Discovery and exploration at Lihir Island

When a geological survey of Papua New Guinea was conducted by the Bureau of Mineral Resources (BMR) between 1969 and 1974, the results fuelled great expectations of finding gold on Lihir Island. The report identified hydrothermal alteration and thermal activity on the Island, suggesting the possibility of an environment favourable to epithermal gold mineralisation.

Buoyed by this theoretical projection, Kennecott Explorations Australia (KEA) and its joint venture partner, Niugini Mining Limited, sent Macnab and Rehder to visit the island in 1982 to carry out sampling work. The results were promising. Rock chip samples off the base of a rock called Alaia, along the beach at Luise Harbour, yielded samples which averaged 1.79 grams per tonne of gold.

On the basis of these samples an application was made for an Exploration Licence. Granted in 1982, it led to the start of a major drilling campaign that continued from 1983 until 1992.

Drilling commenced in the Coastal area in late 1983, and continued into the adjacent Lienetz area throughout 1984. By the end of that year, the presence of a large gold resource had been confirmed.

Between 1985 and 1987 areas of anomalous soils in upper Ladolam Creek were sampled for gold, revealing the huge potential of the deposit. Drilling intersected gold values averaging 6 grams per tonne between the surface and 197 metres. When the hole was deepened, a further 42 metres of gold mineralisation, averaging 3.92 grams per tonne, was intersected between 230 metres and 272 metres. This prospect was named the Minifie area, and became the focus of diamond drilling throughout 1987. Further exploration continued, and ultimately defined several other adjacent and partly overlapping ore deposits, referred to as the Camp and Kapit areas.

In 1988 the RTZ Corporation (now Rio Tinto) acquired Kennecott from BP Minerals America, thereby taking over as the Lihir Joint Venture partner with Niugini Mining Limited. The Joint Venture conducted almost nine years of test drilling, as well as detailed metallurgical test work and geotechnical, geothermal, groundwater, environmental and engineering studies, which culminated in the Feasibility Report for the Lihir Project.

Following the submission of the report to the Papua New Guinea Government and extensive community consultation, the Joint Venture was issued with a Special Mining Lease on 17 March 1995. The lease is valid for the term of the company's Mining Development Contract - a period of 40 years.

Lihir Gold Limited (LGL) was incorporated in Papua New Guinea in June 1995, with a listing of the company's shares undertaken in October of the same year. The process plant completed construction in 1997 and the operation began producing gold. Shortly afterwards site clearance began and, in accordance with the Integrated Benefits Package, villagers occupying the area designated for the process plant site were relocated and new houses built for them.

Since then, the amount of gold produced annually has increased from 232,697 ounces to over 700,000 ounces.