The Asia Miner

OCT-DEC 2016

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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6 | ASIA Miner | Volume 13 • Issue 4 | 2016 Road to Success Due diligence Woodlark has three defined deposits – Bu- sai, Kulumadau and Woodlark King - with a resource of 45 . 1 million tonnes @ 1 . 50 grams/tonne (g/t) gold for 2 . 12 million ounc- es, including a reserve of 10 . 9 million tonnes @ 2.20 g/t for 766,000 ounces. Geopacific is assessing resources to establish which areas hold the best potential to convert a further 500,000 ounces into reserves, deliv- ering a 1 . 2 million ounce reserve . This is in accordance with the earn-in transaction to acquire up to 80% of the project from Kula Gold . Kula had the project for about 10 years, undertook a lot of drilling and obtained all key approvals. A definitive feasibility study showed that Woodlark will be an open pit operation with initial annual throughput of 1 . 8 million tonnes, producing about 100,000 ounces, over an initial nine-year life . Ron Heeks said, "We are in a due dili- gence period and recognise that there is huge potential to re-base the project. We are looking at the numbers and coming up with an outline so that when we decide to proceed, we will have a development plan that details how the project will move for- ward . "Capex was done at the top of the market in 2012 and is now way out of the money . US$250 million to build a 1 . 8 million tonne mill is high and operational costs are com- mensurately high . By re-basing costs we would expect to move more measured and indicated resources into reserves . We are also including the inferred resources to work out which bit we tackle first to advance into measured and indicated categories then into reserve . It is not an exploration pro- gram, it's a development drill-out . "Every part of the project has been signed off by the government; it is fully permitted - tailings, environmental and social compo- nents. We just need to move it to a point where capex is such that the mine life al- lows it to occur . The original DFS allowed for a four-year capex payback with nine year mine life which made raising development finance too difficult. We aim to move it to a much shorter payback with a 10 year mine life at which point it is nearly a no-brainer for development financiers. "When it is taken from the current cut-off of just above 1 g/t to around a 0.6 g/t cut, where a 1 . 8 million tonne operation should be, a massive amount of incremental ounc- es are brought in and we are aiming at sav- ings in other operational areas as well, sig- nificantly improving the strip ratio." The potential Geopacific's assessment of Busai deposit has identified significant potential to increase resources and reserves . The assessment used 3D financial modelling to demonstrate the relationship between current pit designs and existing resources . It demonstrated that in spite of a substantial portion of the resource being measured and indicated, a large portion has not been converted to re- serve because high OPEX costs resulted in the in-pit, cut-off grade being too high . The assessment enables targeting of optimal areas for development drilling to increase the resource . There are 408,000 ounces in reserve at a 1 . 0 g/t lower cut- off and 1 . 04 million ounces in resource at a 0 . 5 g/t lower cut, meaning that there are 400,000 ounces in the pit which can be captured with improved economics . There are 370,000 ounces of inferred resource within and around the current pits which are available to be converted to measured an indicated resources with selective drilling and then included in the reserves . On top of that there is the expansion potential, with more than 3km of mineralised trend . "We believe the known resources sur- rounding Busai pit, which currently contains more than half of the project reserves, are a small portion of the total mineralisation avail- able from the 3km of widely drilled strike length in the area," Ron Heeks says . "This zone has the potential to be expanded fur- ther and provide a solid base for future min- ing operations . " Assessment of Kulumadau also identified significant potential to increase resources and reserves . 3D modelling shows sub- stantial inferred mineralisation surrounding the pits and includes an area with a core of more than 5 g/t . Resources may be amena- ble to conversion with a combination of im- proved economics, selected drilling and updated pit designs . There are 282,000 ounces in reserve at the 1 . 0 g/t cut and 840,000 ounces in re- source at the 0.5 g/t cut. There is significant potential to increase the reserve with a high- grade zone adjacent to the current pit and a 397,000 ounce inferred resource surround- ing the current pits . "Significantly, increasing the reserve base does not rely on new exploration success, just development drilling in the existing resource," Ron Heeks says . "We believe the known min- eralisation surrounding the Kulumadau pits, which contain about a third of the project re- serves, will provide an excellent starting point from which to increase reserves . " The Kulumadau area covers two pits on opposite sides of a circular geological struc- ture . Wide-spaced drilling between the pits indicates continuity of mineralisation and sug- gests that the pits could be joined. Geopacific aims to undertake infill drilling with a view to moving existing inferred resources into the measured and indicated categories . The exploration potential is being as- sessed simultaneous to the development Core samples gathered from drilling at Woodlark Island . The project has provided a source of income for locals and has the potential to do so to a far greater degree as it is developed .

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