The first phase of a cost review by Geopacific Resources at the Woodlark Gold Project on Woodlark Island in Papua New Guinea has identified the potential to reduce capital expenditure (CapEx) at the project. The review has outlined a 27% CapEx saving on the gold processing plant.

The original feasibility study on Woodlark was released by Kula Gold in 2012 at the height of the mining cost cycle. In accordance with the transaction to earn up to 80% of Woodlark from Kula, Geopacific is targeting increasing reserves to 1.2 million ounces of gold in conjunction with reducing CapEx and operational expenditure (OpEx).

Geopacific identified the potential for significant CapEx and OpEx savings to be achieved and appointed Mincore Engineers to complete a first-stage review of the processing plant construction costs on a ‘like-for-like’ comparison with 2012 costs. The design is for a 1.8 million tonne/annum conventional Carbon-in-Leach (CIL) processing plant, using a sag and ball mill in the grinding circuit.

The review was strictly focused on the direct processing plant construction costs which account for approximately 55% of the construction costs of the 2012 Definitive Feasibility Study (DFS). The aim of the first phase of the review was to determine the scale of possible CapEx reductions in relation to the 2012 DFS. A higher level of savings is expected to be achieved from the second stage of the review which will cover infrastructure costs.

The review by Mincore demonstrates that a CapEx saving of $25 million, which equates to a 27% reduction, could be achieved by constructing the original processing plant design in the current economic environment. The review achieves the aim by clearly demonstrating that substantial cost reductions are possible in the current economic environment.

Geopacific managing director Ron Heeks said, “The results from the like-for-like plant cost comparison confirms what we initially thought – that the top-of-the-mining-cycle costs could be reduced significantly. Now that we understand the plant construction costs we are looking at other infrastructure costs like roads, accommodation and the port to determine the extent of savings available there. We expect these savings to be greater on a proportional basis.”

Phase two of the review is ongoing with a focus on site infrastructure costs, where it is expected that a higher percentage of cost savings could be achieved. Geopacific believes that the construction methodologies relating to both plant and infrastructure used in the 2012 DFS are open to optimisation. To allow for this, the review is using the construction methodologies that Geopacific expects to use, rather than a ‘like-for-like’ comparison.

Geopacific has also identified the potential for a refined process path that may significantly reduce OpEx. Metallurgical test work is under way to validate this and determine the optimal configuration for the processing plant. Achieving OpEx savings is expected to allow for optimisation of the reserve envelope.