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TRANSCRIPT
ISS
N 1838-9511
AUGUST/SEPTEMBER 2016
Australia Papua New GuineaBusiness Council
CONTENTS12: GEOPACIFIC’S
WOODLARK
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29: SOVEREIGN BONDS
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AW_182x60_v1.indd 1 6/28/13 3:48 PM
Cover picture: Geologist Ron Heeks EO�PDA�I=J=CEJC�@ENA?PKN�KB�$AKL=?Eň?�Resources, which recently announced an earn-in deal with Kula Gold on the Woodlark Island gold project
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COVER STORY
Stars align for Geopacific on Woodlark IslandThe stars have not aligned terribly well for the global mining industry over the past few years and if the more gloomy pundits are to be believed, things are not going to get better in the near term.
12 AUGUST/SEPTEMBER 2016 PNG REPORT
13AUGUST/SEPTEMBER 2016 PNG REPORT
But pessimism is completely absent in the 3HUWK� RI¿FHV� RI� MXQLRU�exploration company
*HRSDFL¿F� 5HVRXUFHV�� ZKLFK� � VRPH�WLPH� DJR� LGHQWL¿HG� WKH� RSSRUWXQLW\�to make the Woodlark island gold SURMHFW�LQ�3DSXD�1HZ�*XLQHD�DFWXDOO\�ZRUN�$OLJQPHQW� RI� WKH� VWDUV�� IRU�
*HRSDFL¿F�DQ\ZD\��LV�QRZ�FRPLQJ�WR�IUXLWLRQ�IROORZLQJ�WKH�GHDO�GRQH�ZLWK�.XOD� *ROG�� RZQHU� RI� WKH� :RRGODUN�,VODQG�SURMHFW�,Q�HVVHQFH�� LW� LV�D��$������PLOOLRQ�
HDUQ�LQ� GHDO� RYHU� WKH� ����� PLOOLRQ�RXQFH� JROG� SURMHFW� ZKLFK�� DOWKRXJK�DQ� LVODQG�� IDOOV� ZLWKLQ� 0LOQH� %D\�3URYLQFH�%HVW�SDUW�RI�LW�IRU�*HRSDFL¿F�LV�WKDW�
WKH� GHDO� UHTXLUHV� QR� SD\PHQW� WR� WKH�YHQGRUV�7KH� GHDO�� ZKLFK� KDV� EHHQ� LQ�
JHVWDWLRQ� IRU� WKH� SDVW� ��� PRQWKV��ZLOO�XQIROG� LQ� WKUHH� WUDQFKHV��GXULQJ�ZKLFK�*HRSDFL¿F�ZLOO�HDUQ�XS�WR�����by spending the cash in stages over WKH�QH[W�����\HDUV�
the company’s aim is to increase WKH�JROG�RUH� UHVHUYH� IURP��������R]�WR�PRUH�WKDQ�����PLOOLRQ�
“this is a game changer for *HRSDFL¿F�� � (DUQLQJ� LQWR�:RRGODUN�RQ� WKHVH� WHUPV� DOORZV�*HRSDFL¿F� WR�JDLQ� DQ� LPPHGLDWH�� DFKLHYDEOH� SDWK�WR� SURGXFWLRQ� ZLWK� D� PRGHVW� RXWOD\�DQG� FRQVLGHUDEOH� SRWHQWLDO� UHZDUGV�́ �ZDV� KRZ� PDQDJLQJ� GLUHFWRU� 5RQ�+HHNV�GHVFULEHG�WKH�GHDO��ZKLFK�ZDV�DQQRXQFHG�RQ�-XO\����³7LPLQJ� FRXOGQ¶W� EH� EHWWHU�� ZLWK�
the gold price achieving record
The population of Woodlark Island is about 6000 traditional
landowners in a number of different population centres, living a mainly subsistence based village lifestyle
‘This is a simple task, which can be achieved by rebasing the project’s capex and opex and conducting a selected drilling program to move existing inferred and indicated resources into proven and probable categories’– Ron HEEkS, GEoPAcific RESoURcES MAnAGinG diREcToR
KLJKV��7KH�WDVN�LV�VLPSOH�±�SURYH�XS�D� UHVHUYH�EDVH�RI�����PLOOLRQ�RXQFHV�RI� JROG� WR� SURYLGH� VXI¿FLHQW� VFDOH�and longevity to attract development IXQGLQJ�� ZLWKLQ� WKH� IUDPHZRUN� RI�:RRGODUN¶V�FXUUHQW�SHUPLWV�7KLV� ZRXOG� PHDQ� WKDW� *HRSDFL¿F�
ZRXOG� QHHG� WR� FRQYHUW� D� IXUWKHU��������� WR� �������� RXQFHV� RI� JROG�IURP� WKH� FXUUHQW� UHVRXUFH� ������PLOOLRQ�WRQQHV�DW�����JUDPV�SHU�WRQQH�JROG�IRU����0R]�JROG��LQWR�UHVHUYHV�+HHNV� H[SODLQV� WKDW� *HRSDFL¿F�
XQGHUWRRN� D� JDS� DQDO\VLV�� ZKLFK�highlighted the potential to increase
the reserve life of Woodlark and HQKDQFH� LWV� HFRQRPLFV�� ZKLFK� ZLOO�DOORZ� WKH� SURMHFW� WR� EH� IXQGHG� LQWR�SURGXFWLRQ��³7KLV� LV� D� VLPSOH� WDVN�� ZKLFK�
can be achieved by rebasing the SURMHFW¶V� FDSH[� DQG� RSH[�ZKLFK�ZDV�XQGHUWDNHQ�DW�WKH�WRS�RI�WKH�UHVRXUFH�ERRP� DQG� FRQGXFWLQJ� D� VHOHFWHG�drilling program to move existing LQIHUUHG�DQG�LQGLFDWHG�UHVRXUFHV�LQWR�proven and probable categories and PDNH� VXUH� WKH� HFRQRPLFV� DOORZ� WKH�FXUUHQW� ORZHU�JUDGH� LQGLFDWHG� DQG�PHDVXUHG�UHVRXUFHV�WR�EH�PLQHG�́
14 AUGUST/SEPTEMBER 2016 PNG REPORT
*HRSDFL¿F� EHOLHYHV� LW� KDV� PRUH�WKDQ� WKH� FDSDELOLW\� DQG� KXPDQ�¿UHSRZHU� UHTXLUHG� WR� WKURZ� DW�:RRGODUN�,VODQG�ZKLOH�QRW�OHWWLQJ�XS�at its advanced exploration copper-JROG� .RX� 6D� SURMHFW� LQ� &DPERGLD�DQG� JROG� H[SORUDWLRQ� LQ� )LML�� +HHNV�VWUHVVHV� WKDW� *HRSDFL¿F¶V� ERDUG� KDV�EXLOW�DQG�UXQ�PLQHV�LQ�UHPRWH�DUHDV��challenging environments and on VPDOO�LVODQGV�
the board and senior managers have been involved in the FRQVWUXFWLRQ� RI� ��� PLQHV� LQ� VL[�FRXQWULHV�� PRVW� RI� ZKLFK� ZHUH� LQ�physically or socio-economically FKDOOHQJLQJ� MXULVGLFWLRQV� LQFOXGLQJ�&KLQD��,QGRQHVLD��0RQJROLD�DQG�:HVW�$IULFD���7KH\�DOVR�KDYH�H[SHULHQFH�LQ�PDQDJLQJ�ODUJH�SRUWIROLRV�RI�SURMHFWV�ZLWK�LPSUHVVLYH�UHVXOWV�2QH� RI�+HHNV¶� SUHYLRXV� UROHV�ZDV�
as technical manager for straits Asia ZKHUH� KH� ZDV� UHVSRQVLEOH� IRU� WKH�UHVWDUW�RI�WKH�0RXQW�0XUR�JROG�PLQH�LQ�FHQWUDO�.DOLPDQWDQ���7KLV�LQFOXGHG�WKH� GHYHORSPHQW� RI� WZR� QHZ� JROG�discoveries into viable deposits and WKHQ�VWDUWLQJ�PLQLQJ�RSHUDWLRQV�+HHNV�ZDV�DOVR�UHVSRQVLEOH�IRU�UH�
HYDOXDWLQJ� WKH� H[SORUDWLRQ� VWUDWHJ\�DW� WKH� 6HEXNX� ,VODQG� FRDO� RSHUDWLRQ�LQ� .DOLPDQWDQ� DQG� VXEVHTXHQWO\�HQDEOLQJ�DQ�LQFUHDVH�RI�UHVRXUFHV�DQG�UHVHUYHV� WR� RYHU� ����PLOOLRQ� WRQQHV���7KLV� LV� WKH� SURMHFW� WKDW� EHFDPH� WKH�¿UVW� PLQLQJ� FRPSDQ\� OLVWHG� RQ�6LQJDSRUH� 6WRFN� ([FKDQJH�� ZLWK� D�ÀRDW�RI�PRUH�WKDQ������PLOOLRQ�2Q� RQH� RI�PLQLQJ¶V� VRIWHU�� EXW� QR�
OHVV�VLPSOHU�WDVNV��+HHNV�ZDV�KHDYLO\�involved in the relocation of the �����SHUVRQ�VKDQW\�6DOPDQ�YLOODJH�WR�D�QHZ�VLWH�ZLWK�PRGHUQ�EXW�FXOWXUDOO\�appropriate homes and amenities on EHKDOI� RI�$GDPXV�5HVRXUFHV��ZKLFK�GHYHORSHG� WKH� 1]HPD� JROG� PLQH� LQ�*KDQD¶V�6RXWKHUQ�$VKDQWL�EHOW�)HOORZ� *HRSDFL¿F� ERDUG� PHPEHU�
0DUN�%RMDQMDF�ZDV��DW�WKH�WLPH��&(2�An example of the nuggety gold found at the Woodlark Island gold project
Ron Heeks Mark Bojanjac Milan Jerkovic Scott Munro
RI� $GDPXV� ZKLFK� SXW� 1]HPD� LQWR�SURGXFWLRQ�� ZKLFK� LV� QRZ� RZQHG� E\��(QGHDYRXU�0LQLQJ�*HRSDFL¿F� FKDLUPDQ� 0LODQ�
-HUNRYLF� DQG�+HHNV� KDYH� D� SHUVRQDO�DQG� SURIHVVLRQDO� DVVRFLDWLRQ� ZKLFK�VSDQV�GHFDGHV�+LVWRULFDOO\�� 3DFL¿F� 5RDG� &DSLWDO�
DQG� 5DQG� 0HUFKDQW� %DQN� LQYHVWHG�LQ�WKH�SUHFXUVRU�WR�.XOD�*ROG�EHIRUH�listing and extensive drilling took place over several years to arrive at WKH�UHVRXUFH�.XOD� ZDV� ÀRDWHG� DW� ������ SHU�
VKDUH�DQG�KDV�VLQFH�VSHQW�DERXW������PLOOLRQ�RQ�WKH�SURMHFW�DQG�LW�LV�QRZ�DW�IXOO\�SHUPLWWHG�VWDWXV�
“it has all the environmental SHUPLWV�� DOO� WKH� VRFLDO� SHUPLWV��tailings permits and a granted mining OLFHQFH�� 7KHUH� KDV� EHHQ� ����PLOOLRQ�VSHQW� RQ� WKH� WDLOLQJV� GHVLJQ� DORQH�́ �VDLG�+HHNV��ZKR�DGGHG�WKDW�ZKHQ�DOO�WKLV�ZRUN�ZDV�EHLQJ�GRQH��LW�ZDV�LQ�DQ�������R]�JROG�SULFH�HQYLURQPHQW�%XW� DIWHU� VSHQGLQJ� WKUHH� \HDUV�
JHWWLQJ�LW�SHUPLWWHG��JROG�KDG�GURSSHG�EDFN� WR� ������R]�� DQG� ZLWK� WKH�HVWLPDWHG� KLJK� FDSH[�� WKH� QXPEHUV�GLG�QRW�DGG�XS�WR�EXLOG�WKH�PLQH�³:H�DUH�QRW�RXW�WKHUH�WU\LQJ�WR�¿QG�
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LQIHUUHG� PLQHUDOLVDWLRQ� OD\� EHWZHHQ�WKH� FXUUHQW� SLW� RXWOLQHV� IRU� WKH�.XOXPDGDX� HDVW� DQG� ZHVW� SLWV� DQG�EHORZ� WKH� %XVDL� GHSRVLW� DV� ZHOO� DV�LQVLGH�WKH�FXUUHQW�SLW�RXWOLQHV��7KHVH�DUHDV�ZHUH�GULOOHG�RQ�D���P�E\���P�JULG� DQG� QHHG� WR� EH� LQ¿OO� GULOOHG� WR�DFKLHYH� UHVHUYH� VWDWXV�� WKH� SLWV� DQG�
SHULSKHULHV� ZRXOG� FRPELQH� LQWR� RQH�YHU\� ELJ� SLW��0DQ\� RI� WKH� GULOOKROHV�HQGHG� LQ� PLQHUDOLVDWLRQ�� LQFUHDVLQJ�WKH�SRWHQWLDO�IRU�PRUH�RXQFHV�DW�GHSWK�+HHNV�VDLG�D�³PDVVLYH�DPRXQW�FRXOG�
EH� GRQH´� LQ� WHUPV� RI� UHVFKHGXOLQJ�WKH� PLQLQJ� SODQ� DQG� UHZRUNLQJ�WKH� FRQ¿JXUDWLRQ� RI� WKH� SLW� ZDOOV���5HGH¿QLQJ�WKH�VWULS�UDWLR�E\�DOWHULQJ�WKH� SLW� DQJOHV� RIIHUHG� VXEVWDQWLDO�XSVLGH�WR�WKH�SURMHFW�QXPEHUV��³7KH� WZR� ELJJHVW� FRVWV� ZLWK� DQ\�
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15AUGUST/SEPTEMBER 2016 PNG REPORT
KDG� DQ� DQJOH� RI� ��� GHJUHHV�� ZKLFK�LV� IDLUO\� ÀDW� DQG� LQ� D� VWXG\� GRQH� ���PRQWKV�DJR�� LW�ZDV�IRXQG�WKDW� LI� WKLV�ZDV�FKDQJHG�E\����GHJUHHV�WKH�PLQH�FRXOG�SLFN�XS�D�IXUWKHU��������R]�RI�UHVRXUFHV�́ �VDLG�+HHNV�,Q�WHUPV�RI�VFKHGXOLQJ��+HHNV�VDLG�
WKDW�.XOD�KDG�VFKHGXOHG�D�FRQVLVWHQW�grade of 2gpt over the entire mine OLIH�EXW�*HRSDFL¿F�EHOLHYHG� WKDW� WKLV�VKRXOG�EH�FKDQJHG��³7KH�PLQH�VKRXOG�EH� VFKHGXOHG� RYHU� WKH� \HDUV� VR� WKDW�WKH�ORZ�JUDGH�VWRFNSLOH�EXLOGV�XS�DQG�WKH�KLJK�JUDGH�LV�SXW�WKURXJK�¿UVW�«�VR� WKDW�ZKHQ�\RX� DUH� SURFHVVLQJ� WKH�ORZ�JUDGH�WKH�FDSH[�KDV�DOUHDG\�EHHQ��UHSDLG�³3D\EDFN� LV� \RXU� ELJJHVW� VLQJOH�
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Long-term potential of the area is KXJH��VD\V�+HHNV��ZKR�DGGV�WKDW�RQO\�WKUHH�RXW�RI����DUHDV�KDYH�EHHQ�WHVWHG�WR�UHVHUYH�VWDQGDUG�5HÀHFWLQJ�RQ�KRZ�VXFK�D�IDYRXUDEOH�
GHDO� ZLWK� .XOD� FDPH� DERXW�� +HHNV�said the corporate approach did not ZRUN��DQG�ZKLOH�YDULRXV�RSWLRQV�ZHUH�EHLQJ� GLVFXVVHG�� &UHGLW� 6XLVVH� SXW�RXW� DQ� H[WUHPHO\� IDYRXUDEOH� QRWH� RQ�:RRGODUN�� ZKLFK� WRRN� .XOD¶V� VKDUH�SULFH�IURP����F�WR��F�YHU\�TXLFNO\�³7KH\� WXUQHG�RYHU�PRUH� WKDQ�KDOI�
WKH� FRPSDQ\� LQ� D� ZHHN�� 6RPHWKLQJ�OLNH� ���� PLOOLRQ� LQ� D� ZHHN�́ � VDLG�+HHNV�,I�+HHNV�KDV�KLV�ZD\��DQG�WKH�VWDUV�
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envisaged a nine-year life at capital FRVWV�RI�PRUH�WKDQ������PLOOLRQ�IRU�D�SD\EDFN�SHULRG�RI�IRXU�\HDUV�³7KH�PLQH�OLIH�ZDVQ¶W�ORQJ�HQRXJK�
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LV�IXOO\�SHUPLWWHG��<RX�FRXOG�EXLOG�WKH�SURMHFW� DV� LW� VWDQGV�� ,W¶V� SUREDEO\� WKH�ODVW�IXOO\�SHUPLWWHG�PXOWLPLOOLRQ�RXQFH�XQPLQHG�JROG�GHSRVLW�VLWWLQJ�WKHUH�́)RU� WKH� ¿UVW� VL[� PRQWKV�� PRVW�
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16 AUGUST/SEPTEMBER 2016 PNG REPORT
Looking down on the Woodlark Island camp
A technician checks weather monitoring equipment on Woodlark
$XVWUDOLD��DV�GXULQJ�WKLV�GXH�GLOLJHQFH�SHULRG��ZH�ZLOO�QRW�EH�GULOOLQJ�KROHV��:H� ZLOO� EH� UH�UXQQLQJ� PRGHOV��¿QGLQJ�RXW�ZKDW�ZH�KDYH�WR�GR�WR�GULOO�LQIHUUHG�UHVRXUFHV�VR�WKDW�ZKHQ�ZH�KLW�WKH�JURXQG��ZH�NQRZ�H[DFWO\�ZKDW�ZH�KDYH�WR�WDUJHW�́ �VDLG�+HHNV�*HRSDFL¿F� JHRORJLVW� 6FRWW� 0XQUR�
DVVLVW� ZLWK� WKH� ZRUN� QHHGHG� WR� EH�GRQH��'ULOOLQJ� ZLOO� FRPH� LQ� WKH� VHFRQG�
SKDVH��³7KHUH�DUH�DOVR�VRPH�VDWHOOLWH�GHSRVLWV� ZKLFK� PLJKW� EH� TXLWH� QLFH�KLJK�JUDGH� IHHG�� :H� DOUHDG\� KDYH�HQJLQHHUV�ZRUNLQJ�RQ�HVWLPDWHV�RI�WKH�FXUUHQW� PLQLQJ� FRVWV� DQG� HQJLQHHUV�ZRUNLQJ�RQ�WKH�SODQW��EHFDXVH�JHWWLQJ�GRZQ� WR� WKLV� ���PRQWK� SD\EDFN� LV�SUHWW\�FULWLFDO�́+HHNV� LV� ¿UPO\� RI� WKH� EHOLHI� WKDW�
Woodlark island has the potential to EHFRPH�D���WR��0R]�SURMHFW�
“to believe that there is the SRWHQWLDO� WR� GRXEOH� WKH� UHVRXUFH� LV�RQ� :RRGODUN� LV� QRW� GLI¿FXOW�� 0RVW�VHFWLRQV�DUH�RSHQ�DW�GHSWK��<RX�RQO\�KDYH� WR� SXVK� LW� GRZQ� DQRWKHU� ��� RU���P�́ �VDLG�+HHNV��ZKR�SRLQWV�RXW�WKDW�RI� WKH��������P�RI�GULOOLQJ�GRQH�RQ�WKH�SURMHFW�RQO\�DERXW�KDOI�ZDV�GULOOHG�LQ�WKH�SLW�DUHDV�³7KHUH¶V�VWXII�DOO�RYHU�WKH�SODFH�́
17AUGUST/SEPTEMBER 2016 PNG REPORT
The Woodlark Island core shed
W22'/$5.� ,6/$1'�is part of the trobriand ,VODQG� *URXS� LQ�WKH� 6RORPRQ� 6HD�� D�
UHDVRQDEO\� ODUJH� LVODQG�� DERXW� ����VTXDUH� NLORPHWUHV�� EXW� UHPRWH� DQG�UHODWLYHO\�LVRODWHG��
the island terrain is relatively ÀDW�ZLWK� VRPH� ORZ�� XQGXODWLQJ� KLOOV��JHQHUDOO\� KHDYLO\� IRUHVWHG� ZLWK�WURSLFDO� MXQJOH� DQG� KDV� DQ� DYHUDJH�
DQQXDO� UDLQIDOO�RI��P��D� WHPSHUDWXUH�UDQJH�RI����WR����GHJUHHV�DQG�DYHUDJH�UHODWLYH�KXPLGLW\�LV�����7KH�SRSXODWLRQ�RI�:RRGODUN�,VODQG�
LV�DERXW������WUDGLWLRQDO�ODQGRZQHUV�LQ� D� QXPEHU� RI� GLIIHUHQW� SRSXODWLRQ�FHQWUHV�� OLYLQJ�D�PDLQO\�VXEVLVWHQFH�EDVHG�YLOODJH�OLIHVW\OH�7KH� YLOODJH� RI� *XDVRSD�� RQ� WKH�
VRXWK�HDVWHUQ�HQG�RI�WKH�LVODQG��LV�WKH�base of local level government and
the location of the second World War $PHULFDQ�EXLOW�DLUVWULS��ZKLFK�LV�QRZ�WKH�PDLQ�DLUSRUW� IRU� WKH� LVODQG�� �7KH�SURMHFW�LV�OLQNHG�WR�*XDVRSD�URDG�
the island has a long history of gold mining dating back to the late ����V� ZLWK� UHFRUGV� VKRZLQJ� DQ�estimated pre-second World War JROG� SURGXFWLRQ�� LQFOXGLQJ� DOOXYLDO�VRXUFHV�� RI� DERXW� �������� RXQFHV� RI�JROG�
18 AUGUST/SEPTEMBER 2016 PNG REPORT
Woodlark Island: facts and history
COVER STORY
The Woodlark Island gold project is about 600km east of Port Moresby on Woodlark Island in Milne Bay Province.
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19AUGUST/SEPTEMBER 2016 PNG REPORT
The kind of terrain typical on Woodlark Island
The Kula Gold nursery on Woodlark Island. The island has been heavily logged for ebony
The airstrip, built by United States troops during the Second World War, on Woodlark Island