The results of a scoping study for Geopacific Resources' 1.56-million-ounce Woodlark gold project, in Papua New Guinea, indicate strong financial returns, including significant free cash flow and rapid payback over an estimated 12-year life-of-mine (LoM), the company announced on July 30.

This study highlights the technical and financial merits of the Woodlark gold project.

“This study builds on the recent mineral resource and infrastructure improvements at the project and provides increased confidence that Woodlark is capable of generating strong financial returns for its stakeholders over a long-life operation,” Geopacific CEO James Fox said.

The findings in the study were supported by extensive technical and financial information, based on conservative estimates, including an assumed gold price of A$2 900/oz, he said, adding that Woodlark offered 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 derisking initiatives, and drill planning to progress high-priority exploration targets with potential to augment the project underway,” Fox said.

The project economics indicate a pretax net present value (NPV) at an 8% discount rate of A$625-million (post-tax A$501-million) at a gold price of A$2 900/oz, which represents a 17% discount to the spot price.

The pretax internal rate of return (IRR) stands at 40.5% (post-tax 37.7%), with an estimated 18-month payback period from the first production.

The LoM revenue is projected at A$3.3-billion, with a pretax net cash flow of A$1.3-billion. The LoM all-in sustaining cost is A$1 534/oz gold, while the all-in cost is A$1 820/oz gold.

Total preproduction capital is estimated at A$326-million for mine development, gold plant and infrastructure engineering, procurement and construction management costs, first fills and critical spares.

Fox noted that the project’s economics were highly leveraged to the gold price, with pretax net cash flow rising to A$1.95-billion at the spot gold price of A$3 505/oz, delivering a pretax NPV, at an 8% discount rate, of more than A$1-billion and a pretax IRR of 58.5%.

The project’s physicals indicate total gold production of 1.14-million ounces over a 12-year mine life from low-strip openpit mining of more than 97% measured and indicated mineral resources.

Average gold production is expected to be about 95 000 oz/y, delivered by conventional carbon-in-leach processing with an average 90.1% gold recovery.

Fox said key permits were already in place, reducing execution risk identified during the 2023 work programme.

He added that exploration had also identified near-term opportunities with significant potential for resource growth and inclusion in future production scenarios.