Subsid's 2Q & Interim Results

RIO TINTO PLC
23 July 1999


39q

LIHIR GOLD LIMITED
ARBN 069 803 998
Incorporated in Papua New Guinea

QUARTERLY REPORT TO SHAREHOLDERS 30 JUNE 1999
     
Registered Office and Postal Address and Contact Numbers:

7th Floor, Pacific Place
Cnr Champion Parade & Musgrave St

PO Box 789, Port Moresby
Papua New Guinea

Lihir Island
Tel: [phone]
Fax: [phone]

Sydney         Tel: [phone]


FINANCIAL RESULT FOR HALF YEAR TO 30 JUNE 1999 in US$m

Highlights from Financial Statements (unaudited)

                                       1999        1998
                                       First Half  First Half

Gold sold Oz                           269,211     262,228
Average price realised US$/oz          361         346

Sales revenue                          97.3        90.9
Operating costs                        (92.7)      (69.2)
Profit before interest and tax         4.6         21.7
Financial costs                        (14.3)      (15.4)
Tax                                    3.1         (2.2)
(Net loss)/profit after
interest and tax                       ( 6.6)      4.1

Capital expenditure                    17.6        13.6
Cash flow before financing
and hedge sale                         (14.6)      7.1



                               Second      First       First
                               quarter     quarter     half
                               1999        1999        1999

Total cash cost per ounce      278         227         254


FINANCIAL RESULT FOR THE HALF YEAR

Lihir  recorded  a loss of US$6.6 million for the  half  year.
Revenue  was higher than in the first half of 1998 because  of
both increased output and a higher price realisation from  the
hedgebook.

During   June  Lihir  realised  US$29m  as  profit  from   the
restructure of part of its hedgebook which was closed out  for
that amount.  This profit is being recorded over the same time
period as would have occurred had gold been delivered into the
hedging   transactions   in   the  future,   and   accordingly
recognition of almost all of this profit has been deferred  to
future periods.

Costs were US$23.5 million higher than corresponding period in
1998  principally  due  to  an increased  depreciation  charge
(US$5.3 million, reflecting the lower reserve base adopted  at
the   beginning  of  1999),  autoclave  reline  costs  (US$4.7
million),  higher  lime consumption (US$2.7  million)  and  an
adjustment  to  the  rate of deferred  waste  credits  (US$4.0
million).

Because  of  the continued fall in the gold price  during  the
half  year,  the directors have formed the view  that  if  the
current  gold price environment prevails, Lihir will  adopt  a
lower  price  for  end  of year reserve calculation  purposes.
For  the half year to 30 June 1999 the assumed long term price
of US$350/oz has been retained.

Cash  costs for the quarter, after credits, of US$278/oz  were
adversely  affected by below capacity production  and  also  a
reduction  in  in-process inventory (US$14/oz).  Additionally,
costs  were impacted by the autoclave reline (US$14/oz) and  a
one  off  change to deferred waste mining credits  (US$28/oz).
Lihir  expects that higher production in the second  half  and
the  effect  of  negotiated and future  cost  reductions  will
result in significantly lower cash costs going forward.

FINANCIAL POSITION AT 30th JUNE

Net  debt at 30th June was US$223m, comprising debt of US$295m
and  cash  of US$72m. Shareholders funds were US$683m,  giving
net debt as a percentage of total capital of 25%.

At  the  end of June Lihir had hedged 2.444 million ounces  of
gold  at  an  average  price  of US$339/oz  through  committed
forward  sales and in-the-money options. The market  value  of
the hedgebook was approximately US$ 125 m.


The profile of the hedgebook was as follows:-

                                 Ounces
                   Year           000's            US$/oz

Spot deferred
sales                            1,195              273
                                   130              270
                                    38              287
Puts and forwards  1999            159              423
                   2000            315              422
                   2001            206              463
                   2002            201              463
                   2004-2008        40 per year     335

PRODUCTION FOR THE QUARTER

                             Second      First        Half year
                             quarter     quarter      to 30
                             1999        1999         June 1999
Mining
Material moved     kt        7,441        8,500        15,941
Ore mined          kt        1,174        1,542        2,716

Processing
Ore processed      kt        655          603          1,258
Average grade      g/tAu     6.93         7.24         7.08
Gold recovery      %         96.4         94.7         95.6
Gold poured        oz        142,630      128,329      270,959

Mine  production  for  the quarter  was  affected  in  May  by
industrial   action   involving  employees   of   the   mining
contractor.  The dispute involved a number of  issues  all  of
which were satisfactorily resolved through negotiation and did
not   affect   gold   production.  As  previously   announced,
reductions  in  both mining and blasting contract  costs  were
agreed during the quarter. The benefits of both these will  be
felt in the second half of the year.

The  geothermal  drilling program progressed well  during  the
quarter.  2 wells were drilled, with a maximum vertical  depth
achieved so far of 1,190 metres.

During  both  the first and second quarters only  two  of  the
three autoclaves were operating. The successful outcome of the
reline  of autoclave no 3 and the inspection of the other  two
autoclaves  was announced on 28th June.  It is  expected  that
autoclave no 2 will require relining at the beginning of 2000.
During  June  a  planned maintenance shutdown of  the  process
plant took place. No maintenance shutdown is scheduled for the
second half of the year although it is possible that parts  of
the  plant may be briefly shutdown at the very end of 1999 for
Y2K control purposes.

During the second quarter very good oxidation throughput rates
were achieved, in excess of 150 tonnes per hour per autoclave,
which is well ahead of the design rate of 125tph. Considerable
experience has been gained during 1999 of processing different
ores  without significant variation in throughput and a number
of  operational improvements have been put in place to  ensure
that this is sustainable.

Work  continued during the quarter on finding ways of reducing
lime consumption in a cost- effective way and this remains  an
objective for the second half of the year.

During  the  quarter the Praxair oxygen plant was successfully
commissioned and passed its completion tests. Construction  of
the  pilot  flotation  plant is on  schedule  for  the  fourth
quarter  with  major long lead items on order.  The  flotation
plant, which will have a capacity of 120 tonnes per hour, will
increase gold production as well as acting as a pilot plant to
help  determine  the  technical  feasibility  of  subsequently
installing a larger circuit for the possible flotation of  low
grade  ore.  It is intended to enrich sulphur grades,  thereby
improving  the  efficiency  of  the  autoclave  reaction   and
reducing costs.

The  pre-feasibility study into debottlenecking and  expansion
options  began during the quarter and the results are expected
in the fourth quarter.

EXPLORATION FOR THE QUARTER

Exploration  diamond  and  RC drilling  continued  within  the
Special  Mining  Lease  in  the  Lienetz-Minifie  bridge   and
Borefields  areas. Additional economic ore grade intersections
were  encountered  in both zones. Drilling  will  continue  on
these  targets to procure sufficient data for the  calculation
of a mining reserve.

South-east   Minifie  RC  infill  drilling  has  shown   grade
intersections which are on average above those in the  current
reserve  model  for  that  area, and an  extensive  follow  up
program is planned for the third quarter.

Regional  exploration continued in the Londolovit  Valley  and
Huniho Caldera with 455 geochemical samples collected. In  the
Huniho Caldera geological mapping was completed. Mapping, rock
chip  and  channel  sampling of old tracks in  the  Londolovit
Valley, Ilkot and Lakunbut areas is ongoing.

A  detailed geological interpretation of the Landsat TM,  JERS
SAR and aerial photograph data is in progress.

Additional resource and drilling will continue with the aim of
proving additional gold reserves within the mining area during
the second half of the year.

PRODUCTION OUTLOOK

On  8th July autoclave no 2 came into service following  minor
repairs,  and gold was produced from all three autoclaves  for
the first time in 1999, using additional oxygen from the newly
commissioned Praxair oxygen plant. Since that time  new  daily
records  for  gold  production have been  achieved  and  Lihir
remains  confident  that  it will produce  more  than  600,000
ounces of gold in 1999.

YEAR 2000

With  the upgrading of the power station control system during
the quarter, the program of upgrading critical on-site systems
for  year 2000 compliance was successfully completed, and will
be   followed   by   an  internal  audit.  Implementation   of
contingency  plans  for managing identified critical  off-site
risks  has  begun.  These  risks  primarily  involve  possible
disruption   to  the  operations  of  business  partners   and
suppliers   within   Papua   New   Guinea.    Lihir   actively
participates in a liaison program initiated by the PNG Chamber
of  Mines  and  Petroleum, and has put in place  a  number  of
preemptive  measures to reduce the Company's  exposure  to  an
acceptable level.

Contacts for Investor Information:
Michael Merton -  Chief Executive Officer  Tel [phone]
Bradley Mills  -  Company Secretary        Tel [phone]
Website: www.lihir.com.pg
Email: [e-mail]

Share Registrar:                        ADR Depositary:
Corporate Registry Services Pty Ltd     The Bank of New York
Level 32                                101 Barclay St 22 West
345 Queen Street                        New York
Brisbane Qld 4000                       New York 10286
Tel. [phone]                    Tel.[phone]