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.

Client
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 15 years.

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 a part of the Gruyere project feasibility study.

Development of the project is based on one large openpit mine and a conventional semiautogenous/ball mill circuit, gravity/carbon-in-leach (CIL) plant, with throughput of 7.5-million tonnes of fresh ore a year and up to 8.8-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 in 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%.

Value
In July 2018, an independent third-party review of the definitive estimate for the Gruyere gold project has 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.

Duration
The project’s execution is based on a five-month early works programme, immediately followed by a 24-month construction and commissioning timeframe to achieve first gold production by the end of 2018.

Latest Developments
Gold Fields CEO Nick Holland has said that first gold at the Gruyere gold project remains scheduled for the June 2019 quarter.

However, the final forecast capital is now estimated at A$621-million, which includes scope changes and force majeure costs of A$30-million, along with a contingence of the same amount.

This compares with the original budget of A$532-million, with A$329-million spent on the project to date. A$185-million is expected to be spent in the second part of this year.

Despite the increased capital for the project, Gold Fields maintains that the long-life, low-cost nature of Gruyere will subsequently improve the Gold Fields portfolio.

Overall project engineering and construction was 94% and 61% complete respectively, with engineering, procurement and construction (EPC) 39% complete as at the end of July 2018.

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?
First gold from the Gruyere project remains on schedule for the June quarter of 2019.

The capital cost of the project, however, has increased to A$621-million.

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