LIHR Lihir Gold, Limited (MM)

Newcrest Mining Limited ("Newcrest") and Lihir Gold Limited (TSX: LGG)(ASX: LGL)(NASDAQ: LIHR) ("LGL") today announced that they have entered into a Merger Implementation Agreement ("MIA") under which it is proposed that Newcrest will acquire all of LGL's ordinary shares under a Scheme of Arrangement.

LGL shareholders will receive one Newcrest share for every 8.43 LGL shares they own, plus A$0.225 cash per share, less any interim dividend declared or paid by LGL for the half year ending 30 June 2010.

Based on Newcrest's closing price of A$32.06 on 3 May, the implied offer price from Newcrest is now A$4.03 per LGL share, valuing LGL at approximately A$9.5 billion. This represents a 6.4% improvement on Newcrest's previous proposal to acquire LGL as announced on 1 April 2010.

The implied offer price of A$4.03 per LGL share represents an attractive premium for LGL shareholders on a range of measures:

--  A 40.8% premium to LGL's closing share price on 12 February 2010, the
last trading day prior to Newcrest's approach to LGL in February;
--  A 29.5% premium to LGL's closing share price on 29 March 2010, the last
trading day prior to Newcrest's improved proposal in March; and
--  A 33.4% premium to LGL's 1 month VWAP to 29 March 2010.

A limited mix and match structure will also apply, giving LGL shareholders greater flexibility in the offer consideration (see further details below).

The directors of LGL unanimously recommend that shareholders vote in favour of the Scheme in the absence of a superior proposal and subject to an independent expert's opinion that the Scheme is in the best interests of LGL shareholders. Each LGL director will vote the voting rights attached to all LGL shares over which he or she has control in favour of the shareholder vote to implement the Scheme (in the absence of a superior proposal and subject to the independent expert's opinion that the Scheme is in the best interests of LGL Shareholders).

Newcrest Chairman, Don Mercer, said the combination of Newcrest and LGL has compelling strategic logic and merit, which was recognised overwhelmingly by shareholders of both companies.

"The combined organisation will be Asia-Pacific's leading gold producer, with a standout portfolio of long-life, high margin, tier one gold assets," he said.

Newcrest Managing Director and CEO, Ian Smith, said the combined portfolio of assets was unmatched in the global industry providing an outstanding platform to deliver superior returns to shareholders and offering significant opportunities for employees and other stakeholders.

"The portfolio of high quality operating mines and exciting growth opportunities will deliver long term, sustainable production growth within the lowest cost quartile of the global industry for at least the next 30 years," said Mr Smith.

LGL Chairman, Ross Garnaut, said "the LGL Board had recognised from the outset the highly complementary nature of Newcrest and LGL, and the strong strategic logic in combining the two organisations."

"We are therefore pleased to have secured an improved financial proposal that we can recommend to our shareholders," he said.

"Our shareholders will receive a highly attractive premium and, by receiving Newcrest shares, will participate in the benefits created by the combination of the two companies," said Dr Garnaut.

Implementation

The acquisition of LGL by Newcrest will be by way of a Scheme of Arrangement in Papua New Guinea ("PNG").

The Scheme is also subject to regulatory approvals and certain other conditions. For further details please refer to the MIA in Appendix 2 of this announcement.

A mix and match structure has been established so that LGL shareholders will have the opportunity to choose from the following alternative forms of consideration:

--  Mixed Consideration: As described above, being a fixed ratio of 1
Newcrest share for every 8.43 LGL shares, plus A$0.225 cash per share
(less any interim dividend declared by LGL for the half year ending 30
June 2010);
--  Maximum Shares: for LGL shareholders wishing to increase the scrip
component of their consideration; or
--  Maximum Cash: for LGL shareholders wishing to increase the cash
component of their consideration.

The Maximum Shares and Maximum Cash alternatives will be subject, respectively, to a maximum total share consideration of 280,988,130 Newcrest shares(1) and a maximum cash consideration of A$1.0 billion. The Directors of LGL unanimously recommend that shareholders elect to receive either the Mixed Consideration or Maximum Shares.

In total, the cash consideration of the transaction will range from A$533 million(2) to A$1.0 billion, with shareholders subject to scale back on a pro-rata basis if required. Shareholders who elect to receive the Mixed Consideration will not be subject to any scale back. The default option for LGL shareholders who do not make an election will be Maximum Shares.

Newcrest intends to fund the cash component of the consideration via internal financial sources.

Once the Scheme is implemented, LGL shareholders will own approximately 35.5% to 36.8% of the combined organisation, depending on the elections made by shareholders under the mix and match structure.

The Scheme is subject to approval by LGL shareholders at a vote anticipated to be held in late July 2010.

(1) Excludes any shares issued as a result of vesting of LGL employee options

(2) Excludes any additional cash that may be issued as a result of vesting of LGL employee options

Under the Merger Implementation Agreement signed today, LGL retains the ability to continue existing discussions with third parties until 8 June in connection with any competing control transaction for LGL, with no solicitation of further parties.

It is anticipated that LGL shareholders will receive Scheme documents in late June and will vote on the Scheme in late July, with completion of the transaction expected in August 2010.

Under the MIA, LGL has agreed to provide Newcrest with access to any information it requests on LGL, in order to complete confirmatory due diligence. This process will be completed on or before 8 June.

Grant Samuel will be appointed to prepare the independent expert's report to determine whether the Scheme is in the best interests of LGL shareholders as soon as reasonably practicable (and if possible by 8 June 2010).

The terms of reference for Grant Samuel will include consideration of the possible effect of the proposed Resource Super Profits Tax announced on 2 May 2010. In this regard, Newcrest has agreed with LGL to provide Grant Samuel with the access to relevant Newcrest information to allow Grant Samuel to complete its assessment.

The combined group

Combining Newcrest and Lihir forms a highly complementary portfolio of operating and development projects the foundation of which are the Cadia Valley, Lihir Island and Telfer operations that will generate a base load annual production of around 2.5 million ounces for many years to come. Supplementing these world class operations are:

--  One of the world's highest grade gold mines at Gosowong
--  Two recently commissioned medium scale operations at Bonikro and Hidden
Valley with brownfields growth potential
--  Two quality, smaller scale mines at Mt Rawdon and Cracow, both located
in central Queensland
--  Two large undeveloped resources at Wafi-Golpu and Namosi with the
potential to develop into major gold/copper operations
--  Significant greenfield growth potential in Cote D'Ivoire and Morobe
Province, PNG
--  Complementary mix of pure gold and gold-copper assets
--  Cash costs in the first quartile of the industry

The transaction will also combine complementary skill sets to drive further value opportunities:

--  Open pit, bulk underground and selective underground skills
--  Metallurgical expertise in flotation and refractory processing
--  Copper concentrate marketing skills
--  Strong technical expertise
--  Proven exploration skills

Further information on the benefits anticipated by Newcrest of the combination of Newcrest and LGL is set out in Appendix 1.

LGL and Newcrest shareholder information

To obtain further information, LGL shareholders can contact the LGL Shareholder Information Line on 1300 749 597 for shareholders located in Australia, and +61 3 9415 4665 for shareholders located outside Australia.

Newcrest shareholders can also obtain further information via contacting the Newcrest Shareholder Information Line on 1800 55 45 25 for shareholders located in Australia, or +61 2 9207 3630 for shareholders located outside Australia.

Newcrest is being advised by Lazard, Merrill Lynch and Allens Arthur Robinson.

LGL is being advised by Greenhill Caliburn, Macquarie Capital Advisers Limited and Blake Dawson.

Appendix 1: Further information on the benefits anticipated by Newcrest of the combination of Newcrest and LGL is available at the following link: http://media3.marketwire.com/docs/lihr0503appendix1.pdf.

Appendix 2: Merger Implementation Agreement is available at the following link: http://media3.marketwire.com/docs/lihr0503appendix2.pdf.

Contacts: Newcrest Mining Limited - Investors: Steve Warner +61 3 9522 5316 steve.warner@newcrest.com.au Newcrest Mining Limited - Media: Kerrina Watson +61 3 9522 5593 kerrina.watson@newcrest.com.au Lazard John Wylie +61 3 9657 8402 Merrill Lynch David Petrie +61 3 9659 2724 Lihir Gold Limited Joe Dowling GM Corporate Affairs +61 421 587 755 North American Investor Relations Cheryl A. Martin 303-386-4586 cmartin@martincorpcom.net Greenhill Caliburn Richard Phillips +61 9935 6806 Macquarie Capital Advisers Robert Dunlop +61 3 9635 8129 Macquarie Capital Advisers Michael Ashforth +61 8 9224 0644