Name of the Project
Gruyere gold project.

Location
The project is located in the Yamarna greenstone belt, about 200 m east of Laverton, in Western Australia.

Project Owner/s
The project is a joint venture (JV) between Australia’s Gold Road Resources and South Africa’s Gold Fields.

Gold Road and Gold Fields entered into a 50:50 JV over the Gruyere project in November 2016. The South Africa-based major paid A$350-million for its share in the project.

Project Description
A feasibility study has confirmed Gruyere as one of the longest-life, lowest-cost undeveloped gold deposits in the world, with an estimated mine life of 12 years. The expected ounces of gold recovered over the life of the project are estimated at 3.47-million ounces.

The project has total proven and probable reserves of 91.6-million tonnes grading 1.2 g/t gold. The Gruyere JV has also awarded mining leases over additional mineral resources at Central Bore and Attila-Alaric, which do not form part of the Gruyere project feasibility study.

Development of the project is based on a large openpit mine, conventional semiautogenous grinding/ball mill circuit and gravity/carbon-in-leach (CIL) plant, with throughput of 7.5-million tonnes of fresh ore a year and up to 8.2-million tonnes of oxide ore a year.

A mining contractor will undertake activities, with Gold Road providing technical and managerial direction.

The feasibility study proposes that the pit be mined in four stages. Stages 1 and 2 comprise two independent pits at the northern and southern ends of the deposit. Stage 3 will combine the two starter pits and Stage 4 will cut back to the final pit design.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The project has a pretax net present value (NPV), at an 8% discount rate, of A$486-million and an internal rate of return (IRR) of 24% at a A$1 500/oz gold price. At a A$1 750/oz gold price, the NPV increases to A$910-million, with an IRR of 35%.

Capital Expenditure
In July 2018, an independent third-party review of the definitive estimate for the Gruyere gold project increased the capital cost estimate from A$532-million to A$621-million.

The updated capital cost included scope changes and force majeure costs of A$30-million, as well as a A$30-million contingency.

Key contributors to the increased capital cost included a range of scope changes that will improve the operability and maintainability of the process plant and infrastructure, as well as advance operating and capital expenditure (capex), including the acquisition of additional equipment previously intended to be hired.

Costs will be funded from existing cash and working capital facilities.

Planned Start/End Date
Gruyere poured its first gold at the start of July 2019; the project is now ramping up to nameplate capacity.

Latest Developments
Gold Road Resources has flagged a potential increase in yearly production from its Gruyere JV with Gold Fields over the next three years.

The three-year production outlook for the Gruyere project has shown a 35% to 50% increase in yearly production and the potential for significant free cash flow growth to sustain production of about 350 000 oz.

The three-year outlook incorporates a five-stage openpit, and included reserves, which are constrained within the original 2016 feasibility study pit design.

The outlook also depicts an improving trend with higher grades and increased throughput combining for a favourable impact on production, and has incorporated the experience gained at the operation since mining started in 2018.

Gold Road has told shareholders that minimal capex will be required at the Gruyere process plant to achieve the targeted throughput increases to ten-million tonnes a year, while low all-in sustaining costs would be maintained.

Since operations started 18 months ago, the JV partners have been working on operational improvements to operate the process plant above its nameplate design of 7.5-million tonnes a year, and the 2020 rate of 8.1-million tonnes a year.

Key motivations to increase the process plant’s yearly throughput include improving the process plant utilisation rate by upgrades to the pebble crushing circuit, increasing the wear life of crusher liners and the life of the semiautogenous grinding and ball mill liners, improving maintenance work planning and scheduling, and enhanced operating practices.

The JV partners will also undertake an upgrade to the powerhouse, enabling the process plant to operate reliably at full capacity under all conditions, mine to mill optimisation, additional instrumentation and process control improvements, and continued minor debottlenecking of the process plant.

The Gruyere operation is expected to increase its production to between 260 000 oz and 300 000 oz in 2021, of which between 130 000 oz to 150 000 oz will be attributable to Gold Road, compared with the 129 087 oz attributable delivered in 2020.

An updated ore reserve for Gruyere is expected in the first half of this year, and additional drilling is also planned at the project.

Meanwhile, Gold Road has set an exploration budget of A$27-million for its on-ground exploration activities at its Yamarna and Yandina projects, also in Western Australia, for 2021

Key Contracts, Suppliers and Consultants
Amec Foster Wheeler and Civmec (EPC), APA Group (pipeline and gas-fired power station), MACA (airstrip), MACA and ACJV (Yeo borefield construction) and Amec Foster Wheeler Civmec JV (EPC contractor).

Contact Details for Project Information
Gold Road Resources, tel +61 8 9200 1600, fax +61 8 9481 6405 or email perth@goldroad.com.au.