WA gold miner Gascoyne wraps up strong operating year
ASX-listed gold miner Gascoyne Resources achieved another solid quarterly operating performance at its 100% owned Dalgaranga operation, about 65km north-west of Mount Magnet in WA’s Murchison region, in the three months to the end of June. After meeting key production and operating benchmarks for the 2021 financial year, Gascoyne has positioned itself for growth with the recently announced strategic acquisition of Firefly Resources and its source of shallow, higher-grade gold resources within trucking distance of Dalgaranga.
The acquisition increases Gascoyne’s tenure in the district to a whopping 1,200 square kilometres of highly prospective greenstone terrane.
In mid-June we announced the merger agreement with Firefly. We are very excited by the opportunity that this transaction will provide to Gascoyne. Access to shallow and higher-grade ore and a vast exploration package within trucking distance to Dalgaranga has the potential to be a game changer for Gascoyne over the next couple of years.
Exploration at Gascoyne’s current tenure included more than 16,000m of drilling in the latest quarter at Dalgaranga, Greencock, Mt Egerton and Glenburgh.
Standout drill intercepts were reported at the company’s Tanqueray East prospect and included 28m grading 2.5 grams per tonne of gold including 7m at 5 g/t gold from 114m down hole. Further results are due to flow through steadily over the coming quarter.
Perth-based Gascoyne produced 17,416 ounces of gold in the June quarter compared with 19,203 ounces in the previous three months. The majority of June quarter ore was mined from the Gilbey’s Main Zone, completing stage one of the mine plan. Additional ore was sourced from the hanging wall lode located in the northern end of the Gilbey’s pit where lower recoveries were expected in processing shale ore and elevated sulphide ores.
With stage-one mining of the Gilbey’s Main Zone winding up, a total of $6.3 million was invested in stage-two pre-stripping of the Gilbey’s pit to ensure a steady flow of ore to the processing plant for the next quarter.
Total ore throughput of 655,000 tonnes during the June quarter was down from the 704,000t achieved in the March quarter due to a planned major shutdown of the mill. It brought the 2021 financial year total ore throughput to 2.64 million tonnes, significantly above-nameplate capacity of 2.5 million tonnes, providing the company with increased confidence that the plant can exceed its design capacity.
June quarter processing cash costs were at $13.86 per tonne compared with a March quarter cost of $11.44. The costs were impacted by lower mining rates and the planned shutdown. For the 2021 financial year the average processing cash cost was $12.60 per tonne which the company said confirmed “the Dalgaranga process plant is one of the most efficient, lowest cash cost gold processing plants for its size in Australia”.
Gascoyne maintained the required quarterly instalment loan repayments of $3.5 million, reducing debt to $14 million. With a track record of strong production and elevated cash flows at current high gold prices, the company is on course to be debt free by the end of the current financial year, representing a complete turnaround for the once troubled gold miner.
At the end of the 2021 fiscal year the company’s cash balance stood at a healthy $23.4 million.
With a total of 77,278 ounces of gold produced for the 2021 financial year, Gascoyne comfortably met its gold production guidance for the full 12 months of 70,000-80,000 ounces. All-in sustaining costs of gold production in FY21 averaged an encouraging $1,589 an ounce.
The company’s production guidance envisages all-in sustaining costs averaging $1,200-$1,300 an ounce for the current full year.
Gascoyne has a total of 44,782 ounces of gold production forward sold at an average price of $2,564 an ounce over the next 15 months.
The spot gold price currently sits at $2,443 an ounce.
During the June quarter Gascoyne also released updated mineral resource and ore reserve numbers for Dalgaranga with a resource estimate of 25 million tonnes of ore grading an average of 0.8 grams per tonne for 648,900 ounces of contained gold.
Probable and proved ore reserves contained within the Dalgaranga resource stand at 13.5 million tonnes at an average grade of 0.8 g/t for 339,000 ounces of contained gold.
Gascoyne dealt with more than its fair share of hurdles during the latest quarter with unseasonal wet weather, low staffing levels, a scheduled mill shutdown and reduced mining rates due to the stage two mining transition all impacting on mining production and temporarily increasing costs.
On the flipside, however, with stage-two mining operations progressing on schedule, improvements made to the gravity circuit during the shutdown and mill technical team developing a greater understanding of the treatment of elevated sulphide ore, Gascoyne has favourable winds in its sails heading into the new financial year.
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