Exploration Key to Gold Road Resources’ Future

THE INSIDE STORY: Development of the Gruyere gold project is on schedule to promote Gold Road Resources (ASX: GOR) to be an Australian gold producer.

As exciting that is, the company is determined to maintain its reputation as an explorer for, and discoverer of, rich gold deposits.

Gold Road Resources’ Yamarna exploration tenements cover 180 kilometres of greenstone strike, making it one of Australia’s largest greenfields gold exploration projects.

To put that in perspective, the tenements cover the same distance that separates the Western Australian goldfields hubs of Kalgoorlie and Norseman.

To focus the $23 million of exploration drilling Gold Road is conducting this year, it has separated its tenements into three delineated hubs.

The 100 per cent-owned Northern Hub encapsulates the Ibanez (Corkwood) and Bloodwood targets.

The Southern Hub, also 100 per cent Gold Road-owned, includes the Smokebush, Toppin Hill, and Wanderrie targets.

“Each of these hubs is a geological target area with multiple targets within each one,” Gold Road Resources’ Executive Director – Exploration & Growth Justin Osborne told The Resources Roadhouse.

“They are close enough to each other that should we start finding deposits within a camp that may be close enough to a deposit in another we could possibly develop another mining/processing centre, into which we can feed material from multiple camps.

“We want to be a producing exploration company: we want to be a decent sized producer at 150,000 ounces per year, but we also still want to be an aggressive exploration company.”

The company’s 50 per cent interest in the Central Hub includes the Gruyere gold project, where construction is being managed by Gruyere Management Pty Ltd, a wholly-owned subsidiary of the company’s 50 per cent Joint Venture partner Gold Fields Limited.

Currently all Yamarna Mineral Resources and Ore Reserves are located within the Gruyere JV tenements.

The Ore Reserve for Yamarna was recently increased by 6.3 per cent to 97.35 million tonnes at 1.2 g/t gold for 3.74 million ounces of gold.

This included a maiden combined Ore Reserve of 3.59 million tonnes at 1.55 g/t gold for 179,000 ounces for satellite deposits at Attila and Alaric after a Pre‐feasibility Study into developing each as open pit mines to provide satellite feed to the Gruyere process plant was completed.

Modifications to the mine design operational plan increased Ore Reserves at Gruyere by 44,000 ounces following to 93.76 million tonnes at 1.18 g/t gold for 3.56 million ounces.

Six million dollars (100 per cent basis) of Gold Road’s 2018 budget will fund drilling at the Gruyere JV focusing on resource definition drilling on additional high‐margin satellite deposits.

Early this year, RC drilling to convert the existing Attila‐Alaric Trend 12.32 million tonnes at 1.5 g/t gold for 596,000 ounces Mineral Resource to Ore Reserve commenced on the Montagne Deposit, which along with the Argos deposit contributes 207,000 ounces to the above figure.

“Exploration activity we have planned for the Central Hub, within the Gruyere JV, is focused along the Golden Highway – the Attila-Alaric Trend,” Osborne explained.

“Most of that will be infill drilling, and hopefully identify some new higher-grade zones in some of the Central Hub deposits, such as Montagne and Argos.

“If we can start proving those up on closer spacing, we might establish some pockets of high-grade Reserves that can be trucked across to Gruyere.”

In February 2018 Gold Road achieved 100 per cent-ownership of the Southern Hub tenements by acquiring the 50 per cent interest of its JV partner since 2013, Sumitomo Metal Mining Oceania Pty Ltd (SMMO).

Subsequent drilling confirmed high-grade mineralisation at the Smokebush Camp and along the 14-kilometre-long Supergroup Trend in the Wanderrie Camp, starting approximately 15 kilometres north of the Smokebush Camp.

Diamond drilling at Smokebush improved understanding and continuity of high-grade dolerite hosted mineralisation, returning intersections of:

56.25 metres at 1.95g/t gold from 98.75m, including 5.41m at 4.22g/t gold from 133.65m and 7.73m at 5.45g/t gold from 144m;

6.76m at 31.13g/t gold from 167.71m, including 0.94m at 191.36g/t gold from 173.06m; and

71m at 2.95g/t gold from 123m, including 6m at 5.34g/t gold from 143m

Diamond and RC drilling results from Wanderrie also confirmed potential to define several deposits, including:

2m at 17.45g/t gold from 80m;

1m at 17.27g/t gold from 134m and 5m at 4.5g/t gold from 140m;

5m at 3.63g/t gold from 85m and 2m at 10.31g/t gold from 130m; and

5m at 3.64g/t gold from 57m.

10.53m at 4.19g/t gold from 165m

“At both of those targets we intersected high-grade mineralisation,” Osborne said.

“We believe both have potential to progress to where we would like them to be by the end of the year, which would be ready to commence Resource drilling.”

Another Southern Hub target is Toppin Hill where previous drilling encountered 12m at 4.7g/t gold and 9.1m at 3.5g/t gold.

Toppin Hill was part of the South Yamarna JV with SMMO where the company had limited opportunities to conduct follow-up drilling after the original discoveries.

Aircore drilling on the Wanderrie Supergroup Trend confirmed 11 kilometres of strike, returning mineralised intersections of:

2m at 14.74g/t gold from 73m;

1m at 17.73g/t gold from 68 metres; and

5 metres at 2.03 g/t gold from 108m.

The Northern Hub has demonstrated plenty of potential and Gold Road is eager to complete current diamond and RC testing at one of its highest‐ranked targets, Ibanez, within the Corkwood Camp.

Previous results from Ibanez include:

10m at 28.67g/t gold from 240m, including 2m at 136.57g/t gold from 240m; and

8.20m at 11.63g/t gold from 229.67m, including 3.33m at 27.48g/t gold from 232.26m.

Unseasonable heavy rainfall stymied Gold Road’s plans to gain access to Ibanez and the broader Corkwood area in February, however all necessary clearances have since been approved and the access track repaired allowing drilling of Ibanez to recommence.

The company’s true exploration roots will be on show when it gets to the Romano and Bloodwood targets in the Northern Hub.

Bloodwood and Romano will be the first ‘untested’ camps that Gold Road will have drilled for more than three years.

“Romano sits north of Gruyere along the same Dorothy Hills Shear and is a target we have been trying to get to for two or three years,” Osborne enthused.

“At Bloodwood we will be drilling out an approximate 15-kilometre strike length that is completely untested between Corkwood and Attila-Alaric.

“The magnetics we have seen from Bloodwood indicate there are some interesting target zones that don’t look any different to the target zones we originally encountered along the Attila-Alaric Trend.

“There is now 600,000 ounces of Resources at Attila-Alaric so if we are able to repeat that at Bloodwood and establish substantial Resources at Romano and Corkwood, that would then become the backbone of a new processing centre.

“The same goes for the Southern Hub.

“If we were to find half a million ounces at each of Smokebush, Wanderrie and Toppin Hill – that’s 1.5 million ounces in a centre that would be enough to justify a separate project development.

“Don’t get me wrong, it would be fantastic to find a one-million-ounce deposit in its own right, but if we were to establish three half-million-ounce centres, then that’s fine too.”

Anticipation is high amongst the Western Australia gold community for the opening of the Gruyere gold project.

As Australia’s next tier one gold mine, the Gruyere gold project is an important new project for WA that is expected to produce an average of 270,000 ounces per annum over the 13-year life-of-mine and low all in sustaining costs.

To give those figures some perspective it is worth noting that Australia is the second largest producer of gold in the world with 288 tonnes of gold produced in 2016-17.

There are currently 66 operating gold mines in Australia including 14 of the world’s largest, 11 of which are in Western Australia making it the country’s major gold producer, accounting for almost 70 per cent of Australia’s total gold production.

This means that if it was a country – which many Sandgropers would prefer – Western Australia would ranks as the fifth largest gold producer in the world.

The Gruyere Gold Project was discovered by Gold Road in October 2013 on the South Dorothy Hills Trend.

Just 10 months after making the Gruyere discovery, Gold Road had defined a substantial high-grade gold deposit which has since grown to 144 million tonnes grading 1.3 grams per tonne for 5.9 million ounces of contained gold, making it one of the largest undeveloped gold deposits in Australia.

The project attracted the attention of Gold Fields Ltd, which entered a 50:50 Joint Venture with the ambitious explorer.

Construction of the 7.5 million tonnes per annum Gruyere gold project commenced at the beginning of 2017 and since then the Project team has managed to tick off several important milestones, the biggest of which is to come in the shape of the first gold pour, scheduled for the beginning of the 2019 June quarter.

The delivery from discovery to first gold of 5.5 years will represent a great achievement by Gold Road and Gold Fields.

The Project milestones achieved over the past 18 months include:

Installation and establishment of the 648 room Gruyere Village by McNally Construction which was opened by the Hon. Bill Johnston, WA Minister for Mines in August 2017;

Construction of the Anne Beadell borefield, the main water supply for the Gruyere Village and early earthworks by GR Engineering Services and Desert Sands;

Completion by MACA of the all-weather 100 seater jet capable Gruyere airstrip, Gruyere main access road, clearing and part pre-stripping of the Stage 1 Pit and the life-of-mine Tailings Storage Facility, and commencement of the Yeo borefield which will provide water for mine operations;

Over 50 per cent completion progress by the Amec Foster Wheeler Civmec Joint Venture (ACJV) on construction of the Gruyere Process Plant and other infrastructure;

Completion of the 198 kilometre Yamarna Gas Pipeline (YGP), which was installed by Nacap Australia Pty Ltd on behalf of APA Group slightly ahead of schedule. All generators and gas engines have been installed at the 45MW Gruyere Power Station. Integrity testing is in progress ahead of anticipated commissioning of the power station in the December 2018 quarter; and

Delivery of all significant plant and equipment including SAG, Ball Mills and crushing circuit to site with installation underway.

The construction is fully funded by the Gruyere Joint Venture.

Construction of mining infrastructure commenced in the March 2018 quarter and mining activities are scheduled to begin in the December 2018 quarter.

At the peak of the mining services contract, Downer expects to deploy 170 personnel at Gruyere charged with moving approximately 31 million tonnes of material per year.

The Gruyere gold project will employ a total of 350 personnel once in operation.


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

Level 2
26 Colin Street
West Perth WA 6005

Ph: +61 8 9200 1600

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

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