Ok Tedi-Kingston gold deal shifts focus to PNG and GPR’s Woodlark

A PNG mine acquisition could spark interest in Geopacific Resources and the potential of its Woodlark gold project.

Geopacific Resources’ Woodlark gold project could be set to benefit from increased interest in PNG’s gold scene. Pic via Getty Images

• In the latest big gold deal, Kingston Resources will receive up to $95 million from the sale of its Misima gold project in PNG to state-backed miner Ok Tedi

• The acquisition comes amid a wave of M&A among the Australian gold sector’s major players, fuelled by near-record prices

• And it comes as Geopacific Resources and its more advanced Woodlark gold project enters a new exploration phase to grow its current 1.67Moz resource

Special report: The gold dealmaking has spread north with Kingston Resources set to bank up $95 million from the divestment of its Misima gold project in Papua New Guinea to mining giant Ok Tedi.

Ok Tedi, which is 67 per cent owned by the Papuan New Guinea government, will pay at least $60 million to Kingston (ASX:KSN) for control of the major gold development and exploration project in the Solomon Sea.

The deal doubles KSN’s investment in the project, clears its debt and funds its ambitions to boost Australian gold and copper production.

Misima is a large but relatively low-grade gold and copper resource on an island of the same name, about 625 kilometres south-east of Port Moresby, and 160km south of Geopacific Resources (ASX:GPR) Woodlark gold project.

Mining stopped on the island in 2004 and Kingston estimated in 2022 that it would cost $476 million to restart the mine.

But the gold price is at near all-time highs, with forecasts of more safe haven buying over the next few years, sparking a spate of growth-focused action in the Australian gold sector.

That includes Northern Star Resources (ASX:NST) spending $5 billion on De Grey Mining (ASX:DEG), Gold Fields bidding $3.7 billion for Gold Road Resources (ASX:GOR), Ramelius Resources’ $2.4 billion takeover of Spartan Gold (ASX:SPR); and Alkane Resources (ASX:ALK), and TSX-listed Mandalay Resources combining to create a $1.013bn gold producer.

Outlook heading north

The appetite for growth has now moved to our closest gold-rich northern neighbour and that’s expected to renew interest in Geopacific Resources and its Woodlark gold project.

More advanced than Misima, Geopacific’s Woodlark has infrastructure and key licences already in place to support the near-term development of the project with a current mineral resource of 48.3 million tonnes at 1.07 g/t gold, totalling 1.67 million ounces.

More than 88% of the resources are classified in the higher confidence Measured and Indicated categories.

Woodlark Island is in a region of Papua New Guinea rich in significant copper-gold porphyry deposits. Among these are the Tier 1 epithermal-porphyry copper-gold deposit pair at the Wafi-Golpu project held by global giant Newmont and Harmony Gold Mining. Another is Newmont’s Lihir mine which has estimated reserves of 45Moz.

Woodlark is also part of the same tectonic and geological setting as Misima, which contributes to the projects’ similar gold mineralisation profiles. Misima has a current mineral resource estimate of 3.8 million ounces of gold and 22.1Moz of silver.

Geopacific is aiming to get closer in size to its larger-resourced neighbours after the recent identification of significant copper-gold porphyry potential, which has opened up a new phase of district-scale exploration at the project.

Fourteen porphyry copper-gold target environments will be assessed as part of fieldwork to be completed over the next six months, with a 30,000m drill campaign to start this quarter.

Any new resources and technical improvements discovered during the current program will be fed into the DFS, which GPR will complete by the end of calendar year. This follows on from last year’s scoping study, which outlined the robust economics of the shallow deposit.

It forecast annual production of 95,000 ounces over a 12-year mine life, a pre-tax NPV of A$625 million and a 40.5% internal rate of return – with a gold price of only A$2,900 (it’s currently A$5,112).

This article was developed in collaboration with Geopacific Resources, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

Originally published as Ok Tedi-Kingston gold deal shifts focus to PNG and GPR’s Woodlark