A two-year study of the Panguna mine -- located on the autonomous island of Bougainville -- found that mine structures had "deteriorated", while "tailings continued to migrate downstream and chemicals continue to be released".
The Rio Tinto-commissioned study, conducted by environmental firm Tetra Tech Coffey, found that in some areas, buildings, bridges or the ground itself were "unstable and may collapse".
This poses the risk of harm, injury or death to the local community, according to the report.
The mining giant has for years been accused of sidestepping responsibility for cleaning up poisonous waste at the vast mothballed copper and gold mine.
Rio Tinto's Australian chief executive Kellie Parker said the "comprehensive assessment" marked an important milestone in understanding the long-term impacts of the mine.
"While we continue to review the report, we recognise the gravity of the impacts identified and accept the findings," she said in a Friday statement.
Parker acknowledged it would take time, but vowed to work closely with stakeholders to ensure the legacy of the mine was addressed in a "fair and equitable manner" for impacted communities.
The report found that tailings from the mine -- which run into the Kawerong-Jaba River -- had "permanently changed the river system" and it would not "naturally return to how it was before the mine for at least 100 years".
The river system also posed a risk to the communities' health and high metals in soil that made plants difficult to grow, the report said.
But there were still some water sources that people could safely drink, bathe and swim in.
The report made 24 recommendations, including outlining areas that need further investigation, which will be considered by relevant stakeholders to determine the next steps.
Australia's Human Rights Law Centre, which helped organise legal action against Rio Tinto, said communities continued to live with the "devastating impacts of the mine".
"Mine infrastructure is crumbling, putting lives at risk. Villages are being flooded and communities cut off from access to water and essential services," the centre said in an update on its website.
It vowed to continue working with the community.
The mine is estimated to still hold more than five million tonnes of copper and 19 million ounces of gold -- worth billions of dollars at current market prices.
The Panguna mine, which operated between 1972 and 1989, was one of the South Pacific's largest mines.
But anger among locals over the environmental damage and distribution of profits triggered an uprising that forced its closure.
The ensuing civil war left up to 20,000 people dead -- about 10 percent of Bougainville's population at that time.
As part of a 2001 peace agreement that ended the civil war, Bougainville voted overwhelmingly to gain independence from Papua New Guinea.
lec/cwl
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