Tag Archives: Kula Gold

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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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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Geopacific now holding 93% of PNG goldfield

Matt Birney | The West Australian | 23 August 2018

ASX listed gold developer Geopacific Resources now holds a 51% direct interest in its flagship Woodlark gold project in PNG, after achieving the second tranche incentive milestone with its project JV partner Kula Gold Limited.

The company now holds a 93% economic interest in the project, courtesy of its 85% controlling interest in Kula Gold in addition to its direct interest in the project.

The project level earn-in agreement with Kula dates back to July 2016 and required the company to spend up to A$8m over a 2-year period and complete an estimation of an initial ore reserve exceeding 1.2 million gold ounces to achieve this second tranche.

With both of these hurdles now overcome, Geopacific will concentrate on meeting the requirements of the third and final tranche of the JV agreement with Kula, where it can earn a 95% economic interest in the project, effectively winding up the JV.

The remaining 5% interest will be taken up by the PNG Government, who has agreed to take this stake when the project is ready to be mined, by reimbursing a proportionate share of sunk costs.

Geopacific Managing Director Ron Heeks said: “Geopacific now directly owns 51% of Woodlark Mining Limited and will continue to increase ownership as we move forward with development of the project.”

“The DFS continues as does exploration to scope out the larger goldfield that holds such potential. Our debt advisors Ironstone Capital are also progressing well. The project is coming together as we hoped and continues to move towards a 2019 start to construction.”

The company has strongly focussed its attention on the Woodlark gold project over the last two years in order to stay on schedule for this intriguing opportunity.

Geopacific reported the outcome of its PFS for the Woodlark project in March, saying the results indicated a robust, low-cost, low stripping ratio, open pit operation that could deliver an average of 100,000 ounces of gold annually, over a 10-year initial mine life.

Since that time, the company has commenced an island-wide soil sampling program over its tenements in PNG and has hardly missed a beat, turning up multiple gold and copper targets pretty much everywhere it looks.

This is perhaps unsurprising, given the project’s location in the “ring of fire”, surrounded by multi-million ounce deposits at Lihir, Panguna, Simberi and Misima.

Geopacific has proved up a mineral resource of 1.57 million ounces, whilst developing new exploration targets nearby to potentially add to its arsenal over coming years.

The big picture envisaged by the company more than 2 years ago is finally coming together, with project development well underway, ongoing exploration success outside the main mining leases and consolidation of the project ownership on schedule.

Geopacific is well on track to become PNG’s next significant gold producer over the coming year or so.

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Geopacific Resources raises $10m for Woodlark gold exploration

Woodlark Island

Ewen Hosie | Australian Mining | May 2, 2018

Gold explorer Geopacific Resources has raised $10 million in exploration funding for its Woodlark gold project in Milne Bay, Papua New Guinea.

The funds were raised in a placement of 280 million shares at $0.036 cents each, a 5.3 per cent discount on the company’s closing price before making the announcement.

Geopacific hopes to establish a drill program to define the project’s wider potential beyond near-pit reserve drilling. The company is targeting an aspirational resource of 5 million ounces (Moz) of gold, a significant expansion on the current resource figure of 1.57Moz.

“Any new discoveries have the potential to ultimately improve the forecast gold production profile in excess of the current 100,000oz per annum and extend the mine life,” said Geopacific managing  director Ron Heeks.

“Having established Woodlark as a robust gold development project it’s encouraging to see strong financial support for our strategy to finalise the definitive feasibility study (DFS) and bring a significant exploration program online to continue to grow the project,” he added.

More than half of the $10 million will go towards resource development and drilling at $5.6 million overall; $900,000 is budgeted for completion of Woodlark’s DFS, $1.1 million for exploration costs at company projects in Cambodia and Fiji, and the remaining $2.4 million will be for working capital, offer and other project costs.

In addition to Woodlark, Geopacific’s projects include the Kou Sa copper-gold project in Cambodia and five gold projects in various stages of exploration in Fiji, being the island nation’s largest licence holder. These include the Nabila, Sabeto, Vuda, Rakiraki and Cakaudrove projects.

In March, completion of a pre-feasibility study (PFS) on Woodlark allowed Geopacific to increase its interest in the project to 93 per cent under agreement terms with joint venture partner Kula Gold.

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Geopacific kicks off Woodlark DFS in PNG

Geopacific Managing Director Ron Heeks (left) on site in PNG

Matt Birney | The West Australian | 10 April 2018

Aspiring gold producer Geopacific Resources has kicked off its Definitive Feasibility Study for the Woodlark Island project in PNG and all things being equal, should have the completed document on the street by the third quarter of this year.

The DFS follows on from the company’s encouraging Pre-feasibility Study results, which were announced in March, after an extensive work program throughout 2017.

The PFS supports the development of a conventional open pit operation delivering an average output of 100,000 ounces of gold annually for at least 10 years, with an all-in sustaining cost to produce of A$1100 per ounce.

Exhibiting very simple metallurgy, a high gravity gold content, low striping ratios, lowish CAPEX and a post-tax payback of just over 2 years, the Woodlark project appears to be quite robust on paper

According to the company, the epithermal gold mineralisation at the project is amenable to bulk-style, low-grade mining, with large volume, shallow, open pits.

The breadth and rigour of the PFS document, particularly in relation to the estimation of mining costs and metallurgy, which were both done to DFS standards, has shortened the estimated completion time for the DFS.

The aim of the DFS is to finalise and optimise plant design and infrastructure, delivering capital costs to within a 15% level of accuracy.

Importantly, the project sits on a granted mining lease and is already fully permitted, which means that things could move quickly for Geopacific after the DFS is churned out.

Woodlark also has solid regional exploration potential to grow beyond the global mineral resource of 1.58 million ounces, providing an element of blue sky for the 100,000 ounce a year project.

A number of key, near-mine brownfields areas have the potential to materially add to the mine plan at Woodlark, opening up further options for the operation, once in production.

Managing Director Ron Heeks said; “The PFS showed that Woodlark is a robust project that can surpass the critical production level of 100,000oz gold per annum. We see clear potential for upside from the Woodlark PFS estimates as well as significant exploration potential within close proximity to the current 1.1million ounce Reserve.

“Woodlark’s PFS outcomes see the project compare favourably to competing gold development projects on key metrics including the low forecast strip ratio and short post-tax capital payback.”

Heeks continues to put his family money where his mouth is too having recently waded into the market to pick up another 746,000 Geopacific shares in his wife and daughter’s name.

The company now holds a 92.75% interest in Woodlark via both its shareholding in Kula Gold, the project originator and its direct interest in the project, courtesy of a farm in agreement with Kula.

Geopacific is in good company in Papua New Guinea, surrounded by multi-million ounce gold deposits located on the country’s mainland and surrounding archipelago.

If the stars align for the company as expected, construction of the Woodlark project could commence in 2019, with first gold out by the middle of 2020.

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Foreign investors mock PNG govt’s dumb deal

‘The project came gift wrapped, courtesy of the PNG Government who will buy 5% when it is ready to be mined by paying the equivalent of 5% of sunk costs to-date. This could see the PNG Government shell out more than $6m for just 5% of the project’.

Geopacific muscling into giant territory with PNG gold majors

Matt Birney | Business News | 9 November, 2017

They say that it’s often the second owner of the big projects that make money from them and that may well be true of Geopacific Resources’ Woodlark Island project in PNG.

It was picked up for a song by Geopacific from Kula Gold and is positioned dead centre in the middle of a string of copper and gold infested islands that make up mineral rich Papua New Guinea.

In a region littered with mining projects that boast gold resources of up to 60m ounces, it is almost unthinkable that Geopacific’s mineral reserve would remain at just 766,000 ounces of gold – a number that would already have most junior explorers starting a conversation with an EPC contractor.

A quick glance at the existing PNG projects that form a neat radius around Geopacific’s Woodlark Island project leaves you with the distinct impression that this is indeed the land of the giants.

Neatly positioned around Woodlark is Newcrest’s 49m ounce Lihir project, St Barbara’s 6m ounce Simberi project, Rio Tinto’s former 23m ounce Panguna mine, the 29m ounce Hidden Valley project, the dual 17m ounce Ok Tedi and Frieda River deposits and the 24m ounce Porgera project.

The goliath amongst the giants however is clearly the 63m ounce Freeport Papua project that boasts one of the largest gold and copper resources in the world.

At 2m ounces of resource and 766,000 ounces of reserve going 2.2 grams per tonne, Geopacific’s deposit, as impressive as it is, drifts into obscurity amongst these giants.

The company is however continuing to furiously drill it out and with such huge projects in their midst, management’s expectation of a sizeable upgrade in reserve is perhaps not unreasonable.

Kula Gold listed on the back of the Woodlark project with a remarkable $1.80 float in November 2010 that resulted in a $203m market cap for the company.

They had $80m in the bank on listing day and spent the lot on the project and then some.

In fact by the time Kula ran out of financial puff last year they had plunged almost $150m into the project and associated corporate entities.

Amazingly, Geopacific picked up 87% of it earlier this year through a series of corporate and project level plays for the paltry sum of just $10m worth of script and $650k worth of expenditure on the ground.

And the project came gift wrapped too, courtesy of the PNG Government who will buy 5% of it when it is ready to be mined by paying the equivalent of 5% of sunk costs to-date. This could see the PNG Government shell out more than $6m for just 5% of the project.

In addition to now holding 86% of Kula who own 95% of Woodlark, Geopacific already own 5% of the actual Woodlark project after spending $650k on it as part of their farm in agreement. Geopacific started their quest for control of Woodlark initially by entering into a farm in agreement with Kula, but later decided to take over the entire company in a 1 for 1.1 all script offer and to-date have secured 86% of Kula’s stock in a move that cost them only about $10m in script.

They also have further farm in rights and creep abilities that will most likely see them own almost all of it save only for the PNG Government’s 5% share in due course.

Woodlark could very well be a miners paradise too, with a reserve that may well keep growing and a project that is already fully permitted from both an environmental and mining perspective.

The project came with a veritable storehouse of drilling data from over 275,000 metres of drilling and Geopacific have added over 20,000 additional metres since getting involved.

Even though the global resource grade at Woodlark is 2.2 grams per tonne, the three different prospects within the project boast some impressive high grade breakouts.

These include a 32m intersection grading 7 grams per tonne gold, 48m @ 10.39 g/t, 36m @ 12.52 g/t, 11.2m @ 36.3 g/t and 22m @ 7.54 g/t gold, all of which are from the Kulumadau prospect which is still open to the west and East.

Geopacific discovered an 84m mineralised zone at Kulumadau with several well mineralised intercepts including 10m @ 7.84 g/t, 13m @ 3.11 g/t and 12.3m @ 2.23 grams per tonne gold.

Other impressively long intersections at the project include 21m @3.27g from 40m, 23m @ 4.82 g/t from 102m, 52 @4.5g/t, 19m @ 3g/t, 27m @ 2.5g/t, 34m @ 3g/t and 33m @ 4 grams per tonne gold.

Kula completed a feasibility study on the project some years ago which will most likely require updating now but will serve as a cost effective base for Geopacific’s own study of the resource.

Kula concluded that the project could turn out 674,000 ounces of gold over the first 6 years of mine life from a 1.8mt per annum plant.

They predicted that figure could increase to 813,000 ounces over the first nine years when in-pit inferred resources and lower grade stockpiles were utilised.

Cash operating costs were predicted to come in at around US$730 an ounce with capital costt looking like being somewhere in the order of U$160m.

Kula’s study also identified several out of pit areas that could potentially increase the ore reserve in time, particularly at the Kulumadau prospect where a further 4mt at 2.9 grams per tonne for around 400,000 inferred ounces were identi fied but not included in the pit design at the time.

Kula were looking to upgrade these resources with further drilling and the grand plan was to eventually amalgamate the Kulumadau east and west pits.

Geopacific recently raised $10.5m in an oversubscribed capital raise to continue the considerable work already carried out on Woodlark by Kula and they are now armed and dangerous as they hurtle headlong towards a decision to get into production.

The market is expecting an upgrade to the mineral reserve at Woodlark sometime soon as Geopaci c completes its own study on the project and continues its extensive drilling campaign.

Geopacific management appear have form too. The management team, led by Geologist Ron Heeks point to the 10 mines in six different countries they have developed between them as evidence that they can make Woodlark fly. Notably Heeks was the technical manager at Straights Asia and was partly responsible for turn around at the Muro gold mine and also at the Sebuku coal mine amongst other things.

The institutions are also sitting up and taking notice of Woodlark too with the likes of Tembo Capital, RCF, Pacific Road, Franklin Advisers and RMB Australia sitting comfortably on the Geopacific register now.

Woodlark is a fast developing story that looks to still have some upside with the potential to really surprise given the monolithic projects on its doorstep.

PNG is a region that does not consider a 2 million ounce resource or even a 2 million ounce reserve to be remarkable – at just 2.7c a share and with a market cap of around $50m, Geopacific and Woodlark look interesting amongst a sea of amazing projects.

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Geopacific to advance Woodlark gold project following Kula takeover

Australian Mining | September 1, 2017

Geopacific Resources has raised $10.5 million through a share placement to help it advance development of the Woodlark gold project in Papua New Guinea.

The capital raising follows Geopacific’s takeover of Kula Gold, the owner of the project on Woodlark Island.

Geopacific’s stake in Kula has increased to 75.05 per cent over the past month and it has appointed directors to the takeover target’s board.

Managing director Ron Heeks said Geopacific achieved an oversubscribed capital raising, offered without a discount to the closing price on the day prior to the placement.

“We are now in a position to deliver our strategy, to continue to unlock the value and also test the true scale of the Woodlark gold project through exploration,” Heeks said.

Geopacific is also planning to offer a share purchase plan to raise an additional $1 million at 3 cents per share.

Heeks said Geopacific was planning to advance the Woodlark project towards production in the most effective manner.

“The exploration potential of the region is historically and recently known to be significant and drilling results and metallurgical testwork have been consistently positive. We are looking forward to moving to the project forward,” Heeks said.

Woodlark’s development approvals include a 1.8 million tonne per annum conventional carbon-in-leach processing plant.

The company has launched a 16-week metallurgical testwork program at the site and will use the results in a definitive feasibility study for the project.

Geopacific raises A$10.5m for Woodlark

Esmarie Swanepoel | Mining Weekly | 1 September 2017

ASX-listed Geopacific Resources has raised A$10.5-million through a share placement to advance its Woodlark gold project, in Papua New Guinea, towards production.

The company on Friday announced that it would place 250-million shares, at 3c each, to a wide range of high-calibre investors, the majority of which were already shareholders.

The shares would be placed under the company’s existing capacity, and would not require shareholder approval.

“We are delighted with the level of support we have seen in this placement. We have achieved an oversubscribed capital raise, offered without a discount to the closing price on the day prior to the placement,” said Geopacific MD Ron Heeks.

“The strength of support from specialist resource sector investors and generalist Australian institutional investors demonstrates that Geopacific presents a value proposition,” he added.

The company is now planning a share purchase plan to raise an additional A$1-million, with shares to be priced at 3c each.

Geopacific is currently advancing work at its Woodlark project, where a previous definitive feasibility study estimated that a 1.8-million-tonne-a-year gravity and carbon-in-leach operation could produce around 100 000 oz/y of gold.

Geopacific had initially entered into an earn-in agreement with fellow-listed Kula Gold to acquire an 80% share in the project area, but in April this year launched a full takeover offer for Kula. 

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