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 has confirmed it 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 and conventional semiautogenous/ball mill circuit, and a 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 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.

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%.

Value
In July 2018, an independent third-party review of the definitive estimate for the Gruyere gold project has increased the capital cost estimate to A$621-million, up from the previous budget of A$532-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 advancing operating and capital expenditure, including the buying of additional equipment previously intended to be hired.

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

Duration
First gold is targeted for the June 2019 quarter.

Latest Developments
The Gruyere project is expected to deliver higher production levels than initially estimated.

The updated mine plan has increased the average production from 270 000 oz/y estimated in the 2016 feasibility study to 300 000 oz/y.

The increase in gold production has been driven by the opportunistic buying of larger semiautogenous grinding and ball mills, which will increase the processing rate from the planned 7.5-million tonnes a year to 8.2-million tonnes a year, from 2021.

Slight improvements to expected metallurgical recoveries and the addition of the two Golden Highway deposits will also assist with the higher output.

With the higher output, the project life has decreased slightly from 13 years to 12 years, while the expected ounces of gold recovered over the life of the project have increased by 8%, from 3.21-million ounces to 3.47-million ounces.

At the end of November, the overall project was about 85% complete, with all civil and concrete works for the process plant completed and structural steel, plate steel and tankage nearing completion.

Commissioning of the plant is planned for March 2019, with first gold production targeted in the June quarter.

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 (EPC contractor).

On Budget and on Time?
First gold from the Gruyere project remains on schedule for the June quarter of 2019.

The capital cost of the project, however, has increased to A$621-million.

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