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Gascoyne to ride with Firefly as Westgold bid falls over

Gascoyne Resources looks set to throw its lot in with ASX-listed Firefly Resources after the Supreme Court motioned through a merger deal between Gascoyne and Firefly. The move effectively ends Westgold’s surprise bid for Gascoyne, closing the books on the protracted precious metals love triangle between the three players. Gascoyne will now look to Firefly’s extensive landholdings in the region to forward plan its operations.

The complicated affair began when Gascoyne and Firefly agreed back in June to a union that would allow Gascoyne to take custody of its new partner’s two key assets: the 196,000 ounce Melville gold deposit and perhaps more importantly, a 1200 square kilometre exploration belt between Yalgoo and Mount Magnet.

However, Peter Cooke’s Westgold showed up before the consummation of the Gascoyne/Firefly marriage – albeit a couple of months late – and in a scene reminiscent of countless movies, Westgold spoke long and loud on the question of whether or not Gascoyne and Firefly should be joined in wedded bliss.

Westgold’s bid however was subject to the Firefly/Gascoyne marriage falling over and whilst Gascoyne had no legal rights to terminate, Firefly did, but chose to remain joined at the hip to Gascoyne, effectively seeing off the larger, better heeled suitor.

When the Takeovers Panel declined to serve as relationship counsellor and intervene on Westgold’s behalf with respect to the proposed Gascoyne-Firefly merger, the die was cast and the scheme of arrangement was then ushered through by the Supreme Court.

The completion of the Firefly merger doubles Gascoyne’s landholdings in the Murchison region and the company says it will now advance a suite of near surface deposits discovered by Firefly and increase exploration across its broader tenement package that has to date seen very little modern exploration.

Gascoyne says the recent events solidify the value of its coveted gold processing facility at Dalgaranga. The company says it will now build a mining pipeline around its crown jewel, the Dalgaranga mill, based partly on its own resources but also on Firefly’s gold deposits that are sprinkled around the processing plant.

The modern and strategically located mill is capable of churning out about 2.5 million tonnes of ore per annum and is situated about 65 kilometres north of Mount Magnet.

The asset has consistently operated beyond its capacity and Westgold’s failed offer appears to have been driven by its desire to gain ownership of the mill.

Gascoyne says that with the Firefly transaction set to be wrapped up in a matter of days, it is well placed to capitalise on its new portfolio and has earmarked several milestones to be completed by Q3 next year. This includes an update on the mineral resource estimate for Firefly’s Melville deposit and a maiden mineral resource estimate for the Applecross deposit.

The company is also planning on completing a scoping study and maiden ore reserve for the Melville deposit that will be followed by a mining proposal.

Moving forward Gascoyne says it will prioritise the introduction of Melville along with other regional deposits over its previously planned cutback of the existing Gibney’s open pit.

Importantly, the company say this strategy will reduce waste stripping costs and improve short to medium term cashflows.

Gascoyne will also continue its exploration and will, over the next six months, likely review results from its Hendricks, Greencock and Sly Fox targets at Dalgaranga. The company is also awaiting results from previously completed drilling at Yalgoo and expects to have them in within the next new weeks.

A marriage averted, a marriage gained and suitors lining up. Gascoyne, who was in administration only a year ago, has successfully transformed from ugly duckling to belle of the ball and like all marriages, its consummation with Firefly will be revealing.

Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au

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