Name of the Project
Dalgaranga gold project.

Location
The project is located in the Dalgaranga greenstone belt, in the Murchison province of Western Australia.

Client
Gascoyne Resources.

Project Description
The project contains an updated mineral resource of 31.1-million tonnes grading 1.3 g/t, and includes an updated proven and probable mineral reserve of 14.3-million tonnes grading 1.27 g/t. 

The updated mine plan excludes the Sly Fox mineral resource of 77 000 oz, which is expected to improve the production profile in years 3 and 4.

As a result of the updated mineral resource announced in March, the mine plan, design and schedule have been updated to align production with the increased throughput rate that modelling has shown to be achievable, while soft oxide and transitional ore will be processed in the early years.

The project comprises two opencut mines, a new conventional semiautogenous (SAG) milling circuit and a gravity and carbon-in-leach (CIL) processing plant with a throughput capacity of 2.5-million tonnes a year.

The processing plant will be located adjacent to the existing waste dump, to the east of the Gilbeys openpit, to minimise mine haulage costs.

The new mine design for the Gilbeys deposit has resulted in the Dalgaranga production target being increased to 15.3-million tonnes grading 1.3 g/t gold for 623 000 oz within the deposit, including the Gilbeys South and Golden Wings openpits.

As a result of the revised mine design and schedule, along with the increased throughput in the early years of the operation, a revised production target has been developed. The new production schedule will result in the project producing 244 000 oz in the first two years of operation, representing an increase of more than 35 000 oz in that time, compared with the feasibility study mine schedule, and is expected to improve project economics significantly.

The project has an initial mine life of six years.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The project has a pretax net present value, at an 8% discount rate, of A$177-million and an internal rate of return of 65%, based on a A$1 600/oz gold price, with a payback of 18 months.

Value
Preproduction capital costs for the processing plant and associated infrastructure are estimated at A$86-million, including contingencies of $6.1-million.

Duration
Subject to conditions being met, the Dalgaranga project is scheduled to start ore commissioning in the second quarter of 2018.

Latest Developments
The Commonwealth Bank of Australia and the National Australia Bank will provide A$60-million in debt for Gascoyne Resources to advance the Dalgaranga gold mine.

The debt facility has a term of 4.5 years from first drawdown, which is expected in mid-December, and makes provision for early repayment without penalty. It has a mandated hedging stipulation of 164 000 oz, which has been completed at an average hedge gold price of about A$1 710/oz. Gascoyne has noted that the rolled-out hedged gold price will be determined and announced once the hedges are novated to the financiers and the delivery schedule has been arranged.

Meanwhile, Gascoyne Resources has selected remote power generation specialist Zenith Energy to build, own and operate (BOO) a 15 MW gas-fired power station at the Dalgaranga project.

The companies have executed a power purchase agreement (PPA), in terms of which supply will start late in the second quarter of 2018 under an initial six-year term, which can be extended for a further four years.

Gascoyne MD Mike Dunbar has said that the choice of gas-fuelled generators considerably derisks the project, as it reduces input costs and lowers the company's exposure to any future escalation in the diesel price for power generation.

Key Contracts and Suppliers
GR Engineering (processing plant) and Zenith Energy (gas-fired power station).

On Budget and on Time?
The project is currently within budget and on time.

Contact Details for Project Information
Gascogne Resources, tel +61 8 9481 3434, fax +61 8 9481 0411 or email admin@gascoyneresources.com.au.