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 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 grinding/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 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 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.

Planned Start/End Date
First gold is targeted for the June 2019 quarter.

Latest Developments
Gold production expectations from the Gruyere JV have been downgraded for the 2019 calendar year, on the back of a delay to the completion of the plant construction and commissioning.

First gold production from Gruyere is still on track for the June quarter; however, full-year production guidance has now been amended from between 100 000 oz and 120 000 oz, to between 75 000 oz and 100 000 oz for 2019.

The JV partners have noted that the commissioning of the entire process plant flowsheet, particularly of the ball mill, will be delayed by more than a month.

The timeframe for the completion of construction and commissioning of the ball mill has been extended, pending the resolution of process control design and installation. Once the ball mill is fully functioning, the design throughput of up to 1 000 t/h will be achievable.

Ore commissioning of the ball mill is expected early in the September quarter of this year, with ramp-up to take place over a six- or seven-month period.

“The delay in construction and commissioning is disappointing, however, the areas of the plant currently commissioned are performing strongly,” Gold Fields executive VP Stuart Mathews has said.

“Additionally, mining continues to track ahead of plan and mined tonnes are closely aligned to reserve and grade control estimates, which sets Gruyere up for sustainable production once commissioning and ramp-up have been completed.”

Gold Road MD and CEO Duncan Gibbs has added that as a global tier-one mine, the project remained within cost guidance, with the JV partners confident of a successful ramp-up to nameplate capacity, as well as the long-term performance of the operation.

The project’s final capital-cost forecast has remained unchanged at A$621-million, with all-in sustaining cost for the period to the end of 2019 likely to be higher than the previous guidance of between A$1 050/oz and A$1 150/oz on the back of the delay.

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?
The project remains on schedule for first gold production in the June 2019 quarter and within previously announced total cost estimates.

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