Gruyere will cost $455m: Gold Road

A pre-feasibility study has confirmed the viability of Gold Road Resources’ Gruyere gold project near Laverton, with the study predicting a $455 million cost to bring it into production.

Gold Road released details of a pre-feasibility study on Gruyere, led by GR Engineering Services and AMC Consultants, which showed a maiden ore reserve of 3.17 million ounces of gold to support an annual production of 265,000oz over an initial 12-year mine life.

The study also estimated an average all-in sustaining cost of $960/oz over the life of mine, with a payback period of less than four years.

The results of the study revealed an increase in the project’s capex from the predicted $360 million in a scoping study, which was completed in January last year, along with a higher AISC, up from $916/oz in the scoping study.

However, the scoping study also estimated the project would produce a lower average of 190,000ozpa, while the base resource has been upgraded by 620,000oz to 5.62 million ounces.

The project will consist of a large-scale open-pit mine using a conventional 7.5 million tonnes per annum SAG/Ball mill circuit, Carbon in Leach processing facility, and a gas-fired power generation plant.

“The full PFS confirms the project as one of Australia’s best undeveloped gold deposits and indicates a technically sound and financially viable project generating over $1 billion in free cashflow over an initial 12-year project life,” Gold Road said in a statement.

“Based on the positive PFS outcome, the board has approved the immediate progression to a feasibility study on the project to further define and support the case for project funding and development.”

Gold Road chairman Ian Murray said while the PFS suggested a 12-year life on the project, the exploration potential of Gruyere and the surrounding Yamarna region meant there was significant potential to extend the life beyond.

“We are now aiming to complete the feasibility study on Gruyere by the end of 2016 which will allow Gold Road to make an investment decision in early 2017,” Mr Murray said.

“Opportunities to optimise and enhance the financial performance of the project will be thoroughly assessed during this feasibility stage.”

Gold Road shares were 2.5 per cent higher to 41 cents each at midday.