Gascoyne Resources Limited (Gascoyne or the Company) has today been reinstated to trading on the ASX following the successful recapitalisation process. As part of the recapitalisation, Gascoyne undertook an equity capital raising lead by Canaccord Genuity (Australia) Limited (Canaccord Genuity), which raised approximately A$85.2 million at a post consolidation issue price of A$0.50 per share (post consolidation). The Company now has a well-capitalised balance sheet with a cash balance of over A$30 million and bank debt reduced to A$40 million.
Gascoyne has built a solid production track record since accessing the higher grade Gilbey’s Main Zone at the Dalgaranga Gold Project in Western Australia, utilising the high quality processing infrastructure already in place, whilst maintaining a strong relationship with key mining contractor NRW.
The Company is in a strong position with a robust Life of Mine Plan (LOMP) based on updated Resource Model and Ore Reserve estimates, leading to a significantly improved production rate with nine consecutive months (to September 2020) exceeding 6,000 ounces of gold produced.
Gascoyne’s latest drill results from the recently completed resource definition RC drilling program included an intersection of 11 metres at 4.2 grams per tonne (g/t) of gold (Au) and confirmed the potential for mine life extensions (see ASX Announcement 19 October).
With a strong balance sheet and the gold price trading at very high levels (+A$2,680 / oz), Gascoyne states that it is well funded to pursue growth initiatives including additional resource definition drilling at the Dalgaranga Gold Project’s Gilbey’s and Sly Fox deposits, and a wider surrounding regional exploration program.
Gascoyne notes that their Glenburgh Exploration / Development project also offers significant upside, and technical reviews have commenced towards progressing to a pre-feasibility study, with an updated Mineral Resource estimate anticipated in the December quarter.
Gascoyne Resources CEO and Managing Director, Richard Hay, expressed his sincere appreciation to all stakeholders who supported the Company during its recapitalisation, including National Australia Bank and Commonwealth Bank of Australia, Investec Bank, Canaccord Genuity, Foster Stockbroking, Bridge Street Capital, NRW, Zenith Pacific, Evol, Maroomba Airlines, FTI Consulting and the Gascoyne team.
“The team has achieved a great outcome for all stakeholders with Gascoyne’s reinstatement on the ASX. The fact that we are a WA-based business has also meant very minimal impact from COVID-19 with no operational setbacks. Furthermore, the results from our recent drilling program (see ASX Announcement 19 October) highlight the potential to enhance the mine life at our Dalgaranga operation,” Mr Hay said.
“Credit for this achievement goes to the Gascoyne team, FTI Consulting, creditors, shareholders, new investors and suppliers for their support. Gascoyne today has a materially reduced debt, sufficient working capital, a strong balance sheet combined with a capable, experienced Board and Management group. This platform will enable the Company to pursue meaningful growth in a favourable gold price environment.”
Initial Mandatory Hedging
A requirement under the new debt facility with Investec Bank plc (Investec) is to partially protect adverse movements in the gold price by hedging on a rolling 18-month basis, a minimum of 40 per cent of forecast gold sales.
Following draw down of proceeds under the debt facility and effectuation of the DOCA, the Company entered into forward sale agreements with Investec for approximately 46,000 ounces (being 40 per cent of forecast production and gold sales over the 18 month period commencing on 1 November 2020).
The forward sale price has been set at A$2,667 per ounce. This price is significantly higher than that used for the recent Ore Reserve estimate update (see ASX release dated 31 July 2020).
Settlements under the forward sale agreement are expected to occur evenly over the duration of the initial 18-month period. Additional mandatory hedging of a minimum of 40 per cent of forecast gold sales will be agreed on a month by month basis with Investec as each existing month rolls off for the duration of the debt facility.
The balance of gold production is currently to be sold at spot prices.
*Above image: Dalgaranga Gold Project – Gilbey’s Pit at Sunrise (Looking South). Image courtesy of Gascoyne Resources Limited.