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REFINING THE GOLD STANDARD abcrefinery.com

The unfortunate production downgrade puts a small dent in “One of the challenges for us with regards to M&A is it’s got
plans to have Gruyere crack the 300,000 ozpa mark this year to involve assets that don’t dilute the value of the portfolio,”
before ramping up to 350,000 ozpa over the next three years. he said. “With Gruyere we’ve got a long-life, low-cost, high-
Speaking ahead of the setback, Gibbs was full of praise for quality asset in a low-risk jurisdiction and investors are not
the process plant which consistently achieved a throughput of going to be happy if you mix that up with a high-cost asset in
8.2 mtpa in 2020, above the 7.5 mtpa outlined in the feasibility a high-risk jurisdiction.
study. “Tropicana we saw as another analogue of Gruyere given it’s
“We’ve gone from 270,000 ozpa to nearly 300,000 ozpa and a JV that was not going to be managed by Gold Road, but
we’re going to 350,000 ozpa so it’s not only been a big step- similarly has a 10-year plus life. It’s high cost at the moment
up in ounce production, it’s been a big step-up in cash flow but that’s kind of driven by where they are in the mining. In
– and that’s not from throwing lots of capital at the project, many ways we saw it as a good fit to the organisation and I
it’s basically just running the place faster and smarter,” Gibbs guess with my own background there it made sense for us to
said. look at it, but obviously it sold for a price that was above where
“I don’t think there’s anything you could say that has been a we saw value creation for Gold Road’s shareholders.”
systemic surprise with the operation. It’s certainly delivering Gold Road generated sector-leading cash flow in terms of per
above what was presented in the investment case through ounce production during the back half of 2020 when the gold
higher production and also with what we’re seeing coming price achieved all-time highs. Gibbs said it was great to see
through in [mine] life extensions.”
Exploration remains Gold Road’s lifeblood and the
company has committed another $27 million to
finding more ounces in and around Gruyere this year,
including below the existing open pit. Earlier this year
a maiden underground resource of 18.47mt @ 1.47 g/t
for 870,000oz was announced for Gold Road’s 50%
share of the JV.
Gibbs said the company was confident the resources
at Gruyere continued at depth and could one day be
extracted via underground mining methods. However,
that day will not likely arrive until the resources in the
open pit are depleted.
“The way we’re kind of looking at it is not so much
underground mining occurring concurrently with the
open pit, which is the typical model, it’s probably
more likely that an underground mine comes in after
the open pit is depleted in perhaps a decade’s time,”
Gibbs explained.
“If the drilling and the work there is successful, it really Gold Road managing director Duncan Gibbs (right) with Gold Fields
can turn Gruyere from being a 10-year operation into a Australasia executive vice-president Stuart Mathews
much longer-term operation. It’s quite a game changer
for the longevity of Gruyere. I think people have so many gold miners making money, however, he is wary of
perhaps been surprised by the fact we’re looking at mining lack of new discoveries in the development pipeline.
a relatively low-grade orebody by underground, but it works
“We’re becoming characterised by underground mines getting
because of the thicknesses of the ore zone and the relative
deeper and a lack of greenfields exploration for new mines;
simplicity of the mineralisation that we’ve got at depth.”
obviously we’re one of the few companies doing it,” Gibbs
Earlier this year, Gold Road’s name was also thrown up said.
as the potential frontrunner for IGO Ltd’s 30% share of the
“We’re seeing some industry consolidation – the big deal
Tropiacana gold mine. The company placed a bid for the
being Northern Star and Saracen – but that doesn’t add to
operation, which Gibbs was integral in establishing, but was
total production or create new jobs, so the future long term
ultimately usurped by Regis.
needs to be driven by making new discoveries. Gruyere was
Gibbs said the company remained on the lookout for other successfully brought into production and the big talk at the
opportunities in the M&A space which did not come at a cost moment is De Grey [Mining Ltd].”
to the ongoing success of Gruyere, both from an exploration
and production sense.

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