All images: Gascoyne Resources.
BY ELIZABETH FABRI
WITH construction now underway at its flagship Dalgaranga project, Gascoyne Resources’ time in the sun has arrived as it transitions to gold producer.
There is light (and gold) at the end of the tunnel for Gascoyne Resources with first gold slated at its Dalgaranga project in the second quarter of 2018.
The Dalgaranga project within the Murchison region WA –formerly operated by a JV between Equigold and Western Reefs – produced 229,000 ounces of gold between 1996 and 2000, with little exploration undertaken at the site since.
It wasn’t until 2013 that Gascoyne Resources, recognising the region’s vast potential, purchased an 80 per cent interest in the project.
The company’s decision to acquire Dalgaranga has since paid dividends, with the JORC measured, indicated and inferred resources now sitting at 31.1 million tonnes at 1.3 g/t gold for 1.32moz of contained gold, and proved and probable ore reserve at 14.3mt at 1.27 g/t for 581,000oz of gold.
In December last year, Gascoyne Resources purchased the remaining 20 per interest in the project
The project comprises two open pits; a high-grade Golden Wings deposit, a cutback of Gilbeys deposit; and potential third pit, Sly Fox, to come online in the next few years.
In November 2016, the company completed a feasibility study, which included developing a new 2.5 million tonne per annum (mtpa) processing facility at the site, and it would have an initial six year mine life with scope to extend.
A $55 million capital raising was completed in March this year.
On 5 July, Gascoyne Resources awarded a $66.5 million engineering, procurement and construction (EPC) contract to GR Engineering to design and construct the project’s processing facilities.
By early September, the bulk earthworks and 240 person accommodation village was completed, and the engineering and design of the 2.5mtpa processing plant was 75 per cent complete.
The plant is being designed for soft ore, and will comprise a single jaw crusher, single stage SAG mill, high gravity gold recovery, rapid leaching capabilities.
Recent modelling has also found the plant will be capable of processing more than 3mtpa while treating soft oxide and transitional ore.
GR Engineering was now mobilised to site and had begun concrete work including the SAG mill foundations, CIL tank foundations and bunding, and workshop and warehouse foundations.
The tailings storage facility life and water evaporation pond construction was well advanced as was the water bore construction and dewatering pipeline.
The access road and clearing for the airstrip was also nearing completion.
Construction of the airstrip will begin in October to allow flights straight into the site from early next year.
From a financial perspective, the company has mandated Commonwealth Bank of Australia (CBA) and National Australia Bank (NAB) to arrange a debt facility of up to $60 million to see the project fully funded.
“Mandating tier 1 Australian lenders CBA and NAB for the debt funding required for the development of the Dalgaranga Project is a strong vote of confidence in the project and the work undertaken by the Gascoyne Team since we finished the Feasibility Study in November last year,” Gascoyne Resources managing director Mike Dunbar said.
“The terms we have negotiated highlight the quality of the project.
“With the mandate completed, construction will continue on schedule towards production in Q2 of next year.”
The mine will produce about 100,000oz of gold a year.
However during its first two years of operation this will be slightly higher at 120,000oz a year while the plant can increase throughput while processing soft oxide and transitional ore.
The higher production in the first few years was announced earlier this year as part of an update to the mine design and schedule.
Mr Dunbar said the new plan will see the project now produce 244,000oz in its first two years.
“This represents an increase of over 35,000 ounces in the first two years of production when compared to the Feasibility Study mine schedule, and is expected to have a significant positive improvement to the project economics,” he said.
“This production profile and schedule excludes the recently discovered Sly Fox deposit, which adds a further 77,000oz to the resources base, and is expected to improve the production profile in year 3 and 4 of the operation.
“However the exact impact is yet to be determined as exploration is ongoing in the region and the JORC modifying factors yet to be fully determined.”
Sly Fox was discovered late last year 600 metres south of the Gilbeys deposit, following an aircore drilling campaign that found near surface and significant downhole thicknesses of gold mineralisation.
Mr Dunbar said the new mineral resource estimate for Sly Fox further enhanced the Dalgaranga project’s scale and potential to extend the current mine life of six years.
“With the resource updated and the increase in the resource confidence, it is expected that a maiden ore reserve for Sly Fox will be completed in the next month, less than 6 months since the deposit was discovered,” he said.
“The addition of these shallow and soft ores through the mill in the early years is expected to lift the production rates in the early years of production.”
Beyond continued exploration upside at Dalgaranga, Gascoyne Resources’ next development opportunity was its 100 per cent owned Glenburgh gold project.
Within the company’s namesake Gascoyne region, Glenburgh was its initial first choice to bring into production, before Dalgaranga was acquired.
While the focus remains on Dalgaranga at present, the company is continuing to evaluate Glenburgh to define meaningful increases in the resource base and progress project permitting.
The company recently completed a 30 hole RC drilling program at the 1.05 million ounce resource, targeting resource extensions to the Icon, Tuxedo, Apollo, Mustang and Torino deposits, and will soon begin updating its pre-feasibility study for the project, which hasn’t been updated since 2013.
Once given the green light, Glenburgh development could be funded through cash flow from Dalgaranga, and enable Gascoyne to double annual production to 200,000oz.