Milne Bay’s Woodlark gold project is likely to get the go ahead within the next three months, after developer Geopacific Resources assesses the definitive feasibility study which will be completed in Q3 this year. Managing Director, Ron Heeks, tells Business Advantage PNG, if it goes ahead, production should commence in early 2020.

Woodlark CEO Ron Heeks shows local children how a drone works. Source: Woodlark

When the Woodlark licence was issued in 2014 to Kula Gold, it was the first gold mining lease to be issued in eight years, and marked a milestone for the sector.

Since then, Kula Gold brought in Perth-based miner Geopacific Resources, which last week moved to 51 per cent ownership at project level.

Controlling interest

Geopacific now has a controlling interest (85 per cent) in Kula Gold, taking its overall economic interest in the project to 93 per cent. The PNG government will have a 5 per cent share at the production stage.

Kula had spent A$150 million (K359m) in exploration costs, and Managing Director, Ron Heeks, estimates Geopacific will spend about another A$180 million (K431m) getting the project into production..

‘It will do wonders for the community and the whole Milne Bay area.’

‘Our pre-feasibility study indicated a low-cost, low stripping ratio, open-pit, 10-year operation, with production at about 100,000 ounces per annum,’ he tells Business Advantage PNG.

Location of Woodlark mine (Red box). Source: PNG Mine Watch

Robust

Heeks says the three sites—Kulumadau, Busai and Woodlark King—have combined resources of about 1.6 million ounces of gold and reserves of 1.1 million ounces.

‘It’s not a huge project, but it is very robust’ he says. ‘It will pump a significant amount of money into the local economy.

‘Locals are keen on it and it will do wonders for the community and the whole Milne Bay area.’

‘We are used to creating rosters.’

Woodlark is surrounded by well-established gold mines: Newcrest’s Lihir at 66 million ounces of gold and St Barbara’s Simberi at six million ounces.

Heeks estimates it will provide about 420 jobs with a high percentage of those earmarked for locals. The population of Woodlark Island is 6000.

‘The main reason for that,’ he says, ‘is it’s that it’s the right thing to do.

‘Of course, the economics are that it’s cheaper than flying in staff, but there’s a huge social incentive to employ local people, and many other benefits.’

Deep water port

Heeks says many locals are employed as traditional farmers.

But we are used to creating rosters which accommodate people’s other commitments—for example, through job sharing or just making allowances for those commitments.’

‘I’m happy with the current price of gold.’

Woodlark Island has some extra advantages. A deep water port 4 kilometres away, with safe anchorage, will provide easy and efficient access for construction and consumables to operate the mine.

‘We’re building a small wharf facility on the opposite side of the bay, closer to the operation and this will avoid disrupting villagers.’

Feasibility study

The company is waiting for the definitive feasibility study to be finished in the next few weeks, which will then be assessed followed by talks about financing the project.

Ironstone Capital has been appointed debt advisors and talks with financiers are also progressing well, says Heeks.

Gold is now about A$1647 (K3945) an ounce which Heeks describes as ‘an excellent price, although the market thinks it should be higher’.

Geopacific sells its gold to the Perth Mint.

‘I’m happy with the current price of gold. It’s only 10 per cent off its all-time high and there’s a bit of a problem if you can’t make money at that price.’