Gold Road Resources Ltd (ASX:GOR) (FRA:E6Q) (OTCMKTS:ELKMF) continues to expect all-in sustaining costs (AISC) of A$1,050 to A$1,150 (US$720.82-789.48) an ounce for the December quarter at commercial gold production operation Gruyere in Western Australia.
The mid-tier WA company and its joint venture partner Gold Fields Ltd (NYSE:GFI) (JSE:GFI) achieved a commercial gold milestone at their operation by the end of September 2019 and now expect to hit the top end of their 2019 Gruyere production guidance.
Calendar year guidance for Gruyere has been set at 75,000 to 100,000 gold ounces on a 100% basis.
Life‐of‐mine average Gruyere production is forecast to be about 300,000 ounces a year at A$1,025 AISC over a 12‐year mine life.
The low costs compare to a spot gold price of about US$1,485.15 (A$2,162.49) an ounce this week.
Gold Road said, “As throughput rates and gold recoveries exceeded Gruyere’s ramp‐up expectations, the Gruyere JV now anticipates gold production for calendar 2019 to be at the upper end of guidance.
“AISC for the December 2019 quarter is guided between A$1,050 and A$1,150, slightly higher than forecast life‐of‐mine average (A$1,025 per ounce) as production continues to ramp‐up to full nameplate capacity.”
Nameplate capacity is 915 tonnes per hour for transitional ore and 855 tonnes per hour for fresh rock in the March quarter 2020, with feasibility study utilisation levels of 91.3%.
Gold Road achieves revenues
West Perth-based Gold Road released its September quarterly report to market today, reporting it had sold 12,461 ounces of its share of gold from Gruyere at a A$2,052 an ounce average price in the September quarter.
The new ASX200 entrant had A$65.3 million of cash reserves and A$5.8 million of bullion-on-hand by the end of September 2019.
Net debt was A$9.3 million after the company had drawn down A$80.4 million of a $150 million funding facility by the end of the quarter.
JV partners mine more than 2 million tonnes
Gruyere mine is run as a 50:50 joint venture with high-profile gold miner Gold Fields through the mine operator and manager’s subsidiary Gruyere Mining Company Pty Ltd.
The partners mined 2.1 million tonnes of ore in the quarter with average grades of 0.88 g/t for 59,662 contained ounces in the September 2019 quarter.
By quarter’s end, Gold Road had hedged 125,300 ounces at an average A$1,837 an ounce price for product to be delivered between October 1, 2019, and September 30, 2022.
Ore stockpiles on site totalled 3.2 million tonnes by quarter-end and included 900,000 tonnes at 1.18 g/t run of mine which was due for processing in the December 2019 quarter.
A low-grade 2.2 million tonnes of ore at 0.62 g/t was stockpiled.
Processing plant commissioning continued in the quarter after the partners achieved their first gold pour in late June 2019.
Total ore processed in the September quarter was 1.1 million tonnes at a 1 g/t mill head grade in the September quarter for gold recovery of 94.4% for 29,107 ounces of gold produced.
Gold Road reported, “Plant availability progressively improved during the quarter, averaging 82.4% for September at an average throughput rate of 1,014 tonnes per hour (tph) for 501,964 tonnes milled, to be on track to complete ramp‐up to feasibility study utilisation levels of 91.3% and nameplate capacity of 915 tph for transitional ore and 855 tph for fresh rock in the March quarter 2020.”
Resource update pending
Gold Road is anticipating an updated resource statement for Gruyere as it wraps up a 9,000-metre drilling campaign at the mine site 200 kilometres east of Laverton.
The Gold Fields Ltd (NYSE:GFI) (JSE:GFI) group joint venture partner had set a A$17-20 million exploration budget this year and is hoping to continue its discovery efforts on Yamarna Belt.
Gold Road said, “Diamond drilling is near complete at Gruyere to enable conversion of a significant portion of the current inferred resource to indicated resource status in support of future optimisation of the mine plan and mine infrastructure.”
Positive results from the drilling campaign have included: 36.2 metres grading 2.44 g/t gold from 282.8 metres and 44.9 metres grading 1.80 g/t from 270.1 metres; and 73.4 metres grading 1.80 g/t from 288.6 metres.
Regional exploration efforts deliver
Assays from reverse circulation (RC) drilling at the 100% Gold Road-owned Yaffler South prospect are expected in the December 2019 quarter.
Drillers have intersected coherent, consistent mineralisation at the prospect.
High-grade results include: 11 metres grading 5.94 g/t from 74 metres; 12 metres grading 3.40 g/t from 116 metres; and 12 metres grading 2.71 g/t from 59 metres.