Dalgaranga gold project, Australia – update

3rd March 2023 By: Sheila Barradas - Creamer Media Research Coordinator & Senior Deputy Editor

Dalgaranga gold project, Australia – update

Photo by: Gascoyne Resources

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 company suspended operations at Dalgaranga in November 2022, transitioning the 2.5-million-tonne-a-year mill to care and maintenance.

Latest Developments
Gascoyne Resources has unveiled a A$50-million funding package to advance exploration work and deliver an updated operating plan for its Dalgaranga gold project.

The funding package will comprise a A$26.3-million equity raise, a A$21.3-million investment from Tembo Capital and a A$2.5-million unsecured loan from Delphi.

Under the equity raising, Gascoyne will undertake an underwritten institutional placement of 86-million new shares, at 10c each, to raise an initial A$8.6-million, and a 1-for-2.42 pro rata accelerated nonrenounceable entitlement offer of 176-million new shares to raise a further A$17.6-million.

The placement price represents a 49% discount to Gascoyne’s last closing price and a 37% discount to the company’s theoretical ex-rights price.

The placement will fall within Gascoyne’s existing capacity and will not require shareholder approval.

Gascoyne has also entered into binding agreements with Tembo Capital Mining for a A$21.3-million investment, which will be split across two tranches, including a A$15-million secured loan to mandatorily convert into fully paid ordinary shares in Gascoyne at 10c a share, and a A$6.3-million secured loan to mandatorily convert to a 1.8% gold royalty over all Dalgaranga tenements and a 1.35% royalty over the Yalgoo, Glenburg and Mt Egerton tenements.

Following the conversion of tranche A, Tembo Capital will have the right to nominate one person to be appointed as a nonexecutive director to the Gascoyne board of directors, in addition to information and access rights, and rights to participate in future equity offers, provided that Tembo Capital has at least a 9% shareholding in Gascoyne.

It is expected that experienced geologist, corporate executive and company director John Hodder will join the Gascoyne board of directors as Tembo Capital’s nominee following conversion of tranche A.

Meanwhile, in addition to its commitment of up to A$5.8-million in the equity raising, shareholder Delphi has entered into a binding agreement with Gascoyne to provide a A$2.5-million unsecured loan to mandatorily convert to a 0.7% gold royalty over all 100%-owned Dalgaranga tenements and 0.525?% gold royalty over all 100% owned Yalgoo, Glenburgh and Mt Egerton tenements.

The A$39.2-million of the funds raised will be used on exploration work at Never Never, studies at Yalgoo, and care and maintenance costs for the Dalgaranga operation, until the end of June 2024.

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.