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Gold Road Resources has joined the ranks of Australian gold producers. What’s next for the company now it has reached this milestone?
Gold Road Resources put its growth aspirations in motion a long time before first gold was poured at the Gruyere operation in Western Australia.
The company, now worth more than a billion dollars on the Australian Securities Exchange (ASX), has earned a reputation for growth since making the greenfields discovery in 2013.
Three years later, Gold Road announced its maiden reserve at Gruyere, delivered a feasibility study and formed a 50:50 joint venture with Gold Fields to cement its place as an emerging player in the precious metals sector.
Gold Road and Gold Fields started construction of Gruyere the following year and by the end of 2017 had appointed Downer as its mining services contractor.
These achievements alone add up to a consistent accumulation of milestones for the company, which has overcome occasional development hurdles along the way to be on the verge of becoming part of the exclusive ASX200.
Gold Road’s most recent obstacle has been the commissioning of Gruyere’s processing plant that, despite the announcement of first gold this month, has not yet been achieved.
Delays to the commissioning of the ball mill, part of the 8.2 million tonne a year processing plant, even forced the JV to delay first production by a month in June.
Gold Road chief executive officer Duncan Gibbs says the JV has, however, made progress bringing the ball mill online and is on course to achieve this in the September quarter.
“We had some delays with that,” Gibbs tells reporters in Melbourne this week. “Construction wise it was basically complete, but we had some delays programming the process control system, which was a little surprising for us. We are pretty much through that now.”
Aside from the delay to the processing plant, the JV has continued mining ahead of schedule with more than two million tonnes of mined ore stockpiled, ready for the ramp up.
Gruyere, the first large-scale gold operation to be developed in Australia since Tropicana earlier this decade, is designed to annually produce an average of 300,000 ounces over a 12-year mine life.
By reaching this level, it would become one of Australia’s top 10 gold mines by output.
In 2019, Gruyere is expected to produce between 75,000 and 100,000 ounces of gold, down from the 100,000 to 120,000 ounces forecast prior to the commissioning delays.
Gruyere is being ramped up to reach its targeted steady-state production rate by November, when the site will also be officially opened.
The mine puts Gold Road halfway to its company goal of becoming a 300,000 ounce a year producer in its own right.
Gold Road’s growth aspirations will be driven by its long-held exploration assets, which centre on the 6000 square kilometres of tenements along the Yamarna gold belt.
Gibbs says the company’s aim beyond the Gruyere ramp up will continue to be finding a second significant source of gold production at the tenements.
“The bigger opportunity for us is to try and find another discovery so that’s really what we are focusing on – the next growth platform,” Gibbs, who became Gold Road CEO in August 2018, says.
“But if we have got Gruyere in this district it gives us some options of course. We have some micro deposits and we have got the ability to take them to Gruyere.”
Gold Road will target discoveries that are at least a million ounces in size. The company has set a $20 million exploration budget for 2019, most of which will be used towards finding another greenfields discovery.
Gibbs reinforces Gold Road’s long-standing focus on greenfields exploration, saying he believes the budget is at “about the right rate” for where the company is now placed.
“Right now we are out there looking for a big one. I don’t think we have found it yet, but we have found other economic mineralisation – probably the most advanced we have got at the moment is Gilmour,” Gibbs says.
Gilmour, about 55 kilometres south of Gruyere, is described by Gibbs as a high-grade quartz vein system, a different deposit to the company’s 2013 discovery.
Gold Road aims to deliver a resource for Gilmour by the end of the year and hopes the project could move the company closer to developing its first standalone mine.
“If this is all we find in the area there is no doubt we can make money out of it on the grades we are seeing by taking it to Gruyere,” Gibbs says.
“The first prize for us is really finding other deposits in the area for a standalone operation. Then this might feed into another mine.”
Gold Road’s greenfields strategy extends to an earn-in joint venture with junior Cygnus Gold over 5000 square kilometres of tenements in the Yilgarn region in south-west Western Australia.
Better known as a region for farming, the Yilgarn tenements are at a similar stage to where the Yamarna belt was 10 years ago due to the limited exploration that has been performed in the area, according to Gibbs.
However, the Yilgarn opportunity reflects Gold Road’s now-rare gold mining strategy in Australia to identify greenfields prospects.
And if Gruyere has proven anything, Gold Road is geologically equipped to unearth another monster in underexplored ground.
“We have got this big land package (at Yamarna). What’s the aim of that? It is to find another million or two million ounce plus discovery which we can develop as a standalone operation,” Gibbs concludes.