An infill drilling programme to further derisk the fully permitted, multi-million ounce project is ahead of schedule after ramping up in December with the arrival of a third rig. 

Woodlark lies in a region renowned for world-class gold mines and not only already contains a 2.1 million ounce resource but has been granted mining and environmental approval.

Geopacific is earning up to 51% of the project during tranche 2 by spending A$8 (US$6) million to prove up a 1.2 million ounce gold reserve. It can earn up to 80% in tranche 3 by spending up to $10 million to prepare a bankable feasibility study and financing the project. 

The company is well on its way towards joining the next generation of gold producers, saying it is so advanced because the inputs for the BFS are largely complete and are just being “tweaked” to improve the economics.

Managing director Ron Heeks (pictured left) describes the opportunity to develop Woodlark as a “company maker”.

Woodlark’s previous mining plan was costed during the height of the boom in 2012 and Geopacific is busy optimising the previously-established metallurgical and processing plant plans and fine-tuning the capital and operational expenditure costs.

“This project is a company maker and we have the management team to bring it into production – we’ve brought more than 10 projects into production in six countries before,” Heeks said.

“It really puts us in line to be one of the next over-100,000 ounce per annum gold producers and people are only just beginning to understand how de-risked it is.”

A recent research note by Petra Capital, titled “Breathing new life into Woodlark” has garnered positive attention for the company and tipped a target share price of A10c.

“Although the area has huge prospectivity, we don’t have to go anywhere new with our drilling programme to increase confidence in the existing resource,” Heeks continued.

“It’s further de-risked by being fully permitted and it’s in a great part of the world to build mines.

“We’re surrounded by world-class success stories (including Misima, Lihir and Simberi), without the challenges of extreme topography.

“Papua New Guinea is definitely a ‘go to, can do’ place for mining and has the track record to prove it.”

Geopacific’s first-hand experience and considerate approach to remote area mining has been welcomed by the local community, which is strongly backing the project.

This is amply demonstrated by the local village allowing Geopacific to drill near the school during the holiday period.

Heeks said in turn, the company was empowering the island’s communities by sourcing as much produce locally as possible, employing locals over expats and once in production, intends to build a high school so older students did not have to travel to the mainland.

There is a strong local skill set to draw from, given the 15 years and A$150 (US$110) million spent on Woodlark prior to Geopacific’s involvement.

“I don’t think many people realise how advanced the project is,” Heeks said.

“It places us in a unique position of having a very advanced project to move forward into near-term production, for no acquisition cost.  All we have to do is the work we would have done in any event, which is increasing the reserves.

“Millions has already been spent on permitting, metallurgy and detailed engineering, so little work is required apart from infill drilling to convert already identified ounces into reserves and some redesign and cost-saving changes.”

While some might think the island location presented challenges, Woodlark’s gentle topography and sea access bring many benefits.

“We’re not in the highlands spending thousands of dollars on a helicopter to get around,” Heeks said.

And aside from the standard logistics of bringing supplies in by barge, the bulk transport method also offers substantial cost savings.

“Take power generation for example, which usually represents about 60% of a mine’s operating cost,” Heeks said.

“A barge can bring in millions more litres of fuel than a truck for about the same cost, and the same shipment can also carry other large consumables like balls for the mill.

“We’re also looking at the option of using LPG for power generation, as it’s now possible to bulk ship pressurised gas.”

The power options being investigated are part of Geopacific’s broader optimisation studies and the company intends to have most of the major costs rebased by the third quarter of this year.

Metallurgical consultants, Independent Metallurgical Operations (IMO) has already identified potentially significant cap-ex and op-ex cost savings in their strategic review of the metallurgical studies and testwork.

“IMO are working to determine if the process route can be modified to reduce power and consumable costs,” Heeks said.

“If the ore can be separated by light grinding, then a smaller mill will be required to fine grind only a portion of the ore and this has numerous efficiency benefits.”

Globally experienced minerals engineering, procurement and construction company Mincore is undertaking a strategic plant and infrastructure design and cost review.

Heeks said Mincore specialised in remote projects and had recently been involved in the restart of the K92 underground gold mine, also in Papua New Guinea.

Mincore also used modular steel structures to minimise site construction man-hours at a remote build in Africa, and Heeks said being able to transport large, assembled sections to Woodlark by boat further improved the cost-effectiveness of the development.

“Mincore is also very practical when it comes to mill design and maximising engineering for the conditions,” he said.

In addition, Geopacific has identified human resources as another area to optimise and is already assessing local training needs to minimise the need for fly-in, fly-out employees.

“We’re impressed with the calibre and dedication of staff from the local community,” Heeks said.

Meanwhile, the company has an RC and two diamond drill rigs in action to prove up Woodlark’s greater potential. The rigs started at the Busai deposit and two have moved on to Kulumadau, which Geopacific believes holds even greater prospectivity.

In addition to current reserves, Busai contains some 600,000oz of gold in resources, while Kulumadau has inferred mineralisation of 4 million tonnes at 2.9g/t gold for 397,000oz outside the current pit shells.

Initial assay results from drilling at Busai confirmed Geopacific’s revised exploration model, with the first hole returning 48m of gold mineralisation. 

Heeks said the results confirmed the potential for Geopacific to achieve its aim of building a 1.2-million-ounce gold reserve inventory by including mineralisation within, and adjacent to, current pit designs.

“These results also provide excellent guidance to inform further drilling to advance the reserve inventory effectively,” he said.

Geopacific is expecting to report a continuous flow of drill assays after posting the initial results.

In another example of the company’s cost-effective approach to progressing Woodlark, its onsite laboratory is operated by independent group Intertek, meaning only 150g sample pulps are flown to the mainland facility for analysis.

Heeks said Woodlark’s existing scale, untapped exploration potential and location in a great region to build world-class mines was hard to beat.

“Quite frankly, it’s a company-maker,” he said.

“This is a fully permitted project of considerable scale.

“We believe Woodlark is one of the last multi-million ounce, permitted, unmined gold projects in the world.

“It’s very advanced and we have the qualified team to bring it online in the near-term.

“We’re aiming to get into production in the shortest possible time but beyond that, there is also a huge amount of exploration potential.

“A 5 million ounce project would be small compared with some of the region’s other gold mines.”