The Site

Niolam Island is the principal island of the Lihir Group in the New Ireland Province of Papua New Guinea. Although actually named 'Niolam', it is referred to generally as 'Lihir Island', and is thus called throughout this text. It lies at latitude 3^o08' south and longitude 152^o38' east. Other islands in the Lihir Group include Masahet, Sinambiet, Mahur and Mali. The nearest towns are Namatanai and Kavieng on New Ireland (60 km to south-south-west and 210 km to west-north-west, respectively) and Rabaul, on New Britain, 104 km to south-south-west.

A coronous PNG Class X airstrip lies 4.5 km north-west of the townsite. The island is about 22 km from north to south and 14.5 km from east to west at its widest points. It reaches a height above sea level of 700m rising from a sea floor about 1600 m deep. The coastline is almost entirely a narrow belt of raised shelf coral limestone which is highly developed along the eastern and northern sides where it forms a nearly continuous platform, up to 100 m high, with prominent cliffs and headlands broken by deep gullies.

Lihir Island has a tropical maritime climate. The recorded maximum temperature is +34.7^oC and the recorded minimum is +19.3^oC. Rainfall averages 3300 mm/y with intense falls during short periods. It is unaffected by tropical cyclones which occur mainly in a belt from latitudes 10o south to 20o south. The prevailing winds at Ladolam are south-easterly and north-westerly.

History

There is no early history of gold discovery and mining on Lihir Island, the first activity in the region being minor alluvial gold production during the 1930s near Tugi Tugi in the Tabar islands, 80 km to the north-west.

Although a few companies visited the island in the 1960s and 1970s in search of porphyry copper deposits, the first systematic work was a series of geological investigations throughout the Tabar to Feni chain by the Bureau of Mineral Resources (BMR) and the Geological Survey of Papua New Guinea between 1969 and 1974. The results of this work were published in 1982 as a BMR Report.

Hydrothermal alteration and thermal activity on Lihir Island described in that report suggested the possibility of an environment favourable to epithermal gold mineralisation, and the island was visited by Macnab and Rehder in 1982 on behalf of Kennecott Explorations (Australia) and its joint venture partner Niugini Mining Limited. Macnab and Rehder sampled pyritised and potassic altered outcrops and boulders along the beach at Luise Harbour which averaged 1.79 g/t of gold.

Drilling commenced in the Coastal area in late 1983, and continued with bulldozer benching in both the Coastal and Lienetz areas throughout 1984. By the end of the year a large gold resource had been established and the exploration programme was expanded to delineate oxide reserves.

Areas of anomalous vegetation in upper Ladolam Creek were sampled by soil geochemistry and hand auguring in late 1985, and by reverse circulation drilling in 1986. Encouraging results were obtained and, at the end of 1986, one hole intersected gold values averaging 6 g/t between the surface and bottom of the hole at 197 m. The hole was deepened to 285 m in 1987 to intersect a further 42 m of mineralisation averaging 3.92 g/t between 230 m and 272 m. The prospect was named 'Minifie' area, and became the focus of diamond drilling throughout 1987. By the middle of the year it was clear that a new, near-to-surface, sulphide resource had been discovered in the Minifie area, in addition to the known mineralisation below Lienetz Hill.

Exploration drilling continued until 1992, together with an extensive programme of metallurgical test work, geotechnical, geothermal, groundwater, environmental and feasibility engineering studies. Mine planning led to the definition of a recoverable sulphide reserve within the planned Minifie and Lienetz open pit of 104 Mt of ore at an average grade of 4.37 g/t of gold, based on a break-even cut-off grade of 2 g/t.

Construction of relocation housing commenced in April 1995 for those villagers occupying the area designated for the process plant site. Following successful completion of the initial public offering, site clearance commenced in November 1995 with initial gold production from sulphide ore scheduled for October 1997. In early 1996 a decision was taken to commence operations on oxide ore from the Lienetz area and the scheduled production date was brought forward to May 1997 for oxide ore, and October 1997 for sulphide ore. Full production and financial completion tests were successfully achieved by July 1998.

A 15 tph Praxair oxygen plant was added in mid 1999 and a 120tph Flotation plant in December 1999.

The mining contract was curtailed and Owner Mining commenced on 17 April 2000.