This Western Australian-based gold company represents a unique opportunity for investors, according to Gascoyne Resources’ managing director Mike Dunbar.

“We are one of only four independent gold developers left on the ASX who are looking at producing 100,000 – 200,000 ounces a year (the others being Gold Road Resources, Dacian Gold and Blackham Resources),” he said.

Gascoyne kept its head down during the tough times for juniors and has worked hard to progress its two projects – emerging at a perfect time, as the Australian dollar gold price soars while construction and diesel costs drop and there is a keen labour market. 

Dunbar said Gascoyne was in a prime position for growth and further re-rating.

“I have to have to keep pinching myself,” he said.

“During the tough years, we kept our head down and worked on de-risking both projects and we were incredibly frugal.

“All staff voluntarily took a 20% pay cut and it’s meant that we’ve come out this side far more prepared than we otherwise would be.”

The first project Gascoyne plans to bring into production is the 1.05 million ounce 80% owned Dalgaranga gold project, 60km north-west of Mt Magnet, producing an initial 125,000 ounces of gold in its first year.

Dalgaranga’s robust pre-feasibility study released in March outlines high margins thanks to an all-in sustaining cost of AUD$913 an ounce, an internal rate of return of 90%, low capital expenditure of $75 million (due to existing infrastructure) and payback within 12 months. 

Its resource is split between the historically mined Gilbey’s Pit and the Golden Wings deposit, and the lease’s many prospects – with names inspired by various gins – are also proving just the tonic for Dalgaranga.

Gascoyne has identified mineralisation at Hendricks of 12m at 2.2g/t gold and 18m at 3g/t and 15m at 1.5 g/t in the fresh rock and is busy drilling targets including Vickers and Beefeater.

“We’ve seen a 40% increase in the resource at Dalgaranga since November, it’s now a 1 million ounce deposit and it’s still growing,” Dunbar said.

“While we are yet to confirm the what the ultimate size of the resource will be, we believe that like all other gold mining projects, the mine life will extend well beyond the initial mine life, with potential for 8-10 years plus.”

The company is debt-free and cashed up – after releasing its Dalgaranga PFS, it raised $15 million via a private placement that was more than three times oversubscribed.

Dunbar also paid tribute to the generosity in the gold industry which helped give Gascoyne a strong headstart in developing Dalgaranga.

He approached the Dalgaranga’s previous owner and operators, Equigold, and Nick Georgetta in particular, who had been at the helm before he went to low-cost gold producer Regis Resources.

He asked for information on what had and hadn’t worked at Dalgaranga, and received “a remarkable data set” from monthly processing data to grade control and reagent consumption data. 

“It gave us a huge head start,” Dunbar said.

Gascoyne then engaged Mintrex Pty Ltd, who had built all three of Regis’ plants and were involved in refining Dalgaranga’s plant, which has since been moved offsite, to design Dalgaranga’s 2.5 million tonne processing plant, armed with the historical data and recent testwork.

“Due to the excellent relationship between Mintrex and Regis, we were also able to tour Regis’ Moolart Well processing plant and speak to the operators about how the plant was working, what they would do again and what they would change if they had the opportunity – it was very enlightening,” he said.

“It gave us a real insight into how Regis, who are widely considered to be ‘best in class’ at operating lower grade open cut mines at one of the lowest costs, operates.

“I think you have to be prepared to ask the people who are considered the best at what they do for their advice and then listen and learn from them.”

“Because of our headstart with the additional information, it means Dalgaranga is easier to develop particularly as it’s Gascoyne’s first development and it is derisked the most,” Dunbar said.

“The rapid payback of the project is expected within about 12 months, although it could be sooner depending on the gold price and debt structure.

“We’re weighing up our financing options that will offer the best result for our shareholders and our development.”

Gascoyne’s 20% JV partner is currently free carried to completion of the feasibility study, when he will then have to either contribute to all capital expenditure and operating costs or revert to a 2% net smelter royalty, which has been assumed in the PFS and incorporated in the AISC of $913 an ounce.

Dunbar said Gascoyne was now staffing up to a sustainable level and bringing on board the appropriate skill sets to transition into a gold producer.

“To say we’re busy is an understatement,” Dunbar said.

“We’re looking forward to the exploration results at Dalgaranga – even another 50,000oz could turn our early production into 125,000 ounces a year for the first three years, which will unlock much more value.”

However, as Dunbar points out, while Dalgaranga is being rapidly progressed to generate cashflow, that is just the start. The company already has an exciting growth project in the 100%-owned plus-1Moz Glenburgh gold project.

“Glenburgh has the potential to be a multi-million ounce system,” Dunbar said.

He has long believed in the potential at Glenburgh, which lies about 250km east of Carnarvon and contains a 21.3 million tonne mineral resource estimate at 1.5g/t gold for 1 million ounces.

“In the mid-1990s I worked on Glenburgh when it had only 80,000oz and I believed it would be a much larger system and that’s why I joined Gascoyne,” he said.

“In 2009 when we listed we had 200,000oz at Glenburgh, by 2013 it was 1 million so that shows how much prospectivity is there.”

Dunbar said it held some geological similarities to the giant Tropicana gold deposit in eastern WA as both were found in discrete terrains that had collided with the WA’s Yilgarn craton. 

“We did a lot of work on geological models on how we believe the area formed and we’ve only targeted 30% of three subparallel trends,” he said.

“It’s a complex area and I think now with the collaboration of Geological Survey of WA we understand it far better. 

“We’ve certainly got first mover advantage in the area, and we’ve got all the ground we want.

“I like to use the analogy that our strike length is 70km, which is the distance between Melbourne and Geelong.

“It’s a big system, (former Federal Parliament Speaker) Bronwyn Bishop would need a helicopter to get from one end to the other.”

The company has set up a separate exploration team for each project so both teams can work completely independently and the capital raising has enabled Gascoyne to send drill rigs back to Glenburgh for the first time in almost two years to aggressively explore the project. 

“There are lots of high priority targets at Glenburgh including a 6km long soil anomaly, with grades over 2.0g/t sticking out of the ground, so there are lots of opportunities at Glenburgh to grow the resource base significantly,” Dunbar said.

“As one of the very few gold developers left on the ASX, it is a very exciting time for Gascoyne and to have two +1 million ounce projects on granted Mining leases in WA I think Gascoyne provides the best exposure for investors wanting a company with growth and exposure to the Australian dollar gold sector.”