Equigold Ivorian Mine Starts, Aims to Double Output

Lihir's Equigold poured its first gold in Ivory Coast this month, starting production that will begin at 120,000 ounces a year but may expand to 200,000 ounces as new deposits are confirmed, the miner said on Tuesday.

The Bonikro mine, Ivory Coast's newest and biggest gold mine, has estimated reserves of 1 million ounces but new finds at nearby mines could double output and extend the life of the operation to 12 years, said managing director Hichem Tabka.

Equigold, which was bought this year by Lihir Gold Ltd, also has operations in Papua New Guinea and Australia.

The gold price has fluctuated during the financial crisis, trading at $745 an ounce on Tuesday morning, up from a 13-month low of $680.80 touched last Friday but far off the $1,030.80 record high it hit in March.

"The first gold was poured on the evening of 5 October," Tabka told Reuters. "We are looking at 120,000 ounces of gold per year, which is a relatively small operation but three times bigger than any existing operation in Ivory Coast."

Tabka said the ore at the mine, 250km (155 miles) northwest of Abidjan, the commercial capital, was "relatively clean" with an anticipated recovery rate of 94%.

The firm has 11 exploration licences covering 8,000km 2 (3,000mi 2 ) and has applied for another eight licences, covering 14,000km 2 , he said.

"What is anticipated at the moment is that we could double the existing reserves of 1 million ounces. We will initiate an expansion programme very soon to increase production to up to 200,000 ounces per year," he told Reuters in an interview.

Better known as the world's top cocoa grower, Ivory Coast is West Africa's latest emerging gold producer and, with new mines coming on line, sees production hitting 15 tons per year by 2010, up from 8.5 tons in 2008 and 1.5 tons in 2007.

"There is big potential across the country. The company is ready to multiply by three its exploration budget for 2009 to over $20m," Tabka said.

So far, he added, $85m had been invested in the Bonikro project and the financial crisis should not hit operations as they had been financed by a shareholder loan and the feasibility study had used $600 per ounce as a basic price.

Delayed polls, instability

The company's licences are both in the government-controlled south and rebel-controlled north of Ivory Coast, which has been split since a 2002-2003 war that led to protracted peace talks and is supposed to culminate in elections on 30 November.

The polls are widely expected to be delayed as the identification of voters and disarmament of combatants is long behind schedule and mired in disputes.

While political instability has disrupted plans, the greatest threat now is from armed banditry around the mine site.

"It is always a concern. Every time there has been (political) turmoil in the country, it has delayed the project by six months to a year," Tabka said.

"But it is more the insecurity associated with the situation than the government, which has been very supportive of our approach in the country," he added.

By David Lewis, Reuters.