Gascoyne Resources has suspended open pit mining and ore processing operations at its Dalgaranga site in Western Australia.
The two million tonnes per annum Dalgaranga mill will be transitioned to a care and maintenance basis over the next two to three weeks and maintained in a state ready for a rapid resumption of production.
The company said that gold production at the mine had been negatively impacted in recent months by abnormally high rainfall, labour shortages and COVID impacts.
These factors had continued through October and into November, leading to reduced production levels, higher production costs and negative cash-flow from operations, which the board determined was not sustainable. Furthermore, it is clear that despite the significant potential of the other assets such as Yalgoo, Gilbey’s North and Never Never, the transition to mining this higher-grade ore was not affordable and cannot be optimised at the current time given Gascoyne’s liquidity position.
The majority of the workforce currently at Dalgaranga will be demobilised over the next two days while discussions have commenced with contractors and creditors to allow the company to restructure its financial position to enable the mine to remain on care and maintenance in the medium term.
Gascoyne managing director Simon Lawson said the decision was disappointing, particularly in light of the hard work the exceptional team at Dalgaranga had put in over the past couple of years.
“The continued pressure of industry-wide cost inflation, approval delays and sub-par operational performance have contributed to the board and | uniting in the view that continuing to operate in these challenging times is extremely high risk. We are committed to developing a sustainable +5-year solid mine plan targeting higher margin production and we strongly believe that this focus is in the best interests of the company and our shareholders.
“The foundation of our decision is heavily influenced by the phenomenal near-mine exploration success Gascoyne has enjoyed in recent months, making what is arguably Australia’s best new high-grade gold discovery right on the doorstep of the current operation.
“However, the timelines involved in properly drilling out and developing this exceptional discovery, together with the ongoing productivity, equipment availability and people shortage issues experienced by the mining contractor, mean that it is simply a more prudent and sensible step to pause mining and processing, step back and recast our operations on a much more sustainable basis.”