KULA Gold has reached a major milestone in its bid to develop the Woodlark Island project after an environmental permit for the proposed gold mine was issued.

The Papua New Guinea director of environment Gunther Joku awarded the permit to Kula subsidiary Woodlark Mining Limited in late February, marking the end of a year-long assessment process which involved assessing the environmental impact statement by the Department of Environment and Conservation (DEC).

The DEC assessment involved a technical review by marine and environmental consultancy BMT WBM, a public consultation process and a final recommendation to the minister for Environment and Conservation.

Kula Gold chief executive Stuart Pether referred to the issue of the environmental permit as a “significant milestone in the development of the project and the company.”

Importantly, the issue of the permit now clears the way for the PNG Mining Advisory Council to recommend the grant of the mining lease to the mining minister.

Kula said it was currently working towards the grant of the mining lease which would enable it to seek project funding to help kick start the project’s construction phase.

The Woodlark Island project, located 600kilometres east of Port Moresby in Milne Bay Province, has a defined ore reserve of 766,000ounces based on a gold price of US$1,200 per ounce. The nine year project is based around three open pit mining areas and a 1.8 million tonne per annum gravity and carbon in leach plant.

A feasibility study for Woodlark Island completed in September 2012 estimated a total establishment capital cost of US$160 million. A capital payback period of 2.6 years from the start of production was also given, however that timeframe was based on a US$1600 per ounce gold price.