As well as general cost escalations caused by supply chain disruptions and COVID-19, he said there was a need to redesign and revise significant elements in the project to deal with ‘previously unidentified complexities.’ The mining project had also faced ‘project management and contractor performance issues’.

‘Because of these matters, Geopacific was no longer in compliance with the terms of its finance facilities and therefore did not have the requisite funding in place to proceed with the project,’ he said.

‘The board therefore formed the view that the project development could not currently progress and took the relevant commercial steps to implement an expedited orderly wind-down of development activities, whilst also seeking to maintain optionality for future development.’

‘In spite of the project suspension, Geopacific appears to have bought itself some time to resolve its situation.’

Exactly what form that future development will take is yet to be determined. Bantock told shareholders the company would now reprioritise ‘exploration drilling, targeting resource growth and new discoveries across the Woodlark mining lease’.

A drilling program is currently under way to see if the current resource estimate of 1.57 million ounces of gold can be improved on.

For sale?

Geopacific Respurces’ Andrew Bantock. Credit: Geopacific Resources

In spite of the project suspension, Geopacific appears to have bought itself some time to resolve its situation.

‘The company continues to engage positively with PNG stakeholders and has secured an amendment to the Woodlark mining lease to extend the project construction deadline condition by one year to 5 July 2024,’ he said. ‘All other conditions of the mining lease remain in good standing.’

The company now has A$28 million (K71 million) in cash and no debt. However, Bantock canvassed the possibility of selling equipment to ‘provide additional material cash funding if required’.

While Bantock remained positive about the prospects of creating a gold mine on Woodlark Island, citing an improved gold price, it is not yet clear whether this will be done by Geopacific itself, or another party.