Scoping Study lifts confidence in GPR economics

Geopacific Resources releases Scoping Study forecasting healthy margins for Woodlark Gold Project
Study’s projections include significant free cash flow over 12 years
GPR to move forward with ongoing optimisation and de-risking work

Special Report: Geopacific Resources has taken a huge step towards re-commencing development of its 1.56Moz Woodlark Gold Project with the release of a Scoping Study confirming its financial and technical merits.

The study released today for Geopacific’s (ASX:GPR) 100%-owned project forecasts robust operating margins, including significant free cash flow over 12 years and rapid payback.

Golden dozen

The initial production target is 1.14Moz gold over the 12-year mine life from low-strip open pit mining, with a payback period of only 18 months from first production.

GPR estimates pre-tax net present value and internal rate of return – both key measures of a project’s profitability – will be a very healthy $625m and 40.5% (post-tax 37.7%), respectively.

The Undiscounted Life of Mine revenue is forecast to be $3.3 billion, with pre-tax net cashflow of $1.3 billion.

Life of mine all-in sustaining costs are modelled at A$1,534/oz gold, and all-in costs of A$1,820/oz gold.

That’s incredibly competitive when compared to GPR’s peers in Australia and overseas.

Worth noting is that the study’s projections are based on a conservative A$2,900/oz gold price (approximately a 20% discount to the current spot price of ~A$3,600/oz).

At a gold price closer to spot of A$3,505/oz, the project’s pre-tax net cashflow rises to A$1.95 billion, delivering a pre-tax NPV of more than $1 billion and a pre-tax IRR of 58.5%.

Other core metrics:

The average annual gold production of approximately 95,000oz is expected to be delivered via conventional carbon-in-leach processing at an impressive average of 90.1% gold recovery.
Better still is that at least 97% of that production will come from high-confidence measured and indicated mineral resources.
Total pre-production capital is expected to be $326 million for mine development, gold plant and infrastructure, and engineering, procurement, construction and management costs.

Permits in place

With key permits already in place and reduced execution risk identified during the 2023 work program, GPR now has extra confidence in moving ahead with its ongoing optimisation and de-risking work.

Geopacific CEO James Fox said: “This study, along with the recent mineral resource and infrastructure improvements at the project, provide increasing confidence that Woodlark is capable of generating strong financial returns for its stakeholders over a long-life operation.

“These findings are underpinned by extensive technical and financial information, and are based on conservative estimates, including the assumed gold price of A$2,900/oz.

“Additionally, Woodlark offers substantial upside exposure to the gold price and ongoing resource inventory growth.

“We look forward to further advancing the Project with technical and environmental studies to support infrastructure and project throughput optimisation and de-risking initiatives, as well as drill planning to progress priority exploration targets underway.”

Upside potential

GPR continues to refine exploration plans after it identified near-term opportunities for potential resource growth, and to better understand the geology of the deposits.

The project is situated on 529km2 of the highly prospective Woodlark Island, where the company is the only explorer or miner.

The mineralisation at Woodlark is commonly associated with large-scale porphyry copper-gold deposits, a style of geology hosting some of the world’s largest reservoirs of the yellow metal.

This article was developed in collaboration with Geopacific Resources, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.