Bardoc Gold (ASX:BDC) defers FID on leading project

• Bardoc Gold (BDC) shares have taken a knock following the company’s decision to defer a final investment decision on its namesake gold project in Western Australia (WA)
• The company’s decision regarding the future of the project was expected towards the end of this year
• Bardoc Gold Chairman Tony Leibowitz says his board is “not prepared to expose shareholders” to a “challenging time” in WA’s resources cycle
• BDC will instead look to other methods to monetise the deposit and has not ruled out potential mergers or consolidations
• Bardoc Gold shares are down 21.1 per cent at 11:21 am AEST to trade at 4.5 cents

Bardoc Gold (BDC) shares have taken a knock following the company’s decision to defer a final investment decision on its namesake gold project in Western Australia (WA).

BDC made the announcement to the market this morning, citing rapidly escalating costs in the WA resources sector, a tightening labour market and “other COVID-19 related challenges” in its rationale for the decision.

The company was expected to make a decision on the future of the project later this year, however Bardoc Gold Chairman Tony Leibowitz said his board was “not prepared to expose shareholders” to what he described as a challenging time in WA’s resources cycle.

Bardoc had previously described the project as its core focus and was looking to turn the Eastern Goldfields situated deposits into a “sizeable gold production hub”.

These aspirations are now on hold after a recent cash-flow optimisation study put estimated costs of the project at $232 million, some $55 million more than anticipated in pre-production capital cost estimates from March.

Bardoc claims these cost pressures are likely to mount as the project develops over the next 12 to 18 months and only be hindered further by difficulties in hiring skilled personnel and equipment.

BDC also highlighted a lack of investor confidence and “reduced risk appetite” among institutional investors.

Instead, Bardoc has laid plans to commence a strategic review of the project in a bid to monetise the project in the near-term, opening up the possibility to potential mergers and acquisition or consolidation activities.

Mr Leibowitz said undertaking the review was a necessary and pragmatic decision.

“It has become increasingly clear that the rising cost environment across the WA resource sector has made this a very challenging time for any company to launch a significant new mine development,” Mr Leibowitz said.

“The Board is not prepared to expose our shareholders to this level of risk at a very challenging time in the resources cycle, and we are certainly not willing to take on significant amounts of debt and potentially blow our capital structure out to develop a project.”

The company affirms it remains well-funded, with $10.6 million in cash at bank and no debt.

Bardoc Gold shares were down 21.1 per cent at 11:21 am AEST to trade at 4.5 cents.