THE CONFERENCE CALLER: Old pubs with old world charm are the staple along the main drag through the Goldfields town of Kalgoorlie.

One of these grand old dames, however has decided it is time for a makeover and with a new wardrobe and a bit of lippy, she has emerged as the newest contender as ‘Queen of Hannan Street’.

The Lot 35 is batting her eyelids at passing punters on the site that was once de Bernales, named after an entrepreneur who made a name for himself on the goldfields around the 1920s.

The roadhouse feel for her charms over the weekend leading up to the Diggers & Dealers Conference and visited for breakfast.

A quick look at the menu showed this new establishment means business and is ready to greet the morning comestible needs of conference delegates over the next few days.

First the big test – how is the coffee? Pretty bloody good, in fact there are more than a few Perth coffee houses that could take note of how a good hot, strong coffee should be made.

We went for the homemade baked beans with bacon and sausages – they say a picture tells a thousand words so…

 

As a town that rides on the fortunes of the mining industry, Kalgoorlie has done it pretty hard over the past few years while riding out the current downturn.

Businesses up and down Hannan Street have come and gone, most performing the latter, which some observers might say makes the move by the owners of The Lot to undertake a renovation on such a grand scale somewhat optimistic.

The owners of The Lot realised that amongst the all the beautiful old hotels in Kalgoorlie, an opening existed for a new bar with a modern aspect.

“We opened in early May this year with a completely new model for Kalgoorlie,” The Lot 35 operations manager Nathan Keogh told The Roadhouse.

“I think most people are accepting that we are trying to do something different here.”

Owned by Peter Bartlett and Geoff Green, The Lot has undergone some major renovations to bring it into the twenty-first century.

The two owners, and Keogh, all have long family connections to Kalgoorlie and when the renovations were being planned they looked close to home for people to do the job.

“We contracted a local builder, Ian Anderson, and he did a fantastic job,” Keogh said.

“He used local tradies, local supply lines. Anywhere we could tip back into the local economy, rather than heading down to Perth, we did.

“It was probably our proudest part of renovating the pub – that we were able to do it all locally – and we were able to prove that you don’t have to Perth to get the right people to do something good and really positive for the town.”

It’s already looking like a busy week for The Lot with a number of Diggers-related functions already booked in word is sure to spread through the big white tent pretty fast.

Our only hesitation in recommending dropping into The Lot for brekkie while you’re in town this week is that we might struggle to get a table.

THE CONFERENCE CALLER: Everything was as it should be: the auditorium was full, and expectation for the next three days high.

The only point of difference was that for the first time in seven years the Diggers & Dealers Forum would not be opened by big, bad Barry Aldridge.

Instead we were greeted by a more subdued character in new chairman Nick Gioretta.

Although he may have a different approach to his predecessor, Gioretta’s tone was no less demanding as he admonished governments past and present, state and federal in an address that demanded understanding for and action from the industry.

He acknowledged the problems the industry had faced the last 12 months, obviously touching on the drop in the iron ore price and the Western Australian government’s attempts at hiking up royalty rates on gold production.

“What no one could foresee was the slump in commodity prices,” he said.

“What is unusual this time is that the majority of the commodities have bottomed at the same time, hence the comment made by many people in the industry, that we have never seen it this bad.”

Giorgetta took aim at the WA government and its proposed gold royalty increases, saying it was the resilience of the industry that had seen it band together to re-educate Colin Barnett and his mates as to the importance of maintain equilibrium for the sector.

Despite the win he indicated damage had been done to the country’s reputation as a destination for future investment.

“Why don’t governments understand that to continually generate uncertainty that makes investors and financiers restless, is detrimental to an industry that already operates in the high risk category of business?” he asked.

Giorgetta’s next swipe was at a more obvious adversary – the environmental activists of the world.

He suggested these parties had gained the upper hand in recent arguments with the industry due to their better grasp and use of social media.

“It is interesting that environmental activists against the mining industry appear to be more skilled than us in the clever use of marketing and social media to win the support of the Australian community in driving a perception that our industry is not responsible,” he lamented.

“We tend to promote our contribution individually as corporates but not as an industry.

“Organised groups such as the environmentalists will always be more effective operating together than we are acting individually.”

Despite his concerns, Giorgetta also pointed to what he considered to be some positives that have emerged recently for the industry.

These include much of the merger and acquisition activity we have been seeing, including the frenzied accumulation race being battled out between Metals X and Northern Star for the Tanami Central gold project (the finalisation for which was announced the same morning in favour of Bill Beament’s company).

He also claimed raising money seems to be a bit easier for companies compared to 12 months ago, however, I’m sure there are a few managing directors out there prepared to disagree with that sentiment.

“Even though times are difficult for the industry, it is my expectation that we will leave here Wednesday afternoon buoyed with confirmation that companies are still delivering strong operational results and, having taken steps to align the business models to the economic circumstances, as business should, we still have a substantial industry in good shape and with a strong future,” he declared.

CONFERENCE CALLER: The AFL Grand Final may have been deferred from its usual end of September time slot this year, but nothing halts the annual first week of August mining industry pilgrimage to Kalgoorlie for Diggers & Dealers.

As always it’s shaping up to be an interesting week with the Chinese stock exchange doing its best to throw some spice into the mix.

Forget the iron ore price and how much people are paying for an ounce of gold, the real indicator of the health of the industry is merchandise.

Caps and Stubby Holders are the standard giveaway at most conferences, however, over the years companies have been known to strive for that extra yard of recognition at Diggers to separate themselves from the marketing pack.

Of course, in these lean times the merchandising takes a back seat, which is something of a shame as having an innovative, even sought after, piece of promotional paraphernalia does attract punters to a booth, which when you’re in a tent hosting over 100 such spaces is paramount.

A click search online displays an Aladdin’s Cave of profile-raising possibilities from company-branded band-aid dispensers to stress relievers in shapes too numerous – and sometimes dubious – to mention.

Our favourite was the Temporary Tattoos.

We came up with our own design, which we hope will be distributed to punters to be worn as certified entry to the Palace Hotel.

Note: Not a real item.

We are under strict instructions from Mrs Roadhouse to not, ‘bring any more of that crap home!’, but that won’t stop us searching for the best piece of Sideshow Alley accoutrement we can find.

We’ll also be conducting our annual WHAT DID THAT ACHIEVE? survey, where we look at the share price of companies presenting at the conference before they get there and after they leave to see whether or not anybody was really taking as much notice as they should be.

We don’t pretend this to be a survey of any great scientific merit, it is really for our own interest.

We hope you find it interesting in some way too.

Here’s how they stand at the moment:

 

We’ll check in on these next Friday and to give everybody the opportunity to get home and study up before making any rash decisions based on scuttlebut they may pick up while out and about in the thriving nightspots of the Goldfirelds Capital, we’ll also check in the week after.

 

 

THE INSIDE STORY: Gold Road Resources (ASX: GOR) has been travelling in the fast lane for the first half of 2015.

In February, Gold Road released a Scoping Study into the development of its Gruyere gold project, located on the Dorothy Hills Trend of the Yamarna Belt in Western Australia.

The Study considered a large-scale open pit mine, a narrow vein underground mine at Central Bore and a conventional 5 million tonnes per annum Carbon In Leach processing facility (7.5Mtpa and 10Mtpa scenarios were also investigated).

Based on key metrics, projections and estimates at $1,350 per ounce, Gruyere emerged economically robust averaging annual gold production of 190,000 ounces over an 11 year life of mine for 2.1 million ounces.

For the moment these exciting results are old news, however as the company progresses Gruyere through a Pre-Feasibility Study based on a subsequent update to the project’s already substantial resource.

Soon after the Scoping Study, Gold Road updated the JORC 2012 Mineral Resource estimate for Gruyere to 137.81 million tonnes at 1.24 grams per tonne gold for a total of 5.51 million ounces of gold.

 

“We are using the Scoping Study as the base case – we have upgraded the Resource, but the Scoping Study was completed on the smaller Resource,” Gold Road Resources executive director Justin Osborne told The Resources Roadhouse.

“We are in the middle of an options study – which is basically looking at options available to us to determine the optimum size project to build at Gruyere.

“We are considering three cases (5Mtpa, 7.5Mtpa, and 10Mtpa) and they all have merits.

“If you look at the straight NPV, larger projects tend to look better because companies mine them quickly proposing a shorter mine life.

“There are advantages in a longer mine life, not least being greater flexibility within the operation and more time to make potentially higher grade discoveries to extend project life, enhancing value for all of our stakeholders.

“A smaller project with a smaller mill is obviously going to be easier to keep fed.

“It is very difficult to feed a mill of 10 million tonnes at the end of a project like Gruyere, unless you have another Gruyere waiting in the wings.

“If new discoveries are more typical of what we see in the Yilgarn we would expect smaller tonnage projects at higher grade.

“A five or seven tonne mill is much easier to satisfy under that scenario.”

Numbers take on particular importance with the 44 per cent increase on the Gruyere Resource providing Gruyere with some scale of real consequence.

The new Resource also provided a good indication of the quality of the deposit.

“At 5.51 million ounces it’s a very robust ore body,” Osborne said.

“What is very important to note, however, is that the grade remains constant across all categories, Inferred, Indicated or Measured.

“We are busy at the moment with our PFS mining studies, from which we hope to determine the optimum throughput rate as well as the life of mine.

“That’s very important for us as this is the first mining project on the Yamarna Belt and it needs to be a long life project with very robust margins.

“At this stage, for us, it is not about maximising the NPV, it is about having the most robust, safe, long-term mining project we can have operating on that Belt, and one which will produce at healthy margins.

“Once that first plant is built – further discoveries become much easier – and converting those discoveries into economic mining projects is also much easier as the infrastructure is already in place.

“Gold mining operations throughout Western Australia have historically had great success with Brownfields exploration adding significantly to mine life and we see no reason why the Yamarna Project will be any different.

“We are targeting an all-inclusive cost to be in the range of $1000 to $1100, so for a $1500 per ounce gold price you are talking a $400 to $500 margin over all-inclusive costs – not just cash flow.

“If we can achieve that, plus development of a robust project with a mine life more than 10 years, that sets up the first operation on that belt on a sound basis.

“It also provides us good cash flows to fund the future exploration – to allow for further discoveries.”

Ongoing drilling at Gruyere has demonstrated the quality of the deposit and a further increase to the Resource is anticipated for later in the year.

The results for the final 22 drill holes of the 2015 Gruyere Resource drilling program were announced at the end of June.

They included 10 diamond holes, 10 RC holes, and two RC pre‐collars and indicated discrete zones of higher‐grade mineralisation continue to more than 50m below the current Resource Pit Shell.

A high‐level assessment of the potential for large‐scale underground mining at Gruyere below the open pit operation is now underway.

This conceptual Underground Mining Study is focusing on mining method, size dimensions and grade and/or gold price required for economic extraction.

 

“As part of our Gruyere exploration program we are drilling a deep hole, (co-funded by the WA-Government Exploration Incentive Scheme) targeting around 1200 to 1500 metres,” Osborne explained.

“That is mainly to provide information on the Gruyere system at greater depth – whether it is going to prove to be economic depth.

“We are now working on a very high level underground conceptual study. We know that we have the bulk, definitely, for the size and dimensions that would be amenable to large-scale underground mining.

“We are just determining now whether we have the grades down there to make an underground operation economic.

“That would be 15 to 20 years down the track in terms of production, but it has potential to demonstrate what the Gruyere system really is – what the overall size and potential could be.”

Gold Road defied recent market trends and sentiment by raising $39 million by way of a share placement at 44 cents per share, which not only retained its strong institutional and sophisticated shareholder registry, it also added a few more.

Although the company was boasting an enviable bank balance of around $12 million at the time of the raising it was pleased to complete it when there was some market interest in the stock, which was highlighted by an on-market investment by Independence Group (ASX: IGO).

The cash injection will enable Gold Road to complete the PFS and its subsequent Definitive Feasibility Study (DFS) by the end of 2016.

“It was a great opportunity and the perfect time to conduct a raising,” Osborne said.

“The gold price was bubbling and then the Independence Group investment provided some market confidence in the stock.

“The biggest boost of course came from the 44 per cent increase in the Gruyere Resource.

“The best aspect of the raising was maintaining support of institutional investors who realised our share price had moved along nicely since the previous raising at 30 cents, which has ensured we are now fully-funded through to the end of the DFS.”

Gold Road Resources Limited (ASX: GOR)
…The Short Story

HEAD OFFICE
22 Altona Street
West Perth WA 6005

Ph: + 61 8 9200 1600
Fax: +61 8 9481 6405

Email: perth@goldroad.com.au
Website: www.goldroad.com.au

DIRECTORS
Ian Murray, Justin Osborne, Russell Davis, Martin Pyle, Tim Netscher

MAJOR SHAREHOLDERS
RCF        9.8%
Platypus    8.6%
Van Eck    5.9%