<PAGE>
                                                                    Exhibit 4(q)



                              (LIHIR GOLD LIMITED)

26 August 2005

Mr Arthur Hood
Via Email

Dear Arthur

Further to our recent discussions, I am pleased to formally offer you the
position of Managing Director of Lihir Gold Limited (the Company). This offer
remains open until 16 September 2005 and is irrevocable during this period. If
accepted by you, this letter sets out the terms and conditions on which you will
be appointed.

1.   TERM AND LOCATION

     The term of your appointment will be for 5 years commencing on 1 October
     2005 (commencement date), unless terminated earlier under clause 8 below.
     You agree to being appointed to the Board of the Company as from the
     commencement date.

     Your position will initially be based in Brisbane, Australia, with the
     possibility of a requirement for relocation to Sydney or Melbourne should
     the Board decide, following receipt, of your strategic assessment of an
     appropriate location during the first six months of your employment.

2.   RESPONSIBILITIES

2.1  MANAGE AFFAIRS

     Subject to clauses 2.2, as Managing Director you will be responsible to the
     Board for managing the day to day affairs of the Company.

2.2  COMPLY WITH DIRECTIONS AND POLICIES

     You must diligently perform the duties and exercise the powers assigned to
     or vested in you by the Board or its delegates. You must:

     (a)  (COMPLY WITH BOARD INSTRUCTIONS) comply with all lawful orders and
          instructions given by the Board or its delegates;

<PAGE>

     (b)  (COMPLY WITH COMPANY'S POLICIES) comply with all rules, regulations,
          codes of conduct and policies established by the Company;

     (c)  (ENSURE COMPANY COMPLIANCE) ensure the Company complies with
          applicable laws and regulations, including applicable listing rule
          disclosure requirements; and

     (d)  (RELATED BODY CORPORATE) if the Company reasonably requires, perform
          services and hold office not only for the Company but also for related
          bodies corporate.

2.3  OUTSIDE DIRECTORSHIPS

     You must not, without the consent of the Chairman of the Board, be a
     director of any other entity (other than a related body corporate of the
     Company) while employed by the Company.

2.4  DISCLOSURE OF YOUR BENEFITS AND SHAREHOLDINGS

     You must promptly give the Company any informatian you have or ought to
     have which the Company needs to:

     (a)  (REPORTING REQUIREMENTS) comply with reporting requirements, such as
          under applicable laws or under accounting standards;

     (b)  (DISCLOSURE OBLIGATIONS) comply with disclosure obligations under the
          applicable listing rules (for example, under ASX listing rules 3.1 and
          3.19A);

     (c)  (DISCLOSE INFORMATION) comply with its obligations to give or disclose
          information, such as relating to an offer of securities, a buy-back,
          a takeover bid, or a substantial holding; or

     (d)  (INFORM SHAREHOLDERS) inform shareholders properly about a proposal
          referred by the directors of the Company to a meeting of some or all
          shareholders.

2.5  NO INTEREST IN OTHER BUSINESS

     Except as set out in this letter or with the prior permission of the Board,
     you must not undertake any other trade, business or profession, become an
     employee, agent or contractor of another person or have any interest in
     another business.

     You must not hold any direct or indirect pecuniary interest in any club,
     corporation, council, group or trust that would compromise the duties
     required of an executive of the Company.

     You may, however, invest in:

     (a)  (SECURITIES) securities of a corporation which does not carry on
          business similar to or in competition with the Company or a related
          body corporate; or

<PAGE>

     (b)  (LISTED SECURITIES) up to 0.5% of the securities of any corporation if
          those securities are of a class that are listed on a stock exchange;
          or

     (c)  (INVESTMENT FUND) an investment or superannuation fund provided, that
          neither the fund, the trustee of the fund nor its investment manager
          (if any) is controlled by you or any of your associates, and neither
          you nor any of your associates participate in decision-making by the
          fund or have the right to direct the fund to acquire or dispose of
          particular securities. For this purpose, your associates are deemed to
          include your spouse, parents, children, grandchildren and siblings and
          any entity that you or any of your spouse, parents, children,
          grandchildren and siblings control.

2.6  REPORTING

     You must report directly to the Board or as directed by the Board. You must
     provide prompt and full information to the Board regarding time conduct of
     the business of the Company, including any material issue within your
     knowledge affecting the Company and any breaches or possible breaches by
     the Company of applicable law or listing rules.

3.   REMUNERATION AND BENEFITS

3.1  BASE SALARY

     Your gross (before tax) base salary (inclusive of superannuation
     contributions in accordance with clause 3.2) in respect of service will be
     US$450,000 per annum payable by the Company in equal monthly instalments
     during the term of your employment.

3.2  SUPERANNUATION CONTRIBUTIONS

     Each financial year, the Company will allow from such amount the minimum
     superannuation contribution required by applicable law in order to avoid a
     superannuation guarantee shortfall arising, and will contribute the sum
     allowed into a complying superannuation fund of your choice.

     You may elect to have additional superannuation contributions deducted from
     your base salary, to the extent permitted by applicable law. Again, you may
     elect to have those contributions made to a complying superannuation fund
     of your choice.

3.3  SHORT TERM INCENTIVE

     In addition to your base salary, you will be offered in respect of service
     in each year of your employment the opportunity to earn up to a further 50%
     of your base salary (currently US$225,000) each year by way of short term
     incentive. This incentive (or a relevant proportion of it) will be paid to
     you subject to the Board determining that your short term incentive goals
     and criteria for the year concerned have been met, More specifically:

     (a)  50% of the short term amount (i.e., US$112,500 initially) will be
          assessed and contingent upon satisfaction of safety, community and
          environment criteria, with equal weightings to each. The specific
          criteria for each year will be agreed in advance with you.

<PAGE>

     (b)  the other 50% of the short term incentive amount will be assessed and
          contingent upon the actual financial and production performance of the
          Company for the relevant financial year as compared with the budget
          for the year. There will be equal weightings given to four components
          (i.e., the amount of production, the total costs of production,
          achievement of cash flow targets, and achievement of profitability
          targets). The amount, payable to you for this component will be
          calculated on the following basis:

          (i)  Full value allocation for 105% of budget on each component

          (ii) 75% allocation for 97.5% of budget achievement

          (iii) 50% allocation for 90% of achievement

          (iv) 0% allocation for less than 90% of achievement

          (v)  Straight line pro-rata allocation between the above performance
               points

     The amount of the short term incentive actually awarded to you for any year
     will be determined by the Board following the end of the year concerned,
     having regard to the above.

3.4  LONG TERM INCENTIVE

     You will also be offered a long term incentive in respect of service in
     each year of your employment. Your long term incentive will be consistent
     with the principles set out in the schedule to this letter, or as the
     Board may otherwise agree with you from time to time.

3.5  TRAVEL

     The Company will pay your business related travel and accommodation
     expenses. Interstate and overseas travel by you may be taken in business
     class.

3.6  OTHER EXPENSES

     The Company will pay or reimburse you for all reasonable entertainment and
     other out of pocket expenses properly incurred in the performance of your
     duties upon you presenting proper records, such as invoices and receipts,
     reasonably required by the Board.

3.7  RELOCATION TO AUSTRALIA

     The Company will also pay or reimburse you for all reasonable expenses
     incurred by you in relocating you and your family from Tanzania, where you
     presently reside, to Brisbane, Australia, and any subsequent relocation
     contemplated by clause 1. This is subject to you obtaining prior approval
     from the Board or its delegate of a budget for the relocation and
     presenting proper records, such as invoices and receipts, reasonably
     required by the Board.

<PAGE>

4.   ANNUAL REMUNERATION REVIEWS

     The Board will review the amount of your remuneration package once each
     year. If your remuneration package is increased, the increase will be paid
     from 1 March following the review. In reviewing your remuneration package,
     the Board will have regard to:

     (a)  your performance against any criteria developed by the Board and
          agreed with you;

     (b)  increases in the remuneration of senior executives who have
          qualifications and experience similar to those of you and who are
          employed by corporations similar to the Company.

     The Company is under no obligation to increase your remuneration package
     after any review.

5.   INDEMNITY AND D&O INSURANCE

5.1  INDEMNITY

     Subject to the terms and conditions of your appointment, the Company will
     indemnify you to the fullest extent permitted by applicable law and the
     Company's Constitution, against any liability incurred by you as an officer
     of the Company acting in good faith.

5.2  D&O INSURANCE

     During the term of your employment and for 7 years thereafter, the Company
     will (subject to applicable law) use best efforts to ensure that as far as
     practicable (having regard to the cost of coverage and its availability)
     you are insured under a directors' and officers' liability insurance
     policy. The Company will pay the premiums on the policy except to the
     extent prohibited by applicable law.

6.   ANNUAL AND OTHER LEAVE

6.1  ANNUAL LEAVE

     You will be entitled to four weeks' leave in each year, on full
     remuneration. The leave in each year is to be taken at a time or time
     agreed with the Chairman of the Board.

     Leave must be taken by no later than 12 months after it accrues. Unless
     specifically agreed with the Chairman, untaken leave lapses.

6.2  SICK LEAVE

     You will also be entitled to ten days sick leave each year. This leave is
     cumulative. At the discretion of the Board additional paid sick leave may
     be provided. You must notify the Company of your inability to attend work
     as early as possible. You may be requested to supply a medical certificate
     in respect of absences in excess of 3 days. Accrued but untaken sick leave
     is not payable upon your employment ending.

<PAGE>

6.3  LONG SERVICE LEAVE

     You are entitled to long service leave in accordance with applicable law.

6.4  SPECIAL LEAVE

     You are entitled to any special leave that is approved by the Board.

7.   CONFIDENTIAL INFORMATION

7.1  PROPERTY OF THE COMPANY

     Confidential Information is and remains the property of the Company or of
     the related body corporate concerned, in this letter. Confidential
     Information means all information (whether or not it is described as
     confidential) concerning any past, present or future business, operations
     or affairs of the Company or of any of its related bodies corporate.

7.2  PROPER USE

     You must not, and must use best endeavours to ensure that third parties
     do not, disclose Confidential Information directly or indirectly to any
     form to anyone else, or use or copy Confidential Information in any manner
     which is not in the proper course of duties set out in this document and
     for the benefit of the Company or a related body corporate, except if and
     to the extent that:

     (a)  (COMPANY AGREED) the Company has agreed in writing to the disclosure,
          use or copying;

     (b)  (REQUIRED BY LAW) disclosure of Confidential Information is required
          to comply with any applicable law; or

     (c)  (PUBLIC DOMAIN) the Confidential Information has come into the public
          domain otherwise than by breach of a provision of this document.

7.3  RETURN OF CONFIDENTIAL INFORMATION

     Immediately on your employment ending, you must:

     (a)  (RETURN) return to the Company all Confidential Information (including
          personal copies of Board Papers); and

     (b)  (PERMANENTLY DELETE) permanently delete so that it is incapable of
          retrieval any Confidential Information (including personal copies of
          Board Papers) stored electronically.

7.4  CONTINUATION

     The obligations in this clause 7 continue to apply after your employment
     ends.

<PAGE>

8.   TERMINATING EMPLOYMENT

8.1  RESIGNATION BY YOU

     (a)  You may resign from your employment by giving the Company not less
          than 2 months' written notice.

     (b)  If you resign, the Company may, for part or all of the period of
          notice required by paragraph (a), require you to take special leave of
          absence on full pay as from an earlier date notified by the Company
          and forthwith resign your office as a director of the Company.

8.2  EMPLOYMENT TERMINATED BY THE COMPANY

     The Company may terminate your employment by giving you not less than 2
     months' written notice. In this event, the Company may require you to take
     special leave of absence on full pay during some or all of the notice
     period and require you to resign forthwith your office as a director of the
     Company.

8.3  IMMEDIATE TERMINATION BY COMPANY

     The Company may terminate your employment immediately if you:

     (a)  (BANKRUPT) become bankrupt or make an arrangement or composition with
          creditors;

     (b)  (BREACHES DOCUMENT) wilfully commit any breach of a provision of this
          letter;

     (c)  (FRAUD) in the opinion of the Board, commit any act of fraud,
          dishonesty or other serious misconduct;

     (d)  (VACATES OFFICE) vacate office as a director of the Company

     (e)  (SERIOUS MISCONDUCT) are guilty of any serious misconduct or wilful
          neglect in the discharge of your duties; or

     (f)  (UNSOUND MIND) become of unsound mind or are placed under the control
          of any committee or office under any law relating to mental health.

8.4  PAYMENT OF ACCRUED BENEFITS

     If your employment is terminated for any reason the Company must pay to
     you:

     (a)  the base salary payable up to and including the date of termination;
          and

     (b)  any amount due for accrued holiday pay and pro-rata holiday pay for an
          incomplete qualifying year.

<PAGE>

8.5  ADDITIONAL PAYMENTS IN CERTAIN CIRCUMSTANCES

     If (and only if) your employment is terminated as a result of:

     (a)  the Company giving you notice under clause 8.2; or

     (b)  you giving notice of resignation within 2 months after there is a
          significant diminution of your role, status or reporting lines in
          relation to the Company (other than by agreement with you);

     then the Company must pay you the sum determined by multiplying US$925,000
     by the relevant multiple. For this purpose, the "relevant multiple" is as
     follows:

<TABLE>
<S>                                     <C>
IF YOUR EMPLOYMENT IS TERMINATED...     ... THE RELEVANT MULTIPLE IS ...

Before the first anniversary of the     3
date your commencement (commencement
date) (i.e., in year 1 of your
employment)

On or after the first anniversary of    The number of whole months in the period
the commencement date but before the    commencing on the day after the date of
third anniversary of the commencement   termination of your employment and
date (i.e., in years 2 or 3 of your     ending on the fifth anniversary of the
employment)                             commencement date, divided by 24.

On or after the third anniversary of    1 or, if the date of termination of
the commencement date but before the    your employment is after the fourth
fifth anniversary of the commencement   anniversary of the commencement date,
date (i.e., in years 4 or 5 of your     the relevant multiple is a fraction,
employment)                             the numerator of which is the number
                                        of whole months in the period commencing
                                        the day after the date of termination of
                                        your employment and the denominator of
                                        which is 12.
</TABLE>

8.6  COMPLETE STATEMENT OF ENTITLEMENTS

     You acknowledge and agree that the entitlements set out in this letter are
     an exhaustive statement of your entitlements in each circumstance of your
     employment being terminated. You will have no further claim against the
     Company for loss of office other than as specified in this letter.

9.   RETURN OF PROPERTY AND DOCUMENTS

     Immediately on your employment ending or at any other time requested by the
     Company, you must deliver to the Company or its authorised representative:

     (a)  all property belonging to the Company that you have or can reasonably
          obtain (for example cards, keys, equipment, computers, faxes,
          telephones); and

<PAGE>

     (b)  anything on which Confidential Information is recorded (for example
          document and computer disks).

10.  NOTICES

     A notice, consent or other communication under this letter is only
     effective if it is in writing, signed and either left at the addressee's
     address or sent to the addressee by mail or fax. If it is sent by mail, it
     is taken to have been received 3 working days after it is posted. If it is
     sent by fax, it is taken to have been received when the addressee actually
     receives it in full and in legible form.

     Our respective addresses and fax numbers are those set out below, or as we
     may subsequently notify each other:

          YOUR ADDRESS

          Address:    PO Box 1852, Toowong, Queensland, 4066

          THE COMPANY

          Address:    GPO Box 905, Brisbane, Queensland, 4001
          Fax number: (07) 3229 5950
          Attention:  Company Secretary

11.  SEVERABILITY

     If any provision of our agreement is invalid or unenforceable that part of
     the agreement will be modified if possible so that it is enforceable. All
     other provisions capable of separate enforcement continue to operate.

12.  ENTIRE AGREEMENT

     This letter constitutes the entire contractual agreement between the
     Company and you about the subject matter with which it deals. You
     acknowledge that you were not induced to enter the employment by any
     material representation or statement which is not reflected in this letter.

13.  GOVERNING LAW

     Our agreement constituted by your acceptance of this offer is to be
     governed by and construed in accordance with the law in force in
     Queensland. We and you will:

     (a)  submit to the non-exclusive jurisdiction of the courts of Queensland,
          and any court that may hear appeals from those courts, for any
          proceedings in connection with our agreement; and

     (b)  waive any right we or you may have to claim that those courts are an
          inconvenient forum.

<PAGE>

Arthur, we are delighted to offer you the role of Managing Director of Lihir
Gold Limited and look forward to receiving your acceptance of the above Terms
and Conditions.

Yours sincerely


/s/ Ross Gamaut
-------------------------------------
Ross Gamaut
Chairman

I accept the above offer.


-------------------------------------   ----------------------------------------
ARTHUR HOOD                             DATE

<PAGE>

                                    SCHEDULE
                            LONG TERM INCENTIVE PLAN

1.   [NOTIONAL ALLOCATION] You will be awarded a number of rights which is equal
     to a notional allocation of a number of Lihir ordinary shares as of the
     date the Company announces your appointment (ANNOUNCEMENT DATE) and as of
     each anniversary of the announcement date (RELEVANT NOTIONAL ALLOCATION
     DATE), subject to any necessary shareholder approval under applicable law
     or listing rules. This number of rights is referred to below as the "TARGET
     NUMBER" and equates to the maximum number of Lihir ordinary shares which
     you may become entitled to receive under the long term incentive plan in
     respect of the year commencing on the announcement date and each
     anniversary of it (each a RELEVANT PERFORMANCE YEAR).

2.   [CALCULATION OF TARGET NUMBER] The Target Number will be calculated by
     dividing the Australian dollar equivalent of 55.56% of your base salary
     (currently amounting to US$250,000) by the VWAP. For the purpose of
     determining the Australian dollar equivalent of the relevant amount, the
     conversion rate to be applied will be the mid rate applied by the
     Commonwealth Bank of Australia on the last day of the period over which the
     VWAP is to be calculated (or such other rate as the Board reasonably
     determines). The VWAP is the volume weighted average sale price of all
     Lihir ordinary shares sold on the Australian Stock Exchange over:

     (a)  for your first year of your employment, the 20 trading days up to but
          excluding the announcement date (ANNOUNCEMENT DATE VWAP);

     (b)  for each subsequent year of your employment, the 20 trading days up to
          but excluding the anniversary of your announcement date.

3.   [PERFORMANCE HURDLES] At the commencement of each relevant performance
     year, the Board will also set performance hurdles for the year. The
     performance hurdles will be related to assessments of your contributions to
     the long term value of the Company. Specifically:

     (a)  [STRATEGIC PERFORMANCE] 20% of the Target Number will be assessed by
          the Board against the Company's performance in developing corporate
          management and structures in line with Board policies to raise the
          long-term value of the Company, including through project and
          geographic diversification.

     (b)  [NET PRESENT VALUE PERFORMANCE] 20% of the Target Number will be
          assessed by the Board against changes in the present value of the
          Company. This assessment is to have regard to the amount and timing of
          net expected cash flows, as indicated by reserves, costs and other
          relevant factors.

     (c)  [PERFORMANCE AGAINST PEERS] 30% of the Target Number (the TSR GOLD
          ACCUMULATION SHARES) will be assessed by the Board against the
          performance of the:

          (i)  Company's average annual "total shareholder return" over the
               accumulated performance period against announcement date VWAP
               (expressed as a percentage); and

<PAGE>

          (ii) average annual "total shareholder return" of the Comparator Group
               over the accumulated performance period against the Comparator
               Group's VWAP on the announcement date (expressed as a
               percentage).

          If the Company's Average annual total shareholder return performance
          when compared (as noted below) with the Comparator Group's average
          annual total shareholder return performance:

          (iii) is greater by 10% or more, you will be entitled to all TSR gold
               accumulation shares;

          (iv) does not exceed the Comparator Group's average annual total
               shareholder return performance, you will not be entitled to any
               TSR gold accumulation shares; and

          (v)  is greater by an amount of less than 10%, you will be entitled to
               a pro rated number of TSR gold accumulation shares calculated on
               a straight line basis.

          The comparison will be calculated by taking the Company's average
          annual total shareholder return performance over the accumulated
          performance period ("A") and subtracting the Comparator Group's
          average annual total shareholder return performance over the same
          period ("B") (that is. A - B), and then dividing the resulting number
          by B.

     (d)  [GROWTH PERFORMANCE] 30% of the Target Number (the TSR GROWTH SHARES)
          depend on the extent to which the Company's average annual "total
          shareholder return" increases over the accumulated performance period
          compared to the announcement date VWAP (expressed as a percentage). If
          the average annual total shareholder return increases by:

          (i)  15% or more, you will be entitled to all of the TSR growth
               shares;

          (ii) 5% or less, you will not be entitled to any TSR growth shares;
               and

          (iii) more than 5% but less than 15%, you will be entitled to a pro
               rated number of TSR growth shares calculated on a straight line
               basis

          Relevant concepts

          "Total shareholder return" is broadly, share price growth and
          dividends reinvested, excluding the impact of franking credits and
          taxation. It is to be calculated in the manner determined by the
          Board. Where it is calculated for a period greater than a year, an
          average annual return will be used.

          "Accumulated performance period" is the period starting on the
          announcement date and ending at the end of the relevant performance
          year.

<PAGE>

          Where the starting or end point of an entity's total shareholder
          return is calculated for a period, the calculation will be based on
          the volume weighted average sale price of the relevant entity's shares
          sold on the relevant stock exchange for the 20 trading days up to but
          excluding the starting or end date (as the case may be).

          All calculations will be in Australian dollars, with amounts in
          non-Australian currencies converted into Australian dollars using the
          mid rate published by the Commonwealth Bank of Australia as at the
          date of the calculation, as determined by the Company.

          The Comparator Group will initially comprise Newmont, PlacerDome,
          Barrick, Newcrest, AngloGold, Oxiana, Goldfields (South Africa), Rio
          Tinto Limited, Harmony and Croesus. The performance of the Comparator
          Group will be calculated using a simple unweighted average. The Board,
          can adjust the composition of the Comparator Group and the way its
          performance is calculated, if the composition of the group materially
          changes.

4.   [DETERMINATION] As soon as practicable after the end of each relevant
     performance year, the Board will determine the actual number of Lihir
     shares to which you become entitled having regard to the extent to which
     the applicable performance hurdles described above have been met (the
     ACHIEVED NUMBER). This will not exceed the Target Number. You will be
     notified of the outcome of the determination, If the Achieved Number is
     less than the Target Number, the number of rights that is equal to the
     difference between Target Number and the Achieved Number will lapse at this
     time.

5.   [DELIVERY OF SHARES] As soon as practicable following the determination,
     you may give the Company written notice exercising your rights to be
     provided with the number of Lihir ordinary shares determined in accordance
     with the above (ie, the Achieved Number). Subject to applicable law and
     listing rules (including obtaining any necessary shareholder approval), the
     Company will then procure delivery to you of the number of Lihir ordinary
     shares determined in accordance with the above (ie, the Achieved Number),
     subject to you giving the undertaking referred to in paragraph 7 below. The
     shares so delivered will rank equally as from their date of delivery with
     all other fully paid ordinary shares in the Company.

6.   [CASH OUT] If the Company is not permitted by law to deliver Lihir shares
     to you (for example, because a necessary shareholder approval is not
     obtained), the Company must pay you an amount equal to the market value of
     the shares. For this purpose, the market value of the shares will be the
     volume weighted average sale price of all Lihir ordinary shares sold on the
     Australian Stock Exchange over the month period ending on the day preceding
     the date of payment Payment will constitute full satisfaction of your right
     to be delivered the shares.

7.   [RESTRICTION ON DISPOSAL] If shares are delivered to you, you will be
     required to undertake in favour of the Company that, except with the prior
     permission of the Chairman, you will not sell, transfer, encumber or
     otherwise dispose of the shares (or any interest in them) before the
     earlier of;

     (a)  the third anniversary of the end of the relevant performance year;

     (b)  the first anniversary of the date on which your employment with the
          Company is terminated; and

<PAGE>

     (c)  if clause 8.5 of your employment contract applies in respect of the
          termination of your employment, the date on winch your employment is
          terminated.

8.   [DIVIDENDS AND VOTING] You will be entitled to all dividends and other
     distributions paid on the shares during the period referred to in paragraph
     7 above and (subject to applicable law and listing rules) to vote the
     shares at general meetings.

9.   [NO FORFEITURE] You are not liable to forfeit any shares that are subject
     to the restriction referred in paragraph 7 above.