Gold Road Resources: Golden road ahead

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 03 Jul 2017   Posted by admin


All Images: Gold Road Resources.

 

BY CAMERON DRUMMOND

 

AS Gold Road Resources’ Gruyere project is fast-tracked into development, the now self-funded explorer has ramped up its exploration budget to explore organic growth options within its 5000sqkm Yamarna Belt tenements.

 

With its joint venture (JV) partner Gold Fields, Gold Road has now awarded all major contracts for the construction of its Gruyere gold project in the highly mineralised Yamarna Belt, 200km east of Laverton.

A 2010 study by the Geological Survey of WA suggested the Yamarna Belt geological similarities with the Kalgoorlie Terrane greenstone rocks, and studies by previous explorers such as Ausgold supported that claim.

Gold Road’s 5000 square kilometres of tenements in the Yamarna Belt already contain a number of discoveries dating back to 2009 when the company made its first find, Central Bore.

The company undertook a range of exploration drilling campaigns, and in 2013 discovered the massive Gruyere deposit in the WA Goldfields region.

It took just 10 months to define Gruyere as a significant gold deposit, with a maiden mineral resource of 96.96 million tonnes (mt) grading at 1.23 grams per tonne (g/t) for 3.8 million ounces (moz) of gold.

By October 2016, Gold Road had completed a bankable feasibility study confirming the 6.16moz Gruyere as one of the longest life, lowest cost undeveloped gold projects in the world, supporting the production of 270,000 ounces per annum (ozpa) over a 13 year life.

For such a large project touted to cost $514m to bring into production, Gold Road looked for partners to develop its find.

By December last year South African mining giant Gold Fields had paid Gold Road $350m to earn a 50 per cent share of the Gruyere project, and formed the 50:50 Gruyere JV.

For Gold Road, the JV with Gold Fields meant the project was significantly de-risked, and expertise from one of the largest gold producers would fast-track development.

 

“The highly experienced team that we have established over the past 18 months will be the team to develop the Gruyere gold project under the guidance and leadership of Gold Fields,” Gold Road managing director Ian Murray said.

 

In May, Gold Fields increased its holding in Gold Road to 10 per cent for the sum of $64.3m.

Gold Fields acquired 74,824,070 shares at 86 cents per share, a 27 per cent premium to Gold Road’s share price at the time of 67.5 cents.

“We welcome Gold Fields as a shareholder and see this share purchase as a sign of faith that our partner believes in Gold Road and the Yamarna belt,” Mr Murray said.

Haywood Securities head of mining research Geordie Mark said there was an appreciable likelihood that Gruyere would enter production in less than two years.

“Gold Road is not resting on its laurels with Gruyere, and are looking to use their strong balance sheet and expansive foothold within the Yamarna gold belt to deploy around $22m on exploration projects,” Mr Mark said.

First gold from Gruyere was expected in 2018, with the ramp up to full production to occur in 2019.

 

 

Recent Activities

In January, GR Engineering Services was awarded the contract to design, supply and install the Anne Beadell borefield pipelines and associated infrastructure to secure water supply for construction works and provide potable water for the Gruyere village.

Then in April, civil works provider MACA was awarded a bulk earthworks contract for development of the main access road, borefiled access tracks, airstrip and process plant earthworks.

On 15 June, the Gruyere JV awarded a $298m contract to the Amec Foster Wheeler Civmec JV (ACJV) for the engineering, procurement and construction (EPC) of a process plant at the Gruyere gold project.

Up to 50 jobs would be created in Perth for the fabrication of the plant and associated infrastructure at Civmec’s 200,000 square metre facility, while ACJV expected it would begin mobilising to Gruyere in August and have a total workforce of about 300 people on site during peak construction.

“ACJV combines Amec Foster Wheeler’s world class gold processing experience and Civmec’s excellent Australian fabrication and construction capabilities,” Amec Foster Wheeler mining director Greg Hayes said.

Mr Murray welcomed the execution of the EPC contract with ACJV.

“This is another key milestone in the delivery of Gruyere into production and we look forward to work on the plant and associated infrastructure commencing in earnest on site,” Mr Murray said.

“Importantly, this contract will focus on maximising the local content in the construction of Gruyere and generating significant employment opportunities in the Goldfields region and WA more broadly.”

 With the first 300 rooms relocated and erected in March this year, work to dismantle, relocate and install a second set of 300 rooms for the Gruyere accommodation village commenced in February and was scheduled for completion in the June quarter this year.



 

Exploration

Initially, Gold Road had flagged $22m for exploration activities during 2017, however with its strong balance sheet it decided to increase expenditure to $30m, allowing for accelerated exploration activity.

In February it announced the commencement of diamond drilling at its high priority Ibanez prospect on the Pacific Dunes-Corkwood camp scale target within its North Yamarna tenements.

“Given the increased funding resources available to us post the Gruyere JV, the opportunity to accelerate this program at Yamarna is an exciting one, and one that hopefully provides our shareholders with a more immediate exposure to the upside Yamarna has to offer much earlier than we had previously planned,” Gold Road exploration and growth director Justin Osborne said.

Toward the end of May, Gold Road announced an updated mineral resource of the Attila open pit at Gruyere, increasing the deposit by 46 per cent to 6.6mt of ore grading 1.55g/t for 327,300oz of gold.

The updated resource included new information derived from diamond and reverse circulation drilling programs completed in 2016.

Mr Osborne said smart geology and efficient drilling helped extend the resource.

“We have more than 14km of known mineralisation along the Attila-Alaric trend of which we are developing a much more detailed understanding,” Mr Osborne said.

“Given the success at Attila, and further north at Alaric, we have a high level of confidence that other recognised zones along this trend may offer similar upside exploration potential.”

“Additionally, we have identified more than 150km along this same trend extending into our own 100 per cent owned North Yamarna project, and the South Yamarna [JV].”

“Our 2017 exploration programs will be aggressively testing this well-endowed trend over the coming months.”

As part of the ramp up of Gold Road’s greenfields exploration budget for 2017, the company engaged WA operators DDH1 Drilling and Ranger Drilling Services to drill across its North Yamarna, Gruyere and South Yamarna projects.

DDH1 was contracted to complete 35,000 metres of diamond drilling services across all three projects, while Ranger was contracted for all reverse circulation (RC) and aircore drilling.

“These satellite deposits will either increase the life of the mine or would increase our annualised throughput using our SAG and ball mill that now has a greater throughput capacity of 8.5 million tonnes per annum,” Mr Murray said.

“It’s a big regional grassroots exploration that we’re running this year with seven drill rigs in operation.

“We have now identified another five camp scale targets, and we are testing a portion of them this year, and a portion of them next year with our $30m exploration budget, an amount we’d like to spend next year as well.

“This is a long term exploration strategy. The beauty of Gruyere is that now we are a self-funded explorer, generating cash flow from operations and being able to use it for organic growth options.

“What we’d like to do by years end is to have a new discovery announced, which could potentially become our next development project across the Yamarna Belt,” Mr Murray said.