The highly promising Woodlark gold project in Papua New Guinea is now at the project financing stage and could progress to construction in the near-term once financing has been completed and final approvals received from the PNG government.
Geopacific Resources Limited Managing Director Ron Heeks said the Independent Technical Experts' (ITE) report had been completed after five months and validates key technical aspects of the project.
"The timeframe for the go-ahead of the project will depend on project financing he explained. "It's difficult to put an exact date on when this will be finalised, but we have made strong advancements with the ITE report now completed."
The Woodlark Gold Project is situated in the acclaimed Pacific ‘Rim of Fire' on an island in the Milne Bay Province of PNG surrounded by worldclass gold mines including Newcrest's Lihir Gold Mine and St Barbara's Simberi.
Geopacific secured 100% ownership of the project from Kula Gold Ltd (Kula) in June 2019, and the pre-existing joint venture agreement with Kula was extinguished.
Heeks said the focus for Geopacific was then directed towards work programs to advance debt financing discussions, which in turn led to the ITE review. The ITE review is a standard form of technical due diligence when seeking project financing in the industry.
"Following consultation with a consortium of potential lenders we appointed SRK Consulting and ERM Consulting to review all technical and environmental aspects of the project, he said. "An indicative non-binding term sheet from an international lender has been received and the completion of the ITE, will allow us to advance a financing solution.
"Geopacific is now well-placed to develop the project into production after securing 100% ownership of Woodlark. This was a significant step forward as it simplified financing discussions and cost structures.
"We released the definitive feasibility study (DFS) in November 2018, which demonstrated a compelling development option, both from a technical and financial perspective. Project economics are driven by low costs, a positive operating environment and a simple processing route.
"Woodlark is a high margin project. The DFS gold price assumption of $AU1,650 per ounce demonstrated robust financial results. The project is now expected to benefit from further upside with the gold price at record highs above $AU2,000 per ounce. The DFS gold price sensitivity analysis indicates a 78% increase in total free cashflows, driving a rapid project payback of 1.4 years (pre-tax)."
Heeks said Woodlark ticked all the boxes.
"It is a profitable project with a very low waste to ore ratio - three tonnes of waste to every one tonne of ore. This is considerably better than most open pit operations and presents considerable cost savings. Woodlark also benefits from a very supportive local community and being situated on a flat island that has an excellent safe harbour.
"Woodlark is quite a large island, about 70 kilometres by 20 kilometres, and has a population of approximately 6,000 people, who speak English. It's basically subsistence living - farming and fishing - with no running water or power. The majority of our workforce will be local community.
"We will only bring in senior technical people and plan to run extensive training programs for the local labour force. It works both ways as the community gains job opportunities and skills training and because we won't have to incur costs usually associated with flying the labour force in and out.
"It's going to be life-changing for the local people, with the project sharing financial benefits directly with the community and providing a number of social, educational and health benefits.
"Woodlark was the first registered goldfield in Papua New Guinea and has several levels of underground shafts from the turn of the century. There's been a lot of activity on the island over a number of years. We've inherited from previous owners more than $A150 million in historic spend on Woodlark, which included a wealth of drilling data from more than 275,000 metres of drilling."
In addition, Geopacific's team has undertaken a further 30,000m of drilling and a rigorous process of review, validation and re-interpretation of geological data to create a clear view of existing resources.
The work conducted to date and the region's gold mining pedigree have combined to give the company confidence in the gold prospectivity of the island.
On top of that, the island is relatively flat, unlike Misima, Lihir, Simberi and many of the PNG mainland gold mines. This eliminates many logistical issues and provides a positive operating environment which can be serviced through the large harbour.
"We'll be building a port facility on the other side of the bay from the population centres," Heeks said. "At the moment we're helping the local community with activities such as building churches as well as a new village to replace an old settlement which was built during earlier mining.
"We're providing assistance and direction, but the local community are doing their own work. It helps create a sense of ownership."
In 2014, Kula received full permitting for a term of 20 years for the development of a 1.8 million tonne per annum gold mining operation following a comprehensive review by the PNG Mineral Resources Authority.
Heeks said the gold project has mining and environmental licences in place, but the company was waiting on amendments that reflect the improved operating strategy to be cleared by the PNG government.
"There's a lot of uncertainty in PNG at the moment with talk of resource nationalism. However, we have confidence in the proven mining industry that has a long history of attracting foreign investment through mining and exploration.
"We can help by providing job opportunities and other health and social benefits that arise from mining. The great thing about mining is that the love does get spread around. When you look at exploration and mining, so many benefits are created both locally and for the country," he said.
Geopacific also has a copper-gold project in Preah Vihear province in Northern Cambodia's Chep District, near the border with Laos.
The company has explored Kou Sa for copper and gold since 2013 and released an initial JORC compliant resource in July, 2016.
Economic studies indicate the potential for an open pit mining operation with a simple flotation plant to produce a copper-gold-silver concentrate, however the Company is currently focused on developing Woodlark.