Geopacific Resources : Quarterly Activities Report and 5B Cashflow - December 2021

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ASX: GPR

3 February 2022

Quarterly Activities Report

For the period ended 31 December 2021

Geopacific Resources Ltd ('Geopacific' or 'the Company'; ASX: GPR) provides an update on its activities and cashflow for the quarter ended 31 December 2021.

Highlights

• Construction and development activities continued at the Woodlark Gold Project (the 'Project') during the quarter. Key updates include:
  o Earthwork activities to prepare the CIL tanks foundations continued at a slower than expected rate with the placement of geotextile and fill material hampered by high rainfall and equipment availability issues;
  o Finalisation of wharf design and requests for tenders issued for construction;
  o Tailings system design finalised with requests for tenders issued for construction; o Earthworks completed for the permanent camp;
  o SAG and Ball Mill fabrication completed; and
  o Community relocation program continued achieving over 50% of construction complete.
• Further to the ASX Announcement of 11 November 2021, the work program to review the Project Development Schedule and Cost Estimate continued. Key updates include:
  o Additional internal resources with extensive project development experience were secured to assist with the review of all development assumptions, work packages, schedule and cost drivers; o The Board engaged AMC Consultants to assess the Company's proposed revisions to the Project
  execution plan and the resulting costs to complete.
• The Company and the Lender (Sprott Private Resource Lending II (Co), Inc. ('Sprott') entered into previously announced amendments to the Facility and the Stream Agreement ('Agreements').
• As a result of the amendments, the Company prepaid all of the principal (and accrued interest) under the Facility Agreement and repaid the Stream Agreement Deposit. Following these payments, the Company has no debt drawn under the Facilities.
• Drilling contractor, Quest Exploration Drilling, was mobilised to site and a grade control and exploration drilling program commenced:
  o Results from the initial six holes from the grade control RC drill campaign (ref ASX release 23 December 2021) compare favourably with the resource model which has an average grade of 1.04 g/t Au; and
  o The drilling campaign remains active on site testing near pit and step-out targets.
• Cash as at 31 December 2021 of A$67.4m, including A$16.5m held in the Group's Debt Proceeds Accounts to collateralise the US$10m contingent termination fee to Sprott (if it becomes payable) and a reserve buffer of US$2m.

Post Quarter Developments

• On 13 January 2022, Mr Andrew Bantock was appointed as Non-Executive Chairman and Mr Ian Clyne retired from the Board.
• On 3 February 2022, the Company advised that:

1. In view of ongoing delays in the Project schedule and the consequent implications for capital cost escalation, a range of steps have been taken including suspending all detailed engineering and civil works at the Project, pending completion of a review of the Company's strategic options. The

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GRES continued with the procurement of long lead items until the Company made the decision to defer any further commitments on 11 November 2021. Manufacturing of long lead items with orders placed prior to this decision continued to advance and the SAG and Ball Mill fabrication was completed by the end of the quarter.

Earthwork activities to prepare the foundation area for the CIL tank area box cut continued during the quarter, with progress hampered by high rainfall and equipment availability issues.

A new plan was developed in December 2021 to facilitate more effective filling of box cut involving the utilisation of locally quarried hard rock for fill. Use of this hard rock was conditional on the material being appropriately sized and screened prior to placement. In order to implement the revised design, a mobile crusher was mobilised and commissioned with a quarry developed adjacent to the Busai pit, approximately three kilometres from the plant site.

As at the end of December 2021, the quarry was not achieving target rates in turn impacting overall performance of the box cut program as the quarry represents the key production bottleneck. The crusher was also failing to produce appropriately sized material (sub 100mm), which led to the mobilisation of a second crusher and accompanying screening unit to run in parallel.

A dedicated civil engineer was assigned to supervise operations at the box cut with a view to improving productivity. Covers were also ordered and delivered to site to mitigate the impacts of the rainfall by keeping the bulk of the moisture off the box cut floor and channelling it to dedicated sumps. With the suspension of civil works at the site, the box cut area will be made safe and demobilised.

Throughout the December 2021 quarter, works continued on upgrading the existing road infrastructure including maintenance on the road from Busai to the process plant to facilitate the load and haul operation of material from Busai Quarry for box cut fill material. Work also continued on road upgrade to the wharf, with approximately 500 metres remaining to achieve practical scope completion in Q1 2022.

All earthworks for the permanent camp site were finalised during the quarter and preparation of concrete blocks required for the permanent camp footings continued.

Works on the Community Relocation program continued during the quarter at a slower rate than forecast with productivities impacted by shortages of construction materials and equipment availability. At the end of the December 2021 quarter, over 50% of overall construction had been completed. Priority work associated with the school buildings was completed in advance of the commencement of the new school year.

Other key developments during the December 2021 quarter included:

• Finalisation of the wharf design and requests for tenders issued for construction; and
• Finalisation of the tailings system detailed design with requests for tenders issued for construction.

Exploration Activities

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During the December 2021 quarter, results from the initial six holes from the grade control RC drill campaign (refer ASX release 23 December 2021) were received. Drilling results include:

• 080KUL159 with 29 metres at 7.6 g/t Au:
• 080KUL158 with 31 metres at 6.7 g/t Au;
• 080KUL172 with 50 metres at 4.6 g/t Au;
• 080KUL173 with 44 metres at 4.7 g/t Au; and
• 080KUL171 with 41 metres at 3.9 g/t Au.

A further 18 holes (1,200 samples) were awaiting processing in the laboratory in Lae, Papua New Guinea pending assay. The initial results from the campaign are positive and compare favourably with the resource model which has an average grade of 1.04 g/t Au.

A larger drill rig was mobilised to site to facilitate the drilling of deeper holes and commenced drilling in January 2022. Post completion of the grade control drilling, the RC drill rig has moved onto resource expansion and mining lease exploration drilling for the remainder of CY2022:

• Exploration drilling will be focused on the significant near pit exploration potential previously inaccessible due to the proximity of community;
• All three planned pits at the Project are open at depth and laterally; and
• The current pit shells are constrained by data and not economics and an extensive drilling campaign has the potential to add additional in-pit ounces, reduce strip ratio and increase the life-of-mine production.

Figure 1: Near Pit Exploration Potential