Kula, Geopacific cut Woodlark capex

Perth-based explorer Kula Gold says it could save $US25 million, or 27 per cent, on the cost of building its Woodlark Island gold project in Papua New Guinea if done so in the current economic environment.

Kula’s joint venture partner Geopacific Resources, which is earning up to an 80 per cent stake in Woodlark by spending up to $18.6 million on exploration work, initiated the cost-saving study on the project, appointing Mincore Engineers to undertake the review.

The review found that, by constructing the original processing plant design (a 1.8 million tonne per annum conventional carbon-in-leach processing plant using a sag and ball mill in the grinding circuit) from a 2012 definitive feasibility study but in today’s economic climate, about $US25 million in capex savings could be achieved.

That’s 27 per cent below the 2012 capex estimate of $US93 million.

“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,” Geopacific managing director Ron Heeks said.

“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 here.

“We expect these savings to be greater on a proportional basis.”

Geopacific and Kula shares were unchanged at 3.8 cents and 2.1 cents, respectively.