Page 49 - gmj142-Jan-Mar2-mag-web

Woodlark: Ready, set, execute

by Michael Washbourne

Construction of a conventional open pit and 2.4 mtpa CIL
process plant at Geopacific’s Woodlark gold project in
PNG is scheduled to begin on April 1

im Richards could not have asked for a better start to his million, up 76%), IRR (34%, up from 29%) and project payback
Ttenure as Geopacific Resources Ltd’s new chief executive. (1.8 years, down from 2.2 years).
After six years as general manager of St Barbara Ltd’s Simbieri Also factored in the update was almost 20% of the completed
mine in Papua New Guinea, Richards jumped at the opportunity FEED work from lead contractor GR Engineering Services Ltd.
to oversee the build of arguably the next major gold operation “A substantial amount of work had been going on in the
in the country. background, so it’s a bit more than a tweak of the [DFS]
Richards officially started his new job in early October, albeit numbers,” Richards said.
in quarantine in Port Moresby, as Geopacific unveiled Sprott “It definitely wasn’t a feasibility-level study, it was really there
Private Resource Lending II L.P. as the company’s preferred to update the market that there is a lot going on at Geopacific,
financier for development of the 1.6 moz Woodlark gold project, because even though you weren’t hearing much noise, that
about 500km east of mainland PNG. didn’t mean we weren’t actively working towards development
The Sprott commitment includes provision for an $US85 million and this was the opportunity to let everyone know about all of
project finance facility and a $US15 million callable gold stream. that work.
Investment committee approval remains on track for January “There’s been some movements in capex [$255 million, up from
and will likely be followed by an equity raising to round out $198.5 million in the DFS] and opex [$1,239/oz, up from $1,100/
project funding requirements. oz over the life of mine] as a consequence, but overall, we think
Richards was then on hand to witness the updated memorandum it gives a much more robust project. The NPV is strong, the
of agreement being initialled by the Woodlark area owners, as payback is shorter and it’s a more realistic project in terms of the
well as the national, provincial and local-level governments, capital and all-in operating cost.”
paving the way for the start of project construction on April 1, Richards said having Sprott on board as the preferred debt
based on current timelines. financier was an important show of confidence in the Woodlark
“There’s not a hell of a lot of moving parts anymore,” Richards project, which will have an initial mine life of 13 years.
told GMJ. “Sprott is exceedingly well known in mining circles, they’re not
“All of our permits are in place; our debt is now just part of a a fly-by-night operator so we’re very happy to have them as
due diligence process we’ve got to work through, but the terms our preferred debt provider,” he said. “They’ve been incredibly
are agreed; the engineering is very well advanced; and our supportive throughout the process and they’re pushing every bit
recruitment is well advanced in terms of pulling together the as hard as we are to see the project into development in April.”
management team. So, all of the key variables have been taken Having played a vital role in five record years of production at
care of, it’s just finalising the equity raising and we can start Simbieri, Richards believes his operational experience in PNG
building.” will serve Geopacific well as it bids to become the Asia-Pacific
During his first two months at Geopacific, Richards also helped region’s next major gold miner.
finalise what the company is referring to as the “execution “It’s a great jurisdiction,” he said. “There’s massive exploration
update” for Woodlark. potential, the country has a history of mining and you’ve got a
Since June, Geopacific has been busily preparing the project really strong workforce there.
for development, including enhancing the economics previously “You get all the benefits of being close to Australia in terms of
published in the DFS released in late 2018. logistics and pricing, but you’ve got a talent pool that’s not as
Improvements were recorded in a number of key areas, including transient as Australia in terms of chopping from job to job.”
free cash flow ($575 million, up 67% from the DFS), NPV ($347

Page 49