Gascoyne Resources’ Shares Inched Down On ASX Post Announcement Of Operational Update And 2019 Production Guidance

On 24 December 2018, Gold mining and exploration company Gascoyne Resources Limited (ASX: GCY) provided an operational update on the Dalgaranga Gold Project and also announced its 2019 production guidance. Following this news, the share price of the company decreased by 3.571 percent as on 24 December 2018.

The company reported that Ore mined till 20 December 2018 is 165 kt at 0.90 g/t for 4,770 contained ounces. Driven by tighter mining conditions in Gilbeys and water management in both Sly Fox and Golden Wings, the mining production rates remained constrained in the month of December.

The monthly production rates of the company are expected to rise in the future on the back of significant improvement in the overall mining conditions. The improvements in the mining conditions are mainly due to the commencement of mining at Gilbeys South and the continued opening up of the Gilbeys East cutback. Further, the mining conditions were also improved by the completion of mining in Sly Fox and a reduction in vertical advance rates in Golden Wings early in 2019.

As per the Dalgaranga operational update, the Gold production in the first 20 days of December 2018 was 4,245 ounces which came despite an approx. 56-hour mill shutdown which was done to replace remaining original mill grates and replace a split conveyer belt. The total gold production in the December quarter till 20 December 2018 was 15,020 ounce.

The company also informed that the production for Calendar year 2019 had been impacted by the reduction in Gilbeys inventory in oxide and transition ore. Both the Gilbeys South and Plymouth pits are scheduled to start mining in 2019 with Sly Fox planned for completion in the first quarter of the calendar year 2019. The company has revised its production guidance for CY2019 to 92,000 – 102,000 ounces at an AISC of between AUD$1,220 and AUD$1,320 per ounce. Earlier, the company was expecting production of 105,000 to 115,000 ounces at an average AISC of AUD$1,200 to AUD$1,300 per ounce. During CY 2019, the company is expecting Non-sustaining development costs of between A$250 – A$300 per ounce in relation to the capitalized component of waste stripping of the Gilbeys pit. As per the Production Guidance Update for CY2019, the company is expecting an average strip ratio of approx. 14.0 to 1 in CY2019 which is expected to fall considerably to average approx. 5.5 to 1 for the remainder of the current LOM.

On 24 December 2018, the company also announced that NRW Holdings Limited (ASX: NWH) has agreed to support Gascoyne Resources through the provision of a $12 million loan facility which is repayable by the end of 2019 with fees and interest set at commercial rates commensurate for this type of facility. The first principal repayment for the Dalgaranga Project Finance Facility which is A$1.6mn is scheduled to be made on 31 December 2018.

In the last six months, the share price of the company decreased by 72.28 percent as on 21 December 2018. GCY’s shares traded at $0.135 with a market capitalization of circa $72.15 million as on 24 December 2018 (AEST 04:00 PM).


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