08-Dec-2020:  Gruyere to Expand with Renewable Energy Hybrid Microgrid

and:  APA: APA Makes First Hybrid Energy Microgrid Investment

GRUYERE TO EXPAND WITH RENEWABLE ENERGY HYBRID MICROGRID

Highlights

• Gruyere JV installation of a renewable energy hybrid microgrid will increase the mine’s power capacity to enable plant throughput up to a targeted 10 million tonnes per annum (Mtpa)
• Phase 1 installation of an additional 4MW gas engine by mid-2021
• Phase 2 installation of a 13MW solar farm and 4.4MW battery energy storage system by the end of 2021

--- click on links for the full announcements by GOR and APA ---

[I hold GOR shares, GOR (Gold Road Resources) own 50% of the Gruyere Gold Mine in WA.  The other half is owned by South-African-based Gold Fields Ltd.]

Further Reading:

https://goldroad.com.au/wp-content/uploads/2020/10/20201023-Quarterly-Activities-Report-Sept-2020_asx.pdf (23-Oct-2020)

https://goldroad.com.au/wp-content/uploads/2020/10/202010-Diggers-Presentation_ASX.pdf (12-Oct-2020)

https://goldroad.com.au/ (website)

23-Oct-2020:  Quarterly Activities and Cash Flow Report - Sept 2020

plus:  Quarterly Report Conference Call Presentation - Sept 2020

HIGHLIGHTS

Production and Guidance

• Gruyere produced 55,919 ounces of gold (100% basis) during the quarter (June quarter: 71,865 ounces) in line with updated quarterly guidance of 53,000 to 57,000 ounces. Gruyere is on track to meet 2020 annual guidance of 250,000 to 270,000 ounces (100% basis).
• Gold Road delivered its September 2020 quarter production at an AISC of A$1,488 per attributable ounce (June quarter: A$1,233 per ounce) below the revised quarterly guidance of A$1,540 to A$1,590 per ounce.  Annual AISC for 2020 is maintained at between A$1,250 to A$1,350 per ounce(*).
• Gruyere ore tonnes processed totalled 1.9 Mt at a head grade of 1.03 g/t Au and a gold recovery of 91.5%. Plant utilisation was below target at 87% due to additional downtime to configure the milling circuit as the plant transitioned to fresh rock processing and the previously reported failure of a ball mill motor bearing late in the quarter.
• As guided, the September 2020 quarter was higher cost as the operation transitioned from oxide to fresh rock ore processing. The December 2020 quarter is anticipated to be a stronger quarter aligning with annual guidance.

Financial and Corporate

• Gold Road’s gold sales totalled 31,480 ounces at an average price of $2,420 per ounce and included delivery of 8,605 ounces at an average price of $1,790 per ounce into hedges as they fell due. Gold doré and bullion on hand at 30 September 2020 totalled 1,811 ounces.
• Free cash flow of $48.7 million was generated for the quarter, prior to the repayment of debt and includes proceeds from the sale of listed investments. Underlying free cash flow (before sale of investment) for the quarter was $22.2 million (June quarter: $23.8 million).
• The Company ended the quarter in a strong position with cash and equivalents of $103.0 million (June quarter: $109.1 million) and no debt (June quarter: $25 million) as the remaining $25 million of debt was repaid.
• Gold Road announced a dividend policy during the quarter. Subject to Board discretion, it is anticipated that an inaugural dividend will be declared for the six month period ended 31 December 2020(**).
• As part of an ongoing capital management strategy to ensure a liquid and flexible balance sheet, Gold Road increased its revolving corporate debt facilities to $250 million(***). This facility remains undrawn and is reserved for general corporate purposes and potential growth opportunities.

Discovery

• In line with our strategy of making 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 prospects.
• Assays were returned from Gilmour drilling completed earlier in the year which include 4.0 metres at 16.58 g/t Au and 6.78 metres at 5.33 g/t Au.

Notes:

1. (*) Refer to ASX announcement dated 24 September 2020
2. (**) Refer to ASX announcement dated 16 September 2020
3. (***) Refer to ASX announcement dated 18 September 2020

Introduction

Mid-tier gold production and exploration company, Gold Road Resources Limited (ASX:GOR), presents its activity report for the quarter ending 30 September 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 South African-based Gold Fields Ltd group (Gold Fields), who manage Gruyere.

During the September 2020 quarter, Gruyere delivered production of 55,919 ounces of gold (100% basis) (June 2020 quarter: 71,865 ounces – 100% basis) in line with updated quarterly guidance of 53,000 to 57,000 ounces. This production was delivered at an All-in-Sustaining Cost (AISC) of A$1,488 per attributable ounce to Gold Road (June quarter: A$1,233 per ounce), below revised quarterly cost guidance of A$1,540 to A$1,590 per ounce.

The weighted average Lost Time Injury Frequency Rate (LTIFR) for Gruyere and Gold Road was 3.08 at 30 September 2020. There were no lost time injuries recorded at Gruyere or Gold Road during the quarter.

Production

Gruyere (100% basis)

Mining

Mining totalled 1.9 Mt of ore during the quarter at an average grade of 1.03 g/t Au for 61,443 contained ounces. Ore mining was predominantly from the Stage 1 fresh rock pit. The rate of waste stripping increased during the September quarter with the waste to ore ratio lifting from 1.8:1 (June quarter) to 3.1:1 as the second mining fleet became operational and continued stripping of the Stage 2 pit. Quarter on quarter operational mining costs decreased by $2.4 million as a result of the lower mining volumes, while capitalised mining costs increased by $5.6 million as a result of the greater volumes of pre-stripping in the Stage 2 and 3 cutbacks, with the second mining fleet fully mobilised and operational for most of the quarter.

At the end of the quarter, ore stockpiles remained unchanged at 3.2 Mt at 0.70 g/t Au (June quarter: 3.2 Mt at 0.70 g/t Au).

Processing

Total ore processed during the quarter was 1.9 Mt at a head grade of 1.03 g/t Au, and a gold recovery of 91.5% for 55,919 ounces of gold produced. Ore tonnes processed reduced quarter on quarter as ore processing transitioned into fresh rock ore with lower than planned plant availability.

Plant availability averaged 87% over the quarter. Additional plant downtime was incurred to improve the configuration of the SAG milling circuit, with throughput rates improving in the second half of the quarter after the replacement of the SAG mill discharge grates and screens. Production was interrupted for seven days late in the quarter following a ball mill motor bearing failure. The bearing failure occurred on a restart of the processing facility after a scheduled maintenance shutdown. The ball mill is now fully operational, and no further issues are anticipated.

A programme of mine to mill optimisation commenced late in the quarter with trials on higher intensity blasting of fresh rock ore, and blending of fresh and oxide ore demonstrating increased throughput rates. Implementation of mine to mill optimisation practices, design upgrades to the pebble crushing circuit to improve operability and reliability, and milling circuit process automation will be progressed over the coming six months.

Gold recovery on ore processed during the quarter was down slightly quarter on quarter, as expected, with the increase in fresh rock ore processing. Head grades were in line with expectations and down slightly quarter on quarter.

Processing costs continued to benefit from more efficient reagent usage. These benefits were offset by higher maintenance costs quarter on quarter.

All earth works for the tailings dam lift were completed on schedule during the quarter, with minor works required to complete the raise.

AISC was below revised guidance for this quarter largely due to lower than anticipated capital expenditure completed during the quarter. AISC was higher quarter on quarter due to the increased maintenance and capital costs.

--- click on links above for the full report and presentation ---

[I hold GOR shares in my SMSF.]

16-Sep-2020:  Investor Presentation - September 2020   plus   Dividend Policy

[ I hold GOR shares in my SMSF.]

10-Sep-2020:  Yamarna Exploration Update - September 2020

[I hold GOR shares in my SMSF.]

09-Sep-2020:  2020 Half Year Financial Results Announcement   and   2020 Half Year Financial Results

INAUGURAL NET PROFIT REPORTED FOR 6 MONTHS TO 30 JUNE 2020

Half Year Highlights

First Year of Production Completed

• Gruyere maintained a high level of safety performance and suffered no material impact on operations from COVID-19
• 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

Inaugural Six Month Profit

• Gold produced over the six months to 30 June 2020 was 131,460 ounces (100% basis) at an AISC of A$1,186 per attributable ounce
• Operating cash flow attributed to Gold Road over the six months to 30 June 2020 was $59.6 million*
• Gold Road sold 60,400 ounces of gold at an average price of A$2,237 per ounce over the six month period
• Revenue from gold sales for the half year totalled $135.1 million (30 June 2019: Nil)* 
• EBITDA generated over the six month period totalled $61.0 million (30 June 2019: $23.0 million loss)*  
• Consolidated Net Profit after Tax for the half year of $23.4 million (30 June 2019: $16.9 million loss)* 
• Unsold ounces of 5,330 ounces at end of period due to COVID-19 balance sheet precautions** 

Strong Balance Sheet

• Gold Road ended the half year in a strong position with cash of $73 million. Cash and equivalents totalled $109.1 million. Borrowings totalled $25 million resulting in a net cash and equivalents position of $84.1 million**
• Gold Road became debt free*** after repaying $25 million of borrowings on 21 July 2020.

Gold Road Managing Director and CEO Duncan Gibbs commented:  “June saw us celebrate our first year of gold production at Gruyere. The journey has been an exciting one and an outstanding performance for an operation in its first year of production. But the journey continues for us as we look to unlock further efficiencies at Gruyere. We are seeing some positive signs in terms of throughput and recoveries, but we are still on the journey of improving plant availability as we continue to transition into fresh rock. The strong cash flow performance at Gruyere has enabled us to pay down all our debt within less than 10 months from declaring commercial production and this leaves us in a very strong position.

Gruyere and Gold Road have experienced no material production impacts as a result of the COVID-19 crisis. I wish to thank the Gruyere team, our employees, contractors and suppliers for their diligence and excellent performance through this difficult time.

Our exploration push continues in the underexplored Yamarna Greenstone Belt. The half year saw us realign strategy to increase the likelihood of us making meaningful discoveries, as befits a company of our size. The relatively shallow aircore drilling completed so far this year will lead to deeper bedrock drilling of new targets over the coming 6 to 12 months.”

Notes:

1. (*) Note Revenue, EBITDA, cash flow and NPAT excludes the sale of 5,330 ounces of unsold gold held in bullion and dore at 30 June 2020. Financial results are GOR attributable unless otherwise stated.
2. (**) Refer to ASX announcement on 24 July 2020
3. (***) Debt free refers to repayment of borrowings.

[I hold GOR shares in my SMSF, along with NST, EVN, SAR, SBM, RRL, RMS and some QAU.]

[Gold Road (GOR) owns 50% of the world-class Gruyere gold mine in central WA, east of Laverton, which was developed in Joint Venture (JV) with the much larger South-African-based Gold Fields Ltd.  Gruyere produced first gold in June 2019, so the company - and the JV - is still very young.  GOR has provided us with the lowest AISC (cost) guidance for the next 6 to 12 months of ANY of our 25 current ASX-listed gold producers, excluding those who are based off-shore (and have secondary listings on the ASX) and also excluding those (like IGO, SFR, OZL, BHP, etc.) who produce gold as a byproduct of other production or where gold is less than 70% of their total metals production.  After those exclusions, you are left with 25 Australian-based pure-play gold producers - see here for the full list (you'll have to scroll down a few posts to find it) - and GOR have the LOWEST current AISC guidance (lowest costs) of all of them, however GOR also produce a lot less gold (being their 50% share of Gruyere production) than most of the rest of the top 12 producers, and they are still a single mine company, so that also needs to be taken into account when comparing them against other gold producers.]

28-May-2020:  2020 AGM CEO Presentation   and   2020 AGM Chairman's Address to Shareholders

30-Jan-2020:  Quarterly Activities Report and Appendix 5B - December 2019

Great report.  Market liked it.  GOR was up +11.15% today (up 15 cents) on the back of it, from a $1.345 close yesterday to a $1.495 close today, being the best performing gold miner today by a country mile.  And I only just raised my PT ("Valuation") for GOR this week (two days ago) to $1.60, and they're already only 10.5 cents away from reaching it (!)  Now if only I owned some GOR shares....

29-Jan-2019:  Gold Road Resources (GOR) is an emerging gold producer that may well be (or soon become) a takeover target for a bigger player.

GOR released an announcement today detailing their progress at Gruyere - see here.

Highlights:

• Successful introduction of material through Primary Crusher to Coarse Ore Stockpile
• First ore mined as scheduled
• First gold production remains on target for June 2019 quarter
• Construction is 91% complete and remains on schedule and on budget

The rumour is that Newcrest (NCM), Australia's largest listed gold producer, is running their ruler over GOR.  It could just be a rumour of course, and rumours - and takeover speculation in general - are no basis for buying shares, but it's worth noting.