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ISSN 1838-9511 AUGUST/SEPTEMBER 2016 Australia Papua New Guinea Business Council

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Page 1: 453 4 -*(/ '03 ( &0 1 $*'*$ 3 & 4 063$& 4 0/ 800%-3 , *4 · 2016. 8. 9. · CONTENTS 12: GEOPACIFIC’S WOODLARK Published by: Aspermont Limited (ABN: 66 000 375 048) EDITOR: Barry

ISS

N 1838-9511

AUGUST/SEPTEMBER 2016

Australia Papua New GuineaBusiness Council

Page 2: 453 4 -*(/ '03 ( &0 1 $*'*$ 3 & 4 063$& 4 0/ 800%-3 , *4 · 2016. 8. 9. · CONTENTS 12: GEOPACIFIC’S WOODLARK Published by: Aspermont Limited (ABN: 66 000 375 048) EDITOR: Barry

CONTENTS12: GEOPACIFIC’S

WOODLARK

Published by: Aspermont Limited(ABN: 66 000 375 048)

EDITOR: Barry AveryWRITERS: Paul Oates, Haydn Black, Kristie Batten

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COPYRIGHT WARNING: All editorial copy and some advertisements in this magazine are subject to copyright and cannot be reproduced in any form without the written permission of the editor. Offenders will be prosecuted.

DISCLAIMER: Aspermont Ltd (ABN: 66 000 375 048), publisher and owner of PNG Report (‘the publisher’) and each of its directors, officers, employees, advisers and agents and related entities do not make any warranty whatsoever as to the accuracy or reliability of any information, estimates, opinions, conclusions or recommendations contained in this publication and, to the maximum extent permitted by law, the publisher disclaims all liability and responsibility for any direct or indirect loss or damage which may be suffered by any person or entity through relying on anything contained in, or omitted from, this publication whether as a result of negligence on the part of the publisher or not. The publisher does not hold itself out as an investment adviser, nor is it in the business of providing investment advice or any other advice whatsoever. Reliance should not be placed on the contents of this magazine in making a commercial or other decision and all persons are advised to seek independent professional advice in this regard.

Some company profiles have been commissioned by the featured company.

22: EMPOWERMENT

Creditorial 2

News 5

Diary 43

Appointments 46

29: SOVEREIGN BONDS

E N J O Y A P E R F E C T L A N D I N G E V E R Y T I M E .

After flying in to Port Moresby, there’s only one place you’ll want to land. Our Bacchus Rooms offer premium comfort at affordable rates.

With warm timber tones, a hint of designer décor, ultra soft beds and crisp linen, set your course for Airways.

A LW AY S A P L E A S U R E

Airways Hotel, Jacksons Parade, Port MoresbyTel +675 324 5200 Fax +675 325 0759

[email protected] www.airways.com.pg

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

Subscribe today! Visit www.industry-news.net/subscribe, phone +61 8 6263 9100 or email [email protected]

For regular news updates on Papua New Guinea check PNGIndustryNews.net

Page 3: 453 4 -*(/ '03 ( &0 1 $*'*$ 3 & 4 063$& 4 0/ 800%-3 , *4 · 2016. 8. 9. · CONTENTS 12: GEOPACIFIC’S WOODLARK Published by: Aspermont Limited (ABN: 66 000 375 048) EDITOR: Barry

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

Page 4: 453 4 -*(/ '03 ( &0 1 $*'*$ 3 & 4 063$& 4 0/ 800%-3 , *4 · 2016. 8. 9. · CONTENTS 12: GEOPACIFIC’S WOODLARK Published by: Aspermont Limited (ABN: 66 000 375 048) EDITOR: Barry

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

Page 5: 453 4 -*(/ '03 ( &0 1 $*'*$ 3 & 4 063$& 4 0/ 800%-3 , *4 · 2016. 8. 9. · CONTENTS 12: GEOPACIFIC’S WOODLARK Published by: Aspermont Limited (ABN: 66 000 375 048) EDITOR: Barry

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

Page 6: 453 4 -*(/ '03 ( &0 1 $*'*$ 3 & 4 063$& 4 0/ 800%-3 , *4 · 2016. 8. 9. · CONTENTS 12: GEOPACIFIC’S WOODLARK Published by: Aspermont Limited (ABN: 66 000 375 048) EDITOR: Barry

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�

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“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�

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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�

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PLQH� DUH� IXHO� DQG� VWULS� UDWLR�� 7KH�RULJLQDO� VKHOO� RI� WKH� %XVDL� SLW�

15AUGUST/SEPTEMBER 2016 PNG REPORT

Page 7: 453 4 -*(/ '03 ( &0 1 $*'*$ 3 & 4 063$& 4 0/ 800%-3 , *4 · 2016. 8. 9. · CONTENTS 12: GEOPACIFIC’S WOODLARK Published by: Aspermont Limited (ABN: 66 000 375 048) EDITOR: Barry

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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ZRUN�RQ�:RRGODUN�ZLOO�WDNH�SODFH�LQ�

16 AUGUST/SEPTEMBER 2016 PNG REPORT

Looking down on the Woodlark Island camp

A technician checks weather monitoring equipment on Woodlark

Page 8: 453 4 -*(/ '03 ( &0 1 $*'*$ 3 & 4 063$& 4 0/ 800%-3 , *4 · 2016. 8. 9. · CONTENTS 12: GEOPACIFIC’S WOODLARK Published by: Aspermont Limited (ABN: 66 000 375 048) EDITOR: Barry

$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

Page 9: 453 4 -*(/ '03 ( &0 1 $*'*$ 3 & 4 063$& 4 0/ 800%-3 , *4 · 2016. 8. 9. · CONTENTS 12: GEOPACIFIC’S WOODLARK Published by: Aspermont Limited (ABN: 66 000 375 048) EDITOR: Barry

W22'/$5.� ,6/$1'�is part of the trobriand ,VODQG� *URXS� LQ�WKH� 6RORPRQ� 6HD�� D�

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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.

Page 10: 453 4 -*(/ '03 ( &0 1 $*'*$ 3 & 4 063$& 4 0/ 800%-3 , *4 · 2016. 8. 9. · CONTENTS 12: GEOPACIFIC’S WOODLARK Published by: Aspermont Limited (ABN: 66 000 375 048) EDITOR: Barry

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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