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DIGGERS & DEALERS PREVIEW REFINING THE GOLD STANDARD abcrefinery.com

Gold Road: Paving the way

to the next Gruyere

by Michael Washbourne

here is no question Gold Road Resources Ltd has quality asset we have in Gruyere, lets us take a longer term
Tpunched above its weight since the discovery of Gruyere view than probably what a lot of our peers can.”
in 2013. Gold Road has been debt-free for almost a year, having
From delineating a 6 moz resource to joining forces with repaid all its borrowings while growing its bank balance to just
Gold Fields Ltd to finance construction of a large mine now shy of $150 million as of March 31. In fact, most of the debt
exceeding all expectations, the company has rewritten the the company drew down during the construction of Gruyere
playbook for how an explorer can seamlessly make the was to ensure exploration could continue around the site.
transition to profitable producer. According to the company, Gold Road’s half-year dividend
It has now been two years since first gold was poured at yield of 1.42% for the six months to December 31 last year
Gruyere and despite an unexpected production downgrade was higher than established and much larger producers
announced in late June, the operation has hardly skipped a Northern Star Resources Ltd and Regis Resources Ltd
beat. Output for 2021 is now expected to fall within the lower across the same period.
half of the 260,000-300,000oz guidance, having churned out Gibbs insisted the company’s inaugural dividend was not
258,173oz in its first full calendar year of production. a one off, with Gold Road committed to future payouts to
Group free cash flow of $105.5 million was the catalyst for shareholders through the inevitable commodity price cycle.
Gold Road to issue a maiden fully franked dividend of 1.5c/ “We see our dividends being quite sustainable, even in a
share for the six months to December 31 last year, in line with lower gold price environment and things like that,” he said.
the company’s dividend policy of 15-30% free cash flow for
“We’re quite unique to many operations. It was a successful
the half-year and subject to a minimum net cash balance of
start-up, low gearing to begin with, rapid payment of debt.
$100 million.
Obviously with the strong gold price we paid down debt
Gold Road managing director Duncan Gibbs, who joined the and built up the balance sheet much faster than perhaps
company during the final stages of construction at Gruyere we anticipated when the project was committed. Gruyere is
in 2018, said the company’s blueprint for successful mine certainly a very robust business.”
development and operation was now recognised the world
For the most part, Gruyere has exceeded all expectations
over by investors and aspirant producers.
in an operational sense since commercial production was
“The strategy of bringing Gold Fields into the JV, which was declared towards the end of 2019. The only major setback
questioned by some investors at the time, is now talked about came when Gold Road revealed output for the June quarter
by some of the North American investors as the ‘Gold Road was likely to be just 52,000-55,000oz due to a torn mill feed
model’ into how to develop a project,” Gibbs explained to conveyor belt in the processing plant.
GMJ.
Following the shutdown of the milling circuit to replace the
“Often if we’re talking to junior explorers in the development conveyor belt, a coupling on the ball mill failed and the
stage, they’re asking us about the ‘Gold Road model’ as a processing rate significantly reduced with only the SAG mill in
way of financing and developing their own projects. The operation. Gold Road said an engineering investigation was
deal that was put together with Gold Fields was really pretty under way to find the root cause of the failure and prevent
innovative at the time and it’s now allowed us to build what is future repeats.
a very strong balance sheet and I think that, along with the

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