Countdown to production begins at Lihir

Construction is nearly complete and startup is fast approaching for the Lihir gold mine, on the tiny island of the same name.

It will be the largest mine in the world to open in 1997, and when The Northern Miner visited the busy site, the last phase of construction was under way in preparation for a gold pour, due in May.

Situated 370 km northeast of mainland Papua New Guinea, the deposit was discovered in the early 1980s when Kennecott and its exploration partner, Niugini Mining, undertook a regional reconnaissance program of epithermal systems in the South Pacific.

Nuigini is 51%-owned by Battle Mountain Gold (BMG-N), whereas Kennecott is a wholly owned subsidiary of RTZ-CRA (RTZ-N).

Robert Sinclair, Lihir’s construction manager, recalled how, in 1982, Kennecott geologists landed a helicopter on the beach of Luise Bay and sampled the discovery rock, which was later incorporated into one of the several deposits within the Luise caldera.

Three sizable deposits were subsequently delineated: the Coastal in September 1983, the Lienetz in 1984, and, in the upper reaches of Ladolam Creek, the Minifie deposit in 1986. The first hole drilled into the Minifie encountered mineralization averaging 5.86 grams gold per tonne from the collar to the bottom of the hole at 198 metres. When Kennecott deepened the hole, some time afterwards, the final interval proved to be 272 metres grading 5 grams gold.

Kennecott eventually outlined a resource exceeding 40 million oz. gold. A feasibility study, completed after several amendments in 1994, indicated 104 million tonnes of minable reserves grading 4.4 grams gold (or 14.6 million oz.), based on a cutoff grade of 2 grams. Current reserves are sufficient to supply millfeed for 15 years, without taking into consideration possible expansions.

In October 1995, Lihir Gold (LIHRY-Q) was set up to operate the project, and, in an initial public offering, raised US$450 million. After the offering, the major shareholders in the project — Kennecott, Niugini and Mineral Resources Lihir (owned by the Papua New Guinean government and landowners) — each held about 17%, with Vancouver-based junior Vengold (VEN-T) holding 5.6%.

Development of the US$780-million project has been marked by challenges, many of which are related to its location. For example, the deposit exists in a geothermally active caldera; the caldera is breached to the ocean; and the deposit, which extends several hundred metres in depth, is less than 1 km from the sea. Despite geothermal water temperatures of 50-70C, the rock is expected to cool from exposure to the open air.

Also, as the island measures only 192 sq. km, the amount of space available for mine facilities is limited. In the end, management had to relocate two villages, building new houses for those who were displaced.

Lihir Gold has established joint ventures with local inhabitants who provide raw materials, transportation and labor. Medical facilities, supermarkets and housing are under construction for the 1,200 employees and their families who are expected to occupy the site once mining reaches full scale.

Construction is also proceeding on the processing plant, where sulphide material will be subjected to pressure oxidation before being sent to a carbon-in-leach circuit.

In addition, the company is building a 55-MW power station and wharf facilities.

The feasibility study calls for standard, open-pit mining — first from the easily accessible Coastal deposit, where, in fact, mining has already begun (albeit on a small scale) in preparation for startup of the oxide production circuit in May.

The operation contains 4.7 million tonnes of oxide material, which will be processed prior to startup of the sulphide circuit in November.

Mining will then shift to the Minifie deposit, where management plans to install a fence of dewatering wells to prevent water from entering into the pit from the bay.

In 1997, the mine is expected to produce 175,000 oz., rising to 550,000 oz.

next year.