Production Report - ASX · 2009-01-27 · arising from the increased production at Lihir Island....

LIHIR GOLD LIMITED ARBN 069 803 998 Incorporated in Papua New Guinea

Group Overview

• Recordquarterlygoldproductionof315,000oz, up 26% on the three months to September

• Recordannualgoldproductionof882,000ounces, up26%ontheprioryear

• Recordquarterlyandannualproductionof247,000ouncesand771,000ouncesatLihirIsland

• SuccessfulcommissioningofBonikroinIvoryCoastinOctoberprovidesfurtherdiversificationofproduction, with22%ofgoldproducedinoperationsinAustralia andIvoryCoastduringthequarter

Production Summary (Ozs)

Operation Dec Quarter Sept Quarter FY 2008

LihirIsland,PNG 246,865 216,371 771,455

MtRawdon,Qld 24,971 23,837 53,592

Kirkalocka,WA 0 7,726 9,442

Bonikro,IvoryCoast* 36,735 0 36,735

Ballarat,Vic 6,913 2,176 10,366

Total 315,484 250,110 881,590

*Bonikroproductionreportedona100%basis.

• TotalCashCostsforthegroupreducedto$353/ozforthequarter.Annualcashcostsat$400/oz,whichcontinuestopositionthecompanyatthelowerendoftheglobalgoldproductioncostcurve

• Averagerealizedcashgoldpriceof$792/ozforthequarterand$850/ozfortheyear

• Expansionprojectsanddevelopmentproceeding:

–Ballaratproductiontoincreasein2009,asdevelopmentadvancesandminingmethodsarerefined

–LihirIslandMillionOuncePlantUpgradeproceeding toschedule

Outlook

• Groupproductionin2009isexpectedtobemore than1millionozs

• Totalcashcostsperouncefor2009areexpectedto bebelow$400/oz,assumingstableoilpricesand exchangerates

(Quarterlyreportforthethreemonthsended31December2008.AlldollarfiguresrefertoUSdollars.)28January2009

FourthQuarterProductionReportto31December2008Page1of12

Production ReportFOurth Quarter 2008

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LGLachieveda thirdsuccessiveyear ofrecordannualproductionin2008, at882,000ounces.

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Managing Director’s ReviewLihirGoldLtd(LGL)achievedrecordquarterlygoldproductionof315,000ouncesinthethreemonthstoDecember,enablingthecompanytoreportathirdsuccessiveyearofrecordannualproductionin2008, at882,000ounces.

Thiswasup26%fromthe701,000ouncesproduced in2007.

AhighlightofthefourthquarterwasanoutstandingperformanceatthecornerstoneLihirIslandoperation,whichproduced247,000ouncesofgold,takingfullyearproductiontoarecord771,000ounces.

LihirIslandoutputfortheyearbenefitedfromsignificantlyimprovedprocessplantoperation,followingtheexpansionoftheplantcompletedinthefinalquarterof2007.Thatexpansion,whichincludedtheinstallationofadditionalmillingcapacityandaflotationcircuit,enabledplantthroughputfortheyeartobeincreasedby28%toarecord6.2milliontonnesandcontributedtosignificantincreasesinthegradeoforefedtothepressureoxidationcircuits.

AnothercontributortotherecordproductionfortheyearwastheacquisitionofEquigoldNL,completedinJune,whichbroughttheMtRawdon,BonikroandKirkalockaminesintotheLGLgroup.

Together,theseminescontributed100,000ouncestoLGLproductionsinceJune,includingapproximately62,000ouncesinthefourthquarter,followingthesuccessfulcommissioningoftheBonikroplantinIvoryCoastinOctober.Bonikroproduced37,000ouncesinthequarter,withoregradesandplantthroughputsdevelopingaccordingtoplan.

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FourthQuarterProductionReportto31December2008Page3of12

ExplorationactivityinIvoryCoastalsocontinuedtoyieldencouragingresults,increasingtheprospectofexpandedoperationsintheregion.

TheacquisitionofEquigoldenabledsignificantdiversificationofgroupproduction,withsome22%ofgroupgoldoutputinthefourthquartersourcedfromAustraliaandIvoryCoastoperations.

AtBallarat,processingoflowgradeoresfromearlystopesanddevelopmentzonesenabledproductionfortheyear toexceed10,000ounces,including7000ouncesinthefourthquarter.Valuableexperiencehasbeengainedintheminingoftheseinitialstopes,enablingminingmethodstoberefinedtoallowmoreconsistentdeliveryofhighergradeorestothemill.Thekeyfocusthisyear,followingcompletionoftheGoldenPointshaft,willbetodriveaccessintotheNorthernZoneofthemine.

TheexcellentfourthquarterperformancefortheLGLgroupbuildsontheplatformestablishedthroughtheoperationalimprovementsimplementedatLihirIsland,aswellasthroughtheadditionoftheMtRawdonandIvoryCoastassets.LGLisnowestablishedasaglobalgoldproducer,withimprovedoperationalreliabilityandanexcitinggrowthprofilefromaportfolioofhighqualityassets.

Financial Overview

Operatingmarginsincreasedinthefourthquarterasreductionsinunitcostsoffsetlowergoldprices.Atotalof323,000ouncesofgoldweresoldinthequarter,atanaveragerealisedcashpriceof$792/oz,downfrom$847/ozinthethreemonthstoSeptember.However,grosscashcostsforthequarterfellby23%to$403/oz,enablingcashmarginstoexpandby21%to$387/oz.Totalcashcostsfellto$353/oz,from$412/ozinthepriorquarter,firmlyplacingthegroupamongsttheworld’slowestcostgoldproducers.

ThereductioningroupunitcostswasduetotheinclusionofthelowcostoperationsatMountRawdon(US$332/oz)andatBonikro(US$332/oz),andbecauseofscalebenefitsarisingfromtheincreasedproductionatLihirIsland.ThestrongerUSdollaragainsttheAustraliandollaralsocontributedtoreducedcosts,asdidtheloweroilprice.

Outlook

Fullyearproductionin2009isexpectedtoincreasefrom882,000ouncestomorethan1millionozs,firmlyestablishingLGLamongsttheworld’spremiergoldproducers.ProductionwillincludeanotheryearofrecordoutputfromLihirIsland,atbetween770,000–840,000oz;approximately130,000–160,000ozfromBonikroasitdeliversitsfirstfullyearofproduction;90,000–100,000ozfromMtRawdon,maintainingitstrackrecordofconsistentproduction;and50,000–100,000ozfromBallarat.

Unitcostsareforecasttofalltolessthan$400perouncefortheyear,assumingstabledieselpricesandexchangerates.

IlookforwardtoreportingfurthergoodprogresswhenwereleaseourFullYearFinancialResultsinFebruary.

arthur hOOD

ManagingDirector

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FourthQuarterProductionReportto31December2008Page4of12

Operations

PRODUCTIONSTATISTICS

Dec Sept Change Full Year FullYear Change Quarter Quarter Dec-08 2008 2007 2008 2008 2008 From From Sep-08 2007 (%) (%)

Lihir Island

Mining Materialmoved Kt 13,049 12,035 8% 50,660 58,260 -13%

Highgradeore Kt 1,950 1,950 0% 6,181 6,111 1%

Economicgradeore Kt 1,642 2,451 -33% 8,335 4,381 90%

Processing Oremilled Kt 1,578 1,685 -6% 6,154 4,817 28%

Averagegrade oforemilled gAu/t 5.83 4.90 19% 4.77 5.25 -9%

Recovery % 84.0 82.2 2% 82.5 86.0 -4%

Autoclavefeed Kt 1,257 1,304 -4% 4,803 4,586 5%

Autoclavegrade gAu/t 7.09 6.07 17% 5.86 5.51 6%

Goldpoured Oz 246,865 216,371 14% 771,456 700,211 10%

Mt rawdon*

Mining Materialmoved Kt 2,551 2,741 -7% 10,026 8,932 12%

Ore mined Kt 892 858 4% 3,502 3,340 -3%

Processing Oremilled Kt 831 870 -5% 3,460 3,412 1%

Headgrade gAu/t 1.03 0.92 12% 1.03 1.18 -13%

Recovery % 90.5 89.8 1% 89.8 90.4 -1%

Goldpoured Oz 24,971 23,837 5% 102,415 117,528 -13%

AttributabletoLGL Oz 24,971 23,837 5% 53,592 – –

Bonikro*

Processing Oremilled Kt 550 – – 635 – –

Headgrade gAu/t 2.28 – – 2.19 – –

Recovery % 90 – – 90 – –

Goldpoured Oz 36,735 – – 36,735 – –

Kirkalocka*

Processing Oremilled Kt – 150 – 886 1,294 -32%

Headgrade gAu/t – 1.26 – 1.11 1.02 8%

Recovery % – 89.0 – 91.3 88.9 3%

Goldpoured Oz – 7,726 – 30,474 37,873 -20%

AttributabletoLGL Oz – 7,726 – 9,442 – –

Ballarat U/gdevelopment M 2,237 1,552 44% 6,092 3,817 60%

Goldpoured Oz 6,913 2,176 218% 10,366 1,760 489%

LGL Group Oz 315,484 250,110 26% 881,590 701,971 26%

*Acquisitioneffectivefrom17June2008.Kirkalockaceasedproductionfrom14August.

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Increasedoregradesfromthepit,andcontinuedhighratesofprocessplantthroughputenabledLihirIslandto produce a record 247,000ouncesin thefourthquarter.

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LIHIR ISLANDIncreasedoregradesfromthepit,andcontinuedhighratesofprocessplantthroughputenabledLihirIslandtoproducearecord247,000ouncesinthefourthquarter,takingannualproductionto771,000ounces.

Despitemaintenanceissueswiththeshovelfleet,overallminingperformancecontinuedtobesolid,with13milliontonnesmovedinthequarter,takingannualmaterialmovementstomorethan50milliontonnes.Deliveryoftworeplacementshovels,onelateinthequarterandoneearlyin2009,shouldassistinliftingmaterialmovementsin2009.ThefocusoforeproductionremainedinPhaseEightofthepit,whichcontinuedtodeliverconsistenttonnagesofhighgradematerialtotheprocessplant.Theaveragegradeoforemilledroseto5.83gramspertonne,upfrom4.90gramsintheSeptemberquarter.

Intheprocessplant,thebenefitsoftheplantexpansionundertakenin2007,whichaddedmoremillingandoxygencapacity,aswellasaflotationcircuit,becameclearlyevident.Millthroughputfortheyearincreasedby28%to6.15milliontonnes,andaveragegradetotheautoclavesroseto5.86g/t,duemainlytotheuseoftheflotationcircuit,whichproduced730,000tonnesofconcentrateatagoldgradeof11g/t.Theflotationcircuitaddedwellinexcessof100,000ouncestoproductionin2008.Overallautoclavethroughputsalsoincreasedtoarecord4.8milliontonnes,asoperatingparameterswereextended andtheautoclaveswerepushedharder.

Onaquarterlybasis,throughputswerelimitedbythehighsulphurcontentoftheoresbeingprocessed,butfavourablegoldtosulphurratiosneverthelessenabledrecordgoldproductiontobeachieved.Autoclavefeedforthequarterincludedalmost200,000tonnesofflotationconcentrate,whichcombinedwithhighergradeorefromthepit,liftedautoclavefeedgoldgradeto7.1grams/tonne.

Million Ounce Plant upgrade

TheprojectforexpansionoftheLihirIslandproductioncapacitytomorethan1millionouncesayearproceededinthefourthquarter,andremainsonscheduleandonbudget.Theproject,whichwillinvolveinstallationofadditionalcrushing,milling,oxygen,pressureoxidation,CILandtailingsfacilities,isbudgetedtocostapproximately$700millioninFebruary2008dollars.

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OperationsLIHIR ISLAND continued

Million Ounce Plant upgrade continued

DuringtheDecemberquartersignificantprogresswasachievedinengineeringdesignworkandordersplaced forelectricalequipmentandsitebuildings.Ordersforsomesteelequipmentcomponentshavebeenrescheduledto takeadvantageofanticipatedimprovementsinsteel marketconditions.

Potentialpowergenerationfacilitiesfortheexpandedplanthavealsobeenreviewedfollowingreductionsinoilpricesandasgeothermalpowergenerationremainsconstrainedbysteamsupply.Plansarenowbeingdevelopedfortheacquisitionofbarge-mountedheavyfueloilpoweredgeneratorstomeetthepowerrequirementsfortheexpandedplantuntiladditionalgeothermalsteamsuppliesareestablished.

exploration

ExplorationdrillingcontinuedtotakeplaceinthepreviouslyunexploredareabetweentheKapitandLienetzpits,producingencouragingresultswhichultimatelyshould leadtoanincreaseintheresource.

MTRAWDONGoldproductionwas24,971ouncesforthequarter,takingannualproductionto102,415ounces,ofwhich53,592ounceswereattributabletoLGLfromtheJune17 acquisitiondate.

Productionwaspleasinginthequarter,duetooregradeandgoldrecoveriesbeingslightlyhigherthananticipated.Miningactivitieswerefocusedonexpandingthefloorofthepitandmakingprogressonamajorcutbacktoenableaccesstooresinfutureperiods.Intheprocessplant,throughputswereinlinewithplan,butrecoveriesimprovedduetofavourableorecharacteristicsandmoreefficientplantoperations.

Production at Mt Rawdon waspleasinginthequarter,duetooregradeandgoldrecoveriesbeingslightlyhigherthananticipated.

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FourthQuarterProductionReportto31December2008Page7of12

KIRKALOCKATheKirkalockaplanttreatedlastoreon14Augustbeforeceasingoperations.Theplantwasthenplacedintocareandmaintenanceon12Septemberanddidnotcontributeanyproductioninthefourthquarter.

BONIKROTheBonikrooperationinIvoryCoastcommencedgoldproductioninthequarterandhaditsfirstgoldpouronOctober6.Atotalof37,000ouncesofgoldwereproducedintheperiodtotheendofDecember,whichwasastrongperformanceforthefirstthreemonthsofoperationasthepittookshapeandprocessingcircuitswerefine-tuned.

OreproductionremainedinthesofteroxidezonesclosetothesurfaceduringtheDecemberquarter,andisscheduledtocontinueinoxideoreforthefirsthalfof2009.Hardrockminingwillpredominatefromthemiddleoftheyear.

Oregradewasat2.28g/tforthequarter,whichwaswellaboveplan,althoughplantthroughputswereslightlybelowexpectations,duetocommissioningissueswiththecrusherandelutioncircuits.

NewleadershipwasintroducedintotheBonikrooperationduringthequarter,andthesiteleadershipteamiscurrentlybeingstrengthened.Significanttrainingprogramsarealsobeingimplementedtoliftoperatorskilllevelsinthemineandtheprocessplant.

IVORYCOASTExPLORATIONLGL’sexplorationholdingsinIvoryCoastconsistof9grantedexplorationlicencesand20licencesunderapplication,coveringatotalofalmost20,000squarekilometresofthemostprospectivezonesoftheBirimianGreenstoneBelt.

LGL’sexplorationactivityduringtheDecemberquarter wasfocussedoncontinuedinfilldrillingoftheAkissi-So,Assonji-SoandDougbaflaEastresourcesontheHiré andOumélicences.

Atotalof10,365metresofRCand1,693metresofdiamonddrillingwerecompletedinresourcedefinitionprogrammesatthesethreeprojectareas.Thedrillinghasdeliveredencouragingresultswhichareexpectedtoleadtoresourceupgradesinduecourse.

Afurther10,348metresofRCdrillingwascompletedonfollow-uporfirstpassdrillprogrammesontheChappelle(Hiré),Bobosso(Bassawa)andBlaffoGuetto(Didievi)prospects.AtBlaffoGuetto,drillinghasdefineda1.9kilometrestrikelengthofmineralisationwhichisbeing furtherinvestigated.

Thecompanynowhassixexplorationdrillrigsinoperation inIvoryCoast,withadditionalrigstocommenceinthecurrentquarter.

BALLARATDuringthequarter,Ballaratsetnewrecordsforundergrounddevelopmentof2237metres,materialmovedof141,200tonnesandprocessingof87,500tonnes.Thistranslatedintoproductionof6093ouncesofgoldinthequarterand10,366ouncesfortheyear,whichwaswellbelowexpectations.

Miningofthefirstproductionstopeswascarriedoutinthequarter,andwhilethemainstopingareasdeliveredoreof8-10g/t,inlinewithplan,developmentdriveswhichwereexpectedtoprovidesignificantoreprovedtobeinconsistent.Newminingstrategiesarebeingimplementedtooptimiseoresourcesinthefuture.Delaysinboggingahighgradestopeandadjustmentstotheprocessplantalsoreducedoutputforthequarter.

TheGoldenPointshaftexcavationwascompletedwhenitbrokethroughintotheSuliemandeclinejustpriortoyearend,atadepthof318metresfromthesurface.Thesuccessfulcompletionoftheshafthasprovidedthenecessaryventilationinfrastructuretoallowdevelopmenttoproceedtowardsthehighgradenorthernzoneofthemine.

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FourthQuarterProductionReportto31December2008Page8of12

Financial Data

SALES

Dec Sept Change Full Year FullYear Change Quarter Quarter Dec-08 2008 2007 2008 2008 2008 From From Sept-08 2007 % %

Lihir Island

Goldsold Oz 264,792 200,480 +32% 765,484 707,339 +8%

Price–cash $/oz 813 865 -6% 865 666 +30%

Ballarat

Goldsold Oz 5,149 1,855 +178% 8,396 1,089 +671%

Price–cash $/oz 803 853 -6% 835 734 +14%

Mt rawdon

Goldsold Oz 25,959 24,599 +6% 55,499 – –

Price–cash $/oz 571 672 -15% 651 – –

Bonikro

Goldsold Oz 26,863 – – 26,863 – –

Price–cash $/oz 798 – – 798 – –

Kirkalocka

Goldsold Oz – 10,487 – 12,685 – –

Price–cash $/oz – 911 – 924 – –

total

Goldsold Oz 322,762 237,421 +36% 868,926 708,428 +23%

Price–cash $/oz 792 847 -7% 850 666 +28%

Atotalof322,762ouncesweresoldinthequarter,atanaveragecashpriceof$792/oz.Thisincludedsalesof25,959ouncesofproductionfromMtRawdon,at$791/oz,whichwasreducedbyhedgedeliveriesof15,339ozsinthequarteratanaveragepriceofA$601/oz,toarealizedcashpriceof$571/oz.Theremainderofthehedgebooktotals115,797ozs,whicharetobedeliveredquarterlyatA$600overtheperiodtoSept2010.

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COSTS

Dec Sept Change Full Year FullYear Change Quarter Quarter Dec-08 2008 2007 2008 2008 2008 From From Sept-08 2007 % %

Lihir Island

GrossCashCosts $/oz 423 538 -21% 545 442 +23%

TotalCashCosts $/oz 362 411 -12% 406 299 +36%

Mt rawdon

GrossCashCosts $/oz 363 499 -27% – – –

TotalCashCosts $/oz 332 459 -28% – – –

Bonikro

GrossCashCosts $/oz 300 – – – – –

TotalCashCosts $/oz 307 – – – – –

Kirkalocka

GrossCashCosts $/oz – 292 – – – –

TotalCashCosts $/oz – 292 – – – –

total

GrossCashCosts $/oz 403 527 -23% 525 447 +17%

TotalCashCosts $/oz 353 412 -14% 400 301 +33%

*TheBallaratoperationwasnotincommercialproductioninthequarter,hencecostsincurredwereoffsetagainstrevenuesintheperiodandremaining

costswerecapitalised.

Totalcashcostsforthegroupforthequarterfell14%to $353/oz,andwereat$400/ozfortheyear,confirmingLGL’spositioninthelowestquartileofglobalgoldproducers.

GroupcostsintheDecemberquarterbenefitedfromanumberoffactors:

1)AggregatecostsatLihirIslandreducedbyapproximately10%,drivenbyfallingoilpricesandfavourablecurrencymovements.Theseledtosubstantialfallsinmining,processingandpowergenerationcosts.Coupledwithsignificantlyincreasedproduction,thisledtoasharpfallinunitcosts,withgrosscashcosts/ozfalling21%to$423/oz

andtotalcashcostsdown12%to$362/oz.

2)AtMtRawdon,aggregateexpensesreducedslightlyinAustraliandollarterms,duepartlytoimprovedoilpricesandoperationalefficiencies.ThisthentranslatedintoasignificantreductioninUSdollarcostsduetofavourablecurrencymovements,withtheaverageAustraliandollarexchangeratereducingbyapproximately25%comparedwiththeSeptemberquarter.

3)ThelowcostBonikrooperationwasincludedforthe firsttimeintheDecemberquarter,withtotalcashcosts at$332/oz.

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Capital ExpenditureCapitalexpenditurefor2008totalledapproximately$250million,including$135millionatLihirIsland,$90millionatBallarat,and$25millionatBonikroandMtRawdon.

Inaddition,duringthequarterLGLincreasedownershipoftheBonikroproject(90%from85%)andtheexplorationtenements.Thecostoftheadditionalequitywasapproximately$14milion.

In2009,capitalexpenditureisforecasttototalapproximately$300millionforLihirIsland,theMillionOunceProject,BonikroandMtRawdon.TotalexpenditureatBallarat,includingoperatingandcapitalexpenditure,isexpectedtobeapproximately$100million.

Attheendof2008,thecompanyhadapproximately$64millionincashonhandandnodebtdrawndownonthe$250millionlinesofcreditestablishedwithitsbanks.Itisstillintendedthatthesestandbylinesofcreditwillbeincreasedtoaround$300-$400millionwhencreditmarketconditionsimprovebut,inthemeantime,thecompany’sstrongoperatingcashflowsareexpectedtomeetfundingrequirements,aswasthecaseinthesecondhalfof2008.

Attheendof2008,thecompanyhadapproximately$64millionincashonhandand no debt drawn down onthe$250millionlinesofcreditestablished withitsbanks.

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Further Information

CONTACTFORINVESTORINFORMATION

JoeDowling GMCorporateAffairs tel:+61733183308 Mobile:+61421587755 email:joe.dowling@lglgold.com

JoelForwood ManagerInvestorRelations tel:+61733183331 Mobile:+61438576879 email:joel.forwood@lglgold.com

Web site:www.LGLgold.com

SHAREHOLDERENQUIRIES

Queriesrelatedtoshareregistrymatters shouldbedirectedto:

ComputershareInvestorServices Level19,307QueenStreet Brisbane,Queensland4000Australia tel:1300552270or+61732372100 Fax:+61732372152

Web site:www.computershare.comemail:web.queries@computershare.com.au

ADRDEPOSITARY

TheBankofNewYork DepositaryReceiptsDivison 101BarclaySt,22ndFloor NewYork,NewYork10286USA tel:+12128153700 Fax:+12125713050 Web site:www.adrbny.com

PRINCIPALOFFICE

Level7,PacificPlaceCnrChampionParade&MusgraveStreetPortMoresby,PapuaNewGuinea

CORPORATEOFFICE

Level9,500QueenStreetBrisbane,Queensland4000Australia

STOCKExCHANGELISTINGS

AustralianSecuritiesExchange(LGL)NASDAQNationalMarket(LIHR)PortMoresbyStockExchange(LGL)TorontoStockExchange(LGG)

ISSUEDCAPITAL

Thecurrentordinaryissuedcapitalofthecompanyis:

• 2,187,601,047listedordinaryshares• 585,984listedrestrictedexecutiveshares

DIRECTORS

RossGarnaut–ChairmanArthurHood–ManagingDirectorBruceBrookPeterCassidy MikeEtheridgeWinifredKamitGeoffLoudonAlisterMaitland

GROUPSECRETARY

StuartMacKenzie

FourthQuarterProductionReportto31December2008Page11of12

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Forward Looking StatementsThisdocumentmaycontaincertainforward-lookingstatements,includingbutnotlimitedto(i)estimatedreserves,(ii)anticipatedproductionprofilesandcharacteristics,(iii)expectedcapitalrequirements,(iv)forecastcostprofilesor(iv)plans,strategiesandobjectivesofmanagement.Suchforwardlookingstatementsarenotguaranteesoffutureperformanceandinvolveknownandunknownrisks,uncertaintiesandotherfactors,manyofwhicharebeyondthecontrolofLihirGoldLimited(“LGL”),whichmaycauseactualresultstodiffermateriallyfromthosecontainedinthisannouncement.Importantfactorsthatcouldcauseactualresultstomateriallydifferfromtheforwardlookingstatementsinthispresentationincludebutarenotlimitedtothemarketpriceofgold,anticipatedoregrades,tonnage,recoveryrates,productionandequipmentoperatingcosts,theimpactofforeigncurrencyexchangeratesoncostinputsandtheactivitiesofgovernmentalauthoritiesinPapuaNewGuineaandelsewhere,assetforthmorefullyunderthecaption“RiskFactors”in LGL’smostrecentAnnualReportonForm20-F,whichhasbeenfiledwiththeUSSecuritiesandExchangeCommission(“SEC”).

Goldreserveandresourceestimatesareexpressionsofjudgementbasedonknowledge,experienceandindustrypractice,andmayrequirerevisionbasedonactualproductionexperience.Suchestimatesarenecessarilyimpreciseanddependtosomeextentonstatisticalinferencesandotherassumptions,suchasgoldprices,cut-offgradesandoperatingcosts,whichmayprovetobeinaccurate.LGL’swhollyownedsubsidiaryBallaratGoldfieldsPtyLtddoesnothaveanyorereservesandthelevelofitsestimatedmineralresourcesandexplorationpotentialarenecessarilyimpreciseandmayprovetobeinaccurate.Accordingly,noassurancecanbegiventhattheindicatedamountofgoldwillberecoveredorattheratesestimated.

LGLcanthereforegivenoassurancesthatanyoftheestimates,productionprofiles,capital,costprofilesandplanswillnotmateriallydifferfromthestatementscontainedinthisreleaseandtheirinclusioninthisdocumentshouldnotberegardedasarepresentationbyanypersonthattheywillbeachieved.

TheforegoingmaterialisapresentationofgeneralbackgroundinformationaboutLGL’sactivitiesasofthedateofthepresentation.Itisinformationgiveninasummaryformanddoesnotpurporttobecomplete.Itisnotintendedtoberelieduponasadvicetoinvestorsorpotentialinvestorsanddoesnottakeintoaccounttheinvestmentobjectives,financialsituationorneedsofanyparticularinvestor.Theseshouldbeconsidered,withorwithoutprofessionaladvicewhendecidingifaninvestmentisappropriate.

Someoftheinformationcontainedinthisdocumentincludescertainun-auditednon-GAAP(whereGAAPmeans“generallyacceptedaccountingprinciples”)measures,suchas“cashcosts”.Suchunauditednon-GAAPmeasuresareintendedtoprovideinformationaboutthecashgeneratingcapacityandperformanceofLGL’sminingoperations.Inparticular,cashcostsisameasurethatisusedinthegoldminingindustryandwasdevelopedinconjunctionwithgoldminingcompaniesassociatedwiththeGoldInstituteinanefforttoprovidealevelofcomparability.However,LGL’smeasuresmaynotbecomparabletosimilarlytitledmeasuresofothercompanies.

ManagementusesthismeasureforthesamepurposewhenmonitoringandevaluatingtheperformanceofLGL.ThisinformationdiffersfrommeasuresofperformancedeterminedinaccordancewithGAAPandshouldnotbeconsideredinisolationorasasubstituteformeasuresofperformancedeterminedinaccordancewithGAAP.

Competent Person TheinformationinthisreportthatrelatestoExplorationResults,MineralResourcesorOreReservesatLGLisbasedoninformationcompiledbyRoyKiddandBradCox.MrKiddisamemberoftheAustralianInstituteofGeoscientistsandisafulltimeemployeeofLihirServicesAustraliaPtyLtd(LSA)intheroleofPrincipalGeologist.LSAprovidesservicestoLGLpursuanttoaManagedServicesAgreement.RoyKiddhassufficientexperiencewhichisrelevanttothestyleofmineralisationandthetypeofdepositunderconsiderationandtotheactivitywhichheisundertakingtoqualifyasaCompetentPersonasdefinedinthe2004Editionofthe“AustralasianCodeforReportingofExplorationResults,MineralResourcesandOreReserves”.

RoyKiddconsentstotheinclusioninthereportofthemattersbasedonhisinformationintheformandcontextinwhichitappears.

BradCoxisamemberofTheAustralianInstituteofMiningandMetallurgyandisafulltimeemployeeofBallaratGoldfieldsPtyLtdintheroleofGroupResourceGeologistforthecompany.MrCoxhassufficientexperience,whichisrelevanttothestyleofmineralisationandthetypeofdepositunderconsiderationandtotheactivitywhichheisundertakingtoqualifyasaCompetentPersonasdefinedinthe2004Editionofthe“AustralasianCodeforReportingofExplorationResults,MineralResourcesandOreReserves”.BradCoxconsentstotheinclusioninthereportofthemattersbasedonhisinformationintheformandcontextinwhichitappears.

ThisreportistobereadinaccordancewithandsubjecttoLGL’smostrecentlyfiledupdatedreservesandresourcesstatementavailablefromLGL’swebsitewww.lglgold.comoronthecompanyannouncementspageoftheASxwww.asx.com.au.

Note to u.S. InvestorsCautionaryNotetoU.S.Investors–TheUnitedStatesSecuritiesandExchangeCommissionpermitsU.S.miningcompanies,intheirfilingswiththeSEC,todiscloseonlythosemineraldepositsthatacompanycaneconomicallyandlegallyextractorproduce.LGLusescertaintermsonthiswebsite,suchas“measured,”“indicated,”and“inferred”“resources,”whichtheSECguidelinesstrictlyprohibitU.S.registeredcompaniesfromincludingintheirfilingswiththeSEC.U.S.InvestorsareurgedtoconsidercloselythedisclosureinLGL’smostrecentForm20-F,whichmaybesecuredfromLGL,orfromtheSEC’swebsiteatwww.sec.gov/edgar.shtml.

Note to Canadian InvestorsCanadianInvestors–forfurtherinformationinrelationtothecalculationofreservesandresourceswithrespecttoLGL’sLihiroperation,pleaserefertotheLihirGoldLimited(TSx:LGG)TechnicalReport(NI43-101)dated18September2007availableonSEDAR(www.sedar.com).

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