After announcing the $18.65 million agreement in July, Geopacific had up to six months to spend as much as $650,000 on due diligence to earn an initial 5%.

The company completed the initial phase and will now move to a more intensive stage, whereby it is required to spend up to $8 million over two years to achieve a 1.2 million ounce reserve.

That would give the project a 10-year mine life at 120,000oz per annum.

Completing stage two would give Geopacific 51%, though if it spends the money and does not achieve the 1.2Moz reserve, it will hold 40%.

Geopacific can move to 60-75% by spending up to $10 million and achieving “bankable” status at the project.

Woodlark has a current resource of 45.1 million tonnes at 1.5 grams per tonne gold for 2.12Moz gold.

The 2012 feasibility study envisaged a nine-year life at capital costs of more than $200 million for a payback period of four years, but more work will be required to improve economics.

Geopacific is planning to conduct limited infill drilling with the aim of converting a portion of the 800,000oz inferred resource into the measured and indicated categories.

That work will assist in converting resources to reserves and improving the project economics.

Geopacific managing director Ron Heeks said the massive upside potential of the project became more evident during a recent site visit.

“Everything about the trip was positive and we’ve had nothing but support from government and community members that we’ve dealt with in PNG and on Woodlark,” he said.

“We look forward to commencing development drilling and delivering Woodlark along the development path into production.”

Geopacific is well-funded after recently raising $15 million.

Shares in the company were untraded at 3.6c, while Kula was unchanged at 2.9c.