Transcription of Finance News Network Interview with Gascoyne Resources Limited (ASX:GCY) Managing Director, Mike DunbarClive Tompkins: Hello Clive Tompkins reporting for the Finance News Network. Joining me from Western Australian gold explorer Gascoyne Resources
(ASX:GCY) is Managing Director, Mike Dunbar. Mike welcome to FNN. Can you start by introducing the Company?
Mike Dunbar: Absolutely. Gascoyne Resources was listed in December 2009 by combining the assets, the gold assets in the Gascoyne of Western Australia that were held by Giralia Resources
(ASX:GIR) and Helix
(ASX:HLX), and we were listed on the ASX at that time.
Clive Tompkins: Thanks Mike and for people not familiar with the Gascoyne. Where is it?
Mike Dunbar: The Gascoyne is approximately halfway up Western Australia, halfway between Meekatharra and Carnarvon, just south of the Pilbara.
Clive Tompkins: And what size area does the Gascoyne region cover?
Mike Dunbar: The Gascoyne area is a very large area; it covers over 500 kilometres east west and probably around 80 to 100 kilometres north south. So it’s a very large area. It has had a lot of historical production out of it, but predominantly in the eastern Gascoyne not in the western Gascoyne, where we are.
Clive Tompkins: And what’s your footprint as a company and what stage are your projects?
Mike Dunbar: Yeah we’ve got over 1,000, 1100 square kilometres of tenements in the Gascoyne projects themselves. And the most advanced project by far is the Glenburgh project. We’ve got over 700,000 ounces defined already, in indicated and inferred resources and we’re now – we’ve completed a scoping study on them. And we’re now moving forward with a feasibility study on the projects.
Clive Tompkins: Looking at your key project Glenburgh. What does it contain?
Mike Dunbar: Gold. We’ve got an over 700,000 ounce gold resource in the project. All of the deposits outcrop and as a result of that, we’ve completed a scoping study on the back of the resource. And the project will support a – at this stage, appears to support a viable operation. So we’re now moving through feasibility study on that.
Clive Tompkins: And what has the latest drilling revealed, and what’s planned for the rest of the year?
Mike Dunbar: More drilling, we’re doing a lot of drilling this year. Last year, as a result of being aggressive on Glenburgh, we drilled 35,000 metres on the project which for a small company like us, is a massive investment. This year we’re planning 40,000 metres. So for a company of our size to be spending a large amount of money and effort - over 75,000 metres in the last two years by the end of this program, it is a massive investment in the project. But it certainly has been very successful. We’ve identified a number of new deposits, identified some high grade plunging shoots within the system and announced recently, some very high grades - up to 42 grams per tonne in some of the deeper drilling. So it’s been going very, very well but in short – what are we doing? We’re continuing to drill and drill very aggressively on the project. What we’ve seen is with more drilling, the resource has also been growing dramatically. Now we’ve actually grown the resource by over 500,000 ounces in the last 18 month. So that’s a massive investment, but also by doing that drilling, we have seen a large amount of success as a result. And the discovery cost per ounce is actually only $7.18 per ounce. So very, very cheap discovery costs too, which underpins the potential and really underlines the potential of the project.
Clive Tompkins: Thanks Mike. So what’s the next key milestone for the project?
Mike Dunbar: Look more resource growth, to be honest. The first hurdle that I think we need to get closer to is a million ounces, and I believe we will be there by the end of the year. So that’s certainly psychologically and for the market, that’s a nice hurdle to overcome. And I think we will be there by the end of the year. But also in parallel with that, we’re doing development studies and the feasibility study that we’re currently undertaking; it is also a very important step forward to prove the viability and the economic viability of the project.
Clive Tompkins: And Mike, assuming the project ticks all the boxes. When do you hope to be in production?
Mike Dunbar: Depending on which path we take, whether it’s a second-hand plant or a new plant we build, construction period would be between nine and 12 months. A new plant maybe even as long as 15 months, depending on the size and what the feasibility outcomes are. But in production, Quarter 2, 2014 at this stage, would be the aim. It does appear a very short time frame. The reason we can do that is because we’ve got environmental baseline studies have already commenced, all of the long lead time items are already well advanced. We’ve got water for processing nearby, so as part of the scoping study we’ve deliberately ticked all of the normal fatal flaw boxes. Metallurgically we get fantastic recovery, over 50 per cent gravity gold and 95 per cent plus recovery from the resources; so very, very strong project.
Clive Tompkins: Now to your finances Mike, Gascoyne recently raised $6.7 million via a capital raising and rights issue. What will your cash position be following the capital raising?
Mike Dunbar: The rights issue and placement post that fund raising, we’ll have around $8.5 million in the bank. And a large amount of that, probably in excess of $5 million will be spent this year on Glenburgh, advancing that project. So while yes, we’re raising the money and it’s a very substantial amount that we’re raising, 40,000 metres of drilling doesn’t come cheaply and feasibility studies don’t come cheaply.
Clive Tompkins: Now to your share price Mike. Where’s the stock traded over the last 12 months, where is it now and what’s your market cap?
Mike Dunbar: The market cap, post raising will be around $29 million and we’ve been trading between 33 cents and 20 cents for the last 12 months. We’re currently at just over 20 cents. The rights issue is at 20 cents to the existing holders and that actually closes tomorrow, on Friday the 20
th (April). And so, we’ve basically traded sideways for quite some time and the project economics from the scoping study suggest that we should be – the NPV (net present value) rather of the project, is going to be north of $100 million. Between $100 and $150 million depending on what gold price you plug into the financial model. And for a market capitalisation of only around $20 million after you’ve taken the cash that we’ll have, it seems like it certainly needs to be reviewed. And I think we will see a re-rating once we’ve got the capital raising done.
Clive Tompkins: Last question. Where would you like to see Gascoyne Resources by year’s end?
Mike Dunbar: By year’s end, the aim is to have the feasibility study finished as well as a million ounces in resources. And I think that’s really - it would give us a fantastic foundation to build the Company on and to continue the development of Glenburgh.
Clive Tompkins: Mike Dunbar, thanks for the introduction.
Mike Dunbar: Thank you very much.
Ends
