Gold producer Lihir Gold Ltd (ASX: LGL) said today its three months to June production is in line with guidance.

The company recorded total group output of 243,925 ounces from its mining operations, a 6 per cent increase on the March quarter.

Production was in line with the plan for the year, and leaves Lihir on track to produce between 1.0 (million) and 1.1 million ounces of gold in 2010, according to the gold miner.

"Total cash costs for the year are forecast to be below $450/oz, with total cash costs at Lihir Island to be below $420/oz. Total cash costs at Mt Rawdon and at Bonikro are forecast to be between $550 to $575/oz," the company told the stock exchange on Wednesday.

Chief executive Graeme Hunt said Lihir's June production was "robust" and that the company accomplished good progress in its expansion projects at Lihir Island in Papua New Guinea, and in Cote d'Ivoire.

Lihir said that Newcrest's $10.53 billion takeover offer was proceeding "as announced", with the scheme booklet having been issued on July 22 and the scheme meeting scheduled on August 23.

"In the coming months, LGL is well placed to complete the merger with Newcrest, creating a strong and vibrant gold major with a first class portfolio of producing mines and an exciting growth profile," Mr Hunt said in a statement.

Lihir declared it had entered into a merger implementation agreement with Newcrest on May 4. Under the plan, Lihir shareholders will be given one Newcrest share for every 8.43 LGL shares they own and an additional 22.5 cents per Lihir share.

Mr Hunt said "The terms of the proposed merger are attractive for LGL shareholders and the combination with Newcrest will create a major, global gold company with a diversified portfolio of high quality operations."