THE BOURSE WHISPERER: Gascoyne Resources (ASX: GCY) announced the completion of a Pre-Feasibility Study for the company’s 80 per cent-owned Dalgaranga gold project in the Murchison region of Western Australia.
The Dalgaranga gold project contains a Measured, Indicated and Inferred Resource of 23.7 million tonnes at 1.4 grams per tonne gold for 1.05 million ounces of contained gold.
Gascoyne explained the PFS has assumed it to be the 100 per cent owner of the project, with its current Joint Venture partner assumed to convert its 20 per cent interest to a 2 per cent NSR royalty.
The company said the PFS had greatly improved upon previous assessments of the project and is based on historical production records as well as studies completed by a number of independent consultants.
The PFS substantiated Dalgaranga to be one of the highest margin undeveloped gold projects in Australia, identifying it to be a technically and financially robust project with an initial life of mine (LOM) undiscounted pre-tax operating cash surplus of $360 million from revenue of $832 million.
Project development was based on two open cut mines, and a new conventional SAG milling circuit, gravity and carbon in leach processing plant with a throughput of 2.5 million tonnes per annum with estimated LOM Operating Cash Cost (C1) of $836 per ounce, and an estimated LOM all in sustaining cost (AISC) of $913 per ounce.
The project has come in with low pre-production Capital Costs of $75 million (including 15% contingencies) with payback estimated to occur within 12 months of production of 125,000 ounces in first full year of operation, (LOM average of 104,000ozpa).
The study estimates 547,000 ounces within the initial mine plan (12.1Mt at 1.4 g/t gold), with exceptional potential for Resource growth from initial Proved and Probable Ore Reserves of 442,000 ounces (10.1Mt @ 1.4 g/t).
An initial Mine Life of six years, not including nearby organic growth potential has also been established with NPV of $193 million and IRR 90 per cent.
Gascoyne will move directly to commence a full Feasibility Study, with completion expected during Q4 2016.
The company is currently carrying out exploration drilling at the nearby Hendricks discovery.
“The completion of the Pre-Feasibility Study and calculation of the initial Ore Reserve for the project is a considerable step forward for the company,” Gascoyne Resources managing director Mike Dunbar said in the company’s announcement to the Australian Securities Exchange.
“It confirms Dalgaranga will be a low cost and high margin WA gold development with very robust economics.
“The higher grades from the Golden Wings deposit along with the low all in sustaining costs in the first 18 months will allow very rapid payback of the pre-production capital costs and will set the project up to remain competitive at gold prices well below the current levels.
“The compelling technical and economic outcomes of the PFS have lead the Board to immediately approve the commencement of a Feasibility Study, which we are aiming to complete by the end of 2016 to allow an investment decision to be made in early 2017.
“While the PFS outlines a very profitable project that will produce over 100,000 ounces per annum for around six years, that is just the start for the project.
“Significant exploration potential still remains, which could add to the mine life and further enhance the project economics.
“The outstanding exploration potential has recently been highlighted by the discovery of the Hendricks gold mineralisation, less than two kilometres east of the proposed processing plant site, Gascoyne continues to explore this and other prospects and if exploration proves successful, the mine life will undoubtedly grow substantially.”