Following cash flow analysis, Gascoyne Resources has announced that it has moved into administration due to an expected material cash shortfall over the coming months.

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Dalgaranga Gold project 2.5Mtpa processing facility. Image ©Gascoyne Resources

The announcement was made by FTI Consulting, which revealed that on 2 June 2019 Directors of Gascoyne Resources appointed Michael Ryan, Kathryn Warwick and Ian Francis as Voluntary Administrators.

As previously stated in Gascoyne’s ASX announcements, the Company’s focus has been on ramping up mining operations at its 100 per cent owned Dalgaranga Gold Project to increase ore releases and lift grades available for processing.

Despite extensive efforts by the Company to optimise operations by targeting improved mined grade, resource reconciliation, and increased material movements, Gascoyne has continued to experience issues with reconciliation to ore reserves and mineral resource models materially below expectations impacting the level of ounces Gascoyne has been able to produce.

On 28 May 2019, a new preliminary unclassified Localised Uniform Conditioning (LUC) resource model for the Gilbeys deposit produced by Gascoyne’s resource consultants was recommended to the Board as the preferred model from several that had been developed. The new model, although supporting the global gold inventory, defines a higher tonnage lower grade deposit than previous resource models.

On the basis of the new LUC model, and urgently prepared pit mining schedules based on the new model, high level cash flow analysis indicates that due to lower predicted grades, particularly in the next six months, Gascoyne will incur a material cash flow shortfall in the short term.

The Administrators at this stage intend to continue operating Gascoyne on a ‘business as usual’ basis while recapitalisation options are explored.

The Administrators will work closely with Gascoyne employees, suppliers, secured lenders and customers to quickly stabilise operations and preserve value for stakeholders.

On 31 May 2019, Non-Executive Chair Sally-Anne Layman and Non-Executive Director Mark Le Messurier, as well as Mike Ball (Chief Financial Officer) and Richard Hay (Chief Executive Officer) have resigned as statutory Officers of the Company.

NRW Holdings, which provides drill and blast and mining services to Gascoyne, has revealed in a statement that it intended to “continue operating Gascoyne on a ‘business as usual’ basis while recapitalisation options are explored”.

Prior to the announcement of FTI Consulting’s appointment, NRW was expecting earnings before interest, tax, depreciation and amortisation for FY19 in the range of AU$140 million to AU$145 million.

NRW’s assessment of the current exposure to the Gascoyne contract is circa AU$35 million representing working capital, a second ranking secured loan of AU$10 million and equity in Gascoyne of approximately AU$4.3 million, as most of the working capital (circa AU$17 million) and secured debt exposure (AU$10 million) was incurred in the first half of FY19.

Jules Pemberton, Managing Director and CEO NRW Holdings said that whilst the Company was disappointed with the recent events at Gascoyne, it remained positive on the outlook for NRW.

“With key resources, both workforce and equipment, currently in high demand, we remain confident that our personnel and equipment at Gascoyne’s Dalgaranga project can be easily redeployed in the event a recapitalisation is unsuccessful,” concluded Mr Pemberton.


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