27/01/2015 - 14:43

Gold Road hails Gruyere study

27/01/2015 - 14:43

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Perth-based explorer Gold Road Resources will proceed with a pre-feasibility study on its Gruyere project east of Laverton, after conducting a scoping study which found it to be a robust, long life and large-tonnage gold project.

Scoping study work at Gold Road's Gruyere project near Laverton.

Perth-based explorer Gold Road Resources will proceed with a pre-feasibility study on its Gruyere project east of Laverton, after conducting a scoping study which found it to be a robust, long life and large-tonnage gold project.

The study assessed the economics of the Gruyere project, at varying throughput rates, against a number of internal company hurdles.

The base case average annual production, following ramp-up, was estimated to be 190,000 ounces of gold over an initial mine life of 11 years, with an average net pre-tax cash flow of over $80 million per annum, at an assumed gold price of $1,350/oz.

The life of mine gold revenue was forecast at $2.8 billion, producing a net pre-tax cash flow of over $550 million after capital costs.

Pre-production capitals costs were estimated at $360 million.

As a result, the company's board approved the immediate start of a pre-feasibility study.

“The base case production scenario has highlighted multiple opportunities to improve the project’s economics through mine and plant size optimisation, power generation savings and further exploration success from both the Gruyere area and our extensive regional portfolio as well as higher gold prices,” executive chairman Ian Murray said.

“It is also relatively robust at lower gold price scenarios.”

The study also estimated average cash costs of $838/oz and all in sustaining costs of $916/oz.

Mr Murray said the scoping study transforms Gruyere from a “standout gold discovery to a potentially robust gold mining project”.

The Gruyere project comprises a large scale open pit mine, a narrow-vein underground mine and a conventional 5 million tonne per annum carbon in leach processing facility.

Shares in Gold Road were 7.8 per cent lower at 35 cents per share at the close of trade.

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