Gascoyne signs up EVOL

Wesfarmers subsidiary EVOL has won a long-term contract to supply LNG to the power station and the process plant at Gascoyne Resources’ Dalgaranga gold project in the Murchison region.

Under the agreement, EVOL will supply a 1 million litre LNG storage facility and the vaporisation equipment needed for Zenith Energy's 15-megawatt gas fired power station and Gascoyne’s 2.5 million tonnes per annum gold processing plant.

Construction of the LNG facilities and Zenith’s power station has commenced and is scheduled for completion prior to the commissioning of the processing plant, which is set to be finished in May.

Gascoyne managing director Mike Dunbar said it was pleasing to confirm the deal.

“Execution of the long-term LNG supply agreement with EVOL provides Dalgaranga with a low cost, clean, reliable and locally sourced fuel solution,” he said

“The LNG supply agreement with extension options provides certainty for the project, giving us the ability to grow the project, knowing that there is a long-term fuel solution in place.

“The choice of gas-fuelled generators considerably de-risks the project as it reduces input costs and substantially lowers our exposure to any future escalation in the diesel price for power generation.

“LNG also provides flexibility to fuel parts of the process plant with LNG, rather than having to source other, more expensive, fuel options for the elution and recovery circuits as well as the carbon regeneration kiln.”

The Dalgaranga project has an initial mine life of six years and an average output of around 100,000 ounces per annum.

Shares in Gascoyne were up 1 per cent at 48 cents at 3.50pm AEDT.