PNG’S LIHIR GOLD ADDS 4.4 MILLION OUNCES TO RESERVES - January 25, 2007

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PNG’S LIHIR GOLD ADDS 4.4 MILLION OUNCES TO RESERVES

PORT MORESBY, Papua New Guinea (PNG Post-Courier, January 25) – Papua New Guinea miner Lihir Gold Limited has once again proved itself as a world-class mine by adding 4.4 million ounces of gold to its reserves.

The company now has 23.6 million ounces of gold, making their Lihir deposit as one of the largest in the world.

The announcement yesterday pushed up Lihir shares on the Australian Stock Exchange to 13 cents, or 4.5 per cent, to $A3.03 (PGK7.51 per share) [US$2.69].

Chief executive officer Arthur Hood said the increase represented a 23 per cent increase from the December 2004 reserve after depletion for the 2005 and 2006 productions. He added the increase was a net result of a rise in long term gold price assumption from $US380 (K1187.50) per ounce to $US475 (K1484.80) per ounce, a reduction in reserve cut-off rates, adjustment to cost assumptions with increases in mining and processing costs partially by saving from additional geothermal power generation capacity and an enhanced pit shell design incorporating the additional ore reserves and an optimised mining schedule. Mr. Hood said the revised estimate assumed the successful commissioning of the flotation circuit now under construction but did not incorporate further increases in production due to the proposed expansion of the processing plant capacity beyond one million ounces per year.

The estimate includes 3.8 million ounces in proven reserves in stockpile at an average grade of 2.57 grams per ton.

"This is an excellent outcome for the company reconfirming the quality of the Lihir ore body and leading directly to an increase in the value of the project," Mr. Hood said. "Lihir remains one of the great gold mines in the world with a long mine life ahead of it and significant potential for further growth." The company’s last reserve statement in December 2004 estimated reserves at 21 million ounces. Since then, mining activities have depleted the estimated total reserves by 1.8 million ounces to 19.2 million ounces. The depletion included 1.25 million ounces of recovered gold produced during 2005 and 2006, as well those lost during processing.

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