Gascoyne Remains A Favoured Gold Play
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Gascoyne Resources (ASX: GCY, Share Price: $0.66, Market Cap: $167m) is one of our favourite emerging gold production plays, led by a vastly experienced board and management team with a strong blend of exploration, discovery and mining backgrounds. The company boasts a sizeable WA gold resource inventory of 2.05 million ounces - comprising three advanced projects on granted Mining Leases.
Gascoyne has reported further assay results from exploration drilling at its 80%-owned Dalgaranga gold project, with wide and high-grade gold intersections from the first RC assay results from Gilbeys South, including 28 metres @ 3.5 g/t gold from 105 metres depth (including 16 metres @ 5.1 g/t gold).
Gascoyne’s share price has firmed solidly from a low of $0.07 a year ago to a recent high of $0.70 – primarily as a result of growing market awareness of its sizeable and high-quality gold resource base, situated in an ultra-low risk mining jurisdiction. Adding further lustre to the company’s attraction is the robust A$ gold price (trading close to an all-time high), reinforcing the profitability of quality domestic production opportunities like Dalgaranga. Corporate interest is growing in what is likely to be the next domestic gold miner, along with strong drilling results that are enhancing the overall resource picture.
Announcement Detail – Dalgaranga Exploration Update
As we’ve previously discussed in our recent coverage, an aggressive drilling program is underway at the company’s 80%-owned Dalgaranga gold project.
The work comprises a multi-rig program of RC and diamond-core resource drilling, geotechnical and metallurgical drilling at the Gilbeys and Golden Wings deposits - along with RC and air-core exploration drilling at the Hendricks, Beefeater, Vickers, Caorunn and Gilbeys South prospects.
This note focuses on the latest diamond drilling results from the Gilbeys deposit and RC drilling results from the Gilbeys South prospect area.
Firstly, Gilbeys South – where the current RC work is a follow-up to recent encouraging air-core drilling, where results have demonstrated that gold mineralisation extends a further 550 metres south of the current Gilbeys 949,000-ounce Resource.
Importantly, the mineralisation within this area is shallow, with many of the intersections starting in the highly-weathered oxide zone within 15 metres of surface. The first RC results reported from this program are highly encouraging, as they occur around 150 metres southeast of the historic Gilbeys open-pit, on the southern edge of the current Gilbeys Resource.
What’s also encouraging about these initial results is that they show the gold mineralisation to be between 20-30 metres in width and well above the average grade for the current deposit, which remains open to the south and at depth.
Now let’s turn our attention to the Gilbeys deposit itself, where diamond-core drilling has targeted mineralisation under the existing Gilbeys pit.
The drilling was designed to increase the confidence in the Resource at depth in order to allow great Resource confidence – effectively conversion of more of the Resource from the Inferred category into the Indicated and Measured categories. Importantly, this will allow more of the Resource to be converted into Ore
Reserves in order to support a longer mine life. The drilling has also targeted Resource extensions and provided samples required for the Feasibility Study metallurgical test-work.
All of the holes intersected the mineralisation within a few metres of the expected depths, highlighting the excellent continuity of the mineralisation at depth, with the results received continuing to confirm or exceed the predicted down dip widths and grades.
The deposit remains open in all directions with further extensional drilling planned, including deeper RC drilling to test the deposit to the North and South, as well as shallow air-core and RC drilling to test extensions to the mineralisation on the Eastern side of the deposit, where shallow high grades in the oxide zone remain untested along strike to the northeast and southwest.
We initiated coverage of Gascoyne Resources at a price around $0.17 during February 2016 – representing a current gain of 288%.
Dalgaranga can offer a lower capex starter project that will allow it to leverage into its +1Moz Glenburgh project in WA’s Gascoyne region, which requires further drilling to extend beyond the current ~4 year mine life. Both projects in operation would see Gascoyne with a potential production profile of +150,000 oz p.a.
After a decade as a broking resources analyst with Intersuisse, Gavin helped establish the Fat Prophets Mining Report during 2005, writing and producing the report until he established MineLife during late 2010. He writes about mining and energy companies via his MineLife reports.
Disclaimer: Gavin Wendt, who is a director of Mine Life Pty Ltd ACN 140 028 799, compiled this document. It does not constitute investment advice. In preparing this report, no account was taken of the investment objectives, financial situation and particular needs of any particular person. Before making an investment decision on the basis of this report, investors and prospective investors need to consider, with or without the assistance of a securities adviser, whether the information is appropriate in light of the particular investment needs, objectives and financial circumstances of the investor or the prospective investor. Although the information contained in this publication has been obtained from sources considered and believed to be both reliable and accurate, no responsibility is accepted for any opinion expressed or for any error or omission in that information.