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Lihir Production Update and Sustaining Capital Program

24 February 2012

Lihir is experiencing a production disruption caused by a failure detected in the post autoclave final discharge deaeration tank and continued erratic processing plant restart performance.  The tank has been repaired and the plant has been restarted, however a series of minor electrical and mechanical issues continue to cause intermittent plant shutdowns.  Each instance causes the plant to lose efficient production for two to three days.  These plant reliability issues are expected to adversely impact the March quarterly production of the Company by 50,000 to 60,000 ounces.

Newcrest has now owned the Lihir operation for 18 months and believes the existing plant is suffering from long term underinvestment in fixed plant maintenance. The production performance has been unacceptable versus Newcrest's pre-acquisition expectations.

Newcrest has completed a detailed review of the maintenance plan for the plant. The plan is being executed to progressively rectify vulnerable and unreliable parts of the older plant.  Sustaining capital expenditure at Lihir is under constant review and is currently forecast to be around A$200 million per annum for the next few years to support this program.  

Newcrest's financial year 2012 production and cost guidance is being maintained but is under pressure; delivery will largely depend on the performance of Lihir over the next 4 months. Newcrest expects to run Lihir at 65,000 to 75,000 ounces per month for the rest of financial year 2012 but there is an increased probability of production disruption due to the heavy maintenance program being implemented to improve longer term performance.

This production disruption has not impacted the Lihir MOPU project which remains on schedule and on budget.  Newcrest remains confident in realising its medium and long term production forecasts for the Lihir operations, as set out in our August 2011 guidance.

 

For further information, please contact:

Investor Enquiries – North America/Europe

Steve Warner
T: +1 212 351 5064
E: steve.warner@newcrest.com.au

Investor Enquiries – Australia/Asia

Kim Kerr
T:  +61 3 9522 5316
E: kim.kerr@newcrest.com.au

Media Enquiries

Kerrina Watson
T: +61 3 9522 5593
E: kerrina.watson@newcrest.com.au

This information is available on our website at www.newcrest.com.au.