ASX-listed Geopacific Resources has appointed Perth-based GR Engineering as the engineering, procurement and construction contractor for the processing plant at its Woodlark gold project in Papua New Guinea.
The conditional letter of intent covers the planned 2.4 million tonne per annum carbon in leach facility, tailings line and other supporting infrastructure.
Management said the final contract is expected to be in the form of a Guaranteed Maximum Price and will be signed following the agreement of final terms and conditions.
Additionally, the company could instruct GR Engineering to commence early works to procure tenders and pre-order long lead items such as the semi-autogenous grinding and ball mills.
The processing plant will be sited between the Kulumadau and Busai pits that are about 4km apart.
Geopacific Managing Director Ron Heeks said: “GR Engineering has a strong reputation in successfully designing and constructing processing plants on time for a guaranteed maximum price.”
“Geopacific is confident that their recent experience in PNG and strong track record in constructing similar projects will greatly de-risk the construction of Woodlark.”
The Woodlark project holds an ore reserve of nearly 29 million tonnes grading 1.12g/t gold for 1.04 million ounces, contained within a broader JORC-compliant mineral resource estimated at 1.57 million gold ounces.
Under the definitive feasibility study, the project presents as a low strip ratio, high-margin, fully permitted open-pit mining operation, with a processing facility capable of pumping out 100,000 ounces of gold per annum for the first five years.
At a gold price of AUD$2,000 per ounce, the 13-year mining operation generates a pre-tax net cash flow of $754m, a net present value of $474m and internal rate of return of 49%.
The total capital establishment costs for the Woodlark gold project come in at just under $200m, with a third of those monies required to construct the processing plant.
At currently elevated gold prices, payback is estimated to be just 1.4 years.
Notably, the start of production at Woodlark could produce the cashflow Geopacific needs to start exploiting the project’s undoubted blue-sky gold and copper exploration potential.
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By Matt Birney
