Gascoyne Resources Ltd (ASX:GCY) is unlocking a number of synergies via its proposed merger with Firefly Resources Ltd (ASX:FFR) to combine two gold companies with complementary assets in the Murchison region of Western Australia.
Gascoyne aims to leverage its gold mining expertise and available processing infrastructure at the Dalgaranga Gold Project for the benefit of Firefly’s highly prospective suite of assets including its flagship Yalgoo Gold Project.
The merger will create a regional gold production and development business and unlock value for Gascoyne and Firefly shareholders by integrating Yalgoo’s near-surface higher grade deposits into the Dalgaranga production plan – providing opportunities to extend and optimise the existing mining schedule, ultimately improving project economics.
The Dalgaranga Gold Project is about 65 kilometres by road northwest of Mt Magnet in the Murchison gold mining region of Western Australia and covers the majority of the Dalgaranga greenstone belt.
Gascoyne’s production at Dalgaranga primarily from Stage 1 of the Gilbey’s Main Zone in the June quarter resulted in 17,416 ounces of gold produced at an all-in sustaining cost (AISC) of A$1,589 per ounce.
The company reinvested a total of $6.3 million of quarterly revenue into capitalised Stage 2 pre-stripping of the Gilbey’s open pit to ensure consistent ore supply to the processing plant.
An updated ore reserve was estimated for Dalgaranga in May 2021 being 13.53 million tonnes at 0.8 g/t gold for 339,000 ounces of contained gold.
Further high-grade hits
Gascoyne’s Reverse circulation (RC) drilling results from the Hendricks and Vickers prospects at Dalgaranga announced this week include high-grade gold hits at Hendricks:
- 6 metres at 2.4 g/t gold from 27 metres and 22 metres at 2.3 g/t from 38 metres in DGRC0677 including 5 metres at 8.1 g/t from 38 metres;
- 18 metres at 1.6 g/t from 75 metres including 3 metres at 4.9 g/t in DGRC0678;
- 4 metres at 7.3 g/t from 115 metres including 1 metre 26.3 g/t from 115m in DGRC0675.
Follow up RC drilling program
Gascoyne managing director and CEO Richard Hay said: “The latest shallow drill intersections at Hendricks of 6 metres at 2.4 g/t gold from 27 metres and 22 metres at 2.3 g/t gold from 38 metres are very encouraging especially being located only 1.5 kilometres from Gascoyne’s low cost, modern processing plant.
“A follow up infill RC drilling program will begin shortly to further delineate the shallow mineralisation that has near term potential to be integrated into the Dalgaranga mine plan.
“The merger with Firefly Resources is progressing well, with the requisite studies and permitting underway to bring the Yalgoo - Melville deposit into production as soon as possible including a Mining Licence application lodged by Firefly.
“Prospects such as Hendricks should also enhance the Dalgaranga mine plan providing additional optionality and flexibility.”
Melville gold deposit
Firefly’s Melville gold deposit at Yalgoo contains a shallow, from surface, mineral resource of 196,388 ounces at 1.45 g/t gold (0.7 g/t gold cut-off) and is 110 kilometres by road from the Dalgaranga production hub.
About 80% of the Melville resource is in the Indicated category (156,753 ounces at 1.47g/t).
The combined entity will have opportunities to optimise the Dalgaranga mine schedule given the presence of higher-grade ore at Yalgoo which will serve as valuable blending material at Dalgaranga in the future.
There is also significant potential for mine life extensions at Dalgaranga through the integration of Yalgoo ore, with enhanced potential to unlock the full value of the existing resources at Dalgaranga and Yalgoo of 845,000 ounces.
Pathway to a 100,000 ounces per annum producer
Gascoyne’s merger with Firefly will build a stronger base for the company to grow its mine life and increase grade and production as highlighted in the following charts:
The company also owns the Glenburgh Project in the Gascoyne region of Western Australia with an indicated and inferred resource of 16.3 million tonnes at 1 g/t gold for 510,100 ounces of gold from several deposits within a 13 kilometres long shear zone.
The advanced exploration project will be fully evaluated over the coming months to determine its potential development to production.
Last week, Gascoyne’s RC drilling hit high-grade gold at the project with the intersections demonstrating that with further targeted drilling, the Glenburgh resource has the potential to reach a critical mass in support of feasibility studies.
Hay said: “Our first RC drill program at the Glenburgh advanced exploration project since the estimation of an updated Mineral Resource in late 2020 has had immediate success.
“We are very encouraged by the high grade intersections including 8 metres at 11.6g/t, which includes 4 metres at 21.4g/t in the Zone 126 deposit from outside the existing Mineral Resource Estimate.
“This intersection demonstrates that with further targeted drilling, the 510koz Glenburgh Mineral Resource has the potential to reach a critical mass in support of feasibility studies relatively quickly.
“To support this strategy, an aircore rig is due to commence drilling of the South West exploration target before returning 350km south to Dalgaranga to complete the Greencock trend reconnaissance drill program.
“Further resource extension drilling at Glenburgh is also anticipated later in the current half.”