Company Merger Results in Project Spinout

THE BOURSE WHISPERER: With the ink barely dry on their recent merger agreement, Gascoyne Resources (ASX: GCY) and Firefly Resources (ASX: FFR) are set to spin out project from their combined portfolio into a new entity.

The two companies announced a binding Demerger Implementation Deed (DID), under which they have agreed the terms of a demerger of various assets.

These include the Paterson copper-gold project, the Forrestania gold project, and lithium mineral rights over various tenements held by both Gascoyne and Firefly, all of which are to be acquired by a newly incorporated wholly owned subsidiary of Firefly, Firetail Resources Limited.

Firetail will initially be a publicly unlisted company with an intention to seek an ASX listing sometime following implementation of the merger.



Firefly Resources Scores High-Grade Rock Chips at Yalgoo

THE DRILL SERGEANT: Firefly Resources (ASX: FFR) reported assay results from follow-up sampling of recorded and unrecorded gold workings across the northern extent of the company’s 100 per cent-owned Yalgoo gold project in Western Australia.

Firefly Resources recently announced it would be merging with Gascoyne Resources, however this apparently hasn’t stopped the company from concentrating on advancement of its Yalgoo project.

The company concentrated on sampling several historical workings around the intersection of the Western and Eastern Gold Trends at Yalgoo that returned encouraging assays.

These included the Drumline, Drumline South, Mako, Hammerhead and Good Companions prospects, situated within a three square kilometre area at the intersection of the regional folded stratigraphy where the Western and Eastern Gold Trends collide.

The samplings yielded very high grades at the intersection of the Western and Eastern Gold Trends, as well as the notable ‘demagnetisation’ of the BIF rocks in the area, which the company considers as a strong indicator of a potentially large-scale mineralised system at this important structural ‘collision zone.

“There’s a lot of excitement around Firefly at the moment with the announcement of a planned merger with Gascoyne Resources, however we remain absolutely focused on our core objective of delivering results from Yalgoo,” Firefly Resources managing director Simon Lawson said in the company’s ASX announcement.

“This latest round of rock-chip results further builds on the wider reconnaissance results we reported earlier this month by concentrating on some of the more structurally extensive and intensely altered gold zones we have identified.

“Given the widespread recorded mining activity at Yalgoo in the early 1900s, there are a lot of historical workings in the area and many of these workings have remained untouched since the old-timers walked away.

“We have identified these old workings from aerial imagery, studied the spatial relationships between the mineralisation and the different rock types and structures, and visited those workings to ground-truth and sample them.

“Having worked my whole career as a mine geologist, I know that grade is king and scale is everything else.

“Firefly is starting to reveal both of these key elements at Yalgoo with exciting implications for future development potential.

“The true scale of mineralisation over this northern part of the Yalgoo Goldfield is just coming to light now that it’s under single ownership. In particular, the intersection of the Western and Eastern Gold Trends is returning some very high-grade material over hundreds of metres of strike.

“Intersections in structure and stratigraphy commonly concentrate and trap gold, and we believe this is the case in the Drumline/Good Companion prospect area.

“There are many old workings seemingly scattered across this area of around three square kilometres, but when we correlate them with our aerial mapping, geophysics and ground-truthing we can see all the hallmarks of an emerging high-grade prospect area with scale, and importantly an area that has never seen any modern exploration work or drilling.”








Gascoyne Resources and Firefly Resources to Merge into New, Bigger and Better Murchison Gold Entity

COMMODITY CAPERS: At the 2020 Diggers & Dealers Forum there was much excitement centred around the big gold merger between Saracen Mineral Holdings and Northern Star Resources with the new entity to become the owner of Kalgoorlie’s Super Pit operations.

At the time, Northern Star boss Bill Beament suggested there could/should be more gold company mergers, a reasonable call considering the current climate for gold and the price being generated thereby.

In the lead up to annual Kalgoorlie gabfest, Gascoyne Resources (ASX: GCY) and Firefly Resources (ASX: FFR) appear to have taken Beament’s advice on board by announcing this week the two companies would be merging.

In the announcement informing the ASX of their intentions, the two companies declared the merger will, “combine two gold companies with complementary assets in the Murchison region of Western Australia, unlocking a number of synergies by leveraging Gascoyne’s gold mining expertise and available processing infrastructure at Dalgaranga, for the benefit of Firefly’s highly prospective suite of assets including its flagship Yalgoo gold project, which is located only 110km by road from Dalgaranga.”

In an associated conference call, Gascoyne Resources managing director and CEO Richard Hay explained that regional consolidation of tenure around Dalgaranga had been a clear part of the company’s strategy since it gained re-instatement to the ASX back in October last year.

“This transaction – or this merger – is a major step forward for Gascoyne in accelerating our strategy to increase mine life, increase production profile, and build and grow our Resource inventory, and very, very importantly, is the exploration upside of the combined companies between Gascoyne and Firefly,” Hay said.

“Firefly’s Yalgoo gold project is highly complementary with Dalgaranga.”

In the During the same call, Firefly Resources managing director and CEO Simon Lawson – who will ultimately join the Gascoyne Board as a non-executive director, declared his Board had recommended unanimously in favour of the merger proposition.

“The Board believes there is many reasons to support this merger,” Lawson continued.

“Obviously, there is significant exposure at Yalgoo, and we are leveraging investment of over $100 million in infrastructure at Dalgaranga.

“Gascoyne is the logical owner of the Yalgoo gold project, and we will be working very strongly with the team at Gascoyne to complete the merger over the coming months.”

Reasons given for the merger by the two entities includes:

• Strategic consolidation of the higher-grade Yalgoo (Melville) Mineral Resource is within haulage distance of Dalgaranga;

• Firefly’s Melville gold deposit at Yalgoo contains a shallow, from surface, Mineral Resource of 196,388 ounces at 1.45 grams per tonne gold (0.7g/t Au cut-off) and located 110km by road from the Dalgaranga production hub;

• Approximately 80 per cent of the Melville Mineral Resource estimate currently sits in the Indicated category (156,753 ounces at 1.47g/t gold with a 0.7g/t Au cut-off);

• Opportunities to optimise the Dalgaranga mine schedule given the presence of higher-grade ore at Yalgoo which will serve as valuable blending material at Dalgaranga in the future; and

• Potential for mine life extensions at Dalgaranga through the integration of Yalgoo ore, with enhanced potential to unlock the full value of the existing Mineral Resources at Dalgaranga and Yalgoo of 845,000 ounces.

“The integration of high-grade Yalgoo ore in our production plan moving forward has excellent potential to extend mine life, reinforcing Gascoyne’s position as a key gold producer in the Murchison region,” Hay said in the combined ASX announcement.

“Furthermore, the merger with Firefly will consolidate approx. 1,200 square kilometres of the Yalgoo and Dalgaranga greenstone belts under single ownership, significantly enhancing the exploration upside potential with over 100 high quality targets.

“Any discoveries can quickly be brought into production at Gascoyne’s high quality, low cost Dalgaranga processing plant.”

In a steak knife, but wait there’s more moment, it was announced that, in conjunction with the Merger, Gascoyne and Firefly have agreed the terms of a demerger of the lithium rights over the Yalgoo project area as well as the Paterson copper-gold project and Forrestania gold-lithium project which is intended to be acquired by a newly incorporated wholly owned subsidiary of Firefly to be named Firetail Resources Limited, along with the lithium rights over certain tenements at the Dalgaranga project.

“Firefly shareholders will hold approximately 32 per cent of the merged entity, with the transaction providing an opportunity for immediate value realisation at an attractive premium,” Lawson said in the combined ASX announcement.

“Through their holdings in the enlarged Gascoyne, Firefly shareholders will stand to benefit from the re-rating that we would expect to flow from the creation of a larger gold company with an increased mine life and enhanced production profile.

“In addition, they are intended to benefit from the proposed demerger of our copper-gold and lithium exploration assets through Firetail Resources and receive an in-specie distribution in this exciting new energy metals focused company.”





Firefly Resources Bitten by the Gold Bug

THE CONFERENCE CALLER: Having spun off its manganese assets into an oversubscribed IPO, Firefly Resources (ASX: FFR) is now set to devote its corporate attention to three predominantly gold exploration plays in Western Australia. By Mark Fraser

The first – which provided a “defining moment” in the company’s evolution when it acquired the asset last year and will take up most of its oxygen in the foreseeable future – is the historic Yalgoo gold project in the state’s Murchison, where the company holds 800 square kilometres of tenure covering real estate that has already yielded 140,000 gold ounces at a grade of 1.57 grams per tonne.

Over the coming year Firefly plans to drill 30,000 RC metres at Yalgoo as part of a resource upgrade. At the moment it has two rigs on site, with the company planning to employ a third rig during March.

The second cab off the rank is the Paterson copper-gold project in WA’s remote east Pilbara, which is currently at the early exploration stage.

Here, Firefly has around 600 square kilometres of highly prospective rocks in the under-explored Paterson Province. So far it has found some interesting copper-gold mineralisation less than 100m below surface – including grades of 6.5% copper, 1 gram per tonne gold and 900 parts per million molybdenum.

Finally, there’s the early stage Forrestonia gold project, which sits 380km east of Perth on the southern portion of the Forrestonia Greenstone Belt, where the company plans to follow up on some small discoveries at a later date.

For the time being, though, the focus is on Yalgoo, where the company is expecting to establish an update resource for the Melville gold deposit while advancing another seven firm gold prospects.

During the second day of the 2021 RIU Explorers Conference in WA, Firefly Resources managing director Simon Lawson said the company held almost 95 per cent of the upper northern part of the Yalgoo Greenstone Gold Belt.

“What I want to drive home to people is that we are pretty much alone on that belt, it’s already proven that it can produce gold and we have a number of different prospects that can become JORC 2012 resources very quickly,” he said.

In terms of the Melville deposit – which produced the aforementioned 140,000 ounces and was last subjected to a resource estimate in 2004 when the (Australian) gold price was $500 per ounce – Lawson noted that it contained thick high grade mineralisation in the main banded iron formation and further high-grade intercepts from 142m, reinforcing the recently discovered mineralised position both to the east and below the historic resource.

Furthermore, there was a broad mineralised oxide profile between the surface and 12m depth.

“One of the things we sort of discovered during the process of reviewing the old data, and during our own drilling, is that there is mineralisation from surface over a very extensive part of this ore body, and we are going to work on that as a separate model with the intention that we would like to commercialise that as an oxide gold opportunity,” Lawson explained.

Outside of Melville, Firefly has seven other prospects at Yalgoo with four of them (City of Melbourne, Brilliant, Lady Lydia, Prince George and Crescent) all having historic resources.

On the day before Lawson appeared at the RIU conference, Firefly announced it had spun out its Oakover manganese assets – located 80km east on Newman in WA – into a $5.5 million wholly-own IPO to be called Firebird Metals.

“The proposed IPO creates value from a non-core asset,” he added.

“Firefly shareholders will see the in-specie distribution of the shares in this company.

“Firefly won’t retain that value – we will give it to our shareholders. We will get a little bit of cash back from the initial IPO, but the majority of that will go out to our shareholders.”


Firefly Resources Drills Yalgoo Gold Potential

THE DRILL SERAGENT: Firefly Resources (ASX: FFR) reported assays returned from 11 RC drill-holes completed prior to Christmas 2020 at the company’s Yalgoo gold project in Western Australia.

Firefly Resources drilled the holes to test along strike and up-dip resource extensions at the Melville gold deposit and in the process achieved strong results from six holes completed at the Applecross prospect, located 300m along-strike to the north.

Results from Applecross included:

16 metres at 1.23 grams per tonne gold from 33m, including 3m at 3.6g/t gold and 10m at 1.21g/t gold, including 1m at 3.58g/t gold from 61m (BIF-hosted gold);

5m at 0.91g/t gold from 22m and 3m at 1.05g/t gold from 33m (BIF-hosted gold);

4m at 1.57g/t gold from 166m (Porphyry-hosted gold); and

1m at 2.51g/t gold from 113m and 1m at 1.31g/t gold and 5m at 1.27g/t gold from 138m (Porphyryhosted gold).

Two RC drill-holes were also drilled into the northern extents of the Melville deposit to test an up-dip in-fill opportunity and an interpreted down-dip structural offset for the anticipated JORC 2012 Resource update.

The holes intersected:

26m at 1.2g/t gold, including 2m at 5.8g/t gold and 3m at 2.02g/t gold from 55m (updip); and

1m at 2.03g/t gold from 73m and 4m at 0.92g/t gold from 100m (down-dip).

“Importantly, the drilling has begun to demonstrate the scale of the opportunity in front of us and answered some important strategic questions,” Firefly Resources managing director Simon Lawson said in the company’s announcement to the Australian Securities Exchange.

“While there is a lot more drilling to do, the significance of these results is that they firm up our structural model for gold emplacement and displacement providing a solid foundation for us to target rapid resource growth locally and beyond.

“All of the gold mineralisation intersected in our recent drilling at the Applecross prospect, as well as at the Melville gold deposit itself, appears to be near local-scale NW-striking faults.

“We believe our work so far implicates those NW-structures as potential conduits for gold mineralising fluids and mineralised porphyry intrusives.

“Those fluids and intrusives have introduced the gold-bearing fluids into the nearby BIF units due to micro-fracturing of the BIF host, increasing the permeability combined with gold’s well-known affinity for iron-rich rock chemistry.

“As such, we need to target these NW-striking structures effectively to target rapid resource growth.”








Firefly Resources Brightens on Manganese Spin Off

THE CONFERENCE CALLER: In making its case for the planned spinning off of manganese assets into a new Australian publicly-listed identity, Firefly Resources (ASX: FFR) came up with four compelling reasons for the move. By Mark Fraser

First, there has been a systematic shift in the global manganese sector over the past decade, with South Africa – the largest exporter globally – now facing significant challenges regarding logistics, labour and fiscal regimes.

Coinciding with this is the fact Australian operations are currently experiencing higher operational costs, declining head grades and/or are approaching the end of their mine lives.

In this regard, manganese head grades are also starting to decline across the board, while the carbon steel material’s demand continues to grow as a key and un-substitutable element within steel production.

Second, overlying supply-side challenges have emerged, with the uptake in lithium-ion battery utilisation significantly enhancing investor understanding of manganese’s importance.

Third, Firefly’s Oakover manganese project – which is located 85 kilometres east of Newman and some 200km south of the high-grade Woodie Woodie manganese operation in Western Australia’s East Pilbara – is uniquely positioned to capitalise on projected demand and potential supply shortfall through its planned focus on exploration and development of direct shipping ore (DSO) opportunities.

Amongst other advantages, the Firefly spin off can undertake expansion capacity through the evaluation of beneficiation processes in order to upgrade medium grade mineralisation. Furthermore, Oakover sits in a tier one mining jurisdiction that is ideally located given the short shipment time to key Asian markets.

Additionally, it already has significant resource expansion potential based on a firm targeting model.

Finally, the fourth key reason for the development is the fact the demerger would be a “win-win” for the company, allowing it to crystallise shareholder value from the non-core Oakover asset while ensuring its management had the time and resources available to remain focused on both its wholly-owned flagship Yalgoo gold project in WA’s Murchison as well as its Paterson copper-gold play, which is also in the state’s East Pilbara.

Firefly launched its maiden drilling program for Yalgoo in August last year and – during mid-December – announced it had further consolidated the asset via the acquisition of the historic high-grade City of Melbourne gold mine.

Since beginning operations in 1937, it has produced 8,500 ounces at an average grade of 14.7 grams per tonne over four years.

It was briefly opened again in 1991, but with no recorded production, before lying dormant once more until mining resumed in 2015.

As it stands the historic (non-JORC) inferred resource for the operation is 40,348 tonnes at 5.9 grams per tonne gold for 6,602 gold ounces.

It is currently functioning as a small-scale underground operation employing hand-held mining methods wherein high-grade gold is extracted from a consistent quartz “reef” narrow vein gold system.

The City of Melbourne’s mineralisation is associated with a north-south porphyry intrusive that has pushed in along a structural contact.

This is analogous to the company’s neighbouring Melville gold deposit, which has been the main focus of drilling since the Yalgoo asset was acquired.

“With the market currently ascribing little or no value to Firefly for the Oakover manganese project, this demerger represents an outstanding opportunity to release substantial value to Firefly shareholders as a stand-alone ASX-listed vehicle,” Firefly Resources managing director Simon Lawson explained.

“The demerger will enable shareholders to retain exposure to this high-quality manganese exploration and development opportunity, while also allowing Firefly management to focus its efforts on the flagship Yalgoo gold project and the drilling of our exciting Paterson Province assets in early 2021.”

Upon listing the new company – to be called Firebird Metals (ASX: FBM) – will undertake in-fill drilling of the current resource.

It will also conduct along-strike extensional drilling over an identified 4km strike, assess multiple advanced regional prospects that have undergone limited drill testing to date, evaluate additional metallurgical beneficiation testing in parallel with the assessment of DSO strategies (to potentially increase overall project scale) as well as look at consolidation opportunities within the region.

Back in 2012, JORC-compliant due diligence noted that Oakover’s manganese mineralisation appeared to be a partially regolith-controlled supergene enrichment of epigenetic manganese mineralisation of the underlying Balfour shale, where very rich (up to 55% manganese) surface layers overlie thicker deposits of layered manganese in shales of varying grade.

According to Firefly, the drill hole spacings differ only by a small degree, generally conforming to 50m along lines and 100m between them.

Drill coverage at depth is variable, with the maximum hole being 122m.

Drilling density, Firefly said, was considered appropriate at this stage of development.






Firefly Resources Intersects Further High-Grade Gold at Yalgoo

THE DRILL SERGEANT: Firefly Resources (ASX: FFR) reported new results from a second batch of assays received from a recently completed second phase drilling undertaken at the company’s 100 per cent-owned Yalgoo gold project in Western Australia.

Firefly Resources declared the results had confirmed the consistency, high-grade potential and shallow nature of the mineralisation within the Melville gold deposit.

New assay results include:

50 metres at 1.4 grams per tonne gold, including 4m at 5.2g/t gold and 5m at 4.04g/t gold;

30m at 1.23g/t gold, including 6m at 7.48g/t gold;

22m at 5.36g/t gold, including 5m at 17.5g/t gold, including 1m at 73.3g/t gold;

17m at 2.75g/t gold, including 3m at 7.48g/t gold; and

3m at 5.89g/t gold, including 1m at 17g/t gold.

“We have completed systematic drill test of areas that we believed were more ‘at-risk’ in the historical Melville resource estimate when we acquired the project,” Firefly Resources managing director Simon Lawson said in the company’s ASX announcement.

“While producing some spectacular gold results along the way, this drilling within the main resource area has strongly validated the historical data used in the previous estimate, giving us a high level of confidence in the previous estimate.

“The next phase of drilling, currently underway, is designed to significantly increase the footprint of mineralisation by targeting an area up to 500 metres to the north and along-strike from Melville.

“We have established an excellent foundation at Melville in our previous two phases of drilling, and it’s now time to step out and see how big we can grow our key gold asset at Yalgoo.

“Our small team is out there consistently generating results and testing the value proposition represented by Melville right now.

“We are really excited about what we are seeing in these latest drill-holes and have a schedule of targets along-strike from Melville as well as across the multiple proven mineralised trends in the wider Yalgoo gold project.”








Firefly Resources Encounters Thick Shallow Gold Intercepts at Melville Gold Deposit

THE DRILL SERGEANT: Firefly Resources (ASX: FFR) reported the completion of the second phase of a planned maiden drill program at the company’s 100 per cent-owned Yalgoo gold project in Western Australia.

Firefly Resources declared the results received from the first seven RC drill-holes as “outstanding”, adding that they had confirmed the presence of thick, shallow zones of mineralisation at the Melville gold deposit.

Assays include:

24 metres at 3.5 grams per tonne gold, including 3m at 11.77g/t gold and 4m at 7.71g/t gold, 2m at 2.97g/t gold and 5m at 3.39g/t gold, including 2m at 6.5g/t gold;

30m at 1.35g/t gold, including 10m at 2.62g/t gold from 2m;

50m at 1.1g/t gold, including 20m at 2.02g/t gold;

31m at 1.00g/t gold, including 3m 5.82g/t gold;

15m at 0.56g/t gold and 16m at 0.76g/t gold, including 1m at 3.05g/t gold; and

10m at 1.58g/t gold from surface and ends in mineralisation.

“The Yalgoo gold project is just starting to show its real potential,” Firefly Resources managing director Simon Lawson said in the company’s announcement to the Australian Securities Exchange.

“Our drilling results so far show the presence of a consistent, wide mineralised zone along and across the Melville gold deposit.

“Local and regional exploration upside and growth potential is already also starting to become evident through the newly discovered high-grade zone below and to the east of Melville, as well as the correlation of regional architecture to historical high-grade intercepts, demonstrating that Yalgoo has real kilometre-scale potential.

“The Firefly team is working hard to progress our value-driven approach to exploring and growing the potential of the Yalgoo gold project.

“These efforts are made easier by the fact that the geology of the area is outstanding for its gold potential, the presence of a proven goldfield that has existed for over 100 years with an unmined primary gold deposit, mineralised from surface, and with proven potential to deliver new discoveries as well as kilometres of scale for many more.

“This all amounts to a rare and valuable opportunity in the WA gold space.

“Firefly has the necessary experience, funding and support to build something special at Yalgoo and we expect to be out there on the ground making that happen for many years to come.”