Geopacific Resources Ltd (ASX:GPR) maintained a A$1.30 share price target in Sprott’s latest equity research report following the start of an exploratory drilling campaign at the Woodlark Gold Project in Papua New Guinea.
The asset management company maintained its BUY rating, noting that GPR’s current share price of A$0.32 is less than a quarter of its target price.
Low-risk drilling
GPR’s campaign is intended to upgrade and extend the 1.6-million-ounce resource and involves 20,000 metres of low-risk exploration intended to add immediate value via extending the pits laterally and de-risking early production with grade control drilling.
Sprott believes another 40,000 metres of planned drilling focused on new satellite targets across the broader mining licence is “key to extending the mine life and backfilling the production profile”.
The 60,000 metres of total drilling is expected to generate plenty of news flow through to first gold pour in the fourth quarter of 2022.
Robust financing and experienced CEO
Geopacific has one of few fully financed development projects globally, and it is expected to come online next year to the tune of 100,000 ounces of gold per annum.
“With a new CEO in place, low market capitalisation and robust economics, we retain our high conviction on the name, especially after spending time getting to know CEO Tim Richards at Beaver Creek, whose experience building and ramping up big operations including Tasiast and the turnaround of Simberi should strengthen investors’ confidence in Woodlark’s development,” Sprott said in its research report.
Why Sprott likes GPR
GPR's new program at Woodlark marks the first drilling program at the site since 2018. With the upgrade and relocation of local communities, the broader mining licence is wide open to exploration.
The 20,000 metres of grade control drilling is focused on expanding and upgrading the Kulumadau, Busai and Woodlark King pits which are all open at depth and laterally. Once completed, a further 40,000 metres of exploration drilling will test the broader mining licence through to the fourth quarter of 2022.
Key points of value for the company according to Sprott are as follows:
- Vanilla CIL project with good logistics on PNG island;
- CEO Tim Richards prior GM of neighbouring mine Simberi;
- Exploration upside between pits and regionally once RAP complete/site cleared;
- Shovel ready pending final funding; and
- Materially undervalued to spot NAV.
Catalysts:
- 2H21: 20,000 metres of near pit exploration drilling & grade control;
- 2022: 40,000 metres on the broader mining licence;
- 3Q22: Commissioning; and
- 4Q22: Commercial production
GPR is a gold-copper development company with a portfolio of assets in the Asia-Pacific region. The company’s main focus is developing its highly prospective Woodlark Project.