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DIGGeRs & DeALeRs

Building on the Gold Road model

t the time Gold Road Resources Ltd planes around at the moment either, so if
Aengaged Gold Fields Ltd as partner you miss a critical part or something, it re-
of choice to build Gruyere in the remote quires a greater level of diligence relative to
Yamarna greenstone belt of Western Aus- normal circumstances,” he said.
tralia, investors queried whether it was the While aircraft are grounded, Gruyere
right decision. itself is flying with the operation on track
Now, 12 months since commercial for 250,000-280,000oz gold production in
production was celebrated at the 50:50 2020 at AISC of $1,150-1,250oz.
Gruyere JV, Gold Road is still being ques- Conversion of the current 6.1 moz @
tioned, but in a very different way. 1.34 g/t measured-indicated resource will
“A lot of investors now see it as a busi- be the focus in 2021, as the owners look
ness model that they actually quite like. We to enhance the 11-year mine life based on
hear that because we talk about it with in- production of about 300,000 ozpa from a
vestors and aspirant developers, they come reserve base of 3.7 moz.
and talk to us and ask about the Gold Road The seamless transition into production
model. The company has created another at Gruyere has translated into Gold Road
way of developing an asset where you bring boasting a debt free balance sheet high-
a partner in and I think that is something lighted by cash and equivalents of $109 mil-
developers should be potentially consider- lion (as at June 30).
ing,” Gold Road managing director Duncan “We are working on the long-term strat- Duncan Gibbs
Gibbs told Paydirt. egy with Gold Fields on Gruyere and I think “These successes happened towards
Selecting the right partner and having a that is going to take a year or so to really the end of last year or amidst COVID before
robust orebody to work with are both boxes unpack the moving parts. We’re looking to people raised a lot of money, so sometimes
Gold Road studiously ticked off at Gruyere, see if we can expand the pit and those I think the company that runs lean and hard
while the timing of bringing the project on- kind of things. Essentially, taking a pit from has better outcomes; there are lots of loose
stream has been impeccable. 400m deep to something like 500m deep exploration dollars sloshed around,” Gibbs
“It has been as smooth as these things you have to make sure you have the studies said.
can be and the timing has been perfect,” right to eliminate any risk,” Gibbs said. “In my view, at the top of the cycle, a lot
Gibbs said. Outside the Gruyere JV, Gold Road has of money ends up getting wasted and then
“COVID will present challenges if you openly stated its own growth ambitions and the bottom of the cycle you are losing talent
were developing an operation at the mo- the wave of current exploration success in from top end drillers through to superstar
ment, not so much on the supply chain of Australia has whet Gibbs’ appetite to start geologists.
things. It is when you get into the commis- the company’s next chapter with another “For a company like Gold Road we’re
sioning type phase you find that any larger world-class greenfields find. better off running steady state through the
scale operation ends up using a handful of Successes in the ilk of De Grey Mining cycles. Just because we are making amaz-
technical expertise that has to come in from Ltd’s Hemi in the Pilbara and Chalice Gold ing cash flows out of Gruyere in the current
somewhere around the world and getting Mines Ltd at Julimar, following on from the cycle doesn’t mean we have to double our
the right people at the right time could be likes of Havieron and Winu, have given exploration budget and likewise in cutting
quite difficult. companies the ability to raise money for back,” he said.
“That creates an added level of risk in de- exploration, which will hopefully breed the A budget of $25.5 million was set for
veloping an operation in the current global next generation of mines. exploration in 2020, with the target be-
environment, not to say you shouldn’t do While the market is currently enamoured ing 1 moz gold discoveries to feed 100%
it, but you have to have a level of planning with exploration stories, Gibbs is aware of Gold Road-owned operations producing
around that. We are not flying as many the need to spend money prudently. 100,000-150,000 ozpa.

Page 72 OCTOBeR 2020 aUSTRaLIa’S PaYDIRT