The leader of Papua New Guinea said Thursday night he welcomes the development of an ambitious gold-mining operation by Kennecott Corp. on Lihir Island in his Southwest Pacific nation.

The development of the large gold deposit on the island north of Australia, containing about 20 million ounces of mineable gold, will contribute to the economic development of the country, said Prime Minister Rabbie L. Namaliu."We are very pleased that a company of such reputation and good standing in the national mining community is present in Papua New Guinea," Namaliu said. "This is a project with a sizeable potential for development. We look very much forward to working with Kennecott to ensure that this development takes place."

The prime minister said the project appeals to government officials because the country greatly needs foreign investment to develop its infrastructure.

"It's not an easy task, but it's one that we're very pleased to have Kennecott involved in . . .," Namaliu said.

Kennecott President Frank Joklik said project officials will take precautions to preserve the local culture and land of the 75-square-mile island, which has a population of about 5,000.

Joklik also said island residents will be given first priority for jobs and Kennecott has instituted an on-island training program using craftsmen from its Utah copper operation to teach future workers basic skills in carpentry, cement work, cutting and welding for jobs in the mining operation. More than 300 Lihirians have graduated from the program, he said.

During construction, peak employment is expected to be 2,000, including 1,600 Papua New Guinea citizens. During the production phase the operation will employ about 1,400, including 1,100 Papua New Guinea citizens.

Kennecott has also provided health clinic operations, public works such as roads, churches and community centers and training programs since the project's inception in 1983.

The Utah economy will also benefit, Joklik said.

Final proposals for the plant will be presented to Papua New Guinea government officials by 1992, Joklik said. He said such proposals must address environmental consequences, as well as socioeconomic impacts on the nation's residents.

Joklik said, however, that the project is complicated by the existence of geothermal water in 25 percent of the ore body and the refractory nature of the Lihir ore, which requires an expensive pre-oxidation operation before the gold can be recovered.

The project will consist of an open-pit mine, a dewatering and geothermal control system, a plant for recovering gold from the ore, a power plant, port facilities and related infrastructure. Estimated initial capital costs are about $1 billion, Joklik said.

The mine life is estimated at 40 years. Average annual gold production will be about 400,000 ounces, but in the early years the annual production will be over 700,000 ounces.

A copper mine on the island of Bouainville in New Guinea was recently shut down by islanders unhappy with the compensation they were receiving and its impact on the environment, the prime minister said.

But he said he didn't think rebel activity would cause complications to the Utah-based operation, because Kennecott officials have promised to involve Lihir landowners and leaders.