Lihir Gold and Equigold to merge

The companies stated their combined group would have world class assets in Australia, West Africa and Papua New Guinea, producing in excess of 1.2 million ounces of gold a year from 2009 at a cash cost in the lowest quartile of global producers.

The market capitalisation of the combined group will be approximately $9 billion (based on the closing share price of LGL shares as at 19 March 2008), securing its position in the top 30 companies in Australia and among the world’s largest gold producers.

The merger is to be achieved through a Scheme of Arrangement, with Equigold shareholders to receive 33 LGL shares for every 25 Equigold shares they own. Based on the closing prices of LGL shares as at 19 March 2008, the day prior to the announcement of the Scheme, the offer values Equigold shares at
approximately $5.33.

The merger will bring significant benefits to each of the companies and their shareholders. Directors of Equigold and LGL have unanimously supported the proposed merger.

The merged group will have an exceptional growth profile. The Bonikro project, in which Equigold holds an 85% share, is expected to be commissioned in July and will produce approximately 140-150,000 ounces in 2009.

At Ballarat, commercial production is scheduled to commence in the fourth quarter of the current year and the mine is expected to produce around 200,000 ounces per year for more than 20 years.

The Mount Rawdon mine is anticipated to produce in the vicinity of 100,000 ounces of gold per year for the next 10 years.

At Lihir Island, production is forecast to be at record levels of between 700,000 – 770,000 ounces this year, increasing to approximately 1 million ounces by 2011 following a US$696 million expansion of processing capacity.

- 07 Apr 2008