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.

Client
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 on the Gruyere project has confirmed it as one of the longest-life, lowest-cost undeveloped gold deposits in the world, with an estimated mine life of 15 years.

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

Development of the project is based on one large openpit mine and a conventional semiautogenous/ball mill circuit, gravity/carbon-in-leach (CIL) plant, with throughput of 7.5-million tonnes of fresh ore a year and up to 8.8-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 in 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.

Jobs to be Created
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%.

Value
The project’s capital cost estimates have increased to the upper end of the forecast range of between A$506-million and A$585-million, compared with the previous budget of A$532-million.

Duration
The project’s execution is based on a five-month early works programme, immediately followed by a 24-month construction and commissioning timeframe to achieve first gold production by the end of 2018.

Latest Developments
The Gruyere gold project is likely to be late in delivering its first gold, project developers Gold Road Resources and Gold Fields have warned, with the companies also flagging possible cost increases.

The JV parties have noted that, in addition to weather events and schedule extension related costs, a provision review of the definitive estimate has also identified capital cost changes to the tailings storage facility design and increases for some equipment in the engineering, procurement and construction (EPC) contract. It has also identified scope changes in the final design of the process plant and facilities, increased quantities in bulk earthworks, changes in owner's team costs and logistics costs, as well as increased spares and first fills.

“Despite challenging weather conditions, the project is progressing as well as possible,” Gold Fields executive VP for Australasia, Stuart Mathews, has said.

“We have focused on completing the important definitive estimate, now that we have reached the advanced stage of project engineering. Despite the impact of the abnormal weather in the March quarter, action from all parties on site to seek solutions and deal with resulting delays in a positive manner, keeping the project as close to schedule as possible, has been extremely encouraging,” he has noted.

At the end of the March quarter, the overall project engineering and construction was 84% and 44% complete respectively, with EPC of the process plant and associated infrastructure about 17% complete.

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

On Budget and on Time?
The abnormal weather events during the March quarter has impacted on the project schedule and costs, with first gold now likely to be poured in the June quarter of 2019, rather than the March quarter of 2019, as previously forecast.

The project’s capital cost estimates have increased to the upper end of the forecast range.

The causes of the potential cost increases are now being reviewed for classification as either a scope change, force majeure because of weather issues or cost overruns.

Under the terms of the JV agreement, Gold Fields will be responsible for the first $50.1-million of project cost overrun, which will exclude a scope change or force majeure costs.

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