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 Resources Ltd (ASX: GOR) is progressing well on its 2018 and 2019 plans with key catalyst being Gruyere’s construction timeliness. GOR is also finding support from exploration upside driven by its newly revised A$24m to A$26m CY17 exploration spend while development is on track. Positive drilling results from North and South Yamarna, Gruyere JV put up a favorable case in terms of exploration progress.

Yamarna exploration highlights: Gold Road’s high priority Ibanez Prospect focused on diamond and RC drilling has been tracking well. The group has drilled a total of five diamond holes (1,832 meters) and 10 RC holes (1,981 meters). The first diamond hole drilled delivered an intersection of 8.20 metres at 11.63 g/t Au from 229.67 metres including 3.33 metres at 27.48 g/t Au from 232.66 metres, showing the width and grade of the high?grade mineralization intersected in RC hole, which was drilled 20 metres to the south?east in the June 2017 quarter. Remaining four follow up diamond holes and the RC program also intersected mineralization boosting the geological picture at Ibanez. As per the Wanderrie Camp highlights, Exploration activities were centrally located on the Yamarna tenements, included bedrock testing of the prioritized Satriani and Santana targets with RC drilling and infill definition of identified anomalies with air core drilling. One out of the three RC holes intersected the southern projection of the main mineralized shear along the Wanderrie Supergroup Trend, delivering the best intersection of 2 metres at 14.74 g/t Au from 73 metres, including 1 metre at 28.02 g/t Au from 73 metres (17WDRC0033). The group finished eight?hole RC program at Santana (for 1,491 meters) and identified the northern projection of the main mineralized shear, while infill aircore drilling along the southern half of the Wanderrie Supergroup Trend taking in the Gilmour and Morello prospects confirmed consistent gold mineralization along five kilometers of strike. Accordingly, a coherent 11?kilometre long gold anomaly has now been delineated along the full length of the Supergroup Trend.
 
September quarter highlights: The group continued on its plan for A$30 million Greenfields exploration program, having seven drilling rigs in operation across their ~5,500 square kilometer tenement holding in Western Australia’s underexplored Yamarna Greenstone Belt. They intend to make an annual exploration spend in the range of A$24 to A$26 million, which is less than the earlier estimate owing to suspension of the second phase of the Gruyere Deep Drilling program and a slower than planned ramp up of aircore drilling. Overall, 331 diamond reverse circulation (RC) and aircore drill holes for 38,502 meters were made during the quarter which were finished on prioritized early and advanced stage projects within the tenements. The results showed solid geological potential of the landholding.
 

September quarter highlights (Source: Company reports)
 
Gruyere gold project highlights: The group continued to focus on delineation of further higher?grade resources within economic haulage radius of the Gruyere Mill and Open Pit Mine currently under development.  Overall, 54 diamond and RC holes (12,085 meters) were finished aiming for extensions and infill to current resources at Attila, Alaric and Gruyere and advanced projects at YAM14 and Argos. ACJV started process plant construction, undertaking concrete works on site and steel fabrication in Perth. Meanwhile, three tenderers were shortlisted for mining contract, which will be awarded by December 2017 quarter. On the other side, as per the YAM14 Trends, best intersections were made during the quarter which comprise 8 meters at 4.95 g/t Au from 205 meters from the Argos Prospect and 11 meters at 2.46 g/t Au from 85 meters from the YAM14 Prospect. Diamond drilling testing for Gruyere underground potential extended more than 2.0 g/t Au northern high?grade zone to over 200 meters below current pit design. With regards to the South Yamarna JV project, RC drilling extended the strike length of gold mineralization to 1.4 kilometers, with best intersection of 2 meters at 4.34 g/t Au from 142 meters. New anomalies were delineated in aircore drilling at Kingston North with best intersection of 12 meters at 0.38 g/t Au from 72 meters including 4 meters at 1.00 g/t Au from 80 meters.
 

Gruyere Joint Venture Development Schedule (Source: Company reports)
 
Gold forward sales: The group signed margin Gold Forward Sales with two major banks for up to 200,000 ounces of Australian dollar denominated forward sales (100,000 ounces with each bank). Overall the group locked in forward sales contracts for 25,000 ounces at an average forward price of A$1,705 under the Hedging Facilities till date. The Hedging Facilities are unsecured but need cash backing if the mark-to-market rises more than A$25 million with any bank. The construction of the group’s core Gruyere project is on track to meet the estimates of the first gold production in 2019. The group also continues to take proactive steps by hedging a small portion of their estimated production given the volatile gold prices.
 
Balance sheet position: The group had a cash and term deposits of A$240.1 million with 874,131,785 ordinary fully paid shares (as at September 2017). The group spent A$33 million on developing the Gruyere Project which was funded in full by Gold Fields from the deferred consideration in accordance with the Sale Agreement. The balance of the receivable from Gold Fields as at 30 September 2017 reached $41.2 million. The group spent A$3 million on exploration during the September quarter.
 
Outlook: For the December 2017 quarter, the group’s plan for North Yamarna tenements has been flagged to comprise framework diamond and RC drilling at Ibanez aiming for the stacked high?grade lode structures to enable advanced infill drilling. They intend to extend drilling south along the Ibanez Shear trend to Mesaboogie and aiming RC and diamond drilling along the Washburn?Stratocaster trend pending results from ongoing aircore drilling. As per the Gruyere JV project (with the group having 50% stake), the group intends to finish maiden Mineral Resource estimate for YAM14 by early 2018. They intend to continue Alaric and Attila pre?feasibility studies while also starting a conceptual mining study for the northern >2.0 g/t Au zone of Gruyere. With regards to the South Yamarna JV (Gold Road 50%), the exploration work within the South Yamarna JV would comprise more drilling at Yaffler subject to pending assays and aiming for prospective structures under lesser cover at Beefwood East. They are developing a structural and geological map for Kingston North to guide future bedrock testing. For 2018, the group continues to make Gruyere construction and is aiming to be within budget and schedule. The group also aims to have confirmed scale discoveries in Corkwood or Wanderrie Camps. They are targeting two new Camps tested with full field Aircore, with new targets confirmed. The group expects to produce gold bars from Gruyere in 2019, and expects regional discoveries confirming into maiden resources, with studies underway. GOR is further said to have the pipeline of new targets to be confirmed, and get ready for resource drill out by 2019.
 

Project Pipeline (Source: Company reports)
 
Stock performance: The group’s core and promising Gruyere project is fully funded, and has a long life with a large scale highly prospective exploration tenement. The group has a major Greenfields Gold project in Australia and is targeting further million-ounce plus discoveries. GOR is targeting to generate a strong cash and over 135 koz pa by 2019. This promises a solid growth and potential dividends in the future. Despite the current volatile gold prices, the group is a low risk gold investment promising a strong upside. The shares of GOR delivered returns over 8.2% in the last four weeks (as of November 28, 2017) and are still trading at a very reasonable level. Based on the foregoing, we give a “Buy” recommendation on the stock at the current price of $0.710

 
GOR Daily Chart (Source: Thomson Reuters)

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