Company Overview: Gold Road Resources Limited is engaged in mineral exploration and development in Western Australia. The Company is involved in the development of the Yamarna greenstone Belt, which is located approximately 150 kilometers east of Laverton in Western Australia. It holds interests in tenements, covering approximately 5,000 square kilometers in the Yamarna greenstone Belt. Its tenements contain a gold resource of approximately 6.6 million ounces, including approximately 6.2 million ounces at the Gruyere deposit. Its projects include the Gruyere project, Yamarna Belt-Central Bore Trend, Yamarna Belt-Attila Trend and Gold Road. Gruyere project has width that ranges from 7 meters (m) to 190 m with an average width of 90 m. The Gruyere project's mineral resource amounts to approximately 96.93 million tons at approximately 1.23 gram per ton (g/t), and is based on a total of over 38,000 m of drilling, which includes approximately 11,600 m of diamond and over 26,400 m of Reverse Circulation.


GOR Details

Gold Road is positioning itself to pioneering the development of Australia’s newest goldfield, the Yamarna Belt, 200 kilometres east of Laverton in Western Australia and the Company holds interests in tenements covering 6,000 square kilometres in the region, which is historically underexplored and highly prospective for gold mineralisation. In November 2016, Gold Road entered into a 50:50 joint venture with Gold Fields Ltd for the Gruyere Gold Project, with commencement of Project construction in January 2017. Gold Road continues to explore for similar-scale deposits on its 100 per cent owned North Yamarna tenements. Its mission is to create value for its shareholders, people and the community by discovering gold that can be mined profitably. Moreover, its first drilling in 2018 at its South Yamarna Project yielded immediate positive results at the Smokebush Camp, confirming high-grade mineralisation in a very prospective part of the Yamarna Belt. The Group has set high targets for 2018 which involves testing at Smokebush, Toppin Hill, Breelya, Yaffler South, Kingston North, and Hirono Trend and will be a major focus of activity through 2018.


Company’s overall Performance from 17 November 2017 to 21 May 2018 (Source: Company Reports)

Update on its Projects with support from Growth in Western Australia - Approximately11,000 km of prospective exploration tenements and applications are found in Western Australia and it was found that 50 per cent of construction of Gruyere Gold Project was completed. Gold Road made a budget of A$23 million for Greenfields exploration for 2018 across Yamarna. It focuses on Greenfields discoveries in a pristine district with modern techniques. The Group has planned about 165,000 metres drilling for 2018 at Yamarna and focuses on developing strategies to discover and develop world-class gold mines at Yamarna. Its exploring opportunities on Golden Highway and is lifting Gruyere production beyond nameplate. South Yamarna is a key focus for 2018 for exploration and has multiple untested prospective targets at Southern Hub. Few of its drill ready targets include 6.8m @ 31 g/t Au, 67m @ 3.1 g/t Au for Smokebush, 12m @ 4.7 g/t Au, 9.1m @ 3.5 g/t Au for Toppin Hill and 12m @ 12.52 g/t Au, 8m @ 3.12 g/t Au for Wanderrie.


Revenue per tonne Trend (Source: Company Reports)

At its Cygnus Joint Venture high-grade metamorphic terranes are yielding +Moz of discoveries globally. Diamond drilling at Smokebush improved the understanding and continuity of high-grade dolerite that hosted mineralisation, with best intersections and included 56.25 metres at 1.95 g/t Au from 98.75 metres (18SMDD0005) including 5.41 metres at 4.22 g/t Au from 133.65 metres and 7.73 metres at 5.45 g/t Au from 144 metres. The Group’s best intersections at Wanderrie included 2 metres at 17.45 g/t Au from 80 metres (18WDRC0149), 1 metre at 17.27 g/t Au from 134 metres and 5 metres at 4.50 g/t Au from 140 metres (18WDRC0157) and 5 metres at 3.64 g/t Au from 57 metres (18WDRC0159). In October 2017, Gold Road entered into two earn-in joint ventures with Cygnus Gold Ltd to initiate Greenfields exploration in a new region of Western Australia and included few projects like Wadderin and Lake Grace (covering an area of approximately 3,400 km in the underexplored south-west Yilgarn of WA) and in March 2018, a third, connecting project was added to the Joint Venture, Yandina which covered 1,727 km of prospective ground.


Budget and Milestone for the Company’s Projects (Source: Company Reports)

An Insight on March 2018 Quarterly Activities - Gold Road completed its annual exploration targets which formed the basis of the Company’s prioritised Greenfield exploration programme for 2018. This programme will include an investment of approximately $23 million with the drilling of 163,500 metres across its 100 per cent owned Yamarna tenements and the Gruyere Project Joint Venture with Gold Fields Limited. This programme will complement the four drilling rigs at operational sites and there was a delay in February as Yamarna district experienced an above average rainfall with several ex-tropical cyclones that temporarily affected the access to the northern tenements. Two aircore rigs were mobilised to Yamarna at the end of March 2018 and have begun testing at the earlier stage. At Gruyere Gold Project, it was observed that at the end of March 2018, 84 per cent of project engineering was complete, overall construction was 44 per cent complete and 17 per cent of EPC (process plant and associated infrastructure) construction was complete. As at 31 March 2018, the Company had cash, term deposits and current receivables of $224.1 million with zero debt. During the quarter, $62.2 million was spent on the development of the Gruyere Project (100 per cent) and $1.2 million was spent on exploration.


Milestone 3 Overview (Source: Company Reports)

Other Key Updates and Achievements - Gold Road concluded the acquisition of the 50 per cent interest in the South Yamarna Project held by Sumitomo Metal Mining Oceania Pty Ltd (Sumitomo) (as announced on 5 February 2018) with full payment of the outstanding purchase amount. The Group had primarily signed a sale agreement to acquire Sumitomo Metal Mining Oceania Pty Ltd.’s 50 per interest in the South Yamarna Project for $7 million. The Group recently entered into a $100 million of Revolving Corporate Facility, a $50 million of Working Capital Facility and a Gold Hedging Arrangement (Finance Facilities) with a financing syndicate comprising ING Bank Australia, National Australia Bank and Société Générale Hong Kong. Additional 45,000 ounces of gold forward sales were completed at an average price of $1,728 per ounce and this brought the total number to 70,000 ounces at an average price of $1,720 per ounce.


Milestone to be achieved (Source: Company Reports)

The Group forwarded the existing gold forward sale contracts to match production over the first three years of production at the Gruyere Project. Few of its Directors like Brian Kenneth Levet acquired 50,000 fully paid ordinary shares for a consideration of $35,000 and Ian Louis Murray acquired 68,175 fully paid ordinary shares for a consideration of $47,722.50. The Group has highly prospective Yilgarn exploration tenements and has strong ability of cash generation.

Stock Performance - Consolidation of the South Yamarna Project area and its highly prospective targets, allowed Gold Road to prioritise and focus on highest ranked prospects compared to previous years. We can say that it is one of the low-risk gold investment with decent upside and lays the foundation to be a mid-tier gold producer. It is unlocking new discoveries and is aiming to test 2 brand new camps at Bloodwood, Romano, Corkwood South and is working towards testing anomalies to make bedrock discoveries at Cronos and at Kingston North. The Company is focused on unlocking the potential of the Yamarna Belt and has developed an extensive exploration plan for 2018 that focuses on new gold discoveries in the region. It is expected that the first gold production will likely start in June 2019 quarter at Gruyere Gold Project. The upsized production scenario based on better throughput may give a boost, while there has been a delay in first gold production. GOR has a dominant position on Yamarna and its exploration efforts are high while balance sheet position is decent to support construction. The current ratio improved from 5.25 in December 2016 to 13.97 in December 2017. In last one year, the stock price was moving upwards but started falling in last three months that is by 6.88 per cent. The stock price experienced a recovery of 5.67 per cent in last five days (as at 19 June 2018). We give a “Buy” recommendation at the current market price of $0.750 as the Company is working towards completing its drilling and exploration targets.
 

GOR Daily Chart (Source: Thomson Reuters)

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