Competitive Company Culture to Keep Discoveries Coming

With fully-funded construction underway to mine Australia’s most recent greenfields gold discovery, it would be tempting for a junior gold explorer to become complacent.

However, having made its big, company making, Gruyere gold discovery Gold Road Resources (ASX: GOR) is determined to create a company culture that ensures discovery of such deposits keeps coming.

Gold Road, along with its 50:50 Joint Venture partner, Gruyere Mining Company Pty Ltd, a member of the Gold Fields Limited group, currently has development of the Gruyere gold project, 200 kilometres east of Laverton in Western Australia, well under control.

Development kicked off at Gruyere in December 2016, and with construction activities having been in progress for more than 12 months, the project remains on schedule to pour first gold at the end of the first quarter of 2019.

Most pleasing is that costs incurred to date are in line with the budgeted overall Project Capital of A$532 million.

A five‐year A$400 million mining services contract with Downer EDI Mining will begin soon with Downer scheduled to mobilise its workforce in the March 2018 quarter to commence construction of the mining infrastructure.

Mining activities are due to launch in the December 2018 quarter.

In November last year, Gold Road signed margined Gold Forward Facilities with two major banks for up to 200,000 ounces of Australian dollar denominated forward sales.

The Hedging Facilities equate to 100,000 ounces of gold with each bank and so far the company has forward sales contracts locked in for 25,000 ounces at an average forward price of A$1,705.

With the gold price currently above the modelled Gruyere Feasibility Study gold price of A$1,500 per ounce, the company believes it is prudent to lock in a small portion of its forecasted production.

The hedging is part of the company’s stated “prudent management of financial risks”, under which it is reviewing options for standby revolving credit or working capital facilities, which would also include discretionary gold hedging facilities.

The company has slated the end of the March 2018 quarter as a target for the finalisation of any Standby Facilities with the intention to merge the early hedges into any Standby Facility, and to roll the delivery dates of the hedged ounces to meet forecast gold production dates.

By combining higher gold prices and the Standby Facilities, the company can lower its risk profile and ensure flexibility in an environment which is historically volatile.

To date project engineering is 72 per cent complete and construction 32 per cent complete, numbers that support the JV’s confidence of hitting its 2019 deadline.

The company gives a great deal of credit for the achievements of the past 12 months to its project team and the project contractors.

In 2017, Gold Road Resources embarked on a A$30 million greenfields exploration drilling program.

The drilling focused on the Wanderrie and Corkwood Camps, located within the company’s 100 per cent-owned North Yamarna tenements.

RC and diamond bedrock testing of prioritised highest-ranked targets, and infill definition of gold anomalies identified through regional aircore drilling were conducted while Gruyere studies were being completed.

The results improved understanding of these targets with Santana and Satriani (Wanderrie Camp), and Ibanez (Corkwood Camp) standing out.

Broad spaced drilling confirmed gold bedrock mineralisation along the main mineralised shear through the Santana and Satriani prospects, which form part of a continuous 11-kilometre-long mineralised corridor known as the Wanderrie Supergroup Trend.

Gold Road’s geologists were able to develop a deeper understanding of each prospect’s potential, which they have been encouraged to demonstrate inhouse over the summer break.

To keep the company’s exploration ambitions on track, the company called in its geologists from the field for a moment’s respite from the extremely hot December, January and February sun, for what Gold Road’sManaging Director and CEO described as, “The Summer of Fun”.

The heat in the company’s air-conditioned West Perth offices soon intensified as each geology team began presenting what the exploration programs had taught them about their respective prospects.

“Basically, it is creating some competitive tension between the members of the team regarding who it might be that will make the next big discovery for the company,” Murray told The Resources Roadhouse.

“They have all been allocated different geographical areas across the tenement package looking at all the historical work we have conducted over each.

“That then culminates in a meeting where – as a peer group – they will all decide what should be the highest priority exploration targets for the company to tackle next.”

The company’s strategy is simple, but highly effective.

The various teams collect a large amount of information throughout the year in the field, which means they are kept so busy it becomes almost impossible to adequately collate the information and assess the quality and priorities of the targets.

At some 6,000 square kilometres, Gold Road’s Yamarna Belt tenement holding is substantial, and is expected to produce more discoveries to follow the 148 million tonnes at 1.3 grams per tonne for 6.2 million ounces of contained gold Gruyere deposit.

The company has a large number of targets scattered across the belt and believes the best way to determine which targets stand out from the rest is for each to be presented to, and debated by the entire geological group.

“It is a terrific way for the team to reassess, regather their thoughts and retarget opportunities right across the belt,” Gold Road’s Executive Director – Exploration and Growth Justin Osborne said.

“This entails looking at all the work we have conducted at Corkwood, down at Wanderrie and some new areas.

“We have updated the whole geological map for Yamarna with an improved geological understanding.

“That means we can take a good look across the entire tenement area and not just fall in love with one project.

“It allows us to step back and consider the merits of each project in the context of being a small part of the large picture.”

Osborne expanded his point, saying that when targeting prospects, it is very important for the company to have a consistent set of criteria to use when identifying and assessing each one.

“Otherwise, you will have somebody that will look at a target and emerge super-optimistic about it, while somebody else may be more conservative in their approach and consider the same target to be interesting, but that is all,” he explained.

To that end, Gold Road spent a great deal of time last year developing and defining a system that applies consistent parameters to the targets, so the company is then able to classify each with a targeting score.

“This is based on a range of geological criteria that we have determined to be important for gold deposits at Yamarna and can be applied across the Yilgarn,” Osborne continued.

“We can then put all the targets together and rank them objectively – we will work through and update all the interpretations – and then all the targets that come out of that.

“They will be peer reviewed by the whole team, from where we will develop a ranked list of targets.”


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

Level 2
26 Colin Street
West Perth WA 6005

Ph: +61 8 9200 1600


Tim Netscher, Ian Murray, Justin Osborne, Sharon Warburton, Brian Levet