Company Overview - Gold Road Resources Limited (Gold Road) is an Australia-based mineral exploration company in Western Australia. The Company is engaged in exploring and developing the Yamarna greenstone Belt, which is a gold region with tenements covering approximately 5,000 square kilometers on the eastern edge of Yilgarn Craton, located approximately 150 kilometers east of Laverton in Western Australia. Its other projects include the Gruyere project, the Big Cheese project and the North Yamarna. The North Yamarna contains six of the Company's 10 camp targets on the Yamarna Belt, which include South Dorothy Hill Camp Target, Pacific Dunes-Corkwood Camp Target and Sun River-Wanderrie Camp target. The Yamarna Belt has a mineral resource of approximately six million ounces of gold, with discoveries, including the Company's approximately 5.6 million ounce discovery at Gruyere. The South Yamarna tenements cover an area of approximately 2,900 square kilometers.


GOR Details

Feasibility Study of Gruyere Project:Gold Road Resources Ltd.’s (ASX: GOR) Gruyere Project is among the Australia’s best undeveloped gold deposits and it offers the group, an opportunity to transition from explorer to a mid?tier Australian gold producer. The project life for Gruyere Gold Project is 12 years. The Feasibility Study for the project is currently underway and is on schedule for completion in the December 2016 quarter. Accordingly, GOR would be making investments after the outcome of the result and the final mining inventories would be reported on completion of the FS. Moreover, the implementation of the early works strategy has started, which would further de?risk the Gruyere Project. The conditional contract packages for process plant EPC, early works engineering, SAG and ball mills, primary crusher, gas pipeline, construction of the first phase accommodation village and installation of the communication infrastructure backbone, are expected to be awarded over the coming months as part of this strategy. Till now the work completed included the finalization of geotechnical parameters and the design criteria for the Gruyere open pit. The new parameters have led to an optimized pit designs with increased depth and lower strip ratios as compared to the PFS. Additionally, GOR is assessing power solution tenders for Gas vs Diesel, while pursuing the options to secure long lead items, capex & opex being finalized and has shortlisted banks for project finance.
 

Gruyere Ore Underground potential (Source: Company Reports)
 
Agreements and Regulatory Approvals:GOR has signed the native title mining agreement with Yilka and the Cosmo Newberry Aboriginal Corporation covering Gruyere and the nearby Central Bore deposits in May 2016 after granting of the mining leases for the Gruyere Project, and the satellite Central Bore and Attila?Alaric deposits. Moreover, to get the environmental permit for the project the document is now being prepared for submission in the September 2016 quarter. GOR has also submitted the EPA Referral for the construction of the proposed pipeline that would supply gas to power the Gruyere process plant and village. The approvals for pipeline construction would be assessed by the Department of Mines and Petroleum which would lead to cost and time savings to GOR. The group is aiming to have all required licenses and permits by completion of FS.
 
Updated Mineral Resource: The group updated their Mineral Resource in April 2016, which now totals 147.71 million tonnes at 1.30 g/t Au for a total of 6.16 million ounces of gold, which represents a 15% increase in tonnes, but a 5% decrease in grade and a 10% increase in metal as compared to the previous Mineral Resource used in the PFS. The updated Mineral Resource includes 13.86 million tonnes at 1.18 g/t Au for 0.53 million ounces in the Measured resource category, which represents 9% of the total resource metal, and is located in the upper 100 meters of the deposit which would be available during the early years of mine development, and importantly for conversion to a significantly increased Proven Reserve in the FS. Moreover, the overall Mineral resource including Gruyere, Central Bore and Attila Trend totals 153.64 million tonnes at 1.34 g/t Au for a total of 6.61 million ounces of gold.
 

Mineral Resource Table (Source: Company Reports)
 
Exploration Potential being unveiled: GOR has the expertise to unlock the potential by making discoveries on camp scale targets which is a coherent geological system hosting multiple gold deposits relating to a similar gold?bearing event. Gruyere Deposit was discovered with first test in 2013 and all camps tested have intersected gold mineralization. Accordingly, GOR is discovering more than 1moz targets with the proposed budget A$12 to A$14 million. The exploration in Wanderrie entails one defined resource position on a Supergroup Prospect, with a positive bedrock drilling on at least 5 other targets, and at least 10 additional targets already identified. The exploration in Corkwood for which the discovery is being made on Washburn and/or Ibanez, has at least first pass Aircore drilling completed on all prospects. Moreover, the exploration at the North Yamarna Regional in which Dorothy Hills extensions received first pass Aircore test, has one other camp scale target with first pass test and the exploration at South Yamarna JV Regional for which the resource drilling started at Smokebush Dolerite and Toppin Hill and the Bedrock testing identifies more than 5 additional new targets.
 

Discovering more than 1moz targets (Source: Company Reports)
 
Boosting capital position for funding Gruyere Project: GOR is exploring various funding mechanisms and structures for the Gruyere Project, while the decisions on the project funding will be made on completion of the FS. However, the project finance work started in March 2016 and preliminary discussions have been held with a number of local and international banking groups. These have been short listed, based on indicative terms, to a limited number of preferred banks to take through the final stages of the Project Finance negotiations. Additionally, GOR has invited a small number of international and domestic mining companies to consider joint venture options for the Gruyere Project. A number of indicative, incomplete and non?binding proposals were received and assessed for which the decisions are yet to be made. Meanwhile, GOR has successfully raised A$74 million capital through institutional share placement and entitlement offer undertaken at a price of A$0.44 per share. The group has 868,885,771 ordinary fully paid shares, 4,703,977 performance rights and 4,610,000 unlisted options on issue with various strike prices as of June 30, 2016. The group is considering traditional debt and equity structures for future funding programs and considering several indicative, incomplete and non?binding proposals.
 
Positioning on a long term perspective:Gold Road Resources Ltd is expected to generate more than 300,000 oz pa through the Gruyere plant which has more than 15-year production profile and AIC less than A$1,000/oz/Margin>80%. GOR’s 2^nd project is being developed (>1 Moz) and is building up to >500,000 oz pa across Yamarna. Moreover, GOR intends to be a dividend payer, and has a decent cash and equivalents of A$90.5 million as of June 2016. On the other side, the group is strengthening its management, and appointed Tim Netscher, who comes with more than 40 years’ experience in the resources sector from major firms like BHP Billiton, Newmont Mining, Gindalbie Metals, and Impala Platinum. Ian Murray is now the Managing Director and Chief Executive Officer, and continues to focus on Gruyere Project and Yamarna tenements.
 

Gruyere Gold Project and Yamarna Belt Prospects (Source: Company Reports)
 
Stock Performance: Thegroup has a solid assets base with over 5,000 km² prospective exploration tenements on the Yamarna Greenstone Belt and has a 50:50 Exploration joint venture with Sumitomo over South Yamarna project (SYJV). The group has JORC Resources of more than 6.6 Moz Au across its four deposits and is making constant efforts to enhance their base. JORC Ore Reserve reached 3.2 Moz Au. The group’s prestigious Gruyere Gold Project has a project life for twelve years and made native title agreements while getting the relevant Mining Lease approved. The project’s Feasibility Study is on track to finish by the fourth quarter of 2016. Meanwhile, the shares of GOR rose over 21.49% in the last six months (as of August 30, 2016), driven by the recovering gold prices and positive updates by the group. Given the prospects at hand, we give a “Buy” recommendation on the stock at the current price of $0.60
 

GOR Daily Chart (Source: Thomson Reuters)

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