Gascoyne Resources has moved into administration due to an expected material cash shortfall over the coming months.
The announcement was made via FTI Consulting, which revealed that Michael Ryan, Kathryn Warwick and Ian Francis will assume the role as voluntary administrators.
Gascoyne has previously stated its focus on ramping up mining operations at the Dalgaranga gold project in Western Australia to increase ore releases and lift grades available for processing.
Despite this focus, however, the company experienced issues with reconciliation to ore reserves and mineral resource models, meaning the level of ounces produced was far below expectations.
Last week, a new localised uniform conditioning (LUC) resources model for the Gilbeys gold deposit was recommended to the Gascoyne board, with the new model defining a higher tonnage lower grade deposit than previous resource models.
The new LUC model combined with pit mining schedules has meant that the results of high-level cash flow analysis indicate Gascoyne will experience a material cash flow shortfall in the short term.
This is mainly due to lower predicted grades of ore, particularly in the next six months.
Despite the company investigated alternative options to address the cash flow shortfall, including obtaining financial accommodation from creditors and shareholders, Gascoyne realised it could not address the cash flow shortfall.
While in administration, Gascoyne’s shares will be suspended from trading, however, administrators intend to continue operating the company on a ‘business as usual’ basis.
A first statutory meeting of creditors which must be held within eight business days after the commencement of administration, is expected to take place on June 13.