Lihir Gold Ltd Final Results

Rio Tinto PLC
26 January 2001

        
The following release was announced by Lihir Gold Limited on 24 January 2001.
 
                  Fourth Quarter Production and Exploration                   
                          Report to 31 December 2000                          
 
 
HIGHLIGHTS OF THE QUARTER 
 
Production
 
* Gold production for the Quarter was a record 191,288 ounces. 
* Gold production in 2000 was 606,310 ounces. 
* Ore milled during the Quarter (942,257 tonnes) was a record. 

Costs (unaudited)
 
* Total Cash Costs for the Quarter were US$220/oz; Gross Cash Costs were
US$187/oz. Total Cash Costs were relatively high due to the discovery of
additional ore from West Minifie, affecting the Deferred Mining Cost
allocation. 
* Total Cash Costs for 2000 were US$ 236/oz; Gross Cash Costs US$240/oz 

Hedging
 
* An average gold price of US$379 was achieved partly due to gains made on
previous hedging positions closed out and brought to account this period. 
* Hedging was restructured following the recent refinancing of the senior
debt facility.  

Reserves and Exploration
 
* 5,866 m were drilled in North and South Minifie and the Borefields. Assay
results for the infill program generally were at or above expectations 
* Additional high grade and high sulphur ore continued to present itself in
the West Minifie geothermal area of the Phase 3 pit.  
CEO's REVIEW 
 
Commenting on the results, the CEO, Alan Roberts said, 'The past year has
been one of considerable achievement, rounded off with record production in
the fourth Quarter. This very strong last Quarter meant we exceeded our
annual production target of 600,000 ounces. This result was largely due to
the many initiatives taken to improve process plant reliability, helped by a
mine grade that was above expectations in the latter part of the year.
Importantly, relining of all the autoclaves with a new design brick lining
system has been extremely successful, as have projects to increase the
autoclave throughput rate. Most of all, this excellent result was achieved
through the grit and determination of employees and the goodwill of the local
community.'
 
ACTIVITIES REVIEW  
(please refer to the Attachment for the quarterly and annual production and
cost data)

Production  
 
     Performance
                          
                               Variance Report               
                         Percentage Change 2000 v1999        
                                                   Variance  
                   Total Material Moved               0.00   
                   Ore Milled                        17.3%   
                   Ore Milled Grade                 (14.6%)  
                   Gold Recovery                     (2.8%)  
                   Gold Produced                     (3.0%)  
 
     The reasons for the variances were as follows:
 
* The improvement in ore milled was a result of an increase in autoclave
  availability and throughput rates. In addition, an extra 5.2% was milled due
  to commissioning of the flotation plant early in 2000.  
* The reduction in ore grade in 2000 resulted from declining grade in Minifie
  pit, which was expected.  
* Gold recovery in 2000 was down due to gold losses in the flotation plant. 
* The reduction in gold production resulted from declining head grade, offset
  by improved availability and throughput rates. 
 
Mining

The planned major component change out on the haul truck fleet commenced with
engines and drive trains replaced on four of the haul trucks.
 
The fourth barge returned from scheduled maintenance at the Port Moresby
dockyard. The full complement of barges will now be available until mid 2003.
 
 
Process Plant

The operation achieved a quarterly gold production record of 191,288 ounces.
Total ore milled also represented a quarterly record .
 
A number of projects culminated in a significant improvement in grinding
thickener density. Autoclave feed density for December 2000 (in excess of 50
%) was considerably greater than previously achieved. This is very important
for efficient operation of the autoclaves.
 
Recent inspections of the autoclaves during scheduled shutdowns confirmed
that the new design brick linings, installed in the three autoclaves during
1999 and first half of 2000, are in excellent condition.
 
Costs 
                                                                   
                               Total Cash Cost                                
                                           Fourth Quarter     Full year 2000  
                                                2000                          
  Gross Cash Costs              US$/oz          187                 240       
  -     Deferred mining costs                    48                  26       
  -     low grade stockpile                      (6)                (13)      
        adjustment                                                            
  -     inventory adjustments                     3                 (13)      
  -     corporate expenses                      (12)                 (4)      
  * Total cash costs                            220                 236    
   
* Gold Institute Standard


Gross cash costs for the quarter benefited from continuing cost reductions
and high production. Total cash costs were impacted by deferred mining costs
being brought to account which was the result of unscheduled volumes of
high-grade and low-grade ore in Western Minifie.
 
Gross Cash Costs in 2000 were US$16 million less than 1999 - a measure of the
effectiveness of the cost reduction program and in particular the take over
of mine operations from the contractor in April 2000.
 
Health, Safety and Environment  
 
There were two lost time incidents during the quarter, giving a 12-month Lost
Time Incident Frequency Rate of 0.35 per 200,000 hours (A lost time Incident
is when a person cannot return to normal work duties the following shift).
The Lihir operation has a three-star NOSA (National Occupational Safety
Association) rating.
 
There were no reportable environmental incidents during the Quarter.
 

RESERVES AND EXPLORATION 
 
The drilling program concentrated on the North Minifie area (providing infill
data into the planned Phase 4 North cut), the Borefields area (providing
further delineation to the known mineralisation in this area) and additional
geotechnical drilling around the South Minifie limits. In total, 27 holes for
5,866m were completed. Assay results for the infill program generally were at
or above expectations.
 
Results from the Borefields area have confirmed the narrow nature of the ore
shoots in the area. The new information will assist more accurate
interpretation and increased confidence in the orebody model.
 
Century Resources commenced 'hot hole' drilling on the Lienetz program late
in the quarter. A second rig has been mobilised to site and will commence in
January 2001. This program will concentrate on infilling and extending
reserves in and around the Lienetz deposit.
 
Geothermal drilling of steam relief wells continued in the Lienetz area
during the quarter. Drilling conditions were mixed, with one well abandoned
but three wells completed ahead of schedule and without drilling
difficulties. Production testing of the completed wells is scheduled for
early 2001.
 
In November 2000, a geothermal well was brought into production in the West
Minifie area, and has produced steadily the equivalent of more than 8MW,
which further enhances the potential for geothermal power production.
 

REFINANCING  
 
The ABN-AMRO loan facility was signed on 22 November 2000. Under the new
US$50 million facility, the interest rate reduced from 4.8% over LIBOR to
2.9% over LIBOR. The new loan will extend to June 2005 (instead of June 2003
under the previous facility) and will carry Lihir through the period of high
stripping ratios and low grades prior to accessing the Lienetz deposit in
2004. The facility is due for repayment as follows:
 
* 30 June 2003      US$10 million 
* 30 June 2004      US$10 million 
* 30 June 2005      US$30 million 
 
HEDGING 
 
The hedging position has been restructured following the recent refinancing
of the Company's senior debt facility. The major changes made are:
 
* Novation of the main loan forward sales and put option structure to
  release US$42.6m of cash by reducing the average strike price by US$103/oz  
  on 458,035 ounces. 
* Conversion of 364,942 ounces of spot deferreds to forwards in December
  2000 with the remaining 130,000 ounces to be converted by early February
  2001. 
* Replacement of the collar structure with puts and forwards. 
* Implementation of new hedging with a total of 112,500 ounces of forward
  sales based off a spot of US$274 per ounce for delivery over the period     
  March 2003 to June 2005. 

As at 31 December 2000 Lihir's hedge book amounted to 1,952,971 in the money
ounces as shown in the following summary:
 
                                                                            
  Hedging Position 31/12/00                                                   
               Spot Deferreds            Forwards         Put Options Bought  
              Ounces      Price     Ounces      Price      Ounces     Price   
   Q1 2001    130,000    $290.47    127,419     $318.71                       
   Q2 2001                          127,522     $321.25                       
   Q3 2001                          125,282     $323.29                       
   Q4 2001                          125,282     $327.63                       
    Total     130,000    $290.47    505,505     $322.70       0        $0.00  
     2001                                                                     

     2002                           480,024     $342.68                       
     2003                           328,000     $323.66                       
     2004                           188,000     $323.52    20,000     $335.00 
     2005                           161,441     $335.57    20,000     $335.00 
     2006                            20,000     $335.00    20,000     $335.00 
     2007                            20,000     $335.00    20,000     $335.00 
     2008                                 0       $0.00    40,000     $335.00 
              
               130,000    $290.47   1,702,971   $330.11    120,000    $335.00 

 
CORPORATE 
 
As reported during the Quarter, Niugini Mining (Australia) a wholly owned
subsidiary of Lihir Gold Limited, resumed control of the Red Dome mining
lease in North Queensland by terminating the sale agreement. The matter is
now before the Supreme Court of Queensland.
 
OUTLOOK 

Lihir's production target for 2001 is 600,000 ounces. Although gold grade
from Minifie will decline, mining rate is being increased from 37 to 46
million tonnes per annum with the dual objective of maintaining grade
sufficient to produce more than 600,000oz in 2001 and to access the high
grade Lienetz deposit earlier.
 
As noted above, re-bricking of the autoclaves has been very successful. Also,
over the past 12 months downtime for scheduled maintenance of an autoclave
has been reduced from 14 to 7 days, which is world best practice. Time
between shutdowns for each autoclave has been pushed out from 6 to 8 months.
Consequent upon these improvements is that autoclave availability will
increase in 2001. Similarly, following continuous improvements to autoclave
design and feed presentation, autoclave throughput in December was almost 10%
higher than the average for 2000, and planned, throughput rate.
 
It was always recognised that sulphur grades in Minifie would decline.
Sulphur is required above a threshold level to ensure efficient operation of
the autoclaves. Early in 2000 a sulphur flotation plant was introduced to
increase sulphur grades to the autoclaves and this initiative has been very
successful. The next step to ameliorate declining grades is to recover heat
from the tail end of the autoclaves and recycle it to the feed. A heat
recovery plant is being engineered by Hatch and will be commissioned during
3rd Quarter 2001. We are optimistic that the plant will not only compensate
sulphur levels but will give a further boost to throughput rates.
 
Power demands have increased as a result of a deeper pit and the plant
operating consistently at peak levels. A 12th power generator will be
commissioned mid-year to relieve this potential constraint. The geothermal
fields are capable of sustaining at least 11 MW of power. Tests are underway
to investigate the feasibility of harnessing this power and, assuming they
are successful, it is expected that a geothermal power unit will be readily
justified in 2001.
 
It is expected that the autoclaves will require rebricking about 2005. For
three autoclaves this represents a substantial loss of availability during
this period of time. In 2000, the Board authorised a feasibility study to
confirm the viability of installing a 4th autoclave ahead of 2005. This study
will also assess the benefit of increasing grinding and flotation capacity so
that the use of available oxygen and autoclave capacity can be maximised.
 
Downward pressure on costs will continue and it is expected further cost
savings will be achieved in 2001. The main potential for cost reductions
continues to be in improved mine efficiencies. The recent announcement by the
PNG government that the 4% mining levy will be phased out over four years
will eventually provide a benefit of about US$7 million per annum.
 
For further information, please contact:
 
 
LONDON 
 
Media Relations                     Investor Relations 
Lisa Cullimore                      Peter Jarvis
+ 44 (0) 20 7753 2305               + 44 (0) 20 7753 2401
 
AUSTRALIA 
 
Media Relations                     Investor Relations 
Ian Head                            Dave Skinner
[phone]                 [phone]                       
      
                                    Daphne Morros
                                    [phone]
 
Website: www.riotinto.com

 
Notes to Editors 
 
Rio Tinto owns 16.3 per cent of Lihir Gold Limited.
 
 
 
 
Attachment to Fourth Quarter Production Report to 31 December 2000 
 

                                                                              
  Production and              Second      Third      Fourth     Full     Full
  Financial Data             Quarter    Quarter     Quarter     Year     Year 
                                2000       2000        2000     1999     2000
                                                                      
  Mine                                                                        
  Ore mined      kt     2,508   2,676   2,438(a)    2,797    10,419     6,850 
  
  Material        
  moved          kt     9,165   8,053  10,015(b)    8,882    36,115    36,355 
                                                          
  Processing                                                                  
  Ore milled     kt       792     841       838       943     3,414    2,911 
  Grade          gAu/t   5.27    5.64      6.37      6.63      6.01     7.04  
                                                                          
  Recovery       %       90.5    92.7      91.7      91.5      91.6     94.3  
  Gold poured    Oz   121,490 141,203   152,329   191,288   606,310  625,147
                                                                    
  Revenue / Costs                                                             
 (Unaudited)                                                                  
                                                            
  Gold Sold      oz   125,635 131,014   153,123   201,857   611,629  617,450
                                      
  Average cash    US$/oz   421     398       304       348       363     335 
  price received                                                              
                                                  
  Average         US$/oz   427     406       311       379       378     341 
  price received                                                              
  include deferred                                                            
  hedging gains  
                                                             
  Gross cash cost US$/oz   314     251       248       187       240     258  

  deferred                 (5)      16        33        48        26     (21) 
  mining costs          

  low grade stockpile     (35)    (23)      (4)       (6)      (13)      (15) 
  adjustment              (23)    (10)     (28)        3       (13)       (3) 

  inventory                (2)      -         -       (12)       (4)      (2) 
  adjustments              250     235       249       220       236      217 
  corporate expenses
                                                                              
                                                                              
 TOTAL CASH COST                                                              
         
(a) includes a (162)kt retrospective adjustment relating to prior quarters.
(b) includes a 1,281kt retrospective material density adjustment relating to
prior quarters.