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Instinctive win for Gold Road
Gold Road Re-
sources Ltd
started work on the
Gruyere feasibil-
ity study nearly two
months before finalis-
ing the PFS, such was
the company’s con-
fidence of a positive
result.
The findings from what
proved to be a technically
sound and economically ro-
bust PFS were released in
early February, including a
maiden reserve of 81.1mt @
1.22 g/t gold for 3.17 moz,
triggering a 30% uptick in the
company’s share price.
Gold Road executive chair-
man Ian Murray and his
fellow board members pre-
empted such an outcome and
signed off on immediate pro-
gression to full feasibility late over the initial 12 years of
last year, allowing a series of
follow-up work programmes
to start and finish before the
market had a chance to run
its eyes over the latest project
economics.
Metallurgical test work and
geotechnical drilling were
completed during January,
while environmental survey
work and additional water
bore drilling and modelling
remains ongoing.
“We could see from quite
early on that it was very un-
likely the PFS would be nega-
tive,” Murray told Gold Min-
ing Journal.
“We raised money [$39.3
million plus an additional
$570,000 via a share pur-
chase plan] from sharehold-
ers in the middle of last year
to fund the PFS and the fea-
sibility study, so it just made
sense to let the study team
carry on and not have to stop
and restart.
“Some of the work actually
started last year for some of
April – June 2016 GOLD MINING JOURNAL
our longer technical items… Gold Road announced a maiden reserve of 81.1mt @ 1.22 g/t gold
now on the back of the PFS for 3.17 moz at Gruyere in early February
being completed, more de-
tailed engineering design Murray took the Gold Road Road’s bread and butter and
work can start.” story on the road during Feb- the company has set aside
ruary, first to the east coast of $12 million to follow up other
GR Engineering Services Australia and then the US, in prospects around Gruyere.
Ltd will continue as lead en- a bid to attract new investors
gineer of the feasibility study, to the company’s share regis- “It is a good time to be ex-
focusing mainly on develop- ter, which is already growing ploring because drill rigs are
ment of a 7.5 mtpa SAG/ball at a rapid rate. available, they’re at good
mill circuit, gravity/CIL plant costs and good people are
at Gruyere, 200km east of “We have been focusing on available, so if you have
Laverton. the North American resource funding from shareholders it
specialist funds and in Aus- makes sense to spend money
Key economics from the tralia on the generalist funds, on exploration,” Murray said.
PFS included a capex of and over the last six months
$455 million, including $35 we’ve seen those funds com- “Our shareholders are
million contingency, and ing on to the register and buy- certainly telling us they can
AISC of $960/oz, based on ing on-market,” Murray said. see our expertise is in grass-
an exchange rate of 73c to roots exploration. We found
the US dollar. “They can see from our Gruyere at a very low discov-
news reports and the follow- ery cost and they want us to
The PFS also forecast up information that we are repeat that across the belt
more than $1 billion of undis- achieving all the milestones – we own almost the entire
counted, pre-tax cash flow that we set out to achieve and Yamarna greenstone belt –
they can also see the pro- so we need to continue doing
project life. found scale of Gruyere and work in the south, together
the potential of the Yamarna with our JV partner Sumito-
“The capital cost per ounce belt, so they’re coming on to mo, to see how many world-
is just $157/oz gold produced, the register.” class systems we can find.”
which is very low for projects
of this size and scale,” Murray While development plans – Michael Washbourne
said. for Gruyere are top prior-
ity, exploration remains Gold
“The payback on the pro-
ject is 42 months, or three-
and-a-half years, compared
to a reserve life of 11-12 years
for the project, so payback is
less than a third of the life of
the project.
“I think those are the key
points that show this pro-
ject is fundamentally very
robust…there are so few of
these long-life projects being
discovered around the globe,
not just Australia.”
Gold Road will announce
an upgrade to Gruyere’s
128.4mt @ 1.36 g/t gold for
5.62 moz resource later this
quarter and expects to have
the feasibility study wrapped
up by the end of the year.
The company, alongside
lead advisor PCF Capital,
is also seeking to lock down
a formal project funding ar-
rangement this year ahead of
the proposed first construc-
tion works in early 2017.
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