Geopacific Resources Ltd (ASX:GPR) continues to de-risk development of its core Woodlark Gold Project and has deferred construction until the first half of 2022 following multiple infrastructure and engineering delays at the Papua New Guinea site.
Unseasonal inclement weather, build inefficiency and COVID-19 have all had impacts on the progress of early earthworks and the company has decided to reassess its original wharf design at the site in order to potentially upgrade it, while also providing greater opportunity for community participation.
“Woodlark remains highly attractive”
“Whilst the delays at the project are disappointing, they should not take away from the quality of the underlying asset base,” Geopacific Resources CEO, Tim Richards said.
“Woodlark remains a highly attractive project, targeting to deliver over 1 million ounces of gold production at an average all in sustaining cost of A$1,239/ounce over the life of the asset.
“We are doing everything we can to minimise the impact of the delays on the project schedule, and post the completion of the project review we will update the market to the extent of the impacts on the Project Execution Plan.
“Importantly we continue to progress exploration, with these activities continuing. There remains significant exploration potential at the project, which we expect will result in additional value creation at Woodlark.
“Exploration drilling will focus primarily on defining near pit potential, as well as defining other targets in our mining licence area. The ability to add further ore reserves will significantly enhance the metrics of this already high returning gold project.”
Delays and deferments
Apart from unseasonal bad weather and COVID-19 delays, design and engineering works for the offshore component of the tailings pipeline are behind schedule, delaying the issue of construction tenders necessary for final capital estimates.
The Community Relocation program is also ongoing but the build has been delayed and more time will be necessary to give the community time to move homes.
According to Geopacific, the community has been responding positively to the quality of the new houses, school, churches, clinic and trade stores that have been delivered to date.
Due to the combined impact of these factors, the company has decided to defer development until the first half of 2022. All non-essential activities on site will be delayed until the remaining key contracts have been finalised.
Geopacific is working on a critical path analysis to minimise the impact of the delays on the overall project schedule and to then determine the impact on the budget.
De-risking and board shuffles
Geopacific Resources will use this deferment period to re-examine and challenge every part of the project spend and execution based on its experiences to date. GPR will communicate its findings on project updates and funding requirement impacts to the market when they have been collated.
The company is in ongoing negotiations with its project lender, who thus far remains supportive, as it anticipates amendments will be required to the current funding arrangements.
GPR plans to continue to de-risk the project during the review process with the primary focus expected to be:
- The first phase of the exploration program, which will see a combination of over 20,000 metres of grade control and near pit extension drilling;
- Progressing key infrastructure activities including community infrastructure works and permanent camp development;
- Ongoing design and engineering work with engineering contractor GR Engineering Services (GRES);
- Focus of all earthwork activities on back fill of the box cut to prepare the CIL tanks foundations; and
- Planning and engineering work to finalise and cost the optimal wharf location.
Geopacific chairman Ian Clyne has also agreed to temporarily assume an executive role as CEO Tim Richards will be dedicating most of his time in the next two months with the project team overseeing site operations until the new project director arrives onsite.
Luc Vets, the recently appointed project director, had to withdraw due to a personal family matter and recruitment is well advanced for his replacement.
Paull Morton has accepted an appointment as construction manager and joins the company with significant project construction experience in remote locations and strong collaborative skills for liaising with all stakeholders during the development of the project.