Woodlark Island was previously a fully-funded A$255 million development, but construction was halted in late 2021 after A$100 million was spent.

The development was suspended due to the impacts of cost inflation, heavy rainfall and COVID-19.

Since then, Geopacific has had a board refresh, which included the appointment of James Fox as CEO in November.

The revitalised company has spent 2024 working on de-risking and optimisation initiatives, based on lessons learned from previous construction activities.

Fox said a number of critical issues weren’t properly thought through in the first instance, including the location of the plant on karst limestone, and several wharf options.

“It’s easy to look back and point the finger but I feel that there were a whole host of smaller challenges that ultimately compounded into something that was unmanageable from afar,” he said.

“A significant amount of money was spent trying to resolve issues all the while with an eye on the ever-extending time and cost.”

This week, Geopacific released a new scoping study for the project, which confirmed its economics.

The study outlined a 12-year open pit operation to produce an average of 95,000 ounces of gold per annum at all-in sustaining costs of A$1534 per ounce and all-in costs of A$1820/oz.

Pre-production capital costs were forecast at A$326 million, which includes mine development, a 2.9 million tonne per annum carbon-in-leach plant, infrastructure, engineering, procurement and construction management costs, first fills and critical spares.

Based on a gold price of A$2900/oz, the project has a post-tax net present value (8% discount rate) of A$501 million, internal rate of return of 37.7% and 18-month payback period.

Undiscounted life of mine revenue is forecast at A$3.3 billion, with pre-tax net cashflow of A$1.3 billion.

Using the current spot gold price of A$3505/oz increases the NPV to A$781 million, IRR to 51.1% and reduces the payback period to just 11 months.

Fox said the project schedule was still being worked out to ensure the project was de-risked and sites for the plant and wharf finalised.

“We are also assessing higher throughput rates, by a further approximately 20%, and what that means to the existing planning, because if we delineate more gold through exploration we need to ensure that this can be processed within a reasonable timeframe. i.e. not just a longer mine-life,” he said.

“So we would expect at least 12 months for an updated study.”

Resource expansion

The study was based on Woodlark Island’s resource 45.56Mt at 1.07 grams per tonne gold for 1.56 million ounces, of which 93.4% is in the high-confidence measured and indicated categories.

Earlier this year, Geopacific completed a geological review of the project, which uncovered four new high-priority exploration targets close to existing resources.

Exploration on Woodlark is very enticing, as little genuine exploration work has been done over the last five years or so, Fox said.

“The epithermal and porphyry upside potential of the project is substantial,” he said.

Resource estimates for the Great Northern and Wayai Creek prospects are advanced and will be reported shortly.

“Subject to finalising the exploration program, which will involve additional mapping, auguring, trenching, and interpretation, we would expect to be on-ground with a drill rig towards the end of this year,” Fox said.

PNG improving

Papua New Guinea is experiencing a resurgence in terms of gold mining.

After several years of uncertainty, the large Porgera gold mine was reopened in December 2023 by partners Barrick Gold, Zijin Mining and the PNG government.

Around the same time, the world’s largest gold producer, Newmont Corporation entered PNG via its acquisition of Newcrest Mining.

It is now the owner of one of the world’s largest gold mines, Lihir, and 50% holder of the big, undeveloped Wafi-Golpu gold-copper project.

While in Australia in June, Newmont CEO Tom Palmer talked up PNG and reiterated the company’s commitment to developing a block cave mine at Wafi-Golpu.

Fox said while the country still faced challenges in elevating its reputation and creating certainty and confidence in its regulatory framework, all of his experiences to date had been positive.

“There is a genuine desire to see the Woodlark project developed for the benefit of all stakeholders, particularly the local communities that rely on the development of mineral resources to enhance their livelihoods,” he said.