PERTH (miningweekly.com) – ASX-listed Gascoyne Resources has warned of a A$40-million to A$50-million non-cash impairment relating to its Dalgaranga gold project, in Western Australia, for the full year ended June.

The impairment resulted from the 2021 deferral of the Stage 3 cut-back of the western and eastern walls of the main Gilbey’s pit, the industry-wide cost increase in the mining sector, particularly in terms of labour, energy, reagents and equipment parts, and the adoption of conservative forward estimates for the gold price.

“The expected accounting impairment expense will provide an opportunity to reset the balance sheet of Gascoyne as we transition Dalgaranga to a new phase of operations based on mining and processing much higher-grade ore sources in addition to the lower-grade baseload ore feed that has traditionally been mined,” Gascoyne Resources MD and CEO Simon Lawson said.

“In more ways than one, the impairment serves to highlight why we embarked on the search for higher grade ore following my arrival in November last year. The existing Gilbey’s Main Zone orebody is a relatively low-grade deposit, whereas the Never Never Lode is delivering drill intercepts with grades and widths beyond anything ever seen before at Dalgaranga and, quite frankly, beyond anything seen at most Australian gold deposits.

“The more we drill-out the Never Never Lode, the more confident I am becoming that this is shaping up to be a real company changer and the catalyst we need to deliver a step-change in annual production. I look forward to releasing the maiden mineral resource estimate in the coming days,” said Lawson.

Meanwhile, Gascoyne on Wednesday also warned that production at Dalgaranga had been severely impacted by wet weather conditions during the first two months of the September quarter, with the operation falling behind the mine plan schedule, further delaying access to higher grade ore in Stage 2 of the Gilbey’s Main Zone.

 A remediation plan has been developed, however, production for the September quarter is currently expected to be 1 000 oz to 2 000 oz less than the 16 298 oz produced in the June quarter.