AS Geopacific Resources continues to confirm the economic potential of the Woodlark Gold Project, the company is making an off-market takeover for its joint venture partner in the project, Kula Gold. The company believes there is compelling commercial logic in bringing ownership of the project under a single management structure.
Geopacific says the offer would allow Kula’s shareholders to continue their economic participation in the development of the project. It believes the dual ownership causes inefficiencies for both sets of shareholders and diminishes the investment value to current and potential investors. The structure also duplicates governance, management and reporting structures, causing excess leakage of funds from development activities.
In July 2016 the Board of Kula announced that Geopacific had been chosen to advance Woodlark in a joint venture transaction allowing it to earn up to an 80% interest in Kula’s subsidiary company Woodlark Mining by meeting milestones over a period of up to four years.
The first stage involved Geopacific conducting due diligence and preparing a development plan. This was completed last October and Geopacific is progressing towards the next milestone – advancing Woodlark with economic studies and development drilling.
As part of the studies Geopacific has identified the potential to reduce capital expenditure. A cost review has outlined a 27% saving on the gold processing plant.
The original feasibility study was released by Kula in 2012 at the height of the mining cost cycle. In accordance with the Woodlark transaction, Geopacific is targeting increasing reserves to 1.2 million ounces of gold in conjunction with reducing CapEx and OpEx.
It identified the potential for significant savings to be achieved and appointed Mincore Engineers to complete a review of the processing plant construction costs on a ‘like-for-like’ comparison with 2012 costs. The design is for a 1.8 million tonne/annum conventional Carbon-in-Leach (CIL) processing plant, using a sag and ball mill in the grinding circuit.
The review was strictly focused on the direct processing plant construction costs which account for approximately 55% of construction costs of the 2012 DFS. The review demonstrates that a saving of $25 million could be achieved by constructing the original processing plant design in the current economic environment. A higher level of savings is expected to be achieved from the second stage of the review, which will cover infrastructure costs.