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DECEMBER 2021 QUARTERLY REPORT
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HIGHLIGHTS
Production and Guidance
ASX Code GOR
ABN 13 109 289 527
COMPANY DIRECTORS
Tim Netscher
Chairman
Duncan Gibbs
Managing Director & CEO
Brian Levet
Non-Executive Director
Denise McComish
Non-Executive Director
Maree Arnason
Non-Executive Director
Hayden Bartrop
Company Secretary
CONTACT DETAILS
Principal & Registered Office Level 2, 26 Colin St
West Perth WA 6005
www.goldroad.com.au
perth@goldroad.com.au
T +61 8 9200 1600
F +61 8 6169 0784
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1 ASX announcement dated 27 October 2021 | 4 ASX Announcement dated 31 January 2022 |
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Introduction
Mid-tier gold production and exploration company, Gold Road Resources Limited (Gold Road or the Company), presents its activity report for the quarter ending 31 December 2021. Production is from the Gruyere Gold Mine (Gruyere) which is a 50:50 joint venture with Gruyere Mining Company Pty Ltd, a member of the Gold Fields Ltd Group (Gold Fields), which operates Gruyere.
During the December 2021 quarter, Gruyere delivered gold production of 67,813 ounces (100% basis) (September quarter: 59,371 ounces). Production was delivered at an All-in-Sustaining Cost (AISC) of A$1,526 per attributable ounce to Gold Road (September quarter: A$1,697 per ounce). Labour availability related scheduling delays in the open pit resulted in lower than expected head grades, which contributed to lower than expected production and subsequently higher costs than anticipated for the quarter.
Gruyere delivered annual production of 246,529 ounces for the 2021 calendar year, falling slightly short of annual production guidance of between 250,000 and 260,000 ounces. Gold Road's AISC of A$1,558 per attributable ounce was above revised annual cost guidance (A$1,450 to A$1,525 per ounce)5 as a result of the lower than expected attributable production ounces during the December 2021 Quarter.
The weighted average Lost Time Injury Frequency Rate (LTIFR) for Gruyere and Gold Road was 2.3 at 31 December 2021. There were no Lost Time Injuries recorded during the quarter.
The installation of the 13MW PV and 4.4MWh/4MW Battery Energy Storage solution (BESS) continues to progress following delays to both the BESS and PV installation. These delays have arisen from COVID-related transport issues and interstate related quarantine requirements. The new facility is now expected to be commissioned in early 2022.
Production
Gruyere (100% basis)
Mining
Total material movement increased again by 0.3 Mt quarter on quarter with mining from the Stage 2 and Stage 3 pits. Total material movement (waste and ore) continues to benefit from opportunistic use of the ore rehandle fleet and contract mining personnel. Ore mining was at record highs and totalled 3.2 Mt during the quarter. Mined grades lifted quarter on quarter to an average grade of 1.00 g/t Au. However, mined grade was lower than forecast for the quarter, largely due to delayed progress in advancing to the higher grade parts of the Stage 2 pit. The delayed progress was, in part, due to challenges sourcing key blasting personnel as well as interruptions from short term rain events during December. The mined grade is expected to lift through 2022 as mining advances through higher grade zones in the deeper sections of the Stage 2 pit, along with the mining of higher grade oxide and fresh ore from the Stage 3 pit.
At the end of the quarter, ore stockpiles increased to 5.2 Mt at 0.74 g/t Au (September quarter: 4.3 Mt at 0.70 g/t Au).
Processing
Total ore processed during the quarter was 2.2 Mt at a head grade of 1.04 g/t Au, and a gold recovery of 91.2% for 67,813 ounces of gold produced.
Quarterly throughput was at record highs and an annualised rate of 8.9 Mtpa as the process plant utilisation lifted significantly during the quarter. Head grade was higher quarter on quarter, but lower than forecast in line with mined grades.
Metallurgical recoveries improved quarter on quarter due to the increased head grades and less interruptions to the milling circuit this quarter.
Processing throughput and head grades are expected to lift through 2022 as mining progresses into higher grade fresh and oxide ore and availability of the process plant improves from 2021. The Gruyere JV has commenced a study to determine potential benefits from an expansion to the pebble crushing circuit at Gruyere.
5 ASX announcement dated 27 October 2021
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Whilst gold production lifted quarter on quarter, the lower than forecast head grades contributed to lower than forecast gold production for the December quarter and 2021 calendar year. As a result of the lower than expected gold production, AISC per ounce for the December 2021 quarter was higher than expected at A$1,526 (Gold Road attributable) and this impacted annual AISC of A$1,558 (Gold Road attributable).
Operation (100% basis) | Unit | Dec 2021 Qtr | Sep 2021 Qtr | Jun 2021 Qtr | Mar 2021 Qtr | 2021# |
Ore Mined | kt | 3,164 | 2,591 | 2,602 | 1,946 | 10,303 |
Waste Mined | kt | 7,541 | 7,815 | 7,421 | 6,325 | 29,103 |
Strip Ratio | w:o | 2.38 | 3.02 | 2.85 | 3.25 | 2.82 |
Mined Grade | g/t | 1.00 | 0.88 | 0.87 | 1.07 | 0.95 |
Ore milled | kt | 2,236 | 2,101 | 1,986 | 2,116 | 8,439 |
Head Grade | g/t | 1.04 | 0.94 | 0.92 | 1.12 | 1.01 |
Recovery | % | 91.2 | 89.5 | 89.8 | 91.2 | 90.5 |
Gold Produced** | oz | 67,813 | 59,371 | 53,132 | 66,213 | 246,529 |
Cost Summary (GOR)*** | ||||||
Mining | A$/oz | 190 | 204 | 135 | 100 | 158 |
Processing | A$/oz | 639 | 712 | 702 | 561 | 649 |
G&A | A$/oz | 102 | 130 | 156 | 132 | 128 |
Ore Stock & GIC Movements | A$/oz | (38) | (39) | (63) | (24) | (40) |
By-product Credits | A$/oz | (2) | (3) | (5) | (2) | (3) |
Cash Cost | A$/oz | 891 | 1,005 | 924 | 767 | 892 |
Royalties, Refining, Other | A$/oz | 80 | 80 | 85 | 76 | 80 |
Rehabilitation* | A$/oz | 20 | 17 | 19 | 14 | 18 |
Sustaining Leases | A$/oz | 108 | 115 | 129 | 102 | 113 |
Sustaining Capital & | A$/oz | 427 | 480 | 502 | 427 | 455 |
Exploration | ||||||
All-in Sustaining Costs | A$/oz | 1,526 | 1,697 | 1,659 | 1,386 | 1,558 |
*Rehabilitation includes accretion and amortisation. #Gold Road operates to a calendar financial year. ** Gold produced rather than recovered
***Cost per ounce reported against gold ounces produced during the quarter and either sold or held as doré/bullion during the quarter
Sales (50% share)* | Unit | Dec 2021 | Qtr | Sep 2021 Qtr | Jun 2021 Qtr | Mar 2021 Qtr | 2021# |
Gold Sold | oz | 35,460 | 28,350 | 28,425 | 32,100 | 124,335 | |
Average Sales Price | A$/oz | 2,309 | 2,231 | 2,145 | 2,138 | 2,210 |
*Gold Road's 50% share. #Gold Road operates to a calendar financial year
COVID-19
Gruyere and Gold Road experienced no material production impacts resulting from the COVID-19 pandemic. Gold Road continues to operate within the agreed Western Australian government guidelines.
Western Australia has now achieved high vaccination rates of circa 90% of the total population over 12 years of age, with a mandatory booster vaccination required for all remote mining operations. With the emergence of the Omicron variant, Western Australia deferred a planned reopening of state boarders on 5 February. With increasing local transmission levels, and the eventual reopening of the boarder, escalating rates of infection may impact the workforce, transport infrastructure and supply chains in Australia (in particular, the east coast of Australia).
2022 Guidance
2022 Annual Production Guidance is increasing to 300,000 - 340,000 ounces (150,000 - 170,000 ounces attributable) at an attributable AISC of between A$1,270 - A$1,470 per ounce. 2022 Annual guidance is based on the COVID-19 pandemic and the re-opening of state borders not leading to material deviations to the current production and cost environment. Cost guidance is based on the continued opportunistic use of the ore rehandle fleet, which brings forward waste movement from future years and provides some mitigations to industry headwinds including labour availability, supply chain concerns and potential COVID related mining disruptions.
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Production rates are anticipated to progressively improve during the year, largely reflecting improving head grade and plant utilisation, following scheduled relines of both the SAG mill and the ball mill in the March 2022 Quarter.
Gruyere Deep Diamond Drilling
A diamond drill program of 10,071 metres was completed in 2021. The program targeted the full 2 kilometre strike extent of the Gruyere Porphyry, up to 600 metres down-dip of the current Open Pit Ore Reserve (Figure 1). The drill program was designed as a framework of widely spaced holes to assess the continuity, widths and grades of the mineralisation below the currently defined Gold Road Underground Mineral Resource 6.
The assays from four additional holes were returned during the quarter, with significant results reported below:
Gold mineralisation is associated with moderate to strongly altered porphyry with visible gold seen in some sections of drill core.
The deep drilling program is now complete. Assays results are awaited for holes 7, 12 and 13. Once all assay results have been received, a full assessment of the updated geological model will be undertaken before determining next steps.
Figure 1: Long projection looking west (Gruyere Grid) showing results and location of holes beneath the Gruyere Open Pit and
Underground Mineral Resource. Historical drill hole intersection left off for clarity
6 ASX announcement dated 15 February 2021
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Financial and Corporate
Financial Update
As at 31 December 2021, the Company had increased cash and equivalents of $135.5 million with no drawn debt.
During the quarter, Gold Road sold 35,460 ounces (including 8,800 ounces delivered into forward sales contracts) at an average price of A$2,309 per ounce for sales revenue of $81.9 million. Gold sales for the quarter exclude 1,598 ounces of gold doré and bullion held in inventory at 31 December 2021.
Gold Road's attributable operating cash flow from Gruyere for the quarter was $48.5 million. Capital expenditure was $16.0 million. Exploration expenditure was $9.8 million and corporate costs totalled $2.6 million. Finance/Lease costs of $4.4 million included the cost of debt facilities and finance lease payments. Included in corporate costs for the quarter was $287,000 paid to Directors. No tax was paid in the quarter and Gold Road anticipates paying circa $6.4 million in tax attributable to the December 2021 quarter during the March 2022 quarter.
Gold Road's Corporate All-In Cost (CAIC) which includes growth capital, corporate and exploration costs was $1,924 per ounce for the December 2021 quarter. Gold Road's group free cash flow for the quarter was $15.7 million (September quarter: negative $8.4 million) before dividend payments of $3.8 million and net proceeds after costs from the sale of investments of $3.6 million. Gold doré and bullion held in inventory decreased by $3.5 million over the quarter.
Figure 2: Cash and equivalents movement for December 2021 quarter. *Cash and equivalents refers to cash, doré and bullion
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