Perth gold miner insolvent amid cash flow shortfall

Gascoyne Resources' Dalgaranga gold project processing plant.
Gascoyne Resources' Dalgaranga gold project processing plant.

PERTH gold miner Gascoyne Resources has declared voluntary administration, saying its Dalgaranga mine in the Murchison region of WA won’t provide enough gold to solve a cash flow shortfall.

FTI Consulting said on Monday that it intends to continue operating the Perth company as “business as usual” for now.

Gascoyne’s chief financial officer and chief executive officer have also resigned as statutory officers of the company, and its non-executive chair and director have quit as directors.

Gascoyne shares entered a trading halt at 3.9 cents a share on Friday, down 93 per cent from their price of 56.05 cents a year ago.

Gascoyne raised $20.6 million to pay down debt in an entitlement offer in April, issuing 412 million shares at 5.0 cents a share – a 50 per cent discount at the time.

Another placement in August that raised $19 million at 30 cents a share was oversubscribed, as was one in November 2017 that raised $21 million at 38 cents a share.

The Dalgaranga mine began production in January and Gascoyne said it had been trying to ramp up mining but that it was producing “materially below expectations”.

Last week, a new model was prepared for the board that “defines a higher tonnage lower grade deposit than previous resource models” and it became clear that Gascoyne would incur “a material cash flow shortfall in the short term”.

Gascoyne bought 80 per cent of the Dalgaranga project for $150,000 and seven million GCY shares in 2012, and acquired the remaining 20 per cent in 2017.