Gascoyne consolidates Murchison gold base with well timed merger

2021-06-16 14:30:48

WA gold producer Gascoyne Gold has expanded its footprint in WA’s Murchison goldfield by way of a $43 million all-scrip takeover of neighbour Firefly Sources and its circa-200,000-ounce Melville gold challenge. The proposed $160 million union will deliver Firefly’s Yalgoo assets and floor into Gascoyne’s Dalgaranga manufacturing plan because the latter goals to carry annual gold output to 100,000 ounces.

Gascoyne has a present schedule to supply 70,000-80,000 ounces a yr from Dalgaranga, about 65km north-west of Mount Magnet, over the following three years. All-in sustaining prices this monetary yr are pegged at A$1,275-$1,325 an oz versus a present gold value above $2,400/ounce.

Gascoyne says money circulate from Dalgaranga will assist fund an “enhanced exploration and improvement pipeline” of the mixture with Firefly that may initially sit on mineral assets containing 1.38 million ounces of gold and management about 1, of two extremely potential greenstone belts. Gascoyne not too long ago doubled its FY2021 Murchison exploration finances to $6.3 million and anticipated to drill not less than 70,000m on the Dalgaranga, Glenburgh and Mount Egerton challenge areas.

This merger is a really thrilling alternative for Gascoyne and its shareholders and represents a key step ahead in Gascoyne’s technique of delivering worth by extending mine life and growing annual manufacturing at Dalgaranga.

The combination of high-grade Yalgoo ore in our manufacturing plan transferring ahead has glorious potential to increase mine life, reinforcing Gascoyne’s place as a key gold producer within the Murchison area.

The deal, supported by key Gascoyne stakeholders and Firefly administration, continues the previous’s sturdy revival after the corporate went into administration in mid-2019. It subsequently re-emerged on the ASX with a brand new capital construction after paying again and reorganising debt and bettering the working efficiency of Dalgaranga.

Firefly Managing Director and CEO, Simon Lawson, who is anticipated to change into a non-executive director of Gascoyne and be a key determine guiding its wider Murchison exploration focus, stated the becoming a member of of the 2 corporations introduced a compelling alternative for “value-creating, logical consolidation within the Murchison district”.

It additionally offered a transparent pathway to “speed up and de-risk the event of the Yalgoo gold challenge by leveraging Gascoyne’s mining experience and high-quality processing facility at Dalgaranga”.

Gascoyne has sunk about $100 million into mining and processing infrastructure at Dalgaranga, together with a contemporary 2.5 million tonnes every year CIL plant.

Firefly’s Yalgoo challenge begins about 110km down the street and features a shallow mineral useful resource of 196,000 ounces at a mean 1.45g/t at Melville. Gascoyne’s evaluation factors to worthwhile truck-haulage of Melville ore to its mill. Preliminary metallurgical testwork has additionally indicated the Dalgaranga plant can obtain recoveries of not less than 90 per cent on Melville ore.

Superior exploration alternatives at Yalgoo are stated to incorporate greater than 100 gold targets alongside a 28km regional shear zone with 30 targets at untested historic workings with recorded gold manufacturing.

Melville’s useful resource stays open at depth and alongside strike.

Firefly’s Lawson, a former principal geologist at WA gold main Northern Star Sources, says the corporate’s present shareholders have the possibility to be a part of a “bigger, regional gold firm with sturdy cash-flows, enhanced market positioning and the flexibility to quickly unlock the exploration potential of a consolidated 1, floor place within the Yalgoo and Dalgaranga greenstone belts”.

These shareholders will personal about 32 per cent of the merged entity.

Mr Lawson says Firefly backers are additionally anticipated to profit from a proposed demerger of the corporate’s copper-gold and lithium exploration belongings in WA by way of a brand new entity, Firetail Sources, by way of an in-specie distribution “on this thrilling new power metals centered firm”.

All going to plan, the Gascoyne-Firefly union shall be consummated in October this yr.

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