Takeover talk lifts Perseus

The prospect that a takeover of Perseus was part of Lihir's planning led to Perseus shares rising 17.5c or 19 per cent to $1.09, valuing Perseus at $340 million. A 30 per cent premium in a takeover bid would raise Perseus's value to $444 million.

Lihir has not said it has Perseus in its sights. But it did the next best thing when outlining its west African growth ambitions in an investor briefing last Friday.

Lihir already produces 1-1.2 million ounces a year from its namesake mine on Lihir Island in Papua New Guinea, Mount Rawdon in Queensland and the new Bonikro goldmine in Ivory Coast, West Africa.

Bonikro and Mount Rawdon were acquired last year through the $1 billion takeover of Equigold. Bonikro's planned output is an average of 120,000 ounces of gold a year, with Lihir telling analysts it wanted to grow its west African production base to close to 1 million ounces a year by 2018.

That growth would come from an expansion at Bonikro, opportunities created by the group's aggressive exploration program across west Africa, and from two unidentified merger and acquisition opportunities.

Analysts said Perseus ticked all of Lihir's "strategic assessment criteria" covering the scale of operations, the mine life, location and cost. Lihir said any acquisitions would have to be producers of more than 200,000 ounces of gold a year. Perseus plans to be producing 220,000 ounces a year from Ayanfuri when it is developed in 2011.

Ayanfuri is in Ghana, the most stable of the west African nations, ticking another box. Perseus would deliver Lihir the Tengrela gold project in the Ivory Coast, with its proposed 100,000 ounces a year, delivering the "operational synergies" Lihir wants.

Perseus fits Lihir's suggested cost for its proposed bolt-on acquisitions in west Africa of $US200-$700 million ($234-$818 million).