Mid-tier gold production and exploration company Gold Road Resources Limited (ASX: GOR) has provided its chairman’s address and CEO presentation ahead of the company’s annual general meeting (AGM).
The company’s AGM will be held at 2.00pm (AWST) on Thursday, 23 May 2024 at The Melbourne Hotel, 33 Milligan Street, Perth WA 6000. To participate online, please follow this link: https://meetnow.global/MLNRJU7
In his address to shareholders, Gold Road chair Tim Nestscher said:
2023 saw us deliver record gold sales of 161,472 ounces, which in turn generated record EBITDA of $250.1 million and a record NPAT of $115.7 million. Record free cashflow generation of $140.2 million allowed us to continue to make two dividend payments to shareholders during the year – the third successive year in which we have rewarded shareholders with an interim and a final dividend.
Our Company has just completed its fifth year of being a safe and profitable gold producer. The Gruyere Gold Mine, our 50:50 joint venture with operator Gold Fields, has now achieved well over 1,000 days without a lost time injury, an amazing achievement by all involved. Our people, their safety and the environment in which we work remain our most important priorities.
Gruyere continued to operate in complex and uncertain times. Throughout 2023 we faced a number of external challenges such as a tight labour market, supply chain pressures and elevated fuel prices and at times unpredictable and significant weather events.
As reported at the time, late last year, these issues caused mining rates at Gruyere to not ramp up as quickly as planned. Pleasingly, Gold Road, together with Gruyere’s operator – Gold Fields – and Gruyere’s mining contractor – MACA – diligently and promptly worked through these issues. I commend the combined team for the speed with which this underperformance was addressed.
I must also commend all parties for the professional way in which they managed operations at Gruyere earlier this year when – in March – the north-eastern Goldfields area was hit by a significant and sustained regional rain event that forced the temporary cessation of open pit mining activities, as well as the closure of access routes to Gruyere. The team’s performance in safely ramping down Gruyere’s operations in response and then back up to record mining rates following the rain event was a tremendous achievement.
That is quite glib to say but in reality, the closure of the Gruyere access routes effectively meant cutting the site’s lifeline: critical supplies such as diesel for the mining fleet, cyanide, mill balls, lime, etc for ore processing and even food for the hundreds of people in the accommodation village could not be delivered to site. The team worked together tirelessly to firstly quickly identify alternative, albeit longer supply routes, including air deliveries and secondly to assist the Shire in rebuilding the severely damaged access roads, at all times working co-operatively with our local community. The Gruyere team and the many support people at Gold Fields and Gold Road who stepped up to the plate can feel justifiably proud of the results achieved.
I am pleased that this same team is now leading the catch-up of the production lost through this event, which makes me feel confident that we have a good chance of achieving our annual production guidance. Duncan will talk further about these recovery and catch-up activities in his presentation.
But back to the year in review.
2023 marked 10 years since Gold Road discovered the Gruyere deposit, and in April 2023, Gruyere produced its onemillionth ounce of gold. The Gruyere JV retains an Ore Reserve of 3.67 million ounces, a reminder of the potential still available to shareholders even before the JV confirms any potential future underground mining activities at Gruyere. World-class discoveries like Gruyere are only made – at best – a few times each decade and Gold Road is in a privileged position of having an asset capable of continuing to deliver long-term, sustained value for our Shareholders.
Notwithstanding the enormous inherent value in our half-share of Gruyere, your Board and leadership team have continued to assess opportunities to add further value for Shareholders.
I am proud to say that Gold Road has established a reputation for a disciplined and value-driven approach to profitable growth through acquisitions, which specifically includes adherence to the principle of transacting at fair value. We are driven to profitably grow and so will continue to look at strategic opportunities – but we will not pursue growth for the sake of growth. A good example is the recent potential transaction which was reported in the media during April of this year. We viewed the Greenstone Gold Mine in Canada as a strategically interesting joint venture opportunity with many similarities to our own Gruyere Gold Mine. The overall strategic rationale is supported by the majority of our Shareholders.
However, we chose to formally withdraw from this sales process when it became apparent to us that the likely purchase price would exceed our value proposition.
During the year, Gold Road consolidated its position as the largest shareholder in De Grey Mining, which owns the Hemi gold discovery in Western Australia’s Pilbara region. As many of you would have seen, De Grey completed a capital raise this month which Gold Road supported through the uptake of our rights in the Entitlement Offer. Our current 17.85% strategic stake continues to give us significant optionality as De Grey advances Hemi’s development – I am also pleased to say that we acquired this position at a value that I feel demonstrates our ongoing discipline when it comes to value for our shareholders.
Gold Road has also progressed our Australia-wide exploration footprint, with a particular focus on the Mallina project in the Pilbara and our projects in north-eastern Queensland. Your Company is applying the same exploration rigour that led to the discovery of Gruyere and we are excited about what our first on-the-ground activities are indicating. We look forward to systematically building on this foundation in 2024 and beyond.
In his briefing following the formal part of today’s meeting, our managing director and CEO Duncan Gibbs will provide an update on our growth strategy including our highly prospective exploration projects pipeline.
In closing, let me just reiterate that it is your Company’s strong belief that our production and growth must be sustainable. Gold Road continues to be proud of our inclusion in the prestigious Dow Jones Sustainability Index Australia – we are one of very few Australian resource companies to be included in this index.
At Gold Road we also value diversity and have worked hard to create an inclusive culture – as was recognised through the receipt of the AMEC Diversity and Inclusion Award for 2023. You can read more on our sustainable progress in our 2023 Sustainability Report, available on our website.