Mid-tier gold production and exploration company Gold Road Resources (ASX: GOR) has provided its activities report for the quarter ending 30 June 2020. Production is from the Gruyere Gold Mine (Gruyere) which is a 50:50 joint venture with Gruyere Mining Company Pty Ltd, a member of the Gold Fields Ltd group (Gold Fields), who manage Gruyere.
HIGHLIGHTS:
Production and Guidance
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Gruyere produced a record 71,865 ounces of gold (100% basis) during the quarter and remains on track to meet 2020 annual guidance (250,000 to 285,000 ounces – 100% basis).
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Gold Road delivered its June 2020 quarter production at an AISC of A$1,233 per attributable ounce. AISC for 2020 is now anticipated to fall between A$1,150 – A$1,250 per ounce (previous guidance A$1,100 – A$1,200 per ounce).
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Gruyere ore tonnes processed totalled 2.2 Mt at a head grade of 1.06 g/t Au and a gold recovery of 93.1%. Throughput rates remained at or above design as the operation transitions to fresh rock ore processing. Plant utilisation lifted to 88% with an improving trend through the quarter.
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No material COVID-19 production impacts. COVID-19 risks reduced during the quarter with no recent community transmissions in Western Australia.
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Gruyere celebrated its first 12 months of gold production on 30 June 2020, having produced 230,590 ounces (100% basis) since first pouring gold. This was delivered at an average AISC of A$1,155 per attributable ounce to Gold Road.
Financial and Corporate
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Gold Road’s gold sales totalled 28,700 ounces at an average price of A$2,498 per ounce. Gold doré and bullion on hand at the end of the quarter totalled 5,330 ounces.
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Free cash flow of $23.8 million generated for the quarter (excludes unsold doré and bullion).
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$55.4 million of the Revolving Credit Facility was repaid during the quarter reducing Gold Road’s drawn debt position to $25 million.
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The Company ended the quarter in a strong position with cash and equivalents of $109.1 million, resulting in a net cash and equivalents position of $84.1 million.
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Subsequent to quarter end, the Company became debt free having repaid the remaining $25 million of debt on 21 July 2020, while retaining liquidity in excess of $85 million.
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Highly experienced Non-executive Director Maree Arnason joined the Board. Maree’s focus on risk,strategy and sustainability will support Gold Road’s growth and reputation as an ASX200 gold producer.
Discovery
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In line with our strategy to make meaningful discoveries, aircore, RC and diamond drilling continued to focus on new targets in the relatively underexplored 100% owned Southern Project Area, including the Savoie, Beefwood, Hirono, and Kingston North prospects.
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Within the Gruyere JV, aircore drilling was completed along the Dorothy Hills Shear Zone to the south of Gruyere. Assays are pending.
Gruyere celebrated its first 12 months of gold production on 30 June 2020, having produced 230,590 ounces (100% basis) since first pouring gold on 30 June 2019. This was delivered at an average AISC of A$1,155 per attributable ounce to Gold Road since commercial production was attained on 30 September 2019. This is an outstanding achievement for an operation in its first year of production.
During the June 2020 quarter, Gruyere delivered record production of 71,865 ounces of gold (100% basis) (March 2020 quarter: 59,595 ounces – 100% basis) at an All-in-Sustaining Cost (AISC) of A$1,233 per attributable ounce to Gold Road (March 2020 quarter: A$1,135 per ounce).
The weighted average Lost Time Injury Frequency Rate (LTIFR) for Gruyere and Gold Road was 0.99 at 30 June 2020. There were no lost time injuries recorded at Gruyere or Gold Road during the quarter.
Production
Gruyere (50%)
Mining
Mining at Gruyere totalled 2.1 Mt of ore during the quarter at an average grade of 1.06 g/t Au for 72,362 contained ounces (100% basis). The ore mined year to date is in line with expectations, as the operation progressively mines more fresh rock ore. The mining rate increased during the quarter as fresh rock drilling, blasting and mining practices were improved and mobilisation of the second mining fleet commenced. Mobilisation of the second fleet of new generation Komatsu 830E trucks will be completed in the third quarter and will be initially augmented by CAT 785 trucks which are already onsite for stockpile rehandling. Operational mining costs reduced quarter on quarter reflecting lower total volume despite the increase in ore mined. Capitalised mining costs increased as a result of greater volume with the ramp-up of the second mining fleet. The quarter saw slightly higher drill and blast costs than anticipated.
At the end of the quarter, ore stockpiles totalled 3.2 Mt at 0.70 g/t Au (March 2020 quarter: 3.3 Mt at 0.70 g/t Au).
Processing
Total ore processed during the quarter was 2.2 Mt at a head grade of 1.06 g/t Au, and a gold recovery of 93.1% for 71,865 ounces of gold produced (100% basis). Ore tonnes processed exceeded nameplate production rates. A scheduled shutdown was completed at the end of the quarter and included a full SAG mill reline. Changes to the configuration of the SAG mill and grinding circuit were made to enhance the plant performance as the operation transitions into predominantly fresh rock ore processing in the second half of 2020.
Gold recovery on ore processed during the quarter continues to be slightly better than expected. Head grades were largely in line with expectations.
Plant reliability progressively increased, averaging 88% availability for the quarter. Ongoing improvements to increase reliability and address wear areas are anticipated to further improve availability and the consistency of plant throughput.
Processing costs improved during the quarter as a result of increased gold production and more efficient reagent usage. These benefits were partially offset by maintenance costs associated with modifications made to address wear areas and increase plant reliability. In the short term, maintenance costs are anticipated to remain high as further improvements are made and in the longer term reduce as these issues are resolved.
AISC is measured against gold ounces sold during the quarter and ounces produced which were held as gold doré and bullion at the end of the quarter. AISC was higher than anticipated this quarter as a result of higher royalty payments arising from the appreciating gold price, capital expenditure including the tailings dam raise in progress, capitalised waste movement, increased maintenance and some COVID-19 related expenditure.
