Name of the Project
Dalgaranga gold project.

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

Project Owner/s
Gold miner Gascoyne Resources.

Project Description
The project comprises two opencut mines, a new conventional semiautogenous milling circuit, and a gravity and carbon-in-leach 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’s producing 244 000 oz in the first two years of operation, representing an increase of more than 35 000 oz during that time, compared with the production envisioned in the feasibility study mine schedule, and is expected to improve project economics significantly.

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.

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

Planned Start/End Date
The Dalgaranga project was scheduled to start ore commissioning in May 2018, but started gold production ahead of target in March 2018.

Latest Developments
Gascoyne Resources has launched a review of its operating strategy, immediately suspending operations at its Dalgaranga project.

The miner has said that the Dalgaranga processing plant will be transitioned to operate on a care and maintenance basis over the next few weeks and will be maintained in a state of readiness for rapid resumption of production.

The majority of the workforce currently at the mine will be demobilised over the coming weeks.

Gascoyne, in its September quarterly report, flagged that gold production at Dalgaranga had been negatively impacted on by abnormally high rainfall, labour shortages and impacts from the Covid-19 pandemic.

The miner said on November 8 that these impacts had continued in October and November, leading to reduced production levels, higher production costs and negative cash flow from operations, which the board determined was not sustainable.

Further, the company has said it is clear that, despite the significant potential of the company’s assets, such as Yalgoo, Gilbey’s North and Never Never, the transition to mining this higher-grade ore is not affordable and cannot be optimised at the current time amid Gascoyne’s liquidity position.

“It is very disappointing to have to make this decision, particularly in light of all the hard work the exceptional team at Dalgaranga has put in over the past couple of years. The continued pressure of industry-wide cost inflation, approval delays and subpar operational performance have contributed to the board and I uniting in the view that continuing to operate in these challenging times is extremely high risk,” MD and CEO Simon Lawson has said.

Discussions have started with Gascoyne’s contractors and creditors to allow for the company to restructure its financial position to enable Dalgaranga to remain on care and maintenance in the medium term.

During this period, the company’s management team will work with its advisers and key stakeholders to develop a new strategic operating plan and implement a financial restructure.

Lawson has said that preparation of the new strategic operating plan, including a new mine plan, and implementing a financial restructure, are expected to take several months to complete.

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

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