A new PNG project could generate more than $6 billion once in production, this ASX gold company says

Geopacific Resources Ltd (ASX: GPR)’s Woodlark gold project in Papua New Guinea would generate more than $6 billion over the life of the mine, a new study published today says.

Robust project economics

The company released its definitive feasibility study into the proposed gold mine this morning, saying the study “confirms Woodlark as a technically robust, economically attractive, long-life open pit gold development, forecast to generate strong free cash flow and rapid capital payback”.

The study says the mine will generate revenue of $6.1 billion in total, with post-tax net cash flow of $2.5 billion, calculated at a gold price of $5500. The gold price is currently $6312.

The mine is expected to have a payback period of about 18 months and an all-in sustaining cost of production of $ 1,966 per ounce.

The company said:

The production schedule prioritises near-surface higher grade material during the early years of operation, supporting strong eary cash generation and rapid capital payback.

The definitive feasibility study is based on a 1.2 million ounce gold reserve.

The open-pit mining project is expected to cost about $650 million to bring into production.

The company said it would now engage with financing partners “and assess a range of funding solutions”.

Geopacific Resources Managing Director Hamish Bohannan said:

The completion of the DFS marks a major milestone for the Company and confirms Woodlark as a technically robust, long-life project capable of delivering strong margins and significant free cash flow. It comes at a time of increasing international interest in resource development and infrastructure investment in PNG, reflecting the country’s growing strategic importance as a destination for large-scale resource projects and a key supplier of precious metals to global markets. The Woodlark Project is well positioned to contribute to this development landscape while delivering long-term value for shareholders and stakeholders in PNG. Importantly, the Project benefits from a high proportion of Proved and Probable Reserves, established permitting and significant prior technical work which provides a strong foundation as we advance towards development.

Mr Bohannan said the company was targeting a final investment decision on the project by late 2026.

The Woodlark mine is expected to produce for 12 years with 35.6 million tonnes of ore mined.

The project is located on Woodlark Island, about 600km east of Port Moresby.

More exploration to come

The company said there were further near-mine targets that could also result in new resources.

The company said:

Large-scale copper-gold porphyry targets on Woodlark Island remain completely untested, providing a potentially company-making discovery opportunity layered on top of the existing gold project.

Geopacific Resources is valued at $153.9 million.

The post A new PNG project could generate more than $6 billion once in production, this ASX gold company says appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.