‘Fearless’ Gascoyne pivots from struggling producer to ‘exceptional’ new discovery

BY STAFF WRITER

The former producer has repositioned itself as one of the most intriguing value propositions in the ASX gold sector.

Towards the end of last year, Gascoyne Resources’ (ASX:GCY) Managing Director Simon Lawson readily admits the former gold producer had become un-investable.

Like many smaller-scale producers in WA, Gascoyne’s Dalgaranga gold mine had fallen victim to the familiar challenges of low grades, rapidly rising labour and input costs, and skills shortages – with a dash of inclement weather thrown in.

Despite boasting a brand new 2.5Mtpa CIL processing facility and modern surface infrastructure, the sub-1 gram per tonne head grades emanating from Dalgaranga’s main pit – Gilbey’s (named after the gin) –and a host of other headwinds were just too much for Lawson and his team to overcome.

“We made the really tough decision to placetheoperationoncareandmaintenance in November. Despite producing nearly 72,000ozinthe2022financialyear,including a record March quarter, we just didn’t have anymoreleverswecouldpull,” Lawson says. But rather than collapse into Voluntary Administration (as the Company had once before), Lawson was able to negotiate the treacherous path of what he calls a “solvent administration”.

The operation was placed on care and maintenance, redundant staff and employees received their entitlements and headed off to find other jobs in a hot labour market, and all the entities were kept out of administration.

“There were some tough decisions, some difficult conversations and I’m sure we didn’t make a lot of new friends in the process –but at the end of the day we wanted to hold onto the assets and try to make sure that shareholdersdidn’tlosetheirshirts,” he says.

Hope From The Never Never

One of the reasons Lawson – a former Northern Star Resources executive who cut his teeth working for Bill Beament in the early growth days at Paulsens gold mine – was so keen to hang onto the core of the Dalgaranga asset base was a product of near-mine drilling completed earlier in the year.

While urging his exploration team to find more ounces to feed the hungry mill, drilling uncovered what appeared to be a new style of high-grade mineralisation immediately north of the Gilbey’s pit. Subsequent drilling began to reveal what has since emerged as arguably one of the best high-grade gold discoveries seen in Australia in recent times.

With intersections like 56 metres grading 12.5g/t, 59 metres grading 12.5g/t, 50 metres grading 6.46g/t, 32 metres grading 8.58g/t and 35 metres grading 7.67g/t, it is not hard to see why this emerging discovery has captivated not just the Gascoyne team, but the entire market.

In keeping with the established gin theme for Dalgaranga gold deposits, Lawson named the discovery “Never Never” after his favourite South Australian distillery and – just before unveiling a $50 million funding package in February this year and reinstating Gascoyne to trading on the ASX – delivered an impressive JORC Mineral Resource of 2.03Mt at 4.64g/t for 303,000 ounces.

“Wethinkthereisahugeamountofupside to this resource, and we have a high degree ofconfidencethatitwillformthecentrepiece ofourlonger-termoperatingplan,” he says.

Following the raising, Gascoyne is now funded through to mid-2024, with drilling underway aimed at growing the Never Never deposit and completing studies aimed at delivering a solid 5-year mine plan encompassing a blend of ore sources (including Never Never).

“The beauty of all of this is that we already have a plant ready to go and all the infrastructure we need, so we don’t need to jump through all the hoops that explorers typically have to go through to get into production,” Lawson says.

“It’squiteauniquevalueproposition.We’re effectively like an explorer that can flick the switch back into production whenever we want, with one of the best high-grade discoveriesinAustraliaunderournoses.The more we drill, the more we think investors willstarttoseetheopportunity.”