Doray Minerals: delivering on exploration & production

Doray Minerals: delivering on exploration & production

THE BOURSE WHISPERER: In 2014 Doray Minerals (ASX: DRM) emerged as one of Australia’s highest-grade and lowest-cost gold producers at its flagship property, the Andy Well gold project, located in the Murchison region of Western Australia.

Doray transformed from explorer and developer to producer in under four years and became a successful high-grade gold producer while continuing a progressive exploration program.

Doray Minerals managing director Allan Kelly, who jointly won the coveted 2014 AMEC Prospector Award, said the focus maintained by the Board and management, with the assistance from contractors and consultants, helped ensure the Andy Well gold project succeeded in delivering on its targets time and time again.

“Our first gold pour in August 2013 was the culmination of three and a half years of hard work and a steadfast belief in the project,” Kelly said.

“We proved we could discover, develop and construct the project on time and within budget and produce quality gold.

“Andy Well is estimated to produce approximately 75,000 ounces per year over an initial 3.7 years.

“Quarterly production results prove that Andy Well is a high-grade, economical gold operation – and recent exploration results confirm significant project upside.”


The company met its first year production and cost guidance at Andy Well with 76,785 ounces produced at a head grade of 10.8 grams per tonne gold with a cash operating cost of $522 per ounce and an All In Sustaining Cost of $1,044 per ounce.

Quite an achievement for a company in its first year of production.

Revenue from gold sales was $110.3 million, average price received was $1,506 per ounce, and average margin was $462 per ounce for 2014FY.  

The high margins generated in the first year enabled Doray to significantly reduce debt to $13.9 million, which equates to an approximate 75 percent reduction, with $41.1 million repaid or reserved since August 2013.

Doray’s hedging program helped attain the high margins, especially considering the unstable gold price.

Doray hedged 45,000 ounces at $1,620 per ounce to September 2014; 39,000 ounces at $1,505 per ounce between October 2014 and September 2015; with 45 percent of production hedged at $1,547 per ounce between July 2014 and September 2015.

The hedging program has somewhat insulated Doray from the fluctuating gold price and helped ensure a consistent price going forward.

Exploration remains a strong focus for Doray and will continue in the 2015 financial year.

Andy Well’s Judy Lode deposit, located immediately adjacent to the Wilber Lode underground mine, is the second high-grade deposit discovered in the area.

In August 2014 the company announced a 37 per cent increase in the Judy Lode Mineral Resource and a maiden high-grade Judy Ore Reserve of 203,000 tonnes at 8.8g/t gold for 58,000 ounces.

Kelly said the maiden Judy Reserve effectively replaced the reserve depletion from the first year of mining, maintaining the current life of mine at Andy Well.


In addition to Judy, a third parallel high-grade gold discovery, the Suzie Zone, was announced in October 2013, and in February 2014 Doray announced the presence of high-grade gold mineralisation within the ‘Kirsty Zone’, adding to the potential extension in mine life.

Horizontal underground drilling across the footwall stratigraphy at Andy Well confirmed multiple parallel mineralised structures including Suzie and Kirsty providing confidence of near term extensions to the Andy Well mine life and also confirmed intersection in the Suzie Zone over one kilometre from the initial discovery area.

Kelly said the Company would focus on consistent production and systematic exploration of near-mine opportunities.

“We will systematically drill out the Suzie and Kirsty structures and this should hopefully result in a step-change in the resource and reserve base – and ultimately mine life – of the project,’ he explained.

“The company is focussed on reaching production targets, delivering strong financial results and accelerating exploration.”

Doray’s exploration strategy in Western Australia has a multi-pronged approach.

“There remains a strong focus on the Andy Well gold project and developing a significant gold camp in the project area,” Kelly continued.

“The strategy also aims to build a footprint of projects within trucking distance of the Andy Well processing plant and includes acquisition and joint venture opportunities into quality gold projects.

“The $17 million capital raising in February 2014 aimed to accelerate near mine and regional exploration, and assisted in acquiring the highly prospective Gnaweeda project in the northern Murchison, which has the potential to add value to the Andy Well gold project in the near term.

“It also helped the company participate in a joint venture project with Alloy Resources Limited at the Horse Well project in the north eastern Goldfields of Western Australia, where a diamond drill hole recently intersected a significant gold mineralised structure.”

Doray has proven that it’s more than just the Wilber Lode, with Judy, Suzie, Kirsty and other parallel zones expected to increase the mine life in the near future, in addition to new joint venture and acquisition opportunities.

“I believe a continued focus on success in exploration, meeting production and cost guidance, and delivering on the stated 2012 Bankable Feasibility Study should see a positive shift for our investors,” Kelly said.

Doray is not just a Western Australian mining success story, it is an Australian one too.

Its swift progression from explorer to quality gold producer has been meteoric, with production figures to challenge its industry rivals.

Doray Minerals is now well-placed to deliver further exploration success and extend mine life.