Overview -

Keywords   Papua New Guinea   gold   open pit

The Lihir Gold operations are located on Niolam Island, in the New Ireland Province of Papua New Guinea, about 700 km northeast of Port Moresby. As Niolam Island is the principal island of the Lihir Group, it is generally referred to as Lihir Island. Access to the island is by small planes and by boat.

Gold was discovered in 1982 and began operation in 1997. The gold deposit consists of two orebodies, Minifie and Lienetz, located in an inactive volcanic crater known as the Luise Caldera on the east coast of Lihir Island.

The mine produces over 600,000 ounces of gold per year. It is projected to operate until 2020 followed by 28 years processing stockpiled lower grade ore.

Ownership Summary  Name: Lihir Gold Ltd.    Interest: 100%    Note: public Reference: 31 Dec 2006

Lihir consists of an open pit, crusher, SAG and ball mill circuit, flotation circuit, pressure oxidation and carbon-in-leach processing facilities, and electrowinning and smelting facilities to produce gold doré.

Lihir Gold Ltd. operates the mine. There are 1100 employees at the mine. Citizens of Lihir account for 37% of employees, with 52% from within Papua New Guinea.

Location - Lihir Island is a volcanic sea mount that rises steeply from sea level to approximately 600 metres above sea level. Flat land comprises only 15% of the landmass. At its widest points, the island measures 22 kilometres from north to south and 14.5 kilometres from east to west.

The island is made up of five volcanic units, of which three are recognizable volcanic craters (containing the Luise Caldera). The Luise Caldera is the youngest volcano at less than one million years. It is open to the sea on its northeast side, forming the Luise Harbour. Remnant volcanic activity is evidenced by fumaroles and hot springs.

Lihir Island is situated within an area of intensive earthquake activity (the Pacific Rim of Fire), and is surrounded by narrow, fringing coral reef, less than 100m wide, beyond which steep submarine slopes descend to a depth of 2,000m, between five and fifteen km offshore.

The climate is tropical, with temperatures varying between 20°C and 30°C (68°F and 86°F). The island averages 12 feet (3.7 meters) of rain a year.

Most of the island is covered by dense blanket of rainforests and an exotic tangle of vines, creepers, flowers, plants and trees. Orchids blaze from the green ground of rainforest canopy.

There are 13,000 people living in the Lihir group of islands. Boats and a ferry service are the major access to the island. Traditional boats are still used as a form of transport. Small commuter planes land on the island airstrip.

Location Summary Nearest Landmark: PORT MORESBY Distance from Landmark: 700km Direction from Landmark: NE Latitude: 3 deg 5 min S Longitude: 152 deg 35 min E Satellite Image: <click to view>

Marine monitoring is routinely carried out at more than 50 locations around Lihir Island. Studies continue to show that there is no identifiable difference in the number or types of fish surrounding Lihir since gold operations started. There is ongoing monitoring of flora and fauna.

Property - Lihir island is made up of 5 Miocene-Pleistocene volcanic units, of which 3 are recognizable volcanic craters (containing the Luise Caldera) and 2 are sequences of mafic volcanics that predate the three volcanoes.

Remnant geothermal activity is present in the Luise caldera, which has hot springs and fumeroles. The orebody is contained in a hydrothermally-altered porphyry gold system with the gold hosted in volcanics, intrusives and breccias within the caldera. The majority of the gold is contained in sulphides. Gold occurs primarily as sub-micron sized particles within sulfide minerals. The main sulfide mineral is pyrite, with the average sulfide content of the reserves at 6.15% S.

Reserves Summary Name: Lihir Commodity: gold Class: Proven & Probable Tonnage: 188 Mt Grade: 3.48 g/t Note: Total reserve from Minifie, Lienetz and Kapit deposits and stockpiled ore. Reference: 31 Dec 04

Currently defined gold mineralisation occurs near the centre of the caldera. Exploration since 1983 has defined several adjacent and partly overlapping deposits; Lienetz, Minifie, Coastal and Kapit with adjacent satellite deposits of Borefields and Camp. The bulk of the known mineralisation is in Minifie and Lienetz. All of the deposits except Minifie are connected by areas of low-grade mineralisation.

Deposit Summary Deposit Type: Epithermal Sulphide Primary Commodity: gold

The caldera measures approximately 5.5 x 3.5 km. Currently defined gold mineralization occurs within an area of 2.0 x 1.5 km near the center of the caldera. The size of the deposits are: Minifie (the largest at 1.0 x 0.6 km), Lienetz (800 x 400 m), Coustal and Kapit (800 x 500 m).

As of December 2004, proven and probable reserves were 188 Mt grading 3.48g/t gold, giving a total gold content of 21Moz. The project's total resource is 421.8Mt grading 2.95g/t gold, representing 40 Moz of contained gold.

Operation - The Minifie and Lienetz orebodies are mined by conventional open pit methods to 185 m below sea level. Minifie was mined first. The ultimate pit, eventually to remove both orebodies, will extend to within 100 m of the coast and its base will be 200 m below sea level. The overall planned pit area is approximately 2 km².

Minifie and Lienetz are adjacent and overlap. Higher grade ore is fed directly for processing and lower grade ore is being stockpiled. This will be processed during the following 28 years, giving a total projected life of 50 years.

In 2004, Lihir treated 4.1Mt of ore at an average grade of 5.11g/t gold, producing 599,386oz of gold. The target for 2005 is over 700,000oz, a rate that should be maintained for the next 14 years, as the higher-grade Lienetz orebody is brought into production. During 2004, the company achieved record results in terms of its annual mill throughput, autoclave operating time and autoclave throughput. Total production costs were A$357/oz.

Mining equipment additions have included an additional two O&K RH-200 face shovels, two Driltech D40KS rotary drills and nine Caterpillar 785B haul trucks, bringing the total to 21. The mine acquired additional loading and hauling equipment during 2004 for waste-stripping. Key Open pit Equipment is Caterpillar 5130 hydraulic excavators Caterpillar 785B haul trucks.

Mine Production Summary  Mine - Lihir    Capacity: 60 Mt/y    Rate: 46.8 Mt/y    Note: Mine rate includes movement of waste material. Reference: 31 Dec 06

A major aspect of mining at Lihir is the hydrological and geothermal conditions. Hydrothermal activity and a high water table create a major water problem and the water table is lowered by borehole pumping. The estimated annual cost for well installation and operations range from $2 million in the early years to $5 million as greater drawdown is required for deeper mining. Estimates recognize the considerable uncertainties involved in predicting dewatering requirements and the amount of geothermal control needed.

A 30MW geothermal power plant is operating and a further 20MW plant is being built. The company continues to evaluate potential geothermal steam resources as a means of reducing its dependence on imported fuel.

Process - The Lihir processing facility at Putput treats sulphide and oxide ore. The process plant is capable of treating over 4 million tonnes of ore per year, recovering over 91 per cent of contained gold.

The installation of a pebble crusher has raised grinding circuit capacity. The crushing and conveying plant receives run-of-mine ore for crushing and sizing before stockpiling. The ore reclaim and grinding circuit feeds stockpiled ore into a SAG mill for wet grinding. A pre-oxidation circuit removes carbonates from thickened slurry in three tanks before ore is pumped to the autoclaves for pressure oxidation. Ore is cooled from 200°C and depressurised in the flash and quench systems.

Oxidised ore thickened to prepare it for the carbon-in-leach (CIL) process. Gold is extracted by electrowinning, dried and smelted into doré ingots. Waste slurry is thickened prior to cyanide detoxification and discharged through a submerged tailings line.

Major process equipment includes Warman centrifugal pumps, stacking conveyor system from Laurel Engineering, and the oxygen plant from Praxair. Capacity will be increased by upgrading the flotation circuit by 2007.

There are three large autoclaves, each measuring 4.5 m in diameter and 31.25 m in length. Each autoclave is lead-lined carbon steel and weighs more than 350 tonnes.

Processing Summary  Facility - Lihir    Capacity: 6.0 Mt/y    Rate: 4.3 Mt/y  Product    Commodity: gold    Quantity: 651,000 oz    Cost: 283 US$/oz Reference: 31 Dec 06

The vessels are also lined with two layers of acid-resistant brick, which protects the lead lining from both abrasion and high temperature. Here sulphide ore minerals are oxidised by high pressure and high temperature.

Marine facilities are installed to service oil tankers, general cargo ships, passenger ferries and work boats. The wharf at Putput can berth general cargo ships of up to 10 000 DWT, and oil tankers of up to 12 000 DWT, with drafts to 11.5 m.

Waste rock is loaded onto bottom-opening barges for ocean disposal. Technical, social, environmental, and economic assessments support ocean disposal as the best waste rock disposal option for the mine.

Environment and Community - Lihir works closely with the Papua New Guinea government to implement its environmental monitoring and management plan. This now incorporates a mine closure plan and acid rock drainage prevention systems. In 2004 Lihir was the first mine in Papua New Guinea to achieve ISO 14001 accreditation for its environmental management system.

An environmental laboratory has been built and field and laboratory equipment provided for air and water sampling, steam gauging, sediment sampling, fish sampling, weather monitoring, oceanographic monitoring and industrial hygiene measurements.

Before the mine opened the island was relatively isolated from the rest of Papua New Guinea. Infrastructure and public services to Lihir and the neighboring islands were limited. The only source of education was provided by missionaries. Only a few roads were constructed around the island and a small airstrip connected Lihir to the mainland. Now the island has a major airport and a ring road connecting villages on the island. There is a town with school and health care services. The company has built village infrastructure including housing, water and power supplies, and meeting halls and churches.