Lihir partners sign new agreement !@DATELINE=VANCOUVER

Partners in the Lihir gold project in Papua New Guinea plan topool their interests and form a publicly traded company to develop the play.

The partners currently include 80%-owner RTZ (NYSE) and Niugini Mining, a 56.5%-held subsidiary of Battle Mountain Gold (NYSE) which holds the remaining 20% interest.

The new agreement allows the PNG government to acquire a 30% interest. Niguini would increase its position to 30%, leaving RTZ with 40% and the right to operate the project.

These interests would then be pooled into Lihir Gold Co. Plans call for an estimated 30-40% of equity to be sold in an international offering to help fund development. It is expected that Malaysian Mining will be invited to buy equity in the project through the offering.

Previously, RTZ had agreed to bring in Venezuelan Goldfields (TSE) as a partner. But this was complicated by the PNG government, which unilaterally announced plans to bring in Malaysian Mining as the third industry partner. Vengold President Ian Telfer is “cautiously optimistic” his company will become a participant in the project by acquiring a 20% interest from RTZ for US$60 million, as originally planned. “We will not comment further until negotiations between RTZ and the PNG government are completed,” Telfer said. He noted, however, that if all goes well, the establishment of Lihir Gold should help the partners raise capital costs through a combination of new equity and project financing.

Estimated capital costs of developing Lihir are US$609 million, down from US$767 million following completion of a revised feasibility study. The project will be an engineering challenge in that it is in an active hot-springs region.

Proven and probable reserves were last reported (in late 1991) as totaling 98 million tons averaging 0.139 oz. gold per ton. Mine construction is expected to begin sometime next year.