of high cost debt The Companyproposes to retire relatively expensive debt facilities of approximatelyUS$15m.
n Acceleration of Kapit resource development Subjectto successful conversion of resource to reserve at year-end, the Companyproposes to accelerate the intended development of the Kapit resource,including the geothermal drilling programme.This programme would be expected to cost up to US$25m and would allowrefinement of the long-term mining plan, potentially enabling earlier access tothe Kapit resource.
n Efficiency initiatives A range of programmesare being evaluated. These includeplant reliability and throughput options such as improved carbon regenerationcapability, increased ore feed washing capacity, more efficient mine wastehandling and potentially higher mining rate capability.
Following this equity raising, theCompany intends to review its debt structure.
The Board is confident that the aboveinitiatives will deliver increased value to shareholders.
Rio Tinto
Rio Tinto has informed the Companythat it does not intend to participate in this Placement. Rio Tinto has advisedLihir that its present intention is tocontinue to hold its existing shares in the Company.
The Lihir Board advises that Rio Tintowill continue in its management role of the Lihir Project under the existingmanagement contract.
Lihirian Trust
The Company intends to allow a periodof 30 days from the date of the Placement for the Lihirian community (throughthe Lihirian Equity Trust) to subscribe for an additional 10.2 million sharesat the same issue price as the final issue price of the Placement. This offer is non-renounceable and will notbe underwritten.
The Board notes that the Lihirianpeoples interests have been materially reduced since the Companys inceptionin 1995. Most recently, and asdiscussed by the Company at its Annual General Meeting held in April, theLihirian community has agreed to sell down its equity in Lihir to 5.2% toservice the major part of its remaining debt to the European InvestmentBank. As a result of the administrativeprocesses and approvals required, this sell down has not yet occurred.
Lihirs Board continues to recognisethe importance of the local Lihirian community holding equity in the Companyand considers it appropriate to assist the Lihirian community to maintain theirequity interest in the Company at 5.2%.It is likely that their interest will be diluted below this as a resultof the agreed sell down process and the current capital raising. In this event, itis the Boards intention to issue, for nil consideration, such number of sharesto the Lihirian community (through the Lihirian Equity Trust) as is necessaryto maintain their interest at 5.2%. At current exchange rates and recent shareprice range, this potential issue is unlikely to exceed 5 - 6 million shares,but the final issue to the Lihirian community will be determined with referenceto the number of shares issued under the SPP.
Share Purchase Plan
Lihir intends to extend an offer toits existing shareholder base in Australia, Papua New Guinea and New Zealand tosubscribe for shares under a Share Purchase Plan. The Company is applying for a waiver from the ASX to exclude theshares issued under the SPP from the restriction contained in the ASX ListingRules on issuing more than 15% of the Companys issued capital in a 12 monthperiod. The Company will also require awaiver of prospectus provisions from the Securities Commission of Papua NewGuinea. Subject to the grant of these waivers, the SPP would enable eligibleshareholders to subscribe for parcels of shares worth approximately A$2,000,A$3,000 or A$5,000 (or the equivalent in Papua New Guinea and New Zealand). Theoffer price will be equal to the Placement price. The record date for the SPPwill be announced shortly and details of the SPP are expected to be mailed toeligible shareholders in approximately two weeks time. The SPP will not be underwritten and will benon-renounceable. Any shares issued under the SPP will rank equally with theCompany's existing ordinary shares.
Trading Halt
The Company has requested that tradinghalts be placed on its shares on ASX and POMSoX and its American DepositoryReceipts (ADRs) on NASDAQ until the Placement has been completed andallocations advised to successful subscribers.It is anticipated that the trading halts would be lifted by 12.00pm AEDTtomorrow, Thursday 13 November.
This announcement has been prepared for use in Australia andmay not be released or distributed in the United States. It does not constitute an offer of anysecurities for sale in Australia, the United States, Papua New Guinea or anyother jurisdiction. Securities may not be offered or sold in the United Statesin the absence of registration under the US Securities Act of 1933 or anexemption from registration.
For further information, please contact:
LONDON |
AUSTRALIA |
Media RelationsLisa Cullimore Office: +44 (0) 20 7753 2305 Mobile: +44 (0) 7730 418 385 |
Media RelationsIan Head Office: +61 (0) 3 9283 3620 Mobile: +61 (0) 408 360 101 |
Investor RelationsPeter Cunningham Office: +44 (0) 20 7753 2401 Mobile: +44 (0) 7711 596 570 Richard Brimelow Office: +44 (0) 20 7753 2326 Mobile: +44 (0) 7753 783 825
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Investor RelationsDave Skinner Office: +61 (0) 3 9283 3628 Mobile: +61 (0) 408 335 309 Daphne Morros Office: +61 (0) 3 9283 3639 Mobile: +61 (0) 408 360 764 |
Website: http://www.riotinto.com/