Gold Road Resources (ASX: GOR) has taken another significant step towards the Gruyere gold project’s development with the signing of a 15-year electricity supply deal with APA Group (ASX: APA). Under the deal, APA will invest about $180 million to build the 198km Yamarna Gas Pipeline, connecting the Gruyere project site to the APA-run Goldfields Gas Pipeline, as well as a 45MW gas-fired power station. The power station should be up and running by Q4 2018, to align with first gold production at Gruyere.
- Project Capital budget revised to A$532 million (3.5% increase) following engineering, procurement and construction review by Gruyere JV
- Gold Road’s share of revised Capital is A$262 million (2% increase)
- Capital budget includes improvements and enhancements to deliver a more robust Project
- A$585 million Power Supply contract signed with APA Group
- Bulk Earthworks, EPC Process Plant and Associated Infrastructure contracts signed
- ACJV commitment to using all Australian produced steel with fabrication in Henderson, Western Australia
- Installation of the 648 rooms at the Gruyere Village has been completed, commissioning of all facilities expected June 2017
- Contracts awarded for Long-Lead Items – Primary Crusher, SAG and Ball Mills
Gold Road Resources Limited (Gold Road or the Company) is pleased to provide an update on the development activities at the Gruyere Gold Project (the Project), a 50:50 Joint Venture with Gold Fields Ltd (Gold Fields), to form the Gruyere Joint Venture (Gruyere JV), managed by Gruyere Management Pty Ltd (GRM) a wholly owned subsidiary of Gold Fields.
Since the Gruyere JV was formed GRM, the Project manager, together with Gold Fields and Gold Road, has undertaken detailed reviews of Feasibility Study engineering, procurement and construction which has resulted in a number of improvements and enhancements to the Project. Gold Fields extensive operational experience has directly contributed to these improvements and enhancements which will deliver, amongst other benefits:
· a more robust Project with improved operational ergonomics and maintainability advanced process plant controls, and
· more consistent metallurgical recovery.
The Project will also now comply with the International Cyanide Management Code (Cyanide Code), the capital costs thereof to be funded by Gold Fields out of the A$50.7 million cost overrun guarantee under the Gruyere JV Agreement.
Including the above, the revised Project capital cost budget is A$532 million (level of accuracy range of -5% +10%), which is within the forecasted Feasibility Study capital cost range of A$514 million with accuracy range – 10% +15%. Gold Road’s share is A$262 million (a 2% increase over its 50% share of the Feasibility Study capital cost). The Gold Fields A$50.7 million cost overrun guarantee applies to the costs associated with the Cyanide Code as well as any costs above A$532 million.
GRM is committed to the Project construction schedule duration which remains unchanged, however transition to the Gruyere JV, as well as the review of, and improvements to, the Feasibility Study mentioned above, have deferred the start of construction as projected in the Feasibility Study by approximately two months resulting in construction completion forecast for December 2018 and first gold in Q1 2019. A key focus for the Project team is to identify opportunities which will improve the schedule through engineering, procurement and construction.
Gold Road Managing Director and CEO Ian Murray said: “We are pleased with the continued improvements to the Project and that after careful scrutiny of GRM the capital cost estimate has been restrained within the Feasibility Study cost estimate error range. The high quality of the work delivered by the Project team which has enabled us to achieve a fixed price, lump sum EPC contract, schedule of rates Bulk Earthworks contract and the ground breaking power contract.
We all understand the importance of job creation and beneficiation in Western Australia, and in the Project area for the local communities, and we commend our contractors for opportunities they have created.
Together with Gold Fields we look forward to achieving the Project construction milestones, delivering first gold in Q1 2019, and creating a responsible, sustainable and long-life gold project.