Category Archives: Exploration

Geopacific stitches up Woodlark gold project in PNG

The colonisers eye up their pot of gold

Matt Birney | Company Advertorial | The West Australian | 26 June 2019

Geopacific Resources has acquired 100% direct ownership of the flagship Woodlark gold project in Papua New Guinea, buying out fellow Australian Kula Gold’s remaining share in a cash and scrip transaction worth about $3.29m.

Kula will immediately utilise the cash component to repay a loan totalling about $0.72m to Geopacific.

The deal seems like exquisite timing for the company, with the gold price nearly 25% higher than that assumed in November’s definitive feasibility study for Woodlark, which already outlined robust economic metrics and strong margins to develop the project.

Additionally, full ownership streamlines the corporate structure with significant administrative cost reductions and importantly reduces the risk to external financiers, willing to fund the project’s start-up.

Geopacific Managing Director Ron Heeks said: “Moving to 100% ownership of the 1.6Moz Woodlark gold project is a major milestone for the company. Full ownership simplifies project financing discussions and further enhances the company’s attractiveness and general market appeal … (with) additional benefits … (including) a substantial reduction in corporate costs.”

“The timing of the transaction coincides with the near completion of project finance due diligence and a strengthening gold price that is well above the DFS pricing assumption of AUD$1,650/oz. Progression in these work streams alongside the increasing gold price is a positive step in taking advantage of the increasing margin.”

The company is now racing down the final lap with baton in hand and is currently in the closing stages of an Independent Technical Experts, or “ITE”, review of the gold project, with representatives attending a site visit to Woodlark Island this week.

Back in January, the ITE review was commissioned by a consortium of banks and non-bank lenders, after an indicative non-binding term sheet was received.

Perth-based SRK Consulting was appointed as the lead ITE to review the technical aspects of the Woodlark project on behalf of the group of potential lenders.

SRK completed an initial Fatal Flaws Review late in 2018, with none being identified for the project.

With the gold price only strengthening since, the free cash flow position of the proposed initial 13-year mine life project has ballooned with Mr Heeks saying in January: “Every AUD$10 (per ounce) increase in the gold price is an additional ~AUD$10m in revenue which is considerable upside for the +1Moz project …”

November’s DFS study optimised the project at AUD$1,650 per ounce and produced a pre-tax free cash flow of $424m.

Geopacific recently received indicative costs to build the proposed gold processing plant on Woodlark Island from three international standard contractors.

The company said that an initial review of those costs showed that the pricing is in line with the DFS parameters completed last year by Lycopodium.

Total capital establishment costs for the Woodlark gold project come in at just under $200m, with a third of those monies required to construct the processing plant, which is very respectable considering the relatively isolated overseas location.

With respect to the near completion of the ITE review of Woodlark, Mr Heeks added: “The ITE review is progressing well and Geopacific is confident with the technical aspects of the DFS completed by industry-leaders Lycopodium, Mining Plus and MPR Geological.”

“The results from the initial ITE fatals flaws review (built) confidence in the Woodlark project in addition to the conservative approach undertaken in calculating the (mineral) resource. The resource estimate uses a fully diluted resource model with a significant dilution factor.”

“This provides additional comfort that mining at the estimated grade is achievable. The Woodlark deposit is a permitted project with robust economics that are improving with the current gold price ~AUD$350/oz higher than that used in DFS.”

Last month, the company appointed Ian Clyne as its new Chairman to actively drive financing arrangements for the gold project.

Mr Clyne has been part of the company’s board since 2016 and brings with him a wealth of corporate experience including most recently as Group CEO of Bank South Pacific Limited, based in PNG’s capital Port Moresby for five years.

It was a strategic move for Geopacific, with Mr Clyne being a strong advocate for PNG’s potential and its people and holding a high level of commitment to social and community issues within the mainly rural population of the developing country.

Commenting at the time, Mr Clyne said: “As the Chairman of Geopacific, my priority is to drive the Woodlark gold project towards a successful project finance outcome that will maximise shareholder and stakeholder value and returns.”

“Woodlark Island is one of the most prospective regions of PNG and we take great pride in our positive relationships with the local community, the National & Provincial Governments, and the regulatory authorities who have also demonstrated strong levels of support for the permitted … project.”

The Woodlark project holds an ore reserve of nearly 29 million tonnes grading 1.12g/t gold for 1.04 million ounces, contained within a broader JORC-compliant mineral resource estimated at 1.57 million gold ounces.

This gold resource is also likely to build over time as the project has extensive gold and copper exploration potential, in a region where Geopacific holds the dominant land position on the 912 square kilometre area of Woodlark Island.

Once in production, the company will likely be able to self-fund and potentially sustain its mining operations at the Woodlark gold project to beyond the initial 13-year mine life.

The project area is blessed with flat terrain and soft outcropping ores with average metallurgical gold recoveries exceeding 90% during the first five years of production.

All permitting is granted and the project enjoys strong community support in the proven mining investment hub of PNG.

With full ownership of the exciting project within its grasp, the gold price behaving itself and a new Chairman at the helm, Geopacific now has clear air ahead towards the construction, development and ultimately gold production at the impressive and undervalued Woodlark project.

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Drop In Mineral Exploration ‘Threatens Mining Industry’

Mineral exploration in Papua New Guinea

Melisha Yafoi | Post Courier | June 19, 2019

The steady decline in exploration activities particularly mineral exploration is a grave concern for the mining industry [but really for nobody else!].

PNG Chamber of Mines and Petroleum president Gerea Aopi said yesterday that the sector has been depressed and it is of grave concern for the chamber and the industry.

Mr Aopi said the decline threatens the sustainability of the mining industry which has been the back bone of PNG’s economy for more than three decades, adding that exploration is the lifeblood of a vibrant resource sector.

While commenting on this, he said they want to work more closely with the government on the revised Mining Act as it is an important policy that has taken more than a decade to complete.

Mr Aopi said the industry is concerned that some of the changes that have been proposed will have severe negative impacts on the immediate and long-term both existing and proposed projects, to the detriment of PNG’s economy.

“It is important that fiscal and regulatory settings achieve a balance between the expectations of the people, good governance of the nation’s mineral wealth, and the requirements for attracting long-term investments.

“A sound legislative framework provides for a fair distribution of returns between the developer and the state, security of tenure to its investors, and stability of investment terms,” he said.

Mr Aopi said recently the chamber and the mining industry together have contributed to the review currently being undertaken by the government on the country’s Mining (safety) Act and regulations.

“We are fully supportive of this process and are happy with the close collaboration we are having with the government on this review process.

Having an up to date regulation that ultimately promotes the safety of our mine workers and our operation is paramount,” he said.

“We are also ready to support the government’s vision to establish a petroleum resources authority. “We’ve stated publically that industry’s position on many occasions and our position remain steadfast.”

Mr Aopi said the establishment of a strong, robust and efficient regulator that is financially autonomous will have the capacity to promote increased oil and gas exploration and assist the government in regulating petroleum industry activities.

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NZ Māori disappointed ancestral land up for tender for oil and gas drilling in Taranaki

Land covering 2200 square kilometres around Mt Taranaki has been put up for tender for oil and gas drilling. Photo: RNZ / Rebekah Parsons-King

Leigh-Marama McLachlan | Radio New Zealand | 5 May 2019 

Iwi in Taranaki are upset the government has put their ancestral land up for oil and gas drilling.

The latest block offer, announced this week, covers 2200 square kilometres of land around Mt Taranaki.

Ngāti Ruanui chief executive Debbie Ngarewa-Packer said it stirred a feeling of anxiety they know too well.

“The whole community is caught up on what happens if they come. What happens if they are irresponsible around our wāhi tapu?

“What happens if they ruin our whenua and then go off when they have found nothing and dug holes everywhere?

“A community with uncertainty can’t reach its full potential.”

This is the first block offer for this government and comes after last year’s announcement it would ban new oil and gas exploration out at sea – but not onshore.

This week’s offer excluded conservation land and cultural sites like Maunga Taranaki and Parihaka.

But Ngāruahine iwi leader Daisy Noble said it was still unacceptable.

“It should have been a stake in the ground: There is not going to be any more offers,” she said.

“They went for a bob each way and we are sick and tired of these sorts of attitudes.”

In the South Taranaki town of Patea, 53 percent of the adults earn less than $20,000 a year.

Ngāruahine recently settled its treaty claims for $67.5 million dollars but Ms Noble said oil exploration was holding them back.

“The opportunities that exist for us at home, near my hapū, is about our whenua. By the time it comes back to us, all the goodness of it is gone. It’s already taken out.

“How do we develop our whenua when you have already taken the best part away?”

Former Green Party candidate for Te Tai Hauāuru, Jack McDonald, is gutted with the offer, which covers his own tribal lands.

“It is a slap in the face that this so-called progressive government, which is meant to be taking a new approach to climate change and a new approach to Māori-Crown relations, would actually continue with this approach.”

The government aims to reduce New Zealand’s emissions to net zero by 2050.

Te Tai Hauāuru MP Adrian Rurawhe said he understood their concerns.

“I sympathise with them but until we can transition to a low emissions economy, we are basically going to have to live with the situation we are in.”

The tender closes 28 August. In a new move, companies must engage with iwi if they want to explore within 200 metres of a sacred site or waterway.

But Ms Ngarewa-Packer said under the Resource Management Act and in agreements they formed with the companies, their area of influence extended to 500m.

“But for us, some companies could sit there and say, ‘Oh we are going to default to the Crown process, versus yours.’ So to a large degree, it falls shy off the expectations we have on the company.”

She said without the power to veto, iwi ended up in costly legal fights.

Last year, Ngāti Ruanui won a lengthy battle to stop seabed mining off the coast of Patea. It is one of many legal challenges the iwi has pursued.

Ms Ngarewa-Packer said it took a toll and all of that pressure came back each time a block offer was announced.

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Anger after Solomon Islands miner involved in spill gets new licence

MV Solomon Trader oil spill on Rennell Island, Solomon Islands. Photo: The Australian High Commission Solomon Islands

Radio New Zealand | 22 March 2019 

Transparency Solomon Islands says it’s concerned about new mining licences to a company at the centre of an environmental disaster.

The licences given to Bintan Mining Solomon Islands are under fire amid a cleanup of an estimated 100 tonnes of its oil spilled into a marine reserve.

Since a ship contracted by Bintan grounded on a reef off Rennell Island in early February, the company has faced widespread criticism.

But on 8 March, just one day after Prime Minister Rick Hou threatened to put it on an international blacklist, Bintan was issued two mine prospecting licences.

The licences, which were confirmed by the Director of Mines, Nicholas Biliki, are in the islands of Isabel and San Jorge in Isabel province.

Transparency Solomon Islands said Bintan’s licences should be revoked because of the damage done on Rennell.

“Why issue the Licence to a company we know how incapable and irresponsible the company is when it comes to risk sharing of benefits, management and capacity to deal with any disaster,” the NGO said in a statement.

Meanwhile, officials estimate it will take at least two months to salvage the grounded ship.

Mr Biliki declined to be interviewed on Thursday but said he would issue a statement to local media.

The Mining Minister, Bradley Tovosia, appeared to have disconnected his office phone after repeated calls from RNZ Pacific.

Officials estimate it will take at least two months to salvage the ship, the MV Solomon Trader, with the spill contained only this week.

Clean up efforts after the oil spill off Rennell Island in Solomon Islands. Photo: Supplied/ Derek Pongi

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Filed under Corruption, Environmental impact, Exploration, Solomon Islands

Kingston seeks to reboot gold mining on Misima Island

Work on Misima. Source: Kingston Resources

Sarah Byrne | Business Advantage | 18 March 2019

Drilling new targets and locating starter pits are the key focus for junior miner Kingston Resources, as it seeks to revive gold mining on Papua New Guinea’s Misima Island. Managing Director Andrew Corbett reveals the company’s plans to Business Advantage PNG.

With positive drill results to date, Kingston Resources Managing Director Andrew Corbett is confident further exploration will lead to finding new gold resources on Misima Island in Louisiade Archipelago, Milne Bay Province.

‘This year is about following up on the targets we identified through our successful geochemical exploration program in 2018. Identifying near-surface ounces at these targets will allow us to recover capital expenditure, reduce the pay back period and therefore, decrease risk.’

The company is ramping up exploration and plans to drill a range of targets across at least four areas within a few kilometres of the original Misima open pit mine, which operated between 1989 and 2004.

‘We aren’t looking to extend the current resource, we are locating new targets in areas with no previous exploration,’ he says.

Locating starter pits will be the key to reviving the project, according to Corbett.

‘We are ramping up exploration and from what we’ve seen so far, there is great potential at Misima, which is exciting for the team.’

Funding

Kingston’s interest in Misima is driven by the project’s potential to become a large, long-life project, which Corbett says is rare for a junior company.

Juniors have great capacity to take risks by developing new and interesting projects that larger, more risk-averse companies don’t pursue, he adds.

While confident in the outlook for mining projects in Papua New Guinea, Corbett says access to funding is always a focus.

‘At the moment, a lot of the activity is coming from the major players, and it can be difficult for juniors to secure funding.’

In a bid to lessen its need for external funding, the company’s Livingstone project in Western Australia is seen as a potential funding source for Misima.

‘We are continuing to advance Livingstone, this has always been seen as a great option to help fund Misima, through either cash flow or selling it if needs be,’ he says.

‘Funding will always be a challenge, but we are in good stead with having the Livingstone asset and a significant resource base at Misima.’

‘If we continue to deliver operationally, the funding will follow.’

Community support

Corbett says operating in Papua New Guinea has generally been a positive experience, with great support from the Mineral Resources Authority, other regulatory groups and the local community.

‘One of the most important things for us is the support we’ve received, particularly from the local community.

‘We do our best to listen to and work with the community and offer employment where possible because these relationships are key.’

Bright future

As exploration at Misima continues to advance, Corbett says instability around industry regulations is a worry for the company.

‘If the rules change, it is difficult for everyone, from the major players right down to the junior miners.’

As the mining industry in Papua New Guinea continues to strengthen, Corbett says Misima remains a great opportunity for Kingston.

‘I’ve great confidence in mining in Papua New Guinea, with the outlook for gold, copper and nickel in great shape,’ he says.

With the Wafi-Golpu project looking set to get the green light this year, and a number of other projects going ahead or looking to expand, Corbett says things are looking good for the sector.

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Geopacific to fully acquire PNG gold project

Matt Birney | The West Australian | 8 March 2019

ASX listed gold developer Geopacific Resources is set to scoop up the remaining 7% of its JV holding with Kula Gold Ltd it does not already control, giving it full ownership of the emerging Woodlark gold project in PNG.

The timing appears to be quite strategic, with the company’s November DFS for the project delivering strong economic and technical outcomes at a base case scenario using an AUD$1,650 per ounce gold price.

With gold trading 10% higher than that this week, those outcomes are looking rosier by the day.

Back in January, Geopacific’s Managing Director Ron Heeks set it out plainly saying: “… every AUD$10 increase in the gold price is an additional ~AUD$10m in revenue which is a considerable upside for the +1million ounce project optimised at ~AUD$150 less than the current market.”

In fact, a gold price of AUD$1,800 per ounce delivers over AUD$140m in additional free cash to the project over its initial project mine life.

Mr Heeks added this week: “Acquiring 100% direct interest in Woodlark is a positive step in the project’s development pathway. The simplified ownership structure enhances its attractiveness to potential financiers and positions it to take advantage of the growing AUD$ margin as projected revenues and most costs are to be in Australian dollars.”

“Ownership consolidation takes place as the gold price moves well above the DFS pricing assumption of AUD$1,650/oz.”

The company tabled an excellent set of numbers in last year’s Woodlark DFS, headlined by $257m in free cash the project generates in the first five years, or about $51m per year post-tax for the same period.

The study delineated an initial project mine life of 13 years, producing nearly 1 million ounces of gold and spitting out an average of $26m post-tax annually for the life of the mine.

The project produces a post-tax NPV of $197m and an IRR of 29% and post-tax capital payback is estimated to be just over two years.

The all-in sustaining cost for the first five years of production was just AUD$866 per gold ounce, producing high margins at a puny strip ratio of just over 3 to 1.

By comparison, many West Australian open pit gold miners wrestle with double or triple this strip ratio for their narrow shear-hosted deposits.

The project is blessed with flat terrain and soft outcropping ores with average metallurgical gold recoveries exceeding 90% for the first five years of production.

For the life of mine, the AISC was estimated at $1,033 per ounce, largely driving the strong economic outcomes from the DFS.

The sustained increase in the gold price since early October last year has put some icing on the cake for Geopacific and no doubt, was front and centre, in its decision to commence acquiring the Woodlark project outright.

The CAPEX costs for the Woodlark project are pretty tidy too, coming in around AUD$200m, which is a favourable result for any new gold mining operation, particularly one constructed offshore.

Geopacific recently produced an updated ore reserve totalling 28.9 million tonnes grading 1.12g/t gold for 1.04 million ounces, which underpins the project moving forward.

All permitting has been granted and the project enjoys strong community support in the proven mining investment hub of PNG.

The company holds the dominant tenement position on Woodlark Island and administers a very prospective regional exploration portfolio of ground surrounding the granted mining leases.

An island-wide regional geochemical soil sampling program completed over the last six months unearthed a plethora of exciting new gold and copper exploration targets and blue-sky possibilities for Geopacific to consider.

Once in production, the company will be able to self-fund and potentially sustain its mining operations at the Woodlark gold project beyond the initial 13-year mine life.

Acquisition of Kula Gold’s remaining 7% JV holding in Woodlark will come via a cash and scrip transaction that will cost Geopacific about AUD$3.25m

A price it seems willing to fork out to consolidate its interest in the project and simplify the ownership structure, which should also lead to significant corporate cost reductions and administrative overheads.

Simplifying the structure will be beneficial for the company too, as it can get on with the job of financing the project and undertake a full exploration tilt at the very prospective porphyry gold-copper land holdings it controls across Woodlark Island.

The clouds are parting for Geopacific in the PNG, giving greater clarity to its road ahead at the impressive Woodlark gold project.

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Bougainville project looks prospective for Kalia

Matt Birney | The West Australian | January 21, 2019

Kalia Limited has completed a detailed and highly anticipated geophysical survey program over the Mt Tore JV tenements located at the northern end of mineral-rich Bougainville Island in PNG.

According to the company, an initial review of the geophysical data identified deep seated, intrusive geological complexes and potential structural pathways for the sought after base and precious metal mineralisation.

The airborne survey produced nearly 11,000-line kilometres of data over the company’s large exploration licences covering more than 1,700 square kilometres, with the data set currently undergoing final processing by Fathom Geophysics.

Preliminary imagery of the survey data has been created and is currently being used by Kalia personnel on-site to commence generation of potential new exploration targets.

The magnetic data response apparently coincides well with the topography in this part of the island, which Kalia believes is representative of the thickness of the in-situ volcanic units – being thicker in the easternmost EL03 tenement and thinner in excised river valleys elsewhere.

The company’s Technical Director Peter Batten said: “2019 has commenced with fieldwork in EL03 toward the Teoveane – Puspa target with work scheduled to focus there and at Melilup this month.”

“… this new dataset will provide an excellent insight into the geology and structural framework of the project area and assist with optimizing on-ground target follow-up.”

“This will allow the team to more accurately plan for expeditions onto known targets and is especially important for EL04 where the complete lack of geophysical data has previously hampered effective exploration activities.”

Kalia considers the northern part of Bougainville very prospective for many different styles of metallic mineralisation, including porphyry copper-gold deposits, epithermal multi-mineral base metal/gold deposits and volcanogenic massive sulphide mineral occurrences.

According to management, the recent geophysical survey was the first conducted on Bougainville since 1987 and has much better spatial resolution and a fuller coverage than the earlier work.

Kalia has a 75% managing interest in the Tore Joint Venture Limited or “TJV” exploration licences on Bougainville.

The incredible prospectivity of Bougainville is well known with the mothballed Panguna Mine, which still retains an amazing 1.8 billion tonne JORC-compliant mineral resource at 0.3% copper and 0.34g/t gold, serving as a signpost of the island’s potential mineral endowment.

The two Kalia-held exploration licences were the first tenements issued to a non-Bougainvillean entity after the lifting of the moratorium on mining activity by the Autonomous Bougainville Government in May 2017.

Kalia appears to have integrated well with the local communities and its 75/25 JV with local landholders will be held up as the new mining model on Bougainville if Kalia can get its project off the ground.

Generation of new exploration targets from the $1 million investment in the geophysical survey work and interpretation are expected to drop out shortly, with the company anticipating to define additional prospectivity in areas of its tenement holdings never previously surveyed.

With a solid foundation established in the community and the landowner base, Kalia, through the TJV, is poised to start delivering regular assay results from its exploration field work in 2019.

The company is building up a plethora of new geological data on Bougainville that could throw up a treasure trove of exploratory targets over its large land holding on the island.

That this mineral rich province has been off the radar for so long makes the company’s activities very interesting and something of a frontier exploration play, where anything of any size could potentially be unearthed.

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