Australian miner halts work on Woodlark Gold and Silver project in PNG
AUSTRALIAN miner Geopacific Resources has suspended construction work at its Woodlark gold and silver project in Milne Bay, Papua New Guinea, as it continues to review cost estimates and schedules.
Last December, Geopacific warned that there would be a likely increase in Woodlark’s capital cost.
Chairman Andrew Bantock said, “Having recently been named Chairman, I am focused on the company working extensively on its strategic options.
“The suspension of these activities limits the company’s cash expenditures as we reassess how to develop the Woodlark gold project in the most efficient way possible.
“However, we remain focused on the underlying value of the Woodlark gold project, which has over one million ounces of gold in reserves, significant upside potential from untested mineral resources and has seen over 100 million Australian dollars (approximately K257 million) invested over the past 18 months in project design and development.
Last July, Geopacific Resources Ltd secured A$100 million (K257.5 million) for the construction of its gold and silver mine on Woodlark Island, Milne Bay.
Chairman Ian Clyne had confirmed securing funding through a credit facility.
Mineral Resources Authority (MRA) chief executive Jerry Garry confirmed the company had suspended construction work as it needed time to recalculate costs.
The original cost of the project was A$130 million (K314.88 million) over a 13-year lifespan.
The Woodlark project was expected to produce 980,000 ounces and have a net present value of A$347 million (K840 million) and an internal rate of return of 34%.
Despite the suspension of construction works, Garry said Geopacific had improved the design of its accommodations for the relocation exercise following the intervention of MRA.
He added that exploration work is still ongoing.
Garry told The National: “The initial cost of developing the mine has changed significantly due to the coronavirus period.
“Mine construction costs have now increased by 16% to 20%.
“Geopacific has suspended some of its activities.
“They need to raise additional capital.
“Construction work has been suspended from this morning (Thursday).
“All return flight employees have been laid off until further notice. But they continue with exercises to relocate residents and exploration work on gold resources.
“Eighty decent houses have been completed for the landowners.”
The National / Pacific Mining Watch
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