Geopacific identifies cost savings at Woodlark

PERTH (miningweekly.com) – A$25-million in capital savings have been identified at the proposed Woodlark gold project, in Papua New Guinea, as ASX-listed Geopacific Resources works to earn an 80% share in the project.

As part of its earn-in agreement with owner Kula Gold, Geopacific undertook a review of the processing plant construction costs on a like-for-like comparison with the costs estimated in a 2012 definitive feasibility study (DFS).

The company noted that the 2012 design plans had been drawn up at the height of the mining cost cycle, with the review identifying a 27% reduction in cost savings for the proposed 1.8-million-tonne-a-year conventional carbon-in-leach processing plant.

The review was strictly focused on the direct processing plant construction costs, which account for around 55% of the construction costs set out in the 2012 DFS, with Geopacific saying on Thursday that more savings were expected from the second stage of the review, which would cover infrastructure costs.

“The results of the like-for-like plant cost comparison confirm what we initially thought - that the top-of-the-mining-cycle costs could be reduced significantly,” said Geopacific MD Ron Heeks.

“Now that we understand the plant construction costs, we are looking at other infrastructure costs like roads, accommodation and the port to determine the extent of savings available here. We expect these savings to be greater than on a proportional basis.”

Geopacific is also continuing its drilling programme at Woodlark Island as part of its earn-in obligation with Kula, with the aim of upgrading and increasing the existing mineral resource and to boost the ore reserves.

Geopacific is earning an 80% interest in the Woodlark project, which fellow listed Kula owns, through a staged investment.

Tranche one of the investment has seen Geopacific earn a 5% share in the Woodlark project by spending A$650 000 to develop a project plan, while tranche two will require the company to spend A$8-million over a 24-month period to acquire a 40% shareholding.

Should Geopacific choose to continue its investment in the project, the company could earn a 60% interest in Woodlark by spending a further A$10-million over a 24-month period, during the third tranche.

The company could take its shareholding to 75% or 80% by either completing a DFS or raising financing for the project.