viewGeopacific Resources Ltd

Geopacific Resources on target for first gold pour in fourth quarter 2022 as it progresses high-margin Woodlark Project


The next 12 months will be important for the company as it continues to develop the Woodlark mine and move it towards production.

Geopacific Resources Ltd - Geopacific Resources on target for first gold pour in fourth quarter 2022 as it moves forward with high margin Woodlark Gold Project

Quick facts: Geopacific Resources Ltd


Price: 0.3 AUD

Market Cap: $155.77 m

Geopacific Resources Ltd (ASX:GPR) is on target for the first gold pour in the fourth quarter of 2022 as it moves ahead with its high-margin, high-returning and shovel-ready Woodlark Gold Project in Papua New Guinea. 

The next 12 months will be significant for the company as it continues to develop the Woodlark mine and move it towards production. 

It is fully permitted to commence operations with all mining and environmental approvals in place. 

Further, following the securing of US$100 million project financing and the final investment decision to develop the project, the company is fully funded to first production. 

Significant and exciting steps

Geopacific Resources chief executive officer Tim Richards said: “The June 2021 quarter saw the company take significant and exciting steps towards the development of the high margin Woodlark Gold Project.

“The financial close of US$100 million in project financing with Sprott, coupled with the funds raised via our equity placement earlier in 2021, provides the capital required to fully fund the project to first production.

“Development activity continues on-site with the company advancing early work packages associated with the Woodlark Gold Project.

“The activities reflect our commitment to the project and ensure that all long lead time items are ordered and sourced, enabling the project schedule to remain on track for targeted first gold in Q4 CY2022.

“The next 12 months will be significant as we continue to develop the Woodlark mine and move towards production.

“I look forward to providing further updates to the market on our activities in coming periods."

Strong economics

The project has strong economics, including a post-tax net present value of A$347 million and an internal rate of return of 34% at a gold price of A$2,200 per ounce.

Average all-in sustaining cost (AISC) is forecast at A$1,239 per ounce over the 13-year mine life and there is significant exploration upside.

The project is a simple, low-risk operation with conventional open pit mining and standard carbon in leach (CIL) process plant.

These operating metrics deliver average post-tax cash flow of A$100 million per annum over the first five years.

Early phase works

In May 2021, Geopacific Resources signed an early works contract with Contract Power Australia for the procurement of long-lead time items associated with the development of the project power station. A Letter of Intent was issued to support the placement of order for the first phase of mining equipment.

An order was also placed by GR Engineering Services for the procurement of the SAG and ball mills.

The company said site preparation and detailed design works were well advanced with its workforce and access to site remaining unaffected by COVID-19.

It is on track to achieve targeted first gold pour in the fourth quarter of 2022, in line with the November 2020 Project Execution Update.

Woodlark growth strategy

The growth strategy revolves around increasing reserves and inventory to the current mine plan.

Optionality exists to de-bottleneck and expand the mill footprint to accommodate increased ore feed and all drill-defined resources remain open along strike, down dip and at depth.

Its exploration budget will be managed with the available cash flow and project development timing.

Its three-phase exploration strategy is:

➢ Pit extension exploration:

All three operational pits - Busai, Kulumandau and Woodlark King - have significant exploration upside.

➢ Mineral Lease

Substantial land holding is available for exploration post completion of pit step-out drilling, with numerous highly prospective targets identified within the Mining Lease, with visible gold at surface.

All the currently identified targets are proximal to the planned mill location.

The broader mining lease exploration is scheduled to commence once existing pit limits are fully delineated.

➢. Regional step out on to exploration leases

There is a substantial land package extending over a large proportion of the island, with a large number of gold and copper surface outcrops to be evaluated.

The longer-term focus is on the Exploration Lease with numerous gold and copper surface outcrops/soil anomalies identified.

Regional exploration will be highly cost-effective once the project is operational, with only incremental down the hole and assay costs to be funded.

Achieves financial close

During the June quarter, the company completed binding terms and satisfied all conditions precedent to reach financial close with Sprott Private Resource Lending II (CO), Inc for the US$100 million project financing associated with the development of the Woodlark Gold Project.

The financing will be in the form of a US$85 million Project Finance Facility and US$15 million via a Callable Gold Stream, with the US$15 million Callable Gold Stream deposit available immediately.

The US$85 million is now available under staged drawdowns scheduled to occur with meeting certain project development milestones.

With A$255.9 million of cash and equivalents as at June 30, 2021, the project is now fully funded.

Disposal of non-core assets

Geopacific believes that delivering the Woodlark Gold Project into production will generate the greatest return for shareholders and as such, it has reviewed the holding of its non-core assets.

It is in talks with the vendors of the Kou Sa Copper-Gold Project in Cambodia to dispose of its interest in the project.

As for its Fijian gold projects, all licences have been relinquished.

Community and social responsibility

Richards added: “We continue to engage with our local communities and importantly we continue to receive their positive support.

“Our local employment and training strategies are beginning to be implemented and we continue to develop sustainable investment and development initiatives.”

A key focus during the quarter was to support the election of the Dal Wanuwan (Woodlark Landowners Association) executive, and the election and appointment of the board positions for the Landowner Umbrella Company (MDAL), which manages landowner business activities and other landowner investments along with the sub-clan investment companies.

Registration of these business entities will now be finalised and training for the newly appointed directors is being arranged for late July in conjunction with the Department of Commerce and Industry and the Investment Promotion Authority.

During the quarter, a number of community assistance projects, included the maintenance of buildings at several schools across Woodlark, the supply of community water tanks, land preparation for the construction of a community church and road maintenance works.

COVID-19 vaccinations

During the quarter Geopacific worked with the Milne Bay Provincial Health Authority to commence the rollout of the Astra Zeneca COVID-19 vaccine on Woodlark Island by transporting the vaccines from Alotau and providing transport and logistical support on the ground.

Geopacific remains committed to providing assistance to ensure this critical health initiative is implemented as rapidly as possible.

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