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it whole, while major creditor [and min- Gascoyne, much like Ora Banda and
ing contractor] NRW [Holdings Ltd] will Dacian Gold Ltd – another junior miner
receive $7 million cash up front and $12 which went to the brink before pulling back
million in shares. The remainder will come – found operations suffered from poor
in contingency payments. grade reconciliation. Hay said the compa-
“The other creditors will receive $10,000 ny had spent the 14 months in administra-
upfront, 50% of the remainder in shares tion shoring up the resource model.
and 50% in subsequent cash payments.” “We have a far more proven resource
The DOCA announcement came de- model now which has vastly improved the
spite two competing offers – from Chi- level of confidence,” he said.
nese firm Hanking Mining and BlackRock- Operations have also benefitted from
backed Habrock Mining – worth $30 moving into the Gilbey’s Main Zone ore-
million and $80 million respectively. Hay body. Previously, the biggest reconcilia- Dalgaranga produced 73,000oz gold
said the final agreement was the best out- tion issues were associated with the oxide in FY2020
come for the company, shareholders and and transitional material being mined.
creditors. “We tried to mine the oxide to fund the “Around the mine and the plant it is
“I think this is the best outcome for the cutback but the gold simply wasn’t there,” about looking for incremental uplift but
company because it gives us the great- Hay said. “Now we have put money back there are also growth opportunities in the
est certainty going forward,” he said. “All into the open pit cutback to ensure we area,” he said. “Once the capital raising is
shareholders need to vote in favour of have sustainable mining in front of us. done, we will be able to start on further
all results. That will allow us to move to We have a seven-year mine life and it is resource definition and exploration where
a capital raising straight after which will now about maintaining the vast majority the target will be high-grade, smaller ton-
allow us to pay down debt, de-gear the of mill feed from the Gilbey’s Main Zone nage orebodies which we can bring on
company and get to a spot where we have because that is our most consistent and to help us reach our ultimate target of
a more serviceable debt load.” highest-grade orebody.” 100,000 ozpa.”
The appointment of administrators is of- The switch to mining of fresh material Hay said the recovery and DOCA had
ten a death knell for mining companies but from the Gilbey’s Main Zone also initiated been achieved thanks to the commitment
Hay said the move had given Gascoyne a modification in mining method. of Gascoyne staff and the company’s
the breathing space it needed to form a “One of the key learnings was the creditors.
recovery plan for its Dalgaranga gold op- change from a narrow vein, high-grade “One of the key highlights has been the
eration. focus to a low-grade bulk tonnage sce- dedication and positive outlook of the op-
“The company needed the opportunity nario and we are being rewarded for that,” erators,” Hay said. “We had quite a lot of
to continue to trade through this and ad- Hay said. “We also have a fantastic plant turnover in the first month of administra-
ministration allowed that to happen,” he which is doing better than its 2.5 mtpa tion but since then it has been very low,
said. “We have been producing at 6,000oz nameplate capacity It reached 2.93 mtpa particularly from Gascoyne staff. It is a
a month for six months now and have ac- for FY20.” very strong team and they back each
tually posted 73,000oz for FY2020. That With production consistency achieved, other up. We changed out the manage-
is a very strong launching pad for the fu- Hay is intending to spend some of the ment team in July last year. That made a
ture. Who would’ve believed that 12-13 cash from the recapitalisation plan on ex- big difference, particularly in our relation-
months ago?” ploration. ship with NRW, our largest contractor. We
need them working with us to have any
chance. We’ve been backed by our senior
lenders and all our key suppliers.”
Hay said the capital raising would in-
clude a structured entitlement offer as well
as placement to new investors.
“We’ve had very strong interest from
existing shareholders,” he said. “All the
feedback is that they are very excited in
the opportunity to take part and give us a
great shot of becoming a mid-tier miner.”
Reflecting on the rollercoaster of the
last 14 months, Hay said getting resource
estimates right was crucial to having a
successful gold operation.
“You must be crystal clear in the devel-
opment path, you need to do the detailed
work upfront on the resource estimate,” he
said. “Getting that right is key. If you get it
wrong fundamentally in the set-up, it will
be flawed and no matter how good your
operators are you won’t overcome those
flaws.”
– Dominic Piper
After grade reconciliation issues in its first 12 months of operation, the Dalgaranga mine has
been performing consistently since mid-2019

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