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Aug 2014 - Gold Road Res

Gold Road Resources (GOR) rating it as a BUY at $0.335 with a target of >$0.45 (it has already doubled since our last report at 16.5c in April 2014, available on our website)

  • This short-form style report was based on a general (broker/media/Investor) pre-Diggers site visit to Gruyere and announcement of its maiden 3.84moz in-pit resource at Gruyere, and the coming wave of progress announcements that are expected during September 2014.
  • That in-pit maiden resource of 3.84moz is a remarkable achievement (as Ian Murray stated in his presentation, it was achieved by Justin Osborne and his team in only 9.5 months from the discovery on 14 October 2014 - Gold Road was fortunate that Gold Fields' decided to close its Global Exploration Division). At ~400koz/month or ~100koz/week, Gruyere has a discovery cost of only ~$7m or less than $2/oz (which has to be one of the lowest ever achieved), with a measured and indicated resource to a depth of ~140m, that appears capable of providing the first ~8 years of ~5mtpa production.
  • As Justin stated in his Diggers presentation, "Gruyere is BFMC" : namely big, fat and with minimal cover averaging ~ 3m to 4m, which with the typical cross-section (at F [50,000N]) as shown in Figure 5b, is expected to result in a low overall average strip ratio (of possibly only between 2 and 3).
  • With the delineation of the maiden resource, Gold Road has commissioned GR Engineering to complete a scoping study by MQ 2015, leading into a PFS/DFS by JQ2016, construction and then production possibly in 2017 potentially building up to ~200kozpa
  • Gold Road has successive waves of potential discoveries along the ~200km long Yamarna belt as shown in Figures 8a to 8c. Any discovery could influence GOR's share price. In the first wave in SQ2014, are :
  • Toto - part of Dorothy Hills goldfield containing Gruyere, lying between Gruyere & Yam14. 10.5km of Aircore has been completed with assays due by the end of August 2014/early September 2014, and expected to be reported in September 2014. 3 trends were identified in initial RAB/interface drilling as shown in Figure 8c, with some of the drill chips possibly similar to Gruyere.
  • Minnie Hills South - part of the 50/50 JV with Sumitomo. 23 RC holes to an average depth of ~250m have been completed for a ~5,000m RC programme. Assays are in progress and like Toto are expected to be received by the end of August 2014, for release in September 2014.
  • Corktree - has just started Aircore to refusal drilling, aimed at identifying primary anomalism, with 100m-spaced holes being drilled on 800m apart E/W lines. Corktree is regarded as a potentially promising target area with offset basin centres and a gravity high (per p9 of our April 2014 report).
  • RAB/interface has been completed on Riviera - Smokebush, and partly on Metropolitan - Beefwood, with results from both areas, expected in the current September Qtr 2014
  • Written by: Keith Goode
  • Friday, 01 August 2014