Gascoyne Resources achieves full-year gold production guidance, ends quarter in strong financial position

Gascoyne Resources (ASX: GCY) has revealed its full year gold production of 71,153 ounces was within its guidance range for its Dalgaranga operations despite “significant headwinds” – helping the company close out the June quarter (Q4 FY2022) with $32.4 million in cash and gold.

During Q4 FY2022 822,000 tonnes of ore was extracted from the Western Australian mine. It had an average grade of 0.8 grams per tonne gold. Milled ore amounted to 667,000t at an average feed grade of 0.89g/t gold and 85.7% recovery.

Gold output for Q4 FY2022 was 16,298oz – down on Q3 FY2022’s figure of 21,669oz. The lower output was attributed to rain events and COVID-19.

The company sold 16,882oz gold during Q4 FY2022 for an average realised price of A$2,620/oz. Meanwhile, all in sustaining costs were $2,396/oz for the period.

Gascoyne managing director and chief executive officer Simon Lawson said the company was pleased to achieve production guidance despite the “significant headwinds” of rain, COVID-19-caused absenteeism and industry-wide cost pressures.

The six-month production guidance for H1 FY2023 has been set at 30,000-35,000oz.

Near-mine upside

Mr Lawson said Gascoyne’s big news for the June quarter was the success of its near-mine exploration – particularly at Gilbey’s North and the Gilbey’s Eastern Footwall.

“The newly discovered near-mine zone at Gilbey’s North continues to grow and deliver impressive intercepts, and we are confident that it will become the next source of higher-grade ore feed at Dalgaranga.”

As a result, Mr Lawson said the company was already working on permitting and development activities to bring it into the mine plan as soon as possible.

Recent assays from Gilbey’s North revealed at least two consistent wide zones of high-grade mineralisation.

Highlight intercepts were 54m at 6.55g/t gold from 116m, including 12m at 20.1g/t gold.

Other holes hit 53m at 3.59g/t gold from 71m, including 9m at 6.8g/t gold; and 33m at 2.89g/t gold from 21m, including 6m at 8.3g/t gold.

Over at the Gilbey’s Eastern Footwall, drilling intercepted 3m at 5.54g/t gold from 26m, including 1m at 14.8g/t gold; 5m at 38g/t gold from 50m, including 1m at 176g/t gold; and 8m at 1.84g/t gold from 35m, including 1m at 8g/t gold.

“The encouraging drill results from the Eastern Footwall have also highlighted the potential to access higher grade material in this part of the mine and recast our longer-term mine plan,” Mr Lawson said.

Mining to begin in six months

Mr Lawson said Gascoyne was confident it would begin mining at Gilbey’s North and the Eastern Footwall in the next six months – adding “significant” life to the wider Dalgaranga operation.

“Investors should get the first insights into this opportunity with the release of the maiden Gilbey’s North mineral resource and our annual integrated mineral resource estimate and ore reserve updates, which are scheduled for release during the September quarter.”

Once the resource and reserve updates are released, Gascoyne will begin mine planning and scheduling.

All-up during Q4 FY2022, Gascoyne invested $3 million in resource development and mine-life extension activities.

Well-funded and debt free

Mr Lawson noted Gascoyne was debt free, which “significantly” de-risks the business.

The company closed out Q4 FY2022 with $30.9 million in cash and 600,000oz of gold on hand – amounting to a combined total value of $32.4 million.

“With a strong balance sheet, we are well-placed to seize opportunities that may arise during the current period of volatility in financial markets – while continuing to adopt an aggressive approach to near-mine exploration,” Mr Lawson said.

He added the company would also continue to manage the cost escalation and skills shortages that are rampant across the resource sector.