Prior to mine development, exploration drilling within the Luise Caldera on Niolam Island encountered gold mineralisation to the northwest of the main Minifie and Lienetz orebodies. This mineralisation was referred to as the Kapit orebody, and ten diamond drill holes were subsequently completed over the area to investigate its economic potential. Several significant mineralised intercepts were returned. These were interpreted using the orebody model developed for Lihir at that time which invoked a strong horizontal control to mineralisation. Additional consideration was given to the elevated geothermal temperatures encountered, the proximity of the mineralisation to the ocean, and its perceived depth below sea level, resulting in the Kapit area being given a low priority for follow up investigation. As a result, no further work was completed over Kapit until recently._x000D_
The Kapit orebody was the target of an intense diamond drilling programme during 2002/2003. Data from this latest round of drilling has significantly improved understanding of the mineralisation and associated geology. The significant orebody now delineated at Kapit substantially differs from past interpretations, and the latest data has upgraded its economic potential._x000D_
A resource estimate and other critical studies completed in 2003 enabled an updated reserve statement to be issued in February 2004 including the Kapit mineralisation for the first time. Total Probable Reserves at Kapit stand at 25.2 million tonnes (Mt) at 5.28 grams of gold per tonne (g Au/t), for a total of 4.3 million ounces (Moz) of contained gold.