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The Gruyere joint venture between Gold Road and Gold Fields is aiming to pour first gold during the June quarter, and anticipated full production by the end of 2019.
After a re-evaluation in 2018, the final forecast capital cost for construction was estimated at $621 million, up from the initial capex of $507 million.
The project was expected to produce an annual average of 300,000 ounces over its 12-year mine life; about 30,000oz more than the original 270,000ozpa originally flagged, making the project an emerging tier 1 gold producer.
In a statement, the company said that the increase was driven by the “opportunistic purchase of larger SAG and Ball mills to lift throughput to 8.2million tonnes per annum (mtpa) in fresh rock from 2021.”
At 14 February, the JV partners had mined 185,000 tonnes of ore, which created a substantial stockpile in preparation for initial production.
In mid-February, the JV announced its annual guidance for 2019 to sit between 100,000 and 120,000oz, with an all-in sustaining cost of between $1050 and $1150 per ounce.
Downer, which was awarded a five-year $400 million mining services contract in December 2017, started double shift operations in January 2019 as a part of the production ramp up.
“It is good to see the Gruyere project develop from conceptual plans through feasibility study to a well-designed large scale, long-life, low-cost operation that is on the threshold of delivering substantial value for our shareholders,” Gold Road chairman Tim Netscher said.
The project would also see two additional ore sources added to the Gruyere pit that would increase its milling capacity from 7.5 million to 8.2 million tonnes.
The Gruyere gold project was situated on the mining lease M38/1267, about 200km east of Laverton.
Pre-feasibility was completed in February 2016, followed by a feasibility study in October 2016.
The project was wholly owned by Gold Road until November 2016, when the company entered into the 50/50 joint venture agreement with South African giant Gold Fields, which paid $350 million and took on the development and operation of the project.
The sale provided 50 per cent of the required capital that, according to Gold Road, “de-risks the project to a significant degree through the introduction of a partner highly experienced in the development and operation of open-pit gold mines that has agreed to cover any cost overrun up to 10 per cent of the total development budget.”
Construction began in the second half of 2017, and will be completed by mid-2019.
Before production could begin, the JV partners contracted APA Group which would build, own and operate the site’s 45-megawatt gas-fired power station, and the 198km of new pipeline to connect the site to APA’s existing pipeline network.
To secure water for the Gruyere Village, GR Engineering Services completed the construction and commissioning of six out of eight bores at the Anne Beadell borefield.
The Yeo borefield, which was to be used as the main source of water for the process plant, was developed jointly by MACA and the ACJV.
The total investment in construction of the mine was in excess of $1 billion.
Heavy rain in the 2018 March quarter delayed the first gold pour as localised flooding lead to access constraints at certain parts of the project, pushing the first pour back to the second quarter of 2019.
In June 2018, the company announced that as the project entered its critical phase of construction and development, an independent review of the project determined an 8 per cent increase was necessary “after scope changes and force majeure,” saw production cost rise from $507 million to $621 million.
The project had begun recruiting and would require up to 350 staff, with the Gruyere JV requiring 90 new permanent staff, and Downer needing 154.
The company had offered an eight-days-on, six-days-off roster in order to attract workers.
Gruyere is anticipating its first gold pour in the June 2019 quarter.
The JV partners also continued to explore through the Gruyere JV tenements, with emphasis on the discovery of high-margin ore reserves that could supplement the Gruyere life-of-mine schedule.
The 14km Golden Highway had already defined 600,000 ounces, and infill drilling was completed at Montagne and Argos deposits.
These deposits were within economic haulage distance to Gruyere and could potentially be exploited as satellite open pit mines that could increase the mine life of Gruyere.
In Gold Road’s 100 per cent owned northern and southern tenements, staged exploration of the high priority targets had considerable success.
The company’s past and planned expenditure would amount to about $70 million, and was moving toward resource definition at Gilmour, Smokebush and Corkwood, while continuing to make high grade bedrock intersections in early stage prospects and in new shallow gold anomalies.
Gold Road would focus its exploration and evaluation efforts on defining deposits that could support the next significant standalone operations.