Keith Goode: Gold Road Resources Rating It A BUY At $0.355 With A Target Of: $0.50 Keith Goode - Eagle Research Advisory - 22-Apr-2015 Gold Road Resources Limited (GOR) – Working on its PFS for >200,000ozpa Gold Production, potentially from 2018
Having completed its scoping study on a possible 5mtpa operation at Gruyere in January 2015, Gold Road (GOR) has moved into a two-stage PFS in 2015, initially identifying the optimum production rate between 5mtpa & 10mtpa (possibly 7.5mtpa?), followed by detailed design. Assuming that the PFS is completed by Dec 2015, GOR could then start a DFS, financing and construction with a view to producing >200kozpa gold from late 2017/early 2018 at a targeted AIC of
Given that a typical Australian designed plant often treats ~20% more than its designed rate, the initial oxidised throughput rate of a 5mtpa plant could easily be 5.5mtpa or higher, and we have used 5.5mtpa in our/ERA model scenario, expanding the plant after 2 years by 2mtpa to achieve a throughput rate of ~7.5mtpa or so. Grades are expected to be fairly homogenous at ~1.2g/t, which with a ~95% recovery gives >200kozpa at 5.5mtpa. The scoping study also included Central Bore, whereas our modelling excludes it until possibly later in Gruyere's life, reducing initial risk and capex.
Gruyere is currently in PFS infill aimed at taking the bulk of its in-pit resource up to indicated status and reducing the size of the waste blocks when it is expected to be reported in SQ2015 at potentially >5moz (ERA estimate). However, GOR also has an extensive exploration programme firmly focused on making another Yamarna greenstone belt discovery possibly amongst the ~15km long goldfield targets containing Smokebush, Wanderrie, Beefwood, Monteith or Corkwood with results from Mar/Apr 2015.
Although it is early and only a significant intersection, being 59m @ 3.03g/t from 127m (including at least 6 separate intersections ranging from 5.0g/t to 20.6g/t), the Smokebush result over a ~800m strike length could become Gold Road's next discovery.
GOR Price at posting:
35.0¢ Sentiment: Buy Disclosure: Held
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