geopacific resources limited · inferred resources residing within or immediately adjacent to open...

Geopacific Resources Limited Breathing new life into Woodlark October 2016 Recommendation: BUY Leverage off extensive data set & 2.1Moz resource base

Upside to base case valuation

Significant exploration potential, may underpin a larger project

ASX: GPR Share Price: $0.037 Target Price: $0.10/sh M/Cap.: $39.3M Valuation: $170M Shares: 1,152M Monthly T/over: $0.4M

Brett McKay Matthew Schembri +61 2 9239 9605 +61 2 9239 9630 [email protected] [email protected] Petra Capital Pty Ltd

October 2016

2

Contents Executive Summary ............................................................................................................................................ 4

Earn-in targets appear readily achievable, 1.2Moz reserve & DFS for 75% ................................................. 4 Simple, free-milling and open pittable project ............................................................................................... 4 The Project has been permitted but more clarity is required ......................................................................... 4 Significant exploration upside; region hosts multi-million ounce deposits .................................................... 4 Valuation upside to our A$0.10/sh price target (1xP/NPV) ........................................................................... 4 Key risks ........................................................................................................................................................ 4

Investment thesis ................................................................................................................................................ 5

Introduction ......................................................................................................................................................... 6

Woodlark Island Gold Project ............................................................................................................................. 6 Asset History and Previous Work .................................................................................................................. 7 Kula Gold’s Work History ............................................................................................................................... 8 Current Project Status ................................................................................................................................. 10 GPR to target 1.2Moz milestone for initial 51% ownership ......................................................................... 12 Regional exploration upside ........................................................................................................................ 14 Modelled assumptions for the Woodlark Gold Project ................................................................................ 15 Capital Intensity analysis indicates US$150m is in-line with peers ............................................................. 16

Other projects ................................................................................................................................................... 17 Kou Sa Project - Cambodia ......................................................................................................................... 17 Fijian Projects .............................................................................................................................................. 18 Valuation ...................................................................................................................................................... 19 Risks ............................................................................................................................................................ 20

Analysis............................................................................................................................................................. 21

Directors and Senior Management ................................................................................................................... 22

Appendix 1 ........................................................................................................................................................ 23 Peer Comparison ......................................................................................................................................... 23

Appendix 2 ........................................................................................................................................................ 26 Resources and Reserves ............................................................................................................................ 26

Appendix 3 ........................................................................................................................................................ 27

October 2016

3

Geopacific Resources (GPR) BUY Share Price: A$0.037 Breathing new life into Woodlark Target Price: A$0.10 Geopacific Resources Limited (GPR) is a Perth-based gold exploration and development company listed on the ASX with the ticker GPR. GPR recently agreed to acquire up to 80% of the undeveloped Woodlark Island Gold Project (Woodlark) in PNG from Kula Gold Limited (Kula). Woodlark currently hosts a 2.1Moz resource at 1.5g/t including 0.77Moz reserve at 2.2g/t and has had US$150m spent on exploration and study work over recent years. After recently visiting Woodlark, management are finalising plans to re-start aggressive exploration within the coming 4-6 weeks to enable an updated reserve (1.2Moz target) and rebased feasibility study to be completed in 2H CY17. Although GPR is targeting a project capable of delivering 150kozpa over 10 years, our more conservative base case estimates (100kozpa over 12 years for US$150m capex) underpin a fully diluted NPV15 of A$0.10/share. Exploration upside is likely and may support a larger project. We initiate coverage with a BUY.

Extensive data set provides a solid starting point

• 2.1Moz resource & 0.77Moz reserve already defined

• Free-milling, open pittable, abundant free-dig

• US$150m spent on drilling and studies

• DFS completed at top of market pricing (2012), opex & capex to be rebased in updated study

Simple earn-in structure allows GPR to own up to 80%

• Three tranche earn-in based on defined milestones or expenditure (max. $18.65m) over 24 month period

• Project milestones allow up to 75% ownership plus 5% if development finance is raised

• First major milestone is 1.2Moz reserve for 51%

GPR development plan to be refined in next 12 mths

• Focus on infill & extensional drilling to convert more resource into reserve; currently only 36%

• Previous DFS to be superseded following increased reserve, optimised pits & rebased economics

• GPR targeting >150kozpa for >10 years mine life

Permitting & social license well understood

• Granted Mining Lease (ML) although construction approval expires July 2017

• Board/management have extensive experience building & operating mines in remote & challenging settings

Conservative assumptions generate A$0.10/sh NPV

• Petra assume 100kozpa over 12yrs at A$1,122/oz AISC; US$150m capex & 15% discount rate

Company Data Shares – ordinary (M) 1,152 Market cap. (M) 39 12 month low/high ($) A$0.06 / A$0.023 Average monthly turnover / volume A$0.32m / 7.9M GICS Industry Materials / Gold

Financial Summary (fully diluted/normalised)

Year end Dec 2016F 2017F 2018F 2019F 2020F Revenue ($M) 0.0 0.0 0.0 67.6 154.8 Costs ($M) 2.0 2.0 3.5 31.9 70.7 EBITDA ($M) -2.0 -2.0 -3.5 35.7 84.0 NPAT ($M) -1.7 -1.8 -3.1 20.8 43.2 EPS (¢ps) -0.2 -0.1 -0.2 1.3 2.6 PER (x) na na na 3.3 1.6 Cashflow ($M) -1.7 -1.8 -3.1 32.7 68.5 CFPS (¢ps) -0.2 -0.1 -0.2 2.0 4.1 PCFPS (x) na na na 2.1 1.0 Enterprise Value ($M) 38 48 99 162 101 EV / EBITDA (x) -18.8 -24.2 -28.2 4.5 1.2 Dividends (¢ps) 0.0 0.0 0.0 0.0 0.0 Yield (%) 0.0 0.0 0.0 0.0 0.0

Board

Director Position Executive

Milan Jerkovic Chairman Non-Executive Ron Heeks Managing Director Executive

Mark Bojanjac Director Non-Executive John Lewis Company Secretary Executive

GPR – performance over one year

Disclosure and Disclaimer This report must be read with the disclosure and disclaimer on the final page of this document. In August 2016, Petra Capital acted as Exclusive Manager to the placement of 350M shares at $0.043/share to raise $15M, for which Petra Capital received a fee.

October 2016

4

Executive Summary

Earn-in targets appear readily achievable, 1.2Moz reserve & DFS for 75% With 2.1Moz resource and only 0.77Moz in reserve, GPR believe the initial 1.2Moz reserve target and

updated DFS can be achieved well within the 24 month timeframe and below the A$18.65m expenditure threshold. The key areas of focus to earn 75% of the project include:

• Infill drilling to convert more inferred resource into Measure & Indicated status to allow for reserve classification; 770koz of inferred resource located within & around the main pit designs

• Extensional drilling to better define orebody size/geometry, potential along strike and at depth

• Rebase project economics to reduce cut-off grade & lower strip ratio

• Optimise mine plan and refine the feasibility study.

Simple, free-milling and open pittable project Around US$150m has been spent by previous owners at Woodlark, including US$100m by Kula over

recent years. This work included 265,000m of drilling, metallurgical and geotechnical testwork, pre-feasibility and definitive feasibility studies, as well as extensive focus on social, environmental and permitting elements. Key outcomes include:

• Open pittable mineralisation starting at/near surface; conservative pit designs, abundant free dig

• Free-milling with 88-90% recoveries through gravity and CIL, no deleterious elements

• Deep Sea Tailings Placement (DSTP) approved and permitted; no costs related to tailings dam

• Deep water harbour located 15km from processing plant

• Environmental Permit (20 years) and Mining Lease granted (expires July 2017)

• Strong support from local regulators and communities.

The Project has been permitted but more clarity is required After a 20 month waiting period, Kula received the Mining Lease for Woodlark in early July 2014. This

was after the award of the Environmental Permit in February 2014. These permits have a minimum 20 year term and cover various aspects of the project including construction and operating conditions, environmental and social considerations, DSTP and government reporting requirements. However, one of the key conditions of the ML was the completion of construction and commissioning of the project within 36 months of the grant of the ML (July 2017). Whilst we understand only the construction certificate has to be renewed to keep the Mining Lease in good standing, we expect more clarity as GPR ramp-up their involvement with the project and regulatory bodies.

Significant exploration upside; region hosts multi-million ounce deposits

Woodlark Island is surrounded by several multi-million ounce gold deposits. Whilst a 2.1Moz resource has been defined at Woodlark to date, there are numerous opportunities to expand the current resource, as well as discover new deposits. A number of exploration opportunities can be identified:

• Extending known deposits both along strike and at depth

• Further work on earlier stage, near-mine exploration prospects & regional targets

• Investigation below coronous cover sequences which mask bedrock exposure across the island

Valuation upside to our A$0.10/sh price target (1xP/NPV) Our A$0.10/sh price target is set in-line with our NPV of our base case production plan at 15%

discount rate. We include a nominal A$30m (A$0.02/sh) of exploration value to account for the 0.9Moz not captured in our production plan, as well as the inherent value of assets in Cambodia and Fiji.

Key risks Whilst a number of upside considerations can be identified, key risks relate to (i) gold price and

currency exposure, (ii) permitting, geopolitical & social risks associated with operating in PNG (iii) significant variation in capex, opex and mine planning relative to our forecasts and (iv) execution risk.

October 2016

5

Investment thesis GPR recently entered a deal to earn up to 80% of the Woodlark Gold Project located on Woodlark

Island in PNG (Figure 1). The project is located within the broad regional geological province known as the New Guinea Mobile Belt which hosts several multi-million ounce gold and copper-gold deposits of mainly epithermal and porphyry affinity (Figure 2)

With 2.1Moz resource (45Mt at 1.5g/t) and 0.77Moz reserve (11Mt at 2.2g/t Au), Woodlark has had extensive exploration and pre-development work completed, including 265,000m of drilling and a definitive feasibility study by the project vendors (Kula Gold) in 2012. After successfully permitting the project in 2014, the gold price and gold market sentiment moved against Kula and, with limited further funding capacity, they executed the recent earn-in deal with GPR.

With an extensive data set to hand, GPR is planning an infill and extensional drilling program to rapidly expand the size of the reserve from the current 0.77Moz to the 1.2Moz target to earn a 51% interest; inferred resources residing within or immediately adjacent to open pit designs will be the primary target. Rebasing project economics will also assist by dropping the implied reserve cut off grade from 1g/t Au, thus capturing more tonnes at slightly lower grade and lowering the strip ratio. Significant exploration potential also exists, with opportunities to grow existing deposits, follow up on regional targets, as well as conduct further investigation of potential discoveries under the thin coronous cover sequence which masks most of the island.

Whilst GPR are targeting an initial project capable of delivering >150kozpa for more than 10 years, we have modelled a more conservative set of assumptions as the basis to our A$0.10/sh valuation. We assume a 1.8Mtpa operation is built for US$150m (A$200m) starting in 2019 and delivering 104kozpa at A$1,122/oz AISC for 12 years. Other projects, including Kou Sa in Cambodia and the Fijian projects, are captured in our A$30m nominal exploration value.

With a sound base-case gold project with significant upside potential, funding to complete the earn-in and a solid and experienced management team, we initiate coverage of GPR with a A$0.10/sh price target (1xP/NPV) and a BUY recommendation.

Figure 1: Reserves & tenements at Woodlark

Source: Kula Gold, July 2012 at 0.5g/t gold lower cut

Figure 2: Gold deposits in the New Guinea mobile belt

Source: GPR

October 2016

6

Introduction Geopacific Resources Limited (GPR) is a Perth based exploration and development company

focussed on gold and copper in south-east Asia and the Pacific. It is currently earning into the Woodlark Island Gold Project with potential to acquire up to 80% from the project vendor, Kula Gold (ASX:KGD) over a maximum 24 month period. It also has projects in Cambodia and Fiji, with exploration continuing at Kou Sa in Cambodia, although Woodlark is now the primary focus (Figure 3).

Figure 3: Location of GPR assets

Source: GPR

Woodlark Island Gold Project The Woodlark Gold Project (Woodlark) is located on Woodlark Island (or Muyua Island) approximately

600km east of Port Moresby and in the Solomon Sea (Figure 4). The island is approximately 75km long and 25km wide with mild topography (maximum elevation 240m) and dense forest cover. The island averages around 4m/year of rainfall with heavier falls occurring between December – March.

Much of the island is covered by a coronous sequence which formed as coral reefs at a time when the island was partially submerged. The areas without coronous cover (around 40% of the current exploration license) were not submerged and offer the only areas of outcrop to enable modern surficial exploration to take place. The coronous material is excellent for construction and road building and is considered a particularly important resource in an area of elevated rainfall. The island’s main airport was built from coronous material in World War II and remains in good operating condition. Offshore the seafloor rapidly deepens to the north with a deep sea trench only 1-2km north of the island which enables effective disposal of tailings via DSTP.

The population of Woodlark Island is estimated at 6000, with c.151 households/508 people requiring relocation from the Kulumadau mining area. No relocation is required at Busai or Woodlark King.

Gold mineralisation at Woodlark is hosted within a low sulphidation epithermal system believed to be driven by a deeper porphyritic intrusion. Gold is free-milling with a high degree of gravity gold (c.37%) and amenable to standard CIL recovery techniques at 106µm grind size. Mineralisation is variably associated with lodes, quartz veins, stockwork zones and breccias contained within a strongly developed phyllic alteration envelope. The clay-rich host rocks allow for extensive free digging and low mining costs, particularly at Kulumadau, although conservative pit wall angles impact the strip ratio. Three coherent gold deposits are included in the current mine plan as defined in the Definitive Feasibility Study from 2012 (Kulumadau, Busai and Woodlark King) which are all located within 3km of a centralised processing plant (Figure 5).

October 2016

7

Figure 4: Location of the Woodlark Gold Project in PNG

Source: Kula Gold

Figure 5: Woodlark project layout as defined in the 2012 Definitive Feasibility Study

Source: Kula Gold

Asset History and Previous Work

Asset History Prior to Kula Gold

• Historic Activity – there is a long history of gold mining on Woodlark Island going back to the late 1800’s. Gold was first discovered in 1895 prompting an initial gold rush consisting of individual miners working surface alluvial fields (Figure 6). A second rush occurred in 1899 with the discovery of primary gold mineralisation at Kulumadau. Small-scale underground hard rock mining was undertaken at Kulumadau, Busai and Boniavat.

• Recent Exploration – modern day gold exploration techniques were not employed until 1973 when surface geochemistry, geophysics and diamond drilling were undertaken, with porphyry copper and associated skarns being the primary target.

• Pre-2010 – prior to Kula Gold’s listing in 2010, 138km of RC and 30km of diamond had been drilled on the project. The majority of the drilling had been completed at Busai and Busai Regional targets with 46% and 26% of the drilled metres respectively.

October 2016

8

Figure 6: Asset History including Kula Gold acheivements Date Event

1895 Gold discovered, followed by alluvial gold rush

1899 Primary gold discovered. U/G mining at Kulumadau, Busai and Boniavat

1895-1939 200koz of gold produced, production suspended with onset of WWII

1962-1963 & 1973

Bureau of Mineral Resources (BMR) undertook geochemistry, limited geophysics & diamond drilling at Kulumadau

1988 BHP Utah and Nord Resources setup a JV to explore Woodlark Island

1989 Highlands Gold takes over project

1996 Auridiam acquires Highlands Gold

1996 Auridiam completes feasibility study

1998-2004 Auridiam (PNG) Ltd and Battlefield undertake exploration as a JV

2004 BDM Mining Limited acquires project from Auridiam / Battlefield JV

2007 Kula Gold acquires project from BDM Mining Limited

Nov-2010 Kula Gold completes PFS

Nov-2010 Kula Gold Lists on ASX

Sep-2012 Kula Gold completes DFS

Jul-2014 Kula Gold granted mining lease ML508

Jul-2016 Geopacific JV and Earn-In announced

Source: Company Reports, Petra Capital

Kula Gold’s Work History • Kula Gold – The Woodlark Island Project was listed as part of Kula Gold Limited in Nov-2010

with an initial market capitalisation of A$200m. Kula Gold spent US$100m on the project between 2008 and 2015 (Figure 7).

• Pre-feasibility Study – A PFS was released as part of the Nov-2010 IPO prospectus. It detailed a 1.5Mtpa, 2.5g/t project which would produce 708koz over 7 years at a capex of US$135m (Figure 8).

• Resource/reserve update – KGD expanded the resource from 35Mt @ 1.5g/t for 1.8Moz to 45.1Mt @ 1.5g/t for 2.1Moz and reserves from 7.7Mt @ 2.4g/t for 584koz to 10.99Mt @ 2.2g/t for 766koz, following more than 50,000m of drilling.

• Feasibility Study/Approvals – The Definitive Feasibility Study (DFS) was released in Sep-12, the Environmental Permit was granted in Feb-14 and the Mining Lease was awarded in Jul-14. A condition of the Mining Lease was the completion of construction and full commissioning of the project within a 36 month period from the grant of the lease.

• DFS details – The DFS outlined a 1.8Mtpa CIL project producing 813koz over a 9 year mine life (Figure 8). Start-up capex was estimated at US$160m with life of mine capex of US$212m (including US$36m for mining fleet). The project consisted of three open pit operations (Kulumadau, Busai and Woodlark King) within 5km of the centralised processing plant. Tailings disposal was via DSTP. The initial 6 years of mine life focussed on higher grade (2.14g/t) and better recoveries (90% at 106µm with 37% gravity gold), followed by the final three years processing stockpiles (Figure 9). A life-of-mine strip ratio of 9.1:1.0 was forecast, with C1 costs of US$812/oz.

October 2016

9

Figure 7: Kula Gold work expenditure Year Amount Items

2008 US$6m Exploration, Landowner Studies

2009 US$12m Exploration, Scoping Study, Environmental Baseline Studies

2010 US$17m Exploration, PFS, Environment Baseline Studies

2011 US$28m Infill drilling, Hydro/Geotech Frilling, Enviro Data Collection and Baseline Studies

2012 US$23m DFS, EIS and Environmental Data Collection

2013 US$7m EIS, Govt EIS review cost, Permitting

2014 US$5m Permitting, Financing, Exploration

2015 US$1m Approvals Financing, Exploration

Total US$98m


Figure 8: Key project details from PFS and DFS

PFS (IPO 2010) DFS Sep-12 GPR Target

Total Production 708koz 813koz ~1.5Moz

Plant capacity 1.5Mtpa 1.8Mtpa TBA

Feed Grade 2.5g/t 1.7g/t TBA

Gold Recovery 92% 88% TBA

Annual output 101koz 90koz ~150koz

Strip Ratio (W:O) 12.3:1 9.1:1 TBA

Mine Life 7 yrs 6 years ~10yr

Cash Op Costs US$545/oz US$812/oz TBA

Capex US$135m US$212m TBA


Figure 9: Production and grade profile outlined in DFS by KGD

Source: Kula Gold

October 2016

10

Current Project Status

Permitting

The mining lease application was submitted in late October 2009 with Mining Lease (ML) 508 granted in July 2012. The granted ML is for a term of 20 years, with the option to extend for a further 10 years providing a number of conditions are met including;

• Full commissioning of the Project, in accordance to the BFS within 36 months from the grant date (July 2017).

• Reporting to the MRA every 6 months outlining actions undertaken and progress against the BFS implementation schedule.

• Disclosure of the relevant conditions of the Mining Lease in public announcements.

The remainder of the project resides on Exploration License (EL) 1279, with EL1172 and EL1465 completing a contiguous tenement package covering the majority of the island.

The Environmental Permit was awarded for a 20 year term in early 2014. This includes the approval of the DSTP.

GPR can earn up to 80% through a series of milestones or project expenditure

GPR can spend up to A$18.65m over three tranches to earn an interest of up to 75% in Woodlark (Figure 10 and Figure 11). Kula will retain a 25% stake, of which 5% will be assigned to the PNG Government. A further 5% may be earnt by GPR if Kula is unable to, or elects not to, raise its share of the development finance and Geopacific is required to do so.

The deal structure has two components each with a differing ownership outcome for GPR and KGD. The maximum ownership up to 80% can only be attained by GPR if a 1.2Moz reserve is defined within a 24 month period (Incentive target).

• Tranche 1 – GPR will spend up to A$0.65m in less than 6 months on due diligence, defining a work program and committing to proceed to Tranche 2. GPR will earn in a total of 5%.

• Tranche 2 – GPR can spend up to A$8m over 24 months to earn an extra 35% assuming it does not achieve the incentive target of 1.2Moz reserve. KGD will hold 60% including 5% for the PNG Government. Alternatively, if GPR define the 1.2Moz reserve they will earn an additional 46% to take the total to 51%.

• Tranche 3 – if the Incentive target is not reached, GPR can spend up to A$10m under 24 months to take its stake to 60%. If the 1.2Moz reserve is defined, GPR will need to complete an updated DFS to reach 75% ownership.

Once the DFS is complete, KGD has the right to raise its share of development costs proportionate to its interest in the project. Should KGD be unable to, or elect not to, raise its share of funding, then GPR will have the right to arrange KGD’s share and earn an additional 5% interest in Woodlark, taking its total to 80%.

Figure 10: Earn in structure Tranche Timeline Max. spend Milestone GPR KGD PNG

1 6 mths A$0.65m 5% 100% 0%

2 24 mths A$8m Reserve <1.2Moz 40% 60% 0%

Reserve ≥1.2Moz 51% 49% 0%

3 24mths A$10m Reserve <1.2Moz 60% 35% 5%

Reserve ≥1.2Moz + BFS 75% 20% 5%

Reserve ≥1.2Moz + BFS + finance 80% 15% 5%

Total 24 mths A$18.65m


October 2016

11

Figure 11: Deal structure

Source: GPR

October 2016

12

GPR to target 1.2Moz milestone for initial 51% ownership Although GPR is aiming for Woodlark to be a c.150kozpa operation with a minimum 10 year mine life,

it is initially targeting the definition of a 1.2Moz reserve to initially earn 51% of the project, with further milestones to allow for 80% ownership. To do this, it has identified several areas of the project it aims to improve relative to the outcomes of the DFS in 2012. These include:

• Resource to reserve conversion drilling – targeting areas of Inferred resource which currently reside either within or adjacent to existing open pit shells (Figure 12). There is 770koz of inferred resources at Kulumadau and Busai which will be the subject of a targeted infill drilling campaign which aims to upgrade these resources into the Measured and Indicated category. Previous work indicates the three separate pits at Kulumadau would merge into one larger pit when optimising with Measured, Indicated and Inferred resources (Figure 13).

• Rebasing project economics – the DFS was completed at a high point in the mining cycle, resulting in elevated capex and opex assumptions driving a 1g/t cut-off grade for open pit resources. Changes in the mining industry cycle since 2012 has resulted in a more competitive cost environment which should improve project economics and drive a lower cut-off grade; GPR believe 0.5-0.6g/t is achievable for projects of this scale in line with the standard industry range. A lower cut-off grade should allow the addition of ounces to the resource, albeit at a lower grade. An example of the upside potential is demonstrated at Kulumadau which has a 282koz reserve at 1g/t cut-off and 840koz in resource at a 0.5g/t cut-off.

• Extensional drilling – current open pit mine designs are often constrained by drilling data rather than mineralisation. Significant potential exists to continue defining mineralisation both along strike and at depth with further drilling. Pit designs can only be established on Measured and Indicated resources, despite clear indications mineralisation is not closed off by drilling (Figure 14 to Figure 17). More drilling is required in these areas to either extend mineralisation at depth or increase drill hole spacing to enable conversion into higher resource categories.

• Reduce strip ratio – GPR are targeting two areas in a bid to reduce the LOM strip ratio of the current 9.1:1 to around 5-6:1. Firstly, lowering the cut-off grade will convert lower grade mineralisation, which is currently classified as waste, into ore. Secondly, further geotechnical and hydrological investigation of the current pit wall design will take place with a view to potentially steeper pit walls in some areas. This is particularly the case at Kulumadau where walls are as flat at 30 degrees eg. Kulumadau East.

Figure 12: Measured, Indicated & Inferred resources and pit shells at Kulumadau

Source: GPR

October 2016

13

Figure 13: Optimised shell including Inferred resources

Source: GPR

Figure 14: Kulumadau section Figure 15: Busai section

Source: GPR Source: GPR

Figure 16: Resource blocks relative to pit shells Figure 17: Resource grade distribution


October 2016

14

Regional exploration upside Only around half of the 265,000m of diamond and RC drilling completed at Woodlark has been within

the defined reserve areas, resulting in extensive near-mine and regional opportunities to expand the resource base and add to the mine plan over time. The exploration strategy will be focused on three main areas:

1. Near-mine resource/reserve expansion including upgrading Inferred resources and extending mineralisation at depth and along strike of the known deposits.

2. Regional targets, including multiple prospects defined by surface geochemistry, modern geophysics (aeromagnetics and Induced Polarisation) and/or drilling. Several of these targets are located close to the main deposits and the proposed mining operation (Figure 18).

3. Exploration beneath the coronous cover sequence which masks the geology over a large portion of Woodlark Island. Modern geophysical techniques, including detailed magnetics and IP, will help build an improved understanding of both the thickness of the cover sequence and the hidden geology in order to prioritise and accurately target future exploration programs. The coronous cover is believed to average around 10m in thickness and will therefore not be considered a major deterrent to open pit mine design. The discovery of the Kulumadau East deposit during sterilisation drilling for waste dumps is an example of the prospectivity beneath the cover sequence.

Figure 18: Exploration targets on regional aeromagnetics

Source: GPR

October 2016

15

Modelled assumptions for the Woodlark Gold Project

Despite GPR targeting the Woodlark operation to be a +150kozpa mine with +10 year mine life, we have based our initial modelling assumptions around a set of simplified development and operating assumptions, including key parameters outlined in the DFS from 2012.

We assume a 1.8Mtpa operation which exploits a 1.2Moz reserve to produce 100kozpa over a 12 year mine life at average 2g/t and 90% recovery. Start-up capex is estimated at US$150m (A$200m) with an average strip ratio of 7:1 and AISC of US$786/oz (A$1,122/oz). Ownership of 80% is assumed, with first gold production in 2H CY19. Our key project outputs are highlighted in Figure 19 to Figure 24, with cash flow and funding assumptions illustrated in Figure 25 and Figure 26.

Figure 19: Woodlark mill throughput and grade Figure 20: Woodlark gold production and AISC

Source: Petra Capital Source: Petra Capital

Figure 21: Key mining parameters Figure 22: AISC breakdown (LOM average) Mining (US$/t) 2.00 Milling (US$/t) 20 Admin (US$/t) 3.00 Royalty 2.5% Average LOM strip ratio (W:O) 7.0

Mining (US$/oz) 285 Milling (US$/oz) 346 Admin (US$/oz) 52 C1 Costs (US$/oz) 682 Royalties (US$/oz) 56 Corporate (US$/oz) 25 Sustaining (US$/oz) 23 AISC (US$/oz) 786


Figure 23: Woodlark strip ratio profile Figure 24: Woodlark AISC breakdown


October 2016

16

Figure 25: Free cash flow (A$m) Figure 26: FCF forecasts including debt and equity


Capital Intensity analysis indicates US$150m is in-line with peers Our US$150m (A$200m) start-up capex for Woodlark appears in-line with a comparable list of global

development and pre-development gold projects. This list of 12 new open pit & CIL gold projects has an average capital intensity of US$88/t, with Woodlark’s 1.8mtpa project coming in at US$82/t of installed processing capacity (Figure 27 and Figure 28).

Figure 27: Capital intensity of open-pit gold projects


Figure 28: Capital intensity of open pit gold projects


October 2016

17

Other projects

Kou Sa Project – Cambodia Kou Sa is located in Northern Cambodia’s Chep District and has been explored by Geopacific since

early 2013 (Figure 29). The project was originally discovered by BRGM geologists in the 1960’s before the Vietnamese and regional civil wars. No further work was conducted until 2008 when Golden Resource Development Co (GRD) commenced exploration activities.

The project is highly prospective for copper gold mineralisation and exhibits a number of mineralisation styles such as banded fissure vein hosted Cu/Au at Prospect 150 (Figure 30) and an epithermal Au/Ag system at Prospect 190.

Acquisition Terms

GRD is a South Korean controlled Cambodian company that Geopacific acquired an 85% interest, with remaining 15% acquired by The Royal Group. Payment for the 85% initially consisted of a US$0.7m exclusivity payment, followed by US$14m spread between Jan-15 and Jul-2016 in addition to an agreed work program. This was subsequently changed in Feb-16, whereby the final payment of US$6.3m was deferred and split into a US$1.6m payment at completion of a BFS followed by a 2% production royalty (capped at US$8.4m).

Exploration to Date

Modern exploration techniques including systematic geochemistry and geophysics have outlined numerous mineral targets in the project area. Exploration efforts have targeted Prospect 150 and 160, with an initial combined resource of 3.84Mt @ 0.77% Cu and 0.66g/t Au for 29.5kt Cu and 81.8koz defined in July 2016. A higher grade, near surface core of 1.5Mt at 2.4% Cueq could assist the project economics. Further resources from Prospects 100, 117, 128 and 190 are yet to be calculated but drilling looks encouraging. Recent holes from Prospect 190 include 6m @ 3.56g/t Au, 15.48g/t Ag and 6.5m @ 1.11g/t Au and 10.8g/t Ag.

Production Concept

GPR believe a conceptual production plan would involve a 0.75Mtpa conventional flotation plant producing c.10kt Cu eq concentrate for 7 years for c.US$17-20m capex. Exploration continues to support this concept, with a scoping study as well as environmental and social studies underway

Figure 29: Location of Kou Sa in Cambodia Figure 30: Section through Prospect 150


October 2016

18

Fijian Projects GPR is a dominant tenement holder in Fiji with 5 projects located on the two main islands of Viti Levu

and Vanua Levu (Figure 31). The Nabila project with the Faddy’s Prospect on the island of Viti Levu is the most advanced and has been the highest priority project.

Canada-based Lion One Metals (ASX: LLO; TSX: LIO) plans to construct a processing facility at their Tuvatu Project located adjacent to GPR’s Vuda and Sabeto projects and within trucking distance of Faddy’s Prospect. Faddy’s has a non-JORC source estimate of 920kt @ 4.9g/t for 144koz which is the subject of studies evaluating the merits of either a small standalone operation or a toll treating arrangement. Preliminary metallurgical test work indicates Faddy’s could be processed at the planned Tuvatu mill and negotiations between the two parties are underway.

The Faddy’s project is a high grade, near surface epithermal gold system (Figure 33). To date, over 230 holes have been drilled including 22m @ 4g/t and 11m @4.24g/t. Mineralisation appears open along strike and at depth. Diamond drilling is continuing at Faddy’s, whilst trenching is underway at the Rakiraki epithermal gold project.

Figure 31: Summary of Geopacific Projects in Fiji

Project Nabila Rakiraki Vuda Sabeto Cakaudrove

Commodity Gold Gold Gold & Copper Gold & Copper Gold & Copper

Style of Mineralisation

Epithermal Epithermal Epithermal & Porphyry

Porphyry Epithermal

Exploration Status

Advanced Intermediate Intermediate Intermediate Greenfield

Geopacific Ownership

100% 50% (JV with PEN)

100% 100% 100%

Priority High High Medium Medium Low


Figure 32: Location of GPR projects in Fiji (red) Figure 33: Cross section through Faddy’s


October 2016

19

Valuation We model GPR using DCF methodology at a 15% discount rate (real) on a 12 month forward-looking

basis and use the Petra commodity price and currency forecasts (Figure 34 & Figure 35). We include a nominal A$30m (A$0.02/sh) for exploration valuation to account for upside potential at Woodlark, as well as the inherent value of projects in Cambodia and Fiji.

Our valuation is fully diluted for further capital raising activities associated with construction of the Woodlark Gold Project based on 80% ownership. We assume a further $50m in new equity is raised at A$0.085/sh, with the balance of the A$200m development funding sourced from a A$100m debt facility.

The Woodlark Gold Project generates a 45% IRR based on our development and commodity price assumptions.

Figure 34: Fully diluted valuation at 15% discount rate

A$m A$/sh %

Woodlark (80%) 137 0.08 81%

Exploration 30 0.02 18%

Corporate / Other -18 -0.01 -11%

Net Cash (Debt) 21 0.01 12%

Total 170 0.10 100%

Source: Petra Capital

Figure 35: Petra commodity and exchange rate forecasts

2016 2017 2018 2019 2020 (LT)

Gold US$/oz 1275 1310 1300 1300 1300

Silver US$/oz 17.42 19.50 20.00 20.00 20.00

Exchange Rate A$/US$ 0.74 0.73 0.73 0.71 0.70


Valuation sensitivity

GPR is sensitive to both the AUD exchange rate and the gold price (Figure 36)

Figure 36: Valuation sensitivities based on various US$ gold prices and AUDUSD

Gold price forecasts (US$/oz)

1200 1250 1300* 1350 1400

AUDUSD forecasts

65 0.08 0.10 0.11 0.12 0.13 70* 0.08 0.09 0.10 0.11 0.12 75 0.07 0.08 0.09 0.10 0.11 80 0.06 0.07 0.08 0.09 0.10 85 0.05 0.06 0.07 0.08 0.09

Source: Petra Capital * Petra average life of mine estimates

October 2016

20

Risks

Key risks associated with companies operating in the resource sector include exposure to commodity price and currency fluctuations, technical and operating risks, litigation and political risks and funding and equity/debt market risks. Risks specific to GPR include:

• Geopolitical risks – GPR has exposure to exploration and development projects in PNG, Cambodia and Fiji which are countries with a mixed track record in the mining industry.

• Permitting risk – the current Mining Lease expires in July 2017 in accordance with the condition which required the project to be built and commission within a 36 month period. Importantly, the Environmental Permit and DSTP have each been awarded for a 20 year term. Tenure will revert back to the underlying Exploration Licence once the ML expires.

• Social risk – whilst landowner and resettlement agreements were signed in 2011, the validity of these agreements is currently unclear. Further investigation and negotiation maybe required to either ratify existing agreements or form new agreements.

• Ownership and expenditure risk – GPR may not reach the targeted incentive milestones as anticipated and fail to reach the 75% ownership threshold for the expected expenditure. A maximum 60% ownership is possible if a minimum A$18.65m is spent on the project without achieving the 1.2Moz reserve target.

• Funding risk – whilst GPR recently raised A$15m to continue exploration in PNG, Cambodia and Fiji, further development funding will be required to continue advancing Woodlark toward production.

• New operational team risks – whilst management has considerable experience, the team assembled to execute the project is yet to demonstrate how well they can work together, particularly within the PNG mining, regulatory and social framework.

October 2016

21

Analysis


Geopacific Resources Share Price ($) 0.04(GPR) Iss. Shares (current) (M) 1152.3

Iss. Shares (diluted) (M) 1735.34-Oct-16 Unlisted Options (M) 0.0Year End 31 Dec A$ Mkt Cap. ($M) 48.4PROFIT & LOSS 2015A 2016F 2017F 2018F 2019F 2020F RESOURCES INVENTORY 2015A 2016F 2017F 2018F 2019F 2020FSales Revenue $M 0.0 0.0 0.0 0.0 67.6 154.8 Mining Inventory Other Income $M 0.1 0.0 0.0 0.0 0.0 0.0 Tonnes Mt 0.0 0.0 19.0 19 18 16Operating Costs $M 1.9 2.0 2.0 3.5 31.9 70.7 Grade g/t 0.0 0.0 2.0 2.0 2.00 2.00Exploration $M 0.0 0.0 0.0 0.0 0.0 0.0 Contained Gold oz 0 0 0 1,221,728 1,170,287 1,054,544Other $M 0.0 0.0 0.0 0.0 0.0 0.0 ResourcesEBITDA $M (1.9) (2.0) (2.0) (3.5) 35.7 84.0 Tonnes Mt 0.0 0.0 45 45 44 43Dep. & Amort. $M 0.1 0.0 0.0 0.0 3.0 15.7 Grade g/t 0.0 0.0 1.5 1.5 1.5 1.5EBIT $M (2.0) (2.0) (2.0) (3.5) 32.7 68.3 Contained Gold oz 0 0 0 2,174,998 2,123,557 2,007,814Net Interest $M 0.0 (0.3) (0.2) (0.4) 3.0 6.6Pre-Tax Profit $M (2.0) (1.7) (1.8) (3.1) 29.8 61.7 PRODUCTION (100%)Tax $M 0.0 0.0 0.0 0.0 8.9 18.5 Ore Milled Mt 0.00 0.00 0.00 0.00 0.8 1.8Minorities $M 0.0 0.0 0.0 0.0 0.0 0.0 Grade g/t 0.0 0.0 0.0 0.0 2.0 2.0Net Profit $M (2.0) (1.7) (1.8) (3.1) 20.8 43.2 Recovery % 0% 0% 0% 0% 90% 90%Abnormal $M 0.0 0.0 0.0 0.0 0.0 0.0 Gold Produced oz 0 0 0 0 46,297 104,168Reported Profit $M (2.0) (1.7) (1.8) (3.1) 20.8 43.2Dividends Paid $M 0.0 0.0 0.0 0.0 0.0 0.0 REVENUE (attributable)Adjustments $M 0.0 0.0 0.0 0.0 0.0 0.0 Woodlark $M 0.0 0.0 0.0 0.0 67.6 154.8Retained Earnings $M (14.0) (15.8) (17.5) (20.6) 0.2 43.4 Other $M 0.0 0.0 0.0 0.0 0.0 0.0CASH FLOW Total $M 0.0 0.0 0.0 0.0 67.6 154.8Revenue $M 0.0 0.0 0.0 0.0 67.6 154.8Costs $M (1.7) (2.0) (2.0) (3.5) (31.9) (70.7) COSTS (attributable)Net Interest $M 0.0 0.3 0.2 0.4 (3.0) (6.6) Cash costs A$/oz 0 0 0 0 767 807Tax Paid $M 0.0 0.0 0.0 0.0 0.0 (8.9) All in sustaining costs A$/oz 0 0 0 0 843 874Gross Cash Flow $M (1.7) (1.7) (1.8) (3.1) 32.7 68.5 Cash costs US$/oz 0 0 0 0 547 565Net Capex $M (0.0) 0.0 0.0 (69.3) (90.7) (2.8) All in sustaining costs US$/oz 0 0 0 0 601 612Exploration $M (10.8) (15.0) (8.0) (8.0) (5.0) (5.0) Cash costs $M 0.0 0.0 0.0 0.0 28.4 67.2Dividends $M 0.0 0.0 0.0 0.0 0.0 0.0 Other/corporate $M 0.0 2.0 2.0 4 4 4Other $M (5.0) 0.0 0.0 0.0 0.0 0.0 Total $M 0.0 2.0 2.0 3.5 31.9 70.7Free Cashflow $M (17.5) (16.7) (9.8) (80.4) (63.0) 60.7Equity Issues $M 25.4 15.0 20.0 30.0 0.0 0.0 CAPEX (attributable)Net Borrowings $M (0.1) 0.0 0.0 50.0 50.0 (20.0) Woodlark $M 0.0 0.0 0.0 69.3 90.7 2.8Net Investments $M 0.0 0.0 0.0 0.0 0.0 0.0 Other $M 0.0 0.0 0.0 0.0 0.0 0.0Surplus Cash Flow $M 7.8 (1.7) 10.2 (0.4) (13.0) 40.7 Total $M 0.0 0.0 0.0 69.3 90.7 2.8BALANCE SHEETCash $M 12.6 10.9 21.1 20.7 7.7 48.4 DEPRECIATION (attributable)Other Current $M 0.8 0.0 0.0 0.0 0.0 0.0 Woodlark $M 0.0 0.0 0.0 0.0 3.0 15.7Total Current $M 13.3 10.9 21.1 20.7 7.7 48.4 Other $M 0.0 0.0 0.0 0.0 0.0 0.0Fixed Assets $M 0.2 0.2 0.2 69.5 157.2 144.3 Total $M 0.0 0.0 0.0 0.0 3.0 15.7Exploration $M 26.2 41.2 49.2 57.2 62.2 67.2Intangibles $M 0.0 0.0 0.0 0.0 0.0 0.0 EBITDA (attributable)Other $M 8.6 9.4 9.4 9.4 9.4 9.4 Woodlark $M 0.0 -2.0 -2.0 -3.5 35.7 84.0Total NC Assets $M 34.9 50.7 58.7 136.0 228.7 220.8 Other (incl. writedowns) $M 0.0 0.0 0.0 0.0 0.0 0.0TOTAL ASSETS $M 48.2 61.5 79.8 156.7 236.5 269.2 Total $M 0.0 -2.0 -2.0 -3.5 35.7 84.0Total Debt $M 0.0 0.0 0.0 50.0 100.0 80.0Current Liab $M 1.1 1.1 1.1 1.1 10.0 19.6 HEDGING (attributable)Non Current Liab $M 0.0 0.0 0.0 0.0 0.0 0.0 Gold hedged oz 0 0 0 0 0 0TOTAL LIAB $M 1.1 1.1 1.1 51.1 110.1 99.6 Hedged price US$/oz 0 0 0 0 0 0NET ASSETS $M 47.1 60.4 78.6 105.6 126.4 169.6 Hedged price A$/oz 0 0 0 0 0 0SH/HLDRS FUNDS $M 47.1 60.4 78.6 105.6 126.4 169.6 Sales hedged % 0% 0% 0% 0% 0% 0%RATIO ANALYSIS Ave. deliverable price US$/oz 1160 1275 1310 1300 1300 1300EPS ¢ (0.3) (0.2) (0.1) (0.2) 1.3 2.6 Ave. deliverable price A$/oz 1,541 1,718 1,795 1,793 1,825 1,857PER x na na na na 3.3 1.6EPS Growth % >100 >100 (28.5) 72.5 780.6 107.4 ASSUMPTIONSEBITDA per share ¢ -0.2 -0.2 -0.1 -0.2 2.2 5.1 Exchange Rate A$/US$ 0.75 0.74 0.73 0.73 0.71 0.70EBITDA Multiple x -17.7 -24.2 -34.7 -19.8 1.9 0.8 Gold Price US$/oz 1160 1275 1310 1300 1300 1300EV/EBITDA x -11.1 -18.8 -24.2 -28.2 4.5 1.2 Gold Price A$/oz 1541 1718 1795 1793 1825 1857CFPS ¢ (0.2) (0.2) (0.1) (0.2) 2.0 4.1 Silver price US$oz 15.71 17.42 19.50 20.00 20.00 20.00PCFR x na na na na 2.1 1.0 90 day Bank Bills % 2.26 2.14 2.09 2.09 2.09 2.09DPS ¢ 0.0 0.0 0.0 0.0 0.0 0.0 10 Yr Bond rate % 2.71 2.38 2.78 2.78 2.78 2.78Yield % 0.0 0.0 0.0 0.0 0.0 0.0 Interest Rate Charged % 6.00 6.00 6.78 6.78 6.78 6.78Franking % 0 0 0 0 0 0Payout Ratio % 0% 0% 0% 0% 0% 0%Gearing D/E % na na na 27.8 73.0 18.6Interest Cover x 0.0 7.4 8.8 8.0 11.1 10.3EBITDA Margin % na na na na 52.8 54.3 VALUATION (fully diluted) at 15% discount rate A$M A$psEBIT Margin % na na na na 48.4 44.1 Woodlark (80%) 136.8 0.08$ Return On Assets % (4.1) (3.2) (2.5) (2.2) 13.8 25.4 Exploration 30.0 0.02$ Return On Equity % (4.2) (2.9) (2.3) (2.9) 16.5 25.5 Corporate / Other (18) (0.01)$ Eff Tax rate % 0 30 30 30 30 30 Net Cash (Debt) 21.1 0.01$

Total 169.9 0.10$

October 2016

22

Directors and Senior Management

Milan Jerkovic (Chairman) is a qualified geologist with postgraduate qualifications in Mining & Mineral Economics and has over 30 years of experience in the mining industry involving resource evaluation, operations, financing, acquisition, project development and general management. Mr Jerkovic is currently chairman of Blackham Resources and principal of the Xavier Group. He was previously the CEO of Straits Resources Limited and has held positions with WMC, BHP, Nord Pacific, Hargraves, Tritton and Straits Asia and was the founding chairman of Straits Asia Resources. He is a Fellow of the Australian Institute of Mining and Metallurgy and a member of the Australasian Institute of Company Directors.

Ron Heeks (Managing Director) was a founder of Exploration and Mining Consultants and has over 30 years experience with WMC, Newcrest, Newmont (US) and RSG Consulting. Mr Heeks has held senior roles in both mine management and exploration and is a Former General Manager – Technical for Straits Asia Indonesian Operations and Chief Technical Officer for Adamus Resources Southern Ashanti Gold Operation. Mr Heeks was appointed Managing Director of the Company on 28 March 2013 after the takeover of Worldwide Mining Projects Ltd.

Mark Bojanjac (Non Executive Director) is a Chartered Accountant with over 20 years’ experience in developing resource companies. Mr Bojanjac was a founding director of Gilt-Edged Mining Limited and Managing Director of a public company involved in developing assets in Mongolia and China. Mr Bojanjac was CEO of Adamus Resources and oversaw its advancement from an explorer through feasibility studies and managed debt and equity financing of the Nzema gold mine in Ghana. He also serves as Non- Executive Chairman of Canadian explorer, Coventry Resources.

John Lewis (Company Secretary) is a Chartered Accountant with 20 years’ post qualification experience working predominantly in corporate reorganisation, specialising in the mining industry for the last 8 years. Mr Lewis has worked on a number of mining projects including restructuring Croesus Resources NL (now Central Norseman Gold Mines PLC), CFO for Nickelore Limited and CFO, Director and Company Secretary for Dragon Mountain Gold Limited.

Glenn Zamudio (Project Manager) has a strong record of operating and developing businesses in challenging jurisdictions. Mr Zamudio has 5 years of process and engineering experience from feasibility through to commissioning and 10 years of merchant and investment banking experience. From 2002, on arrival in Australia he owned and managed a private businesses for 4 years and then joined Mawson West Limited for 8 years and held positions of Chief Financial Officer and Company Secretary, Executive General Manager Operations and Group Executive Commercial. Mr Zamudio holds a degree in Chemical Engineering, a Masters of Business Administration, is a Chartered Financial Analyst and is a member of Australian Institute of Company Directors (GAICD).

Prayogo Hargyono (Exploration Manager, Cambodia) has a wealth of exploration experience in many commodities including gold, copper and coal. With over 20 years of field experience in Asia, he has held senior positions with Pelsart, Borneo Gold Corporation of Canada, North Limited, Straits Resources, Anglo American, Asian Gold Corporation Indonesia of Ivanhoe Mines. As Head of Exploration for Straits Resources he was responsible for delineating sufficient resources to restart and maintain production at the Mt Muro Gold Mining Operation and for the expansion of coal resources at the Sebuku Coal Mining Operation. He has also held the position of Chief Geologist for Anglo American Indonesia where he was responsible for Porphyry Copper exploration on Papua Island in Indonesia. Later with Ivanhoe Mines, Mr Hargyono was Project Manager for the Kerta Project in West Java of Indonesia focused in exploring epithermal gold-silver deposits. Mr Hargyono holds a degree in Geological Engineering from the Gadjah Mada University.

Philippa Leggat (Corporate Affairs) is a corporate advisor and company director with over 15 years of experience in assisting international organisations that operate in Africa, Asia, Australia and Europe. She has a strong background in corporate governance and finance. Her experience covers mergers and acquisitions, fund raising, defining and executing strategies, business development and improvement. Ms. Leggat has worked in a range of sectors from information technology and telecommunications to finance, real estate and mineral resources, across private, listed and public organisations. Ms Leggat holds a Bachelor of Commerce in Finance, Risk & Strategic Management, a Bachelor of Arts and is a graduate member of the Australian Institute of Company Directors (GAICD).

October 2016

23

Appendix 1

Peer Comparison • Resource – Geopacific will earn in ~80% of the 2.12Moz Woodlark Island deposit (1.70Moz

attributable), placing the company’s resource between Austral Gold and Medusa Mining (Figure 37).

• Reserve – The reserve at Woodlark Island is currently 766koz (613koz attributable) which places the company’s reserve between Red5 and Beadell Resources (Figure 38).

• Resource to Reserve Metrics – Geopacific have a 34% conversion rate with a 2.12Moz resource and 766koz reserve at Woodlark Island. If the reserve were to increase to 1.2Moz without increasing the resource, as planned, the conversion rate would rise to 56% placing Geopacific at the very top of its peers (Figure 39).

Figure 37: Resource Figure 38: Reserve

Source: Company Reports, Petra Capital Source: Company Reports, Petra Capital

Figure 39: Resource to Reserve Conversion


(Grey bar indicates GPR target reserve of 1.2Moz at Woodlark Island with an unchanged resource of 2.12Moz).

October 2016

24

• EV / Resource & EV / Reserve – Geopacific is one of the cheapest gold companies within its peer group on an EV/Resource of A$18/oz and an EV/Reserve of A$53/oz (Figure 40 and Figure 41).

• Planned Production – Planned production of ~100koz/75koz (100%/attributable basis, Petra Estimate) places Geopacific around the 25th percentile of its peer group (Figure 42).

• EV / Planned Production – On an EV basis Geopacific’s EV/Planned production is A$382/oz, which is again one of the cheapest gold companies within its peer group (Figure 43).

• AISC – ASIC are ranked in the third quartile (Figure 44). Improvements are possible as operations are optimised.

Figure 40: EV / Resource Figure 41: EV / Reserve


(Hatched indicates development status)


Figure 42: Planned Production Figure 43: EV / Planned Production


*Development target ^CY16 Guidance ˇFY17 Guidance

Planned production is based upon company guidance or engineering studies if in development


*Development target ^CY16 Guidance ˇFY17 Guidance

Planned production is based upon company guidance or engineering studies if in development

October 2016

25

Figure 44: AISC of ASX Gold Miners and Developers


October 2016

26

Appendix 2

Resources and Reserves Figure 45: Woodlark Island Gold Project Mineral Resources (July 2012)

Deposit Category

Resource (Mt)

Grade (Cut) (g/t Gold)

Gold (Cut) (Oz)

Kulumadau Measured 5.0 1.78 285,000 Kulumadau Indicated 4.4 1.75 245,000 Kulumadau Inferred 8.6 1.4 375,000 Kulumadau Totals 18.0 1.6 910,000 Busai Measured 3.9 1.54 190,000 Busai Indicated 10.4 1.4 480,000 Busai Inferred 8.8 1.3 370,000 Busai Total 23.1 1.4 1,040,000 Woodlark King Indicated 3.0 1.2 115,000 Woodlark King Inferred 1.0 1.8 60,000 Woodlark King Total 4.0 1.4 175,000 All Measured 8.9 1.67 480,000 All Indicated 17.8 1.5 840,000 All Inferred 18.5 1.4 800,000

Totals All 45.1 1.5 2,120,000

Source: Company Reports

Figure 46: Woodland Island Gold Project Ore Reserve (July 2012)

Deposit Proved Probable Total

Tonnes Grade Ounces Tonnes Grade Ounces Tonnes Grade Ounces

Busai 3,283,000 2.2 233,000 2,811,000 1.9 175,000 6,094,000 2.1 408,000

Kulumadau 3,144,000 2.2 223,000 751,000 2.4 59,000 3,863,000 2.3 282,000

Woodlark King 704,000 1.7 39,000 704,000 1.7 39,000 Kalumadau East 330,000 3.7 37,000 330,000 3.7 37,000

Total 6,427,000 2.2 456,000 4,596,000 2.1 310,000 10,991,000 2.2 766,000


Figure 47: Kou Sa Resource Statement (July 2016) 0.4% CuEq cut off

Deposit Category Mt Cu %

Au g/t

Ag g/t

CuEq %

Cu kt

Au koz

Ag koz

CuEq kt

Prospect 150 Indicated 2.36 0.68 1.01 6.02 1.52 16 76.6 457 35.9

Inferred 0.12 0.6 0.5 4.5 1 0.7 1.9 17 1.2

Subtotal 2.48 0.68 0.99 5.95 1.5 16.8 78.6 474 37.1

Prospect 160

Indicated 1.13 0.98 0.07 4.01 1.08 11.1 2.5 146 12.2

Inferred 0.23 0.7 0.1 4.2 0.8 1.6 0.7 31 1.9

Subtotal 1.36 0.93 0.08 4.04 1.04 12.7 3.3 177 14.1

Indicated 3.49 0.78 0.71 5.37 1.38 27.1 79.2 602 48.1

Total Inferred 0.35 0.7 0.2 4.3 0.9 2.3 2.7 48 3.1

Total 3.84 0.77 0.66 5.27 1.33 29.5 81.8 651 51.2


October 2016

27

Appendix 3

Figure 48: Directors’ Interests (showing % on a fully diluted basis) Director Shares (M) Options Total (M)

Milan Jerkovic 8,756,108 500,000 9,256,108 Ron Heeks 5,523,757 2,000,000 7,523,757 Mark Bojanjac 3,041,666 375,000 3,416,666 John Lewis 5,048,814 1,500,000 6,548,814


Figure 49:Top Shareholders Name %

1 Resource Capital Funds 32 2 Tembo Capital 27 3 Board and Senior Execs 2.5


October 2016

Petra Capital Level 17, 14 Martin Place, Sydney NSW 2000

Director: George Marias +61 (0)2 9239 9601 [email protected] Research (Resources): Brett McKay +61 (0)2 9239 9605 [email protected] Research (Resources): Matthew Schembri +61 (0)2 9239 9630 [email protected] Research (Industrials): Michael Henshaw +61 (0)2 9239 9606 [email protected] Research (Industrials): George Kopsiaftis +61 (0)2 9239 9618 [email protected] Research (Industrials): Nick Berry +61 (0)2 9239 9634 [email protected] Research (Industrials): Killian Murphy +61 (0)2 9239 9607 [email protected] Research (Property): Jonathan Kriska +61 (0)2 9239 9633 [email protected] Sales: Frank Barila +61 (0)2 9239 9603 [email protected] Sales: Shane Gavegan +61 (0)2 9239 9616 [email protected] Sales: Mark Innes +61 (0)2 9239 9602 [email protected] Sales: Richard Macphillamy +61 (0)2 9239 9604 [email protected] Sales: Vincent Pisani +61 (0)2 9239 9617 [email protected] Sales: Michael Vincent +61 (0)2 9239 9620 [email protected] Sales: Colin Redmond +61 (0)2 9239 9613 [email protected] Sales: Daniel Gardiner +61 (0)2 9239 9608 [email protected] Sales: Peter Veldhuizen +61 (0)2 9239 9609 [email protected] Corporate (ECM): Conrad Anderson +61 (0)2 9239 9610 [email protected] Administration: Krystle Garven +61 (0)2 9239 9635 [email protected] Administration: Amelia Holland +61 (0)2 9239 9614 [email protected] Administration: Samantha Tingley +61 (0)2 9239 9636 [email protected] Administration: Silvia Fratta Pasini +61 (0)2 9239 9621 [email protected] Administration: Larissa Falvo +61 (0)2 9239 9611 [email protected] Legal & Compliance: Stephen Newton +61 (0)2 9239 9612 [email protected] Financials: Tony Christelis +61 (0)2 9239 9615 [email protected]

Disclosure This document has been prepared in Australia by Petra Capital Pty Ltd which holds an Australian Financial Services License AFSL 317 944. Petra Capital Pty Ltd is an ASX Market Participant. In August 2016, Petra Capital Pty Ltd acted as Exclusive Manager to the placement of 350M shares at $0.043/share to raise $15M, for which Petra Capital Pty Ltd received a fee. Petra Capital Pty Ltd and its associates, officers, directors, employees and agents, from time to time, may receive brokerage, commissions, fees or other benefits or advantages, hold securities in companies researched by Petra Capital Pty Ltd and may trade in these securities either as principal or agent. Disclaimer The information or advice contained in this report has been obtained from sources that were accurate at the time of issue, however the information has not been independently verified and as such, Petra Capital Pty Ltd cannot warrant its accuracy or reliability. Persons relying on this information do so at their own risk. To the extent permitted by law, Petra Capital Pty Ltd disclaims all liability or responsibility for any direct or indirect loss or damage (including consequential loss or damage) caused by any error or omission within this report, or by persons relying on the contents of this report. This report is published by Petra Capital Pty Ltd by way of general information or advice only. This report does not take into account specific investment needs or other considerations that may be pertinent to individual investors. Before making any investment decisions based on this report, parties should consider, with or without an investor adviser, whether any relevant part of this report is appropriate to their financial circumstances and investment objectives. Petra Capital Pty Ltd is a licensed institutional/wholesale stockbroking firm. The report is only intended for institutional and sophisticated clients to whom Petra Capital Pty Ltd has issued the report. Petra Capital Pty Ltd is not licensed to advise retail investors – retail investors should contact their own stockbroker or financial adviser/planner for advice. Key Risks – Resources Companies under Coverage Key risks in relation to the resources sector and the resources companies that are the subject of research by Petra Capital’s analysts include commodity price volatility, currency risk, technical/licencing/operational risks, litigation/political risk, development risk and sovereign risk for overseas assets, as well as feasibility, permitting and financing risks related to the development of growth projects.

Ratings Information regarding the scope and expertise of our research services, processes for selection for coverage, and the management of conflicts of interest can be found on Petra Capital’s website at www.petracapital.com.au/research-disclosures. Petra Capital uses the following ratings system and definitions: Buy - Forecast to outperform the Market by more than 5%; Hold - Forecast to perform up to 5% above or below the Market; Sell - Forecast to underperform the Market by more than 5%; Speculative Buy - Speculative Investment; Take Profits - Recommend taking short term profits in a stock we remain fundamentally positive on a medium term view; Accept Offer - For a company under takeover where we see the offer as a fair price with low risk of a competing offer; No Rating - No rating at this time. Market performance is relative to the S&P/ASX Small Ordinaries Index which we assume generates a neutral return on a 12 month basis. US Investors This material is intended for use by major U.S. institutional investors (as such term is defined in the U.S. Securities Exchange Act of 1934) and “$100 million investors” only and not the general investing public or retail customers. “$100 million investors” means any entity, including any investment adviser (whether or not registered under the U.S. Investment Company Act of 1940) that owns or controls (or in the case on an investment adviser has under management) in excess of US$100 million in aggregate financial assets (i.e. cash, money-market instruments, securities of unaffiliated issues, futures and options on futures and other derivative instruments). Transactions by or on behalf of any US person in any security mentioned in this document may only be effected through Global Alliance Securities, LLC (“Global Alliance”), a U.S. broker dealer. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, its accuracy is not guaranteed. Additional and supporting information is available upon request. This is not an offer or solicitation of an offer to buy or sell any security or to make any investment. Any opinion or estimate constitutes the preparer’s best judgement as of the date of preparation and is subject to change without notice. Petra Capital Pty Ltd or Global Alliance and their associates or affiliates, and their respective officers, directors and employees may buy or sell securities mentioned herein as agent or principal for their own account. Other International International investors are encouraged to contact their local regulatory authorities to determine whether restrictions apply in buying/selling this investment.

ABN 95 110 952 782 ACN 110 952 782

AFSL 317 944

mailto:[email protected]

http://www.petracapital.com.au/research-disclosures

geopacific resources limited · inferred resources residing within or immediately adjacent to open...

Documents