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4-Traders Homepage  >  Equities  >  AUSTRALIAN SECURITIES EXCHANGE LIMITED  >  Gascoyne Resources Ltd    GCY   AU000000GCY6

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Gascoyne Resources : December 2016 Quarterly Report, 4.7 MB

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01/31/2017 | 02:49am CET
DECEMBER 2016 QUARTERLY REPORT SUMMARY OF OPERATIONS

DALGARANGA PROJECT:

57 139 522 900

During the quarter significant progress was made towards development of the Company's 100% Dalgaranga Gold Project, including completion of the Feasibility Study as well as continuation of an ongoing aggressive exploration and resource drilling programme.

Additionally Gascoyne moved to 100% ownership of the Dalgaranga Gold Project through completion of the purchase of the 20% balance of the Mining Lease and Miscellaneous licences that were owned by our JV Partner. The consideration paid for the 20% interest was $4.5 million in cash and 11 million Gascoyne shares, with a deferred cash payment of $1.5 million to be paid after 30,000 ounces have been produced from the project.

The Feasibility Study (FS) was also completed and concluded that a viable project could be developed at Dalgaranga. Key outcomes were:

  • FS outlines a technically and financially robust project with an initial 6 year life of mine (LOM) with undiscounted pre-tax operating cash surplus of A$373 million from revenue of A$866 million1

  • Development based on two open cut mines, and a new conventional SAG milling circuit, gravity and carbon in leach processing plant with a nameplate throughput of 2.5Mtpa, with low Operating Cash Cost (C1) of A$869/oz2 and all in sustaining cost (AISC) of A$931/oz3

  • Pre-production Capital Cost for processing plant and associated Infrastructure of A$86 million (including contingencies of $6.1m) - payback within 18 months of production

  • Production of 105,000ozpa in first two years

  • 592,500 ounces within the initial mine plan 4 (14.1Mt @ 1.31 g/t gold), with exceptional potential for Resource growth

  • Proved and Probable Ore Reserve of 552,000 ounces (13.3Mt @ 1.29 g/t) a 25% increase over PFS

    The FS excludes the exploration potential at the project, in particular the Gilbeys South and Sly Fox Prospects, where drilling during the quarter intersected significant mineralisation including:

    Gilbeys South:

    • 22m @ 5.7 g/t gold, including 6m @ 18 g/t gold
    • 22m @ 2.5 g/t gold
    • 8m @ 11.5 g/t gold including 1m @ 83.7 g/t gold
    • 5m @ 10.7 g/t gold
    • 12m @ 2.0 g/t gold, including 4m @ 5.5 g/t gold
    • 23m @ 1.2 g/t gold o 5m @ 5.2 g/t gold o 14m @ 1.4 g/t gold o 12m @ 1.7 g/t gold o 19m @ 1.2 g/t gold o 13m @ 1.2 g/t gold

      Sly Fox:

    • 36m @ 2.3 g/t gold from 16m including 16m @ 4.2 g/t
    • 39m @ 1.1 g/t gold from 8m to EOH
    • 47m @ 0.5 g/t gold from surface to EOH

GLENBURGH PROJECT:

Soil sampling of a number of regional targets was undertaken during the quarter. Results are currently being assessed with the aim to be drill testing the priority targets in the first half of 2017.

CORPORATE:

During the quarter 2.8 million unlisted employee options were exercised and a further

  1. million issued under the Company's ESOP.

    At the end of the quarter, the Company's cash reserves were $5.9 million.

    CORPORATE DETAILS

    ASX Code: GCY

    Shares: 267M Share Price: 58.5c

    Market Cap: $156 M

    ASSETS

    Cash: $5.9M

    Glenburgh (100%) 1.0M oz Gold Dalgaranga (100%) 1.12M oz Gold Egerton (100%) 24,000oz Gold

    BOARD

    Non-Executive Chairman Mike Joyce

    Managing Director Michael Dunbar

    Non-Executive Directors John den Dryver Gordon Dunbar Graham Riley

    Stan Macdonald

    CONTACT DETAILS

    Telephone: +61 8 9481 3434

    Facsimile: +61 8 9481 0411

    Email:admin@gascoyneresources.com.au Web: www.gascoyneresources.com.au

    REVIEW OF OPERATIONS

    Details of the progress during the quarter include:

    DALGARANGA PROJECT

    Figure 1: Gascoyne Resources Project Locations in the Gascoyne and Murchison Regions

    M59/749 & L 59/141, 142, 151 & 153, ELA59/2150 & LA59/152- 100% Gascoyne

    E59/1709, 1904, 1905, 1906 &, EL21/195 - 80% Gascoyne

    Activities at the Dalgaranga project have accelerated with three drill rigs active on the project for most of the quarter, the Feasibility Study was completed and the Company moved to 100% ownership of the Dalgaranga Gold Project late in the quarter.

    FEASIBILITY STUDY

    As announced to the ASX on the 25th of November, the Dalgaranga Feasibility Study has been completed on the Dalgaranga Gold Project. The FS was based on the existing Measured, Indicated and Inferred Mineral Resource (released 7th of September) which currently stands at 25.7Mt @ 1.4 g/t gold for 1,116,000 ounces of gold. The Measured and Indicated portion has increased to 16.4Mt @ 1.34 g/t gold for 708,000 ounces. A further Resource update will be reported in Q1 2017, which will include new gold mineralisation discovered at the Gilbeys South

    propsect.

    The Feasibility concluded that that a viable project could be developed at Dalgaranga. Key outcomes were:

    • FS outlines a technically and financially robust project with an initial 6 year life of mine (LOM) with undiscounted pre-tax operating cash surplus of A$373 million from revenue of A$866 million1

    • Development based on two open cut mines, and a new conventional SAG milling circuit, gravity and carbon in leach processing plant with a nameplate throughput of 2.5Mtpa

      Page | 2

    • LOM Operating Cash Cost (C1) of A$869/oz2 and all in sustaining cost (AISC) of A$931/oz3

    • Pre-production Capital Cost for processing plant and associated Infrastructure of A$86 million (including contingencies of $6.1m) - payback within 18 months of production

    • Production of 105,000ozpa in first two years

    • 592,500 ounces within the initial mine plan 4 (14.1Mt @ 1.31 g/t gold), with exceptional potential for Resource growth

    • Proved and Probable Ore Reserve of 552,000 ounces (13.3Mt @ 1.29 g/t) a 25% increase over PFS

GOLDEN WINGS DEPOSIT 100,000oz GILBEYS DEPOSIT 1,016,000oz DALGARANGA VILLAGE PROCESS PLANT SITE

Figure 2: Dalgaranga Site Layout

The FS excludes the exploration potential at the project, in particular the Gilbeys South and Sly Fox Prospects (see below for a summary of recent exploration drilling) where strong gold mineralisation has been intersected, and the Company is highly confident of defining additional Resources which it expects will expand the existing 6 year life of mine of the Dalgaranga Project.

See ASX announcement 25th November 2016 titled "Feasibility Confirms Dalgaranga as a Low Cost / High Margin Project" for full details of the Feasibility Study.

Cautionary Statement:

The Company advises that while the FS is based on Proved and Probable Ore Reserves (93%), it is partly based on Inferred Mineral Resources (7%). There is a lower level of geological confidence associated with Inferred Mineral Resources and there is no certainty that further exploration work will result in the determination of Indicated Mineral Resources or that the Inferred Mineral Resources will add to the economics of the project. Currently the drill spacing in the Inferred portion of the resource is too sparse to allow the material to be classified as Indicated. There has historically been very good conversion of Inferred Resources into Indicated Resources as the structures and geological units that host the mineralisation at Dalgaranga can be traced along strike and at depth. however there is no assurance that the economic evaluation outlined above will be realised.

1 Based on production of 541,000oz at US$1,200 gold price, A$/US$ exchange rate of 75c. All amounts in A$ unless otherwise stated

2 C1 operating costs include all mining and processing costs, site administration, refining and site rehabilitation costs

3 AISC includes C1 costs + royalties, sustaining capital, but excludes head office corporate costs.

4. 93% of the material in the mine plan is classified as an Ore Reserve, the remaining 7% is classified as Inferred Mineral Resource.

Table 1 - Key Project Statistics

MINERAL RESOURCES

Tonnage

Grade

Ounces

Measured Resources (Gilbeys and Golden Wings)

2.9Mt

1.41 g/t

133,000

Indicated Resources (Gilbeys and Golden Wings)

13.4Mt

1.33 g/t

574,000

Inferred Resources (Gilbeys and Golden Wings)

9.3Mt

1.4 g/t

408,000

Total Resources

25.7Mt

1.4 g/t

1,116,000oz

MATERIAL IN MINE PLAN

Proved Ore Reserve 1

3.1Mt

1.28 g/t

129,000 (22%)

Probable Ore Reserve 1

10.2Mt

1.3 g/t

423,500 (71%)

Inferred Resource (Gilbeys and Golden Wings)

0.8Mt

1.5 g/t

40,000 (7%)

Total (totals vary due to rounding)

14.1Mt

1.31g/t

592,500oz

CAPITAL COSTS (A$)

Life of Mine

New 2.5 Mtpa Processing Plant

$60.0M

Infrastructure Capital (Offices, TSF, Camp Installation and Ancillary Infrastructure)

$14.8M

Owner's Costs, Construction Facilities, First Fills and Capital Spares

$ 5.3M

Contingency

$ 6.1M

Total Capital Cost

$86.2M

PRODUCTION SUMMARY

Key Outcome

Life of Mine

6 yrs

Strip Ratio

7:1

Gold Production

541,000 oz

Processing Rate

2.5 Mtpa

Average LOM Metallurgical Recovery

91.3%

PROJECT ECONOMICS

Base Case gold price (US$)

$1,200/oz

Exchange Rate (US$:A$)

75c

Revenue (A$)

$866M

C1 Cash Costs (A$) 2

$869/oz

All In Sustaining Costs (A$) 3

$931/oz

Operating Cash Surplus (A$)

$373M

NPV8 (using A$1,600 gold price)

$177M

IRR (using A$1,600 gold price)

65%

Payback (using A$1,600 gold price)

18 months

DEVELOPMENT UPDATE

Following completion of the Feasibility Study, the board has, subject to obtaining a suitable financing arrangement, approved the project to proceed to construction. A large amount of work has already been undertaken towards development. These activities include:

Staffing

Two key management appointments have been made with appointment of a Development Manager, Mr Ian Kerr and Mr David Lim to the role of Chief Financial Controller (CFO).

Gascoyne Resources Ltd. published this content on 31 January 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 31 January 2017 01:49:06 UTC.

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Financials ( AUD)
Sales 2017 -
EBIT 2017 -7,00 M
Net income 2017 -10,0 M
Finance 2017 4,00 M
Yield 2017 -
P/E ratio 2017 -
P/E ratio 2018
EV / Sales 2017 0
EV / Sales 2018 2,13x
Capitalization 166 M
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Mean consensus OUTPERFORM
Number of Analysts 1
Average target price 1,00  AUD
Spread / Average Target 61%
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Managers
NameTitle
Michael Dunbar Managing Director & Director
Rodney Michael Joyce Non-Executive Chairman
David J. Lim Chief Financial Officer & Joint Secretary
Graham Douglas Riley Non-Executive Director
Gordon John Dunbar Non-Executive Director
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