Mid-tier gold production and exploration company Gold Road Resources (ASX: GOR) has formally signed off on 2024 with the release of its annual reporting suite.
Gold Road’s principal asset is a half-share in the Gruyere gold mine, in Western Australia’s north-eastern Goldfields. The Gruyere JV is a 50:50 joint venture with Gold Fields (JSE: GFI), which manages and operates the Gruyere gold mine. In addition, Gold Road also has a significant investment and exploration portfolio that includes a 17.3% strategic shareholding in takeover target De Grey Mining (ASX: DEG).
Gold Road will hold its annual general meeting in Perth on May 16.
Below is an edited extract of Gold Road non-executive chairman Tim Netscher’s letter to shareholders, contained in the annual report.
The annual report was prepared prior to the receipt by Gold Road of an unsolicited, non-binding takeover offer from Gold Fields.
“I reflect on a year during which your company built on its strong foundations to optimally position us well for the future. Importantly, the achievements in 2024 were accomplished without compromising our unwavering focus on safe and responsible production, sustainable practices and value-creating growth.
“Broadly speaking, Gold Road’s strategy has two components:
- continue to optimise the operations of Gruyere; and
- achieve sustainable growth in shareholder value by creating and developing both organic and inorganic growth opportunities.
“In 2024, we marked five years of production from Gruyere, a truly world-class asset.
“However, Gruyere failed to build on its 321,984-ounce record output in 2023, delivering 287,270 ounces in 2024 (Gold Road share: 143,635 ounces). The weaker performance was due to several operational challenges, particularly in the first half of the year, when an unprecedented rainfall event significantly hindered operations.
“Pleasingly, Gruyere’s performance steadily improved as the year progressed, ending with a record December quarter during which the mine produced 91,631 ounces.
“This step-up in performance combined with the waste stripping and mine bench positioning undertaken in the second half of 2024 has given the Gruyere JV partners high confidence in the achievement of the ambitious operational targets which have been set for 2025 and beyond.
“I acknowledge the frustrations that many shareholders felt during the first part of 2024 at Gruyere’s failure to deliver to its full potential. That said, after the performance achieved in the second half of 2024, Gold Road’s management and board remain confident of the long-term, sustainable value still to come from this world-class operation, which only produced its first bar of gold in 2019.
“Performance on the second component of our strategy during 2024 was highly successful, with several notable milestones being achieved.
“Gruyere – and therefore Gold Road – retains an enviable gold inventory that will sustain high levels of production for years to come. There are few ASX-listed gold producers with our market capitalisation that can claim a Mineral Resource of 4.81 million ounces and Ore Reserves of 1.92 million ounces (50% attributable).
“Pleasingly, after mining depletion both attributable Mineral Resources and attributable Ore Reserves increased over 2024. The annual Resource and Reserve Statement, as at 31 December 2024, also included for the first time an Ore Reserve for Gold Road’s 100 per cent-owned Gilmour deposit, which is a significant outcome for shareholders and an excellent return on the exploration expenditure across our 100 per cent-owned Yamarna Project.
“Gold Road holds a 17.3% stake in De Grey Mining , acquired through the successful takeover of DGO Gold in 2022. Northern Star Resources announced a takeover of De Grey on 2 December 2024 by means of a proposed scheme of arrangement, which is expected to complete in April 2025.
“At the time of writing, our De Grey shareholding was valued at $815 million versus the original investment cost of $412 million. This substantial increase in value represents yet another strong vindication of the Gold Road team’s rigorous and disciplined approach to investment decisions, delivering strong value accretion to shareholders.
“Also during 2024, tangible progress was made in advancing the Golden Highway Project as well as commencing a deep drilling program to assess the potential for a future Gruyere Underground Project.
“These two projects, together with the Gilmour Project, have the potential to both significantly extend the life of Gruyere as well as driving Gruyere to be much more robust by creating greater operational flexibility.
“Gold Road remains unhedged at the right time in the gold price cycle. This allowed the company to report another record full-year net profit after tax of $142.7 million (2023: $115.7 million) and enabled the board to determine a fully franked final dividend of 1.5c to complement the interim fully franked payout of 0.5c per share declared in August.
“This was the fourth successive year that Gold Road, which in ASX terms remains a relatively young company, rewarded shareholders with both an interim and a final dividend. The board takes its responsibilities as guardians of shareholder funds seriously and is steadfast in its commitment to a disciplined approach to capital management.”
