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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 20-F
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
 OR
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2009.
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 OR
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number 000-26860
 Lihir Gold Limited
  th
 Company contact person:
 Mr Stuart MacKenzie
+617 3318 3300Stuart.MacKenzie@LGLgold.com
Level 9, 500 Queen Street,
Brisbane,
Queensland, Australia 4000
 
   
  Lihir Gold Limited Ordinary Shares of no par value
    
    NASDAQ Global Market*American Depositary Shares, each of which represents
ten Lihir Gold Limited
    
    NASDAQ Global MarketOrdinary Shares and which are
evidenced by American Depositary Receipts
 *
    
    Not for trading but only in connection with the registration of the American Depositary Shares
representing such shares, pursuant to the requirements of the Securities and Exchange Commission. 
 
 
  Lihir Gold Limited Ordinary Shares
of no par value:
    
    2,368,729,935 (including 342,044
Restricted Executive Shares)
 
  þ o
  o þ
   þ o
  o þ
  þ Large accelerated filer
    
    o Accelerated filer
    
    o Non-accelerated filer
  U.S. GAAP o
    
    International Financial Reporting Standards as
issued by the þ Other o International Accounting Standards
Board
 o o
 o þ




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Table of Contents
 Certain Definitions
    
    
    4Forward Looking Statement
    
    
    6PART I
    
    
    7Item 1. Identity of Directors, Senior Management, and Advisors
    
    
    7Item 2. Offer Statistics and Expected Timetable
    
    
    8Item 3. Key Information
    
    
    9A. Selected Financial Data
    
    
    9B. Capitalisation and Indebtedness
    
    
    11C. Reasons for the Offer and Use of Proceeds
    
    
    11D. Risk Factors
    
    
    11Item 4. Information on the Company
    
    
    22A. History and Development of the Company
    
    
    22B. Business Overview
    
    
    26C. Organisational Structure
    
    
    65D. Property, Plant and Equipment
    
    
    66Item 4A. Unresolved Staff Comments
    
    
    67Item 5. Operating and Financial Review and Prospects
    
    
    68A. Operating results
    
    
    68B. Liquidity and Capital Resources
    
    
    81C. Research and Development, Patents and Licenses, etc.
    
    
    83D. Trend Information
    
    
    83E. Off-Balance Sheet Arrangements
    
    
    83F. Tabular disclosure of Contractual Obligations
    
    
    83G. Recently issued IFRS standards
    
    
    84Item 6. Directors, Senior Management and Employees
    
    
    85A. Directors and Senior Management
    
    
    85B. Compensation
    
    
    88C. Board Practices
    
    
    98D. Employees
    
    
    105E. Share Ownership
    
    
    107Item 7. Major Shareholders and Related Party Transactions
    
    
    109A. Major Shareholders
    
    
    109B. Related Party Transactions
    
    
    111C. Interest of Experts and Counsel
    
    
    112Item 8. Financial Information
    
    
    113A. Consolidated Statements and Other Financial Information
    
    
    113B. Significant Changes
    
    
    113Item 9. The Offer and Listing
    
    
    115A. Offer and Listing Details
    
    
    115Item 10. Additional Information
    
    
    117
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A. Share Capital
    
    
    117B. Memorandum and Articles of Association
    
    
    117C. Material Contracts
    
    
    122D. Exchange Controls
    
    
    126E. Taxation
    
    
    127F. Dividends and Paying Agents
    
    
    130G. Statements by Experts
    
    
    130H. Documents on Display
    
    
    130I. Subsidiary Information
    
    
    130Item 11. Quantitative and Qualitative Disclosure about Market Risk
    
    
    131A. Quantitative Information about Market Risk
    
    
    131B. Qualitative Information about Market Risk
    
    
    131Item 12. Description of Securities Other than Equity Securities
    
    
    132PART II
    
    
    133Item 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    133Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    134Item 15. Controls and Procedures
    
    
    135A. Evaluation of Disclosure Controls and Procedures
    
    
    135B. Managements annual report on Internal control over financial reporting
    
    
    135C. Attestation Report of the Registered public accounting firm
    
    
    135D. Changes in internal control over financial reporting
    
    
    135Item 16A. Audit Committee Financial Expert
    
    
    136Item 16B. Code of Ethics
    
    
    137Item 16C. Principal Accountant Fees and Services
    
    
    141Item 16D. Exceptions from Listing Standards for Audit Committees
    
    
    143Item 16E. Purchases of Equity Securities by Issue and Affiliates
    
    
    144Item 16F. Change in the Registrants Certifying Accountant
    
    
    145Item 16G. Corporate Governance
    
    
    146Item 17. Financial Statements
    
    
    147Glossary of Certain Technical Terms
    
    
    148Conversion Table and Unit Equivalent
    
    
    154Item 18. Financial Statements
    
    
    155Item 19. Exhibits
    
    
    157EX-4.AQEX-4.AREX-4.ASEX-4.ATEX-4.AUEX-4.AVEX-4.AWEX-8EX-12EX-13
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Certain Definitions
          Companies Act Companies Act
 Corporations Ac Corporations Act
           4




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5




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Forward Looking Statements
  (i)
    
    estimated reserves;(ii)
    
    certain plans, strategies and objectives of management;(iii)
    
    anticipated production or construction commencement dates;(iv)
    
    estimated capital expenditure requirements;(v)
    
    expected costs or production output; and(vi)
    
    the anticipated productive lives of projects and mines.
  6




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PART I
 
 Item 1. Identity of Directors, Senior Management, and Advisors
  7




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Item 2. Offer Statistics and Expected Timetable
  8




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Item 3. Key Information
 
 A. Selected Financial Data
  2009
    
    
    2008*ß
    
    
    2007#*ß
    
    
    2006#ß
    
    
    2005#ßAmounts calculated in accordance with IFRS:Statements of Comprehensive Income data:Revenue(1)
    
    
    1,087.4
    
    
    
    748.6
    
    
    
    497.6
    
    
    
    386.0
    
    
    
    263.9Operating profit before other income/(expense)(2)
    
    
    412.9
    
    
    
    266.4
    
    
    
    196.1
    
    
    
    156.2
    
    
    
    59.7Net profit/(loss) after tax from continuing operations
    
    
    178.7
    
    
    
    110.1
    
    
    
    (26.0
    )
    
    
    54.9
    
    
    
    6.1(Loss)/profit from discontinued operation, net of income tax
    
    
    (412.9
    )
    
    
    0.7
    
    
    
    1.9
    
    
    
    
    
    
    
    Profit for the period(3)
    
    
    (234.2
    )
    
    
    110.8
    
    
    
    (24.1
    )
    
    
    54.9
    
    
    
    6.1Earnings ($) per share, basic (4)
    
    
    (0.098
    )
    
    
    0.056
    
    
    
    (0.014
    )
    
    
    0.042
    
    
    
    0.005Earnings ($) per share, diluted(4)
    
    
    (0.097
    )
    
    
    0.056
    
    
    
    (0.014
    )
    
    
    0.042
    
    
    
    0.005Earnings ($) per share  continuing operations, basic (5)
    
    
    0.075
    
    
    
    0.056
    
    
    
    (0.015
    )
    
    
    0.042
    
    
    
    0.005Earnings ($) per share  continuing operations, diluted(5)
    
    
    0.074
    
    
    
    0.056
    
    
    
    (0.015
    )
    
    
    0.042
    
    
    
    0.005Cash dividends ($) per ordinary share
    
    
    0.015
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Number of ordinary shares (millions)(6)
    
    
    2,368.3
    
    
    
    2,187.1
    
    
    
    1,903.9
    
    
    
    1,284.2
    
    
    
    1,284.2
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##### Table of Contents



2009
    
    
    2008*ß
    
    
    2007#*ß
    
    
    2006#ß
    
    
    2005#ßStatements of Financial Position data:Total assets
    
    
    3,627.0
    
    
    
    3,300.1
    
    
    
    2,304.3
    
    
    
    1,503.4
    
    
    
    1,325.7Cash and current receivables held
    
    
    488.6
    
    
    
    85.7
    
    
    
    189.1
    
    
    
    51.6
    
    
    
    133.2Current liabilities
    
    
    146.0
    
    
    
    165.2
    
    
    
    77.8
    
    
    
    177.3
    
    
    
    80.8Long term obligations
    
    
    242.3
    
    
    
    199.1
    
    
    
    58.0
    
    
    
    506.8
    
    
    
    455.1Total equity(7)
    
    
    3,238.7
    
    
    
    2,935.8
    
    
    
    2,168.5
    
    
    
    819.3
    
    
    
    789.8Paid up capital(8)
    
    
    3,420.9
    
    
    
    3,080.0
    
    
    
    2,319.7
    
    
    
    1,027.1
    
    
    
    1,027.5Expenditure and Financing data:Net cash flow from operating activities
    
    
    417.2
    
    
    
    212.4
    
    
    
    (270.0
    )
    
    
    57.3
    
    
    
    (54.5
    )Net cash flow from investing activities
    
    
    (375.6
    )
    
    
    (270.9
    )
    
    
    (178.6
    )
    
    
    (203.3
    )
    
    
    (99.0
    )Financing activities:Issuance of ordinary shares
    
    
    340.9
    
    
    
    
    
    
    
    977.4
    
    
    
    
    
    
    
    Drawdown of term debt
    
    
    50.0
    
    
    
    
    
    
    
    22.4
    
    
    
    65.6
    
    
    
    245.5Repayment of loans
    
    
    (0.1
    )
    
    
    (0.4
    )
    
    
    (421.6
    )
    
    
    
    
    
    
    (49.5
    )Dividend paid
    
    
    (35.5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Advance to subsidiaries pre-acquisition
    
    
    
    
    
    
    (49.7
    )
    
    
    
    
    
    
    
    
    
    
    Purchase of treasury shares
    
    
    
    
    
    
    (0.9
    )
    
    
    (1.3
    )
    
    
    (0.4
    )
    
    
    Net cash flow from financing activities
    
    
    355.3
    
    
    
    (51.0
    )
    
    
    576.9
    
    
    
    65.2
    
    
    
    139.6
 
 (1)
    
    Alternative terminology: net sales or operating revenues.(2)
    
    Alternative terminology: income/(loss) from continuing operations.(3)
    
    Alternative terminology: Net income/(loss) or income/(loss) from operations.(4)
    
    Alternative terminology: net income/(loss) from operations per share(5)
    
    Alternative terminology: income/(loss) from continuing operations per share.(6)
    
    As adjusted to reflect changes in capital.(7)
    
    Alternative terminology: net assets.(8)
    
    Alternative terminology: capital stock.Revised as follows:#(a)
    
    A revision of deferred tax balances was undertaken in LGL which was attributable to the Lihir operation and
was made to reconcile the previously reported tax balances to
amendments sought for various income tax returns for the
periods 1998-2004. The effect of this revision for each
relevant year was: an increase of $10 million in deferred tax
benefit in 2004, a decrease in deferred tax benefit of $3.7
million in 2005, an increase in deferred tax benefit of $1.1
million in 2006, an increase of $1.8 million in deferred tax
benefit in the year ended December 31, 2007, an increase of
$7.4 million in opening retained earnings at January, 1 2007
and an increase of $9.2 million in deferred tax assets.#(b)
    
    Deferred income tax expense increased by $1.8 million to
reflect an accounting adjustment in relation to opening
deferred tax adjustments in Ballarat Goldfields.#(c)
    
    Finalisation of the Ballarat Goldfields business combination
and subsequent adjustments to the provisional accounting values
as illustrated in Note 30(b) and translation of these final
adjustments to the closing $US rate at December 31, 2007.*
    
    Classification of the Ballarat Goldfields operation profit and loss for the year ended
December 31, 2008 and 2007 from continuing operation to discontinued operation.
    
    Finalisation of the Equigold business combination and
subsequent adjustments to the provisional accounting values
as illustrated in Note 31 to our 2009 financial statements,
the amortization and tax effect of these final adjustments
and translation of these final adjustments to the closing $US
rate at December 31, 2008.ß
    
    The EPS and number of ordinary shares calculations for the
2006 and 2005 financial years have been restated to include
the impact of the capital raising undertaken in March 2009 in
accordance with accounting standards. These adjusted figures
are unaudited. 10




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B. Capitalisation and Indebtedness
  
 C. Reasons for the Offer and Use of Proceeds
  
 D. Risk Factors
  
    
    risks associated with the gold mining industry; and
    
    risks specific to the Company.
  1.
    
    Risks associated with the gold mining industry
 1.1
    
    The Companys profitability is dependent on gold prices determined by the
market
 The market price for gold may fluctuate as a result of numerous factors beyond the Companys
control, such as:
 
    
    speculative positions taken by investors or traders in gold;
    
    changes in global demand for gold (as an investment and/or for other uses);
    
    expectations regarding inflation;
    
    the strength of the US dollar (the currency in which gold trades internationally);
    
    gold hedging by producers;
    
    decisions made by central banks and multilateral organisations to purchase, hold or
sell portions of their gold reserves; and
    
    changes in production costs in major gold producing nations including South Africa,
China and various countries located in the former Soviet Union.
 The potential supply of gold consists of new mine production, plus existing stocks of
bullion and fabricated gold held by governments, financial institutions, industrial
organizations and individuals. In addition, the central banks of several countries and
multilateral organizations sell their gold reserves onto the open market. For this reason a
variation in annual gold production may not necessarily have a significant flow on effect
onto the supply or price of gold for that particular year and there is no guarantee that
additional open market sales of gold will not result in a downward pressure on the global
gold price.If the gold price were to decline over an extended period below the price used by the
Company in estimating its reserve calculations, then this could render ore reserves at
certain operations uneconomic, and require a re-evaluation and/or downward adjustment of
those ore reserves.In the past, gold mining companies have sought to mitigate, in part, the effect of gold
price volatility, through hedging strategies which have included periodic purchases or sales
of put or call options, spot deferred sales and forward sales covering a portion of its
gold production at fixed future prices, however as at December 31, 2009, the Companys gold
sales are entirely unhedged.The following table sets forth the high, low and average afternoon fixing prices for gold on
the London Bullion Market (the London P.M. Fix) for the periods indicated.
 11




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Price in $ Per Ounce of GoldYear
    
    High
    
    
    Low
    
    
    Average1988
    
    
    484
    
    
    
    395
    
    
    
    4371989
    
    
    416
    
    
    
    356
    
    
    
    3811990
    
    
    424
    
    
    
    346
    
    
    
    3841991
    
    
    403
    
    
    
    344
    
    
    
    3621992
    
    
    360
    
    
    
    330
    
    
    
    3441993
    
    
    406
    
    
    
    326
    
    
    
    3601994
    
    
    396
    
    
    
    370
    
    
    
    3841995
    
    
    396
    
    
    
    372
    
    
    
    3841996
    
    
    415
    
    
    
    367
    
    
    
    3971997
    
    
    366
    
    
    
    283
    
    
    
    3311998
    
    
    313
    
    
    
    273
    
    
    
    2941999
    
    
    326
    
    
    
    253
    
    
    
    2792000
    
    
    313
    
    
    
    264
    
    
    
    2792001
    
    
    293
    
    
    
    256
    
    
    
    2712002
    
    
    349
    
    
    
    278
    
    
    
    3102003
    
    
    416
    
    
    
    319
    
    
    
    3632004
    
    
    454
    
    
    
    375
    
    
    
    4092005
    
    
    537
    
    
    
    411
    
    
    
    4452006
    
    
    725
    
    
    
    525
    
    
    
    6032007
    
    
    841
    
    
    
    608
    
    
    
    6952008
    
    
    1,011
    
    
    
    712
    
    
    
    8722009
    
    
    1,213
    
    
    
    810
    
    
    
    9722010 (to February 28, 2010)
    
    
    1,153
    
    
    
    1,058
    
    
    
    1,107
 LGLs profitability is dependent on the price of gold. There are many factors outside the
Companys control which determine the gold price and it is impossible for management to
predict future movements in gold prices.
 12




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1.2
    
    Exploration and Developmental risk
 Exploration and mining activity is speculative in nature and requires a significant
financial investment to fund the exploration drilling necessary to quantify the grades of
mineralized material.If mineralization is discovered, it may take additional time and further financial
investment to determine whether an ore reserve exists and commission a feasibility study for
the project. Feasibility studies are based on additional assumptions regarding:
 
    
    gold and other metal prices;
    
    anticipated tonnage, grades and the unique characteristic of the ore;
    
    anticipated recovery rates;
    
    anticipated capital expenditure and cash operating costs; and
    
    the estimated return on investment.
 Each assumption introduces an additional element of risk into this feasibility calculation.Similarly, a Companys ore reserve estimates are merely expressions of judgment based on
knowledge, experience and industry practice, and may require revision when new information
becomes available. Changes in the forecast price of commodities, exchange rates, production
costs or recovery rates may alter the economic status of the reserves and may result in the
restatement of those reserves. Such changes could impact on depreciation and amortisation
rates, asset carrying values, deferred stripping calculations and provisions for
environmental cleanup costs.In summary, no assurance can be given that the indicated amount of gold will be recovered or
at the rates estimated.
 1.3
    
    Fluctuations in oil prices
 Oil-based products, fuels and consumables (including chemicals, explosives, heavy fuel oil
and diesel) are a large operating cost to any mining company. Diesel fuel is used to power
the mining equipment while heavy fuel oil is used to generate electrical power. Whilst the
development of alternative power (eg: geothermal) reduces the dependence on heavy fuel oil,
the Company remains vulnerable to the impact of increases in oil prices for diesel and for
its remaining heavy fuel oil requirements (eg: lubricants).
 1.4
    
    High demand for input production factors
 Due to the increased demand for most mineral commodities experienced over the last few
years, there has been significant demand for many mining and processing inputs. The Company,
like most other mining and processing operations worldwide, has faced shortages and delays
in the procurement of some required parts and supplies. These market pressures have been
reflected in the cost and availability of certain inputs.The above shortages may also lead to delays in the commissioning of the Companys
operations. Suppliers and contractors appointed by the Company may fail to perform
adequately which could lead to further costs, and/or delays, as the Company appoints
alternative suppliers and/or contractors. The construction and commissioning schedules will
also rely on the timely completion of a number of critical activities any of which, if
delayed, could cause construction and commissioning activities to be delayed.The Company cannot guarantee that no equipment will be rendered inoperative due to lack of
parts supply, or that there will be no other adverse effects from the Companys inability to
obtain other mining and processing inputs.
 13




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##### Table of Contents



1.5
    
    Insurance may not address all operating risks
 The Companys mines, processing plants or related facilities could be forced to shut down or
operations could otherwise be disrupted by a variety of risks and hazards, some of which may
be outside the control of the Company. These include environmental hazards, industrial
accidents, technical failures, labour disputes, unusual or unexpected rock formations,
geothermal and seismic activity, flooding and extended interruptions due to inclement or
hazardous weather conditions, fires, explosions and other accidents at the mine, processing
plant or related facilities. These risks and hazards could also result in damage to, or
destruction of, mineral properties or production facilities, personal injury, environmental
damage, business interruption, monetary losses and possible legal liability.While the Company can maintain insurance with a range of coverage consistent with industry
practice, no assurance can be given that this coverage can be maintained at reasonable rates
or that any coverage it arranges will be adequate and available to cover any claims. See
Item 4. Information on the Company  D. Property, Plant and Equipment  Insurance.
 1.6
    
    Competition with other mining companies for projects and key personnel
 The Company competes with other mining companies on a global basis to attract and retain key
human resources. With an increase in mining activity observed in the past few years, there
is a global shortage of key mining industry human resource skills including geologists,
metallurgists, mining engineers, governance, finance and administrative personnel. In
addition there is a high degree of competition for the acquisition of attractive gold mining
projects. A failure to attract and retain key personnel or a failure to acquire attractive
gold mining projects could have a material adverse effect on the Companys business and
operations.
 2.
    
    Risks specific to the Company2.1
    
    The Company is dependent on production from Lihir Island
 The Companys primary operating mine is on Lihir Island in PNG. Whilst the Companys
operations in Bonikro (Côte dIvoire) and Mt Rawdon (Australia) make material contributions
to the Companys gold production, for the year ended December 31, 2009, Lihir Island
represented 76% of the Companys gold production.As a result, the commercial viability of the Company is currently highly dependent upon the
successful operation of its Lihir mine.
 2.2
    
    The Company is subject to political and community
risk
 The Company operates in PNG and Côte dIvoire which are developing countries that are
subject to political uncertainties including, but not limited to, the risk of civil
rebellion, expropriation, nationalization and land ownership disputes. Unpredictable
government actions concerning the economy, taxation, or the operation and regulation of
facilities deemed important (such as mines) could have a significant adverse effect on the
Company.Specific political and community considerations include the following:
 (a)
    
    Division of powers within government.In addition to the national PNG government, PNG has a system of 19 provincial level
governments, most of which are funded almost entirely by direct grants from the
national government. In the past, there have been disagreements between the
national government and the provincial level governments of PNG, primarily in
relation to power
 14




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##### Table of Contents



sharing and revenue arrangements. These inter-government disputes could adversely
affect the Companys operations.
 With regards to the Lihir operation, the New Ireland provincial government exchanged
its equity participation option in the Lihir operation for undertakings by the
national government to provide an annual support grant to the New Ireland province
of 3,000,000 Kina per year for expenditure on infrastructure projects. A failure of
the national government to fulfil these undertakings could have an adverse effect on
the relationship between the national and provincial governments and this could
result in the New Ireland provincial government taking steps that may have negative
consequences for the Lihir operation.(b)
    
    Civil unrestThere have been instances of civil unrest within PNG and Côte dIvoire. In 1989, civil
unrest on Bougainville Island (which is one of the PNG Islands)
developed into an armed rebellion against the national government by
the Bougainville Revolutionary Army and Bougainville
Island purported to secede from PNG. This resulted in, among other
things, the closure of the Panguna copper mine, which has not reopened. Any renewed unrest, especially on Lihir Island, could
adversely affect the Companys operations.In September 2002, civil unrest in Côte dIvoire resulted in a failed coup
attempt. More recently, the elections to be held in November 2008 were postponed to
November 2009 due to delays in implementing the identification and voter
registration process. The President postponed the November 2009 elections citing
irregularities in the compilation of the electoral roll. In
February 2010, the
President dismissed the government causing minor civil unrest which had no effect on
the operations. The government has since been reformed including the electoral
commission and it is now anticipated that the elections will occur later in 2010,
subject to the electoral roll being finalised. Additional election delays could
lead to civil unrest which could adversely affect the Companys operations in Côte
dIvoire.(c)
    
    Landowner compensation issues and community considerations.The Company devotes a significant amount of time and effort to address the concerns
raised by the local communities affected by its mining operations.At its Lihir operation, the Company has entered into an integrated compensation,
relocation and benefits package that covers (in different ways) the affected
landowners, future affected generations and Lihirians generally (the Integrated
Benefits Package or IBP). Most recently on May 2, 2007, the Company, the local
community of Lihir Island, the PNG national, New Ireland provincial and Lihir local
level governments signed a revised Integrated Benefits Package (the Revised IBP).
The implementation of the IBP commitments has been the key focus of all parties. See
Item 4. Information on the Company  B. Business Overview  Description of
Operations  (1) Papua New Guinea: Lihir Operation  1.12  Community Affairs.In Côte dIvoire, the Bonikro operation is located within the boundaries of several
local villages including Bonikro, Konankro, Gogobro (as landowners) and Bandamakro.
This area was previously farming land and the Company has recently concluded a
resettlement and compensation program in accordance with International Finance
Corporation (IFC) guidelines, whereby landowners are being compensated for loss of
land and income by way of three annual instalments, with the final instalment paid
in December 2009. Planning for the resettlement of Bandamakro village commenced in
the third quarter of 2009 and is scheduled for completion in 2010. Resettlement
initiatives are complex and culturally sensitive matters requiring the involvement
and co-operation of local communities and various government departments, this adds
a further dimension of administrative risk and delays. See Item 4. Information on
the Company  B. Business Overview  Description of Operations  (2) Africa 
 (2.9) Community Affairs.While the Company will continue to spend considerable time, effort and expense to
work with the local communities to resolve community issues, no assurance can be
given that
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future community dissatisfaction will not occur and this may lead to disruptions to
the Companys operations.
 2.3
    
    Geological Risk(a)
    
    Hydrological and geothermal risksThe success of the Lihir operation depends, in part, upon the implementation of the
Companys engineering solutions to particular hydrological and geothermal
conditions. Notwithstanding experience gained since the start of the operation,
geothermal and hydrological ground conditions are unique in a mine the size of the
Lihir mine. Significant removal of both groundwater and sea water inflow and
geothermal control is required before and during mining. While the Company has
achieved considerable success to date in addressing these conditions, no assurance
can be given that future efforts will be adequate or meet expectations. A failure
to resolve any unexpected problems relating to these conditions at a commercially
reasonable cost could adversely affect the economics, safety and/or feasibility of
the Lihir operation.The Lihir operation uses geothermal power in order to reduce energy costs of the
mine. Whilst Lihir Island contains large potential steam resources, specific
reservoirs of steam must be identified and harnessed in order to meet the ongoing
needs of the Lihir operations geothermal power facilities. The Lihir operation may
fail to accomplish this in sufficient time to maintain the power requirements of the
geothermal facilities, which could force the Company to rely on other power sources.
See Item 4.  Information on the Company  B. Business Overview  Description of
Operations  (1) Papua New Guinea  Lihir Operation  1.4 Mining.(b)
    
    Earthquake seismic activity risksLihir Island is a volcanic seamount and the Lihir operation is located within the
caldera of a volcano believed to be extinct. In addition, seismic investigations
confirmed that Lihir Island is 90 km away from a seismically activity area
of PNG. From United States Geological Survey (USGS) records of all earthquakes
from 1973 to present, the strongest event within a 200 km radius of Lihir Island was
a M8.2 earthquake on the Richter scale on November 16, 2000, with an epicentre
approximately 109 km south-southwest of Luise Harbour (where mining operations are
carried out) and at a depth of 33 km.The second strongest event on the same USGS record was a M7.7 earthquake on
September 9, 2005, centred 190 km south  southeast of Lihir at a depth of 90 km.
These and other smaller events have been felt at Lihir Island.No assurance can be given that operations at the Lihir mine will not be adversely
affected by earthquake activity (including resulting tsunami risk) during the life
of the Lihir mine. See Item 4.  Information on the Company  B. Business
Overview  Description of Operations  (1) Papua New
Guinea  Lihir Operation.(c)
    
    Landslide risksThe Lihir mine is located in a high erosion environment with the risk of landslides.
Several small landslides have been recorded in the caldera including a significant
landslide in October 2005 that disrupted gold processing for almost a month and
resulted in the deaths of two employees. Landslides are influenced by natural
phenomenon such as rainfall and earthquakes but may also be influenced by the
ongoing mining operations.No assurance can be given that operations at the Lihir mine will not be adversely
affected by a significant landslide during the life of the operation.
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2.4
    
    Construction, commissioning and other operational
risks
 The Company operates in remote locations and this may exacerbate construction, commissioning
and operational risk. Specifically, the successful completion of the MOPU project is
subject to a number of risks and uncertainties including unforseen geological, physical,
economic or environmental conditions that may result in cost over-runs, delays in
construction or delivery of equipment resulting in delayed project commissioning. See Item
4. Information on the Company  B. Business Overview, 
Description of Operations  (1) Papua New Guinea 
Lihir Operation  (3) Processing  (M) MOPU Project.
 2.5
    
    Industrial relations risk
 The Company cannot guarantee that it will not in the future face strikes, work stoppages,
work slowdowns, grievances, complaints, claims of unfair practices or other industrial
activity. Any such activity can cause production delays, increased costs and negative
effects to the Companys ability to deliver on production forecasts. As a result, operating
results may suffer.
 2.6
    
    The Company has limited financial resources
 The Company successfully raised US$325 million in March 2009 via an institutional placement
of its ordinary shares and A$25 million from a share purchase plan and currently has
$250million in debt facilities in place. While the Company currently believes that it has,
or will have, access to resources sufficient to finance its operations and capital
expenditure requirements including the MOPU project, the adequacy of the Companys financial
resources will depend upon its ability to generate sufficient revenues from gold production
and to keep its costs and other expenditures within its current estimates. If the Company
is unable to generate such revenues, keep its costs and expenditures within such estimates,
or if unexpected conditions or developments occur, the Company could require more funds than
are currently available to it.
 2.7
    
    The Companys operations are subject to
environmental obligations
 As a mining company, LGL is required to comply with regulatory frameworks designed to
protect the environment. Whilst the Company is in compliance with its environmental
obligations, there is no guarantee that an event may not occur to jeopardize LGLs ability
to mine. Specific environmental risks applicable to each of the Companys operations
include the following:
 (a)
    
    Lihir operationThe volumes of waste rock currently produced by the Companys Lihir operations
comply with the levels permitted by the approved environmental impact statement and
environment permits for the operations issued by the PNG Department of Environment
and Conservation (DEC).The Companys MOPU project will require a number of permits and approvals, the most
important being the environment permit which is being obtained in consultation with
the DEC. The Company submitted an Environmental Impact Statement
(EIS) to the DEC in
November 2009 and from December 2009 commenced a formal consultation and assessment
period with submissions closing on April 13, 2010. Whilst the Company continues to
work with the DEC during this consultation and assessment period there is no
guarantee that delays in obtaining the environment permit or other permitting delays
will not be encountered and these delays could adversely affect the Companys MOPU
project operating at optimal capacity.
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(b)
    
    Mt Rawdon operationAt the Mt Rawdon operations mine site, there are risks associated with water use
and drainage. A proportion of the stored waste rock has been categorized as
potential acid forming and has the potential to generate poor quality water
following oxidation and washout of the oxidation products following rainfall. The
poor quality water is captured and contained in dams and pumped back to the tailings
storage facility. The tailings storage facility currently contains elevated cyanide
concentrations that have harmed and killed birds. Management practices are in place
to minimise avian access to the storage facility. Seepage from the tailings storage
facility to groundwater has been observed and the operation has installed pumpback
wells and interception trenches directing seepage to reclaim dams and then pumping
the seepage back into the tailings storage facility. The Queensland license
requirements have included conditions on water quality, discharge and compliance
criteria. The Company is currently in compliance with the license conditions.(c)
    
    Bonikro operationAt the Bonikro operations mine site, there are risks associated with water
management and drainage. The mine has constructed a series of coffer dams upstream
of the open pit in order to redirect natural drainage away from the open pit. There
is a risk that, following high intensity rainfall or seismic events, there could be
failure of the dams resulting in a water ingress to the open pit. This would cause
short term operating inefficiencies whilst the water is removed and coffer dams
re-established or alternative bypass systems established. There is also a risk that
sediment rich surface water drainage could exit the mine site following high
rainfall and flow into local village gardens causing damage to crops. This could
result in compensation damage claims from the impacted farmer for loss of crops and
vegetation.Additionally, the communities surrounding the operation have made complaints
regarding dust levels and damage to local housing following open pit blasting
vibration events. These events have been investigated and dust and noise monitoring
equipment sourced. Monitoring commenced in 2009 and the operation is in compliance
with Côte dIvoire regulatory requirements.2.8
    
    The Companys mining and exploration rights may be suspended or
terminated
 As a mining company, LGL is reliant on various governments renewing its existing mining and
exploration rights. Specific risks associated with this process are as follows:
 (a)
    
    Lihir operationThe Lihir operation is subject to the provisions of the PNG Mining Act1992 which
governs the granting of mining rights and the conditions upon which those rights may
be terminated. In particular, the Company is party to a Mining Development Contract
dated March 17, 1995 with the PNG national government. This sets forth the terms upon
which the Company may exercise its rights under the Special Mining Lease which
governs the Lihir operation. Under certain limited circumstances, the PNG national
government may terminate the Mining Development Contract and, therefore, the Special
Mining Lease. Any such termination would prohibit the continued operation of the
Lihir operation.The Companys Exploration Licence (EL485) has an expiry date of March 31, 2010. An
application for renewal of the licence has been made and the Company is now waiting
on a decision (extension of the licence is automatic whilst the application for
renewal is being considered). A denial of the renewal would terminate the Companys
exclusive right to explore for gold on the remainder of Lihir Island (outside the
area of the Special Mining Lease). Despite several subsequent communications with
the relevant government
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department, the Company is yet to receive confirmation that the license has been
renewed and accordingly, can provide no assurance that it will be renewed on
acceptable terms or at all.
 The MOPU project relies on the PNG national government granting a number of permits,
licenses and approvals including environmental, ports, mine safety, electricity and
immigration approvals. The Company is working with the PNG national government, in
particular the Mineral Resources Authority (MRA) and the DEC, to streamline and
facilitate the application for and processing of these requested permits and
approvals. The EIS was submitted and accepted by the DEC in December 2009 and a four
month approval process outlined. However, there is a risk that the necessary permits
and approvals will not be granted by the PNG national government, will not be granted
in a timely manner, thereby delaying the MOPU project or will be granted but with
unexpected and possibly adverse conditions attached.(b)
    
    Bonikro operation and Côte dIvoire exploration licencesThe Bonikro operation is subject to the provisions of the Mining Codeand Mining
Decreeof Côte dIvoire which governs the granting of mining rights and the
conditions upon which those rights may be terminated. A subsidiary of the Company,
namely Equigold Mines CI SA (EMCI), a company incorporated in Côte dIvoire is
party to a Mining Investment Convention dated May 3, 2007 with the State of Côte
dIvoire. The Mining Investment Convention defines the conditions for EMCIs
performance of mining operations within the boundaries of the exploitation permit
relating to the Bonikro operation. In certain limited circumstances, the State of
Côte dIvoire may terminate the Mining Investment Convention. There is a risk that
cancellation of the Mining Investment Convention could result in the cancellation of
the Bonikro exploitation permit or the Bonikro operation becoming unprofitable.Exploration licences are granted and are renewable as long as expenditure and work
commitments are met as outlined and agreed to at the time of granting the initial
exploration licence. There is a negligible risk that the exploration licences would
be revoked by the State of Côte dIvoire.(c)
    
    Mt Rawdon operationMt Rawdon operates under an approved mining lease issued by the Department of Mines
and Energy of Queensland, Australia. There is negligible risk that the mining lease
would be withdrawn.Exploration licences are granted and are renewable as long as expenditure and work
commitments are met as outlined and agreed to at the time of granting the initial
exploration licence. There is a negligible risk that the exploration licences would
be revoked by the Queensland government.
 2.9
    
    The Company is vulnerable to currency risks and foreign exchange
controls
 The PNG national currency, the Kina, is subject to exchange controls. No assurance can be
given that the Company will be able to convert its US$ receipts or any Kina funds it has
into other currencies at rates comparable to those at which funds were remitted to PNG in
the past or at all. In addition, the PNG Central Banking (Foreign Exchange and Gold)
Regulationsrequire the prior approval of the PNG Central Bank to convert funds from Kina
into other currencies. These regulations generally require PNG companies to transfer all of
their non-Kina revenues to PNG and convert them into Kina, as is ordinarily the case with
large mining and petroleum projects in PNG. However, under the Mining Development Contract,
the PNG national government has agreed to ensure that the PNG Central Bank will grant the
Company permission to retain certain of its funds in currencies other than Kina, and to
convert and transfer its Kina funds into offshore
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accounts outside PNG. This permission is limited to certain proceeds from bank loans,
insurance policies, and the sale of gold, in an amount sufficient to cover certain specified
purposes during the following three month period. As a result of these limitations, the
Company is still exposed to certain exchange rate fluctuations and convertibility risks.
There can be no assurance that the Kina will not depreciate from its current position
against the U.S. dollar. See Item 10. Additional Information  D. Exchange Controls.
 Although the Company reports in a single currency (US dollars), its costs and revenues are
exposed to the fluctuations of a number of different currencies. Costs and capital
expenditures incurred at the Lihir operation are denominated in US dollars, Australian
dollars and PNG Kina. Capital expenditures and future operating costs at the Mt Rawdon
operation and the corporate office are (and will be) principally incurred in Australian
dollars. Capital expenditures and operating costs at the Bonikro operation are principally
incurred in US dollars, Central African CFA, Australian dollars and the Euro. Revenues from
the Lihir and Bonikro mines are in US dollars. Revenues from the Mt Rawdon mine are
determined by metals prices denominated in US dollars but are currently received in
Australian dollars.Given that a significant portion of the Companys revenue and a large proportion of
expenditures are denominated in US dollars, the Company in 2008 revised its foreign currency
hedging policy to enable hedging of known capital expenditure commitments in currencies
other than US dollars and again in 2010 to enable hedging of some forecast Kina operating
expenses. However, the Companys non-US dollar costs and capital expenditures may still be
subject to changes beyond its control due to fluctuations in these and other currency
exchange rates.
 2.10
    
    Shareholders are subject to different rights under
certain circumstances
 The Companys corporate affairs are governed by its constitution and the laws of PNG.
Principles of law applicable to the Company and its shareholders may differ from those that
would apply if the Company were incorporated in a jurisdiction in the United States. For
example, while in most cases shareholder votes are held by ballot in a manner similar to the
practice in the United States, in certain circumstances shareholder votes can be limited to
persons actually present at a shareholder meeting (either shareholders or representatives of
shareholders), and the quorum for such purposes can be as low as three persons as is
provided for by the Companys constitution. The Board also has the ability to refuse to
register transfers of ordinary shares that would breach ASX rules or contravene laws. In
addition, the Companys shareholders may have fewer or less well-defined rights under PNG
corporate law with which to protect their interests against actions by its Board or major
shareholders than they might have as shareholders of a corporation incorporated in a
jurisdiction in the United States.
 2.11
    
    Difficulty in the pursuit of litigation against the
Company
 None of the Companys executive officers or directors reside in the United States. The
Company understands that the general rules in respect of service of process issued out of
United States courts requires either:
 
    
    the presence of the person to be served within the jurisdiction of the relevant
court; or
    
    the consent of that person to receive service outside the jurisdiction.
 The Company is not aware that any of the individuals concerned have given consent to service
outside the jurisdiction. Therefore, for a claimant in United States courts, there may be a
risk that such persons cannot be served with process.Certain judgments of certain foreign courts are recognized and enforceable in PNG by
registration under the Reciprocal Enforcement of Judgments Act(Chapter 50 of the PNG Revised
Laws). This Act is applied generally on the basis of reciprocity to prescribed countries and
designated courts within those countries. The United States is a prescribed country under
the Act. The designated courts in the United States are the New York State Court of Appeals
and any Supreme Court of the
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State of New York. If a foreign money judgment is not obtained from a designated court, it
may nonetheless be recognized and enforced in PNG at common law, by commencing a separate
action in the National Court of PNG to sue on the judgment.
 In the Companys prospectus issued in connection with the global offering of shares in 1995,
it was stated that the courts of PNG will not permit original actions for civil liabilities,
predicated upon the civil liability provisions of the US federal securities laws. The
Company has no reason to believe that PNG courts today would take a different attitude, and
allow such actions against the Company, or any of its non-US resident executive officers or
directors. This should only be a difficulty for US investors to the extent that such an
action cannot be brought in the United States, or a judgment of a United States court cannot
be enforced in PNG.
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Item 4. Information on the Company
 
 A. History and Development of the Company
  (a)
    
    Introduction
 Companies Act www.lglgold.com
 
    
    Australian Securities Exchange Limited (ASX);
    
    Port Moresby Stock Exchange (POMSoX);
    
    Toronto Stock Exchange (TSX); and
    
    National Association of Security Dealers Automated Quotations (NASDAQ).
  
    
    the Mount Rawdon operation in the State of Queensland in Australia; and
    
    the Bonikro operation in Côte dIvoire in West Africa.
   (1)
    
    Development of the Lihir operation
 The initial exploration and development work on the Lihir operation was conducted by a joint
venture beginning in 1982. A subsidiary of Rio Tinto plc (referred to collectively with its
subsidiaries and affiliates, as Rio Tinto), one of the participants in the joint venture,
prepared a feasibility report on the Lihir operation dated March 1992 and amended in September
1993, October 1994 and May 1995, which was reviewed and audited by Micon International Limited.
The joint venture, which undertook almost nine years of test drilling and numerous geological
and other studies on the Lihir operation, spent a total of $147 million on exploration and
pre-development activities in relation to the Lihir operation. In October 1995, the Company
acquired the assets relating to the Lihir operation from the joint venture and issued and sold
ordinary shares in a global offering. Production of gold from oxide ore commenced in May 1997.
In October 1997, the Company completed construction of the processing and related facilities for the Lihir operation and commenced production of gold from
sulphide ore.
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The assets acquired from the joint venture included the Special Mining Lease which gives the
Company exclusive mining rights within the leased area of Lihir Island for 40 years from 1995,
provisions exist for extending the term of this lease in accordance with the PNG Mining Act
1992. The Lihir operation relates to the mineral deposits located within the area covered by
the Special Mining Lease. The Company also holds the Exploration Licence (EL485) which provides
the Company with the exclusive right to explore for gold and other minerals on the remainder of
Lihir Island for a renewable two year period. The Company currently holds the licence until
March 31, 2010. Under the provisions of the Mining Act1992, the term of the exploration
licence is deemed to be extended automatically pending the making of a decision on the renewal
application.Rio Tinto completed the sale of all of its shares in the Company in 2005 and no longer holds a
direct interest in the Company. Niugini Mining Limited (NML), an original joint venture
participant, was acquired under a scheme of arrangement and is now a wholly-owned subsidiary of
the Company. No options over the Companys shares remain outstanding. See Item 7. Major
Shareholders and Related Party Transactions  A. Major Shareholders  (e) Share Options.Until October 2005, the Company was managed by Lihir Management Company Limited (LMC), a
wholly-owned subsidiary of Rio Tinto, pursuant to a management agreement dated March 17, 1995.
Rio Tinto acquired a managing interest in the joint venture in 1989, and the joint venture had
been managed by LMC since that time. Since October 2005, the Company has been under independent
management following termination of the management agreement. As part of the termination of the
management arrangement, the Company acquired all of the shares of LMC.The Company has entered into two management services agreement with Lihir Services Australia Pty
Limited (LSA), a wholly owned subsidiary. Under the agreements, the Company engages LSA to
provide or procure the provision of various services. The services provided under the
management services agreements include:
 
    
    representation and liaison services;
    
    banking and credit arrangements;
    
    procurement of goods and services;
    
    recruitment;
    
    marketing of products;
    
    tax returns;
    
    strategic services;
    
    accounting services;
    
    IT and telecommunications;
    
    organisational development;
    
    administration and travel; and
    
    legal.
 LSA charges the Company a fee at normal commercial rates for providing those services under the
two agreements. A copy of the management services agreements were previously included in
Exhibit 4(w) and (x). The updated agreements are included in Exhibit 4(av) and (aw).
 (2)
    
    Merger with Ballarat Goldfields
 The Company acquired 100% of Ballarat Goldfields in February 2007. Ballarat Goldfields has four
wholly owned Australian subsidiaries: New Resources Pty Limited, Berringa Resources Pty Limited,
Ballarat West Goldfields Pty Limited and Corpique (No. 21) Pty Limited. Assets acquired
included the Ballarat East underground gold development project and the Ballarat West, Ballarat
South and Berringa exploration projects located in the vicinity of the town of Ballarat in
Victoria, Australia. The Ballarat operation produced 12,565 ounces of gold in 2009.
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As noted above, this operation is subject to a sale agreement with Castlemaine Goldfields
Limited.
 (3)
    
    Merger with Equigold
 The Company acquired 100% of Equigold in June 2008. At the time of acquisition, Equigold had
five subsidiary companies, three of which were wholly owned and incorporated in Australia and
two of which were majority owned and incorporated in Cote dIvoire. As at January 2010, Equigold
has seven subsidiary companies, three of which are wholly owned and incorporated in Australia,
two of which are wholly owned and incorporated in Cote dIvoire,
and two of which are majority owned
and incorporated in Côte dIvoire. The Australian entities are Swindon Holdings Pty Ltd,
Stanmines NL (now Stanmines Pty Ltd), and Kim Resources NL (now Kim Resources Pty Ltd) and the
Côte dIvoire entities are Equigold Mines Côte dIvoire SA (EMCI) (90% interest effective
December 31, 2009), Equigold Côte dIvoire SA (98% interest effective December 31, 2009), LGL
Exploration CI SA (100% interest effective January 2010), and LGL Development CI SA (100%
interest effective January 2010).Assets acquired included the Mount Rawdon operation located in southeast Queensland, Australia,
the Kirkalocka assets located in the Murchison region of Western Australia and the Bonikro
operation located in Côte dIvoire in West Africa. As part of the acquisition, the Company also
acquired 15,351 square kilometres of exploration licenses either granted or under application in
Côte dIvoire covering in excess of 700 kilometres of highly prospective West African Birimian
greenstone belts. The Kirkalocka assets were sold to a third party over the course of
2008-2009. Consideration included a combination of cash and shares in the purchasing company.
The Company subsequently disposed of its shares in the purchasing company during 2009. The
Company realised a $1.4 million loss on the sale of Kirkalocka assets.
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(b) Capital expenditures
  Capital expenditure 2007  2009
 (in US$ millions)
    
    2009
    
    
    2008
    
    
    2007Lihir
    
    
    279.1
    
    
    
    153.0
    
    
    
    156.5Ballarat
    
    
    35.3
    
    
    
    118.6
    
    
    
    65.9Bonikro
    
    
    49.2
    
    
    
    29.9
    
    
    
    Mount Rawdon
    
    
    5.1
    
    
    
    1.3
    
    
    
    Corporate
    
    
    4.8
    
    
    
    1.3
    
    
    
    0.3373.5
    
    
    
    304.1
    
    
    
    222.7
      (a)
    
    Lihir operation ($151.6 million for the MOPU project and $170.2 million for
other equipment purchases);(b)
    
    Bonikro operation ($12.2 million the resource drilling program and other
equipment).
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B. Business Overview
  Mining Act
     Description of operations
 1.
    
    Papua New Guinea- Lihir operation
 1.1
    
    Summary(A)
    
    Introduction
 The Company is the sole owner and licensed holder for gold mining, processing, and
associated infrastructure assets on Lihir Island, PNG. The following is a summary of the
Companys current operations on Lihir Island, PNG. Given the size, scope and long remaining
production life of the Lihir operation, changes in operations may be made in the future, and
these changes could be material. See Item 3. Key Information  D. Risk Factors for a
discussion of possible risks to Lihirs operations.
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(B)
    
    Lihir Island (Niolam Island)
 Niolam Island (also known and commonly referred to as Lihir Island) is the largest of the
Lihir group of four islands. It is located 920 kilometres northeast of the PNG capital of
Port Moresby. The Lihir Group of islands forms part of the province of New Ireland.
 
 Lihir Island is a volcanic seamount that rises steeply from sea level to about 600 meters
above sea level. It is approximately oval in shape, roughly 22 kilometres long from north
to south and 14.5 kilometres from east to west at its widest points. There is a caldera of
a volcano, which is believed to be extinct, (the Luise Caldera) which adjoins a harbour
(the Luise Harbour) on the east coast of the island. All the known ore deposits of the
Lihir mine are located in the Luise Caldera.Lihir Island experiences a high level of rainfall, averaging about 3,750 millimetres per
year with a range between 2,800 and 5,400 millimetres experienced during operations to date.
It has an annual mean relative humidity of about 82%. The temperature generally varies
between 20°C and 30°C (68°F and 86°F). Lihir Island is north of the area most affected by
cyclones. Natural vegetation is mostly rain forest.Prior to the development of the Lihir operation, Lihir Island was largely undeveloped.
Subsistence agriculture was the principal occupation of most Lihirians, supplemented by some
cash crops such as copra.
 (C)
    
    Mining rights
 The Company holds the Special Mining Lease (SML) which gives the exclusive right to mine
and produce gold from the Luise Caldera area on Lihir Island, including the site of the
processing plant on Putput Point. The SML is governed by the Mining Development Contract.
The SML can be terminated only if the Mining Development Contract is properly terminated.Under the PNG Mining Act1992, a developer may apply for a lease for mining purposes (LMP)
to cover ancillary areas required to support a mining operation. A mining lease (ML) is
required for any quarrying operations outside the SML. The Company has been granted two LMP
one which covers the accommodation and commercial centre, the Londolovit reservoir and the
Lakunbut dam and the other which covers the airstrip. The Company has also been granted two
ML for a hard rock quarry and limestone quarry. These LMP and ML are joined by three mining
easements that provide corridors for road access and power line and water supply.The SML covers 1,739 hectares and includes the Luise Caldera, Luise Harbour and part of
Putput Point. As such, it covers the ore body, processing plant, stockpiles and marine
facilities. The LMP
for the accommodation and commercial centre covers 674 hectares in the Londolovit area and
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the LMP for the airstrip covers 34 hectares. The ML for the hard rock quarry covers 47.7
hectares while the ML for the limestone quarry covers 23.7 hectares
 (D)
    
    Operations
 The mining of the Lihir Island ore body is based on open pit mining of three main linked
pits. Most of the ore is refractory sulphide ore that must be oxidized before the gold can
be leached through cyanidation. Pressure oxidation technology licensed from Dynatec
Corporation is used to treat the refractory ore. In 2005, construction of an additional 3Mt
per year capacity flotation circuit with expanded grinding, flotation and oxygen capacities
was approved and commenced. The flotation circuit was commissioned in late 2007.In February 2008, the Board granted approval for the commencement of the MOPU project. The
MOPU project is expected to increase the processing capacity of the plant by approximately
4.0Mt/a by increasing autoclave capacity by two thirds, and by adding crushing, grinding,
thickening, oxygen and leach plant capacity. The in-pit reserves with the MOPU project are
slightly larger than those for the previous plant configuration. This is due to increased
pit volume and reduced cut-off grade, both of which result from reduced processing costs
with the expansion. Simplified process flow charts are shown below prior to the MOPU
project.
 Current Plant Flowchart after Flotation Installation
 
 Until 2004, the main gold-producing pit was Minifie. Production from Minifie has been
scaled back since early 2005. The second pit, Lienetz, is being mined in a series of phases
to produce the majority of gold ore from 2005 until 2014. The third pit, Kapit, commenced
development in 2009 and is expected to produce ore from 2015 onwards and, with further
cutbacks during this period to both Minifie and Lienetz, complete the mining period.
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1.2
    
    Geology and mineralisation
 Lihir Island is made up of five Miocene-Pleistocene volcanic units, of which three are
recognizable volcanic craters (including the Luise Caldera) and two are sequences of mafic
volcanic rock that pre-date the three volcanoes. The volcano that formed the Luise Caldera
was the most recent major volcanic event on the island. It was formed in the Pleistocene
age, up to one million years ago. Remnant geothermal activity is present in the Luise
Caldera, evidenced by hot springs and fumaroles. Studies of groundwater circulation indicate
there is no magma present below the Luise Caldera.The Luise Caldera is a well-defined, elliptically shaped caldera, which rises steeply to
several peaks over 600 meters above sea level. The caldera is open to the northeast where
it is breached by the sea to form Luise Harbour. Luise Caldera measures approximately 5.5
kilometres by 3.5 kilometres. Currently defined gold mineralization occurs within an area
of about 2.0 by 1.5 kilometres near the centre of the caldera.Exploration work since 1982 has defined several adjacent and partly overlapping mineral
deposits in the Luise Caldera, the principal ones being Lienetz, Minifie, Coastal,
Borefields and Kapit. Of these, the largest is Minifie, which is about 1,000 by 600 meters
with mineralization extending from the surface (50 meters above sea level) to 250 meters
below sea level. The Lienetz deposit north of Minifie is about 800 by 400 meters, and
extends from the surface (140 meters above sea level) to 300 meters below sea level. The
smaller Coastal deposit adjoins Lienetz on the northeast, separating it from the sea. The
Borefields zone extends to the north-east along the Minifie structure and is an extension of
the Minifie mineralization. The Kapit deposit, extending 300 to 400 meters north of
Lienetz, is about 450 by 300 meters with mineralization extending from near surface to 250
meters below sea level. Drilling in 2002 and 2003 extended the limits of Lienetz to the
northwest, confirmed physical connection between Lienetz and Kapit and extended the current
knowledge of the Kapit deposit to establish mineral reserves. The Kapit deposit continues
to be explored by drilling, geotechnical, geothermal and economic studies.The bulk of the known gold mineralization is located in Minifie, Lienetz and Kapit. All of
the deposits are connected by areas of low-grade mineralization. An analysis of the
structural patterns has led to the hypothesis that the Lienetz, Coastal and Kapit areas are
part of a single mineralization system, with a separate feeder system accounting for the
Minifie and Borefields mineralization. The Coastal and Borefields pits are not currently
included in the defined reserves.
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Based on exploration work to date, gold appears to be the only metal of economic
significance present within the Luise Caldera. Gold occurs primarily as sub-micron size
particles in sulphide minerals. The main sulphide material is pyrite, with the marcasite
form present as an accessory mineral. Arsenopyrite is rare. Some limited free gold is
increasingly apparent. Oxidation layers range in thickness from minimal in low lying areas
such as Minifie to a maximum of 70 meters over the higher parts of Lienetz and Coastal and
Kapit.The mineral deposits in the Luise Caldera are hosted by volcanics, intrusives and breccias,
and there has been extensive alteration of these rocks within the caldera. Two major
alteration episodes have been identified, an earlier and deeper porphyry style event
resulting in potassic alteration grading laterally to propylitic alteration and a later and
higher level epithermal event producing argillic, advanced argillic and phyllic alteration.
Because the intensive alteration has destroyed much of the original host rock lithology, the
deposits have been classified into a series of ore types based on alteration, hardness,
degree of brecciation and similar factors. While this is more a metallurgical
classification than a geologic one, it has proved useful in determining many of the mining
and processing characteristics of the ore body and host rocks. The ore types are roughly
sub-horizontal and form a fairly consistent vertical sequence. The general sequence is that
of clay-rich rock, grading into white mica-rock, then felspar-biotite and, at depth, into
felspar-biotite-anhydrite. Within and on the boundaries of the ore types, geological
structure is also a major influence in the localization of higher grades in the ore body.
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1.3
    
    Reserve Estimates
 During 2003 and 2004, an intensive reserve definition and extension drilling program was
undertaken at Lihir, which partially converted the Kapit deposit into reserves. Subsequent
drilling in 2007 and 2008 has extended the reserves in the Kapit area, and potential remains
to further extend these reserves.Development of the Kapit deposit will require the construction of a coffer dam in the
shallows of Luise Harbour. Economic and technical studies have demonstrated the financial
and technical viability of the coffer dam, and a preliminary design, cost estimate and
construction schedule have been developed. A substantial geothermal depressurization program
is also required prior to the mining of the Kapit deposit. Depressurization drilling has
been in progress since 2007 with further drilling scheduled for 2010. Depressurisation
monitoring in the mining area to date indicates a decreasing trend in reservoir pressure,
consistent with timing requirements for the development of Kapit. Development of the Kapit
pit will also require the relocation of the current low-grade stockpile situated on this
deposit. The Kapit pit development lies within the SML. Subject to due processes of
community approvals (such as community consultation and engagement), there currently are no
foreseeable regulatory impediments to the granting of necessary approvals and permits for
the development of the deposit.Appropriate reviews and additional studies in the areas of mining, geotechnical, geothermal,
groundwater and geological modelling have been carried out to confirm and further develop
the assumption base for the mine. Site reviews of mining and processing costs have provided
for an improved modelling and optimization base for the latest estimate.The ore reserves in the table below are based on the Lihir
 block model developed in December 2008, which was calculated at a
gold price assumption of $800 per ounce. The ore reserves are adjusted to take account of mining depletion, to June 30, 2009.
 ContainedReserve
    
    
    Tonnes
    
    
    Average grade
    
    
    OuncesCategory
    
    
    (In millions)
    
    
    (g/t Au)
    
    
    (millions)Un-mined Ore
    
    Probable
    
    
    269.2
    
    
    
    2.77
    
    
    
    23.9Economic Stockpiled Ore
    
    Proven
    
    
    61.6
    
    
    
    2.46
    
    
    
    4.9Total Reserves
    
    
    
    
    
    
    330.8
    
    
    
    2.71
    
    
    
    28.8
 Reserves have been reported in accordance with Industry Guide 7.Un-mined ore reserves quoted are those remaining below the mining surface at June 30, 2009,
within the current pit design.Stockpiled ore comprises mined ore above waste cut-off grade on the stockpiles, as of June
30, 2009.The number of ounces of contained gold does not indicate the number of ounces that
ultimately will be recovered. The number of ounces ultimately recovered and available for
sale will depend upon, among other things, mining efficiency and processing efficiency.The calculation of the average break even cut-off grade of 1.36g/t for mill feed considers
gold price, fixed and variable site costs, refining costs, royalty, mining levies, and
assumed recovery of the stockpiled lower grade fraction. The costs used are based on life
of mine modelled costs broken into two periods, the mine and process period, and
stockpile processing period. The life of mine costs consider all operating conditions,
capital and factors associated with the whole operation for each incremental year of
operation. Mill recoveries used are based on current operating experience for both the
flotation plant and the autoclave and test work on future ore types.
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Costs have been split by fixed and variable, to allow a more definitive estimate during the
two main periods of mine and process period, and stockpile processing period. The
components of the cut-off grade plus the incurred mining costs are used in the optimization
process to determine the ultimate pit limits and economic ore to be mined. Mining costs
will vary and are most dependent on material types, blasting characteristics and haulage
distances.The optimisation process uses a strategy of progressive refinement to develop a pit shell
that maximises profit. The final stage of the process uses a scheduler to verify that the
reserves contained within the pit can be mined and processed economically. This scheduler is
a constraint-based scheduling system that also seeks to maximize NPV. It is capable of
optimizing multiple relationships within the mining schedule within specified constraints.The information in this report regarding ore reserves at Lihir Island is based on
information compiled by Mr David Grigg. David Grigg is employed by LGL in
the role of Superintendent Mine Planning.
 1.4
    
    Mining
 (A)
    
    General
 The ultimate pit shell contains approximately 918 million tonnes of material remaining to be
mined, of which approximately 269 million tonnes are proven and probable reserves in-pit and
649 million tonnes are waste, for an overall waste/ore stripping ratio of 2.4. Most waste
material will be disposed of offshore in deep water within the confines of the SML area.Mining of sulphide ore commenced in the Minifie area because of its higher grade and
shallower depth, and has been extended over time to encompass the Lienetz and Kapit areas.
During 2003 and 2004 most of the mine production was from the Minifie pit. Production of
ore from the high grade Phase 5 in the Lienetz pit started in the final quarter of 2004 and
it was the main ore source in 2005 until mid 2006. Phase 7 and Phase 6, either side of
Phase 5, have since been developed and were the main ore source until 2007. Phase 8
development in northern Lienetz started in early 2007 and was the main ore source from 2008
until 2009. Development of Phase 11, the western edge of Lienetz, began in 2008.Material moved during 2009, 2008 and 2007 is shown in the following table.
 2009
    
    2008
    
    2007High-grade sulphide ore (K tonnes)
    
    
    6,089
    
    
    
    6,204
    
    
    
    6,111High-grade sulphide ore (g/t Au)
    
    
    5.09
    
    
    
    4.98
    
    
    
    5.14Low-grade sulphide ore (K tonnes)
    
    
    6,630
    
    
    
    8,335
    
    
    
    4,380Low-grade sulphide ore grade (g/t Au)
    
    
    2.23
    
    
    
    2.22
    
    
    
    2.32Total Ore (K tonnes)
    
    
    12,719
    
    
    
    14,539
    
    
    
    10,491Total Ore grade (g/t Au)
    
    
    3.60
    
    
    
    3.4
    
    
    
    3.96Total Waste (K tonnes)
    
    
    33,649
    
    
    
    36,120
    
    
    
    47,769Total Material (K tonnes)
    
    
    46,368
    
    
    
    50,660
    
    
    
    58,260
 (B)
    
    Pit design and planning
 The pit design has been developed using a corporate and mine planning framework which guides
the ultimate design. Scheduling and policy optimisation work is undertaken using measured
and indicated material to define a series of efficient and operational nested shells for
mining and an ultimate zero profit shell to define the mining limits. These shells and
ultimate pit shape are used to produce detailed designs.Inter-ramp slope angles range from 10o to 25o in soil-strength
material, 32o to 36o in weak rock, and 48-55o in hard rock.
Mining is carried out on 12-meter benches.
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Detailed designs have been developed for all phases (push backs) out to and including the
ultimate pit shell. This has resulted in 9 remaining mining phases which have been scheduled
to demonstrate that mining is practical and economic over the life of the mine. The mining
sequence has been optimised to maximize the life of mine value of the deposit and a variable
mill feed cut-off grade for direct process ore has been determined for each year of the
mining period.
 (C)
    
    Production scheduling
 In order to maximize project value, the mining production schedule is structured to deliver
the highest grade ores to the processing plant as early as possible, consistent with
practical and logical pit development. An elevated cut-off grade is therefore established,
above which ore is processed immediately, while ore with a lower grade (above the marginal
cut-off) is stockpiled for later processing. This high grade cut-off varies on a periodic
basis, to maintain a continuous ore supply to the mill.
 (D)
    
    Mill throughput
 The circuit throughput is dictated by the autoclaves, with the operating strategy focussed
on ensuring maximum utilisation of the high capital cost items of the plant  primarily the
autoclaves and oxygen plants. The limiting factor in autoclave throughput is the amount of
sulphur that can be oxidised. Throughput is therefore maximised until such time as the
oxidation starts to suffer, indicated by rising autoclave discharge sulphur levels. There is
an economic trade-off between increased throughput and reduced gold recovery, as a result of
insufficient oxidation.The additional milling capacity gained through the flotation expansion in 2007 means that
the autoclaves are now more often the production bottleneck  with the operating strategy
being to ensure that constraints in crushing, milling and leaching are minimised.The processing facility is currently operating to a target of approximately 1,000 tonnes per
operating day of sulphur fed to the autoclaves, depending primarily on the oxidation
characteristics of the ore being processed, the feed solids density to the autoclaves and
the oxygen available. Material processed then varies according to the sulphur grade.
 (E)
    
    Metallurgical recovery
 The planned metallurgical recovery is determined from current historical operating
experience and realistically expected future plant performance. The carbon-in-leach (CIL)
tail grade is modelled primarily as a function of the circuit gold grade, the autoclave
discharge sulphur grade and to a lesser degree the CIL circuit throughput. Test work is
being undertaken to further evaluate the varying recovery relationships by material type
including stockpile material.For autoclave feed during the mining period the recovery is approximately 88% to 92% whilst
the recovery of material through the stockpile processing period is expected to be
approximately 84% to 87%.
 (F)
    
    Sulphide content
 The average sulphide content is highly variable. Therefore, significant effort is committed
to controlling blending of plant feed to maximize throughput by sequencing mine development
and stockpile feed strategies. The ore blend and sulphur target varies depending primarily
on ore type, ore reactivity, and gold grade. Utilisation of the flotation circuit allows
the sulphur content of the autoclave feed to be raised closer to the optimum level of around
6.5% sulphur. During processing of stockpiled material after the cessation of mining this
grade will drop, but will remain in the range where the autoclave heat balance remains
autogenous.
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(G)
    
    Economic grade ore stockpiles
 All ore grading below the applicable annual mill feed cut-off grade (but above the waste or
marginal cut-off grade) will be stockpiled for processing after open pit mining ceases. In
the early years of production the PNG Government required that material with a grade above
1.6 g/t be stockpiled. In 2003 the permitted cut-off grade was increased to 2.0 g/t.
Stockpiled material is processed either following the completion of the mining period, or
earlier as ore supply from the open pit dictates. Throughputs and recovery of stockpiled
material are based on current operating practices and test work, but the behaviour of this
ore, after being stockpiled for periods in excess of 15 years, is uncertain.The current mine plan requires a peak of approximately 150 million tonnes of low grade
stockpiling capacity, however the capacity to stockpile outside the pit and within the SML
is limited by topography to approximately 60 million tonnes. The mine plan therefore relies
on in-pit storage to accommodate the balance.
 (H)
    
    Waste rock disposal
 Because of the lack of suitable land, the potential for seismic activity, high rainfall and
the potential for acidic run-off, the Company and the PNG Government concluded that
land-based disposal of waste rock was not a viable option and that the preferred option, in
terms of cost and environmental acceptability, continues to be offshore disposal in deep
water within the confines of the SML. The acidic generating
characteristics of the waste rock are inhibited in sea water. Soft waste disposal is
achieved using a fleet of up to five bottom dump self-propelled barges via two loading docks
of three bays each in a single wharf structure. Competent waste material is used for
in-pit bench and haulroad sheeting, and as a bulk construction material for ex-pit haulroad
construction, slope buttressing and land reclaim. A significant quantity of competent waste
rock is expected to be used for the Kapit coffer dam construction.
 (I)
    
    Blasting
 The Company engaged DNX PNG Pty Ltd to provide all products, labour and equipment to carry
out the required blasting operations. This includes procurement, transport, manufacture,
storage and management of all explosive material and the design, provision, repair and
maintenance of magazines, manufacturing facilities with a capacity of 50 tonnes of emulsion
per day, and mobile explosive delivery units. The contractor measures and records hole data
(including temperature), primes holes, loads explosives down the holes, ties-in and
initiates the shots, and is responsible for legal compliance during manufacture, and
blasting (including post-blast inspection and dealing with misfires and secondary blasting).
Since the ground temperatures are typically above 100 degrees Celsius, explosive emulsions
used are desensitized to heat by special formulation and blending with glass micro balloons.
New formulations are currently under development in anticipation of the need to blast in
higher ground temperatures in future. See Item 10. Additional Information  C. Material
Contracts  (f) Lihir operations blasting services contracts.
 (J)
    
    Mine drainage
 The average annual recorded rainfall at the Lihir operation is approximately 3,750
millimetres and has ranged from 2,800 to 5,400 millimetres with a maximum one-hour intensity
of 65 millimetres. For this reason, considerable attention has been paid to the design of
appropriate facilities for mine drainage. This includes a system of surface diversion
channels designed to intercept storm water flows before they enter the open pit. A 3%
inclined bench arrangement, and a system of drainage berms, culverts, sumps and pumps has
also been incorporated into the design of each of the phases of pit development. Despite
these design provisions, localized mine production sometimes has to be suspended during
periods of intense rainfall.
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(K)
    
    Mining equipment
 The major mining equipment selected for the Lihir operation has been sized for the levels of
production and operating conditions contemplated by the current life of mine plan. Most of
the mining fleet was purchased from the mining contractor on April 17, 2000 on termination
of contract mining arrangements. The transition from operator mining to owner mining was
smooth with the majority of the contractor equipment and staff transferring to the Company
at this time. The primary excavation fleet now consists of five 23 cubic meter capacity,
and one 14 cubic meter capacity, hydraulic shovels. Material haulage utilizes a matching
fleet of 36 rear dump haul trucks, each with a capacity of 136 tonnes. In addition to this,
a support fleet of smaller shovels, five 100 tonne trucks and ancillary equipment is
employed.
 1.5
    
    Processing
 (A)
    
    General
 A total of 6.5 million tonnes of ore were milled and 4.8 million tonnes were fed through the
autoclaves in 2009 to produce 853,391 ounces of gold.The Companys processing plant is located in an area known as Putput, close to the mine at
the mouth of Luise Harbour. Lihir mine ore is termed refractory, meaning that conventional
extraction of gold by cyanidation is not viable without pre-treatment. The Lihir operations
process plant incorporates a pressure oxidation pre-treatment step using autoclaves to
expose the gold. This in turn is followed by conventional cyanidation.The ore is crushed and then milled through one of two milling circuits, one of which
incorporates flotation to allow upgrading of the sulphur and gold grades. The product of
these circuits is a slurry with grades optimized to suit the next treatment stage, pressure
oxidation in the autoclaves. After the autoclaves the oxidized slurry is washed through
counter-current decantation (CCD) thickeners to remove acid before continuing through
neutralisation, CIL, and tailings disposal. Gold is recovered from the CIL process through
carbon stripping, electro-winning and smelting.The processing plant was initially designed to treat 375 tonnes of ore per hour at a design
sulphur grade of 7.2%. A design autoclave operating time of 89% of total time was predicted,
resulting in a plant capacity of 2.9 million tonnes per year. The processing plant was
upgraded in 1999 to include a second oxygen plant and a small pilot flotation plant. Three
autoclave heat recovery vessels, used to pre-heat autoclave feed, were installed in 2001
along with a twelfth power generatoring unit. In 2002, a pebble crushing circuit was
installed in the grinding area to increase grinding capacity, and three additional autoclave
feed pumps were installed in 2003. In 2004, a new carbon regeneration kiln was installed to
increase gold recovery from the CIL circuit. In 2005, a gravity circuit was installed with
the intention of recovering any free gravity recoverable gold prior to leaching. Materials
transport difficulties combined with a lower than expected occurrence of gravity recoverable
gold led to the gravity circuit being decommissioned.The Company commissioned the 3 Mtpa capacity flotation circuit in 2007 aimed at maximizing
autoclave capacity and improving the economics of processing lower sulphur grade ores. The
upgrade included a new grinding and flotation plant, increased autoclave feed tank capacity,
an additional 10 tph oxygen plant, an additional lime slaker and an additional gold
desorption circuit. Ores of lower sulphur content are targeted for treatment in the new
circuit which utilizes flotation to upgrade the sulphur and gold content of the concentrate
that is produced. This flotation concentrate is mixed with ground ore from the existing
grinding circuit to provide more optimal feed for the autoclave circuit. The oxygen supply
and gold desorption circuits were upgraded to allow for the increased gold production
capability.Also in 2007, one of the original grinding thickeners was converted to a third CCD wash
thickener to reduce the consumption of lime in the gold leaching circuit.
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During 2008, a new larger soft ore sizer (ABON) was installed as a replacement to the
unreliable and low capacity MMD sizer. This allows for increased crushing capacity and
improves the capability of crushing softer high clay content ores. In 2008 a mobile crushing
plant was commissioned on a hire purchase arrangement to further boost crushing capacity and
to provide some insurance against crushing and conveying circuit downtime. This unit was
subsequently purchased in 2009.
 (B)
    
    Crushing
 Run-of-mine stockpiling and primary crushing facilities, incorporating a gyratory crusher
and the newly installed ABON sizer, are located at the Ladolam Creek area, approximately 500
meters east of the Minifie pit. All other processing facilities are located at Putput,
approximately one kilometre southeast of the Ladolam Creek area.
 (C)
    
    Stockpiling and blending
 A series of conveyors transport the crushed ore to a stockpile of approximately 140,000
tonnes capacity located at the Putput processing plant. The stockpile is segregated to allow
stockpiling of flotation feed ores (FGO) and direct feed ore (HGO) for subsequent
processing in the respective milling circuits.Ore is reclaimed from the stockpile via under pile feeders and conveyed into the HGO
grinding mills. Ore that does not flow freely through the under pile feeders is reclaimed
by front-end loader and fed through a separate feeder.A loader provides ore to a feed bin which provides ore to the FGO milling circuit.
 (D)
    
    Grinding and thickening
 Water is combined with the ore feeding the HGO Semi-autogeneous grinding (SAG) mill to
form slurry. Steel balls and the larger rocks in the feed grind the ore down to a fine
particle size. Coarse pebbles (scats) rejected from the SAG mill are conveyed and crushed
separately in the pebble crushing circuit before returning to the feed conveyor. SAG mill
discharge slurry is pumped to cyclone classifiers that separate coarse from fine particles.
Coarse material is directed into a ball mill for further fine grinding before
reclassification, whilst fine material continues on to a thickener. In the thickener, water
is recovered and flocculant is used to assist the settling of solids. Thickened slurry is
pumped to the pressure oxidation circuit. A larger thickener was installed early in 2005 to
allow the plant to better deal with clay-rich ores from the Lienetz pit.The FGO grinding circuit operates in a similar manner to the HGO circuit with the exception
that there is no scats conveying and crushing circuit, scats from these mills are conveyed
back to the coarse ore stockpile by front end loader for processing through the HGO mills
and scats crushers. Product from the FGO grinding circuit reports to a rougher flotation
circuit which separates and concentrates gold containing sulphide minerals into a flotation
concentrate. The flotation concentrate is thickened to 50% solids density prior to blending
with thickened HGO ore in the Pressure Oxidation feed tanks. The flotation circuit can be
bypassed, allowing the FGO grinding circuit to provide additional direct feed to the
autoclave circuit if needed, which has greatly increased the flexibility of the grinding
circuits. The operation of the flotation circuit increases throughput and also provides much
improved control of sulphur grade to the autoclaves allowing more economic treatment or a
wider range of ore types.
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(E)
    
    Pressure oxidation
 The Lihir operations pressure oxidation circuit utilizes Dynatec Corporations patented
technology and is typical of pressure oxidation autoclave circuits used to treat refractory
gold ores elsewhere in the world. Feed slurry with low sulphur grades is first pre-heated
to between 60°C and 90°C in heat recovery vessels. High sulphur ore can bypass this heat
recovery stage. The feed slurry is then pumped under high pressure into three horizontal,
six-compartment autoclave vessels. Inside the autoclave, slurry is subjected to an operating
pressure of 2,650 kPa and a temperature of 200°C  210°C. Pure oxygen added into the
autoclaves causes rapid oxidation of sulphide minerals, exposing the contained gold
particles. Autoclave discharge slurry is depressurized into a flash vessel where temperature
and pressure are reduced closer to atmospheric conditions. Resultant steam produced in the
flash vessels can be used in the heat recovery vessels if pre-heating of the feed slurry is
required. Carbon dioxide, nitrogen and residual oxygen is vented from the autoclaves into
the atmosphere.High-pressure gaseous oxygen for the pressure oxidization process is provided via three
cryogenic oxygen plants located adjacent to the processing plant. These plants have a total
production capacity of 82 tph of gaseous oxygen at 98% purity. Liquid oxygen is also
produced and stored for backup and emergency requirements.
 (F)
    
    Energy
 Power is supplied by a combination of geothermal and heavy fuel oil generators. There are 12
heavy fuel oil generators, each of 6.3 megawatts. A six megawatt geothermal plant was
commissioned in April 2003 and a 30 megawatt plant was commissioned in 2005. Construction
and commissioning of a further 20 megawatt geothermal power expansion was completed in
February 2007.The current site power requirement is approximately 76 megawatts of energy to meet all the
operating needs and allow for an appropriate spinning reserve (or operating power margin to
allow for fluctuations in demand). With the additional geothermal turbines, up to 56
megawatts is sourced from geothermal energy with the remaining 20 megawatts from HFO
generators, depending on steam availability. The Company is actively seeking to source
additional geothermal steam reserves to further reduce hydrocarbon sourced power generation.
 (G)
    
    CCD washing and neutralization
 Oxidized slurry passes through a three-stage CCD thickener circuit where it is washed with
process water to remove the bulk of the sulphuric acid created during the oxidation process.
Residual acid is then neutralized by the addition of milk-of-lime, which is prepared from
imported quicklime in a slaking circuit. In this way, slurry pH level is increased to an
appropriate level for cyanide leaching. Dilution water is added to reduce slurry viscosity
in preparation for CIL processing. During 2004, a by-pass line was added to the CCD
thickener to allow maintenance activities to occur with minimal production effects.
 (H)
    
    CIL processing
 Gold is recovered from the neutralised slurry in a CIL circuit. The circuit consists of
eight large, agitated tanks. The first tank ensures full neutralization and allows the
target pH to be reached. In the second tank, sodium cyanide is added to the slurry to begin
leaching gold into solution. Coarse, granular carbon is added to subsequent tanks to absorb
dissolved gold. Agitation ensures that the slurry, cyanide and carbon are well mixed and
suspended so that most gold containing particles are leached with the gold being adsorbed
onto carbon. Slurry flow progresses through the tanks whilst carbon, retained by screens,
is pumped in a counter-current direction and progressively loads with adsorbed gold.
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(I)
    
    Gold recovery
 Loaded carbon is recovered from the CIL circuit and stripped of gold in a continuous elution
system. This involves soaking gold-loaded carbon in a hot caustic/cyanide solution, causing
the gold to desorb from carbon back into solution, and then rinsing the carbon with hot
demineralised water. Stripped carbon is then regenerated by heating in an atmosphere of
steam, before being returned to the CIL circuit.Gold bearing solution from the elution process is circulated through electrowinning cells
where gold is recovered from solution through electro-plating to produce a gold sludge.
Finally, the sludge is dried and smelted in a furnace to produce doré bars. The gold
recovery facility was originally designed to treat up to 20 tonnes per day of loaded carbon.
This was increased to 28 tonnes per day in 2004 and further increased to 40 tonnes per day
with the installation of the second strip circuit as part of the flotation expansion in
2007.Following the introduction of the flotation expansion the overall ore treatment process was
designed to recover between 75% and 90% of contained gold, depending on ore type. Overall
plant recovery for 2009 was 81.3%.
 (J)
    
    Tailings disposal
 The tailings from CIL, the acidic wash water from the CCDs and the flotation circuit
tailings are combined with power plant and oxygen plant cooling water streams in a junction
box. Cyanide detoxification is achieved by mixing of iron-rich CCD liquor with CIL effluent
to complex the free cyanide. A mixing tank allows sufficient retention time for the
reactions to proceed and the tailings disposal is managed to ensure PNG water quality
standards are met.The combined streams are subsequently discharged into the ocean via a pipeline at a depth of
128 meters, which is below the surface mixed layer of the ocean. The surface mixed layer,
which is the uppermost layer of the ocean that is constantly mixed by wind and wave action,
varies with location and time, with a maximum depth of 98 meters being recorded to date at
the Lihir operation. Being denser than the receiving seawater, tailings discharged below
the surface mixed layer move down the steep submarine slope and will not rise to the
surface.
 (K)
    
    Economic grade ores
 Lower grade ores from the mine have been stockpiled for future processing. Weathering and
natural oxidation of stockpiled ores has the potential to inhibit autoclave throughput by
reducing the grade of sulphide in the ore. To mitigate this effect, a number of measures
have been taken:
 
    
    The heat recovery circuit commissioned in the third quarter of 2001 enables the
pressure oxidation circuit to treat a lower grade of sulphide in ore feed.
    
    Flotation plant capacity provides an opportunity to increase the sulphide grade of
stockpile ore.
    
    Blending of stockpile ores combined with operation of the flotation circuit enables
feeding of the autoclave circuit at the optimum sulphur level.
 (L)
    
    Plans to construct, expand or improve facilities (MOPU project)
 Mined ore production at the Lihir mine significantly exceeds the process plant capacity.
Excess ore is currently stockpiled for future processing. Accordingly, during 2006 a
scoping study was undertaken to assess options for expanding the Lihir operation process
plant. Various technologies and arrangements were considered. The results of the study
indicated that the optimum option involved continued use of the mines existing pressure
oxidation process technology with the additional pressure oxidation throughput processed by
a new autoclave having twice the capacity of each of the existing units. Additional crushing, grinding,
thickening, oxygen and leach plant facilities are also required to provide for the increased
throughput.
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On February 29, 2008 the Board of Directors announced approval to proceed with a major
upgrade of the Lihir operation. The Million Ounce Plant Upgrade (MOPU) Project is expected
to lift gold production capacity to approximately one million ounces per year from the end
of 2011. The MOPU Project was the subject of a 12 month feasibility study in 2007 and
2008which concluded that the upgrade will:
 
    
    Increase output, lower cash costs in a more reliable and consistent production
environment.
    
    Increase the rate of gold production by an average 240,000 ounces per year over the
life of the operation, with output over the period from 2012 to 2023 raised by 2
million ounces to more than 10 million ounces.
    
    Increase overall gold recovered by in excess of 1 million ounces over the life of
the operation due to improved processing efficiencies.
    
    Reduce costs of production following commissioning in 2011 due to economies of scale
associated with the higher annual production levels.
    
    Boost operating cash flows and deliver a significant uplift to net present value.
    
    Create operational flexibility to ensure more reliable and consistent production.
 Following the upgrade the annual throughput capacity of the process plant is targeted to
increase to more than 10 million tonnes, depending on among other things, the sulphur
content of the ore feed. The increased throughput is expected to produce an increase in
averaged annual gold production of 240,000 ounces.The increase in gold production is achieved in two ways:
 
    
    By maximizing direct feed ore to the autoclaves, thereby increasing gold recoveries
and consequently total gold production.
    
    By optimizing the processing operation and increasing the oxidation of the sulphides
contained in the ore.
 The plant upgrade has been developed with the approach of minimizing risk by utilizing the
same processes and technology currently in use at the Lihir operation. A conservative
approach has been taken to design and equipment specification.The total capital expenditure requirement for the additional plant and equipment is expected
to be approximately $700 million in February 2008 dollars.The above estimate excludes capital investment required for expansion of power generating
capacity. The expanded plant is predicted to increase average power demand from the current
demand of 76 MW to 126 MW. The feasibility study has been developed on the basis that the
expanded plant will be primarily powered by steam from geothermal sources through an
expansion of the geothermal power generating capacity. Existing geothermal power generation
capacity on Lihir Island totals 56 MW. Optimisation of the existing plant could lift
production to 76 MW through improvements to turbines and addition of binary units to utilize
heat from brine, which is currently rejected as waste. The estimated capital cost of this
optimisation is approximately $40 million. However, these improvements are subject to
verification of steam supply and completion of cost evaluation of other technologies.Pending definitive geothermal resource exploration and final evaluation, an interim power
station (IPS) is being installed. A detailed feasibility study for the IPS was completed
and approved in 2009. The IPS will meet the power requirement of the expanded plant until
the geothermal expansion is effected or some other power generating technology has been
established to meet long term power needs. The IPS will be a heavy fuel oil, reciprocating
engine power station. It will be barge mounted, providing flexibility for resale. The total
cost, including the shore side infrastructure to support the power barge is expected to be approximately $160 million and
will provide an additional 70 MW of net generating capacity.
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The capital expenditure of the expansion projects is expected to be approximately $400
million in 2010. The project is currently on budget and is expected to be completed by the
end of 2011.Regulatory approvals and permits for the upgraded plant include environmental approvals and
an additional mining lease to facilitate water supply infrastructure construction. These are
required prior to commissioning and will be sought from the relevant authorities
progressively over the next 12 to 18 months.A program of community and government consultation has already commenced. The MOPU Project
is expected to deliver a range of benefits for the people of Lihir managed through the Lihir
Sustainable Development Plan. It will provide significant investment into the local
community at Lihir. Economic benefits will flow to landowners, employees and shareholders.
 (M)
    
    Processing period after 2022
 The current life of mine plan indicates that up to 150 million tonnes of economic grade
material will be on stockpile by the end of mine life in 2023. This stockpile material is
projected to have an average gold grade of 2g/t. The ultimate amount of material stockpiled
and processed may vary depending on future cut-off grades policies adopted, error estimation
inherent with proven and probable reserves categories, and the overall contained sulphur
levels of long term stockpiles.
 1.6
    
    Exploration
 Within the Luise Caldera lie all the reported gold reserves on Lihir Island. Any area within
this area which has not yet been systematically drilled remains prospective for the
discovery of additional gold mineralization. The following map shows the land leases (shaded
in colours) available to the Company for exploration activity.
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Drilling to December 2009 focused on the North Lienetz, Coastal and Kapit Link zones. A
total of 41 holes were completed up until December 31, 2009 for 100,500 m. These results
were used to gain better definition of known mineralisation within targeted areas. 2010
drilling is designed to continue investigating the same areas as well as some infill
drilling in the Lienetz area. The additional drilling will continue to define the
mineralisation which will assist with determining the commercial viability and technical
feasibility of this mineralisation.Early stage exploration is also continuing over other parts of Lihir Island. The Luise
Caldera is one of five distinct volcanic remnants which together form Lihir Island. A
number of these volcanic remnants display geological similarities to the Luise Caldera, and
are therefore considered prospective for gold mineralization.Exploration programs are planned to explore fully the potential of the remainder of the
Island, through a phased program of outcrop mapping, stream sediment and outcrop sampling,
soil sampling, and drilling (assuming sufficient encouragement is gained from each phase to
justify follow-up investigation). Subject to negotiations for land access, it is
anticipated that the whole island will have been mapped and surface sampled within the next
five years. Follow up exploration will be dependent upon the results collected from this
work. See Item 3D. Risk Factors  2.8 The Companys mining and exploration rights may be
suspended or terminated.Exploration activities are expected to be funded from operating cash flows.
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1.7
    
    Infrastructure
 Little or no infrastructure existed on Lihir Island prior to the commencement of mine
related activity and development of the Lihir operation required a significant program of
infrastructure construction. In addition to the processing plant and barge loading
facilities for waste rock disposal, infrastructure now includes a main administration
office, an analytical/environmental laboratory, a training building, a warehouse, plant and
mine maintenance workshops and emergency response facilities.Infrastructure for the workforce includes housing and camp accommodation, and related
community facilities such as a school, medical centre, supermarkets, an open market and a
police station. Camp infrastructure comprises a mix of accommodation types with a total
capacity of approximately 3,000 beds, as well as associated messing and recreation
facilities, and plants for water and sewerage treatment. This infrastructure was upgraded
during 2006 to meet the additional demand arising from major construction activities on
site. In addition, approximately 82 dwellings are in place to house full-time residential
personnel.A wharf has been constructed at Putput for general cargo ships and tankers. An airstrip and
terminal facilities have been constructed on the northern portion of the island. The
airstrip was certified with the PNG Civil Aviation Authority in 2007 and the airport now
operates both domestic and international flights (direct to Cairns, Australia). The existing
road connecting the airstrip and the project site was improved and an unsealed ring road
around the island was installed. A total of some 30 km of the road has been sealed to date.Fresh water is required in the processing plant and in the grinding circuit to reduce the
chloride content of the ore. Potable water is also required. The nearest available source
of water in sufficient quantity is the Londolovit River where a run off weir scheme and
associated pumping station has been constructed. A water treatment plant (installed in 2003
and upgraded in 2009) serves to improve water quality. Some makeup water is abstracted for
processing and ancillary purposes from the pit area itself.Communications at the site, across the island and within the PNG mainland and overseas are
provided through the national telephone network carrier and internet access for the
operation is provided via a dedicated satellite link. Marine and aeronautical radio systems
are also installed. An independent provider installed a digital cellular network in 2007 and
2008, with coverage limited to the northern airport and southern regions of the island,
which includes the airport, town site and processing plant areas.
 1.8
    
    Logistics
 Operational consumables, supplies and maintenance parts are sourced from major suppliers
within PNG and the Asia Pacific region. Petroleum products are sourced from Singapore,
Australia and Fiji, cyanide from Korea, and quicklime from New Zealand. The majority of
supplies are consolidated at the Companys forwarding agency and transported by regular
shipments from Brisbane, Australia. Supplies are generally secured through contracts
varying between one to five years duration. The majority of freight sourced from PNG is
consolidated at Lae and then shipped to Lihir Island.
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1.9
    
    Personnel
 (A)
    
    Workforce
 At December 2009, the Lihir operation employed some 2,130 people on Lihir Island
of which 35% were Lihirian, 55% were other (non-Lihirian) PNG nationals and 10% were
expatriates from various other countries. A great deal of work at the site is undertaken by
third party contractors, or business partners. During 2009, the workforce (including
business partners) totalled some 4,800 people. The Company continues to sponsor regular
professional and developmental training, both in-house and externally. See Item 6 -
Directors, Senior Management and Employees  D. Employees.
 (B)
    
    Occupational health and safety
 The Company operates in a unique and challenging work environment and is committed to having
a workforce free of injury and occupational illness. The Company endeavours to do this by
ensuring that employees, business partners and the community benefit from the Occupational
Health and Safety (OH&S) management plans developed for its Lihir operation.
 (C)
    
    Safety performance
 Both lead and lag indicators are used to measure the Companys safety performance. Some of
the lead indicators used are number of audits and inspections completed, percentage of
corrective actions closed out, standard operating procedure development and review as well
as the number of Job Safety Observations (JSOs) completed. JSOs are an integral part of
the Companys behavioural (or cultural) based safety program. Lag indicators used are the
traditional measures of injury frequency rates. The Company measures both lost time injuries
(LTI) and total recordable injuries TRI), which is the total of lost time and medical
treatable injuries, and restricted work injuries (TRIFR). The frequency rates are based on
1,000,000 exposure hours to align with and benchmark the Company against Australian mining
companies.By focusing on the positive performance indicators, the Lihir operation achieved another
sound performance with only one recorded LTI in 2009. The LTI frequency rate (LTIFR)
decreased to 0.08
 2009
    
    2008
    
    2007
    
    2006
    
    2005LTI
    
    1
    
    3
    
    2
    
    5
    
    12LTIFR
    
    0.08
    
    0.26
    
    0.18
    
    0.53
    
    1.53
 In 2009, 30 serious injuries were recorded, which resulted in a TRI frequency rate
(TRIFR) of 2.5. A total of 24 serious injuries were recorded during 2008, compared to a
TRIFR rate of 2.1 in 2008.Comprehensive site wide OH&S safety plans have been developed and cascade down through the
business to departmental and sectional levels. Key performance areas and key performance
indicators are then benchmarked and reported on using a balanced score card. The scorecards
are updated monthly and reported across the departments and site so employees can keep track
of the Lihir operations safety performance. Employees participate in setting the
departmental and sectional targets and then act like owners to seek to ensure the
operations lead indicators are met.In 2009, the Companys Fitness For Work programs continued and the development of a
Behavioural Based Safety system also commenced. These programs have contributed to the safe
workplace. Considerable work was also initiated with the contractors, ensuring that their
safety management systems were consistent with Lihir operations, or the contractor adopted
the Lihir Systems.
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1.10
    
    Environmental Considerations
 (A)
    
    Overview
 The existing operations at Lihir mine are conducted in accordance with a range of acts,
regulations and regulatory instruments including the original Environmental Plan (EP)
approved in 1996 (NSR, 1995), and the more recently approved Production Improvement Program
Environmental Impact Statement (LGL, 2005). The Company works closely with the government
in implementing all statutory monitoring and reporting requirement as specified in its
Environmental Monitoring and Management Program (EMMP). The recently approved Lihir EMMP
(LGL 2009-2012) was prepared in accordance with the above mentioned plans and environment
permits issued by the PNG Department of Environment and Conservation (DEC). The EMMP
provides details of the environmental monitoring requirements and reporting commitments to
the PNG DEC, Mineral Resources Authority (MRA) and community representatives.Since the commissioning of the flotation circuit in 2007 which increased the maximum
ore-processing throughput from 4.3 Mtpa to 6.7 Mtpa, studies undertaken by LGL have
identified that the greatest opportunity to further improve the economics and long-term
viability of the Lihir gold mine will be achieved by increasing the process plant throughput
to better match the rate of ore mining. LGL mines ore containing approximately 1 million
ounces of gold per year but, stockpiles a significant proportion of the ore for
processing during and after 2023 when open pit mining is planned to end. The Company
prepared and submitted an Environment Impact Statement (EIS) in November 2009 for the MOPU
project.The MOPU Project will result in substantial operational improvements and efficiencies and
better use of the gold resource. Environmental and socio-economic considerations for the
MOPU Project are governed by the Environment Act 2000, which provides for, and gives effect
to, the national goals and principles of the PNG constitution. LGL is waiting on approval
of the EIS from the PNG Government.The final stage of the 50MW geothermal power plant project was commissioned in 2007
increasing total geothermal capacity from an original 6MW steam pilot plant to a nominal
56MW. The 50MW geothermal power plant is registered under the Clean Development Mechanism
allowing the company to claim Carbon Emission Reduction Certificates (CERs) under the
United Nations Framework Convention on Climate Change and the Kyoto Protocol, to which PNG
is a signatory.The Company obtained full certification of its Environmental Management System (EMS)
against the ISO14001 standard in May 2004, making the Company the first operation in PNG to
do so. In 2007, the Company achieved recertification of its management system against
ISO14001 and began working towards a fully integrated management system.
 (B)
    
    Regulation of existing operations
 The existing operations at the Lihir operation are conducted in accordance with a range of
acts, regulations and regulatory instruments, including:
 
    
    Agreed development plans stipulated in the Mining Development
Contract for the Lihir Gold Mine, signed
in 1995 between the Independent State of Papua New Guinea and LGL.
    
    SML 6 issued in 1995 in accordance with the Mining Act 1992 and
included as Schedule I of the Mining Development Contract. The operation also
maintains a number of mining leases, lease for mining purposes and mining
easements.
    
    The Approved Proposal for Development (APFD), approved by the
Minister for Mining and Petroleum in 1995, and included as Schedule III of the
Mining Development Contract.
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
    
    Environmental plan (NSR, 1995), approved in 1995 included as an
associated plan to the 1995 APFD. The plan was prepared in accordance with the
Environmental Planning Act 1978, the Water Resources Act 1982 and the
Environmental Contaminants Act 1978. These acts were repealed following
proclamation of the Environment Act. However, existing approvals, permits and
licences issued under those acts remain valid.
    
    The 2005 Production Improvement Program EIS (LGL, 2005a), received
in-principle approval by the Minister in March 2008, and new environment
permits issued in October 2008.
    
    Environmental management and monitoring program EMMP, originally
approved in 1997 and subsequent revisions in 2000, 2004, and 2009.
    
    Environment permits that regulate the existing operations. These
permits were issued to LGL in October 2008 under the Environment Act. Each
permit outlines the annual charge, conditions, monitoring and reporting
requirements and is valid for 50 years. The permits regulate the following:
 
    
    Permit number WE-L3 (143) for the extraction of water
from Londolovit and Caldera Rivers for use in process water, dust
suppression, village water supply and other uses.
    
    Permit number WD-L3 (191) for the discharge of wastes
into the environment, including waste rock, run-off water, tailing, noise,
sulphur dioxide (SO2) and particulate matter (PM10).
 (C)
    
    Existing Environmental Monitoring and Management Program
 The Companys current EMMP, which was revised in 2009 for the period through 2010, outlines
specific monitoring elements designed to monitor the impacts arising from the companys
activities. The two main objectives of the EMMP are to:
 
    
    Monitor and report on the operations environmental impacts and
compliance with the operations environmental permits.
    
    Implement LGLs environmental management policies and procedures.
 Further to EMMP requirements, the Company retains independent environmental consultants to
report on its environmental compliance. The Company is involved in research projects with
CSIRO Division of Marine and Atmospheric Research, CSIRO Centre for Mining Environmental
Research, CSIRO Division of Land and Water, CSIRO Materials Science & Engineering, Canberra
University, and a number of independent consultants in the field of tailing and land
management including HayCo, Coffey, IHA Consultants and URS. Projects include studies on
the impacts of mine waste disposal on deep and shallow water fish; a shallow water fish and
benthic habitat monitoring program; and an ongoing study of trace metal concentrations on
selected fish, invertebrates and plants. The Company has also commenced a study
investigating the bioaccumulation of mine waste disposal in tropical bentho-pelagic food
webs. This latest study is the first detailed assessment worldwide to address the potential
impact of bio-magnification of contaminants in the food chain from a DSTP operation.The PNG Government carries out its own independent audits and monitoring for elements
contained in the EMMP to confirm the Companys results and the Company complies with its own
corporate reporting requirements, and continues to liaise and consult with local communities
within the framework of the Lihir Sustainable Development Plan (LSDP), funded by the
Companys Integrated Benefits Package (IBP).
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(D)
    
    Terrestrial Environment
 The terrestrial biological environment of Lihir was described in the EIS documentation.The tropical climate of Lihir Island supports a dense and taxonomically diverse terrestrial
plant population. Flora populations vary primarily with elevation and topography, although
in some areas the presence and distribution of some native species has been significantly
altered by human activities including subsistence agriculture, mining and the introduction
of invasive plant species. A diverse range of terrestrial fauna exists on Lihir Island,
similar to distributions found across the New Ireland region. Common fauna includes
marsupials, reptiles, amphibians, birds and mammals, including wild and domesticated pigs
and dogs.Megapodes (Megapodius eremite) are small bush fowl commonly found throughout eastern Asia
and the Pacific region. Megapodes were hunted as a food resource prior to the development of
the mine at Lihir. The birds make use of the geothermally heated soils within the Luise
Caldera to incubate their eggs. The Environmental Plan (NSR, 1995) predicted that up to 80%
of the islands Megapode population would be lost as a result of the loss of the specific
incubation habitat within the caldera. Monitoring surveys (EMMP) and research on megapodes
are conducted jointly with the Wildlife Conservation Society (WCS) to determine the impact
of the habitat reduction from the mine and to undertake research on the potential to develop
hatcheries for this species. Surveys have identified previously unknown breeding grounds
both within and outside the caldera, which may account for the steady population.
 (E)
    
    Marine Environment
 Lihir Island forms the top of a submerged, steep-sided mountain of volcanic origin and is
surrounded by very steep submarine slopes, which rapidly descend from the shore to
considerable depths. The widest coastal area of relatively shallow water is Luise Harbour,
which is a remnant of the collapsed Luise volcanic crater, beyond which the seafloor drops
to depths greater than 1,500 to 2,000 m at distances of 15 to 20 km offshore. Lihir Island
is surrounded by a narrow, nearshore fringing reef.Mining discharges that affect the nearshore marine environment off the east coast of Lihir
Island include waste mine rock, processed tailing slurry, surface runoff from the mining
area (including suspended sediments in runoff and acid rock drainage (ARD) leachate from the
low grade ore stockpiles) and treated effluent from the sewage treatment plants. LGL
undertakes routine compliance monitoring in relation to these discharges in accordance with
the projects Environment (discharge) permit and EMMP.LGL disposes of unprocessed waste rock from the mine into Luise Harbour at a maximum
permitted annual rate of 30 million bulk cubic metres (Mbcm) in accordance with Environment
Permit WD-L3(191) and the projects EMMP element 4.5. There are no chemicals added to waste
rock throughout the excavation and disposal process. However, most waste rock from the Lihir
pits is potentially acid generating, but as it is not stockpiled for any length of time
before disposal and ocean disposal keeps the rock saturated, effects of waste rock disposal
are more physical than chemically related.The tailing slurry, comprising processed ore, process water and cooling seawater, is
discharged via the DSTP system at a depth of 115 m, below the biologically active zone and
where the density of the receiving water precludes the tailing floating back to the surface,
from which point it flows as a density current or dilute sub-surface plumes to depths mainly
between 1,000 and 2,000 m. The Deep sea Tailing Placement discharge is regulated by the conditions specified in
Environment Permit WD-L3(191), which details compliance water quality concentrations within
the receiving seawater at the Mixing Zone Boundary.Seabed monitoring, as part of the EMMP into the amount of mine-derived material entering the
ocean from the different sources with the actual amount estimated to be on the seafloor has
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been undertaken using the geochemical signature of sediment core profiles and observed
thicknesses. This area is more extensive than was originally predicted, although the
originally modelled footprint only represented deposition from the bottom-attached density
currents derived from the DSTP, and did not include settled flocs from sub-surface plumes or
any of the other sources of mine-derived material other than tailing. Nevertheless, the
basis for the prediction of impacts to the seafloor and benthic communities needs to take
into account all sources and further tailing dispersion and deposition modelling has been
completed to predict progressive deposition for the remainder of mine life. Further work
will continue to assess the impact through the studies outlined above.
 (F)
    
    Rehabilitation and decommissioning
 The projects original 1999 Conceptual Mine Closure Plan (MCP) was updated in December 2004.
The 2004 MCP included the planning and financial provision for closure activities,
re-assessment of the environmental and biophysical aspects of closure and consideration of
socio-economic issues leading up to mine closure and beyond.The MCP strategy consists of progressive rehabilitation during the operational stages,
together with specific rehabilitation activities at the cessation of mining activities and
at the end of the low grade stockpile processing period. The main objective of
rehabilitation is to leave the site in a physically and geochemically safe and stable
condition. Where possible, workforce reductions and the rehabilitation and closure
activities will be undertaken progressively prior to the cessation of operations. A further
five years after the completion of rehabilitation has been planned for post-closure
monitoring and maintenance prior to relinquishment.The Company considers community involvement and community support throughout the mine life
integral to orderly mine closure. This is demonstrated by the fact that Chapter Five of the
LSDP includes the agreement reached on mine closure planning aimed at assisting the
community to achieve a sustainable future. The next review of the MCP is scheduled in 2010.
 1.11
    
    Community affairs
 Lihir is the collective name for a group of four islands with a total population, at last
count in December 2008, of approximately 14,529 Lihirians, and approximately 4,860
non-Lihirians from other parts of PNG.Comprehensive land tenure and genealogy studies were conducted prior to the mines
development and records are updated annually. The people of Lihir share a common language
and the clan structure, factors which assisted in the original conduct of the compensation
negotiations and project approval by the community.
 (A)
    
    The Original Integrated Benefits Package (IBP)
 In 1995, a comprehensive set of benefits and compensation arrangements known as the
Integrated Benefits Package (IBP) were agreed between the Company, the three levels of
government (National, Provincial and Local) and the people of Lihir (referred to here as
the Original IBP). The Original IBP details the commitments made by the various
stakeholders to the community in terms of infrastructure and support, community development,
compensation, and relocation of certain families from within the Special Mining Lease. The
Original IBP contains in one volume all of the commitments made to the people in the Lihir
group of islands in return for their allowing the project to proceed on their land.The IBP is based on four chapters including: 1) Destruction (relocation and compensation);
2) Development (royalty payments, equity participation, community infrastructure, facilities
and services, business development, human development, village development); 3) Security (trust
funds, long term development plans, long term investment plans, training and localization);
and 4) Rehabilitation (progressive rehabilitation and mine closure provisions). The Original IBP was
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signed on Lihir on April 26, 1995, by Lihir Management Company Limited
(initially on behalf of the joint venture but with an acknowledgment that it would
subsequently be on behalf of the Company), by the three levels of government and by
representatives of the various groups of landowners and residents on Lihir Island. It
satisfied the requirements of the PNG Mining Act for compensation arrangements to be in
place before mining commenced. The Original IBP was endorsed by the PNG Registrar of Mines
prior to signature by the parties.The compensation provisions of the IBP (chapter 1) provided for compensation to be paid to
the landowners for cleared, damaged or otherwise affected land, for loss of economic plants,
for loss of man-made structures, for loss of marine resources and wildlife, for
discoloration or other adverse effects on creek water and seawater, for disturbance of
burial grounds and sacred sites and for other miscellaneous effects of the Lihir operation.
Additional land use payments and compensation has been, and as required will continue to be,
paid to landowners in the Ladolam pit and Putput plant site areas for loss of access to land
and loss of other resources as a result of the Lihir operation. In addition, the
compensation agreement provides that the landowners will be paid royalties per cubic meter
for sand, gravel and coronus material excavated from their land.Provision of benefits for future generations of landowners and of relocatees was a
significant issue during the negotiations. Therefore IBP chapters 2 and 3 provided for the
establishment of trusts for the long term benefit of landowners and residents and their
children, and contain acknowledgments by the landowners and residents that these agreements
properly and adequately provide for their compensation (statutory and otherwise). In the
event of a dispute, formal mediation and arbitration procedures are provided for in the
agreements. More importantly, the IBP provides for a regular process of review on a five
year cycle to provide an opportunity to keep the agreement consistent with the changing
circumstances on the island over time.In June 2001 the Company, the local community of Lihir and the PNG National, New Ireland
provincial and Lihir local level governments jointly commenced a full review of the Original
IBP to assess its effectiveness and how it might be improved to serve the various parties
better in the future.
 (B)
    
    The revised IBP  Lihir Sustainable Development Plan (LSDP)
 In 2006, following lengthy discussions, the Company commenced implementation of a new 100
million Kina, five-year IBP for the Lihirian community (referred to here as the Revised
IBP). As well as continuing the features of the Original IBP, the Revised IBP facilitates
health, education and community development programs on Lihir Island, with the benefits
distributed island-wide. The Revised IBP agreement is also referred to as the Lihir
Sustainable Development Plan (or LSDP) and, was signed in May 2007. It signifies a commitment
to a process to develop a series of programs aimed at financial independence and self
reliance over the period of mining and that as such each program will require ongoing
detailed annual planning to attain these sustainable objectives.
 (C)
    
    Equity participation
 Beginning in 1995, MRL Capital Limited (MRL), formerly Mineral Resources Lihir Limited has
held shares in the Company on trust for the Lihirian Equity Trust, being the Lihirian
landowners whose land is impacted by the Lihir operation.Since 2005, MRL has sold part of its interest in the Company. This was initially done to
repay loans that were taken out to fund the purchase of shares by MRL. More recently,
further sales were made following MRL obtaining Court orders in November 2006 enabling the terms of the
Lihirian Equity Trust to be varied.After MRLs initial sell down to fund its loan repayments was complete (but prior to MRLs
most recent sales after the terms of the Trust were amended), the Company stated that it
proposed to
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issue 3,284,499 additional shares (being 0.26% of the Companys issued capital
as at September 30, 2006) to MRL for no consideration in accordance with a commitment given
under a non-binding heads of agreement dated March 28, 2003 between the State, the Company,
MRL and other Lihirian entities and a commitment in the Revised IBP. Following receipt of
the necessary approvals from the Companys Board and its various market and corporate
regulators (in particular, the ASX and TSX have specific requirements for the issue of new
capital), the 3,284,499 shares were issued to MRL on March 25, 2008 through a private
placement.As part of an additional commitment in the Revised IBP, the Company has sought to maintain
the Lihirian communitys involvement with and interest in the Lihir operation through a
proposal that the Company issue a smaller number of additional shares in the future to MRL.
Discussions on this proposal are ongoing.Also under discussion is a greater role by the Lihirian community in other business
opportunities. The discussions on this and other issues are continuing within the context of
the Original IBP and LSDP agreements which, as noted above, set the framework for ongoing
negotiation and discussion. In order to expedite these discussions and sustainable
development initiatives a permanent joint stakeholder committee, the LSDP Planning and
Monitoring Committee, was established in 2007 to oversee the implementation and
administration of the agreements.The Company has made substantial annual financial contribution by way of compensation,
community development, royalties, wages, purchases from local suppliers and other payments
to the Lihirian community as shown in the table below.
 2009
    
    2008
    
    2007Kina millions
    
    
    140.2
    
    
    
    105.5
    
    
    
    56.4$ millions equivalent
    
    
    51.5
    
    
    
    41.2
    
    
    
    20.1
 Even though the Company puts significant effort into addressing landowner and community
issues, it cannot guarantee that specific disputes will not disrupt operations in the
future. See Item 3. Key Information  D. Risk Factors  2.2 The Company is subject to
political and community risk.
 (D)
    
    Business development
 Under the terms of the Original IBP the Company provided direct support to the local
community for business development through its Business Development Office (BDO). BDO
assisted the local business community to develop realistic, sustainable commercial
opportunities.The BDO continued to provide advice and assistance to local businesses to assist them in
maintaining financial records and to otherwise complying with the PNG
Companies Act 1992 and
Business Groups Incorporation Act 1974 up until 2008. In 2008 in accordance with the
Original IBP agreement, the BDO became an external independently managed company. The new
independent holding company, Lihir Business Services, and is a subsidiary of Anitua Ltd, the
landowner associations commercial arm.Anitua Ltd oversees a group of companies which manage service contracts in the areas of
catering, civil works, vehicle maintenance, construction and business services.Many other local businesses continue to benefit from the Companys outsourcing program for
support and logistics activities by providing goods and services to the Lihir operation.
This is undertaken by means of a transparent and formalized tender process. Local business
development creates employment and generally contributes to the local economy.
 (E)
    
    Education assistance
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In 2009, the Company continued to assist Lihirian students through a range of programs. In
addition, a major review of the education system aimed at establishing a 20 year education
improvement plan is currently underway. This long term project is underpinned by an
education baseline survey into the status of numeracy, literacy and infrastructure on Lihir
Island.
 (F)
    
    Security
 The Company has supported the establishment by the community of a law and good order
committee on Lihir Island. This committee has liaised closely with the Royal PNG
Constabulary (Police) and other relevant agencies. Several initiatives on community
policing, such as education campaigns on illicit drugs, alcohol abuse and domestic violence,
continue to be pursued. There have also been training courses conducted to improve the
performance of Village Courts. Village Courts are an important level of the judicial system
in the local community. At a District Court level, a resident magistrate continues to be
stationed on Lihir Island, and court facilities have been established allowing the hearing
of criminal and civil matters without long delays.Project security encompasses the plant, mine site, commercial area, housing estate, camps,
hospital, airport and associated infrastructure. These services are provided by a local
security company with security personnel managed and supported by Company personnel.A police station and cell block were completed and handed over to the Royal PNG Constabulary
in late 1997. The Company also provides government housing and other support to the Lihir
Island police contingent. External police support can be mobilized from Kavieng or Rabaul
if required. Flight distances from both of these centers are less than one hour.
 (G)
    
    Community health
 An important benefit provided to the Lihirian community is improved health care. Currently
the Company provides medical services to employees, contractors and their dependents as well
as to the local people through the Lihir Medical Centre at Londolovit, which offers
outpatient, inpatient and preventative health care services. The Medical Centre also
provides support through the provision of drugs and services to all the government and
mission run health facilities throughout the Lihir Group of islands. As with the education
system a review of the community health program is also currently underway as part of the
sustainable development objectives of the LSDP Revised IBP.
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2.
    
    Africa
 2.1
    
    Summary(A)
    
    Introduction
 The Bonikro project is located in central-southern Côte dIvoire in West Africa. It is
located approximately 67 kilometres south of Yamoussoukro, the capital of Côte dIvoire, and
approximately 240 kilometres northwest by road from Abidjan, the commercial centre of the
country. The nearest regional town is Hire which is approximately 9 kilometres from Bonikro.
 
 (B)
    
    Mining rights
 The Bonikro gold deposit is located within the area of Exploitation Licence Number PE32,
originally granted to Equigold CI SA by Presidential Decree 2007-05 on January 17, 2007. The
exploitation license covers an area of 37.12 square kilometres with an extension pending of
264.3 square kilometres and has a term of 8 years.
 (C)
    
    Operations
 Bonikro is a conventional truck and excavator open pit mine free digging the oxide material.
When the fresh material is exposed, drill and blast techniques are employed to first break
the material before moving it. The deposit provides feed for the mill, a modern CIL gold
extraction plant with a 7,500 tonne per day capacity.Mining operations commenced in prestripping in early 2008 with the plant being commissioned
in October 2008, ramping up to full production by the end of 2008.
 2.2
    
    Geology and Mineralisation(A)
    
    Geology
 The geology of the Bonikro deposit is dominated by a sub-volcanic porphyry of granitic
composition that is present in the subsurface over a strike length of at least 600 m and a
width of up to 300 m. The composition, relatively undeformed nature, elongate morphology
and small size of the porphyry, strongly suggest that it is a syntectonic intrusive of the
Proterozoic Dixcove (belt-type) Suite, which has preferentially intruded a pre-existing
shear zone within the Birimian stratigraphy. The porphyry intrudes an extensive sequence of
basalts of the Upper Birimian Series that have been metamorphosed to mid greenschist facies.
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Only two rock types have been identified within the Bonikro deposit. The dominant host of
the mineralization is a relatively undeformed granodiorite that is thought to be a
syntectonic intrusive of the Proterozoic (belt-type) Suite. These are termed Dixcove
granites in nearby Ghana. The unit strike length is over 700 m although the bulk of the
mineralization is limited to the southern 400 m. The granodiorite is bound on its eastern
and western margins by an extensive suite of basalts metamorphosed to greenschist facies.The contacts between the two lithologies are characterized by strong foliation and tectonic
mélange. The western contact is strongly irregular and appears to dip moderately to the west
in the northern half, and becomes almost vertical in the south. The eastern edge dips
sub-vertically to the east and swings back towards the west at depth. The granodiorite unit
plunges shallowly to the north and south resulting in a domal type character. Two high
angle, easterly striking faults have been interpreted from geophysical data to offset this
granodiorite unit.Within the southern portion of the deposit, mineralization is dominated by a north- ing
brittle ductile shear zone with the mineralized zone restricted to a well defined, planar
lode dipping approximately 30 degrees to the east. Further north, mineralization
progressively increases in size and grade as it encroaches on the surfacing granodiorite.
Within the granodiorite itself the mineralized zone becomes more brittle and diffuse in
nature, and is accompanied by extensive quartz stockwork veins in both the footwall and
hanging wall of the primary structure.
 (B)
    
    Mineralisation
 Mineralization within the southern portion of the project area is dominated by a solitary
north-trending brittle-ductile shear zone, which dips approximately 30 degrees to the east,
oblique to the regional fabric. The mineralized zone within the basalt becomes marginally
broader and higher grade as it encroaches on the surfacing porphyry. Within the porphyry,
however, the zone becomes more brittle and diffuse in character, and is accompanied by
extensive zones of stockwork veining in both the footwall and hangingwall of the primary
structure. Although more difficult to identify, there is strong evidence to suggest that
several structures of identical style and orientation are preferentially developed
throughout the porphyry in an en-echelon array, imparting an overall north-north-easterly
trend to the mineralized corridor. The majority of the dilation and mineralization is
preferentially developed within the more competent porphyry. Where the major north-trending
and shallow east-dipping shears are developed in close proximity, the marginal stockwork
veining coalesces to form a broader, more continuous mineralized envelope.Mineralization associated with the principal shears is developed within both the basalt and
the porphyry, while stockwork veining is almost exclusively confined to the porphyry. The
veins are variably sulphidic, being dominated by minor pyrite and subordinate pyrrhotite.
Molybdenite and scheelite are also present along vein margins and fractures, however these
latter species are consistent with the granitic composition of the porphyry and are likely
to represent the product of local remobilisation with a genesis unrelated to the gold
mineralizing system. Gold is frequently observed in either free form or accompanying
sulphides within quartz veins. Minor carbon, frequently accompanied by more abundant
molybdenite, is developed along steeply dipping, late stage, slickensided faults. The
presence of carbon is insignificant, and no other mineral species are likely to adversely
affect analytical results or metallurgy within the mineralized hypogene zone.The Bonikro deposit provides feed for the mill, a modern CIL gold extraction plant with a
7,500 tonne per day capacity.
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2.3
    
    Reserve Estimates
 Appropriate reviews in the areas of mining, geotechnical, and geological modelling have been
carried out to confirm and further develop the assumption base for the mine. Site reviews
of mining and processing costs have provided for an improved modelling and optimization base
for the latest estimate.The Company acquired the mine at Bonikro in the second quarter of 2008. There has been
insufficient work completed to be reporting reserves in accordance with Industry Guide 7.
The Company currently intends to establish reserves in accordance with Industry Guide 7 by
quarter 32010.
 2.4
    
    Mining
 The Bonikro mine includes the Bonikro open pit mine, ROM pad, process plant and tailings
storage facility. Open pit mining is carried out on a seven day week production basis.
Standard drilling and blasting techniques are used in hard rock along with free digging in
soft areas. Selected blast holes are sampled and assayed for production grade control
purposes in hard rock and trench sampling is conducted in soft areas. Broken and freely dug
rock is loaded with an excavator into haul trucks. Depending on the block model
determination or grade control results, the mined material is delivered to the ROM pad,
primary and secondary crusher, low-grade stockpile, or to waste rock dumps.
 (A)
    
    General
 The open cut operation is currently developing the first and second stages of the Bonikro
pit. The operation is a conventional truck and excavator type operation free dig mining the
oxide material. When the fresh material is exposed drill and blast techniques are employed
to break the material before moving it.
 (B)
    
    Pit design and planning
 The Bonikro operations mining department updates a detailed Life of Mine plan (LOM) based
on the current technical information available and utilization of the existing available
mining fleet. Truck productivity predictions (tph and cycle times) are adjusted to reflect
production experience. The proposed haulage profiles are determined for each bench and pit
phase, plus the three possible destinations (ROM pad, low-grade stockpile, and waste dumps).
Using this data, the truck hours required to move the scheduled tonnage are limited to the
actual producing truck hours from the mine fleet (after availability and utilization).Production scheduling is driven by:
 
    
    mill feed requirements and capacities;
    
    stripping requirements for cutback stages;
    
    loading rate constraints, where two excavators and associated trucks
can operate; and
    
    haulage limits determined by the size and number of trucks and their
productivity.
 The LOM uses the following pit design criteria:
 
    
    20 m berm intervals with 5 m mining benches;
    
    Variable slope angles between 37o and 59.6o
inter ramp angles; and
    
    22 m wide haul roads typically 1:10 grade.
 (C)
    
    Mine equipment
 The major mining equipment used at Bonikro during 2009 consists of 2 Terex O&K RH90
excavators and a fleet of 11 Cat 777 dump trucks. The support equipment includes bulldozers,
grader, watercarts, and drill rigs.
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Other equipment includes assorted support equipment and facilities, workshops and
maintenance buildings, wash bay, fuelling facilities and site office.
 2.5
    
    Processing
 The Bonikro operation uses CIL processing, at the rate of approximately 2Mtpa for fresh
ore.A comprehensive metallurgical test work program was carried out on the three ore types
within the pit area. The ore can be classified as extremely clean, with no obvious
metallurgical problems. Gold recovery by cyanidation is very high (96%) even at a grind of
P80 125microns. As a high percentage of the gold is coarse, the gravity circuit recovers
approximately 35% of the total gold.The metallurgical flowsheet followed at Bonikro is simple and robust. The plant design is
based upon equipment that is reliable and easy to maintain, arranged in a layout that has
proven convenient and efficient to operate in other plants arranged in a similar manner.The low stripping ratio in the mine lends the mining operation to direct tipping from mine
trucks to the crusher, with about 30% rehandling from ROM stockpile. A small ROM pad has
been prepared adjacent to the primary crusher feed hopper. The trucks dump directly to the
crusher and the immediate ROM pad serves only as a truck marshalling area and emergency dump
site in the event of an unacceptably long delay for trucks dumping at the crusher. Low grade
ore excess to production capacity is dumped close to the ROM forming an extension of the
ROM.The ore is prepared for grinding with two stages of crushing in closed circuit with a screen
to size the product to minus 50mm, and deposited into a large stockpile with sufficient live
capacity to feed the grinding circuit for 15 hours. A semi-autogenous grinding (SAG) mill
and a pebble crusher grinding circuit reduce the primary crushed ore to a finely ground
slurry which is treated by conventional gravity separation techniques and CIL technology to
extract the gold and silver from the ore. The primary crusher is located about 600meteres
from the mine to avoid flyrock and to minimize the mine haulage costs. The remainder of the
treatment plant is more than 600 meters from the mining operations.The plant has a nominal capacity of 2 Mtpa on hard ore and is designed to extract 94% of the
gold from the ore. Based on the varying hardness of the ore, crushing and grinding rates
can change significantly within the deposit, having a direct impact on mill throughput and
ultimately unit costs.
 2.6
    
    Infrastructure
 The Bonikro operation moved from the development stage to the production stage in October,
2008. The installed infrastructure includes a process plant, primary and secondary crushers,
workshops and administration building. A process water dam provides water for the
operations needs. Future infrastructure will include a mining office and warehouse
facilities.Process water for the Bonikro operation site is sourced from small dams constructed around
the site. A series of bores have been installed to supplement the dams particularly during
the dry periods.The Bonikro operation lies close to the local electrical grid. Power is supplied to the
operations transformer at the local township of Hiré and then transmitted 15 km to the
Bonikro mine site.
 2.7
    
    Logistics
 Operational consumables, supplies and maintenance parts are sourced from major
suppliers within Africa, Europe, Australia and the Asia Pacific region. Petroleum
products are sourced from within Africa and cyanide from Ghana and Australia. The majority of supplies are consolidated
at a nominated forwarding agency and transported by regular shipments from Europe and Australia..
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Local transport companies within West Africa provide transport to the mine
site. Supplies are generally secured on normal purchase orders and supply contracts ranging
from between one to three years duration.
 2.8
    
    Rehabilitation and Decommissioning
 The Bonikro mine closure plan was part of the approved Environment Impact Statement (Chapter
17). The estimated cost was $3.0 million. Formalised mine closure planning is to commence
in mid 2010.
 2.9
    
    Community affairs
 The social aspects of the Bonikro operation were identified in the project
Environmental Impact Study (EIS) and plans developed to address issues like resettlement,
land compensation, loss of agricultural land and general social wellbeing. The EIS outlined
the requirements and was accepted by the Government of Côte dIvoire and community allowing
the project to proceed. Implementation of the plans has been progressing and has included
resettlement and relocation of the Bonikro village including construction of modern housing,
schools, churches, water supply, electrification and other community infrastructure. A
compensation package payable in three annual instalments was agreed by the community and two
payments have been made. The compensation payments include land required for the development
of the Bonikro Project. Where the mine has impacted non compensated land, suitable
compensation has been negotiated and payment made to the traditional owners.Community relation staffing at the Bonikro operation includes three experienced fulltime
community liaison officer and two other staff in Abidjan including a community business
development officer, who support community based projects. The mine has established a
regular consultation forum which has local community representatives, that meets to discuss
and resolve issues arising from within the local community.An experienced external consultant has completed a review of all the community obligations
and to provide advice on best practice and business development opportunities. This project
has engaged the community, in partnership with the Company, to identify opportunities for
improvement in community relations and business development. The program identified at
each of the major villages a number of projects that are currently being deployed or are on
an implementation plan. A social management system is being developed to provide
standards, guidelines and tools to support the mine management and community staff.
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2.10
    
    African Exploration(a)
    
    Cote dIvoire ExplorationLGLs exploration holdings in Côte dIvoire are located in some of the most
prospective zones of the Birimian greenstone belt. They consist of 17 granted
exploration licences covering 11,000 square kilometres and a further 12 licences
under application covering 7,500 square kilometres. The greenstone belts in Côte
dIvoire are similar to, or extensions of, geology in the surrounding countries of
Ghana, Mali, Burkina Faso, Niger and Guinea, which have yielded a number of
multimillion ounce gold discoveries. Exploration efforts in Côte dIvoire were
upgraded in 2009 to accelerate assessments of the large exploration acreage held in
the country. Exploration activities continued in multiple target areas in Côte
dIvoire during the year, but drilling activities were focused on Bonikro and Hiré,
where eight drill rigs were deployed. LGL is currently drilling in excess of 250,000
metres a year and plans to spend approximately $37 million on exploration in 2010.(b)
    
    BonikroExtensive exploration was carried out at Bonikro during the year. Diamond drilling
within the previously identified inferred resource area, below the existing final
pit shell design, returned sufficient high grade intersections to warrant the
commencement of an infill drilling program. The drill program has commenced and will
be completed in the middle of 2010. This is expected to allow the Company to make an
updated resources and reserves report in the second half of the year.(c)
    
    Near BonikroNumerous prospects within 30 kilometres of Bonikro offer strong opportunity to
supplement the present mine plan. These include the Dougbafla East prospect,
approximately 15 kilometres north of the Bonikro deposit and at Hiré, 12 kilometres
south-east of Bonikro. Hiré includes individual prospects of Agbalé, Akissi-So,
Central, Chappelle and Assondji-So (in order from north to south), all of which
contain significant gold mineralisation.Infill drilling has been undertaken or is planned at Akissi-So, Assondji-So,
Agbalé and Chappelle, and some extension drilling will be carried out at Assondji-So
and at Chappelle. Infill drilling to date has been focused on areas expected to fall
within the perimeter of an optimized pit. Results are pending.(d)
    
    Hiré Feasibility StudyIn 2009 the company commenced a feasibility study for the development of
satellite deposits at Hiré, around 10 kilometres from the Bonikro plant. Under the
proposed expansion plan, higher grade ore from Hiré (approximately 3 g/t) would be
trucked to Bonikro for processing, commencing in 2012 and milling capacity at Bonikro
would be increased by the addition of a ball mill. This would potentially increase
gold production to an average 250,000 ounces per year, and extend the life of
Bonikro.
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3
    
    Australia  Mount Rawdon operation
 3.1
    
    Summary(A) IntroductionThe Mount Rawdon operation is an open pit gold and silver mine and process plan located in
south-east Queensland, approximately 80 kilometres south-west of Bundaberg, Queensland,
Australia. The Company acquired the Mount Rawdon gold project in June 2008 though the
merger with Equigold.(LOGO)
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(B)
    
    Mining rights
 The Company currently maintains six Exploration Permits for Minerals (EPMs), surrounding
the Mount Rawdon mine site. These six EPMs encompass 604.8 km2.(LOGO)
 (C)
    
    Operations
 The Mount Rawdon gold deposit is a massive, volcaniclastic hosted, low grade gold deposit
that exhibits characteristics conducive to low cost mining and treatment. The surface extent
of mineralization forms a roughly ovoid zone of 200 meters x 300 meters at greater than 0.7
g/t gold.The Mount Rawdon deposit provides feed for the mill, a modern carbon-in-leach (CIL) gold
extraction plant with a 10,000 tonne per day capacity.The operation is a conventional truck and excavator open pit mine. The deposit has produced
25.2 million tonnes of ore containing 859,000 ounces of gold since February 2001. Production
has shown that the current mineral reserve model is within an acceptable tolerance of
variance for both tonnage and grade of the deposit when compared to surveyed mine
production. The reconciliation showed that the block model estimated total ore tonnes and
ounces to be slightly less (6.4% and 7.4% respectively) than the actual production figures.
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3.2
    
    Geology
 The local geology at Mt Rawdon is dominated by dacite intrusives and dacite-rich
volcaniclastics. The two are considered genetically linked and have been intruded by a sequence
of acidic to basic dykes and plugs. While many of the rocks present at Mt Rawdon are peculiar
to the Mt Rawdon Complex, other lithologies, such as the quartz trachyte dykes, are regional in
their extent.The mineralization is considered synchronous to subsequent to most of the intrusive activity
and all of the major rock types at the deposit are mineralized to some degree.Two major lineaments in the region are the east-north-east trending Swindon Fault zone and the
north-north-west trending Perry Fault zone. The Coastal Block sediments have a layering and a
foliation that reflects these trends.The Swindon Fault zone marks the contact between the Aranbanga Volcanic Group and the Curtis
Island Group metasediments to the south. Regionally, the Perry Fault zone is a series of
upright faults, which are aligned with the eastern margin of the Middle Triassic Esk Trough to
the south. The dominant movement along these faults is suggested to be sinistral for the Perry
Fault zone and dextral along the Swindon Fault zone.Multiple phases of volcanic and intrusive activity occurred during the Middle to Late Triassic.The first at 235-230 Ma includes granodiorite and diorite intrusives, followed by the eruption
of olivine basalt, pyroxene andesites and rhyolitic ignimbrite of the Aranbanga Volcanic Group
at 228-223 Ma. The final phase at 218-215 Ma is associated with cauldron collapse and ring
fracturing, resurgent doming and sub-volcanic felsic intrusions.Molybdenum, copper, copper-gold and epithermal gold mineralization in the region are closely
associated with Triassic magmatism.The Mount Rawdon gold deposit is a massive, volcaniclastic hosted, low grade gold deposit that
exhibits excellent characteristics conducive to low cost mining and treatment. The surface
extent of mineralization forms a roughly ovoid zone of 200 meters x 300 meters at greater than
0.7g/t gold.The mineralization takes the form of pyrite disseminations in the matrix of a volcaniclastic
sequence and as sulphide veinlets. Gold grade generally increases as pyrite alteration and
sulphide veining increase. The host volcaniclastic sequence strikes northeast and has a shallow
to moderate dip to the southwest. The volcaniclastics are typically massive and poorly sorted.An intrusive dacitic dome feature with associated andesite and trachyandesite dykes occurs
south of the main mineralized zone. The contact is steeply dipping and the margins are
brecciated. Intrusion of dacitic fragmental rocks occur adjacent and at the intersection of
north north-west striking and east-north-east striking structures which are parallel to the
major regional Perry Fault (NNW strike) and Swindon Fault (ENE strike). These fragmentals occur
at the North West contact of the main dacite body and are compositionally equivalent. The
margins are steep dipping.A later stage of trachytic and acid-intermediate intrusion has resulted in a series of four
quartz trachyte dykes that intrude the mineralized zone at Mt Rawdon. There are also other
associated intrusives present.The mineralization and alteration at Mt Rawdon postdate the volcaniclastic sequence and dacite
suite. It is still open at depth to the south west of the main zone and at the contact of the
fragmental dacite plug with the main dacite body.
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3.3
    
    Reserve Estimate
 Appropriate reviews in the areas of mining, geotechnical, and geological modelling have been
carried out to confirm and further develop the assumption base for the mine. Site reviews of
mining and processing costs have provided for an improved modelling and optimization base for
the latest estimate.The ore reserves in the table below are based on the April 2009 model at $800 per ounce gold
price assumption, adjusted to take account of mining depletion, to December 31, 2009.
 Reserve
    
    
    Tonnes
    
    
    Average grade
    
    
    Contained Ounces
    
    
    Average grade
    
    
    Contained OuncesCategory
    
    
    (Mt)
    
    
    (g/t Au)
    
    
    (Au ,000 ozs)
    
    
    (g/t Au)
    
    
    (Ag,000 ozs)Un-mined Ore
    
    Proven
    
    
    1.5
    
    
    
    0.82
    
    
    
    38
    
    
    
    2.26
    
    
    
    105Probable
    
    
    30.1
    
    
    
    0.81
    
    
    
    786
    
    
    
    2.37
    
    
    
    2,292Stockpiled Ore
    
    Proven
    
    
    0.4
    
    
    
    0.79
    
    
    
    10
    
    
    
    2.79
    
    
    
    36Total Reserves
    
    
    
    
    
    
    32.0
    
    
    
    0.81
    
    
    
    835
    
    
    
    2.37
    
    
    
    2,433
 Reserves have been prepared in accordance with Industry Guide 7.Un-mined ore reserves quoted are those remaining below the mining surface at December 31, 2009,
within the current pit design.Stockpiled ore comprises mined ore above waste cut-off grade on the stockpiles, as of December
31, 2009.The number of ounces of contained gold does not indicate the number of ounces that ultimately
will be recovered. The number of ounces ultimately recovered and available for sale will
depend upon, among other things, mining efficiency and processing efficiency.The calculation of break even cut-off grade of 0.31g/t for ore considers gold price, fixed and
variable site costs, refining costs, royalty, mining levies, and assumed recovery of the
stockpile. The life of mine costs consider all operating conditions, capital and factors
associated with the whole operation for each incremental year of operation. Mill recoveries
used are based on current operating experience.The information in this report regarding ore reserves at Mt Rawdon is based on information
compiled by Mr Nick Spicer. Nick Spicer is employed by LGL in the role of
Principal Mining Engineer.
 3.4
    
    Mining
 (A)
    
    General
 The Mount Rawdon operation includes the Mount Rawdon open pit mine, run of mine (ROM)
Pads, mill and tailings storage facility.The mine production rate has historically been 13,200 BCM (35,900 tonnes) per day of which
5,200 BCM (14,100 tonnes) per day has been ore. Open pit mining is carried out on a five day
week production basis. Standard drilling and blasting techniques are used, and selective
blast holes are sampled and assayed for production grade control purposes. Broken rock is
loaded with an excavator into haul trucks. Depending on the block model determination or
grade control results, the mined material is delivered either to the ROM Pad, primary
crusher, low-grade stockpile, or to waste rock dumps.
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(B)
    
    Pit design and planning
 The operations Mining Department updates a detailed LOM based on the available reserves and
utilizing the available mining fleet. Truck productivity predictions (BCM/h and cycle
times) are adjusted to reflect production experience. The proposed haulage profiles are
determined for each bench and pit phase, including the three possible destinations (ROM Pad,
low-grade stockpile, and waste dumps). Using this data, the truck hours required to move the
scheduled tonnage are limited to the actual producing truck hours from the mine fleet (after
availability and utilization).Production scheduling is driven by:
 
    
    mill feed requirements and capacities;
    
    stripping requirements for the cutback stages;
    
    loading rates constraints, where only two excavators and associated
trucks can operate; and
    
    haulage limits determined by the size and number of trucks and their
productivity.
 The LOM uses the following pit design criteria:
 
    
    13 m to 25 m berm width;
    
    30 m bench height;
    
    Variable slope angles based on recommendation between 53o
and 63.4o inter ramp angles; and
    
    25 m wide haul roads typically 1:9 grade.
 The current pit design was designed from an A$800 per ounce pit optimization conducted in
October 2009 and was limited by practical pushback size limitations on the south side.
 (C)
    
    Production scheduling
 Production is derived entirely from the Mount Rawdon deposit from 2009 until 2015, at which
time the current reserve will be depleted.
 (D)
    
    Mine equipment
 Mt Rawdon utilizes the services of local earthmoving contractors to develop the open pit.
The major mining equipment used includes Hitachi EX1900s, Hitachi EX1200s and Komatsu HD 785
haul trucks. This equipment was selected to meet the production needs of the operation. In
addition, a support fleet of graders, loaders and other ancillary gear are used.Other equipment includes assorted support equipment and facilities, workshops and
maintenance buildings, wash bays, fuelling facilities and site office.
 3.5
    
    Processing
 (A)
    
    Process plant
 Ore from the Mt Rawdon deposit is processed at the CIP mill located at the Mt Rawdon mine.
The Mt Rawdon mill facility was constructed in 2000, with the first doré produced in January
2001.The Mt Rawdon mill initially had a capacity of 300 tonnes per hour (2.44 million tonnes per
year at 93% availability). A plant upgrade late in 2002 increased the mill capacity to 420
tonnes per hour (3.44 million tonnes per year at 94% availability). Mill feed is first
crushed to minus 150 mm in a 42 x 65 primary gyratory crusher, located near the pit for
direct tipping, then conveyed to a Jaques 65 secondary crusher set at 2030 mm with the
facility to bypass lump as needed for the SAG mill. The ore is then stockpiled near the
mill.Using a fixed conveyor from a reclaim tunnel, the crushed material is conveyed to a
SAG mill which operates in closed circuit with a ball mill and a bank of
cyclones for
 61




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sizing. A portion of the cyclone underflow is screened and then directed to a gravity
recovery circuit.Correctly sized material flows onto two trash screens and then into leach tanks where
cyanide is used to dissolve the gold. Activated carbon is used in the CIP circuit to adsorb
the gold from the cyanide solution. Carbon particles loaded with gold are removed from the
slurry by screening and are transferred to the gold recovery circuit where the gold is
stripped from the carbon by a high temperature/pressure cyanide solution. Gold ions in the
solution are then plated onto a cathode by electrowinning. The gold is then melted into doré
bars for shipment to a refiner. Mill tailings are pumped to the tails storage facility
(TSF) and decanted solution is recycled back to the mill.
 (B)
    
    Mill recovery
 Gold recoveries at the Mt Rawdon mill have historically ranged from 87 percent to more than
90 percent since production began in 2001. During 2001 to 2004, it was necessary to add lead
nitrate and slightly increase the cyanide concentrations to maintain mill recovery rates
with some of the feed coming from upper levels of the pit.As the pit was developed to the lower levels, the recoveries became more consistent and the
mill is now consistently achieving recoveries of 90% for most of the ore being treated.
 3.6
    
    Infrastructure
 The existing infrastructure includes a process plant, primary and secondary crushers, workshops
and administration building. A large water dam provides water for to the operations needs. No
further infrastructure is planned to be installed.Process water for the Mount Rawdon operation is sourced from a weir constructed on the Perry
River approximately 5 kilometres from the mine site. A water allocation and two option
agreements are currently in place for additional water allocations sourced from the nearby
Paradise dam, details of which are:
 
    
    Sunwater  500 megalitres per annum.
    
    Burnett Shire  (Option 1)  400 megalitres per annum.
    
    Burnett Shire  (Option 2)  400 megalitres per annum.
 A water line has been constructed to the Burnett River which lies approximately 14 kilometres
from the mine site and is connected to a pumping facility.The Mount Rawdon mine lies on the Queensland state electrical grid. ERGON Energy has contracted
grid energy supply at 66,000V with 10,000kW authorized demand, supplied to the operations
on-site transformer. The power for the Mt Rawdon operation is sourced from an ISIS to Gayndah
ring main transmission on a 66Kv line, together with a separate power line funded by Equigold upon start up of the mine.
 3.7
    
    Logistics
 Operational consumables, supplies and maintenance parts are sourced from major suppliers within
Australia. The majority of supplies are delivered direct to the site using a local transport
company. Petroleum products and general chemicals are purchased within Queensland and other
states in Australia to support the mine. Supplies are generally secured through normal purchase
orders and supply agreements ranging from one to three year terms.
 3.8
    
    Rehabilitation and decommissioning
 Mt Rawdon Operation has an approved set of planning documents from the Queensland Government EPA
which includes a requirement to submit a 5 year rehabilitation costing, based on current and
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projected mine development. This rehabilitation costing is then used to set the rehabilitation
bond. Mount Rawdon has lodged bonds within the Plan of Operations with the Queensland
Government of A$8.4 million for the mine site and A$2.4 million for the easement covering the
power line that was constructed to provide power to the operation.The Company is currently reviewing the closure plan strategies and has engaged consultants to
facilitate this process and also undertake reviews of waste material acid mine drainage
potential and groundwater. These reviews will assist with identifying the current risks and also
potential future risks. This information will be used to develop appropriate mine closure
strategies.
 3.9
    
    Community affairs
 The mine operation is serviced from the small township of Mount Perry, which is located 20
kilometres by road north of the mine. The operation is located on a Company owned large pastoral
lease and there is little influence on the surrounding population.The mine maintains good relations with the local community with the majority of the operations
workforce living locally.
 4
    
    Ballarat Project
 4.1
    
    Summary
 TheCompany acquired the Ballarat project when it completed the merger (by way of scheme of
arrangement) with Ballarat Goldfields in 2007. Following a review in 2009, the Company
decided to divest the Ballarat Project and, on March 5, 2010, the Company announced that it
had entered into a sale agreement with Castlemaine Goldfields Limited.
 4.2
    
    Operations in 2009
 (A)
    
    Mining
 During 2009, the operation was focused on the underground development of the Ballarat East
field as well as carrying out exploration activities in the Ballarat East, Ballarat West,
Berringa and Ballarat South fields. The 2009 work program focused mainly on accessing ore
zones in the central and southern areas of Ballarat East and construction of surface and
mine infrastructure including ventilation for the underground mine. Following completion of
this underground ventilation infrastructure at the end of 2008, the Company resumed
development work to open up the potentially larger ore zones located in the northern areas
of the Ballarat East mine. A total of approximately 18 kilometres of workings had been
developed to the end of 2009. The project involved the development of a series of declines
running along the strike of the Ballarat East field. These are known as the Sulieman, Woah
Hawp, Sovereign and Prince declines.Material moved during 2009, 2008 and 2007 is shown in the following table.
 2009
    
    2008
    
    2007Development (m)
    
    
    4061
    
    
    
    6,093
    
    
    
    3,819Total Ore (tonnes)
    
    
    104,995
    
    
    
    129,282
    
    
    
    24,998Total Ore (g Au/t)
    
    
    4.3
    
    
    
    3.5
    
    
    
    3.3Total Waste (tonnes)
    
    
    170,288
    
    
    
    296,287
    
    
    
    217,300Total Material (tonnes)
    
    
    275,283
    
    
    
    425,569
    
    
    
    242,298
 63




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(B)
    
    Processing
 The processing plant was designed by Gekko Systems, a Ballarat based company with expertise
in gravity recovery and gold leaching. It was constructed in two phases, the first being
gravity-only recovery while the second phase involved the recovery of fine gold and gold
associated with sulphides. The power source for the Ballarat operation is from the main
grid. There are two major connection points, being a 5MVA 66/11kV substation and a 3.5MVA
22/11kV substation.The plant is located near the portal and surface workshops. The site was designed to
minimize earthworks and to minimize noise emissions. The first phase was completed in
December 2005 with a design capacity to treat seventy-five tonnes of ore per hour. The
intensive leach plant was commissioned in December 2008.
 2009
    
    
    2008Production (oz)
    
    
    12,565
    
    
    
    10,366
 4.3
    
    Divestment
 In 2009, a review of the Ballarat project concluded that it would be unlikely to achieve the
desired production and cost outcomes. A decision was made to divest the Ballarat project
and a sale process was commenced. On March 5, 2010, the Company announced its entry into a
sale agreement with Castlemaine Goldfields Limited for the sale of the Ballarat project.
Under the agreement, the Company will receive A$4.5 million in cash plus an additional 2.5%
royalty interest (calculated on net smelter return) in future production, capped at A$50
million. The sale is subject to certain conditions including Castlemaine shareholders
approving the issue of new equity to raise a minimum of A$20 million. On March 19, 2010,
Castlemaine announced that it had received a firm commitment from its existing shareholders
and new institutional and sophisticated investors to raise A$30million, in this announcement
Castlemaine further advised that the resolution to approve the issue of new equity would be
considered by its shareholders at its upcoming annual general meeting. In preparation for
the transition to new ownership, the operation was wound down and placed on care and
maintenance from March 5, 2010.
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C.
    
    Organisational Structure
 Lihir Gold Limited was incorporated in 1995 under the laws of PNG and registered under the
Companies Act. The registered office of the Company is located at Seventh Floor, Pacific Place,
Corner Champion Parade and Musgrave Street, Port Moresby, NCD, PNG whilst the corporate services
office is located at 500 Queen Street, Brisbane, Queensland, Australia.Lihir Gold Limited is the parent entity for a global group of companies primarily involved with
gold production, exploration, and the development of gold mining properties (the LGL Group). The
Companys primary operation is a gold mine located on Lihir Island in the New Ireland province of
PNG. The Company also has operations in Mt Rawdon (Queensland, Australia) and Bonikro (Côte
dIvoire).As at December 31, 2009, the LGL Group consisted of the company and twenty separate entities which
are wholly or majority owned by Lihir Gold Limited.The following table illustrates the ownership structure of the LGL Group:
 Country of
    
    
    Ownership Interest
    
    
    Voting PowerLihir Gold Limited Subsidiaries
    
    Incorporation
    
    
    (Percent)
    
    
    (Percent)Niugini Mining Limited
    
    Papua New Guinea
    
    
    100
    
    
    
    100Niugini Mining (Australia) Pty Ltd
    
    Australia
    
    
    100
    
    
    
    100Lihir Management Company Limited
    
    Papua New Guinea
    
    
    100
    
    
    
    100Lihir Business Development Limited(1)
    
    Papua New Guinea
    
    
    100
    
    
    
    100Lihir Services Australia Pty Ltd(2)
    
    Australia
    
    
    100
    
    
    
    100Lihir Australian Holdings Pty Ltd(3)
    
    Australia
    
    
    100
    
    
    
    100Ballarat Goldfields Pty Ltd(4)
    
    Australia
    
    
    100
    
    
    
    100Berringa Resources Pty Ltd
    
    Australia
    
    
    100
    
    
    
    100Ballarat West Goldfields Pty Ltd
    
    Australia
    
    
    100
    
    
    
    100New Resources Pty Ltd
    
    Australia
    
    
    100
    
    
    
    100Corpique(No.21) Pty Ltd
    
    Australia
    
    
    100
    
    
    
    100Equigold Pty Ltd(5)
    
    Australia
    
    
    100
    
    
    
    100Swindon Holdings Pty Ltd(6)
    
    Australia
    
    
    100
    
    
    
    100Stanmines Pty Ltd(7)
    
    Australia
    
    
    100
    
    
    
    100Kim Resources Pty Ltd(8)
    
    Australia
    
    
    100
    
    
    
    100LGL Holdings CI SA
    
    Côte dIvoire
    
    
    100
    
    
    
    100Equigold Mines CI SA(9)
    
    Côte dIvoire
    
    
    90
    
    
    
    90Equigold CI SA(10)
    
    Côte dIvoire
    
    
    98
    
    
    
    98LGL Exploration CI SA
    
    Côte dIvoire
    
    
    100
    
    
    
    100LGL Development CI SA
    
    Côte dIvoire
    
    
    100
    
    
    
    100
 
 (1)
    
    On March 12, 2010 the Directors of Lihir Business Development Limited resolved to change
the name of the entity to LGL PNG Holdings Limited(2)
    
    On March 12, 2010 the Directors of Lihir Services Australia Pty Ltd resolved to change the
name of the entity to LGL Services Australia Pty Ltd(3)
    
    On March 12, 2010 the Directors of Lihir Australian Holdings Pty Ltd resolved to change the
name of the entity to LGL Australian Holdings Pty Ltd(4)
    
    On March 12, 2010 the Directors of Ballarat Goldfields resolved to change the name of the
entity to LGL Ballarat Operations Pty Ltd(5)
    
    On March 12, 2010 the Directors of Equigold Pty Ltd resolved to change the name of the entity
to LGL Mount Rawdon Operations Pty Ltd(6)
    
    On March 12, 2010 the Directors of Swindon Holdings Pty Ltd resolved to change the name of
the entity to LGL Mount Rawdon Property Holdings Pty Ltd(7)
    
    On March 12, 2010 the Directors of Stanmines Pty Ltd resolved to change the name of the
entity to LGL CDI Investments Pty Ltd(8)
    
    On March 12, 2010 the Directors of Kim Resources resolved to change the name of the entity to
LGL CDI Exploration Pty Ltd(9)
    
    On March 18, 2010 the Directors of Equigold Mines CI SA resolved to change the name of the
entity to LGL Mines CI SA(10)
    
    On March 18, 2010 the Directors of Equigold CI SA resolved to change the name of the entity
to LGL Resources CI SA 65




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D. Property, Plant and Equipment
 The information previously located in this section is now located under item 4  Information on
the Company  B. Business Overview, Except for the following material on Insurance.
 Insurance
 The Company has a comprehensive insurance program which is reviewed on an annual basis to
accommodate changing business requirements such as increased asset values, capital works
projects and the recent mergers with Ballarat Goldfields and Equigold. The insurance program
provides cover for various insurable events including property damage and business interruption
(property loss or damage, business interruption (Lihir operation only) and construction risks),
combined liability (public, products and errors and omissions), directors and officers
liability, marine liability, aviation liability, crime (fidelity guarantee, theft by employees),
money (theft by people other than employees) and various employee cover (workers compensation,
medical and corporate travel). Deductibles apply to any claim, while the insurance program is
comprehensive, as outlined in Item 3. Key information  D. Risk Factors there is still some
risk that insurance coverage may not address all operating risks. In particular the appropriate
level of cover takes into account the increasing diversification of cash flows for the Company
resulting from the merger with Equigold.
 66




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Item 4A. Unresolved Staff Comments
  67




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Item 5. Operating and Financial Review and Prospects
 
 A. Operating results
 (a) Introduction
       68




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(b) Recent developments
 (1)
    
    Ballarat impairment
 A comprehensive review of the Ballarat operation was completed in mid June 2009 indicating
that mining in bulk production quantities would not be sustainable due to the nature of the
ore body. Consequently in July 2009 the Company announced that a process for selling the
Ballarat assets had been initiated. The Company is of the view that any future value of the
assets will be linked to any sales proceeds. On March 5, 2010, the Company announced its
entry into a sale agreement with Castlemaine Goldfields Limited. The net assets of the
Ballarat cash generating unit have been impaired and are carried at nil value. An
impairment charge of $546 million before tax has been recognised in discontinued operations.
This includes $31 million in respect of goodwill allocated to the Ballarat cash generating
unit. The tax effect of this impairment charge is $137 million giving rise to a total
impairment charge net of tax of $409 million. After allowing for the non-recognition for
accounting purposes of deferred tax assets of $18 million in respect of Australian tax
losses, deferred tax assets of $51 million remain in the Consolidated Entitys Statement of
Financial Position in respect of Ballarat assets.
 (2)
    
    Issue of additional capital
 In March and April of 2009, the Company raised $340.9 million (net of transaction costs)
through a placement of shares to institutional investors and a share purchase plan. A
total of 171.7 million shares were issued through the share placement and a further 8.9
million were issued through the share purchase plan.
 (3)
    
    Dividends
 On November 30, 2009 the Company paid an interim dividend of 1.5 cents per share to ordinary
shareholders registered at the close of business on November 9, 2009. The total dividend
amount paid was $35.5 million.A further dividend was declared by the Company of 1.5 cents per share to ordinary share
holders registered at the close of business on March 2, 2010. Papua New Guinea dividend
withholding tax of 10% will be payable by the Company on this dividend.
 (4)
    
    Class B shares
 In accordance with the Companys constitution and the PNG Companies Act, LGL redeemed all
161,527,405 class B shares previously held by Niugini Mining Limited (NML), a wholly owned
subsidiary of LGL. the Class B shares represented NMLs shareholding in LGL at the time LGL
acquired NML by way of scheme of arrangement in February 2000 when the ordinary shares held
by NML in LGL were reclassified as Class B shares. The Class B shares were unlisted and
have been redeemed for a payment of Kina 16,152.75 (approximately $6,150) from LGL to NML.
 (5)
    
    Sale of Ballarat operation
 On March 5, 2010, the Company announced that it had entered into an agreement with
Castlemaine Goldfields Limited for the sale of the Ballarat project in Victoria. The Company
will receive A$4.5 million in cash plus an additional 2.5% royalty interest (calculated on
net smelter
return) in future production, capped at A$50 million. The sale is subject to certain
conditions including Castlemaine shareholders approving the issue of new equity to raise a
minimum of A$20 million. On March 19, 2010, Castlemaine announced that it had received a
firm commitment from its existing shareholders and new institutional and sophisticated
investors to raise A$30million, in this announcement Castlemaine further advised that the
resolution to approve the issue of new equity would be considered by its shareholders at its
upcoming annual general meeting. In preparation for the transition to new ownership, the
operation was wound down and placed on care and maintenance from March 5, 2010.
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##### Table of Contents



(6)
    
    Reserves
 On February 18, 2010, the Company announced that the total gold reserve at Mt Rawdon was
835,000 ounces. Silver reserve was at 2.433 million ounces. Cut-off grades reduced from
0.495 g/t of gold to 0.31 g/t. The optimised pit design has led to the southern and western
sides of the pit being pushed back, wall slopes flattened and the depth of the pit reduced
marginally.On October 29, 2009 the company announced that it had increased reserves at its Lihir Island
operation by 7.5 million ounces, taking total ore reserves to 28.8 million ounces at June
30, 2009. This 36% increase in reserves is the net result of the following factors:
 
    
    Increase in the reserves inventory through expansion and refinement of the
proposed pit shell.
    
    A rise in the long term gold price assumption from $675/oz to $800/oz.
    
    Adjustments to cost assumptions of mining and processing costs offset by the
cost benefits from the MOPU project at Lihir Island, currently under construction.
    
    Depletion by mining to June 30, 2009.
 (7)
    
    Resignation of Arthur Hood
 On January 17, 2010, The Board of Directors accepted the resignation of the Companys Chief
Executive Officer Arthur Hood. Mr Hood stood down immediately and Chief Financial Officer
Phil Baker was appointed as Chief Executive Officer pending a global search for a new chief
executive. Mr Hoods termination package includes a cash payment
of A$2.3 million and 3.5
million share rights previously awarded. Mr Hood elected to retain his 2009 share rights for
their three year term and to receive the cash equivalent of his pro-rata 2008 share rights.
The extent to which his 2009 share rights will vest will remain subject to company
performance in accordance with the terms of the shareholder-approved executive share plan.
In addition, Mr Hood received a cash payment of A$1.3 million in lieu of share rights that
he would have been entitled to in the current year, had his contract run its full term.
 (8)
    
    Hedge book close out
 The acquired Equigold hedge book was closed out in June 2009 for an outlay of $37.9 million.
For the period January 1, 2009 to the time of close out, a total of 30,678 ounces were
delivered into the hedges at a contract price of approximately A$600/oz and brought to
account as a cash hedging loss of $7.7 million in the Statement of Comprehensive Income.
The Equigold hedge losses represent the cumulative difference between the prevailing spot
price of gold at the time of such delivery and the spot price (A$939/oz) prevailing at the
date of completing the merger with Equigold. The close out of the Equigold hedge book
followed the closure of the LGL hedge book in April 2007, in accordance with the companys
policy of not hedging gold production. Although the LGL and Equigold hedge books have been
closed out, hedge accounting requires the profit or loss on those hedge contracts to be
brought to account at the original designation dates. Accordingly, the total hedging loss
for the year of $118.7 million includes $111.0 million of non-cash losses. Future periods
will continue to report non-cash hedging losses in line with the original designation dates
of the closed hedges and these will be brought to account in the Statement of Comprehensive
Income.
 (c) Critical accounting estimates and judgments
  70




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Recoverability of long-lived assets
  Recoverability of non-current ore stockpiles
  Determination of ore reserves and mineral resources and remaining mine life
     Provision for restoration and rehabilitation obligations
  71




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##### Table of Contents



Recoverability of deferred tax assets
   Unit-of-production method of depreciation
  Deferred mining costs
  Estimated impairment of goodwill
  (d) Changes in accounting policies and new accounting standards
  72




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PRELIMINARYASSESSMENT ON THEIMPACT OF THECONSOLIDATED
    
    APPLICATION DATEAPPLICATION DATE OF
    
    ENTITYS FINANCIAL
    
    FOR THEREFERENCE
    
    TITLE
    
    SUMMARY
    
    STANDARD
    
    REPORT
    
    CONSOLIDATED ENTITYIFRS 1
    
    First-time Adoption
of International
Financial Reporting
Standards
    
    Amendments relating
to oil and gas
assets and
determining whether
an arrangement
contains a lease
    
    Annual periods
beginning on or
after 1 January
2010
    
    Not applicable
    
    Not applicableIFRS 2
    
    Share-based Payment
    
    Amendments relating
to group
cash-settled
share-based payment
transactions
    
    Annual periods
beginning on or
after 1 January
2010
    
    The Consolidated
Entity does not
presently have any
share-based payment
arrangements that
will be effected by
the amendment
    
    Annual periods
beginning on or
after 1 January
2010IFRS 3
    
    Business Combination
    
    Comprehensive
revision on
applying the
acquisition method
    
    Annual periods
beginning on or
after 1 July 2009
    
    This amendment will
impact the
accounting for
future business
combinations
effected after
adoption of the
revised accounting
standard.
    
    Annual periods
beginning on or
after 1 January
2010IFRS 9
    
    Financial
instruments
    
    Phase 1 of
replacing IAS 39.
Deals with the
classification and
measurement of
financial assets
    
    Annual periods
beginning on or
after 1 January
2010
    
    The group is
currently in the
process of
evaluating the
potential effect of
this standard.
    
    Annual periods
beginning on or
after 1 January
2013IFRIC 16
    
    Hedges of a net
investment in a
foreign operation
    
    This interpretation
provides
clarification for
the accounting for
hedges of a net
investment in a
foreign operation
    
    Annual periods
beginning on or
after 1 October
2009
    
    The amendments are
not expected to
have any impact on
the Consolidated
Entity at the
present time
    
    Annual periods
beginning on or
after 1 January
2010IAS 32
    
    Financial
Instruments:
Presentation
    
    Amendments relating
to classification
of rights issues
    
    Annual periods
beginning on or
after 1 February
2010
    
    The amendments are
not expected to
have any impact on
the Consolidated
Entity at the
present time
    
    Annual periods
beginning on or
after 1 January
2011IAS 39
    
    Financial
Instruments:
Recognition and
Measurement
    
    Amendments for
embedded
derivatives when
reclassifying
financial
instruments
    
    Annual periods
beginning on or
after 30 June 2009
    
    The amendments are
not expected to
have any impact on
the Consolidated
Entity at the
present time
    
    Annual periods
beginning on or
after 1 January
2010Amendments for
hedged items
    
    Annual periods
beginning on or
after 1 July 2009
    
    The amendments are
not expected to
have any impact on
the Consolidated
Entity at the
present time
    
    Annual periods
beginning on or
after 1 January
2010Amendments to IFRS
    
    Various
    
    Improvements to
International
Financial Reporting
Standards
    
    Annual periods
beginning on or
after 1 July 2010
    
    The amendments are
not expected to
have any impact on
the Consolidated
Entity at the
present time
    
    Annual periods
beginning on or
after 1 January
2011
 73




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(e) Financial results of operations
  $mNote
    
    
    2009
    
    
    2008(1)
    
    
    2007(1)Revenue
    
    
    6
    
    
    
    1,087.4
    
    
    
    748.6
    
    
    
    497.6Cost of sales
    
    
    8
    
    
    
    (618.8
    )
    
    
    (439.8
    )
    
    
    (260.5
    )Gross profit from mining operations
    
    
    
    
    
    
    468.6
    
    
    
    308.8
    
    
    
    237.1Corporate expense
    
    
    
    
    
    
    (46.2
    )
    
    
    (31.9
    )
    
    
    (25.3
    )Project studies
    
    
    
    
    
    
    (0.1
    )
    
    
    (2.6
    )
    
    
    (7.5
    )Exploration expense
    
    
    
    
    
    
    (9.4
    )
    
    
    (7.9
    )
    
    
    (8.2
    )Operating profit before other income / (expense)
    
    
    
    
    
    
    412.9
    
    
    
    266.4
    
    
    
    196.1Other income / (expense)Hedging loss
    
    
    9
    
    
    
    (118.7
    )
    
    
    (75.5
    )
    
    
    (97.2
    )Other income
    
    
    10
    
    
    
    7.2
    
    
    
    0.3
    
    
    
    Other expenses
    
    
    10
    
    
    
    (21.8
    )
    
    
    (31.3
    )
    
    
    (13.8
    )Operating profit before finance costs
    
    
    
    
    
    
    279.6
    
    
    
    159.9
    
    
    
    85.1Financial income
    
    
    11
    
    
    
    9.1
    
    
    
    7.3
    
    
    
    10.4Financial expenses
    
    
    11
    
    
    
    (5.4
    )
    
    
    (0.5
    )
    
    
    (131.5
    )Profit / (loss) before tax
    
    
    
    
    
    
    283.3
    
    
    
    166.7
    
    
    
    (36.0
    )Income tax benefit / (expense)
    
    
    13
    
    
    
    (104.6
    )
    
    
    (56.6
    )
    
    
    10.0Net profit / (loss) after tax from continuing operations
    
    
    
    
    
    
    178.7
    
    
    
    110.1
    
    
    
    (26.0
    )Discontinued Operations(Loss) / Profit from discontinued operations, net of income tax
    
    
    12
        

    
    (412.9
    )
    
    
    0.7
    
    
    
    1.9(Loss) / Profit for the period
    
    
    
    
    
    
    (234.2
    )
    
    
    110.8
    
    
    
    (24.1
    )Attributable to equity holders of the Company
    
    
    
    
    
    
    (234.0
    )
    
    
    111.0
    
    
    
    (24.1
    )Attributable to minority interests
    
    
    29
    
    
    
    (0.2
    )
    
    
    (0.2
    )
    
    
    (234.2
    )
    
    
    110.8
    
    
    
    (24.1
    )Other comprehensive incomeExchange difference on translation of foreign operations
    
    
    28
    (a)
    
    
    104.6
    
    
    
    (154.9
    )
    
    
    42.6Net change in fair value of cash flow hedges
    
    
    28
    (a)
    
    
    21.4
    
    
    
    (32.7
    )
    
    
    (59.1
    )Deferred loss on cash flow hedges
    
    
    28
    (a)
    
    
    118.7
    
    
    
    76.7
    
    
    
    97.8Net change in fair value of available for sale financial assets
    
    
    28
    (a)
    
    
    3.0
    
    
    
    (2.2
    )
    
    
    1.2Income tax on other comprehensive income
    
    
    13
    
    
    
    (30.4
    )
    
    
    (27.6
    )
    
    
    (4.9
    )Other comprehensive income for the period net of tax
    
    
    
    
    
    
    217.3
    
    
    
    (140.7
    )
    
    
    77.6Total comprehensive income
    
    
    
    
    
    
    (16.9
    )
    
    
    (29.9
    )
    
    
    53.5Attributable to equity holders of the Company
    
    
    
    
    
    
    (16.7
    )
    
    
    (29.7
    )
    
    
    53.5Attributable to minority interests
    
    
    29
    
    
    
    (0.2
    )
    
    
    (0.2
    )
    
    
    (16.9
    )
    
    
    (29.9
    )
    
    
    53.5Earnings / (loss) per share
    
    
    40- Basic (cents/share)
    
    
    
    
    
    
    (9.8
    )
    
    
    5.6
    
    
    
    (1.4
    )- Diluted (cents/share)
    
    
    
    
    
    
    (9.7
    )
    
    
    5.6
    
    
    
    (1.4
    )Continuing operations
    
    
    40- Basic (cents/share)
    
    
    
    
    
    
    7.5
    
    
    
    5.6
    
    
    
    (1.5
    )- Diluted (cents/share)
    
    
    
    
    
    
    7.4
    
    
    
    5.6
    
    
    
    (1.5
    )
 
 (1)
    
    Revised (refer Note 36 of the financial statements)*
    
    Refer to item 18 Financial Statements 74




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##### Table of Contents



Overview of operating results
     2009 Production Summary (Ozs)
 Operation
    
    FY 2009Lihir, PNG
    
    
    853,391Mt Rawdon, QLD
    
    
    107,780Bonikro, Cote dIvoire
    
    
    150,023Ballarat, VIC
    
    
    12,565Total
    
    
    1,123,759
     
    
    Total revenue for the year rose by 45% to a record $1,087.4 million, driven by a
combination of higher gold sales volume (30%) and a higher gold price (13%). Carbon
credits added around $1.2 million to revenue.
    
    Total cash operating cost, before depreciation and amortisation, totalled $453.2
million, up 26% on the previous year. The increase reflected higher throughput, production
and sales volumes, increased fuel prices and adverse exchange rate movements.
    
    Mine EBITDA(1) improved strongly for the year, rising 63% to $634.2 million.
This increase reflected the strong improvement in operational performance at the Lihir
mine and a full years contribution from the Bonikro and Mt Rawdon operations.
    
    Underlying profit(2) was a record $289.5 million, up 57% on the previous
year.
    
    Net loss after tax attributable to shareholders of the Company was $234.0 million, down
from a profit of $111.0 million in 2008.
    
    Cash generated from operations for the year were $450.9 million.
    
    An impairment charge for Ballarat of $409 million after-tax, writing down the Ballarat
assets.
 
 (1)
    
    Refer to Item 18. Financial Statements, Notes to the financial Statements, Note 5 for a
reconciliation of Mine EBITDA 75




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##### Table of Contents



(2)
    
    Underlying profit is reconciled as follows: 2009
    
    
    2008
    
    
    2007Profit / (loss) attributable to equity holders
of the Company
    
    
    (234.0
    )
    
    
    111.0
    
    
    
    (24.1
    )Non cash hedging loss (after tax)
    
    
    77.7
    
    
    
    51.2
    
    
    
    53.1Discontinued Operations (after tax)
    
    
    412.9
    
    
    
    
    
    
    
    Loss on repayment of gold loan (after tax)
    
    
    
    
    
    
    
    
    
    
    82.5Write down of power plant and barges (after
tax)
    
    
    
    
    
    
    
    
    
    
    8.9Impairment of listed equity securities (after
tax)
    
    
    
    
    
    
    2.2
    
    
    
    Write down of geothermal and dewatering wells
(after tax)
    
    
    
    
    
    
    19.7
    
    
    
    Loss on disposal of assets following
comprehensive asset review (after tax)
    
    
    15.2
    
    
    
    
    
    
    
    De-recognition of DTA
    
    
    17.7
    
    
    
    
    
    
    
    Underlying profit / (loss) after tax
    
    
    289.5
    
    
    
    184.1
    
    
    
    120.4
 Discussion and analysis of the Statement of Comprehensive Income
 Revenue
    Cost of sales
    .
 76




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##### Table of Contents



Corporate expenses
  Exploration
   Hedging loss
     Other expenses/ (income)
  77




---



##### Table of Contents



Exchange differences on translation of foreign operations
  Tax Expense
 Income tax
     Dividend withholding tax
  Discontinuing operations
  78




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##### Table of Contents



Discussion and analysis of the Statement of Financial Position
   Discussion and analysis of the Statement of Cash Flows
    
    
    Lihir  $128.3 million including; mining fleet $16.4 million, geothermal projects $23.2
million, camp accommodation / catering $8.6 million, steam wells $7.5 million and near mine
exploration $5.3 million
 
    
    MOPU($123.2 million) and interim power station ($27.6 million)
 
    
    Ballarat operation infrastructure and development expenditure  $35.3 million (pre
impairment loss)
 
    
    Mt Rawdon  $5.1 million
 
    
    Bonikro, Côte dIvoire  $49.2 million including near mine exploration of $21.3 million
(incorporating Oume, Bonikro and Hiré)
     79




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##### Table of Contents




    
    Lihir sustaining capital and Million Ounce Plant Upgrade  $141 million
    
    Ballarat operation infrastructure and development expenditure  $108 million
    
    Bonikro, Côte dIvoire  $27 million
  (f) Significant changes in the state of affairs
  
    
    After completing a review of the Ballarat gold mine in Victoria it was concluded that
despite encouraging results from ongoing exploration activities in the north of the Ballarat
gold field, the project would be unlikely to achieve the scale required to fit within the LGL
portfolio. A decision was made to divest the Ballarat project and a sale process was
commenced. On March 5, 2010, the Company announced the entry into a sale agreement with
Castlemaine Goldfields Limited for the sale of the Ballarat project. Under the agreement, the
Company will receive A$4.5 million in cash plus an additional 2.5% royalty interest
(calculated on net smelter return) in future production, capped at A$50 million. The sale is
subject to certain conditions including Castlemaine shareholders approving the issue of new
equity to raise a minimum of A$20 million. On March 19, 2010, Castlemaine announced that it
had received a firm commitment from its existing shareholders and new institutional and
sophisticated investors to raise A$30million, in this announcement Castlemaine further advised
that the resolution to approve the issue of new equity would be considered by its shareholders
at its upcoming annual general meeting. In preparation for the transition to new ownership,
the operation was wound down and placed on care and maintenance from March 5, 2010.
    
    On 17 January 2010, the Board of Directors accepted the resignation of the Companys Chief
Executive Officer Arthur Hood. Mr Hood stood down immediately and Chief Financial Officer
Phil Baker was appointed as Chief Executive Officer pending a global search for a new chief
executive. Mr Hoods termination package includes a cash payment of A$2.3million and 3.5
million share rights previously awarded. Mr Hood elected to retain his 2009 share rights for
their three year term and to receive the cash equivalent of his pro-rata 2008 share rights.
The extent to which his 2009 share rights will vest will remain subject to company performance
in accordance with the terms of the shareholder-approved executive share plan. In addition, Mr
Hood received a cash payment of A$1.3 million in lieu of share rights that he would have been
entitled to in the current year, had his contract run its full term.
 80




---



##### Table of Contents



B. Liquidity and Capital Resources
 (a) Liquidity
         81




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##### Table of Contents



(b) Capital Expenditures
  Capital expenditure 2007  2009
 (in US$ millions)
    
    2009
    
    
    2008
    
    
    2007Lihir
    
    
    279.1
    
    
    
    153.0
    
    
    
    156.5Ballarat
    
    
    35.3
    
    
    
    118.6
    
    
    
    65.9Bonikro
    
    
    49.2
    
    
    
    29.9
    
    
    
    Mount Rawdon
    
    
    5.1
    
    
    
    1.3
    
    
    
    Corporate
    
    
    4.8
    
    
    
    1.3
    
    
    
    0.3373.5
    
    
    
    304.1
    
    
    
    222.7
      Financial instruments
  82




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##### Table of Contents



C. Research and Development, Patents and Licenses, etc
  
 D. Trend Information
       
 E. Off-Balance Sheet Arrangements
  
 F. Tabular disclosure of Contractual Obligations
  Later than 1 year
    
    
    Later than 2 yearsbut not later than
    
    
    but not later thanTotal
    
    
    Less than 1 year
    
    
    2 years
    
    
    5 years
    
    
    More than 5 years$ m
    
    
    $ m
    
    
    $ m
    
    
    $ m
    
    
    $ mCapital (Finance) Lease
Obligations
    
    
    0.9
    
    
    
    0.7
    
    
    
    0.2
    
    
    
    
    
    
    
    Operating Lease
Obligations
    
    
    21.4
    
    
    
    1.6
    
    
    
    1.8
    
    
    
    5.9
    
    
    
    12.1Capital expenditure
commitments(i)
    
    
    334.6
    
    
    
    269.5
    
    
    
    45.1
    
    
    
    20.0
    
    
    
    Purchase obligations
(ii)
    
    
    49.9
    
    
    
    49.9
    
    
    
    
    
    
    
    
    
    
    
    Other Liabilities
(iii)
    
    
    73.4
    
    
    
    26.9
    
    
    
    6.1
    
    
    
    7.7
    
    
    
    32.7Borrowings(iv)
    
    
    66.8
    
    
    
    3.5
    
    
    
    3.5
    
    
    
    59.8
    
    
    
    Total
    
    
    546.3
    
    
    
    353.2
    
    
    
    57.3
    
    
    
    93.5
    
    
    
    42.3
 83




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##### Table of Contents



(i)
    
    The major items of capital commitment are: Lihir Island ($151.6 million for the MOPU
Project and $170.2 million for other equipment purchases), and Bonikro ($12.2 million resource
drilling program and other equipment).(ii)
    
    Purchase obligations consist of trade creditors of $44.1. million and employee service
related liabilities of $5.8 million.(iii)
    
    Other liabilities represents $73.4 million consisting of current and non-current provisions
on the consolidated balance sheet which represents certain employee, rehabilitation and other
provisions.(iv)
    
    During the year the Company entered into a $50million financing facility
(as the borrower) with PNG Sustainable Development Program Limited. The facility is on normal
commercial terms and was negotiated on an arms length basis. 
 G. Safe Harbour
 .
 84




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##### Table of Contents



Item 6. Directors, Senior Management and Employees
 
 A. Directors and Senior Management
 (a) Directors
  Name
    
    Age
    
    
    Year AppointedDr Ross Garnaut
    
    
    63
    
    
    
    1995Mr Bruce Brook
    
    
    54
    
    
    
    2005Dr Peter Cassidy
    
    
    64
    
    
    
    2003Dr Michael Etheridge
    
    
    63
    
    
    
    2007Lady Winifred Kamit
    
    
    56
    
    
    
    2004Mr Geoff Loudon
    
    
    67
    
    
    
    1995Mr Alister Maitland
    
    
    68
    
    
    
    2007
 Dr Ross Garnaut
   Mr Bruce Brook
   85




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##### Table of Contents



Dr Peter Cassidy
   Dr Mike Etheridge
   Lady Winifred Kamit
   Mr Geoff Loudon
   Mr Alister Maitland
  86




---



##### Table of Contents



(b) Senior management
  Name
    
    
    Age
    
    
    Position with the Company
    
    
    Year JoinedPhil Baker
    
    
    54
    
    
    Chief Executive Officer (effective  January, 17 2010)Chief Financial Officer
    
    
    2007Peter Smith
    
    
    51
    
    
    Chief Operating Officer (effective March 1, 2010)
    
    
    2009Noel Foley
    
    
    60
    
    
    Executive General Manager Lihir Operations
    
    
    2006Graham Folland
    
    
    51
    
    
    Executive General Manager Corporate Development
    
    
    2006Tim Fry
    
    
    45
    
    
    Executive General Manager West Africa and Corporate Services
    
    
    2008Michael Sullivan
    
    
    52
    
    
    Executive General Manager Legal and & General Counsel
    
    
    2009
 Phil Baker:
 Peter Smith:
 Noel Foley:
 Graham Folland:
 Tim Fry:
 87




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##### Table of Contents



Michael Sullivan:
  
 B. Compensation
  
    
    Principles used to determine the nature and amount of remuneration
    
    Details of remuneration
    
    Service agreements
    
    Share based compensation
 A. PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION
 (1) An overview
   
    
    competitive in structure and quantum with comparator organisations so as to
attract, retain and motivate appropriately qualified and experienced executives;
 
    
    acceptability to shareholders;
    
    performance linkage / alignment of executive compensation;
    
    transparency; and
    
    capital management.
   
    
    has company profit as a core component of plan design;
    
    focuses on sustained growth in shareholder wealth, consisting of dividends and
growth in share price, and delivering constant return on assets as well as focusing the
executive on key non financial drivers of value; and
    
    attracts and retains high calibre executives.
 Alignment to program participants interests:
 
    
    rewards capability and experience;
    
    reflects competitive reward for contribution to growth in shareholder wealth; and
    
    provides a clear structure for earning rewards.
 88




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##### Table of Contents



(2) Non-executive directors and Chairman
       (a)
    
    Executive directors
  Directors fees
  
    
    the Chairman of the Board: $300,000 per annum (with no additional fee for service on any committees); and
    
    for the other non-executive directors:
 
    
    base fee: $100,000 per annum;
    
    fee for serving as Chairman of the Audit Committee: $27,500 per annum;
    
    fee for serving as Chair of other committees: $20,000 per annum; and
    
    fee for membership of a committee: $10,000 per annum (per committee)
  89




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##### Table of Contents




    
    the Chairman of the Board: $330,000 per annum (with no additional fee for service on any
committees); and
    
    for the other non-executive directors:
 
    
    base fee: $110,000 per annum;
    
    fee for serving as Chairman of the Audit Committee: $30,250 per annum;
    
    fee for serving as Chair of other committees: $22,000 per annum; and
    
    fee for membership of a committee: $11,000 per annum (per committee)
   2009
    
    
    2008$
    
    
    $Dr Ross Garnaut (2) (3)
    
    
    322,500
    
    
    
    282,787Mr Bruce Brook (2)
    
    
    137,063
    
    
    
    118,893Dr Peter Cassidy (2)
    
    
    139,750
    
    
    
    121,393Dr Michael Etheridge (2)
    
    
    118,250
    
    
    
    103,306Lady Winifred Kamit (1)
    
    
    139,750
    
    
    
    121,393Mr Geoff Loudon (1)
    
    
    129,000
    
    
    
    112,350Mr Alister Maitland (2)
    
    
    118,250
    
    
    
    103,306
 
  (1)
    
    Fees are paid to Lady Kamit and Mr Loudon in PNG Kina. Mr Loudons fees are donated
to the Port Moresby City Mission.(2)
    
    Fees are paid to Dr Garnaut, Mr Brook, Dr Cassidy, Dr Etheridge and Mr Maitland in
Australian dollars equivalent to the amount reported.(3)
    
    The services of Dr Garnaut are provided through Dr Garnauts family company,
Maccullochella Pty Limited.  Remuneration and
    
    
    Safety and
    
    
    SustainableNomination
    
    
    Technical Committee
    
    
    DevelopmentBase fees
    
    
    Audit Committee fees
    
    
    Committee fees
    
    
    fees
    
    
    Committee fees
    
    
    Total Directors feesDr Ross Garnaut
    
    $
    322,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    322,500Mr Bruce Brook
    
    $
    107,500
    
    
    $
    29,563
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    137,063Dr Peter Cassidy
    
    $
    107,500
    
    
    
    
    
    
    $
    10,750
    
    
    $
    21,500
    
    
    
    
    
    
    $
    139,750Dr Michael Etheridge
    
    $
    107,500
    
    
    
    
    
    
    
    
    
    
    $
    10,750
    
    
    
    
    
    
    $
    118,250Lady Winifred Kamit
    
    $
    107,500
    
    
    
    
    
    
    $
    10,750
    
    
    
    
    
    
    $
    21,500
    
    
    $
    139,750Mr Geoff Loudon
    
    $
    107,500
    
    
    
    
    
    
    
    
    
    
    $
    10,750
    
    
    $
    10,750
    
    
    $
    129,000Mr Alister Maitland
    
    $
    107,500
    
    
    $
    10,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    118,250
 
   90




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##### Table of Contents



(3) Executive remuneration
   
    
    base package including superannuation and benefits;
    
    short-term performance incentives; and
    
    long-term incentives through participation in the Lihir Executive Share
Plan (the LESP).
  Total fixed remuneration
    Benefits
  Short term incentives
     91




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##### Table of Contents



STI Target Level
    
    Managing Director
    
    
    Key management personnelAttainment of Target
    
    60% of Base package
    
    40% of Base package(before tax)
    
    (before tax)
 Long-term incentives
  (b) Details of remuneration
 Amounts of remuneration
   
    
    Phil Baker  Chief Financial Officer
    
    Noel Foley  Executive General Manager, Papua New Guinea Operations
    
    Graham Folland  Executive General Manager Corporate Development
    
    Tim Fry  Executive General Manager West Africa and Corporate Services
    
    Peter Smith  Executive General Manager Australia and Africa
Operations (appointed April 1, 2009)
    
    Michael Sullivan  Executive General Manager Legal & General Counsel (appointed
September 1, 2009)
  
    
    Noel Foley  Executive General Manager, Papua New Guinea Operations
 92




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##### Table of Contents



Key management personnel and other executives of the Consolidated Entity
  Long-
    
    Share-Post-employment
    
    
    
    
    
    term
    
    basedShort-term employee benefits
    
    benefits
    
    
    
    
    
    benefits
    
    paymentsCashsalary and
    
    
    
    
    
    Non
    
    
    
    
    
    
    
    
    
    Longfees
    
    Cash
    
    monetary
    
    Super-
    
    
    
    
    
    service
    
    Sharebonus
    
    benefits(5)
    
    annuation
    
    Other
    
    leave
    
    rights
    
    TotalName
    
    $
    
    $
    
    $
    
    $
    
    $
    
    $
    
    $
    
    $Non-executive directorsDr Ross Garnaut  Chairman
    
    
    322,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    322,500Mr Bruce Brook
    
    
    137,063
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    137,063Dr Peter Cassidy
    
    
    139,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    139,750Dr Mike Etheridge
    
    
    118,250
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    118,250Lady Winifred Kamit
    
    
    139,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    139,750Mr Geoff Loudon
    
    
    129,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    129,000Mr Alister Maitland
    
    
    118,250
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    118,250Sub-total non-executive
directors
    
    
    1,104,563
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,104,563Executive directorsArthur Hood(1)
    
    
    1,440,462
    
    
    
    631,553
    
    
    
    10,787
    
    
    
    57,299
    
    
    
    
    
    
    
    41,300
    
    
    
    2,354,982
    
    
    
    4,536,383Other key management personnelPhil Baker(2)
    
    
    395,529
    
    
    
    106,235
    
    
    
    10,787
    
    
    
    21,567
    
    
    
    
    
    
    
    5,307
    
    
    
    349,423
    
    
    
    888,848Noel Foley
    
    
    291,442
    
    
    
    141,387
    
    
    
    
    
    
    
    57,303
    
    
    
    
    
    
    
    18,289
    
    
    
    345,617
    
    
    
    854,038Graham Folland
    
    
    312,509
    
    
    
    82,158
    
    
    
    10,787
    
    
    
    28,126
    
    
    
    
    
    
    
    6,567
    
    
    
    311,886
    
    
    
    752,033Tim Fry
    
    
    359,371
    
    
    
    114,686
    
    
    
    10,787
    
    
    
    28,043
    
    
    
    12,508
    (7)
    
    
    2,385
    
    
    
    187,541
    
    
    
    715,321Peter Smith(3)
    
    
    263,973
    
    
    
    87,849
    
    
    
    8,514
    
    
    
    23,758
    
    
    
    
    
    
    
    1,100
    
    
    
    119,169
    
    
    
    504,363Michael Sullivan(4)
    
    
    130,151
    
    
    
    42,023
    
    
    
    12,974
    (6)
    
    
    4,321
    
    
    
    
    
    
    
    412
    
    
    
    
    
    
    
    189,881Total key management
personnel compensation
    
    
    4,298,000
    
    
    
    1,205,891
    
    
    
    64,636
    
    
    
    220,417
    
    
    
    12,508
    
    
    
    75,360
    
    
    
    3,668,618
    
    
    
    9,545,430
 
 Notes:(1)
    
    Mr Hood resigned from the position of Managing Director and Chief Executive Officer on
January 17, 2010.(2)
    
    Mr Baker was appointed the Chief Executive Officer on January 17, 2010.(3)
    
    Mr Smith commenced employment with the Consolidated Entity on April 1, 2009.(4)
    
    Mr Sullivan commenced employment with the Consolidated Entity on September 1, 2009.(5)
    
    Non-monetary benefits include car parking, salary continuance and death and total permanent
disablement and motor vehicle benefits.(6)
    
    Included in the total non-monetary benefit is a car benefit of $9,021(7)
    
    Housing assistance 93




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##### Table of Contents



Name
    
    Fixed remuneration
    
    
    At risk - STI
    
    
    At risk - LTI2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Executive directors of
Lihir Gold LimitedArthur Hood
(resigned January
17, 2010)
    
    
    20
    %
    
    
    20
    %
    
    
    12
    %
    
    
    12
    %
    
    
    68
    %
    
    
    68
    %Other key management personnel of 
Consolidated EntityPhil Baker
    
    
    33
    %
    
    
    33
    %
    
    
    13
    %
    
    
    13
    %
    
    
    54
    %
    
    
    54
    %Noel Foley
    
    
    33
    %
    
    
    33
    %
    
    
    13
    %
    
    
    13
    %
    
    
    54
    %
    
    
    54
    %Graham Folland
    
    
    33
    %
    
    
    33
    %
    
    
    13
    %
    
    
    13
    %
    
    
    54
    %
    
    
    54
    %Tim Fry
    
    
    33
    %
    
    
    33
    %
    
    
    13
    %
    
    
    13
    %
    
    
    54
    %
    
    
    54
    %Peter Smith
    
    
    33
    %
    
    
    
    
    
    
    13
    %
    
    
    
    
    
    
    54
    %
    
    
    Michael Sullivan
    
    
    33
    %
    
    
    
    
    
    
    13
    %
    
    
    
    
    
    
    54
    %
    
    
    
 (c) Service agreements
   Arthur Hood, Managing Director (resigned January 17, 2010)
  
    
    the Managing Directors total fixed remuneration;
    
    60% of the total fixed remuneration (to represent the Short-Term
    
    Incentive component of remuneration); and
    
    106.67% of the total fixed remuneration (to represent the Long-Term
Incentive component of remuneration).
  94




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##### Table of Contents



Phil Baker, Chief Financial Officer
 
  Chief Executive Officer (effective January 17, 2010)
  Noel Foley, Executive General Manager PNG Operations
 
  Graham Folland, Executive General Manager Corporate Development
 
  Tim Fry, Executive General Manager West Africa and Corporate Services
 
  Peter Smith, Executive General Manager Australia and Africa Operations (Chief Operating Officer,
effective March 1, 2010)
 
  Michael Sullivan, Executive General Manager Legal & General Counsel
 
  95




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##### Table of Contents



(d) Share-based compensation
 Share rights
  2009 grant
      Name
    
    Number of share rights
    
    
    Number of share rights vestedgranted during the year
    
    
    during the year2009
    
    
    2008
    
    
    2009
    
    
    2008Directors of Lihir Gold
LimitedArthur Hood(1)
    
    
    1,870,202
    
    
    
    1,649,164
    
    
    Nil
    
    
    129,249Other key management personnel of the Consolidated EntityPhil Baker
    
    
    317,930
    
    
    
    192,711
    
    
    Nil
    
    
    45,074Noel Foley
    
    
    268,059
    
    
    
    183,644
    
    
    Nil
    
    
    41,996Graham Folland
    
    
    261,825
    
    
    
    158,705
    
    
    Nil
    
    
    33,355Tim Fry
    
    
    356,373
    
    
    Nil
    
    
    n/a
    
    
    NilPeter Smith
    
    
    210,395
    
    
    Nil
    
    
    n/a
    
    
    NilMichael Sullivan
    
    Nil
    
    Nil
    
    
    n/a
    
    
    Nil
 
 (1)
    
    Mr Hood received $3.7 million (before tax) in lieu of share rights that
were granted to him in 2008 upon his resignation on 17 January 2010. Mr Hood elected to retain his
2009 share rights for their three year term.   96




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##### Table of Contents



(a)
    
    Exercise price: $ nil (2008  $ nil)(b)
    
    Expected volatility: 55% (2008  46.9%)(c)
    
    Risk-free interest rate: 3.07% (2008  6.8%)(d)
    
    Expected life of right (years): 10 years (2008  10 years)(e)
    
    Weighted average share price at grant date: $2.08 (2008  $2.98)(f)
    
    Expected dividend yield: 0% (2008  0%)
   Shares provided on exercise of share rights
  Name
    
    Date of exercise of
    
    
    Number share rights exercised duringshare rights
    
    
    the year2009
    
    
    2008Directors of Lihir Gold LimitedArthur Hood
(resigned January 17, 2010)
    
    
    
    
    
    
    
    
    
    
    129,249Other key management personnel of the Consolidated EntityPhil Baker
    
    
    
    
    
    
    
    
    
    
    Noel Foley
    
    
    
    
    
    
    
    
    
    
    41,996Graham Folland
    
    
    
    
    
    
    
    
    
    
    33,355Tim Fry
    
    
    
    
    
    
    
    
    
    
    Peter Smith
    
    
    
    
    
    
    
    
    
    
    Michael Sullivan
    
    
    
    
    
    
    
    
    
    
    
 97




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##### Table of Contents



C. Board Practices
   
    
    setting the Companys values and standards of conduct, including in respect of safe
work practices, environmental compliance and social obligations, and ensuring that
these are adhered to in the interests of the Companys shareholders, employees,
customers, suppliers and the communities in which it operates;
    
    safeguarding the reputation of the Company;
    
    providing leadership of the Company within a framework of prudent and effective
controls which enable risks to be assessed and managed;
    
    setting the Companys direction, strategies and financial objectives and ensuring
that the necessary financial and human resources are in place for the Company to meet
its objectives;
    
    ensuring that the performance of management, and the Board itself, is regularly
assessed and monitored;
    
    ensuring monitoring of compliance with regulatory and ethical standards; and
    
    appointing, terminating and reviewing the performance of the Managing Director/CEO.
   
    
    final approval of corporate strategy and performance objectives and reserves and
financial plans;
    
    capital management, including capital raisings, and the approval and monitoring of
significant capital expenditure;
    
    monitoring of financial performance, review and approval of significant financial
and other reporting;
    
    assessing the appropriateness and adequacy of, and monitoring compliance with,
corporate governance policies and ethical standards;
    
    evaluating the performance of the senior management team;
    
    determining the Companys risk management policies and reviewing and ratifying its
risk management and internal control framework, including insurance, corporate security
and prudential limits, codes of conduct, and legal compliance;
    
    determining the Companys treasury policies, including gold price hedging, foreign
currency and interest rate exposure; and
    
    the engagement of auditors to review and report to the Board on the Companys
financial results and reporting systems, internal controls and compliance with
statutory and regulatory requirements.
  www.lglgold.com
 98




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##### Table of Contents



(b) Composition of the Board
  
    
    the Board may, in accordance with the Companys constitution, be comprised of a
minimum of five directors and maximum of twelve; and
    
    the roles of the Chairman of the Board and of the Managing Director should be
exercised by different individuals.
       Year AppointedName
    
    Position and Committee Memberships
    
    As DirectorRoss Garnaut
    
    Chairman of the Board, Independent
Director
Member of the Audit Committee
Member of the Sustainable
Development Committee

Chairman of the Remuneration and
Nomination Committee
    
    
    1995Geoffrey Loudon
    
    Independent Director

Member of the Safety and Technical
Committee

Member of the Sustainable
Development Committee
    
    
    1995Peter Cassidy
    
    Independent Director

Chairman of the Safety and Technical
Committee

Member of the Remuneration and
Nomination Committee
    
    
    2003
 99




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##### Table of Contents



Year AppointedName
    
    Position and Committee Memberships
    
    As DirectorWinifred Kamit
    
    Independent Director

Chair of the Sustainable Development
Committee

Member of the Remuneration and
Nomination Committee
    
    
    2004Bruce Brook
    
    Independent Director

Chairman of the Audit Committee
    
    
    2005Michael Etheridge
    
    Independent Director

Member of the Safety and Technical
Committee
    
    
    2007Alister Maitland
    
    Independent Director

Member of the Audit Committee
    
    
    2007
 (c) Board committees
  
    
    Audit;
 
    
    Remuneration and Nomination;
 
    
    Sustainable Development (formally Environmental and Lihir Impact Committee); and
 
    
    Safety and Technical.
  (1) Audit Committee
  
    
    Mr Bruce Brook  Committee Chairman
 
    
    Dr Ross Garnaut
 
    
    Mr Alister Maitland
   
    
    determining the appropriateness of accounting principles and disclosure practices
adopted by management and monitoring compliance with applicable accounting standards and
other requirements;
    
    overseeing the preparation and audit of, and verifying and ensuring the integrity of,
the Companys Financial Statements and reports;
    
    the appointment, compensation, retention and oversight of the Companys external
auditor or any other public accounting firm engaged for the purpose of performing audit,
review or attestation services for the Company;
    
    reviewing and evaluating the independence, qualifications and performance of the
external auditor and managing the relationship between the Company and its external
auditor;
 100




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##### Table of Contents




    
    monitoring the adequacy of the Companys internal financial controls;
    
    overseeing the risk management and compliance systems and processes;
    
    overseeing the retention, tasking and resourcing of the Companys internal auditors,
monitoring their progress and evaluating their performance; and
    
    reviewing the financial management of the Company generally and undertaking such other
tasks as the Board or the Managing Director may request from time to time.
  (A) Auditor independence and engagement
  
    
    requires that no person may play a significant role in managing the audit for more
than five out of any ten successive years;
    
    must approve all non-audit work which may be undertaken by the external auditor and
exclude them from undertaking such work where it may give rise to a conflict of
interest;
    
    receives periodic statements, at least annually, from the auditors outlining all
work undertaken for the Company, and confirming that the auditor has satisfied all
professional regulations relating to auditor independence;
    
    meets with the external auditor independently of management;
    
    reviews the performance of external auditors at least annually and is responsible
for recommending to the Board their appointment, reappointment or termination;
    
    reviews the scope of the annual audit plan and approves the scope of the audit
services to be provided;
    
    reviews any engagement fees or terms proposed by the external auditors;
    
    reviews and discusses with external auditors or management any significant matters,
problems, difficulties or any other major issues regarding financial reporting issues;
    
    considers whether the external auditors provision of non-audit services to the
Company and any other relationship between the external auditor and the Company (if
any) is compatible with maintaining the independence and objectivity of the external
auditor and maintaining the quality of the audit services provided; and
    
    if applicable, takes appropriate action in response to the external auditors report
to satisfy itself of the external auditors independence for the purposes of making a
recommendation to the Board.
   (B) Risk oversight and management
  101




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##### Table of Contents



(C) Management assurances
     (2) Remuneration and Nomination Committee
  
    
    Dr Ross Garnaut  Committee Chairman
    
    Dr Peter Cassidy
    
    Lady Winifred Kamit
  
    
    reviewing remuneration of non-executive directors, the Managing Director and other
senior executives;
    
    establishing criteria for membership of the Board and its committees;
    
    processes for the identification of suitable candidates;
    
    reviewing membership of the Board and its committees;
    
    nominating members of the Board and its committees;
    
    formulating policies relating to the retirement of non-executive directors;
    
    reviewing management succession planning, human resources and remuneration policies
for the Company generally;
    
    ensuring the Companys obligations in relation to employee benefits and
entitlements, including superannuation, are met; and
    
    recruitment, induction, promotion, retention, termination and other general
conditions of employment.
  102




---



##### Table of Contents



(3) Sustainable Development Committee
  
    
    Lady Winifred Kamit  Committee Chairperson
 
    
    Dr Ross Garnaut
 
    
    Mr Geoff Loudon
  
    
    the interaction between the Companys activities and the local community, and the
ways in which these activities contribute to social and economic development;
    
    dealings with the local community in relation to land;
    
    maintaining and improving community health;
    
    the impact and associated risks of the Companys activities on the natural marine,
terrestrial and atmospheric environment;
    
    liaising with and monitoring any specialist advisory panels, working groups or
committees established for the purposes of sustainable development; and
    
    monitoring the Companys compliance with the applicable regulatory regimes including
both the Companys compliance with the relevant local and international emission
standards and the Companys reporting obligations pursuant to those standards and
codes.
   (4) Safety and Technical Committee
  
    
    Dr Peter Cassidy  Committee Chairman
 
    
    Mr Geoff Loudon
 
    
    Dr Michael Etheridge
  
    
    occupational health and safety standards, policies and issues;
 
    
    technical issues associated with the Companys exploration, mining and processing
activities, with reference to the standards set by the Company and the standards and
norms of the industry more generally;
 103




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##### Table of Contents




    
    review and monitoring of LGLs reserves and resources (including review of
statements made in compliance with the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves (the JORC Code)); and
    
    the status of major capital projects approved by the Board.
  104




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##### Table of Contents



D. Employees
  2009
    
    
    2008
    
    
    2007Lihir OperationManagement
    
    
    13
    
    
    
    9
    
    
    
    10Commercial, human resources, towns and site services, community and environment
    
    
    591
    
    
    
    373
    
    
    
    455Mining operations and mine technical
    
    
    586
    
    
    
    582
    
    
    
    570Plant operations and maintenance
    
    
    1,017
    
    
    
    1,055
    
    
    
    879African OperationsManagement
    
    
    18
    
    
    
    1
    
    
    
    Commercial, human resources, towns and site services, community and environment
    
    
    328
    
    
    
    46
    
    
    
    Mining operations and mine technical
    
    
    313
    
    
    
    58
    
    
    
    Plant operations and maintenance
    
    
    156
    
    
    
    136
    
    
    
    Exploration site personnel
    
    
    280
    
    
    
    2
    
    
    
    Various corporate support personnel
    
    
    10
    
    
    
    10
    
    
    
    Mt Rawdon OperationManagement
    
    
    1
    
    
    
    1
    
    
    
    Commercial, human resources, towns and site services, community and environment
    
    
    10
    
    
    
    8
    
    
    
    Mining operations and mine technical
    
    
    7
    
    
    
    6
    
    
    
    Plant operations and maintenance
    
    
    41
    
    
    
    36
    
    
    
    Ballarat OperationManagement
    
    
    6
    
    
    
    6
    
    
    
    9Commercial, human resources, towns and site
    
    
    13
    
    
    
    23
    
    
    
    10services, community and environmentMining operations and mine technical
    
    
    16
    
    
    
    186
    
    
    
    83Plant operations and maintenance
    
    
    68
    
    
    
    87
    
    
    
    Lihir Services Australia  BrisbaneVarious corporate support personnel
    
    
    139
    
    
    
    99
    
    
    
    53Total Company employees
    
    
    3,613
    
    
    
    2,724
    
    
    
    2,069Total contractors (full-time equivalent)
    
    
    2,204
    
    
    
    1,893
    
    
    
    1,893Total
    
    
    5,817
    
    
    
    4,617
    
    
    
    3,962
     105




---



##### Table of Contents



106




---



##### Table of Contents



E. Share Ownership
  Interest held by directors in shares of theCompany(1)as at February 18, 2010Ross Garnaut
(Director)
    
    
    167,148
    (2)Bruce Brook
(Director)
    
    
    67,730
    (3)Peter Cassidy
(Director)
    
    
    46,074
    (4)Michael Etheridge
(Director)
    
    
    73,501
    (5)Geoffrey Loudon
(Director)
    
    
    143,840Winifred Kamit
(Director)
    
    
    2,667
    (6)Alister Maitland
(Director)
    
    
    82,637
    (7)
 
  (1)
    
    Since April 1, 2009, the Board adopted a policy that non-executive directors acquire LGL
shares equivalent in value to 20% of their annual fees (pre-tax) with the exception of
non-executive directors that donate their fees to charity(2)
    
    Held by Maccullochella Pty Limited of which Dr Garnaut is a director and shareholder.(3)
    
    35,107 of which are held by Eagles Rest 156 Pty Limited as trustee of the Brook Family
Superannuation Fund and 21,773 of which are held by Mrs GD Brook.(4)
    
    26,667 of which are held by Cassidy Waters Pty Limited as trustee for the Cassidy Superannuation Fund.(5)
    
    Held by Tectonex Geoconsultants Pty Ltd as trustee for the Etheridge Superannuation Fund.(6)
    
    Held by Kamchild Limited of which Lady Kamit is a director and shareholder.(7)
    
    Held by the Alister Maitland Superannuation Fund.     107




---



##### Table of Contents



Interest held by key management in shares ofthe Company as at February 18, 2010Phil Baker
    
    
    23,773Graham Folland
    
    
    83,981Noel Foley
    
    
    152,339Tim Fry
    
    
    2,457Peter Smith
    
    
    10,000Michael Sullivan
    
    
    
 108




---



##### Table of Contents



Item 7. Major Shareholders and Related Party Transactions
 
 A. Major Shareholders
 Securities Act Securities Act
 Percentage/VotingSubstantial Shareholder
    
    Relevant Interest
    
    
    Power (%)BlackRock Investment Management
(Australia) Limited
    
    
    287,736,882
    
    
    
    12.14Fidelity Management & Research
LLC and Fidelity International
Limited
    
    
    209,367,759
    
    
    
    8.84Commonwealth Bank of Australia
    
    
    203,827,336
    
    
    
    8.60
 
 (a)
    
    Class B shares  Niugini Mining Limited   
    
    did not carry any voting rights or any entitlement to dividends; and
    
    were not transferable and were redeemable at the Companys option.
  (b) PNG Government Participation and MRL Capital Limited Shareholding
   109




---



##### Table of Contents



(c) American Depositary Shares
   (d) United States Resident Shareholders
 December 31,
    
    
    December 31,2009
    
    
    2008US Holders of Ordinary Share
    
    
    92
    
    
    
    78Total number of shares held
    
    
    703,605
    
    
    
    567,852
   (e) Share Options
  110




---



##### Table of Contents



(f) Control
   
 B. Related Party Transactions
  
    
    Dr Garnaut was re-appointed as chairman commencing on May 1, 2004, subject to his
continuing to hold office as a director and to certain other termination rights set out
in the agreement;
    
    No fees or benefits are payable to Dr Garnaut by reason of his retirement or other
termination of office; and
    
    The Company has agreed to indemnify Dr Garnaut against any liability incurred in
defending any proceedings arising from the performance of his duties and
responsibilities in which judgment is given in his favor, he is acquitted, or relief is
granted to him under the Companies Act. The indemnity does not apply to the extent it
would be inconsistent with the Companys constitution or to the extent the liability is
otherwise insured.
      111




---



##### Table of Contents



C. Interest of Experts and Counsel
  112




---



##### Table of Contents



Item 8. Financial Information
 
 A. Consolidated Statements and Other Financial Information
  (a) Export sales
    2009
    
    
    2008
    
    
    2007Export sales
    
    $
    M
    
    
    
    977.2
    
    
    
    683.9
    
    
    
    492.3Export volume
    
    ozs
    
    
    
    1,005,893
    
    
    
    792,346
    
    
    
    707,339Export volume as % of total
sales volume
    
    
    
    %
    
    
    90.2
    
    
    
    91.2
    
    
    
    99.8
 
 (b)
    
    Legal or arbitration proceedings  (c) Dividend distributions
   
 B. Significant Changes
    113




---



##### Table of Contents



114




---



##### Table of Contents



Item 9. The Offer and Listing
 
 A. Offer and Listing Details
      Ordinary Shares
    
    American Depositary SharesYear
    
    High
    
    Low
    
    High
    
    LowA$
    
    
    
    A$
    
    
    
    $
    
    
    
    $2005
    
    
    2.35
    
    
    
    0.99
    
    
    
    37.01
    
    
    
    15.302006
    
    
    3.64
    
    
    
    1.98
    
    
    
    28.37
    
    
    
    11.462007
    
    
    4.42
    
    
    
    2.74
    
    
    
    40.95
    
    
    
    21.702008
    
    
    4.37
    
    
    
    1.53
    
    
    
    39.95
    
    
    
    9.812009
    
    
    3.73
    
    
    
    2.44
    
    
    
    34.75
    
    
    
    16.72
 Ordinary Shares
    
    American Depositary SharesQuarter Ending
    
    High
    
    Low
    
    High
    
    LowA$
    
    
    
    A$
    
    
    
    $
    
    
    
    $2008
    
    March 31
    
    
    4.37
    
    
    
    3.59
    
    
    
    39.95
    
    
    
    31.57June 30
    
    
    3.29
    
    
    
    2.86
    
    
    
    31.87
    
    
    
    26.50September 30
    
    
    2.80
    
    
    
    1.75
    
    
    
    24.80
    
    
    
    13.93December 31
    
    
    3.13
    
    
    
    2.25
    
    
    
    21.93
    
    
    
    13.982009
    
    March 31
    
    
    3.29
    
    
    
    3.20
    
    
    
    22.79
    
    
    
    21.97June 30
    
    
    2.98
    
    
    
    2.93
    
    
    
    27.24
    
    
    
    19.75September 30
    
    
    2.85
    
    
    
    2.79
    
    
    
    28.06
    
    
    
    20.40December 31
    
    
    3.30
    
    
    
    3.22
    
    
    
    34.75
    
    
    
    24.44
 115




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##### Table of Contents



Ordinary Shares
    
    American Depositary SharesMonth
    
    High
    
    Low
    
    High
    
    LowA$
    
    
    
    A$
    
    
    
    $
    
    
    
    $September 09
    
    
    2.76
    
    
    
    3.18
    
    
    
    28.17
    
    
    
    22.53October 09
    
    
    2.85
    
    
    
    3.33
    
    
    
    30.55
    
    
    
    24.17November 09
    
    
    3.04
    
    
    
    3.70
    
    
    
    35.00
    
    
    
    27.38December 09
    
    
    3.12
    
    
    
    3.73
    
    
    
    35.08
    
    
    
    27.14January 2010
    
    
    2.77
    
    
    
    3.46
    
    
    
    24.25
    
    
    
    32.09February 2010
    
    
    2.58
    
    
    
    2.89
    
    
    
    23.74
    
    
    
    26.23
  116




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Item 10. Additional Information
 
 A. Share Capital
  
 B. Memorandum and Articles of Association
  (a) PNG Companies and Securities Laws
    
    
    the acquisition of, or an agreement to acquire, whether contingent or not, assets the
value of which is more than half the value of assets of the company before the acquisition;
    
    the disposal of, or an agreement to dispose of, whether contingent or not, assets of the
company the value of which is more than half the value of the assets of the company before
the disposal; or
    
    a transaction which has or is likely to have the effect of the company acquiring rights
or interests, or incurring obligations or liabilities, the value of which is more than half
the value of the assets of the company before the transaction.
    117




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
    
    the power to control the exercise of any right to vote attached to a voting share;
    
    the power to acquire or dispose of the voting share; or
    
    having the above powers by virtue of any trust, arrangement, agreement or understanding.
  (b) Constitution
  
    
    reflected changes made under the new Companies Act (for example, the abolition of par
value of shares, the increased power for directors to make distributions of money or
property to members and the removal of the requirement that a company have specific objects
and powers); or
    
    took advantage of specific provisions of the new Act which allow the Company to take a
course of action (for example, to buy back the companys shares, to indemnify directors or
to pay for D&O liability insurance) if expressly permitted to do so by its constitution.
  
    
    The Company is incorporated and registered in PNG (Number C1-23423) and is a registered
foreign company in Australia (ARBN 069 803 998). Under section 17 of the Companies Act, a
company has full capacity to carry on or undertake any business or activity, do any act or
enter into any transaction, and in respect of these purposes, it has full rights, powers
and privileges. Therefore it is not necessary to list the objects and purposes of the
Company in its constitution.
    
    In accordance with clause 17, a director may vote on a proposal, arrangement or contract
in which he is materially interested provided that he has complied with the Companies Act,
the Official Listing Rules of the ASX and provided the board does not otherwise determine.
    
    The constitution contains provisions for the remuneration of directors (including
reimbursement of expenses), the indemnification of directors in respect of certain
liability or for costs incurred in defending or settling any claim or proceedings relating
to such liability, and for effecting insurance
for directors to the extent permitted under the Act. These are general powers of the
Company which may in the normal course be exercised by a resolution of the Board. An
interested director
 118




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who has declared his or her interest would be entitled to vote on any
such resolution unless the board has determined that the director should not exercise any
power in relation to the matter. The interested director is not entitled to vote on a
resolution to make that preliminary determination.There are no specific provisions relating to borrowing powers in the constitution. Clause
20.1 provides that the Board has all necessary power for managing, and for directing and
supervising the management of, the business and affairs of the Company to the exclusion of
the Shareholders and in accordance with clause 21.9 every resolution of the board is decided
by a majority of votes. Therefore, the borrowing by the Company is determined by a majority
decision of the Board.
    
    An exercise of the borrowing power may in certain circumstances be subject to the
provisions of the Companies Act (section 110) requiring shareholder approval for major
transactions.
    
    There are no provisions for retirement or non-retirement of directors under an age limit
in the constitution.
    
    Clause 15.5 provides that a director of the Company need not be a shareholder.
    
    Clause 10A.2(b) provides that Class B shares have no entitlement to dividends.
    
    Clause 24.1 provides that the Board may declare distributions to the shareholders (other
than Class B shareholders) including declaring the property to constitute the distribution
and the time of the distribution. Shareholder approval is not required for a distribution.
Clause 24.3 provides that where the Board has declared a dividend the obligation of the
Company to make the distribution only arises when the Board fixes the time for distribution
and that time has arrived.
    
    Clause 24.8 provides that each dividend in respect of each share must be distributed
according to the amount paid up on that share save to the extent that the terms of issue of
a share provide otherwise. The Company does not have any partly paid shares on issue.
    
    Clause 24.18 provides that all dividends declared but unclaimed may (in the case of
dividends not to be distributed as money) be realized into money and (in any case) be
invested for the benefit of the Company until claimed or until required to be dealt with
under any applicable law dealing with unclaimed money.
    
    Clause 5.6 provides that if a call in relation to a share is due and payable and not
paid, the shareholder has no right to receive any dividends and has no right to vote.
    
    Clause 10A.2(a) provides that the Class B shareholders do not have any voting rights.
    
    Clause 13.2 provides that each shareholder who is entitle to vote on a resolution (where
not disqualified from voting pursuant to the Listing Rules or the Act) has one vote on
voting by voice or show of hands, and on a poll he has the number of votes equal to the
number of fully paid shares held by that person.
    
    Under clause 15.3, one third of the directors (excluding the managing director) retire
by rotation each year and are eligible for re-election.
    
    Clause 27.3 provides that after distribution of assets to repay paid up capital any
surplus assets will be distributed to the shareholders in proportion to the amount paid up
by the shareholder on each share, save to the extent that the terms of issue of a share
provide otherwise.
    
    Clause 10A.2(d) provides that the Class B shares are redeemable at the option of the
Company for consideration of K100 per million (or part thereof) of those shares.
    
    Clause 2.6(b) provides that the Company is authorized to redeem any redeemable shares
subject to the provisions of the Listing Rules and the securities clearing house business
rules of Australia.
    
    There are no provisions in the constitution in relation to sinking funds.
 119




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
    
    Clause 5 provides that the Board may make calls on a shareholder in respect of any or
all of the amount unpaid on the share unless the terms of issue make that payment payable
at a fixed time. The constitution does not expose the shareholders to any liability to
further capital calls by the Company.
    
    There are no provisions discriminating against any existing or prospective holder of
such securities as a result of such shareholder owning a substantial number of shares in
the constitution.
    
    Under the Companies Act, any provision of the constitution can be altered by special
resolution of the shareholders requiring a 75% majority vote of those attending and voting.
    
    Clause 8.2 provides that where the Company by ordinary shareholders resolution
consolidates, divides or sub-divides its shares, the Company may also by special resolution
determine that, as between the shares resulting from the consolidation, division or
sub-division, one or more of those shares has some preference or special advantage as
regards dividends, capital, voting or otherwise over or compared with the other shares.
    
    Clause 8.3 provides that if the shares are divided into different classes of shares, the
rights attached to any class of shares may only be varied or abrogated with either the
written consent of 75% of the shareholders of that class, or, sanction of a special
resolution passed at a separate meeting of that class of shareholders.
    
    Clause 8.4 provides that the board may do anything to give effect to any resolution
authorizing or effecting the alteration of the share capital of the Company, the variation
or abrogation of rights attaching to any class of shares, or to adjust the rights of all
parties.
    
    Clause 11.3 provides that the board may convene a special meeting of the Company at any
time. Alternatively, clause 11.4 provides that the shareholders may requisition the
holding of a special meeting as provided by section 102(b) of the Companies Act, which
requires a written request of shareholders holding shares carrying not less than 5% of the
voting rights.
    
    Clause 11.2 provides that the Company must hold an annual general meeting in accordance
with the Companies Act, which must be held not later than 15 months after the previous
annual general meeting.
    
    Fourteen days written notice of the meeting must be sent to the shareholders, directors
and auditor of the Company, stating the nature of the business, the text of any special
resolution and, if required by the Official Listing Rules of the ASX, include a form of
proxy.
    
    All shareholders (including Class B shareholders) may attend a meeting of shareholders
either in person, by proxy, by attorney or (in the case of a shareholder which is a body
corporate) by a representative.
    
    Clause 12.2 provides that no business may be transacted by a meeting of shareholders
unless a quorum of three is present. Clause 12.3 provides that, where a quorum is not
present within 30 minutes after the time appointed for the meeting, (in the case of a
meeting requisitioned by shareholders), the meeting is dissolved, or in the case of any
other meeting, it is adjourned to the same time and the same place the following week, and
if there is not a quorum within 30 minutes of the appointed time of that meeting, it is
dissolved.
  120




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
    
    There are no limitations on rights to own securities, including the rights of non-resident
or foreign shareholders to hold or exercise voting rights on the securities imposed by foreign
law, or by the charter or other constituent document of the Company in the constitution.
    
    There are no provisions in the constitution that would have an effect of delaying,
deferring or preventing a change in control of the Company, and that would operate only with
respect to a merger, acquisition or corporate restructuring involving the Company (or any of
its subsidiaries).
    
    There are no provisions in the constitution governing the ownership threshold above which
shareholder ownership must be disclosed.
    
    The Company is incorporated, and has its principal activities, in PNG. As such it is
subject to the Companies Act, the Securities Act of PNG and the Takeovers Code under the
Securities Act of PNG. The general effect of this legislation is referred to elsewhere in
this Annual Report.
    
    In relation to an increase in capital by the issue of new shares, clause 2.1 provides that
this power is conferred on the board of directors subject to the listing rules of any
applicable stock exchange (namely the Australian Securities Exchange, Port Moresby Stock
Exchange and the NASDAQ Stock Exchange). The conditions in this regard are no more stringent
than is required by law. There are no pre-emptive rights of existing shareholders.
 121




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C. Material Contracts
 (a) General operational agreements
 (1) Pressure oxidation technology license.
  (2) Lihir management
  (b) Equigold merger
 (1) Merger implementation agreement
  
    
    obtaining approvals from applicable regulatory bodies such as the Foreign Investment
Review Board, the Australian Securities and Investments Commission, the ASX, POMSoX,
NASDAQ, SEC, PNGSC and the TSX as appropriate;
    
    obtaining exchange control approval from the Bank of Papua New Guinea;
    
    under decree 96-634 of August 9, 1996 determining the terms of application of Law
95-553 of July 18, 1995 being the Mining Code of the Republic of the Ivory Coast,
obtaining the authorization of the Administration des Minesto implement the Scheme;
    
    obtaining Equigold shareholder approval of the Scheme at the scheme meeting by the
requisite majorities under the Corporations Act;and
    
    obtaining Court approval of the Scheme in accordance with section 411(4)(b) of the
Corporations Act.
 (2) Deed poll
  122




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(3) Completion
  (c) Integrated Benefits Package
  (d) Revised Integrated Benefits Package
  (e) Lihir operation blasting services contracts
  (a)
    
    a contract with dnx Australia Ltd for the supply of products out of Australia; and(b)
    
    a contract with dnx PNG Ltd for the supply of services at the Lihir operation.
   (f) AGR Matthey gold refining contract
 123




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(g) Metalor Gold Refining Contract
  (h) Million Ounce Plant Upgrade Project (MOPU) Contracts
  (1) Oxygen plant contract
  (2) Autoclave contract
  (3) Grinding mills
  (4) Interim Power Supply  Wartsila floating power plant
  124




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(5) Community compensation package
  (6) Grinding and oxidation feed and detailed design
  (7) Autoclave Internals Contract
  (8) MOPU Contract for Low Voltage MCCs and Switchrooms
  125




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D. Exchange Controls
   a)
    
    to comply with any conditions or approvals issued by the Central Bank before September 3,
2007;b)
    
    obtain prior approval from the Central Bank to operate a bank account outside PNG;c)
    
    to obtain prior approval from the Central Bank to give a guarantee or to grant security to a
non-resident where there is no direct benefit to the resident entity or its business in PNG;
andd)
    
    to report certain transactions (by lodgement of the prescribed forms) to the Central Bank for
example reporting any physical commodity exports from PNG.
  a)
    
    proceeds from the sale of mining products;b)
    
    the proceeds of bank loans and insurance policies in an aggregate amount, sufficient to pay
three months anticipated loan servicing obligations;c)
    
    payments for goods and services to persons resident outside of PNG;d)
    
    dividends to non-PNG shareholders; ande)
    
    payments for certain approved reductions in share capital.
   126




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E. Taxation
  
    
    a dealer in securities;
    
    a trader in securities that elects to use a mark-to-market method of accounting for
securities holdings;
    
    a tax-exempt organization;
    
    a life insurance company;
    
    a person liable for alternative minimum tax;
    
    a person that actually or constructively owns 10% or more of our voting stock;
    
    a person that holds shares or ADSs as part of a straddle or a hedging or conversion
transaction; or
    
    a person whose functional currency is not the U.S. dollar.
    
    
    a citizen or resident of the United States;
    
    a domestic corporation;
    
    an estate whose income is subject to United States federal income tax regardless of its
source; or
    
    a trust if a United States court can exercise primary supervision over the trusts
administration and one or more United States persons are authorized to control all substantial
decisions of the trust.
 You should consult your own tax advisor regarding the United States federal, state and local, and
other tax consequences of owning and disposing of shares and ADSs in your particular circumstances.
  (a) Taxation of Dividends
   127




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(b) Taxation of Capital Gains
  (c) PFIC Rules
   128




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(d) PNG Taxation
 Natural Persons
  Companies and superannuation funds
     Capital gains tax
    Stamp duty
 129




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F. Dividends and Paying Agents
   
 G. Statements by Experts
  
 H. Documents on Display
   
 I. Subsidiary Information
  130




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Item 11. Quantitative and Qualitative Disclosure about Market Risk
 
 A. Quantitative Information about Market Risk
  
 B. Qualitative Information about Market Risk
           131




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Item 12. Description of Securities Other than Equity Securities
  132




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PART II
 
 Item 13. Defaults, Dividend Arrearages and Delinquencies
  133




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Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
 A. None
 B. None
 C. None
 D. None
 E. Use of Proceeds
  134




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Item 15. Controls and Procedures
 
 A. Evaluation of Disclosure Controls and Procedures
    
 B. Managements annual report on Internal control over financial reporting
    
 C. Attestation Report of the Registered public accounting firm
  
 D. Changes in internal control over financial reporting
  135




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Item 16A. Audit Committee Financial Expert
   136




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Item 16B. Code of Ethics
  
    
    Code of Conduct;
    
    Conflicts of Interest Policy;
    
    Whistleblower Policy and Procedure;
    
    Market & Shareholder Communication Policy;
    
    Continuous Disclosure Policy; and
    
    Board Communications Policy.
  (a) Code of Conduct
 "
 
    
    Compliance with laws
    
    Dealing with public officials
    
    Giving or receiving gifts or benefits
    
    Conflicts of interests
    
    Confidentiality
    
    Insider Trading
    
    Information Systems
    
    Financial controls and records
    
    Sustainability
    
    Equal Opportunity, employee harassment and discrimination
    
    Occupational Health and Safety
  (b) Conflicts of Interest Policy
  
    
    a definition of what is a conflict of interest
    
    a procedure to facilitate the disclosure of the conflict of interest
    
    a procedure to allow the standing notification of a conflict of interest; and
    
    Steps to be taken to handle the conflict of interest.
 137




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##### Table of Contents



(c) Whistleblower Policy and Procedure
  www.stopline.com.au
 (d) Market and Shareholder Communication Policy
   
    
    a plain English description of the Companys obligations under ASX Listing Rule 3.1
(the continuous disclosure obligation) and its parallel application on the other markets
on which LGL securities are traded (namely POMSoX, NASDAQ and TSX);
    
    commitments by LGL to use multiple delivery systems to ensure stakeholders are
informed about the business, including email, internet and the LGL website;
    
    initiatives to promote shareholder participation at general meetings including
advanced notice, multimedia presentations, efficient streamlined proxy appointment
processes and information sessions; and
    
    a commitment by LGL to self-assess its corporate governance practices against the ASX
Corporate Governance Councils Principles for Good Corporate Governance and report the
outcome in the LGL annual report.
 (e) Continuous Disclosure Policy
    
    
    a plain English definition of price sensitive information, including several
examples;
    
    the establishment of a Disclosure Committee which is tasked with deciding what
information is to be disclosed to the market, co-ordination of disclosure between
the various markets, regulators, analysts and the website, overseeing the education
of the business on LGLs disclosure obligations and monitoring of compliance with
this policy.
The Disclosure Committee is made up of (a minimum of two of) the CEO, CFO, Group
Secretary and GM Corporate Affairs;
 138




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##### Table of Contents




    
    A process to follow for market speculation or rumours, including responding to
regulator enquiries; and
    
    The policy on release of price sensitive information to analysts, investors and
the media.
 (f) Board Communications Policy
   (a)
    
    any major events at an LGLs operation likely to have a material impact on production
or the general functioning of that operation (which may trigger the continuous disclosure
policy).(b)
    
    any significant event at an LGLs operation that may have the effect of reducing or
limiting production or result in the urgent need for additional unforseen capital
expenditure;(c)
    
    any event which is likely to impact negatively on a supplier or contractor to LGL
requiring LGL to either adopt contingencies or engage alternative suppliers;(d)
    
    any significant safety, environmental, industrial or community incident;(e)
    
    financial matters that significantly affect the Company or need to be discussed;(f)
    
    industrial relations issues (or employment issues generally) that have the short term
potential to negatively impact on an LGL operation (such as news of an impending strike);
or(g)
    
    any event that is considered prudent by executive employees or the Group Secretary to
inform the Board.
  
    
    full fair and accurate timely disclosure in all reports and documents including all
public communications;
    
    commitment to a work environment where the health, safety and well-being of employees,
contractors, visitors and other parties affected by the Companys operations are paramount;
    
    compliance with all laws, regulations and other requirements relating to all aspects of
business and personal conduct within PNG and the countries with which the Company
interacts;
    
    integrity, honesty, transparency and respect in all interactions (whether internal or
with groups outside the Company) including with Lihirian and other representative groups in
relation to issues important to the community;
    
    excellence in the management of environmental responsibilities to ensure minimisation of
any adverse effects on the environment or impact on the local community;
    
    adoption of the highest standards of business administration, accountability and
corporate governance, including the ethical use of all Company resources, funds, equipment,
information and time;
    
    high standards of proprietary when dealing in any tradable securities of the Company,
including shares, options and prescribed interests.
    
    fairness, within the framework of commitments to local community groups, to potential
and existing employees in all areas of recruitment, training and administration of employee
benefits;
    
    initiative and personal commitment by all employees, contractors and agents working on
behalf of the Company, to the highest standards of work performance and the effective
achievement of Company objectives; and
    
    accountability and willingness to take responsibility.
 139




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140




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Item 16C. Principal Accountant Fees and Services
 Companies Act
 (a)
    
    review the performance of the external auditors at least annually and be responsible for
recommending to the Board their appointment, re-appointment or termination;(b)
    
    review the scope of the annual audit program, or audit plan and approve the scope of the
audit services to be provided;(c)
    
    review any engagement fees or terms proposed by the external auditors;(d)
    
    consider whether the external auditors provision of non-audit services to the Company and
any other relationship between the external auditor and the Company (if any) is compatible
with maintaining the independence and objectivity of the external auditor and maintaining the
quality of the audit services provided; and(e)
    
    if applicable, take appropriate action in response to the external auditors report to
satisfy itself of the external auditors independence for the purposes of making a
recommendation to the Board.
   2009 Fees
    
    
    2008 Fees
    
    
    2007 FeesServices provided
    
    $000
    
    
    $000
    
    
    $000Audit fees
    
    
    1,177
    
    
    
    1,197
    
    
    
    685Audit-related fees
    
    
    244
    
    
    
    422
    
    
    
    642Tax fees
    
    
    151
    
    
    
    141
    
    
    
    54
  
    
    comfort letters;
    
    statutory audits;
    
    attest services;
    
    consents; and
    
    assistance with and review of documents filed with the SEC.
  
    
    employee benefit plan audits;
    
    due diligence related to mergers and acquisitions;
    
    accounting assistance and audits in connection with proposed or consummated
acquisitions;
    
    internal control reviews; and
    
    consultations concerning financial accounting and reporting standards.
 141




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##### Table of Contents




    
    tax compliance services, including the preparation of original and amended tax
returns;
    
    tax consultations, such as assistance and representation in connection with
tax audits and appeals, tax advice related to mergers and acquisitions, employee benefit
plans and requests for rulings or technical advice from taxing authorities; and
    
    tax planning services.
 142




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Item 16D. Exceptions from Listing Standards for Audit Committees
  143




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Item 16E. Purchases of Equity Securities by Issue and Affiliates
 Total number of

    
    Maximum number (orshares purchased as

    
    approximate dollarvalue) ofAverage price

    
    part of publicly

    
    shares that may yet beTotal number of

    
    paid per share

    
    announced plans or

    
    purchased under the plansPeriod
    
    shares purchased

    
    (A$)

    
    programs

    
    or programsSeptember 2008
    
    
    546,575
    (1)
    
    $
    2.74744
    
    
    
    564,575
    
    
    Nil2009
    
    Nil
    
    
    Nil
    
    
    Nil
    
    
    Nil
 
 (1)
    
    546,575 shares purchased on market in accordance with the 2007 LESP, announced by
invitation letter to all participants dated January, 31 2007. For further information see
Item 6B. Compensation  (d) Share based compensation. 144




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Item 16F. Change in the Registrants Certifying Accountant
  145




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Item 16G. Corporate Governance
  
    
    In 1995, the Company was granted an exemption with respect to the quorum
requirement under NASDAQ Listing Rule 4350(f), now rule 5620, which requires each issuer to
provide for a quorum as specified in its by-laws for any meeting of the holders of common
stock, which shall in no case be less than 33 1/3% of the outstanding shares of the
Companys common voting stock. The Company complies with the quorum requirements set forth
in Item 10.B (b) above.
    
    Rule 5605 requires independent directors to have regularly scheduled meetings
at which only independent directors are present. During 2009, the Chairman organized two
formal non-executive director (NED) meeting sessions to facilitate NED discussions in the
absence of management. In addition informal NED sessions are regularly held in conjunction
with scheduled Board meetings.
 www.lglgold.com
 146




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Item 17. Financial Statements
  147




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Glossary of Certain Technical Terms
 Alteration
    
    Change in the mineral composition of a rockAnhydrite
    
    Mineral form of calcium sulfateArgillic alteration
    
    Alteration composed of clay mineralsArsenopyrite
    
    A sulfide mineral of iron and arsenicAutoclave
    
    Vessel used for chemical reactions at high temperature and pressure;
for example, to oxidize sulfide oreAutogenous threshold
    
    The level of sulfur feed at which the heat generated by oxidation of
the sulfides is sufficient to propagate the reaction.Ball mill
    
    A mill using metal balls as the grinding mediumBCM
    
    Bank Cubic Meter (a volume of material in its insitu state).Bench
    
    The horizontal floor along which mining progresses in a pit, also
used to describe the horizontal segment between two such floors. The
thickness of such a segment is referred to as the bench height. As
the pit progresses to lower levels, safety benches are left in the
walls to catch any rock falling from above.Brecciation; breccia
    
    Fracturing of pre-existing rocks by natural forces; a rock type
formed in this mannerBullion
    
    Gold or silver in bars or ingotsCalcining
    
    To reduce to a powder or friable state by heatCaldera
    
    Large basin shaped, typically circular crater resulting from volcanic
activityCarbon-in-leach
    
    Method of extracting gold from solution using carbonConcentrate
    
    Material that has been processed to increase the content of contained
metal or mineral relative to the contained wasteCounter-current decantation or CCD
    
    The clarification and concentration of slurry material by the use of
several thickeners in series, with the washing solution flowing in
the opposite direction to the slurryCut-off grade
    
    The lowest grade of mineralized material that can be economically
extractedCyanidation
    
    A standard method of extracting gold and silver from crushed or
ground mineralized rock using sodium cyanideCyanide leaching
    
    The extraction of a precious metal from an ore by its dissolution in
a cyanide solutionDilution
    
    Waste which is commingled with ore in the mining process
 148




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Dore
    
    A mixture of gold and other metals, mostly silver, usually the raw
metal produced from a precious metal mineEconomically
    
    as used in the definition of reserves, implies that profitable
extraction or production under defined investment assumptions has
been established or analytically demonstrated. The assumptions made
must be reasonable, including assumptions concerning the prices and
costs that will prevail during the life of the projectElectro-winning
    
    The process of removal of gold from solution by the action of
electric currentsElution
    
    The process of desorption (taking of gold from carbon)Epithermal
    
    A term applied to deposits formed at shallow depths from ascending
solutions of moderate temperaturesExsolution
    
    To be removed from solutionFeasibility study
    
    A technical and financial study of a project at sufficient level of
accuracy and detail to allow a decision as to whether the project
should proceedFlocculant
    
    An additive introduced to promote aggregation in a solution.Flotation
    
    The process of concentrating ground mineral particles by attaching
them to air bubbles in a slurry using chemical reagents and
recovering the mineralized froth generated by aerationFree gold
    
    Gold not chemically or physically entrapped and hence amenable to
relatively simple extraction processes.Friable
    
    Said of a rock or mineral that crumbles naturally or is easily
broken, pulverized, or reduced to powder, such as soft or poorly
cemented sandstone.Fumaroles
    
    Vents in a volcanic region from which gases and vapors emanate at
high temperaturesGAAP
    
    Generally accepted accounting principles.Geochemistry
    
    The study of the variation of chemical elements in rocks and soils; a
method of exploration based on thisGeotechnical
    
    Pertaining to the engineering properties of rocks and soilsGeothermal
    
    Pertaining to the heat of the earths interiorGrade
    
    The metal (or mineral) content per unit of rockGrinding
    
    Reducing mineralized rock to the consistency of fine sand by crushing
the abrading in a rotating steel grinding mill
 149




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##### Table of Contents



Gyratory Crusher
    
    A primary crusher consisting of a vertical spindle, the foot of which
is mounted in an eccentric bearing within a conical shell. The top
carries a conical crushing head revolving eccentrically in a conical
maw.Hydrological
    
    Pertaining to the science of hydrologykPa
    
    A unit of pressure  an abbreviation for kilopascals, gauge.Joint venture
    
    An arrangement in which two entities unite to form a new,
jointly-owned entity to achieve a specific purpose.Legally
    
    As used in the definition of reserves, does not imply that all
permits needed for mining and processing have been obtained or that
other legal issues have been completely resolved. However, for
reserves to exist there should not be any significant uncertainty
concerning issuance of these permits or resolution of legal issues.Lime
    
    Calcium oxide; artificially made from limestoneLimestone
    
    Rock composed mainly of calcium carbonateLithology
    
    The physical characteristics of rockMafic
    
    Descriptive of rocks containing or made up of ferro-magnesian
minerals (usually dark in color)Magma; magmatic
    
    Liquid molten rock; pertaining to processes and rocks involving magmaMarcasite
    
    Iron sulfide mineral (a form of pyrite)Metallurgy
    
    The science and technology of metals, usually pertaining to the
processing of metals and minerals in miningMill feed grade
    
    The grade of material feed to the mill, equivalent to received at millMilling/mill
    
    The comminution of the ore, although the term has come to cover the
broad range of machinery inside the treatment plant where
economically valuable minerals are separated from the oreMineable
    
    The portion of a reserve for which extraction is technically and
economically feasibleMineral deposit
    
    A mineralized underground body which has been intersected by a
sufficient number of closely-spaced drill holes and/or underground
sampling to support sufficient tonnage and ore grade to warrant
further exploration or development; a mineral deposit or mineralized
material does not qualify as a commercially mineable ore body
(Reserves), as prescribed under standards of the Commission, until a
final and comprehensive economic, technical, and legal feasibility
study based upon the test results is concluded.Net smelter returns
    
    The value received for a mineral after refining, less the cost of
transporting the mineral to the refinery and the cost of refining
 150




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##### Table of Contents



Open pit
    
    Surface mining in which the ore is extracted from a pit. The geometry
of the pit may vary with the characteristics of the ore body.Ore
    
    Material that contains one or more minerals, at least one of which
has commercial value and which can be recovered at a profitOre body
    
    A continuous well defined mass of material of sufficient ore content
to make extraction economically feasibleOre grade
    
    The average amount of the valuable metal or mineral contained in a
specific mass of ore; for gold, this is usually expressed as troy
ounces per short ton (2,000 pounds avoirdupois) or grams per tonneOunces
    
    Troy ounces of 31.103 grams, or 1.097 Avoirdupois ouncesOutcrop
    
    That part of a rock formation exposed on surfaceOxide ore
    
    Gold ore that has been subjected to oxidation through natural
weathering and surface water percolation to the extent that the
minerals are readily treatable by standard processesPhyllic alteration
    
    Hydrothermal alteration of rocks involving the secondary formation of
quartz and sericitePit shell
    
    Designed outline of an open pit mine containing all the open pit ore
reservesPleistocene
    
    A subdivision of geologic time, about 10,000  2 million years before
the presentPotassic alteration
    
    Hydrothermal alteration of rock involving the secondary formation of
potash feldspar, commonly the mineral orthoclase, usually with
biotitePressure oxidation
    
    A method of processing refractory sulfide orePropylitic alteration
    
    Hydrothermal alteration of basic rocks involving the secondary
formation of chlorite, epidote, calcite and sulphideProbable Reserves
    
    means reserves for which quantity and grade and/or quality are
computed from information similar to that used for proven reserves,
but the sites for inspection, sampling and measurement are farther
apart or are otherwise less adequately spaced. The degree of
assurance, although lower than that for proven reserves, is high
enough to assume continuity between points of observation.Proven Reserves
    
    means reserves for which; (a) quantity is computed from dimensions
revealed in outcrops, trenches, workings or drill holes; grade and/or
quality are computed from the results of detailed sampling; and (b)
the sites for inspection, sampling and measurement are spaced so
closely and the geologic character is so well defined that size,
shape, depth and mineral content of reserves are well establishedPyrite
    
    Iron sulfide mineral
 151




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##### Table of Contents



RC hole
    
    A reverse circulation drill hole produced by percussion drilling in
which rock cuttings are recovered instead of core. Reverse
circulation refers to the air flow which flows downward around the
outside of the drill pipe, returning with the rock cuttings through
the drill bit face and stem.Reactive sulfur
    
    In mineral processing involving pressure oxidation, sulfur in the
form of sulfideRefining
    
    The final stage of metal production in which final impurities are
removed from the molten metal by introducing air and fluxes. The
impurities are removed as gases or slagRefractory ore
    
    Ore not amenable to standard processing techniquesReserves
    
    Means that part of a mineral deposit that can be economically and
legally extracted or produced at the time of the reserves
determinationROM
    
    Run of mine padsSampling
    
    Taking small pieces of rock at intervals along exposed mineralization
for assay (to determine the mineral content)SAG
    
    Semi-autogenous grinding, a method of comminution that utilizes the
rock fragments to assist in the grinding processSeismic
    
    Pertaining to shock waves that pass through the earthShotcreting
    
    Application by pressure spraying of a setting medium with the
characteristics of concrete for stabilization of rock faces.Silt curtain
    
    A flooding barrier to be deployed offshore from watercourses, which
causes temporary ponding of sediment laden fresh water within its
confines to enhance settling, and mixing with sea water, as the
turbid stream is forced underneath the barrierSlurry
    
    A fluid comprising fine solids suspended in a solution (generally
water containing additives)Smelting
    
    Thermal processing whereby molten metal is liberated from
beneficiated ore or concentrate with impurities separating as lighter
slagStockpile
    
    A store of unprocessed oreStripping
    
    The process of removing overburden or waste to expose oreStripping ratio
    
    In open pit mining, the ratio of waste material to ore, usually
expressed as tonnes waste : tonnes oreSulfide ore
    
    Ore characterized by the inclusion of metal in the crystal structure
of a sulfide mineral. This type of ore is often refractory oreSuperannuation fund
    
    A contributory pension fund.
 152




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##### Table of Contents



Surface mixed layer
    
    Uppermost layer of the ocean that is constantly mixed by wind and
wave actionTailings
    
    The finely-ground waste product from ore processingUnderground Mine
    
    Mining of an ore body beneath the earths surface where ore is
recovered using trucks via a portal or hoisted via a shaft
 153




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##### Table of Contents



Conversion Table and Unit Equivalent
 Units of MeasureUS$/ oz. Gold
    
    US dollars per troy ounce of goldUS$/ t ore
    
    US dollars per tonne of oreC
    
    Degrees Celsiusg Au/t
    
    Grams of gold per tonneha
    
    Hectareskg
    
    Kilogramskg Au/t
    
    Kilograms of gold per tonnekPa
    
    kilo Pascalskt
    
    kilo tonnesm2
    
    Square metersm3
    
    Cubic metersmtpy
    
    Million tonnes per yeart/d
    
    Tonnes per dayt/h
    
    Tonnes per hourUnit EquivalentsCelsius degrees
    
    (Fahrenheit degrees minus 32.0) times 5/91 cubic meter
    
    35.314 cubic feet1 gram
    
    0.03215 troy ounces1 gram Au/tonne
    
    0.02917 troy ounces gold/short ton1 hectare
    
    2.471 acres1 kilogram
    
    2.205 pounds1 kilometre
    
    0.62 statute miles1 kilopascal
    
    0.145 pounds per square inch1 kilo tonne
    
    1102.31 short tons1 meter
    
    3.281 feet1 millimetre
    
    0.039 inches1 square kilometre
    
    0.3861 square miles1 square meter
    
    10.764 square feet1 tonne
    
    1.1023 short tons
 154




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##### Table of Contents



Item 18. Financial Statements
 Audited Financial Statements
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
    
    FA-1CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
    
    
    F-1CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
    
    
    F-3CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
    
    
    F-5CONSOLIDATED STATEMENTS OF CASH FLOW
    
    
    F-7NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
    
    
    F-8
 155




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##### Table of Contents



PricewaterhouseCoopersABN 52 780 433 7576th Floor Credit HouseCuthbertson StreetPO Box 484PORT MORESBYPAPUA NEW GUINEATelephone (675) 321 1500Facsimile (675) 321 1428Website: www.pwc.com.pg
 
 Report of Independent Registered Public Accounting Firm
  Internal Control  Integrated Framework
 FA-1




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##### Table of Contents



FA-2




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##### Table of Contents



$MNOTE
    
    
    2009
    
    
    2008(1)
    
    
    2007(1)CONTINUING OPERATIONSRevenue
    
    
    6
    
    
    
    1,087.4
    
    
    
    748.6
    
    
    
    497.6Cost of sales
    
    
    8
    
    
    
    (618.8
    )
    
    
    (439.8
    )
    
    
    (260.5
    )Gross profit from mining operations
    
    
    
    
    
    
    468.6
    
    
    
    308.8
    
    
    
    237.1Corporate expense
    
    
    
    
    
    
    (46.2
    )
    
    
    (31.9
    )
    
    
    (25.3
    )Project studies
    
    
    
    
    
    
    (0.1
    )
    
    
    (2.6
    )
    
    
    (7.5
    )Exploration expense
    
    
    
    
    
    
    (9.4
    )
    
    
    (7.9
    )
    
    
    (8.2
    )Operating profit before other income / (expenses)
    
    
    
    
    
    
    412.9
    
    
    
    266.4
    
    
    
    196.1Other income / (expenses)Hedging loss
    
    
    9
    
    
    
    (118.7
    )
    
    
    (75.5
    )
    
    
    (97.2
    )Other income
    
    
    10
    
    
    
    7.2
    
    
    
    0.3
    
    
    
    Other expenses
    
    
    10
    
    
    
    (21.8
    )
    
    
    (31.3
    )
    
    
    (13.8
    )Operating profit / (loss) before finance costs
    
    
    
    
    
    
    279.6
    
    
    
    159.9
    
    
    
    85.1Financial income
    
    
    11
    
    
    
    9.1
    
    
    
    7.3
    
    
    
    10.4Financial expenses
    
    
    11
    
    
    
    (5.4
    )
    
    
    (0.5
    )
    
    
    (131.5
    )Profit / (loss) before tax
    
    
    
    
    
    
    283.3
    
    
    
    166.7
    
    
    
    (36.0
    )Income tax (expense) / benefit
    
    
    13
    
    
    
    (104.6
    )
    
    
    (56.6
    )
    
    
    10.0Net profit / (loss) after tax from continuing operations
    
    
    
    
    
    
    178.7
    
    
    
    110.1
    
    
    
    (26.0
    )DISCONTINUED OPERATIONS(Loss) / Profit from discontinued operation, net of income tax
    
    
    12
    
    
    
    (412.9
    )
    
    
    0.7
    
    
    
    1.9(Loss) / Profit for the period
    
    
    
    
    
    
    (234.2
    )
    
    
    110.8
    
    
    
    (24.1
    )
 
 (1)
    
    Restated (refer Note 36)  F-1




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##### Table of Contents



$MNOTE
    
    
    2009
    
    
    2008(1)
    
    
    2007(1)OTHER COMPREHENSIVE INCOMEExchange difference on translation of foreign operations
    
    
    28
    (a)
    
    
    104.6
    
    
    
    (154.9
    )
    
    
    42.6Net change in fair value of cash flow hedges
    
    
    28
    (a)
    
    
    21.4
    
    
    
    (32.7
    )
    
    
    (59.1
    )Deferred hedging loss transferred to hedging loss expense
    
    
    28
    (a)
    
    
    118.7
    
    
    
    76.7
    
    
    
    97.8Net change in fair value of available for sale financial assets
    
    
    28
    (a)
    
    
    3.0
    
    
    
    (2.2
    )
    
    
    1.2Income tax on other comprehensive income
    
    
    13
    
    
    
    (30.4
    )
    
    
    (27.6
    )
    
    
    (4.9
    )OTHER COMPREHENSIVE INCOME / (LOSS) FOR THE
PERIOD NET OF TAX
    
    
    
    
    
    
    217.3
    
    
    
    (140.7
    )
    
    
    77.6TOTAL COMPREHENSIVE (LOSS) / INCOME
    
    
    
    
    
    
    (16.9
    )
    
    
    (29.9
    )
    
    
    53.5Total comprehensive income / (loss) for the period is
attributable to:Owners of the Company
    
    
    
    
    
    
    (16.7
    )
    
    
    (29.7
    )
    
    
    53.5Non-controlling interests
    
    
    29
    
    
    
    (0.2
    )
    
    
    (0.2
    )
    
    
    (16.9
    )
    
    
    (29.9
    )
    
    
    53.5(Loss) / profit for the period is attributable to:Owners of the Company
    
    
    
    
    
    
    (234.0
    )
    
    
    111.0
    
    
    
    (24.1
    )Non-controlling interests
    
    
    29
    
    
    
    (0.2
    )
    
    
    (0.2
    )
    
    
    (234.2
    )
    
    
    110.8
    
    
    
    (24.1
    )Earnings / (loss) per share
    
    
    40 Basic (cents/share)
    
    
    
    
    
    
    (9.8
    )
    
    
    5.6
    
    
    
    (1.4
    ) Diluted (cents/share)
    
    
    
    
    
    
    (9.7
    )
    
    
    5.6
    
    
    
    (1.4
    )Continuing operations
    
    
    40 Basic (cents/share)
    
    
    
    
    
    
    7.5
    
    
    
    5.6
    
    
    
    (1.5
    ) Diluted (cents/share)
    
    
    
    
    
    
    7.4
    
    
    
    5.6
    
    
    
    (1.5
    )
 
 (1)
    
    Restated (refer Note 36)  F-2




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##### Table of Contents



$MNOTE
    
    
    2009
    
    
    2008(1)ASSETSCURRENT ASSETSCash and cash equivalents
    
    
    14
    
    
    
    473.5
    
    
    
    64.7Receivables
    
    
    16
    
    
    
    15.1
    
    
    
    21.0Inventories
    
    
    17
    
    
    
    162.5
    
    
    
    139.0Derivative financial assets
    
    
    25
    (g)
    
    
    9.3
    
    
    
    0.4Other assets
    
    
    
    
    
    
    19.7
    
    
    
    5.1Assets classified as held for sale
    
    
    12
    
    
    
    8.5
    
    
    
    Total current assets
    
    
    
    
    
    
    688.6
    
    
    
    230.2NON-CURRENT ASSETSReceivables
    
    
    16
    
    
    
    0.1
    
    
    
    0.4Inventories
    
    
    17
    
    
    
    333.3
    
    
    
    255.0Derivative financial assets
    
    
    25
    (g)
    
    
    1.6
    
    
    
    0.3Deferred mining costs
    
    
    18
    
    
    
    299.5
    
    
    
    257.0Property plant and equipment
    
    
    19
    
    
    
    1,888.8
    
    
    
    2,104.0Intangible assets
    
    
    20
    
    
    
    352.0
    
    
    
    419.3Available-for-sale financial assets
    
    
    21
    
    
    
    4.2
    
    
    
    2.3Deferred income tax asset
    
    
    13
    
    
    
    58.9
    
    
    
    31.6Investments in subsidiaries
    
    
    30
    
    
    
    
    
    
    
    Total non-current assets
    
    
    
    
    
    
    2,938.4
    
    
    
    3,069.9Total assets
    
    
    
    
    
    
    3,627.0
    
    
    
    3,300.1
 
 (1)
    
    Restated (refer Note 36)  F-3




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##### Table of Contents



$MNOTE
    
    
    2009
    
    
    2008(1)LIABILITIESCURRENT LIABILITIESAccounts payable & accrued liabilities
    
    
    22
    
    
    
    111.4
    
    
    
    102.1Provisions
    
    
    23
    
    
    
    26.9
    
    
    
    18.5Borrowings and finance facilities
    
    
    24
    
    
    
    0.7
    
    
    
    0.3Derivative financial liabilities
    
    
    25
    (g)
    
    
    
    
    
    
    33.5Deferred settlement payable
    
    
    26
    
    
    
    
    
    
    
    10.8Liabilities classified as held for sale
    
    
    12
    
    
    
    7.0
    
    
    
    Total current liabilities
    
    
    
    
    
    
    146.0
    
    
    
    165.2NON-CURRENT LIABILITIESProvisions
    
    
    23
    
    
    
    46.5
    
    
    
    37.5Borrowings and finance facilities
    
    
    24
    
    
    
    50.2
    
    
    
    0.2Derivative financial liabilities
    
    
    25
    (g)
    
    
    
    
    
    
    18.9Deferred income tax liability
    
    
    13
    
    
    
    145.6
    
    
    
    142.5Total non-current liabilities
    
    
    
    
    
    
    242.3
    
    
    
    199.1Total liabilities
    
    
    
    
    
    
    388.3
    
    
    
    364.3NET ASSETS
    
    
    
    
    
    
    3,238.7
    
    
    
    2,935.8EQUITYContributed equity
    
    
    27
    
    
    
    3,420.9
    
    
    
    3,080.0Reserves
    
    
    28
    (a)
    
    
    (74.2
    )
    
    
    (305.9
    )(Accumulated loss) / retained earnings
    
    
    28
    (b)
    
    
    (139.7
    )
    
    
    129.8Total equity attributable to owners of the Company
    
    
    
    
    
    
    3,207.0
    
    
    
    2,903.9Non-controlling interests
    
    
    29
    
    
    
    31.7
    
    
    
    31.9TOTAL EQUITY
    
    
    
    
    
    
    3,238.7
    
    
    
    2,935.8
 
 (1)
    
    Restated (refer Note 36)  F-4




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##### Table of Contents



ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANYRETAINEDEARNINGS /
    
    
    
    
    
    
    NON-ISSUED
    
    
    
    
    
    
    (ACCUMULATED
    
    
    
    
    
    
    CONTROLLING
    
    
    TOTALCAPITAL
    
    
    RESERVES(1)
    
    
    LOSS)(1)
    
    
    TOTAL(1)
    
    
    INTEREST(1)
    
    
    EQUITY(1)$M
    
    
    $M
    
    
    $M
    
    
    $M
    
    
    $M
    
    
    $MBalance at 1 January 2007
    
    
    1,027.1
    
    
    
    (250.7
    )
    
    
    42.9
    
    
    
    819.3
    
    
    
    
    
    
    
    819.3Total comprehensive income / (loss) for the period
    
    
    
    
    
    
    77.6
    
    
    
    (24.1
    )
    
    
    53.5
    
    
    
    
    
    
    
    53.5Transactions with owners in their capacity as owners: Share based payments to employees
    
    
    
    
    
    
    2.9
    
    
    
    
    
    
    
    2.9
    
    
    
    
    
    
    
    2.9 Deferred tax on share based payments
to employees
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    0.2 Issue of shares  on acquisition of Ballarat
    
    
    316.5
    
    
    
    
    
    
    
    
    
    
    
    316.5
    
    
    
    
    
    
    
    316.5 Issue of
shares  rights issue/placement
(net of transaction costs)
    
    
    977.4
    
    
    
    
    
    
    
    
    
    
    
    977.4
    
    
    
    
    
    
    
    977.4 Purchase of treasury shares
    
    
    (1.3
    )
    
    
    
    
    
    
    
    
    
    
    (1.3
    )
    
    
    
    
    
    
    (1.3
    )Balance at 31 December 2007
    
    
    2,319.7
    
    
    
    (170.0
    )
    
    
    18.8
    
    
    
    2,168.5
    
    
    
    
    
    
    
    2,168.5Balance at 1 January 2008
    
    
    2,319.7
    
    
    
    (170.0
    )
    
    
    18.8
    
    
    
    2,168.5
    
    
    
    
    
    
    
    2,168.5Total comprehensive income / (loss) for the period
    
    
    
    
    
    
    (140.7
    )
    
    
    111.0
    
    
    
    (29.7
    )
    
    
    (0.2
    )
    
    
    (29.9
    )Transactions with owners in their capacity as owners: Share based payments to employees
    
    
    
    
    
    
    4.7
    
    
    
    
    
    
    
    4.7
    
    
    
    
    
    
    
    4.7 Deferred tax on share based payments to
employees
    
    
    
    
    
    
    0.8
    
    
    
    
    
    
    
    0.8
    
    
    
    
    
    
    
    0.8 Non-controlling interest on acquisition of
subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50.2
    
    
    
    50.2 Purchase of non-controlling interests
    
    
    
    
    
    
    4.5
    
    
    
    
    
    
    
    4.5
    
    
    
    (18.1
    )
    
    
    (13.6
    ) Issue of shares  on acquisition of
Equigold NL
    
    
    756.0
    
    
    
    
    
    
    
    
    
    
    
    756.0
    
    
    
    
    
    
    
    756.0 Issue of shares  Mineral Resources Lihir
Limited
    
    
    5.2
    
    
    
    (5.2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
     Purchase of treasury shares
    
    
    (0.9
    )
    
    
    
    
    
    
    
    
    
    
    (0.9
    )
    
    
    
    
    
    
    (0.9
    )Balance at 31 December 2008
    
    
    3,080.0
    
    
    
    (305.9
    )
    
    
    129.8
    
    
    
    2,903.9
    
    
    
    31.9
    
    
    
    2,935.8
 
 (1)
    
    Restated (refer to note 36) F-5




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##### Table of Contents



ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANYRETAINEDEARNINGS /
    
    
    
    
    
    
    NON-ISSUED
    
    
    
    
    
    
    (ACCUMULATED
    
    
    
    
    
    
    CONTROLLING
    
    
    TOTALCAPITAL
    
    
    RESERVES(1)
    
    
    LOSS)(1)
    
    
    TOTAL(1)
    
    
    INTEREST(1)
    
    
    EQUITY(1)$M
    
    
    $M
    
    
    $M
    
    
    $M
    
    
    $M
    
    
    $MBalance at 1 January 2009
    
    
    3,080.0
    
    
    
    (305.9
    )
    
    
    129.8
    
    
    
    2,903.9
    
    
    
    31.9
    
    
    
    2,935.8Total comprehensive income / (loss) for the period
    
    
    
    
    
    
    217.3
    
    
    
    (234.0
    )
    
    
    (16.7
    )
    
    
    (0.2
    )
    
    
    (16.9
    )Transactions with owners in their capacity as owners: Share based payments to employees
    
    
    
    
    
    
    9.3
    
    
    
    
    
    
    
    9.3
    
    
    
    
    
    
    
    9.3 Deferred tax on share based payments
to employees
    
    
    
    
    
    
    5.1
    
    
    
    
    
    
    
    5.1
    
    
    
    
    
    
    
    5.1 Issue
of shares  placement and share
purchase plan (net of transaction costs)
    
    
    340.9
    
    
    
    
    
    
    
    
    
    
    
    340.9
    
    
    
    
    
    
    
    340.9 Dividends paid
    
    
    
    
    
    
    
    
    
    
    (35.5
    )
    
    
    (35.5
    )
    
    
    
    
    
    
    (35.5
    )Balance at 31 December 2009
    
    
    3,420.9
    
    
    
    (74.2
    )
    
    
    (139.7
    )
    
    
    3,207.0
    
    
    
    31.7
    
    
    
    3,238.7
 
 (1)
    
    Restated (refer Note 36)  F-6




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##### Table of Contents



$MNOTE
    
    
    2009
    
    
    2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIESReceipts from customers
    
    
    
    
    
    
    1,085.5
    
    
    
    747.7
    
    
    
    472.4Payments arising from suppliers & employees
    
    
    
    
    
    
    (634.6
    )
    
    
    (539.7
    )
    
    
    (365.9
    )Cash generated from operations
    
    
    
    
    
    
    450.9
    
    
    
    208.0
    
    
    
    106.5Insurance recoveries
    
    
    
    
    
    
    4.5
    
    
    
    
    
    
    
    Close out of hedge book
    
    
    
    
    
    
    (37.9
    )
    
    
    
    
    
    
    (368.5
    )Income tax refund received
    
    
    
    
    
    
    
    
    
    
    4.6
    
    
    
    Interest and finance charges paid
    
    
    
    
    
    
    (0.3
    )
    
    
    (0.2
    )
    
    
    (8.0
    )Net cash flow from operating activities
    
    
    15
    
    
    
    417.2
    
    
    
    212.4
    
    
    
    (270.0
    )CASH FLOWS FROM INVESTING ACTIVITIESInterest received
    
    
    
    
    
    
    2.4
    
    
    
    3.5
    
    
    
    9.7Purchase of property plant and equipment
    
    
    
    
    
    
    (370.8
    )
    
    
    (277.9
    )
    
    
    (206.7
    )Interest and financing charges capitalised
    
    
    
    
    
    
    (2.7
    )
    
    
    (2.9
    )
    
    
    Proceeds on disposal of share investments
    
    
    
    
    
    
    4.7
    
    
    
    
    
    
    
    Proceeds on disposal of property, plant & equipment
    
    
    
    
    
    
    2.0
    
    
    
    0.1
    
    
    
    Payments for investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.2
    )Payments for acquisition of non-controlling interests
    
    
    
    
    
    
    (10.8
    )
    
    
    (2.8
    )
    
    
    Acquisition of subsidiary net of cash acquired
    
    
    31
    
    
    
    (0.4
    )
    
    
    9.1
    
    
    
    19.6Net cash flow used in investing activities
    
    
    
    
    
    
    (375.6
    )
    
    
    (270.9
    )
    
    
    (178.6
    )CASH FLOWS FROM FINANCING ACTIVITIESDividends paid
    
    
    
    
    
    
    (35.5
    )
    
    
    
    
    
    
    Drawdown of debt
    
    
    
    
    
    
    50.0
    
    
    
    
    
    
    
    22.4Repayment of debt
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.4
    )
    
    
    (88.2
    )Repayment of gold loan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (333.4
    )Proceeds of equity issue
    
    
    
    
    
    
    348.5
    
    
    
    
    
    
    
    989.0Underwriting expenses
    
    
    
    
    
    
    (7.6
    )
    
    
    
    
    
    
    (11.6
    )Advance to subsidiary pre acquisition
    
    
    
    
    
    
    
    
    
    
    (49.7
    )
    
    
    Payment for treasury shares
    
    
    
    
    
    
    
    
    
    
    (0.9
    )
    
    
    (1.3
    )Net cash flow from / (used in) financing activities
    
    
    
    
    
    
    355.3
    
    
    
    (51.0
    )
    
    
    576.9Net increase / (decrease) in cash and cash equivalents
    
    
    
    
    
    
    396.9
    
    
    
    (109.5
    )
    
    
    128.3Cash and cash equivalents at beginning of year
    
    
    
    
    
    
    64.7
    
    
    
    174.2
    
    
    
    47.0Effects of exchange rate changes to cash held
    
    
    
    
    
    
    11.9
    
    
    
    
    
    
    
    (1.1
    )Cash and cash equivalents at end of year
    
    
    14
    
    
    
    473.5
    
    
    
    64.7
    
    
    
    174.2
  F-7




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##### Table of Contents



NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
   (i) Basis of preparation
 Companies Act 1997
   1.
    
    derivative financial instruments are measured at fair value2.
    
    financial instruments at fair value through profit and loss are measured at fair value3.
    
    available for sale financial assets are measured at fair value
  F-8




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (ii) Consolidation
      (iii) Joint ventures
  F-9




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (iv) Exploration, evaluation and pre-development expenditure
     (v) Development properties
    F-10




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (vi) Mine properties
       F-11




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (vii) Deferred mining costs
       F-12




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (viii) Capitalisation of interest and financing costs
   (ix) Property, plant and equipment
 Cost and valuation
  Depreciation and amortisation
  F-13




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (ix)Property,
plant and equipment (continued)
   APPROXIMATE PERCENTAGEDEPRECIATED AS UNIT-OF-
    
    
    APPROXIMATE PERCENTAGEFIXED ASSET CLASSIFICATION
    
    PRODUCTION
    
    
    DEPRECIATED AS STRAIGHT-LINE
    
    
    DEPRECIATION RATEDeferred Development
    
    
    100
    %
    
    
    
    
    
    Based onapplicable reservesLand & buildings
    
    
    100
    %
    
    
    
    
    
    Based onapplicable reservesPlant & equipment
    
    
    86
    %
    
    
    14
    %
    
    2  20 years forstraight-line assetsBased onapplicable reservesfor UOPTotal average
    
    
    90
    %
    
    
    10
    %
 F-14




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (ix)Property,
plant and equipment (continued)
      F-15




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (x) Intangible assets
 Exploration rights
  Mining information
  Land owner share grants
  Goodwill
    F-16




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (xi) Inventories
      F-17




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (xii) Impairment of assets
  (xiii) Restoration, rehabilitation and environmental expenditure
   F-18




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (xiii) Restoration, rehabilitation and environmental expenditure (continued)
   (xiv) Leases
 Lihir Gold Limited as Lessee
   F-19




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (xiiv) Leases (continued)
   (xv) Receivables
  (xvi) Payables
  F-20




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (xvii) Borrowings
   (xviii) Other non-derivative financial instruments
   Held to maturity investments
  Available-for-sale financial assets
  F-21




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (xviii) Other non-derivative financial instruments (continued)
  Financial assets at fair value through profit or loss
  Other
  F-22




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (xix) Derivative financial instruments and hedging activities
   1.
    
    hedges of the fair value of recognised assets, liabilities or firm commitments (fair value
hedge);2.
    
    hedges of a particular cash flow risk associated with a recognised asset, liability or highly
probable forecast transaction (cash flow hedge); or3.
    
    hedges of a net investment in a foreign operation (net investment hedge).
    F-23




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (xix) Derivative financial instruments and hedging activities (continued)
 Cash flow hedges
      F-24




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (xix) Derivative financial instruments and hedging activities (continued)
     Net investment hedges
  F-25




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (xix) Derivative financial instruments and hedging activities (continued)
 Derivatives that do not qualify for hedge accounting
  Hedge book re-structure
  (xx) Contributed equity
   F-26




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (xxi) Share-based payments
  1.
    
    The Lihir Executive Share Plan (the LESP), which provides benefits to the executives of the
Company; and
 2.
    
    Share issues made to local Lihirian landowners through Mineral Resources Lihir Limited
(MRL)
 Executive share plan
      F-27




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (xxi) Share-based payments (continued)
  Share-based payments to local Lihirian landowners
   (xxii) Revenue recognition
  1.
    
    the product is in a form suitable for delivery and no further processing is required by, or
on behalf of, the Consolidated Entity;
 2.
    
    the quantity and quality (grade) of the product can be determined with reasonable accuracy;
 3.
    
    the product has been dispatched to the customer and is no longer under the physical control
of the Consolidated Entity (or property in the product has earlier passed to the customer);
 4.
    
    the selling price can be measured reliably;
 F-28




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (xxii) Revenue recognition (continued)
 5.
    
    it is probable that the economic benefits associated with the transaction will flow to the
Consolidated Entity; and6.
    
    the costs incurred or to be incurred in respect of the transaction can be measured reliably.
    (xxiii) Hedging income / expense
  F-29




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (xxiii) Hedging income / expense (continued)
   (xxiv) Interest income
  (xxv) Carbon credits
  (xxvi) Cash and cash equivalents
  1.
    
    cash on hand and at call deposits with banks or financial institutions, net of bank
overdrafts; and
 2.
    
    investments in money market instruments with less than 90 days to maturity from the date of
acquisition.
 F-30




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (xxvii) Employee benefits
 Wages, Salaries, Salary at Risk, Annual Leave and Sick Leave
  Long Service Leave
   Defined Contribution Superannuation Plan
   F-31




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (xxviii) Provisions
   (xxix) Dividends
  (xxx) Income tax
    F-32




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (xxx) Income tax (continued)
   Tax consolidation legislation
   F-33




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (xxxi) Goods and service tax (GST)
    (xxxii) Foreign currency translation
 Functional and presentation currency
  Transactions and balances
  F-34




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (xxxii) Foreign currency translation (continued)
 Consolidated Entity companies
  1.
    
    Assets and liabilities for each Statements of Financial Position presented are translated at
the closing rate at the end of the reporting period
 2.
    
    Income and expenses for each Statements of Comprehensive Income are translated at average
exchange rates (unless this is not a reasonable approximation of the cumulative effect of the
rates prevailing on the transaction dates, in which case income and expenses are translated at
the dates of the transactions); and
 3.
    
    All resulting exchange differences are recognised in the other comprehensive income.
   F-35




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (xxxiii) Business combinations
   (xxxiv) Segment reporting
   (xxxv) Assets and liabilities held for sale and discontinuing operations
   F-36




---



##### Table of Contents



Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 (xxxv) Assets and liabilities held for sale and discontinuing operations (continued)
     (xxxvi) Comparatives
  (xxxvii) Rounding of amounts
  F-37




---



##### Table of Contents



NOTE 2: CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
    Recoverability of long-lived assets
  F-38




---



##### Table of Contents



Note 2: CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
 Recoverability of non-current ore stockpiles
  Determination of ore reserves and mineral resources and remaining mine life
     F-39




---



##### Table of Contents



Note 2: CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
 Provision for restoration and rehabilitation obligations
  Recoverability of deferred tax assets
   Unit-of-production method of depreciation
  F-40




---



##### Table of Contents



Note 2: CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
 Deferred mining costs
  Estimated impairment of goodwill
   F-41




---



##### Table of Contents



NOTE 3: CHANGES IN ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS
   PRELIMINARYASSESSMENT ON THEIMPACT OF THECONSOLIDATED
    
    APPLICATION DATEAPPLICATION DATE OF
    
    ENTITYS FINANCIAL
    
    FOR THEREFERENCE
    
    TITLE
    
    SUMMARY
    
    STANDARD
    
    REPORT
    
    CONSOLIDATED ENTITYIFRS 1
    
    First-time Adoption
of International
Financial Reporting
Standards
    
    Amendments relating
to oil and gas
assets and
determining whether
an arrangement
contains a lease
    
    Annual periods
beginning on or
after 1 January
2010
    
    Not applicable
    
    Not applicableIFRS 2
    
    Share-based Payment
    
    Amendments relating
to group
cash-settled
share-based payment
transactions
    
    Annual periods
beginning on or
after 1 January
2010
    
    The Consolidated
Entity does not
presently have any
share-based payment
arrangements that
will be effected by
the amendment
    
    Annual periods
beginning on or
after 1 January
2010IFRS 3
    
    Business Combination
    
    Comprehensive
revision on
applying the
acquisition method
    
    Annual periods
beginning on or
after 1 July 2009
    
    This amendment will
impact the
accounting for
future business
combinations
effected after
adoption of the
revised accounting
standard.
    
    Annual periods
beginning on or
after 1 January
2010IFRS 9
    
    Financial
instruments
    
    Phase 1 of
replacing IAS 39.
Deals with the
classification and
measurement of
financial assets
    
    Annual periods
beginning on or
after 1 January
2010
    
    The group is
currently in the
process of
evaluating the
potential effect of
this standard.
    
    Annual periods
beginning on or
after 1 January
2013
 F-42




---



##### Table of Contents



PRELIMINARYASSESSMENT ON THEIMPACT OF THECONSOLIDATED
    
    APPLICATION DATEAPPLICATION DATE OF
    
    ENTITYS FINANCIAL
    
    FOR THEREFERENCE
    
    TITLE
    
    SUMMARY
    
    STANDARD
    
    REPORT
    
    CONSOLIDATED ENTITYIFRIC 16
    
    Hedges of a net
investment in a
foreign operation
    
    This interpretation
provides
clarification for
the accounting for
hedges of a net
investment in a
foreign operation
    
    Annual periods
beginning on or
after 1 October
2009
    
    The amendments are
not expected to
have any impact on
the Consolidated
Entity at the
present time
    
    Annual periods
beginning on or
after 1 January
2010IAS 32
    
    Financial
Instruments:
Presentation
    
    Amendments relating
to classification
of rights issues
    
    Annual periods
beginning on or
after 1 February
2010
    
    The amendments are
not expected to
have any impact on
the Consolidated
Entity at the
present time
    
    Annual periods
beginning on or
after 1 January
2011IAS 39
    
    Financial
Instruments:
Recognition and
Measurement
    
    Amendments for
embedded
derivatives when
reclassifying
financial
instruments
    
    Annual periods
beginning on or
after 30 June 2009
    
    The amendments are
not expected to
have any impact on
the Consolidated
Entity at the
present time
    
    Annual periods
beginning on or
after 1 January
2010Amendments for
hedged items
    
    Annual periods
beginning on or
after 1 July 2009
    
    The amendments are
not expected to
have any impact on
the Consolidated
Entity at the
present time
    
    Annual periods
beginning on or
after 1 January
2010Amendments to IFRS
    
    Various
    
    Improvements to
International
Financial Reporting
Standards
    
    Annual periods
beginning on or
after 1 July 2010
    
    The amendments are
not expected to
have any impact on
the Consolidated
Entity at the
present time
    
    Annual periods
beginning on or
after 1 January
2011
 NOTE 4: INTEREST IN UN-INCORPORATED JOINT VENTURE ASSETS
  F-43




---



##### Table of Contents



NOTE 5: SEGMENT REPORTING
 Identification of reportable segments
    Non-GAAP measures
  Types of products
  F-44




---



##### Table of Contents



Note 5: SEGMENT REPORTING (continued)
 Accounting policies and inter-segment transactions
  
    
    Interest revenue
    
    Finance costs
    
    Hedging gains or losses
    
    Income taxes
    
    Corporate expenses
   
    
    Cash and cash equivalents
    
    Current and deferred tax balances
    
    Interest bearing loans and borrowings
    
    Derivative financial instruments
    
    Assets and liabilities of the corporate office
  F-45




---



##### Table of Contents



Note 5: SEGMENT REPORTING (continued)
 AUSTRALIAAUSTRALIA
    
    
    
    
    
    
    
    
    
    
    TOTAL CONSOLIDATED
    
    
    (BALLARAT)PROFIT AND LOSS
    
    PAPUA NEW GUINEA
    
    
    (MT RAWDON)
    
    
    AFRICA
    
    
    UNALLOCATED
    
    
    ENTITY
    
    
    (DISCONTINUED)(1)YEAR ENDED 31 DECEMBER 2009
    
    US$M
    
    
    US$M
    
    
    US$M
    
    
    US$M
    
    
    US$M
    
    
    US$MRevenue from external customers
    
    
    828.9
    
    
    
    108.5
    
    
    
    150.0
    
    
    
    
    
    
    
    1,087.4
    
    
    
    Cost of sales (excluding depreciation and amortisation)
    
    
    (342.1
    )
    
    
    (46.2
    )
    
    
    (64.9
    )
    
    
    
    
    
    
    (453.2
    )
    
    
    Mine EBITDA
    
    
    486.8
    
    
    
    62.3
    
    
    
    85.1
    
    
    
    
    
    
    
    634.2
    
    
    
    Non-cash cost of salesDepreciation and amortisation of
Mine properties
    
    
    
    
    
    
    (22.3
    )
    
    
    (40.9
    )
    
    
    
    
    
    
    (63.2
    )
    
    
    Other depreciation and amortisation
    
    
    (91.1
    )
    
    
    (5.3
    )
    
    
    (23.8
    )
    
    
    (1.0
    )
    
    
    (121.2
    )
    
    
    (91.1
    )
    
    
    (27.6
    )
    
    
    (64.7
    )
    
    
    (1.0
    )
    
    
    (184.4
    )
    
    
    Change in inventories and deferred waste
    
    
    16.6
    
    
    
    0.4
    
    
    
    1.8
    
    
    
    
    
    
    
    18.8
    
    
    
    Gross profit / (loss) from mining operations
    
    
    412.3
    
    
    
    35.1
    
    
    
    22.2
    
    
    
    (1.0
    )
    
    
    468.6
    
    
    
    Corporate expense
    
    
    
    
    
    
    
    
    
    
    (5.5
    )
    
    
    (40.7
    )
    
    
    (46.2
    )
    
    
    Project studies
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    Exploration expense
    
    
    (0.3
    )
    
    
    (0.2
    )
    
    
    (8.9
    )
    
    
    
    
    
    
    (9.4
    )
    
    
    Operating profit / (loss)
before other income / (expense)
    
    
    411.9
    
    
    
    34.9
    
    
    
    7.8
    
    
    
    (41.7
    )
    
    
    412.9
    
    
    
    Hedging profit / (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (118.7
    )
    
    
    (118.7
    )
    
    
    Other income and (expenses)
    
    
    (12.2
    )
    
    
    (0.2
    )
    
    
    (0.1
    )
    
    
    (2.1
    )
    
    
    (14.6
    )
    
    
    Net financial income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.7
    
    
    
    3.7
    
    
    
    Profit / (loss) before income tax
    
    
    399.7
    
    
    
    34.7
    
    
    
    7.7
    
    
    
    (158.8
    )
    
    
    283.3
    
    
    
    Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (104.6
    )
    
    
    (104.6
    )
    
    
    Net profit / (loss) after tax
    
    
    399.7
    
    
    
    34.7
    
    
    
    7.7
    
    
    
    (263.4
    )
    
    
    178.7
    
    
    
    Profit / (loss) from discontinued operation, net of income tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (412.9
    )Capital expenditure
    
    
    279.1
    
    
    
    5.1
    
    
    
    49.2
    
    
    
    4.8
    
    
    
    
    
    
    
    35.3
 (1)
    
    Refer to Note 12 F-46




---



##### Table of Contents



Note 5: SEGMENT REPORTING (continued)
 AUSTRALIA
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AUSTRALIA(MT RAWDON/
    
    
    
    
    
    
    
    
    
    
    TOTAL(1)
    
    
    (BALLARAT/PROFIT AND LOSS
    
    PAPUA NEW GUINEA
    
    
    KIRKALOCKA)
    
    
    AFRICA
    
    
    UNALLOCATED
    
    
    CONSOLIDATED ENTITY
    
    
    (DISCONTINUED)(2)YEAR ENDED 31 DECEMBER 2008
    
    US$M
    
    
    US$M
    
    
    US$M
    
    
    US$M
    
    
    US$M
    
    
    US$MRevenue from external customers
    
    
    667.1
    
    
    
    60.0
    
    
    
    21.5
    
    
    
    
    
    
    
    748.6
    
    
    
    Cost of sales
(excluding depreciation and amortisation)
    
    
    (322.3
    )
    
    
    (33.2
    )
    
    
    (5.0
    )
    
    
    1.0
    
    
    
    (359.5
    )
    
    
    Mine EBITDA
    
    
    344.8
    
    
    
    26.8
    
    
    
    16.5
    
    
    
    1.0
    
    
    
    389.1
    
    
    
    Non-cash cost of salesDepreciation and amortisation of mineral reserves
    
    
    
    
    
    
    (11.2
    )
    
    
    (10.0
    )
    
    
    
    
    
    
    (21.2
    )
    
    
    Other depreciation and amortisation
    
    
    (66.0
    )
    
    
    (2.4
    )
    
    
    (7.7
    )
    
    
    (0.9
    )
    
    
    (77.0
    )
    
    
    (66.0
    )
    
    
    (13.6
    )
    
    
    (17.7
    )
    
    
    (0.9
    )
    
    
    (98.2
    )
    
    
    Change in inventories and deferred waste
    
    
    15.2
    
    
    
    
    
    
    
    2.7
    
    
    
    
    
    
    
    17.9
    
    
    
    Gross profit from mining operations
    
    
    294.0
    
    
    
    13.2
    
    
    
    1.5
    
    
    
    0.1
    
    
    
    308.8
    
    
    
    Corporate expense
    
    
    
    
    
    
    
    
    
    
    (0.9
    )
    
    
    (31.0
    )
    
    
    (31.9
    )
    
    
    Project studies
    
    
    (2.6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.6
    )
    
    
    Exploration expense
    
    
    (5.8
    )
    
    
    
    
    
    
    (2.1
    )
    
    
    
    
    
    
    (7.9
    )
    
    
    Operating profit / (loss)
before other income / (expense)
    
    
    285.6
    
    
    
    13.2
    
    
    
    (1.5
    )
    
    
    (30.9
    )
    
    
    266.4
    
    
    
    Hedging profit / (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (75.5
    )
    
    
    (75.5
    )
    
    
    Other income and (expenses)
    
    
    (28.0
    )
    
    
    
    
    
    
    
    
    
    
    (3.0
    )
    
    
    (31.0
    )
    
    
    Net financial income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.8
    
    
    
    6.8
    
    
    
    Profit / (loss) before income tax
    
    
    257.6
    
    
    
    13.2
    
    
    
    (1.5
    )
    
    
    (102.6
    )
    
    
    166.7
    
    
    
    Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (56.6
    )
    
    
    (56.6
    )
    
    
    Net profit / (loss) after tax
    
    
    257.6
    
    
    
    13.2
    
    
    
    (1.5
    )
    
    
    (159.2
    )
    
    
    110.1
    
    
    
    Profit / (loss) from discontinued operation, net of income tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.7Capital expenditure
    
    
    141
    
    
    
    1
    
    
    
    27
    
    
    
    1
    
    
    
    
    
    
    
    108.8
 
 (1)
    
    Restated (refer Note 36)(2)
    
    Refer to Note 12 F-47




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##### Table of Contents



Note 5: SEGMENT REPORTING (continued)
 AUSTRALIA
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AUSTRALIA(MT RAWDON/
    
    
    
    
    
    
    
    
    
    
    TOTAL(1)
    
    
    (BALLARAT/PROFIT AND LOSS
    
    PAPUA NEW GUINEA
    
    
    KIRKALOCKA)
    
    
    AFRICA
    
    
    UNALLOCATED
    
    
    CONSOLIDATED ENTITY
    
    
    (DISCONTINUED)(2)YEAR ENDED 31 DECEMBER 2007
    
    US$M
    
    
    US$M
    
    
    US$M
    
    
    US$M
    
    
    US$M
    
    
    US$MRevenue from external customers
    
    
    497.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    497.6
    
    
    
    Cost of sales
(excluding depreciation and amortisation)
    
    
    (224.5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (224.5
    )
    
    
    Mine EBITDA
    
    
    273.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    273.1
    
    
    
    Non-cash cost of salesDepreciation and amortisation of mineral reserves
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other depreciation and amortisation
    
    
    (50.3
    )
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    (50.4
    )
    
    
    Change in inventories and deferred waste
    
    
    14.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14.4
    
    
    
    Gross profit from mining operations
    
    
    237.2
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    237.1
    
    
    
    Corporate expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25.3
    )
    
    
    (25.3
    )
    
    
    Project studies
    
    
    (7.5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7.5
    )
    
    
    Exploration expense
    
    
    (8.2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8.2
    )
    
    
    Operating profit / (loss)
before other income / (expense)
    
    
    221.5
    
    
    
    
    
    
    
    
    
    
    
    (25.4
    )
    
    
    196.1
    
    
    
    Hedging profit / (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (97.2
    )
    
    
    (97.2
    )
    
    
    Other income and (expenses)
    
    
    (13.0
    )
    
    
    
    
    
    
    
    
    
    
    (0.8
    )
    
    
    (13.8
    )
    
    
    Net financial income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (121.1
    )
    
    
    (121.1
    )
    
    
    Profit / (loss) before income tax
    
    
    208.5
    
    
    
    
    
    
    
    
    
    
    
    (244.5
    )
    
    
    (36.0
    )
    
    
    Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10.0
    
    
    
    Net profit / (loss) after tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (26.0
    )
    
    
    Profit / (loss) from discontinued operation, net of income tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.9Capital expenditure
    
    
    149
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58
 (1)
    
    Restated (refer Note 36)(2)
    
    Refer to Note 12 F-48




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##### Table of Contents



Note 5: SEGMENT REPORTING (continued)
 AUSTRALIAAUSTRALIA
    
    
    
    
    
    
    
    
    
    
    (BALLARAT)PAPUA NEW GUINEA
    
    
    (MT RAWDON/ KIRKALOCKA)
    
    
    AFRICA
    
    
    UNALLOCATED
    
    
    (DISCONTINUED)(2)
    
    
    GROUPBALANCE SHEET
    
    US$M
    
    
    US$M
    
    
    US$M
    
    
    US$M
    
    
    US$M
    
    
    US$MAs at 31 December 2009Assets and liabilitiesSegment assets
    
    
    2,052.0
    
    
    
    232.7
    
    
    
    773.3
    
    
    
    560.5
    
    
    
    8.5
    
    
    
    3,627.0Segment liabilities
    
    
    (129.9
    )
    
    
    (17.0
    )
    
    
    (15.5
    )
    
    
    (218.9
    )
    
    
    (7.0
    )
    
    
    (388.3
    )As at 31 December 2008(1)Assets and liabilitiesSegment assets
    
    
    1,745.1
    
    
    
    189.9
    
    
    
    611.3
    
    
    
    277.2
    
    
    
    476.6
    
    
    
    3,300.1Segment liabilities
    
    
    (85.0
    )
    
    
    (24.6
    )
    
    
    (13.0
    )
    
    
    (222.5
    )
    
    
    (19.2
    )
    
    
    (364.3
    )As at 31 December 2007(1)Assets and liabilitiesSegment assets
    
    
    1,578.6
    
    
    
    
    
    
    
    
    
    
    
    243.8
    
    
    
    481.9
    
    
    
    2,304.3Segment liabilities
    
    
    (79.2
    )
    
    
    
    
    
    
    
    
    
    
    (45.0
    )
    
    
    (11.6
    )
    
    
    (135.8
    )
 (1)
    
    Restated (refer Note 36)(2)
    
    Refer to Note 12 Major customers
   F-49




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##### Table of Contents



Note 5: SEGMENT REPORTING (continued)
 2009CUSTOMER
    
    $M
    
    SEGMENT REPORTING REVENUE1
    
    193.0
    
    Papua New Guinea / Australia2
    
    184.4
    
    Papua New Guinea / Africa3
    
    106.4
    
    Papua New Guinea4
    
    104.6
    
    Papua New Guinea
 2008CUSTOMER
    
    $M
    
    SEGMENT REPORTING REVENUE1
    
    89.1
    
    Papua New Guinea / Africa2
    
    82.7
    
    Papua New Guinea3
    
    79.2
    
    Papua New Guinea4
    
    77.5
    
    Papua New Guinea
 2007CUSTOMER
    
    $M
    
    SEGMENT REPORTING REVENUE1
    
    86.6
    
    Papua New Guinea2
    
    55.1
    
    Papua New Guinea3
    
    52.3
    
    Papua New Guinea
 NOTE 6: REVENUE
 $M2009
    
    
    2008(1)
    
    
    2007(1)Gold sales
    
    
    1,083.0
    
    
    
    742.7
    
    
    
    492.2Silver sales
    
    
    3.2
    
    
    
    1.4
    
    
    
    0.1Other revenue(2)
    
    
    1.2
    
    
    
    4.5
    
    
    
    5.31,087.4
    
    
    
    748.6
    
    
    
    497.6
 (1)
    
    Restated (refer Note 36)(2)
    
    Other revenue includes certified emission reduction certificate credits F-50




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##### Table of Contents



NOTE 7: EMPLOYEE EXPENSES
 $M2009
    
    
    2008
    
    
    2007Equity settled share-based payment compensation
    
    
    (9.3
    )
    
    
    (4.7
    )
    
    
    2.9Defined contribution superannuation expense
    
    
    (8.2
    )
    
    
    (7.3
    )
    
    
    9.8Other personnel expenses
    
    
    (110.8
    )
    
    
    (80.8
    )
    
    
    56.2(128.3
    )
    
    
    (92.8
    )
    
    
    68.9
 NOTE 8: COST OF SALES
 $M2009
    
    
    2008(1)
    
    
    2007(1)Operating costs
    
    
    (528.7
    )
    
    
    (452.5
    )
    
    
    (303.8
    )Royalties, levies & production taxes
    
    
    (25.6
    )
    
    
    (17.8
    )
    
    
    (13.2
    )Refining costs
    
    
    (4.3
    )
    
    
    (3.6
    )
    
    
    (0.5
    )Depreciation & amortisation
    
    
    (184.4
    )
    
    
    (98.2
    )
    
    
    (50.4
    )Deferred mining costs
    
    
    41.2
    
    
    
    40.0
    
    
    
    70.0Changes in inventories
    
    
    88.2
    
    
    
    94.2
    
    
    
    41.2Stores inventories obsolescence
    
    
    (1.0
    )
    
    
    (0.1
    )
    
    
    (0.8
    )Foreign exchange loss
    
    
    (4.2
    )
    
    
    (1.8
    )
    
    
    (3.0
    )(618.8
    )
    
    
    (439.8
    )
    
    
    (260.5
    )
 (1)
    
    Restated (refer Note 36) NOTE 9: HEDGING LOSS
 $M2009
    
    
    2008
    
    
    2007Cash hedging loss
    
    
    (7.7
    )
    
    
    (9.9
    )
    
    
    (21.4
    )Non-cash hedging loss
    
    
    (111.0
    )(1)
    
    
    (65.6
    )
    
    
    (75.8
    )(118.7
    )
    
    
    (75.5
    )
    
    
    (97.2
    )
 (1)
    
    Reflecting $102.4 million from the closed-out LGL hedge book in 2007 and $8.6 million from
the closed-out Equigold hedge book. F-51




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##### Table of Contents



NOTE 10: OTHER INCOME AND EXPENSES
 $M2009
    
    
    2008
    
    
    2007Other incomeInsurance recovery
    
    
    4.0
    
    
    
    
    
    
    
    Profit on sale of available for sale assets
    
    
    3.1
    
    
    
    
    
    
    
    Other income
    
    
    0.1
    
    
    
    0.3
    
    
    
    7.2
    
    
    
    0.3
    
    
    
    Other expensesImpairment of listed equity securities(1)
    
    
    
    
    
    
    (3.2
    )
    
    
    Net property, plant and equipment loss on disposal
    
    
    (17.2
    )
    
    
    (28.1
    )
    
    
    (13.8
    )Provision for rehabilitation
    
    
    (1.0
    )
    
    
    
    
    
    
    Other expense
    
    
    (3.6
    )
    
    
    
    
    
    
    (21.8
    )
    
    
    (31.3
    )
    
    
    (13.8
    )
 (1)
    
    Listed share investments with a significant or prolonged decline in fair value below cost
have been impaired. The impairment loss is equivalent to the difference in the listed market
valuation at 31 December 2008 and the cost of the respective securities. F-52




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##### Table of Contents



NOTE 11: FINANCIAL INCOME AND EXPENSES
 $M2009
    
    
    2008(1)
    
    
    2007(1)Financial incomeInterest income
    
    
    2.4
    
    
    
    3.0
    
    
    
    9.2Foreign exchange gain
    
    
    6.7
    
    
    
    4.2
    
    
    
    Gold lease rate fees
    
    
    
    
    
    
    
    
    
    
    0.3Other income
    
    
    
    
    
    
    0.1
    
    
    
    0.99.1
    
    
    
    7.3
    
    
    
    10.4Financial expensesLoss on repayment of gold loan
    
    
    
    
    
    
    
    
    
    
    (117.9
    )Foreign exchange loss
    
    
    
    
    
    
    
    
    
    
    (5.8
    )Interest expense on debt facilities
    
    
    
    
    
    
    
    
    
    
    (4.8
    )Accretion expense on rehabilitation
    
    
    (4.3
    )
    
    
    (0.4
    )
    
    
    Other interest & financing
    
    
    (1.1
    )
    
    
    (0.1
    )
    
    
    (3.0
    )(5.4
    )
    
    
    (0.5
    )
    
    
    (131.5
    )
 
 (1)
    
    Restated (refer Note 36) NOTE 12: DISCONTINUED OPERATION
  F-53




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##### Table of Contents



Note 12: DISCONTINUED OPERATION (continued)
   $M2009
    
    
    2008
    
    
    2007Revenue
    
    
    15.1
    
    
    
    7.0
    
    
    
    0.8Expenses
    
    
    (46.3
    )
    
    
    (7.0
    )
    
    
    (0.8
    )Gross loss
    
    
    (31.2
    )
    
    
    
    
    
    
    Exploration expense
    
    
    
    
    
    
    (0.6
    )
    
    
    (0.2
    )Other income
    
    
    0.5
    
    
    
    
    
    
    
    0.5Other expenses
    
    
    
    
    
    
    
    
    
    
    (0.1
    )Impairment
    
    
    (546.1
    )
    
    
    
    
    
    
    Financial income
    
    
    
    
    
    
    0.5
    
    
    
    Financial expenses
    
    
    
    
    
    
    (0.1
    )
    
    
    (Loss)/ income before tax from discontinued operation
    
    
    (576.8
    )
    
    
    (0.2
    )
    
    
    0.2Income tax benefit
    
    
    163.9
    
    
    
    0.9
    
    
    
    1.7Net (loss) / profit after tax from discontinued operation
    
    
    (412.9
    )
    
    
    0.7
    
    
    
    1.9
  $M2009
    
    
    2008
    
    
    2007Net cash used in operating activities
    
    
    (33.5
    )
    
    
    (1.7
    )
    
    
    (5.1
    )Net cash used in investing activities
    
    
    (23.4
    )
    
    
    (108.1
    )
    
    
    (58.0
    )Net cash used in financing activities
    
    
    (0.3
    )
    
    
    (0.4
    )
    
    
    (0.2
    )Net cash used in discontinued operation
    
    
    (57.2
    )
    
    
    (110.2
    )
    
    
    (63.3
    )
 F-54




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##### Table of Contents



Note 12: DISCONTINUED OPERATION (continued)
  2009$MBALANCE SHEETAssets classified as held for saleTrade and other receivables
    
    
    0.1Inventories
    
    
    2.1Other assets
    
    
    0.3Property plant and equipment
    
    
    6.0Deferred income tax asset
    
    
    Assets classified as held for sale
    
    
    8.5Liabilities classified as held for saleAccounts payable & accrued liabilities
    
    
    1.4Provisions
    
    
    5.3Borrowings and finance facilities
    
    
    0.3Deferred income tax liability
    
    
    Liabilities classified as held for sale
    
    
    7.0Net assets classified as held for sale
    
    
    1.5
 Impairment test for Ballarat
   F-55




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##### Table of Contents



Note 12: DISCONTINUED OPERATION (continued)
   F-56




---



##### Table of Contents



NOTE 13: INCOME TAX
  $M2009
    
    
    2008
    
    
    2007Income Tax ExpenseCurrent tax
    
    
    
    
    
    
    
    
    
    
    Under / (over) provided in prior years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deferred tax
    
    
    (60.4
    )
    
    
    56.2
    
    
    
    (10.1
    )Under / (over) provided in prior years
    
    
    1.1
    
    
    
    (0.5
    )
    
    
    (1.6
    )Total income tax (benefit) / expense
    
    
    (59.3
    )
    
    
    55.7
    
    
    
    (11.7
    )Income tax expense from continuing operation
    
    
    104.6
    
    
    
    56.6
    
    
    
    (10.0
    )Income tax benefit from discontinued operation
    
    
    (163.9
    )
    
    
    (0.9
    )
    
    
    (1.7
    )The tax on the Consolidated Entitys profit before tax
differs from the theoretical amount that would arise using
the tax rate applicable to profits of the Company as
follows:Numerical reconciliation of income tax expense / (benefit)
to prima facie tax payableProfit / (loss) before tax from continuing operations
    
    
    283.3
    
    
    
    166.7
    
    
    
    (36.0
    )Adjust Côte dIvoire profit tax holiday
    
    
    (8.9
    )
    
    
    (4.4
    )
    
    
    274.4
    
    
    
    162.3
    
    
    
    (36.0
    )Loss before tax from discontinued operations
    
    
    (576.8
    )
    
    
    (0.2
    )
    
    
    0.2(302.4
    )
    
    
    162.1
    
    
    
    (35.8
    )Prima facie income tax expense / (benefit) on before tax
profit at 30%
    
    
    (90.7
    )
    
    
    48.7
    
    
    
    (10.7
    )Tax effect of amounts which are not deductible (taxable)
in calculating taxable income Expenses not deductible for tax purposes
    
    
    7.9
    
    
    
    7.6
    
    
    
    1.0 Tax losses not recognised from Côte dIvoire
(Exploration)
    
    
    2.7
    
    
    
    
    
    
    
    
 F-57




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##### Table of Contents



Note 13: INCOME TAX (continued)
 $M2009
    
    
    2008
    
    
    2007 De-recognition of deferred tax assets(1)
    
    
    20.3
    
    
    
    
    
    
    
     Application of capital losses
    
    
    (0.2
    )
    
    
    
    
    
    
     Recognition of tax losses not previously recognised
    
    
    
    
    
    
    
    
    
    
    (0.2
    ) Section 72A double deductions
    
    
    (0.4
    )
    
    
    (0.1
    )
    
    
    (0.2
    )(60.4
    )
    
    
    56.2
    
    
    
    (10.1
    )Adjustment for current tax of prior periodsUnder / (Over) provided in prior years
    
    
    1.1
    
    
    
    (0.5
    )
    
    
    (1.6
    )Tax (benefit) / expense
    
    
    (59.3
    )
    
    
    55.7
    
    
    
    (11.7
    )
 
 (1)
    
    De-recognition of deferred tax assets includes tax losses de-recognised of $20.3 million $M2009
    
    
    2008(1)
    
    
    2007(1)(b) Deferred Income TaxDeferred tax assets:
    
    
    208.3
    
    
    
    226.6
    
    
    
    244.4Deferred tax liabilities:
    
    
    (295.0
    )
    
    
    (337.5
    )
    
    
    (185.3
    )(86.7
    )
    
    
    (110.9
    )
    
    
    59.2The gross movement of the deferred tax account is as follows:Balance at beginning of year
    
    
    (110.9
    )
    
    
    59.1
    
    
    
    93.5Credited / (charged) to profit and loss
    
    
    18.6
    
    
    
    (55.7
    )
    
    
    11.7Included in discontinued operation
    
    
    61.0
    
    
    
    
    
    
    
    Acquired on business combination
    
    
    
    
    
    
    (112.4
    )
    
    
    (37.5
    )De-recognised losses charged to P&L(2)
    
    
    (20.3
    )
    
    
    
    
    
    
    Translation adjustments
    
    
    (9.8
    )
    
    
    24.9
    
    
    
    (3.8
    )Tax charged to equity
    
    
    (25.3
    )
    
    
    (26.8
    )
    
    
    (4.7
    )Balance at end of year
    
    
    (86.7
    )
    
    
    (110.9
    )
    
    
    59.2Deferred tax (liability) / asset  PNG
    
    
    (78.6
    )
    
    
    31.6
    
    
    
    101.3Deferred tax (liability) / asset  CÔTE DIVOIRE
    
    
    (67.0
    )
    
    
    (64.2
    )
    
    
    Deferred tax asset / (liability)  Australia
    
    
    58.9
    
    
    
    (78.3
    )
    
    
    (42.1
    )Balance at end of year
    
    
    (86.7
    )
    
    
    (110.9
    )
    
    
    59.2
 
 (1)
    
    Restated (refer Note 36)(2)
    
    The Company has carry forward tax losses of $135.3 million ($40.5 million at the applicable
30% tax rate) recognised as an asset as at balance date as part of the Deferred tax asset
recognised for Australia noted above with losses amounting to $67.6 million ($20.3 million at
the applicable 30% tax rate) that are not currently recognised. F-58




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##### Table of Contents



Note 13: INCOME TAX (continued)
  Movements in deferred tax assets and deferred tax liabilities
 PROVISIONSDEFERRED TAX ASSETS
    
    AGAINST ASSETS
    
    
    DERIVATIVES
    
    
    TAX LOSSES(1)
    
    
    OTHER(2)
    
    
    TOTAL(4)At 1 January 2008
    
    
    12.0
    
    
    
    
    
    
    
    227.7
    
    
    
    4.7
    
    
    
    244.4Credited / (charged) to
profit and loss
    
    
    (1.2
    )
    
    
    
    
    
    
    (13.1
    )
    
    
    (16.1
    )
    
    
    (30.4
    )Translation adjustment
    
    
    (0.3
    )
    
    
    (3.8
    )
    
    
    
    
    
    
    11.0
    
    
    
    6.9Acquired on business
combination
    
    
    4.8
    
    
    
    15.8
    
    
    
    
    
    
    
    1.6
    
    
    
    22.2Charged to equity
    
    
    
    
    
    
    6.7
    
    
    
    (23.2
    )
    
    
    
    
    
    
    (16.5
    )At 1 January 2009
    
    
    15.3
    
    
    
    18.7
    
    
    
    191.4
    
    
    
    1.2
    
    
    
    226.6Credited / (charged) to
profit and loss
    
    
    11.5
    
    
    
    (14.0
    )
    
    
    (66.4
    )
    
    
    69.4
    
    
    
    0.5Translation adjustment
    
    
    1.2
    
    
    
    1.6
    
    
    
    4.4
    
    
    
    6.3
    
    
    
    13.5Acquired on business
combination
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Credited / (charged) to equity
    
    
    
    
    
    
    (6.3
    )
    
    
    (30.7
    )
    
    
    4.7
    
    
    
    (32.3
    )At 31 December 2009
    
    
    28.0
    
    
    
    0.0
    
    
    
    98.7
    
    
    
    81.6
    
    
    
    208.3
 F-59




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##### Table of Contents



Note 13: INCOME TAX (continued)
 ACCELERATED
    
    
    CONSUMABLE
    
    
    DEFERRED
    
    
    PREPAID
    
    
    MININGDEFERRED TAX LIABILITIES
    
    TAX DEPRECIATION
    
    
    STORES
    
    
    MINING
    
    
    INSURANCE
    
    
    TENEMENTS
    
    
    DERIVATIVES
    
    
    OTHER(3)
    
    
    TOTAL(4)At 1 January 2008
    
    
    (38.1
    )
    
    
    (6.4
    )
    
    
    (66.0
    )
    
    
    (0.8
    )
    
    
    (66.8
    )
    
    
    
    
    
    
    (7.2
    )
    
    
    (185.3
    )Credited / (charged) to
profit and loss
    
    
    (20.3
    )
    
    
    (8.3
    )
    
    
    (10.0
    )
    
    
    
    
    
    
    3.3
    
    
    
    
    
    
    
    10.0
    
    
    
    (25.3
    )Translation adjustment
    
    
    1.0
    
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    12.9
    
    
    
    
    
    
    
    4.0
    
    
    
    18.0Acquired on business
combination
    
    
    (4.0
    )
    
    
    
    
    
    
    (1.0
    )
    
    
    
    
    
    
    (128.7
    )
    
    
    
    
    
    
    (0.9
    )
    
    
    (134.6
    )Charged to equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.4
    )
    
    
    (9.9
    )
    
    
    (10.3
    )At 1 January 2009
    
    
    (61.4
    )
    
    
    (14.7
    )
    
    
    (76.9
    )
    
    
    (0.8
    )
    
    
    (179.3
    )
    
    
    (0.4
    )
    
    
    (4.0
    )
    
    
    (337.5
    )Credited / (charged) to
profit and loss
    
    
    (13.2
    )
    
    
    3.2
    
    
    
    (12.8
    )
    
    
    0.7
    
    
    
    85.8
    
    
    
    
    
    
    
    (4.9
    )
    
    
    58.8Translation adjustment
    
    
    (0.2
    )
    
    
    
    
    
    
    (0.4
    )
    
    
    
    
    
    
    (21.4
    )
    
    
    0.2
    
    
    
    (1.5
    )
    
    
    (23.3
    )Acquired on business
combination
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Credited / (charged) to
equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3.1
    )
    
    
    10.1
    
    
    
    7.0At 31 December 2009
    
    
    (74.8
    )
    
    
    (11.5
    )
    
    
    (90.1
    )
    
    
    (0.1
    )
    
    
    (114.9
    )
    
    
    (3.3
    )
    
    
    0.3
    
    
    
    (295.0
    )
 
 (1)
    
    Includes tax losses recognised amounting to $40.5 million for Australia and $58.2 million
for Papua New Guinea(2)
    
    Other includes deferred tax assets associated with the discontinuance of the Ballarat
operation(3)
    
    Other includes share-based payments(4)
    
    Restated (refer Note 36) F-60




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##### Table of Contents



Note 13: INCOME TAX (continued)
  Income tax on other comprehensive income
 $M2009
    
    BEFORE TAX
    
    
    TAX EFFECT
    
    
    NET OF TAXExchange difference on translation of foreign operations
    
    
    104.6
    
    
    
    10.3
    
    
    
    114.9Deferred loss on cash flow hedges
    
    
    140.1
    
    
    
    (40.1
    )
    
    
    100.0Net change in fair value of available for sale financial
assets
    
    
    3.0
    
    
    
    (0.6
    )
    
    
    2.4Other comprehensive income
    
    
    247.7
    
    
    
    (30.4
    )
    
    
    217.3
 $M2008
    
    BEFORE TAX
    
    
    TAX EFFECT
    
    
    NET OF TAXExchange difference on translation of foreign operations
    
    
    (154.9
    )
    
    
    (11.7
    )
    
    
    (166.6
    )Deferred loss on cash flow hedges
    
    
    44.0
    
    
    
    (16.5
    )
    
    
    27.5Net change in fair value of available for sale financial
assets
    
    
    (2.2
    )
    
    
    0.6
    
    
    
    (1.6
    )Other comprehensive income
    
    
    (113.1
    )
    
    
    (27.6
    )
    
    
    (140.6
    )
 $M2007
    
    BEFORE TAX
    
    
    TAX EFFECT
    
    
    NET OF TAXExchange difference on translation of foreign operations
    
    
    42.6
    
    
    
    
    
    
    
    42.6Deferred loss on cash flow hedges
    
    
    38.7
    
    
    
    (4.5
    )
    
    
    34.2Net change in fair value of available for sale financial
assets
    
    
    1.2
    
    
    
    (0.4
    )
    
    
    0.8Other comprehensive income
    
    
    82.5
    
    
    
    (4.9
    )
    
    
    77.6
 F-61




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##### Table of Contents



NOTE 14: CASH AND CASH EQUIVALENTS
 $M2009
    
    
    2008
    
    
    2007Cash at bank and on hand
    
    
    82.0
    
    
    
    39.6
    
    
    
    44.7Short term deposits with financial institutions
    
    
    391.5
    
    
    
    25.1
    
    
    
    129.5473.5
    
    
    
    64.7
    
    
    
    174.2
    F-62




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##### Table of Contents



NOTE 15: NOTE TO STATEMENTS OF CASH FLOWS
 $M2009
    
    
    2008
    
    
    2007Reconciliation of cash flow from operating activities to
operating profit after taxNet (loss) / profit after tax
    
    
    (234.2
    )
    
    
    110.8
    
    
    
    (24.1
    )Hedge book restructure payments and receiptsPurchase of gold to close out hedge book
    
    
    (37.9
    )
    
    
    
    
    
    
    (368.5
    )Add back non-cash items:Depreciation and amortisation
    
    
    184.4
    
    
    
    98.2
    
    
    
    50.4Provision for doubtful debts
    
    
    (1.0
    )
    
    
    0.7
    
    
    
    1.3Fair value losses
    
    
    
    
    
    
    
    
    
    
    0.4Non-cash hedging loss
    
    
    111.0
    
    
    
    65.6
    
    
    
    75.4Impairment losses
    
    
    546.1
    
    
    
    3.2
    
    
    
    Other non-cash items
    
    
    1.8
    
    
    
    (0.8
    )
    
    
    (0.7
    )Share based payment expenses
    
    
    9.3
    
    
    
    4.7
    
    
    
    2.9Add back items presented in investing or financingLoss on disposal of assets
    
    
    14.1
    
    
    
    27.9
    
    
    
    13.8Interest income
    
    
    (2.4
    )
    
    
    (3.5
    )
    
    
    (9.7
    )Interest and financing costs
    
    
    (0.3
    )
    
    
    0.2
    
    
    
    117.9Change in operating assets and liabilities net of purchase
of subsidiary and translation differences(Increase) / decrease in debtors and prepayments
    
    
    (6.9
    )
    
    
    (8.0
    )
    
    
    (6.0
    )(Increase) / decrease in inventories
    
    
    (102.1
    )
    
    
    (107.4
    )
    
    
    (54.3
    )(Increase) / decrease in deferred mining costs
    
    
    (40.8
    )
    
    
    (36.4
    )
    
    
    (70.0
    )Increase / (decrease) in operating payables
    
    
    21.5
    
    
    
    (1.8
    )
    
    
    12.7Increase / (decrease) in operating provisions
    
    
    13.9
    
    
    
    (1.3
    )
    
    
    7.1Increase / (decrease) in provision for income taxes payable
    
    
    
    
    
    
    4.6
    
    
    
    (0.3
    )(Decrease) / increase in provision for deferred income tax
    
    
    (59.3
    )
    
    
    55.7
    
    
    
    (18.3
    )Net cash flow from operating activities
    
    
    417.2
    
    
    
    212.4
    
    
    
    (270.0
    )
 F-63




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##### Table of Contents



NOTE 16: RECEIVABLES
 $M2009
    
    
    2008| |CURRENTOther amounts receivable from third parties
    
    
    21.1
    
    
    
    25.9Less: Provision for doubtful accounts
    
    
    (6.0
    )
    
    
    (4.9
    )Other debtors  related parties and controlled entities
    
    
    
    
    
    
    15.1
    
    
    
    21.0NON-CURRENTOther debtors  related parties and controlled entities
    
    
    
    
    
    
    Other amounts receivable from third parties
    
    
    0.1
    
    
    
    0.40.1
    
    
    
    0.4
 NOTE 17: INVENTORIES
 $M2009
    
    
    2008(1)CURRENTStores
    
    
    86.5
    
    
    
    74.2Ore stockpiles
    
    
    57.7
    
    
    
    46.7Gold in circuit
    
    
    7.4
    
    
    
    7.9Finished goods
    
    
    10.9
    
    
    
    10.2162.5
    
    
    
    139.0NON-CURRENTOre stockpiles
    
    
    333.3
    
    
    
    255.0333.3
    
    
    
    255.0
 
 (1)
    
    Restated (refer Note 36) F-64




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##### Table of Contents



NOTE 18: DEFERRED MINING COSTS
 $M2009
    
    
    2008(1)NON-CURRENTDeferred mining costs
    
    
    299.5
    
    
    
    257.0299.5
    
    
    
    257.0
 
 (1)
    
    Restated (refer Note 36) Movements:
 $M2009
    
    
    2008(1)Carrying amount at start of year
    
    
    257.0
    
    
    
    218.3- Cash waste costs attributable to current year mining activity
    
    
    (20.2
    )
    
    
    (7.7
    )- Non-cash waste costs attributable to current year mining activity(2)
    
    
    (2.6
    )
    
    
    (1.0
    )- Total cash costs of material mined during the period (cash)
    
    
    54.0
    
    
    
    41.7- Total non-cash costs of material mined during the period(2)
    
    
    10.0
    
    
    
    6.2- Translation adjustments
    
    
    1.3
    
    
    
    (0.5
    )Carrying amount at end of year
    
    
    299.5
    
    
    
    257.0
 
 (1)
    
    Restated (refer Note 36)(2)
    
    Non-cash costs comprise depreciation and amortisation on operating property, plant and
equipment. F-65




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##### Table of Contents



NOTE 19: PROPERTY, PLANT AND EQUIPMENT
 $MNote
    
    
    2009
    
    
    2008(1)LAND AND BUILDINGSCost brought forward
    
    
    
    
    
    
    133.9
    
    
    
    125.7Transfers from capital works in progress
    
    
    
    
    
    
    9.9
    
    
    
    9.5Assets acquired through business combination
    
    
    31
    
    
    
    
    
    
    
    1.5Reclassification
    
    
    
    
    
    
    (4.5
    )
    
    
    Disposals
    
    
    
    
    
    
    (0.1
    )
    
    
    (1.9
    )Translation adjustments
    
    
    
    
    
    
    0.3
    
    
    
    (0.9
    )Cost carried forward
    
    
    
    
    
    
    139.5
    
    
    
    133.9Depreciation brought forward
    
    
    
    
    
    
    (35.6
    )
    
    
    (31.6
    )Charge for the year
    
    
    
    
    
    
    (5.3
    )
    
    
    (4.2
    )Reclassification
    
    
    
    
    
    
    5.6
    
    
    
    Disposals
    
    
    
    
    
    
    
    
    
    
    0.2Impairment for the year(2)
    
    
    
    
    
    
    (0.9
    )
    
    
    Depreciation carried forward
    
    
    
    
    
    
    (36.2
    )
    
    
    (35.6
    )Net book value
    
    
    
    
    
    
    103.3
    
    
    
    98.3PLANT AND EQUIPMENTCost brought forward
    
    
    
    
    
    
    1,176.6
    
    
    
    965.9Additions
    
    
    
    
    
    
    18.6
    
    
    
    11.5Transfers from capital works in progress
    
    
    
    
    
    
    77.7
    
    
    
    217.4Transfers to assets held for sale
    
    
    
    
    
    
    (6.0
    )Assets acquired through business combination
    
    
    31
    
    
    
    
    
    
    
    31.8Reclassification
    
    
    
    
    
    
    (2.9
    )
    
    
    Disposals
    
    
    
    
    
    
    (54.9
    )
    
    
    (42.1
    )Translation adjustments
    
    
    
    
    
    
    22.5
    
    
    
    (7.9
    )Cost carried forward
    
    
    
    
    
    
    1,231.6
    
    
    
    1,176.6Depreciation brought forward
    
    
    
    
    
    
    (329.8
    )
    
    
    (283.0
    )Charge for the year
    
    
    
    
    
    
    (88.5
    )
    
    
    (64.4
    )Reclassification
    
    
    
    
    
    
    1.5
    
    
    
    Disposals
    
    
    
    
    
    
    38.5
    
    
    
    17.7Impairment for the year(2)
    
    
    
    
    
    
    (58.7
    )
    
    
    Translation adjustments
    
    
    
    
    
    
    (14.0
    )
    
    
    (0.1
    )Depreciation carried forward
    
    
    
    
    
    
    (451.0
    )
    
    
    (329.8
    )Net book value
    
    
    
    
    
    
    780.6
    
    
    
    846.8
 
 (1)
    
    Restated (refer Note 36)(2)
    
    Refer to Note 12 F-66




---



##### Table of Contents



Note 19: PROPERTY, PLANT AND EQUIPMENT (continued)
 $MNote
    
    
    2009
    
    
    2008(1)DEFERRED DEVELOPMENTCost brought forward
    
    
    
    
    
    
    703.7
    
    
    
    639.1Additions
    
    
    
    
    
    
    17.3
    
    
    
    105.1Transfers from capital works in progress
    
    
    
    
    
    
    14.1
    
    
    
    42.0Assets acquired through business combination
    
    
    31
    
    
    
    
    
    
    
    6.4Reclassification
    
    
    
    
    
    
    (24.6
    )
    
    
    Disposals
    
    
    
    
    
    
    (1.2
    )
    
    
    (2.1
    )Translation adjustments
    
    
    
    
    
    
    36.8
    
    
    
    (86.8
    )Cost carried forward
    
    
    
    
    
    
    746.1
    
    
    
    703.7Depreciation brought forward
    
    
    
    
    
    
    (113.8
    )
    
    
    (101.3
    )Charge for the year
    
    
    
    
    
    
    (21.0
    )
    
    
    (12.9
    )Reclassification
    
    
    
    
    
    
    19.3
    
    
    
    Impairment for the year(2)
    
    
    
    
    
    
    (407.6
    )
    
    
    Disposals
    
    
    
    
    
    
    0.5
    
    
    
    0.4Translation adjustments
    
    
    
    
    
    
    1.0
    
    
    
    Depreciation carried forward
    
    
    
    
    
    
    (521.6
    )
    
    
    (113.8
    )Net book value
    
    
    
    
    
    
    224.5
    
    
    
    589.9MINE PROPERTIESCost brought forward
    
    
    
    
    
    
    487.6
    
    
    
    Assets acquired through business combination
    
    
    31
    
    
    
    
    
    
    
    544.3Translation adjustments
    
    
    
    
    
    
    45.4
    
    
    
    (56.7
    )Cost carried forward
    
    
    
    
    
    
    533.0
    
    
    
    487.6Depreciation brought forward
    
    
    
    
    
    
    (21.2
    )
    
    
    Charge for the year
    
    
    
    
    
    
    (63.2
    )
    
    
    (21.2
    )Translation adjustments
    
    
    
    
    
    
    (3.8
    )
    
    
    Depreciation carried forward
    
    
    
    
    
    
    (88.2
    )
    
    
    (21.2
    )Net book value
    
    
    
    
    
    
    444.8
    
    
    
    466.4
 
 (1)
    
    Restated (refer Note 36)(2)
    
    Refer to Note 12 F-67




---



##### Table of Contents



Note 19: PROPERTY, PLANT AND EQUIPMENT (continued)
 $MNote
    
    
    2009
    
    
    2008(1)PRE-DEVELOPMENTCost brought forward
    
    
    
    
    
    
    4.3
    
    
    
    Additions
    
    
    
    
    
    
    28.3
    
    
    
    4.3Reclassification
    
    
    
    
    
    
    3.8
    
    
    
    Disposals
    
    
    
    
    
    
    
    
    
    
    Translation adjustments
    
    
    
    
    
    
    
    
    
    
    Cost carried forward
    
    
    
    
    
    
    36.4
    
    
    
    4.3Depreciation brought forward
    
    
    
    
    
    
    
    
    
    
    Charge for the year
    
    
    
    
    
    
    0.4
    
    
    
    Reclassification
    
    
    
    
    
    
    (1.7
    )Translation adjustments
    
    
    
    
    
    
    (1.2
    )
    
    
    Depreciation carried forward
    
    
    
    
    
    
    (2.5
    )
    
    
    -Net book value
    
    
    
    
    
    
    33.9
    
    
    
    4.3Cost brought forward
    
    
    
    
    
    
    87.1
    
    
    
    107.7Additions
    
    
    
    
    
    
    298.7
    
    
    
    183.2Transfers
    
    
    
    
    
    
    (101.7
    )
    
    
    (268.9
    )Assets acquired through business combination
    
    
    31
    
    
    
    
    
    
    
    80.3Reclassification
    
    
    
    
    
    
    3.5
    
    
    
    Translation adjustments
    
    
    
    
    
    
    0.1
    
    
    
    (15.2
    )Costs carried forward
    
    
    
    
    
    
    287.7
    
    
    
    87.1Net book value
    
    
    
    
    
    
    287.7
    
    
    
    87.1
 
 (1)
    
    Restated (refer Note 36) F-68




---



##### Table of Contents



Note 19: PROPERTY, PLANT AND EQUIPMENT (continued)
 $MNOTE
    
    
    2009
    
    
    2008(1)REHABILITATIONCost brought forward
    
    
    
    
    
    
    14.1
    
    
    
    5.2Additions
    
    
    
    
    
    
    5.4
    
    
    
    6.7Assets acquired through business combination
    
    
    31
    
    
    
    
    
    
    
    2.2Disposals
    
    
    
    
    
    
    (2.1
    )Translation adjustments
    
    
    
    
    
    
    0.4
    
    
    
    Cost carried forward
    
    
    
    
    
    
    17.8
    
    
    
    14.1Amortisation brought forward
    
    
    
    
    
    
    (2.9
    )
    
    
    (2.7
    )Charge for the year
    
    
    
    
    
    
    (0.6
    )
    
    
    (0.2
    )Disposals
    
    
    
    
    
    
    2.1Impairment for the year(2)
    
    
    
    
    
    
    (2.4
    )
    
    
    Translation adjustments
    
    
    
    
    
    
    
    
    
    
    Amortisation carried forward
    
    
    
    
    
    
    (3.8
    )
    
    
    (2.9
    )Net book value
    
    
    
    
    
    
    14.0
    
    
    
    11.2Total property, plant & equipment
    
    
    
    
    
    
    1,888.8
    
    
    
    2,104.0
  
 (1)
    
    Restated (refer Note 36)(2)
    
    Refer to Note 12 F-69




---



##### Table of Contents



NOTE 20: INTANGIBLE ASSETS
 $MNOTE
    
    
    2009
    
    
    2008(1)MINING INFORMATIONCost brought forward
    
    
    
    
    
    
    55.9
    
    
    
    49.2Acquired through business combination
    
    
    31
    
    
    
    
    
    
    
    23.2Translation adjustments
    
    
    
    
    
    
    9.6
    
    
    
    (16.5
    )Cost carried forward
    
    
    
    
    
    
    65.5
    
    
    
    55.9Amortisation brought forward
    
    
    
    
    
    
    (1.0
    )
    
    
    Charge for the year
    
    
    
    
    
    
    (2.4
    )
    
    
    (1.2
    )Impairment for the year(2)
    
    
    
    
    
    
    (43.6
    )
    
    
    Translation adjustments
    
    
    
    
    
    
    (0.4
    )
    
    
    0.2Amortisation carried forward
    
    
    
    
    
    
    (47.4
    )
    
    
    (1.0
    )Closing net book value
    
    
    
    
    
    
    18.1
    
    
    
    54.9EXPLORATION RIGHTSCost brought forward
    
    
    
    
    
    
    148.8
    
    
    
    1.9Acquired through business combination
    
    
    31
    
    
    
    
    
    
    
    147.2Translation adjustments
    
    
    
    
    
    
    0.1
    
    
    
    (0.3
    )Cost carried forward
    
    
    
    
    
    
    148.9
    
    
    
    148.8Amortisation brought forward
    
    
    
    
    
    
    
    
    
    
    Charge for the year
    
    
    
    
    
    
    
    
    
    
    Impairment for the year
    
    
    
    
    
    
    (1.7
    )
    
    
    Translation adjustments
    
    
    
    
    
    
    
    
    
    
    Amortisation carried forward
    
    
    
    
    
    
    (1.7
    )
    
    
    Closing net book value
    
    
    
    
    
    
    147.2
    
    
    
    148.8LICENSESCost brought forward
    
    
    
    
    
    
    
    
    
    
    0.1Acquired through business combination
    
    
    31
    
    
    
    
    
    
    
    Translation adjustments
    
    
    
    
    
    
    
    
    
    
    (0.1
    )Cost carried forward
    
    
    
    
    
    
    
    
    
    
    Closing net book value
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Restated (refer Note 36)(2)
    
    Refer to Note 12 F-70




---



##### Table of Contents



Note 20: INTANGIBLE ASSETS (continued)
 $MNOTE
    
    
    2009
    
    
    2008(1)GOODWILLCost brought forward
    
    
    
    
    
    
    195.7
    
    
    
    35.3Acquired through business combination
    
    
    31
    
    
    
    
    
    
    
    168.1Translation adjustments
    
    
    
    
    
    
    3.6
    
    
    
    (7.7
    )Cost carried forward
    
    
    
    
    
    
    199.3
    
    
    
    195.7Amortisation brought forward
    
    
    
    
    
    
    
    
    
    
    Charge for the year
    
    
    
    
    
    
    
    
    
    
    Impairment for the year(2)
    
    
    
    
    
    
    (31.2
    )
    
    
    Translation adjustments
    
    
    
    
    
    
    
    
    
    
    Amortisation carried forward
    
    
    
    
    
    
    (31.2
    )
    
    
    Closing net book value
    
    
    
    
    
    
    168.1
    
    
    
    195.7OTHER INTANGIBLE ASSETSCost brought forward
    
    
    
    
    
    
    22.3
    
    
    
    7.7Acquired through business combination
    
    
    31
    
    
    
    
    
    
    
    14.8Transferred from capital works in progress
    
    
    
    
    
    
    2.0
    
    
    
    Disposals
    
    
    
    
    
    
    
    
    
    
    (0.2
    )Additions
    
    
    
    
    
    
    
    
    
    
    Translation adjustments
    
    
    
    
    
    
    (0.1
    )
    
    
    Cost carried forward
    
    
    
    
    
    
    24.2
    
    
    
    22.3Amortisation brought forward
    
    
    
    
    
    
    (2.4
    )
    
    
    (0.7
    )Charge for the year
    
    
    
    
    
    
    (3.8
    )
    
    
    (1.7
    )Translation adjustments
    
    
    
    
    
    
    0.6
    
    
    
    Amortisation carried forward
    
    
    
    
    
    
    (5.6
    )
    
    
    (2.4
    )Closing net book value
    
    
    
    
    
    
    18.6
    
    
    
    19.9Total intangible assets
    
    
    
    
    
    
    352.0
    
    
    
    419.3
 
 (1)
    
    Restated (refer Note 36)(2)
    
    Refer to Note 12 F-71




---



##### Table of Contents



Note 20: INTANGIBLE ASSETS (continued)
 Impairment test for goodwill
     $MBallarat CGU
    
    
    Mount Rawdon CGU
    
    
    African CGU
    
    
    168.1168.1
  Key assumptions used for fair value less costs to sell of the African CGUs
  F-72




---



##### Table of Contents



Note 20: INTANGIBLE ASSETS (continued)
  (a)
    
    Gold price per ounce used for long-term forecast sale cash flows was US$1,100 for 2010 to
2014, US$900 for 2015 and beyond.(b)
    
    Production schedule assuming a progressive ramp up during the eight years from 2012 to 2019.(c)
    
    Total production over the life of the mine of between 2.9 million ounces and 4.8 million
ounces (weighted over a number of strategic business cases).
    (a)
    
    The real cash flows for each SBP case with varying lives ranging from 8 years to 14 years;
 (b)
    
    A real post-tax discount rate of 7%.
 F-73




---



##### Table of Contents



Note 20: INTANGIBLE ASSETS (continued)
 Impact of changes to key assumptions
  AFRICA CGUCHANGE IN NPV$MIncrease of real post-tax discount rate by1%
    
    
    (67
    )Decrease of real post-tax discount rate by 1%
    
    
    74Reduction in gold price from 2010 by $100/oz and $200/oz for 2011 - 2014
    
    
    (136
    )Increase gold price from 2014 and beyond by $200 per ounce
    
    
    173
  NOTE 21: AVAILABLE-FOR-SALE FINANCIAL ASSETS
 Listed equity securities
 $M2009
    
    
    2008At beginning of the year
    
    
    2.3
    
    
    
    2.5Additions (1)
    
    
    
    
    
    
    0.2Disposals(2)
    
    
    (2.1
    )
    
    
    Acquired through business combination(3)
    
    
    
    
    
    
    6.8Translation
    
    
    1.1
    
    
    
    (1.8
    )Impairment
    
    
    
    
    
    
    (3.2
    )Revaluation surplus / (deficit) transfer to Equity
    
    
    2.9
    
    
    
    (2.2
    )At end of the year
    
    
    4.2
    
    
    
    2.3
 
 (1)
    
    During 2008, the Consolidated Entity acquired 1 million shares of Rex Minerals Limited as
consideration for the North Creswick exploration licence.(2)
    
    During 2009, the Consolidated Entity disposed of its holdings in Rex Minerals Limited and
Mount Magnet South NL respectively.(3)
    
    During 2008, the Consolidated Entity acquired 12 million shares of Mount Magnet South NL and
10.4 million shares of Adamus Resources Limited on acquisition of Equigold Pty Limited
(formerly Equigold NL). F-74




---



##### Table of Contents



NOTE 22: ACCOUNTS PAYABLE & ACCRUED LIABILITIES
 $M2009
    
    
    2008CURRENTTrade creditors and accruals
    
    
    111.4
    
    
    
    102.1111.4
    
    
    
    102.1
 NOTE 23: PROVISIONS
 $M2009
    
    
    2008CURRENTEmployee provisions
    
    
    26.0
    
    
    
    18.5Rehabilitation provision
    
    
    0.9
    
    
    
    26.9
    
    
    
    18.5NON CURRENTEmployee provisions
    
    
    3.0
    
    
    
    4.4Rehabilitation provision
    
    
    30.1
    
    
    
    23.6Other provisions(1)
    
    
    13.4
    
    
    
    9.546.5
    
    
    
    37.5
 
 (1)
    
    Includes an amount of $10.1 million for the following: In attributing value to the
potential exploration projects acquired, it has been assumed that through the realisation of
these projects the Côte dIvoire government will take a 10% stake on any projects that proceed
to operate as mining projects. This potential 10% interest has been recognised as an other
provision. F-75




---



##### Table of Contents



Note 23: PROVISIONS (continued)
 (a)
    
    Current employee provisions relate to the following short-term benefits which are payable
within 12 months:
 $MEmployee provisions current
    
    2009
    
    
    2008Annual leave
    
    
    9.5
    
    
    
    8.1Sick leave
    
    
    1.6
    
    
    
    1.4Service bonus
    
    
    5.0
    
    
    
    3.1Short term incentives
    
    
    6.1
    
    
    
    3.3Long service leave current
    
    
    2.6
    
    
    
    1.3Other employee provisions
    
    
    1.2
    
    
    
    1.326.0
    
    
    
    18.5
   (b)
    
    Non-current employee provisions relate to the non-current portion of service bonuses and
long-service leave entitlements that are determined in accordance with the requirements for
other long-term employee benefits.
 $M2009
    
    
    2008Employee provisions non-currentLong service leave
    
    
    2.0
    
    
    
    2.7Service bonus
    
    
    1.0
    
    
    
    1.73.0
    
    
    
    4.4
 F-76




---



##### Table of Contents



Note
23: PROVISIONS (continued)
 (c)
    
    Movements in each class of provision, excluding employee provisions, during the financial
year are set out below:
 $M2009Rehabilitationprovision
    
    
    Other
    
    
    TotalCarrying amount at start of year
    
    
    23.6
    
    
    
    9.5
    
    
    
    33.1 Utilised during the year
    
    
    (0.1
    )
    
    
    
    
    
    
    (0.1
    ) additional / (reduction in) provision for changes in estimated cash outflows
    
    
    (1.7
    )
    
    
    
    
    
    
    (1.7
    ) additional provision due to ground disturbance
    
    
    1.1
    
    
    
    
    
    
    
    1.1 change in discount & inflation rate
    
    
    7.1
    
    
    
    
    
    
    
    7.1 acquisition of subsidiaries
    
    
    
    
    
    
    
    
    
    
     interest charge / accretion
    
    
    4.3
    
    
    
    
    
    
    
    4.3 reclassed to current asset held for sale
    
    
    (3.3
    )
    
    
    
    
    
    
    (3.3
    ) disposal of tenements
    
    
    (1.4
    )
    
    
    
    
    
    
    (1.4
    ) transfer to discontinued operation
    
    
    
    
    
    
    
    
    
    
     onerous contract
    
    
    
    
    
    
    3.1
    
    
    
    3.1 translation adjustment
    
    
    1.4
    
    
    
    0.8
    
    
    
    2.2Carrying amount at end of year
    
    
    31.0
    
    
    
    13.4
    
    
    
    44.4Current
    
    
    0.9
    
    
    
    
    
    
    
    0.9Non-current
    
    
    30.1
    
    
    
    13.4
    
    
    
    43.531.0
    
    
    
    13.4
    
    
    
    44.4
 F-77




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##### Table of Contents



NOTE 24: BORROWINGS AND LEASING AGREEMENTS
 $M2009
    
    
    2008CURRENTBorrowings
    
    
    
    
    
    
    Finance leases (Note 38)
    
    
    0.7
    
    
    
    0.30.7
    
    
    
    0.3NON CURRENTBorrowings
    
    
    50.0
    
    
    
    Finance leases (Note 38)
    
    
    0.2
    
    
    
    0.250.2
    
    
    
    0.2
 Borrowings
   Finance leases
  F-78




---



##### Table of Contents



NOTE 25: FINANCIAL INSTRUMENTS AND RISK
 a) Financial risk management overview
  1.
    
    Credit risk2.
    
    Liquidity risk3.
    
    Market risk- consisting of:
 
    
    Foreign exchange risk
    
    Interest rate risk
    
    Commodity price risk
    F-79




---



##### Table of Contents



Note 25: FINANCIAL INSTRUMENTS AND RISK (continued)
 2009$MCARRYING AMOUNT
    
    
    FAIR VALUEFinancial assetsAvailable for sale financial assets
    
    
    4.2
    
    
    
    4.2Receivables
    
    
    15.2
    
    
    
    15.2Cash and cash equivalents
    
    
    473.5
    
    
    
    473.5Derivative financial assets
    
    
    10.9
    
    
    
    10.9Financial liabilitiesDerivative financial liabilities
    
    
    
    
    
    
    Finance lease liabilities
    
    
    0.9
    
    
    
    0.9Accounts payable & accrued liabilities
    
    
    111.4
    
    
    
    111.4Deferred settlement payable
    
    
    
    
    
    
    Borrowings
    
    
    50.0
    
    
    
    50.0
 2008$MCARRYING AMOUNT
    
    
    FAIR VALUEFinancial assetsAvailable for sale financial assets
    
    
    2.3
    
    
    
    2.3Receivables
    
    
    21.4
    
    
    
    21.2Cash and cash equivalents
    
    
    64.7
    
    
    
    64.7Derivative financial assets
    
    
    0.7
    
    
    
    0.7Financial liabilitiesDerivative financial liabilities
    
    
    52.4
    
    
    
    52.4Finance lease liabilities
    
    
    0.5
    
    
    
    0.5Accounts payable & accrued liabilities
    
    
    102.1
    
    
    
    102.1Deferred settlement payable
    
    
    10.8
    
    
    
    10.8Borrowings
    
    
    
    
    
    
    
 F-80




---



##### Table of Contents



Note 25: FINANCIAL INSTRUMENTS AND RISK (continued)
  Level 1 financial instruments
  Level 2 financial instruments
  Level 3 financial instruments
   2009
    
    LEVEL 1
    
    
    LEVEL 2
    
    
    LEVEL 3
    
    
    TOTALFinancial assetsAvailable for sale financial
assets
    
    
    4.2
    
    
    
    
    
    
    
    
    
    
    
    4.2Derivative financial assets
    
    
    10.9
    
    
    
    
    
    
    
    
    
    
    
    10.9Financial liabilitiesDerivative financial liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 F-81




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##### Table of Contents



Note
25: FINANCIAL INSTRUMENTS AND RISK (continued)
 2008
    
    LEVEL 1
    
    
    LEVEL 2
    
    
    LEVEL 3
    
    
    TOTALFinancial assetsAvailable for sale financial
assets
    
    
    2.3
    
    
    
    
    
    
    
    
    
    
    
    2.3Derivative financial assets
    
    
    0.7
    
    
    
    
    
    
    
    
    
    
    
    0.7Financial liabilitiesDerivative financial liabilities
    
    
    52.4
    
    
    
    
    
    
    
    
    
    
    
    52.4
 b) Credit risk
   F-82




---



##### Table of Contents



FINANCIAL INSTRUMENTS AND RISK (continued)
  
    
    has a policy for establishing credit limits for the entities with which it deals;
    
    may require collateral where appropriate; and
    
    monitors the overall financial strength of customers through publicly available credit
information.
   PAST DUE BUT NOT IMPAIREDCARRYING
    
    
    
    NEITHER PAST DUE
    
    
    
    LESS THAN
    
    
    BETWEEN 30 AND 90
    
    
    
    GREATER THAN 90
    
    
    PAST DUE ANDAMOUNT

    
    
    
    NOR IMPAIRED
    
    
    30 DAYS
    
    
    DAYS
    
    
    DAYS
    
    
    IMPAIRED$M
    
    
    $M
    
    
    $M
    
    
    $M
    
    
    $M
    
    
    $M2009Other amounts
receivable from
third parties
(current)
    
    
    15.1
    
    
    
    13.8
    
    
    
    0.3
    
    
    
    0.4
    
    
    
    0.6
    
    
    
    6.0Other amounts
receivable from
third parties
(non-current)
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    2008Other amounts
receivable from
third parties
(current)
    
    
    21.0
    
    
    
    4.7
    
    
    
    0.6
    
    
    
    1.0
    
    
    
    14.7
    
    
    
    4.9Other amounts
receivable from
third parties
(non-current)
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.4
    
    
    
    
 F-83




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##### Table of Contents



Note 25: FINANCIAL INSTRUMENTS AND RISK (continued)
 .
 c) Liquidity risk
     F-84




---



##### Table of Contents



Note 25: FINANCIAL INSTRUMENTS AND RISK (continued)
 TOTAL
    
    
    TOTALLESS THAN
    
    
    BETWEEN 1
    
    
    BETWEEN 2
    
    
    OVER 5
    
    
    CONTRACTUAL
    
    
    CARRYING1 YEAR
    
    
    & 2 YEARS
    
    
    & 5 YEARS
    
    
    YEARS
    
    
    CASH FLOWS
    
    
    AMOUNT2009Accounts payable and accrued
liabilities
    
    
    111.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    111.4
    
    
    
    111.4Finance lease liabilities
    
    
    0.7
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    0.9
    
    
    
    0.9Derivative financial liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deferred settlement payable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Borrowings
    
    
    3.5
    
    
    
    3.5
    
    
    
    59.8
    
    
    
    
    
    
    
    66.8
    
    
    
    50.0
 TOTAL
    
    
    TOTALLESS THAN
    
    
    BETWEEN 1
    
    
    BETWEEN 2
    
    
    OVER 5
    
    
    CONTRACTUAL
    
    
    CARRYING1 YEAR
    
    
    & 2 YEARS
    
    
    & 5 YEARS
    
    
    YEARS
    
    
    CASH FLOWS
    
    
    AMOUNT2008Accounts payable and accrued
liabilities
    
    
    102.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102.1
    
    
    
    102.1Finance lease liabilities
    
    
    0.3
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    0.5
    
    
    
    0.5Derivative financial liabilities
    
    
    33.5
    
    
    
    18.9
    
    
    
    
    
    
    
    
    
    
    
    52.4
    
    
    
    52.4Deferred settlement payable
    
    
    10.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10.8
    
    
    
    10.8Borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  d) Foreign exchange risk
  F-85




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##### Table of Contents



Note 25: FINANCIAL INSTRUMENTS AND RISK (continued)
  1.
    
    translational exposure in respect of non-functional currency monetary items
 2.
    
    transactional exposure in respect of non-functional currency expenditure and revenues
    F-86




---



##### Table of Contents



Note 25: FINANCIAL INSTRUMENTS AND RISK (continued)
 FOREIGN EXCHANGE RISK-10%
    
    
    +10%PROFIT
    
    
    
    
    
    
    PROFITCARRYING
    
    
    
    
    
    
    BEFORE
    
    
    
    
    
    
    BEFOREAMOUNT
    
    
    EQUITY
    
    
    TAX
    
    
    EQUITY
    
    
    TAX2009
    
    $M
    
    
    $M
    
    
    $M
    
    
    $M
    
    
    $MAustralian dollar denominated balancesCash and cash equivalents
    
    
    41.5
    
    
    
    
    
    
    
    (4.2
    )
    
    
    
    
    
    
    4.2Receivables
    
    
    3.8
    
    
    
    
    
    
    
    (0.4
    )
    
    
    
    
    
    
    0.4Derivative financial assets
    
    
    6.3
    
    
    
    (5.3
    )
    
    
    
    
    
    
    5.3Finance lease liabilities
    
    
    (0.3
    )
    
    
    
    
    
    
    0.0
    
    
    
    
    
    
    
    (0.0
    )Accounts payable
    
    
    (25.1
    )
    
    
    
    
    
    
    2.5
    
    
    
    
    
    
    
    (2.5
    )Euro denominated balancesDerivative financial assets
    
    
    0.6
    
    
    
    (6.3
    )
    
    
    
    
    
    
    6.3
    
    
    
    Accounts payable
    
    
    (0.6
    )
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    (0.1
    )PNG kina denominated balancesCash and cash equivalents
    
    
    (0.7
    )
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    (0.1
    )Receivables
    
    
    12.0
    
    
    
    
    
    
    
    (1.2
    )
    
    
    
    
    
    
    1.2Derivative financial assets
    
    
    0.0
    
    
    
    (1.1
    )
    
    
    
    
    
    
    1.1
    
    
    
    Accounts payable
    
    
    (0.8
    )
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    (0.1
    )CFA franc denominated balancesCash and cash equivalents
    
    
    1.5
    
    
    
    
    
    
    
    (0.2
    )
    
    
    
    
    
    
    0.2Receivables
    
    
    0.5
    
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    0.1Finance lease liabilities
    
    
    (0.9
    )
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    (0.1
    )Accounts payable
    
    
    (2.0
    )
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    (0.2
    )Total (decrease) / increase
    
    
    
    
    
    
    (12.7
    )
    
    
    (3.0
    )
    
    
    12.7
    
    
    
    3.0
 F-87




---



##### Table of Contents



Note 25: FINANCIAL INSTRUMENTS AND RISK (continued)
 FOREIGN EXCHANGE RISK-10%
    
    
    +10%CARRYING
    
    
    
    
    
    
    PROFIT
    
    
    
    
    
    
    PROFITAMOUNT
    
    
    EQUITY
    
    
    BEFORE TAX
    
    
    EQUITY
    
    
    BEFORE TAX2008
    
    $M
    
    
    $M
    
    
    $M
    
    
    $M
    
    
    $MAustralian dollar denominated balancesCash and cash equivalents
    
    
    4.3
    
    
    
    
    
    
    
    (0.4
    )
    
    
    
    
    
    
    0.4Receivables
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Derivative financial liabilities
    
    
    (51.7
    )
    
    
    5.2
    
    
    
    
    
    
    
    (5.2
    )
    
    
    Finance lease liabilities
    
    
    (0.5
    )
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    (0.1
    )Accounts payable
    
    
    (5.4
    )
    
    
    
    
    
    
    0.5
    
    
    
    
    
    
    
    (0.5
    )PNG kina denominated balancesCash and cash equivalents
    
    
    1.9
    
    
    
    
    
    
    
    (0.2
    )
    
    
    
    
    
    
    0.2Receivables
    
    
    8.9
    
    
    
    
    
    
    
    (0.9
    )
    
    
    
    
    
    
    0.9Accounts payable
    
    
    (6.1
    )
    
    
    
    
    
    
    0.6
    
    
    
    
    
    
    
    (0.6
    )CFA franc denominated balancesCash and cash equivalents
    
    
    0.6
    
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    0.1Accounts payable
    
    
    (2.1
    )
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    (0.2
    )Total increase / (decrease)
    
    
    
    
    
    
    5.2
    
    
    
    (0.2
    )
    
    
    (5.2
    )
    
    
    0.2
 e) Interest rate risk
   F-88




---



##### Table of Contents



Note 25: FINANCIAL INSTRUMENTS AND RISK (continued)
 INTEREST RATE RISK-10BPS
    
    
    +10BPSCARRYING
    
    
    
    
    
    
    PROFIT
    
    
    
    
    
    
    PROFITAMOUNT
    
    
    EQUITY
    
    
    BEFORE TAX
    
    
    EQUITY
    
    
    BEFORE TAX$M
    
    
    $M
    
    
    $M
    
    
    $M
    
    
    $M2009Cash and cash equivalents
    
    
    473.5
    
    
    
    
    
    
    
    (0.4
    )
    
    
    
    
    
    
    0.4Borrowings
    
    
    (50.0
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total (decrease) / increase
    
    
    
    
    
    
    
    
    
    
    (0.4
    )
    
    
    
    
    
    
    0.42008Cash and cash equivalents
    
    
    64.7
    
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    0.1Borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total (decrease) / increase
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    0.1
  f) Price Risk
    F-89




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##### Table of Contents



Note 25: FINANCIAL INSTRUMENTS AND RISK (continued)
 CONSOLIDATED ENTITY
 FUEL AND OIL PRICE RISK+10%
    
    
    -10%CARRYING
    
    
    
    
    
    
    PROFIT
    
    
    
    
    
    
    PROFIT BEFOREAMOUNT
    
    
    EQUITY
    
    
    BEFORE TAX
    
    
    EQUITY
    
    
    TAX2009
    
    $M
    
    
    $M
    
    
    $M
    
    
    $M
    
    
    $MDerivative financial asset/(liability)
    
    
    4.0
    
    
    
    5.7
    
    
    
    
    
    
    
    (5.7
    )
    
    
    Total increase / (decrease)
    
    
    
    
    
    
    5.7
    
    
    
    
    
    
    
    (5.7
    )
    
    
    
   EQUITY PRICE RISK+10%
    
    
    -10%CARRYING
    
    
    
    
    
    
    PROFIT BEFORE
    
    
    
    
    
    
    PROFIT BEFOREAMOUNT
    
    
    EQUITY
    
    
    TAX
    
    
    EQUITY
    
    
    TAX2009
    
    $M
    
    
    $M
    
    
    $M
    
    
    $M
    
    
    $MAvailable-for-sale financial assets
    
    
    4.2
    
    
    
    0.4
    
    
    
    
    
    
    
    (0.4
    )
    
    
    Total increase / (decrease)
    
    
    
    
    
    
    0.4
    
    
    
    
    
    
    
    (0.4
    )
    
    
    
 EQUITY PRICE RISK+10%
    
    
    -10%CARRYING
    
    
    
    
    
    
    PROFIT BEFORE
    
    
    
    
    
    
    PROFIT BEFOREAMOUNT
    
    
    EQUITY
    
    
    TAX
    
    
    EQUITY
    
    
    TAX2008
    
    $M
    
    
    $M
    
    
    $M
    
    
    $M
    
    
    $MAvailable-for-sale financial assets
    
    
    2.3
    
    
    
    0.2
    
    
    
    
    
    
    
    (0.2
    )
    
    
    Total increase / (decrease)
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    (0.2
    )
    
    
    
 F-90




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##### Table of Contents



Note 25: FINANCIAL INSTRUMENTS AND RISK (continued)
 g) Derivative financial instruments
 $MDERIVATIVE FINANCIAL INSTRUMENTS
    
    2009
    
    
    2008Current assets Fuel oil swaps
    
    
    2.5
    
    
    
     Forward currency contracts
    
    
    6.8
    
    
    
    0.49.3
    
    
    
    0.4Non-current assets Fuel oil swaps
    
    
    1.5
    
    
    
     Forward currency contracts
    
    
    0.1
    
    
    
    0.31.6
    
    
    
    0.3Current liabilities Forward commodity contracts
    
    
    
    
    
    
    33.5
    
    
    
    33.5Non-current liabilities Forward commodity contracts
    
    
    
    
    
    
    18.9
    
    
    
    18.9
   F-91




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##### Table of Contents



Note 25: FINANCIAL INSTRUMENTS AND RISK (continued)
 LESS THAN 1
    
    
    BETWEEN 1 &
    
    
    BETWEEN 2 &
    
    
    OVER 5
    
    
    TOTAL CARRYINGYEAR
    
    
    2 YEARS
    
    
    5 YEARS
    
    
    YEARS
    
    
    VALUE2009Assets Forward currency contracts ($A)
    
    
    6.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.3 Forward currency contracts (EURO)
    
    
    0.5
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    0.6 Fuel oil swaps (metric tonnes)
    
    
    1.2
    
    
    
    0.8
    
    
    
    
    
    
    
    
    
    
    
    2.0 Gas oil swaps (barrels)
    
    
    1.3
    
    
    
    0.7
    
    
    
    
    
    
    
    
    
    
    
    2.0
 h) Gold hedge book close out
   F-92




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##### Table of Contents



Note 25: FINANCIAL INSTRUMENTS AND RISK (continued)
 GROSS PRE-TAX
    
    
    
    
    
    
    NET POST-TAXNON-CASH HEDGING LOSS
    
    
    TAX EFFECT
    
    
    NON-CASH HEDGING LOSSDESIGNATION YEAR
    
    $M
    
    
    $M
    
    
    $M2010  1st half-year
    
    
    45.6
    
    
    
    (13.4
    )
    
    
    32.22010  2nd half-year
    
    
    43.2
    
    
    
    (12.8
    )
    
    
    30.42011  1st half-year
    
    
    41.3
    
    
    
    (12.3
    )
    
    
    29.02011  2nd half-year
    
    
    2.9
    
    
    
    (0.9
    )
    
    
    2.02012  1st half-year
    
    
    2.9
    
    
    
    (0.8
    )
    
    
    2.12012  2nd half-year
    
    
    2.9
    
    
    
    (0.9
    )
    
    
    2.02013  1st half-year
    
    
    3.0
    
    
    
    (0.9
    )
    
    
    2.12013  2nd half year
    
    
    3.0
    
    
    
    (0.9
    )
    
    
    2.1144.8
    
    
    
    (42.9
    )
    
    
    101.9
 i) Capital management
    F-93




---



##### Table of Contents



Note 25: FINANCIAL INSTRUMENTS AND RISK (continued)
   NOTE 26: DEFERRED SETTLEMENT PAYABLE
 $M2009
    
    
    2008CURRENTDeferred settlement payable
    
    
    
    
    
    
    10.8
    
    
    
    10.8
  F-94




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##### Table of Contents



NOTE 27: CONTRIBUTED EQUITY
 $M2009
    
    
    2008(a) Issued and paid up capitalOrdinary sharesOpening balance
    
    
    3,080.0
    
    
    
    2,319.7New issues  Mineral Resources Lihir Limited
    
    
    
    
    
    
    5.2New issues  Equigold acquisition
    
    
    
    
    
    
    756.0New issues  placement and share purchase plan
    
    
    348.5
    
    
    
    Less: Transaction costs
    
    
    (7.6
    )
    
    
    Shares reclassified as treasury shares (1)
    
    
    
    
    
    
    (0.9
    )Closing balance
    
    
    3,420.9
    
    
    
    3,080.0
 NUMBER OF SHARES 0002009
    
    
    2008(b) Issued and paid up capitalOpening balance
    
    
    2,187,140
    
    
    
    1,903,912New issues  placement and share purchase plan
    
    
    180,543
    
    
    
    New issues  Mineral Resources Lihir Limited
    
    
    
    
    
    
    3,284New issues  Equigold acquisition
    
    
    
    
    
    
    280,405Shares reclassified as treasury shares(1)
    
    
    
    
    
    
    (546
    )Treasury shares reclassified as ordinary shares(1)
    
    
    575
    
    
    
    85Closing balance
    
    
    2,368,258
    
    
    
    2,187,140
 
 (1)
    
    The treasury restricted executive shares are shares purchased for the LESP (see Note 32).
On consolidation, shares held under the LESP are offset against contributed equity.  F-95




---



##### Table of Contents



Note 27: CONTRIBUTED EQUITY (continued)
 Companies Act 1997
 Share placement and share purchase plan
  Equigold acquisition
  Mineral Resources Lihir Limited
  F-96




---



##### Table of Contents



NOTE 28: RESERVES
 $M2009
    
    
    2008(1)(a) ReservesForeign currency translation reserve
    
    
    (9.1
    )
    
    
    (124.0
    )Hedging
reserve  cash flow hedges
    
    
    (94.4
    )
    
    
    (194.4
    )Fair value reserve
    
    
    1.6
    
    
    
    (0.8
    )Employee share based payments reserve
    
    
    23.2
    
    
    
    8.8Landowner share based payments reserve
    
    
    
    
    
    
    Other reserves
    
    
    4.5
    
    
    
    4.5(74.2
    )
    
    
    (305.9
    )Movements:Foreign currency translation reserveOpening balance
    
    
    (124.0
    )
    
    
    42.6Currency translation differences arising during the year
    
    
    104.6
    
    
    
    (154.9
    )Deferred tax
    
    
    10.3
    
    
    
    (11.7
    )(9.1
    )
    
    
    (124.0
    )Hedging
reserve  cash flow hedgesOpening balance
    
    
    (194.4
    )
    
    
    (221.9
    )Fair value of cash flow hedges
    
    
    21.4
    
    
    
    (32.7
    )Deferred hedging gains / (losses) transferred to hedging loss expense
    
    
    118.7
    
    
    
    76.7Deferred taxation
    
    
    (40.1
    )
    
    
    (16.5
    )(94.4
    )
    
    
    (194.4
    )Fair value reserveOpening balance
    
    
    (0.8
    )
    
    
    0.8Fair value of available for sale financial assets
    
    
    3.0
    
    
    
    (2.2
    )Deferred tax
    
    
    (0.6
    )
    
    
    0.61.6
    
    
    
    (0.8
    )Employee share based payments reserveOpening balance
    
    
    8.8
    
    
    
    3.3Share rights expensed
    
    
    9.3
    
    
    
    4.7Deferred taxation
    
    
    5.1
    
    
    
    0.823.2
    
    
    
    8.8
 F-97




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##### Table of Contents



Note 28: RESERVES (continued)
 $M2009
    
    
    2008(1)Landowners share based payments reserveOpening balance
    
    
    
    
    
    
    5.2Shares issued
    
    
    
    
    
    
    (5.2
    )
    
    
    
    Other reserveOpening balance
    
    
    4.5
    
    
    
    Purchase of non-controlling interests
    
    
    
    
    
    
    4.54.5
    
    
    
    4.5(b) Retained Profits(1)Movements in (accumulated losses)/retained profits were as follows:Opening balance
    
    
    129.8
    
    
    
    18.8Net (loss) / profit for the year
    
    
    (234.0
    )
    
    
    111.0Paid dividends
    
    
    (35.5
    )
    
    
    (139.7
    )
    
    
    129.8
 
 (1)
    
    Restated (refer Note 36) Nature and purpose of reserves
 Foreign currency translation reserve
  Hedging reserve  cash flow hedges
  Fair value reserve
  F-98




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##### Table of Contents



Note 28: RESERVES (continued)
 Employee share based payments reserve
  
    
    the fair value of share rights issued to employees but not exercised
    
    in the parent entity  the fair value of shares and share rights issued to employees of
subsidiaries
 Landowner share based payments reserve
  
    
    the fair value of shares issued to local landowners
 Other reserve
  NOTE 29: NON-CONTROLLING INTERESTS
 $M2009
    
    
    2008| |Non-controlling interest in Equigold Mines Côte dIvoire
SA and Equigold Côte dIvoire SAContributed equity
    
    
    32.1
    
    
    
    32.1Accumulated loss
    
    
    (0.4
    )
    
    
    (0.2
    )Total non-controlling interests
    
    
    31.7
    
    
    
    31.9Movements in non-controlling interest in retained earnings:Balance at the beginning of the year
    
    
    (0.2
    )
    
    
    Interest in loss after tax
    
    
    (0.2
    )
    
    
    (0.2
    )(0.4
    )
    
    
    (0.2
    )
 F-99




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##### Table of Contents



NOTE 30: INVESTMENTS IN SUBSIDIARIES
 NAME OF SUBSIDIARY
    
    % OWNERSHIP INTEREST
    
    COUNTRY OF INCORPORATIONNiugini Mining Limited
    
    
    100
    %
    
    Papua New GuineaNiugini Mining Australia Pty Ltd
    
    
    100
    %
    
    AustraliaLihir Management Company Limited
    
    
    100
    %
    
    Papua New GuineaLihir Business Development Limited(1)
    
    
    100
    %
    
    Papua New GuineaLihir Services Australia Pty Limited(2)
    
    
    100
    %
    
    AustraliaLihir Australian Holdings Pty Ltd(3)
    
    
    100
    %
    
    AustraliaBallarat Goldfields Pty Ltd(4)
    
    
    100
    %
    
    AustraliaNew Resource Pty Ltd
    
    
    100
    %
    
    AustraliaBerringa Resources Pty Ltd
    
    
    100
    %
    
    AustraliaBallarat West Goldfields Pty Ltd
    
    
    100
    %
    
    AustraliaCorpique No. 21 Pty Ltd
    
    
    100
    %
    
    AustraliaEquigold Pty Limited(5)
    
    
    100
    %
    
    AustraliaSwindon Holdings Pty Ltd(6)
    
    
    100
    %
    
    AustraliaStanmines Pty Limited(7)
    
    
    100
    %
    
    AustraliaKim Resources Pty Limited(8)
    
    
    100
    %
    
    AustraliaLGL Holdings CI SA
    
    
    100
    %
    
    Côte dIvoireEquigold Mines CI SA(9)
    
    
    90
    %
    
    Côte dIvoireEquigold CI SA(10)
    
    
    98
    %
    
    Côte dIvoireLGL Exploration CI SA
    
    
    100
    %
    
    Côte dIvoireLGL Development CI SA
    
    
    100
    %
    
    Côte dIvoire
 (1)
    
    On March 12, 2010 the Directors of Lihir Business Development Limited resolved to change
the name of the entity to LGL PNG Holdings Limited(2)
    
    On March 12, 2010 the Directors of Lihir Services Australia Pty Ltd resolved to change the
name of the entity to LGL Services Australia Pty Ltd(3)
    
    On March 12, 2010 the Directors of Lihir Australian Holdings Pty Ltd resolved to change the
name of the entity to LGL Australian Holdings Pty Ltd(4)
    
    On March 12, 2010 the Directors of Ballarat Goldfields resolved to change the name of the
entity to LGL Ballarat Operations Pty Ltd(5)
    
    On March 12, 2010 the Directors of Equigold Pty Ltd resolved to change the name of the entity
to LGL Mount Rawdon Operations Pty Ltd(6)
    
    On March 12, 2010 the Directors of Swindon Holdings Pty Ltd resolved to change the name of
the entity to LGL Mount Rawdon Property Holdings Pty Ltd(7)
    
    On March 12, 2010 the Directors of Stanmines Pty Ltd resolved to change the name of the
entity to LGL CDI Investments Pty Ltd(8)
    
    On March 12, 2010 the Directors of Kim Resources resolved to change the name of the entity to
LGL CDI Exploration Pty Ltd(9)
    
    On March 18, 2010 the Directors of Equigold Mines CI SA resolved to change the name of the
entity to LGL Mines CI SA(10)
    
    On March 18, 2010 the Directors of Equigold CI SA resolved to change the name of the entity
to LGL Resources CI SA F-100




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##### Table of Contents



Note 30: INVESTMENTS IN SUBSIDIARIES (continued)
     NOTE 31: BUSINESS COMBINATIONS
 Prior year business combinations
 Equigold NL
    F-101




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##### Table of Contents



Note 31: BUSINESS COMBINATIONS (continued)
  Provisionalfair value aspreviously reported
    
    
    Adjustments
    
    
    Final$M
    
    
    
    
    
    
    $MCash and cash equivalents
    
    
    14.4
    
    
    
    
    
    
    
    14.4Receivables
    
    
    8.3
    
    
    
    
    
    
    
    8.3Inventories
    
    
    18.6
    
    
    
    (1.0
    )
    
    
    17.6Other assets
    
    
    0.3
    
    
    
    
    
    
    
    0.3Deferred mining costs
    
    
    2.9
    
    
    
    (2.9
    )
    
    
    Property, plant & equipment
    
    
    745.1
    
    
    
    (78.8
    )
    
    
    666.3Intangible Assets
    
    
    178.5
    
    
    
    6.6
    
    
    
    185.1Available for sale financial asset
    
    
    6.8
    
    
    
    
    
    
    
    6.8Accounts payable & accrued liabilities
    
    
    (16.8
    )
    
    
    
    
    
    
    (16.8
    )Noncurrent provisions (1)
    
    
    (23.1
    )
    
    
    (0.9
    )
    
    
    (24.0
    )Derivative financial instruments
    
    
    (52.8
    )
    
    
    
    
    
    
    (52.8
    )Deferred income tax assets / (liabilities)
    
    
    (188.0
    )
    
    
    75.6
    
    
    
    (112.4
    )Borrowings
    
    
    (49.0
    )
    
    
    
    
    
    
    (49.0
    )Net assets
    
    
    645.2
    
    
    
    (1.4
    )
    
    
    643.8Goodwill arising on business combination
    
    
    165.2
    
    
    
    2.9
    
    
    
    168.1Minority interests
    
    
    (49.1
    )
    
    
    (1.1
    )
    
    
    (50.2
    )Total cost
    
    
    761.3
    
    
    
    0.4
    
    
    
    761.7
 (1)
    
    Includes an amount of $10.1 million for the following: In attributing value to the
potential exploration projects acquired, it has been assumed that through the realisation of
these projects the Côte dIvoire government will take a 10% stake on any projects that proceed
to operate as mining projects. This potential 10% interest has been recognised as an other
provision. $M|Purchase considerationShares issued (280,405,288 shares at A$2.87 at rate of US$0.9394 per A$1)
    
    
    756.0Direct costs relating to the acquisition
    
    
    5.7761.7
 F-102




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##### Table of Contents



Note 31: BUSINESS COMBINATIONS (continued)
 Reconciliation to cash flow
 YEAR ENDED31 DECEMBER 2008US$MAcquisition of subsidiary net of cash acquired:Cash balances acquired
    
    
    14.4Less: direct cash costs of acquisition(1)
    
    
    (5.7
    )Net cash inflow
    
    
    8.7
 (1)
    
    An additional $0.4 million of direct costs have been attributed to the acquisition since 31
December 2008. NOTE 32: SHARE BASED PAYMENTS
 a) Lihir Executive Share Plan
    F-103




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##### Table of Contents



Note 32: SHARE BASED PAYMENTS (continued)
    b) Fair value of share rights granted
          F-104




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##### Table of Contents



Note 32: SHARE BASED PAYMENTS (continued)
   c) Summary of movements and other information
  PER SHARE
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NUMBER
    
    
    NUMBER
    
    
    NUMBERRIGHT
    
    
    
    
    
    
    
    
    
    
    NUMBER
    
    
    EXERCISED
    
    
    FORFEITED
    
    
    ADJUSTED
    
    
    NUMBER
    
    
    NUMBEREXERCISE
    
    INDICATIVE
    
    
    PERFORMANCE
    
    
    NUMBER AT
    
    
    GRANTED DURING
    
    
    DURING
    
    
    DURING
    
    
    DURING
    
    
    OUTSTANDING AT
    
    
    EXERCISABLE ATPRICE
    
    VALUE
    
    
    CONDITIONS
    
    
    1-JAN-09
    
    
    PERIOD
    
    
    PERIOD
    
    
    PERIOD
    
    
    THE PERIOD
    
    
    31-DEC-09
    
    
    31-DEC-09
    
    
    2.529
    
    
    
    1
    
    
    
    33,344
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,449
    )
    
    
    15,895
    
    
    
    15,895
    
    
    2.602
    
    
    
    2
    
    
    
    11,551
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,386
    )
    
    
    5,165
    
    
    
    5,165
    
    
    1.928
    
    
    
    3
    
    
    
    61,429
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (32,004
    )
    
    
    29,425
    
    
    
    29,425
    
    
    1.978
    
    
    
    4
    
    
    
    61,431
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (32,005
    )
    
    
    29,426
    
    
    
    29,426
    
    
    
    
    
    
    5
    
    
    
    6,411
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,843
    )
    
    
    3,568
    
    
    
    3,568
    
    
    1.408
    
    
    
    6
    
    
    
    3,946,875
    
    
    
    3,709,419
    
    
    
    
    
    
    
    (2,045,510
    )
    
    
    
    
    
    
    5,610,784
    
    
    
    
    
    
    1.387
    
    
    
    7
    
    
    
    3,946,922
    
    
    
    3,709,441
    
    
    
    
    
    
    
    (2,045,536
    )
    
    
    
    
    
    
    5,610,827
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    8,067,963
    
    
    
    7,418,860
    
    
    
    
    
    
    
    (4,091,046
    )
    
    
    (90,687
    )
    
    
    11,305,090
    
    
    
    83,479
 NUMBER EXERCISED
    
    EXERCISE DATE
    
    WEIGHTED AVERAGE PRICE AT EXERCISE DATEn/a
    
    n/a
    
    n/a
 F-105




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##### Table of Contents



Note 32: SHARE BASED PAYMENTS (continued)
  PER SHARE
    
    
    
    
    
    
    
    
    
    
    NUMBER
    
    
    NUMBER
    
    
    NUMBERRIGHT
    
    
    
    
    
    
    
    
    
    
    GRANTED
    
    
    EXERCISED
    
    
    FORFEITED
    
    
    
    
    
    
    
    
    
    
    NUMBEREXERCISE
    
    INDICATIVE
    
    
    PERFORMANCE
    
    
    NUMBER AT
    
    
    DURING
    
    
    DURING
    
    
    DURING
    
    
    OTHER
    
    
    NUMBER OUTSTANDING
    
    
    EXERCISABLEPRICE$
    
    VALUE
    
    
    CONDITIONS
    
    
    1-JAN-08
    
    
    PERIOD
    
    
    PERIOD
    
    
    PERIOD
    
    
    CHANGES
    
    
    AT 31-DEC-08
    
    
    AT 31-DEC-09
    
    
    2.529
    
    
    
    1
    
    
    
    163,183
    
    
    
    
    
    
    
    (114,133
    )
    
    
    (46,944
    )
    
    
    31,238
    
    
    
    33,344
    
    
    
    33,344
    
    
    2.602
    
    
    
    2
    
    
    
    167,192
    
    
    
    
    
    
    
    (4,459
    )
    
    
    
    
    
    
    (151,182
    )
    
    
    11,551
    
    
    
    11,551
    
    
    1.928
    
    
    
    3
    
    
    
    250,763
    
    
    
    
    
    
    
    (213,395
    )
    
    
    
    
    
    
    24,061
    
    
    
    61,429
    
    
    
    61,429
    
    
    1.978
    
    
    
    4
    
    
    
    250,775
    
    
    
    
    
    
    
    (213,396
    )
    
    
    
    
    
    
    24,052
    
    
    
    61,431
    
    
    
    61,431
    
    
    
    
    
    
    5
    
    
    
    7,603
    
    
    
    
    
    
    
    (1,192
    )
    
    
    
    
    
    
    
    
    
    
    6,411
    
    
    
    6,411
    
    
    1.542
    
    
    
    6
    
    
    
    1,840,903
    
    
    
    2,154,285
    
    
    
    
    
    
    
    (48,313
    )
    
    
    
    
    
    
    3,946,875
    
    
    
    
    
    
    1.507
    
    
    
    7
    
    
    
    1,840,928
    
    
    
    2,154,307
    
    
    
    
    
    
    
    (48,313
    )
    
    
    
    
    
    
    3,946,922
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    4,521,347
    
    
    
    4,308,592
    
    
    
    (546,575
    )
    
    
    (143,570
    )
    
    
    (71,831
    )
    
    
    8,067,963
    
    
    
    174,166
  NUMBER EXERCISED
    
    EXERCISE DATE
    
    
    WEIGHTED AVERAGE PRICE AT EXERCISE DATE(1)546,575
    
    23  29 Sep 2008
    
    
    A$2.75
 
 (1)
    
    Purchased over a 7 day period due to restrictions on the volume that could be traded on any
one day. Expenses arising from share-based payment transactions
  $M2009
    
    
    2008Executive share plan
    
    9.3
    
    
    
    4.79.3
    
    
    
    4.7
  F-106




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##### Table of Contents



Note 32: SHARE BASED PAYMENTS (continued)
  1.
    
    Individuals are set key performance indicators (KPIs) based around the Companys performance
in line with Board policies to raise the long-term value of the Company. The performance
conditions were assessed by the Board.2.
    
    This performance condition was assessed by the Board against changes in the net present value
of the Company. This assessment was to have regard to the amount and timing of net expected
cash flows, as indicated by reserves, costs and other relevant factors. Certain potential
sources of change in the Companys net present value were not included in the assessment of
this performance condition as they have been assessed by the Board to be beyond the
individuals control and the control of the management team generally.3.
    
    This performance condition was assessed by the Board by reference to the performance of the:
 
    
    Companys total shareholder return or TSR over the performance period from the VWAP
Month Employed until the testing date using the VWAP (volume weighted average share
price); and
    
    Average total shareholder return of the Comparator Group using the Comparator
Groups VWAP for the same time periods as applicable above.
 Average Total shareholder return or TSR is, broadly, share price growth and dividends
reinvested, excluding the impacts of franking credits and taxations.4.
    
    This performance condition was assessed to the extent to which the Companys TSR increased
over the performance period using the VWAP Month for each participant as the starting share
value for the TSR until the testing date VWAP.5.
    
    This grant was made to existing participants who held share rights at the time of the 3 for 1
Entitlement offer and were unable to participate in the offer due to trading restrictions
leading up to the capital raising. In recognition of Participants in the LESP not being
eligible to participate in the Entitlement Offer, the directors resolved that the number of
share rights vested for each Participant be adjusted to take into account each Participants
entitlement to share rights had they been eligible to participate. The grant is subject to
the same three year service period restrictions.6.
    
    This performance measure will be assessed on the extent to which Companys TSR increases over
the performance period compared to growth in the TSX Global Gold Index (Index) over the
performance period.7.
    
    This performance measure will be assessed on the extent to which the Companys TSR increases
over the performance period compared to the TSR growth of companies in a comparator group of
peers over the performance period.
 F-107




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##### Table of Contents



NOTE 33: RELATED PARTY TRANSACTIONS
   Loans to / (from) related parties
  NOTE 34: KEY MANAGEMENT PERSONNEL
 Directors
  (i) Chairman  Non-Executive
  (ii) Executive Directors
  (iii) Non-Executive Directors
 
 Other key management personnel
  F-108




---



##### Table of Contents



Note 34: KEY MANAGEMENT PERSONNEL (continued)
 NAME
    
    POSITION
    
    EMPLOYERPhil Baker(1)
    
    Chief Financial Officer
    
    Lihir Services Australia Pty LtdGraham Folland
    
    Executive General Manager, Corporate
Development
    
    Lihir Services Australia Pty LtdNoel Foley
    
    Executive General Manager, PNG Operations
    
    Lihir Gold LimitedTim Fry
    
    Executive General Manager, West Africa
and Corporate Services
    
    Lihir Services Australia Pty LtdPeter Smith
    
    Executive General Manager, Australia and
Africa Operations (appointed 1 April
2009)
    
    Lihir Services Australia Pty LtdMichael Sullivan
    
    Executive General Manager, Legal & General
Counsel (appointed 1 September 2009)
    
    Lihir Services Australia Pty Ltd
 
 (1)
    
    In addition to the role as Chief Financial Officer, Mr Baker was appointed the Chief
Executive Officer on 17 January 2010, refer to note 42.  NAME
    
    POSITION
    
    EMPLOYERPhil Baker
    
    Chief Financial Officer
    
    Lihir Services Australia Pty LtdStuart MacKenzie
    
    Group Secretary and General Counsel
    
    Lihir Services Australia Pty LtdGraham Folland
    
    Executive General Manager, Corporate 
Development
    
    Lihir Services Australia Pty LtdNoel Foley
    
    Executive General Manager, PNG Operations
    
    Lihir Gold LimitedMark Clark
    
    Executive General Manager, West Africa
and Corporate Services (appointed 17
June 2008, resigned 31 October 2008)
    
    Lihir Services Australia Pty LtdMorgan Hart
    
    Executive General Manager, Australia and
Africa Operations (appointed 17 June
2008, resigned 31 December 2008)
    
    Lihir Services Australia Pty LtdTim Fry
    
    Executive General Manager, West Africa
and Corporate Services (appointed 1
November 2008)
    
    Lihir Services Australia Pty Ltd
 F-109




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##### Table of Contents



Note 34: KEY MANAGEMENT PERSONNEL (continued)
 a) Key management personnel compensation
 $2009
    
    
    2008Short-term employee benefits
    
    
    5,581,035
    
    
    
    4,887,335Post-employment benefits
    
    
    220,417
    
    
    
    308,711Termination benefits
    
    
    
    
    
    
    Long-term benefits
    
    
    75,360
    
    
    
    26,517Share-based payments
    
    
    3,668,618
    
    
    
    2,650,2409,545,430
    
    
    
    7,872,803
 b) Equity instrument disclosures relating to key management personnel
 Share rights provided as remuneration
  F-110




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##### Table of Contents



Note 34: KEY MANAGEMENT PERSONNEL (continued)
 Share right holdings
 BALANCE AT
    
    
    EQUITY
    
    
    
    
    
    
    FORFEITED/
    
    
    BALANCE AT2009
    
    START OF
    
    
    SETTLED
    
    
    
    
    
    
    OTHER
    
    
    END OF
    
    
    VESTED ANDNAME
    
    THE YEAR
    
    
    COMPENSATION
    
    
    EXERCISED
    
    
    CHANGES
    
    
    THE YEAR
    
    
    EXERCISABLE
    
    
    UNVESTEDDirectors of Lihir Gold LimitedMr Arthur Hood
(resigned 17
January 2010)
    
    
    3,102,611
    
    
    
    1,870,202
    
    
    
    
    
    
    
    (1,453,441
    )
    
    
    3,519,372
    
    
    
    
    
    
    
    3,519,372Other key management personnel of the Consolidated EntityPhil Baker
    
    
    444,497
    
    
    
    317,930
    
    
    
    
    
    
    
    (206,712
    )
    
    
    555,715
    
    
    
    45,074
    
    
    
    510,641Noel Foley
    
    
    382,602
    
    
    
    268,059
    
    
    
    
    
    
    
    (198,960
    )
    
    
    451,701
    
    
    
    
    
    
    
    451,701Graham Folland
    
    
    329,242
    
    
    
    261,825
    
    
    
    
    
    
    
    (170,537
    )
    
    
    420,530
    
    
    
    
    
    
    
    420,530Tim Fry
    
    
    
    
    
    
    356,373
    
    
    
    
    
    
    
    
    
    
    
    356,373
    
    
    
    
    
    
    
    356,373Peter Smith
    
    
    
    
    
    
    210,395
    
    
    
    
    
    
    
    
    
    
    
    210,395
    
    
    
    
    
    
    
    210,395Michael Sullivan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,258,952
    
    
    
    3,284,784
    
    
    
    
    
    
    
    (2,029,650
    )
    
    
    5,514,086
    
    
    
    45,074
    
    
    
    5,469,012
 F-111




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##### Table of Contents



Note 34: KEY MANAGEMENT PERSONNEL (continued)
 2008
    
    BALANCE AT START OF
    
    
    EQUITY SETTLED
    
    
    
    
    
    
    FORFEITED/OTHER
    
    
    BALANCE AT END OF
    
    
    VESTED ANDNAME
    
    THE YEAR
    
    
    COMPENSATION
    
    
    EXERCISED
    
    
    CHANGES
    
    
    THE YEAR
    
    
    EXERCISABLE
    
    
    UNVESTEDDirectors of Lihir Gold LimitedMr Arthur Hood
    
    
    1,667,724
    
    
    
    1,649,164
    
    
    
    (129,249
    )
    
    
    (85,028
    )
    
    
    3,102,611
    
    
    
    
    
    
    
    3,102,611Other key management personnel of the Consolidated EntityPhil Baker
    
    
    251,786
    
    
    
    192,711
    
    
    
    
    
    
    
    
    
    
    
    444,497
    
    
    
    45,074
    
    
    
    399,423Mark Clark
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Noel Foley
    
    
    242,342
    
    
    
    183,644
    
    
    
    (41,996
    )
    
    
    (1,388
    )
    
    
    382,602
    
    
    
    
    
    
    
    382,602Graham Folland
    
    
    204,343
    
    
    
    158,705
    
    
    
    (33,355
    )
    
    
    (451
    )
    
    
    329,242
    
    
    
    
    
    
    
    329,242Tim Fry
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Morgan Hart
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stuart MacKenzie
    
    
    179,821
    
    
    
    136,033
    
    
    
    (30,989
    )
    
    
    
    
    
    
    284,865
    
    
    
    
    
    
    
    284,8652,546,016
    
    
    
    2,320,257
    
    
    
    (235,589
    )
    
    
    (86,867
    )
    
    
    4,543,817
    
    
    
    45,074
    
    
    
    4,498,743
 Share holdings
  RECEIVED DURING THEYEAR ON THE2009
    
    BALANCE AT THE
    
    
    EXERCISE OF SHARE
    
    
    OTHER CHANGES
    
    
    BALANCE AT THE ENDNAME
    
    START OF THE YEAR
    
    
    RIGHTS
    
    
    DURING THE YEAR
    
    
    OF THE YEARDirectors of Lihir Gold LimitedDr Ross Garnaut
    
    
    113,523
    
    
    
    
    
    
    
    53,625
    
    
    
    167,148Mr Arthur Hood (resigned 17 January 2010)
    
    
    517,953
    
    
    
    
    
    
    
    1,773
    
    
    
    519,726Mr Bruce Brook
    
    
    53,334
    
    
    
    
    
    
    
    14,396
    
    
    
    67,730Dr Peter Cassidy
    
    
    44,301
    
    
    
    
    
    
    
    1,773
    
    
    
    46,074Dr Michael Etheridge
    
    
    61,728
    
    
    
    
    
    
    
    11,773
    
    
    
    73,501Lady Winifred Kamit
    
    
    2,667
    
    
    
    
    
    
    
    
    
    
    
    2,667Mr Geoff Loudon
    
    
    143,840
    
    
    
    
    
    
    
    
    
    
    
    143,840Mr Alister Maitland
    
    
    80,864
    
    
    
    
    
    
    
    1,773
    
    
    
    82,637
 F-112




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##### Table of Contents



Note 34: KEY MANAGEMENT PERSONNEL (continued)
 RECEIVED DURING THEYEAR ON THE2009
    
    BALANCE AT THE
    
    
    EXERCISE OF SHARE
    
    
    OTHER CHANGES
    
    
    BALANCE AT THE ENDNAME
    
    START OF THE YEAR
    
    
    RIGHTS
    
    
    DURING THE YEAR
    
    
    OF THE YEAROther key management personnel of the Consolidated EntityPhil Baker
    
    
    22,000
    
    
    
    
    
    
    
    1,773
    
    
    
    23,773Graham Folland
    
    
    83,981
    
    
    
    
    
    
    
    
    
    
    
    83,981Noel Foley
    
    
    150,566
    
    
    
    
    
    
    
    1,773
    
    
    
    152,339Tim Fry
    
    
    2,457
    
    
    
    
    
    
    
    
    
    
    
    2,457Peter Smith
    
    
    
    
    
    
    
    
    
    
    10,000
    
    
    
    10,000Michael Sullivan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 RECEIVED DURING THEYEAR ON THE2008
    
    BALANCE AT THE
    
    
    EXERCISE OF SHARE
    
    
    OTHER CHANGES DURING
    
    
    BALANCE AT THE ENDNAME
    
    START OF THE YEAR
    
    
    RIGHTS
    
    
    THE YEAR
    
    
    OF THE YEARDirectors of Lihir Gold LimitedDr Ross Garnaut
    
    
    101,523
    
    
    
    
    
    
    
    12,000
    
    
    
    113,523Mr Arthur Hood
    
    
    353,704
    
    
    
    129,249
    
    
    
    35,000
    
    
    
    517,953Mr Bruce Brook
    
    
    33,334
    
    
    
    
    
    
    
    20,000
    
    
    
    53,334Dr Peter Cassidy
    
    
    44,301
    
    
    
    
    
    
    
    
    
    
    
    44,301Dr Michael Etheridge
    
    
    61,728
    
    
    
    
    
    
    
    
    
    
    
    61,728Lady Winifred Kamit
    
    
    2,667
    
    
    
    
    
    
    
    
    
    
    
    2,667Mr Geoff Loudon
    
    
    143,840
    
    
    
    
    
    
    
    
    
    
    
    143,840Mr Alister Maitland
    
    
    30,864
    
    
    
    
    
    
    
    50,000
    
    
    
    80,864Other key management personnel of the Consolidated EntityPhil Baker
    
    
    10,000
    
    
    
    
    
    
    
    12,000
    (1)
    
    
    22,000Noel Foley
    
    
    97,070
    
    
    
    41,996
    
    
    
    11,500
    
    
    
    150,566Graham Folland
    
    
    47,651
    
    
    
    33,355
    
    
    
    2,975
    (1)
    
    
    83,981Tim Fry
    
    
    
    
    
    
    
    
    
    
    2,457
    
    
    
    2,457Morgan Hart
    
    
    1,386,000
    
    
    
    
    
    
    
    (389,510
    )
    
    
    996,490Stuart MacKenzie
    
    
    14,969
    
    
    
    30,989
    
    
    
    
    
    
    
    45,958
 
 (1)
    
    Adjustment made to prior year movement to reflect correct closing balance as at 31 December
2008. F-113




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##### Table of Contents



Note 34: KEY MANAGEMENT PERSONNEL (continued)
 c) Outstanding balances receivable from key management personnel
  NUMBER OF EMPLOYEESREMUNERATION AND BENEFIT BAND
    
    2009
    
    2008
    
    2007$30,001  $40,000
    
    
    42
    
    
    
    13
    
    
    
    37$40,001  $50,000
    
    
    99
    
    
    
    74
    
    
    
    27$50,001  $60,000
    
    
    75
    
    
    
    55
    
    
    
    24$60,001  $70,000
    
    
    65
    
    
    
    75
    
    
    
    20$70,001  $80,000
    
    
    82
    
    
    
    77
    
    
    
    26$80,001  $90,000
    
    
    45
    
    
    
    55
    
    
    
    13$90,001  $100,000
    
    
    43
    
    
    
    45
    
    
    
    11$100,001  $110,000
    
    
    30
    
    
    
    29
    
    
    
    15$110,001  $120,000
    
    
    39
    
    
    
    30
    
    
    
    17$120,001  $130,000
    
    
    30
    
    
    
    41
    
    
    
    36$130,001  $140,000
    
    
    33
    
    
    
    30
    
    
    
    24$140,001  $150,000
    
    
    31
    
    
    
    25
    
    
    
    29$150,001  $160,000
    
    
    22
    
    
    
    16
    
    
    
    21$160,001  $170,000
    
    
    17
    
    
    
    21
    
    
    
    20$170,001  $180,000
    
    
    17
    
    
    
    17
    
    
    
    37$180,001  $190,000
    
    
    18
    
    
    
    10
    
    
    
    10$190,001  $200,000
    
    
    10
    
    
    
    15
    
    
    
    2$200,001  $210,000
    
    
    12
    
    
    
    8
    
    
    
    2$210,001  $220,000
    
    
    4
    
    
    
    6
    
    
    
    4$220,001  $230,000
    
    
    5
    
    
    
    3
    
    
    
    1$230,001  $240,000
    
    
    4
    
    
    
    2
    
    
    
    1$240,001  $250,000
    
    
    2
    
    
    
    3
    
    
    
    3$250,001  $260,000
    
    
    1
    
    
    
    4
    
    
    
    3$260,001  $270,000
    
    
    2
    
    
    
    2
    
    
    
    4$270,001  $280,000
    
    
    1
    
    
    
    2
    
    
    
    1$280,001  $290,000
    
    
    1
    
    
    
    3
    
    
    
    $300,001  $310,000
    
    
    7
    
    
    
    1
    
    
    
    $310,001  $320,000
    
    
    
    
    
    
    4
    
    
    
    $340,001  $350,000
    
    
    2
    
    
    
    2
    
    
    
    
 F-114




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##### Table of Contents



Note 34: KEY MANAGEMENT PERSONNEL (continued)
 NUMBER OF EMPLOYEESREMUNERATION AND BENEFIT BAND
    
    2009
    
    2008
    
    2007$350,001  $360,000
    
    
    2
    
    
    
    3
    
    
    
    1$360,001  $370,000
    
    
    1
    
    
    
    1
    
    
    
    1$450,001  $460,000
    
    
    
    
    
    
    
    
    
    
    1$470,001  $480,000
    
    
    1
    
    
    
    
    
    
    
    1$480,001  $490,000
    
    
    1
    
    
    
    
    
    
    
    1$530,001  $540,000
    
    
    2
    
    
    
    1
    
    
    
    $610,001  $620,000
    
    
    1
    
    
    
    
    
    
    
    1$640,001  $650,000
    
    
    1
    
    
    
    1
    
    
    
    1$650,001  $660,000
    
    
    
    
    
    
    
    
    
    
    1$660,001  $670,000
    
    
    
    
    
    
    1
    
    
    
    $730,001  $740,000
    
    
    
    
    
    
    1
    
    
    
    $820,001  $830,000
    
    
    1
    
    
    
    
    
    
    
    
 NOTE 35: RETIREMENT BENEFITS
  F-115




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##### Table of Contents



NOTE 36: COMPARATIVE RESTATEMENT
 2008
 
    
    
    
    
    
    
    
    
    2008Comparative period adjustments to
    
    $M
    
    
    BALLARAT(1)
    
    
    PPA(2)
    
    
    $Mincome statement items
    
    AS REPORTED
    
    
    ADJUSTMENT
    
    
    ADJUSTMENT
    
    
    AS RESTATEDRevenue
    
    
    755.6
    
    
    
    (7.0
    )
    
    
    
    
    
    
    748.6Cost of sales
    
    
    (451.3
    )
    
    
    7.0
    
    
    
    4.5
    
    
    
    (439.8
    )Exploration expense
    
    
    (8.5
    )
    
    
    0.6
    
    
    
    
    
    
    
    (7.9
    )Financial income
    
    
    7.8
    
    
    
    (0.5
    )
    
    
    
    
    
    
    7.3Financial expenses
    
    
    (0.6
    )
    
    
    0.1
    
    
    
    
    
    
    
    (0.5
    )Income tax expense
    
    
    (51.8
    )
    
    
    (0.9
    )
    
    
    (3.9
    )
    
    
    (56.6
    )Profit from discontinued operation
    
    
    
    
    
    
    0.7Other comprehensive incomeForeign currency translation
    
    
    (127.6
    )
    
    
    
    
    
    
    3.6
    
    
    
    (124.0
    )Hedging
    
    
    (197.4
    )
    
    
    
    
    
    
    3.0
    
    
    
    (194.4
    )Other
    
    
    4.4
    
    
    
    
    
    
    
    0.1
    
    
    
    4.5Earnings / (loss) per share Basic (cents/share)
    
    
    5.3
    
    
    
    
    
    
    
    
    
    
    
    5.2 Diluted (cents/share)
    
    
    5.3
    
    
    
    
    
    
    
    
    
    
    
    5.2Continuing operations Basic (cents/share)
    
    
    5.3
    
    
    
    
    
    
    
    
    
    
    
    5.2 Diluted (cents/share)
    
    
    5.3
    
    
    
    
    
    
    
    
    
    
    
    5.2
  F-116




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##### Table of Contents



Note 36: COMPARATIVE RESTATEMENT (continued)
 Comparative period adjustments to balance items
    
    2008
    
    
    
    
    
    
    
    
    
    
    2008$M
    
    
    BALLARAT(1)
    
    
    PPA(2)
    
    
    $MAS REPORTED
    
    
    ADJUSTMENT
    
    
    ADJUSTMENT
    
    
    AS RESTATEDCurrent inventories
    
    
    140.0
    
    
    
    
    
    
    
    (1.0
    )
    
    
    139.0Deferred mining costs
    
    
    259.5
    
    
    
    
    
    
    
    (2.5
    )
    
    
    257.0Property, plant and equipment
    
    
    2,166.2
    
    
    
    
    
    
    
    (62.2
    )
    
    
    2,104.0Intangible assets
    
    
    417.3
    
    
    
    
    
    
    
    2.0
    
    
    
    419.3Non-current provisions
    
    
    (36.8
    )
    
    
    
    
    
    
    (0.7
    )
    
    
    (37.5
    )Deferred income tax liability
    
    
    (215.2
    )
    
    
    
    
    
    
    72.7
    
    
    
    (142.5
    )Reserves
    
    
    312.6
    
    
    
    
    
    
    
    (6.7
    )
    
    
    305.9Retained earnings
    
    
    (128.1
    )
    
    
    
    
    
    
    (1.7
    )
    
    
    (129.8
    )Non-controlling interest
    
    
    (32.0
    )
    
    
    
    
    
    
    0.1
    
    
    
    (31.9
    )
 
 (1)
    
    Classification of the Ballarat operation profit and loss for the year ended 31 December
2008 from continuing operation to discontinued operation.(2)
    
    Finalisation of the Equigold business combination and subsequent adjustments to the
provisional accounting values as illustrated in Note 31, the amortization and tax effect of
these final adjustments and translation of these final adjustments to the closing $US rate at
31 December 2008. F-117




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##### Table of Contents



Note 36: COMPARATIVE RESTATEMENT (continued)
 Comparative period adjustments to incomestatement items
    
    2007
    
    
    
    
    
    
    
    
    
    
    2007$M
    
    
    BALLARAT(1)
    
    
    PPA(2)
    
    
    $MAS REPORTED
    
    
    ADJUSTMENT
    
    
    ADJUSTMENT
    
    
    AS RESTATEDRevenue
    
    
    498.4
    
    
    
    (0.8
    )
    
    
    
    
    
    
    497.6Cost of sales
    
    
    (261.3
    )
    
    
    0.8
    
    
    
    
    
    
    
    (260.5
    )Exploration expense
    
    
    (8.4
    )
    
    
    0.2
    
    
    
    
    
    
    
    (8.2
    )Financial income
    
    
    10.9
    
    
    
    (0.5
    )
    
    
    
    
    
    
    10.4Financial expenses
    
    
    (131.6
    )
    
    
    0.1
    
    
    
    
    
    
    
    (131.5
    )Income tax benefit
    
    
    11.7
    
    
    
    (1.7
    )
    
    
    
    
    
    
    10.0Profit from discontinued operation
    
    
    
    
    
    
    1.9
    
    
    
    Earnings / (loss) per share- Basic (cents/share)
    
    
    (1.4
    )
    
    
    
    
    
    
    
    
    
    
    (1.4
    )- Diluted (cents/share)
    
    
    (1.4
    )
    
    
    
    
    
    
    
    
    
    
    (1.4
    )Continuing operations- Basic (cents/share)
    
    
    (1.4
    )
    
    
    
    
    
    
    
    
    
    
    (1.5
    )- Diluted (cents/share)
    
    
    (1.4
    )
    
    
    
    
    
    
    
    
    
    
    (1.5
    )
  
 (1)
    
    Classification of the Ballarat operation profit and loss for the year ended 31 December
2008 from continuing operation to discontinued operation.(2)
    
    Finalisation of the Equigold business combination and subsequent adjustments to the
provisional accounting values as illustrated in Note 31, the amortization and tax effect of
these final adjustments and translation of these final adjustments to the closing $US rate at
31 December 2008. F-118




---



##### Table of Contents



NOTE 37: AUDITORS REMUNERATION
  $2009
    
    
    2008
    
    
    2007(a) Assurance servicesAudit servicesPricewaterhouseCoopers, PNG Firm
    
    
    235,301
    
    
    
    239,420
    
    
    
    154,843PricewaterhouseCoopers, Other Overseas Firms
    
    
    941,205
    
    
    
    957,680
    
    
    
    530,295Total remuneration for audit services
    
    
    1,176,506
    
    
    
    1,197,100
    
    
    
    685,138Other assurance servicesPricewaterhouseCoopers, PNG Firm
    
    
    
    
    
    
    
    
    
    
    16,026PricewaterhouseCoopers, Other Overseas Firms
    
    
    244,204
    
    
    
    422,752
    
    
    
    625,664Total remuneration for other assurance services
    
    
    244,204
    
    
    
    422,752
    
    
    
    641,690Total remuneration for assurance services
    
    
    1,420,710
    
    
    
    1,619,852
    
    
    
    1,326,828(b) Taxation servicesPricewaterhouseCoopers
    
    
    151,350
    
    
    
    141,453
    
    
    
    53,598Total remuneration for taxation services
    
    
    151,350
    
    
    
    141,453
    
    
    
    53,598
 F-119




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##### Table of Contents



NOTE 38: CAPITAL AND LEASING COMMITMENTS
 Operating lease commitments
  $2009
    
    
    2008Payable- not later than one year
    
    
    1.6
    
    
    
    2.2- later than one year but not later than 2 years
    
    
    1.8
    
    
    
    0.9- later than two years but not later than 5 years
    
    
    5.9
    
    
    
    1.2- later than 5 years
    
    
    12.1
    
    
    
    0.121.4
    
    
    
    4.4
  Finance lease commitments
 $2009
    
    
    2008Payable- not later than one year
    
    
    0.7
    
    
    
    - later than one year but not later than 2 years
    
    
    0.3
    
    
    
    Total minimum lease payments
    
    
    1.0
    
    
    
    Future finance charges
    
    
    (0.1
    )
    
    
    Total finance lease liability
    
    
    0.9
    
    
    
    Representing lease liabilities:Current
    
    
    0.7
    
    
    
    Non-current
    
    
    0.2
    
    
    
    0.9
    
    
    
    
 F-120




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##### Table of Contents



Note 38: CAPITAL AND LEASING COMMITMENTS (continued)
 Capital expenditure commitments
 $2009
    
    
    2008Capital expenditure commitments contracted for:Payable  not later than one year
    
    
    269.5
    
    
    
    83.7Payable  not later than two year
    
    
    45.1
    
    
    
    13.2Payable  not later than three years
    
    
    20.0
    
    
    
    334.6
    
    
    
    96.9
   NOTE 39: CONTINGENT LIABILITIES AND CONTINGENT ASSETS
 Contingent liabilities
  F-121




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##### Table of Contents



Note 39: CONTINGENT LIABILITIES AND CONTINGENT ASSETS (continued)
   Contingent assets
   
    
    gold production commencing (in any quantity) from the Kirkalocka processing plant; and
    
    MMS entering into any unconditional dealing or agreement to deal (including sale, lease,
mortgage or other Encumbrance) in relation to the Kirkalocka processing plant (whether in
whole or in part), or any such dealing or agreement becoming unconditional.
  F-122




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##### Table of Contents



NOTE 40: EARNINGS PER SHARE
  $2009
    
    
    2008(1)(2)
    
    
    2007(1)(2)Net profit / (loss) attributable to ordinary
shareholders from continuing operations
    
    
    178.7
    
    
    
    110.1
    
    
    
    (26.0
    )Net (loss) / profit attributable to ordinary
shareholders from discontinued operations
    
    
    (412.9
    )
    
    
    0.7
    
    
    
    1.9(234.2
    )
    
    
    110.8
    
    
    
    (24.1
    )Weighted average number of ordinary shares (millions)
    
    
    2,388.9
    
    
    
    1,965.1
    
    
    
    1,758.9Basic EPS (cents/share)  continuing operations
    
    
    7.5
    
    
    
    5.6
    
    
    
    (1.5
    )Basic EPS (cents/share)  discontinued operations
    
    
    (17.3
    )
    
    
    
    
    
    
    0.1Basic EPS (cents/share)  total
    
    
    (9.8
    )
    
    
    5.6
    
    
    
    (1.4
    )Diluted number of ordinary shares (millions)
    
    
    2,403.1
    
    
    
    1,968.3
    
    
    
    1,762.6Diluted EPS (cents/share)  continuing operations
    
    
    7.4
    
    
    
    5.6
    
    
    
    (1.5
    )Diluted EPS (cents/share)  discontinued operations
    
    
    (17.1
    )
    
    
    
    
    
    
    0.1Diluted EPS (cents/share)  total
    
    
    (9.7
    )
    
    
    5.6
    
    
    
    (1.4
    )
 Reconciliation of weighted average number of ordinary shares
 2009
    
    
    2008(2)
    
    
    2007(2)Weighted average number used
in calculating basic earnings
per share (in millions)
    
    
    2,388.9
    
    
    
    1,965.1
    
    
    
    1,758.9Adjustments for calculation of
diluted earnings per share:Contingently issuable shares
    
    
    
    
    
    
    
    
    
    
    3.3Effect of share rights on issue
    
    
    14.2
    
    
    
    3.2
    
    
    
    0.4Weighted average number used
in calculating diluted
earnings per share (in
millions)
    
    
    2,403.1
    
    
    
    1,968.3
    
    
    
    1,762.6
 
 (1)
    
    Restated (refer Note 36)(2)
    
    The EPS and number of ordinary shares calculations for the 2008 and 2007 financial years have
been restated to include the impact of the capital raising undertaken in March 2009. F-123




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NOTE 41: DIVIDENDS PER SHARE
  CENTS PERSHARE
    
    
    TOTAL AMOUNT$MDeclared and paid during 2009Interim 2009 ordinary (record date 9 November 2009)
    
    
    1.5
    
    
    
    35.535.5
 NOTE 42: SUBSEQUENT EVENTS
     F-124




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Note 42: SUBSEQUENT EVENT (continued)
  F-125




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LIHIR GOLD LIMITED
(Registrant)By /s/ Phil BakerTitle:   Chief Executive Officer  126




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Item 19. Exhibits
 Exhibit 1 *
    
    Constitutionof Lihir Gold Limited, effective as of
April 28, 1998 (incorporated by reference to Lihir Gold
Limiteds annual report on Form 20-F for the fiscal
year ended December 31, 2000).Exhibit 4 (a) *
    
    Syndicated Facilities Agreementbetween Lihir Gold
Limited, ABN AMRO Australia Limited, ABN AMRO Bank N.V.
(Australia Branch), Australia and New Zealand Banking
Group Limited, Bayerische Hypo-und Vereinsbank AG, BNP
Paribus, Bank of Western Australia Limited,
Commonwealth Bank of Australia, Macquarie Bank Limited,
National Australia Bank Limited, Natexis Banques
Populaires, Societe General, Société Génerale Australia
Branch, WestLB AG, and Westpac Banking Corporation
dated September 13, 2005 incorporated by reference to
Lihir Gold Limiteds annual report on Form 20-F for the
fiscal year ended December 31, 2005).Exhibit 4 (b) *
    
    Refinancing Coordination Deed 2005between Lihir Gold
Limited, ABN AMRO Australia Limited, ABN AMRO Bank NV,
Commonwealth Bank of Australia, Macquarie Bank Limited,
Société Génerale and Société Génerale Australia Branch,
dated September 13, 2005. (incorporated by reference
to Lihir Gold Limiteds annual report on Form 20-F for
the fiscal year ended December 31, 2005).Exhibit 4 (c) *
    
    Amending Deed (Security Trust Deed)between Lihir Gold
Limited, Niugini Mining Limited, Niugini Mining
(Australia) Pty Ltd, ABN AMRO Australia Limited, ABN
AMRO Bank NV, Commonwealth Bank of Australia, Macquarie
Bank Limited, Société Génerale and Société Génerale
Australia Branch, Mitsui & Co. Precious Metals Inc.,
and J. Aron & Company dated September 13, 2005
(incorporated by reference to Lihir Gold Limiteds
annual report on Form 20-F for the fiscal year ended
December 31, 2005).Exhibit 4 (d) *
    
    Lihir Gold Security Trust Deedbetween Lihir Gold
Limited, Niugini Mining Limited, Niugini Mining
(Australia) Pty Ltd, ABN AMRO Australia Limited, ABN
AMRO Bank NV, Citibank N.A., and J. Aron & Company
dated November 22, 2000 (incorporated by reference to
Lihir Gold Limiteds annual report on Form 20-F for the
fiscal year ended December 31, 2000).Exhibit 4 (e) *
    
    Lihir Gold Limited Offshore Chargebetween Lihir Gold
Limited and ABN AMRO Australia Limited dated September
13, 2005 (incorporated by reference to Lihir Gold
Limiteds annual report on Form 20-F for the fiscal
year ended December 31, 2005).Exhibit 4 (f) *
    
    Lihir Gold Deed of Security (PNG) 2005between Lihir
Gold Limited and ABN AMRO Australia Limited dated
September 13, 2005 (incorporated by reference to Lihir
Gold Limiteds annual report on Form 20-F for the
fiscal year ended December 31, 2005).Exhibit 4 (g) *
    
    Lihir Gold Mortgage of Bullion Accountbetween Lihir
Gold Limited and ABN AMRO Australia Limited dated
September 13, 2005 (incorporated by reference to Lihir
Gold Limiteds annual report on Form 20-F for the
fiscal year ended December 31, 2005).Exhibit 4 (h) *
    
    Special Mining Lease, dated as of March 17, 1995,
between Lihir Gold Limited and the PNG Government
(incorporated by reference to Lihir Gold Limiteds Form
F-1 filed September 6, 1995).
 127




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Exhibit 4 (i) *
    
    Mining Development Contract, dated as of March 17,
1995, between Lihir Gold Limited and the PNG Government
(incorporated by reference to Lihir Gold Limiteds Form
F-1 filed September 6, 1995).Exhibit 4 (j) *
    
    Share Sale and Purchase Agreementbetween Rio Tinto
Western Holdings Limited and Lihir Gold Limited dated
October 10, 2005 (incorporated by reference to Lihir
Gold Limiteds annual report on Form 20-F for the
fiscal year ended December 31, 2005).Exhibit 4 (k) *
    
    Technical and Procurement Services Agreementbetween
Technological Resources Pty Ltd, Rio Tinto Services
Limited and Lihir Gold Limited dated October 10, 2005
(incorporated by reference to Lihir Gold Limiteds
annual report on Form 20-F for the fiscal year ended
December 31, 2005).Exhibit 4 (l) *
    
    General Termination and Release Deedbetween Lihir Gold
Limited, Lihir Management Company Ltd, Rio Tinto
Western Holdings Ltd and Rio Tinto plc dated October
10, 2005 (incorporated by reference to Lihir Gold
Limiteds annual report on Form 20-F for the fiscal
year ended December 31, 2005).Exhibit 4 (m) *
    
    Compensation Agreement for Land, Crops, Water and Air,
dated as of April 26, 1995, between Lihir Management
Company, Lihir Mining Area Landowners Association
Incorporated, Block Executives (for and on behalf of
the Landowners), Catholic Mission (Kavieng Property
Trust) and the United Church in PNG and the Solomon
Islands (incorporated by reference to Lihir Gold
Limiteds Form F-1 filed September 6, 1995).Exhibit 4 (n) *
    
    Putput and Ladolam Relocation Agreementdated as of
April 26, 1995, between Lihir Management Company, Lihir
Mining Area Landowners Association Incorporated and the
persons named in various schedules to the agreement
(incorporated by reference to Lihir Gold Limiteds Form
F-1 filed September 6, 1995).Exhibit 4 (o) *
    
    Integrated Benefits Package Review Status Statement
between Nimamar Rural Local Level Government, Lihir
Mining Area Landowners Association, the State of Papua
New Guinea, New Ireland Provincial Government and Lihir
Gold Limited dated November 9, 2005 (incorporated by
reference to Lihir Gold Limiteds annual report on Form
20-F for the fiscal year ended December 31, 2005).Exhibit 4 (p) *
    
    Amended and Restated Lihirian Equity Settlement
Agreementdated January 27, 2006 between Mineral
Resources Development Company Limited, MRL Capital
Limited (Formerly Mineral Resources Lihir Limited) and
the European Investment Bank (incorporated by reference
to Lihir Gold Limiteds annual report on Form 20-F for
the fiscal year ended December 31, 2005).Exhibit 4 (q) *
    
    Patent and Know-How License Agreementdated August 5,
1995 between Sherritt Inc and Lihir Management Company
Limited for and on behalf of Lihir Gold Limited,
together with amendment thereto dated August 18, 1995
(incorporated by reference to Lihir Gold Limiteds
annual report on Form 20-F for the fiscal year ended
December 31, 2003).Exhibit 4 (r) *
    
    Number not usedExhibit 4 (s) *
    
    Agreement for the Servicesof Dr Ross Garnaut as
Chairman of Lihir Gold Limited, dated April 26, 2004
between Lihir and Maccullochella Pty Ltd. (incorporated
by reference to Lihir Gold Limiteds annual report on
Form 20-F for the fiscal year ended December 31, 2003).
 128




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Exhibit 4 (t) *
    
    Facility Agreementbetween Lihir Australian Holdings
Pty Limited and Australia and New Zealand Banking Group
Limited dated October 17, 2006. (incorporate by reference to Lihir Gold Limiteds annual report on Form 20-F for the fiscal year ended December 31, 2006);Exhibit 4 (u) *
    
    Deed of Chargebetween Lihir Australian Holdings Pty
Limited and Australia and New Zealand Banking Group
Limited dated October 19, 2006. (incorporate by reference to Lihir Gold Limiteds annual report on Form 20-F for the fiscal year ended December 31, 2006);Exhibit 4 (v) *
    
    Parent Deposit Agreementbetween Lihir Gold Limited and
Australia and New Zealand Banking Group Limited dated
February 12, 2007. (incorporate by reference to Lihir Gold Limiteds annual report on Form 20-F for the fiscal year ended December 31, 2006);Exhibit 4 (w) *
    
    Management Services Agreement (PNG)between Lihir
Services Australia Pty Limited and Lihir Gold Limited
dated May 9, 2006. (incorporate by reference to Lihir Gold Limiteds annual report on Form 20-F for the fiscal year ended December 31, 2006);Exhibit 4 (x) *
    
    Management Services Agreement (Australia) between Lihir
Services Australia Pty Limited and Lihir Gold Limited
dated May 9, 2006. (incorporate by reference to Lihir Gold Limiteds annual report on Form 20-F for the fiscal year ended December 31, 2006);Exhibit 4 (y) *
    
    Merger Implementation Agreementbetween Lihir Gold
Limited, Lihir Australian Holdings Pty Limited and
Ballarat Goldfields NL dated October 17, 2006. (incorporate by reference to Lihir Gold Limiteds annual report on Form 20-F for the fiscal year ended December 31, 2006);Exhibit 4 (z) *
    
    Share Subscription Agreementbetween Lihir Australian
Holdings Pty Limited and Ballarat Goldfields NL dated
October 17, 2006. (incorporate by reference to Lihir Gold Limiteds annual report on Form 20-F for the fiscal year ended December 31, 2006);Exhibit 4 (aa) *
    
    Deed Pollbetween Lihir Gold Limited the holders of
fully paid ordinary shares in Ballarat Goldfields NL
dated December 12, 2006. (incorporate by reference to Lihir Gold Limiteds annual report on Form 20-F for the fiscal year ended December 31, 2006);Exhibit 4 (ab) *
    
    DNX (Australia) Contractbetween Lihir Gold Limited and
DNX Australia Pty Ltd dated January 2, 2008. (incorporate by reference to Lihir Gold Limiteds annual report on Form 20-F for the fiscal year ended December 31, 2007); andExhibit 4 (ac) *
    
    DNX (PNG) Contractbetween Lihir Gold Limited and DNX
Papua New Guinea Ltd dated January 2, 2008. (incorporate by reference to Lihir Gold Limiteds annual report on Form 20-F for the fiscal year ended December 31, 2007); andExhibit 4 (ad) *
    
    Revised IBP (Integrated Benefits Package Review Status
Statement LSDP)between Lihir Gold Limited and the
People of Lihir represented by the Mining Area
landowners Association Inc and the Nimamer Rural
Local-Level Government dated May 2, 2007 (incorporate by reference to Lihir Gold Limiteds annual report on Form 20-F for the fiscal year ended December 31, 2007); andExhibit 4 (ae) *
    
    Gekko Contractbetween Ballarat Goldfields NL and Gecko
Systems Pty ltd made on March 26, 2007. (incorporate by reference to Lihir Gold Limiteds annual report on Form 20-F for the fiscal year ended December 31, 2007); andExhibit 4 (af) *
    
    Spinefex Contractbetween Ballarat Goldfields NL and
Spinefex Projects Pty Ltd made on or about May 12,
2005. (incorporate by reference to Lihir Gold Limiteds annual report on Form 20-F for the fiscal year ended December 31, 2007); andExhibit 4 (ag) *
    
    Pybar Contractbetween Ballarat Goldfields NL and Pybar
Mining Services Pty Ltd made on October 18, 2004. (incorporate by reference to Lihir Gold Limiteds annual report on Form 20-F for the fiscal year ended December 31, 2007); andExhibit 4 (ah) *
    
    Washingtons Drilling Contractbetween Lihir Gold
Limited and Washingtons Drilling (international)
Limited NZ made on August 2, 2007. (incorporate by reference to Lihir Gold Limiteds annual report on Form 20-F for the fiscal year ended December 31, 2007); andExhibit 4 (ai) *
    
    Merger Implementation Agreementbetween Lihir Gold
Limited, Lihir Australian Holdings Pty Ltd and Equigold
NL made on March 20, 2008. (incorporate by reference to Lihir Gold Limiteds annual report on Form 20-F for the fiscal year ended December 31, 2007); andExhibit 4 (aj) *
    
    Lihir Executive Share Plan (LESP)for Lihir Gold
Limited approved by shareholders on April 24, 2007. (incorporate by reference to Lihir Gold Limiteds annual report on Form 20-F for the fiscal year ended December 31, 2007); andExhibit 4 (ak)*
    
    Spinefex Projects Pty Ltd & Gekko Systems Pty Ltd
amendment letter dated June 2008 to the Spinefex
Contract between Ballarat Goldfields NL and Spinefex
Projects Pty Ltd made on or about May 12, 2005. (incorporate by reference to Lihir Gold Limiteds annual report on Form 20-F for the fiscal year ended December 31, 2008).
 129




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Exhibit 4 (al)*
    
    AGR Matthey Gold Refining Contractbetween Lihir Gold
Limited and AGR Matthey (a partnership between the
Western Australian Mint, Australian Gold Alliance Pty
Ltd and Johnson Matthey (Aust.) Ltd) made on March 1
2008. (incorporate by reference to Lihir Gold Limiteds annual report on Form 20-F for the fiscal year ended December 31, 2008).Exhibit (am)*
    
    Metalor Gold Refining Contractbetween Equigold Mines
CI SA and Metalor Technologies SA made on August 28,
2008. (incorporate by reference to Lihir Gold Limiteds annual report on Form 20-F for the fiscal year ended December 31, 2008).Exhibit (an)*
    
    Oxygen Plant Contractbetween Lihir Gold Limited and
Air Products PLC made on May 2, 2008. (incorporate by reference to Lihir Gold Limiteds annual report on Form 20-F for the fiscal year ended December 31, 2008).Exhibit (ao)*
    
    Autoclave Contractbetween Lihir Gold Limited and WE
Smith Engineering Pty Ltd made on October 10, 2008. (incorporate by reference to Lihir Gold Limiteds annual report on Form 20-F for the fiscal year ended December 31, 2008).Exhibit (ap)*
    
    Grinding Mills Agreementbetween Lihir Gold Limited and
FLSmidth Minerals Pty Limited made on May 8, 2008. (incorporate by reference to Lihir Gold Limiteds annual report on Form 20-F for the fiscal year ended December 31, 2008).Exhibit (aq)
    
    Interim Power Solution Barge Contractbetween Lihir
Gold Limited and Wartsilla Finland OY made on August
26, 2009.Exhibit (ar)
    
    Community compensation packagebetween Lihir Gold
Limited and Lihir Mining Area Landowners Association
dated August 27, 2009.Exhibit (as)
    
    Grinding and oxidation feed and detailed designbetween
Lihir Services Australia Pty Limited ABN 33 116 067 611
and Lycopodium Minerals Qld Pty Ltd ABN: 37 124757 384
on September 11, 2008.Exhibit (at)
    
    Autoclave Internals Contractbetween Lihir Gold Limited
and Koch Australia Pty Ltd made on July 27, 2009Exhibit (au)
    
    MOPU Contract for Low Voltage MCCs and Switchrooms
between Lihir Gold Limited and Plummer Industries Pty
Ltd ACN 008 9o7 784 made on June 25, 2009.Exhibit (av)
    
    Management Services Agreement (PNG)between Lihir
Services Australia Pty Limited and Lihir Gold Limited
dated July 23, 2009.Exhibit (aw)
    
    Management Services Agreement (Australia) between Lihir
Services Australia Pty Limited and Lihir Gold Limited
dated July 23, 2009.Exhibit 8
    
    Significant subsidiariesExhibit 12
    
    302 Certification by Chief Executive OfficerExhibit 13
    
    906 Certification by Chief Executive Officer
 130