Gascoyne Resources Limited (ASX : GCY) has appointed Voluntary Administrators FTI Consulting amidst concerns over expected volumes at the Dalgaranga Gold Project. The company will explore recapitalisation options to facilitate on-going trading.
FTI Consulting today announces that the Directors of Gascoyne Resources Limited ACN 139 522 900 and its subsidiaries resolved on 2 June 2019 to appoint Michael Ryan, Kathryn Warwick and Ian Francis as Voluntary Administrators.
Gascoyne’s focus has been on ramping up mining operations at its 100% owned Dalgaranga Gold Project to increase ore releases and lift grades available for processing.
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Despite extensive efforts by Gascoyne Resources (GCY) to optimise operations by targeting improved mined grade, resource reconciliation, and increased material movements, GCY has continued to experience issues with reconciliation to Ore Reserves and Mineral Resource models materially below expectations impacting the level of ounces GCY 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 GCY’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 6 months, GCY will incur a material cash flow shortfall in the short term.
Although GCY has investigated options to address that cash flow shortfall, through obtaining financial accommodation from creditors and shareholders, it has become apparent that those options will not successfully address the cash flow shortfall in the time available.
As a consequence, the Directors have determined to appoint voluntary administrators to GCY Group.
While in Administration the Company’s shares will be suspended from trading. Updates on the process will be uploaded on the ASX platform.
Strategy for Gascoyne Resources moving forward
The Administrators at this stage intend to continue operating GCY on a ‘business as usual’ basis while recapitalisation options are explored.
The Administrators will work closely with GCY employees, suppliers, secured lenders and customers to quickly stabilise operations and preserve value for stakeholders.
First statutory meeting of creditors
A first statutory meeting of creditors must be held within eight business days after commencement of the administration and is expected to take place on 13 June 2019. Meeting notices setting out the time and location for the first meeting of creditors will be distributed to GCY Group’s creditors over coming days.