Gascoyne Resources Ltd (ASX: GCY)

Gascoyne Resources Ltd was placed in a trading halt session on November 20, 2017, as the group is understood to be seeking a capital raising worth $20 million. It is said that the group has indicated for a non-underwritten placement being priced at 38 cents per share, and this reflects a discount of 10.6% to Gascoyne’s last closing price and 14.2% to the 10-day volume-weighted average price. The group seems to have appointed Hartleys and Argonaut Securities as joint lead managers for this move; and aims to use the proceeds towards exploration and development of the Dalgaranga and Glenburgh gold projects, and for working capital.

Gascoyne has recently entered into a gold forward sale facility with Commonwealth Bank of Australia (ASX: CBA) to arrange a debt facility for the development of the Dalgaranga Gold Project. The mine plan has also been updated lately and now includes three deposits, Gilbeys (including Gilbeys South), Golden Wings and the recently discovered Sly Fox deposit.
 

Site Layout (Source: Company Reports)
 
The key thing to note is that the plan incorporates 652,000 oz of contained gold (16.2 Mt @ 1.3 g/t gold), post successful exploration close to the mill. The development activities have also been expedited for the upper portions of the Sly Fox discovery to maximise plant throughput after the recognition of 2.5mtpa plant under construction with capacity to treat up to 3.0Mtpa of oxide ore. With the new mine plan having an increase of about 1 million tonnes over previous mine plan, the group can utilise the excess plant capacity for the first 2 years of production, defer waste movement, and extend gold production beyond 6 years.

Meanwhile, Gilbeys Ore Reserve has been updated for better Mine Design and stands at 523,000 oz (13.2 Mt @ 1.2 g/t gold). Further, Golden Wings Ore Reserve has been updated to account for the updated Mine Design and Mineral Resource, and the same stands at 63,000 oz (1.4 Mt @ 1.4 g/t gold); while Sly Fox maiden Probable Ore Reserve stands at 26,000 oz (0.6 Mt @ 1.3 g/t gold).

GCY is now tracking well with regards to construction of the Dalgaranga Gold Project with first gold production expected in the second quarter of 2018. The stock has otherwise fallen 15% in last one month, as at November 17, 2017, owing to volatility and concerns over developmental activities.

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