Gold Road Resources : Quarterly Activities Report – September 2019

ASX Announcement

22 October 2019

September Quarterly Report

HIGHLIGHTS

Production and Guidance

• Gruyere ramp‐up is progressing well, with commercial production attained at the end of September 2019, slightly ahead of guidance
• Gruyere produced 29,107 ounces during the quarter (100% basis)
• 2019 annual guidance range reaffirmed at the upper end of 75,000 to 100,000 ounces (100% basis)
• AISC unchanged for December 2019 quarter between A$1,050 to A$1,150 per ounce

Financial and Corporate

• As at 30 September 2019:
• • Gold Road had cash of $65.3 million and bullion of A$5.8 million on hand
  • Gold Road had a net debt of A$9.3 million, with A$80.4 million of its A$150 million facility drawn
  • Gold Road has hedged 125,300 ounces at an average price of A$1,837 per ounce for delivery between 1 October 2019 and 30 September 2022
• Gold Road sold 12,461 ounces of its share of gold from Gruyere at an average price of A$2,052 per ounce.
• On 22 August 2019, Gold Fields Ltd sold its 9.9% shareholding in the Company as part of a broader debt reduction strategy
• Gold Road joined the ASX200 Index and the GDXJ ETF1 in September 2019

Discovery

• Diamond drilling is near‐complete at Gruyere to enable conversion of a significant portion of the current Inferred Resource to Indicated Resource status in support of future optimisation of the mine plan and mine infrastructure. Results include 36.2 metres at 2.44 g/t Au from 282.8 metres, 44.9 metres at 1.80 g/t Au from 270.1 metres and 73.4 metres at 1.80 g/t Au from 288.6 metres.
• At Yaffler South (100% owned), bedrock RC drilling intersected coherent and consistent mineralisation. Better results include; 11 metres at 5.94 g/t Au from 74 metres, 12 metres at 3.40 g/t Au from 116 metres and 12 metres at 2.71 g/t Au from 59 metres. Drilling continued during the quarter with assays expected in the December 2019 quarter.

ASX Code GOR

ABN 13 109 289 527

COMPANY DIRECTORS

Tim Netscher

Chairman

Duncan Gibbs

Managing Director & CEO

Justin Osborne

Executive Director, Exploration & Growth

Brian Levet

Non-Executive Director

Sharon Warburton

Non-Executive Director

Carol Marinkovich

Company Secretary

CONTACT DETAILS

Principal & Registered Office Level 2, 26 Colin St

West Perth WA 6005

www.goldroad.com.au

[e-mail]

T [phone]

F [phone]

• Van Eck Vectors Junior Gold Miners Exchange Traded Fund

Introduction

Mid‐tier gold production and exploration company, Gold Road Resources Limited (Gold Road or the Company), presents its activity report for the quarter ending 30 September 2019. The Gruyere gold mine is a global Tier 1 gold mine with a long operating life and forecast high margins, located approximately 200 kilometres east of Laverton, in Western Australia (Gruyere). Life‐of‐mine average production is forecast at approximately 300,000 ounces per annum at an average All‐in Sustaining Cost (AISC) over a 12‐year life of approximately A$1,025 per ounce. Gruyere is a 50:50 joint venture with Gruyere Mining Company Pty Ltd, a member of the Gold Fields Ltd group (Gold Fields), who are the operators and managers of Gruyere.

Gruyere delivered another quarter of milestones as project development was completed within budget, commissioning of all processing circuits was completed, and commercial levels of production were attained at the end of the quarter and slightly earlier than guidance.

The excellent safety performance at Gruyere continued with a zero Total Recordable Injury Frequency Rate (TRIFR) at 30 September 2019. As at 30 September 2019, Gold Road's (100% owned) exploration operations rolling 12 month TRIFA was 16.6 (22.1 at 30 September 2018) with one recordable injury during the quarter.

Production

Gruyere (50%)

Mining

A total of 2.1 Mt of ore was mined during the quarter at an average grade of 0.88 g/t gold for 59,662 contained ounces. Ore and waste mining movement remain ahead of schedule. The ore mined year to date is lower than the life of mine average reserve grade, which is in line with the lower modelled grades at the upper levels of the Resource within the regolith profile. The ore mined to date also includes low grade material mined outside of the Resource and has been stockpiled.

At the end of the quarter, ore stockpiles totalled 3.2 Mt and included 0.9 Mt at 1.18 g/t Run‐Of‐Mine (ROM) scheduled for processing during the December 2019 quarter. Low grade material totalling 2.2 Mt at 0.62 g/t gold, has been stockpiled and includes additional ore tonnages identified via grade control definition adjacent to and contiguous to resource modelled ore blocks.

Processing

Commissioning of the process plant continued during the quarter following the first gold pour in late June 2019. In early August, following the commissioning of the ball mill, the project commenced ramp‐up which is forecast to take six to seven months to reach full production.

Total ore processed during the quarter was 1.1 Mt at a mill head grade of 1.00 g/t, achieving a gold recovery of 94.4% for 29,107 ounces of gold produced. The process plant was initially commissioned on lower grade ore to avoid potential recovery losses. Recovery on the oxide and transition ore processed has been better than expected during the plant commissioning and ramp‐up period. The mill head grade reconciles closely to the mine estimated grade derived from grade control drilling.

Plant availability progressively improved during the quarter, averaging 82.4% for September at an average throughput rate of 1,014 tonnes per hour (tph) for 501,964 tonnes milled, to be on track to complete ramp‐up to feasibility study utilisation levels of 91.3% and nameplate capacity of 915 tph for transitional ore and 855 tph for fresh rock in the March quarter 2020.

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	Operation (100% basis)*	Unit	Sep 2019 Qtr	YTD
	Ore Mined	kt	2,111	4,570
	Waste Mined	kt	3,119	10,468
	Grade	g/t	0.88	0.85
	Ore milled	kt	1,111	1,227
	Head Grade	g/t	1.00	0.97
	Recovery	%	94.4	93.8
	Gold Produced	oz	29,107	29,107

*Cost performance not reported pre‐Commercial Production. Gold produced excludes gold in circuit.

Sales (50% share)*	Unit	Sep 2019 Qtr	YTD
Gold Sold	oz	12,461	12,461
Average Sales price	A$/oz	2,052	2,052
*Gold Road's 50% share

Production Guidance

As throughput rates and gold recoveries exceeded Gruyere's ramp‐up expectations, the Gruyere JV now anticipates gold production for calendar 2019 to be at the upper end of guidance of 75,000 to 100,000 ounces (100% basis)2. AISC for the December 2019 quarter is guided between A$1,050 and A$1,150, slightly higher than forecast life‐of‐mine average (A$1,025 per ounce3 ) as production continues to ramp‐up to full nameplate capacity. This AISC range is in line with guidance released in February 20194.

Gruyere Development

The Gruyere Joint Venture announced that commercial production was attained at the end of September 20195.

Gold Road is pleased with the development of Gruyere, with outstanding safety performance by the construction team which achieved more than 3 million construction hours without a lost time injury and slightly lower than forecast development costs. The quality of the construction, and early performance of the circuit through the commissioning and early ramp up phase are establishing Gruyere as a world‐class operation.

Gruyere JV Exploration

A 9,000 metre drilling programme is near complete aiming to extend the Indicated Resource below the current Ore Reserve pit design (Figure 1) and delineate the limits of mineralisation at the southern and northern extremities of the Gruyere Porphyry. Deepening the limits of the Indicated Resource will allow for future strategic evaluation and mine optimisation. Assays so far received confirm the excellent continuity of the Gruyere mineralisation as observed in open pit mining exposures and previous infill drilling programmes, providing confidence that the Indicated Resource will extend below the limits of the current Ore Reserve pit design. It is anticipated that drilling will be finalised in October 2019 and the Mineral Resource will be updated in early 2020.

• ASX announcement dated 19 June 2019

• ASX announcement dated 6 December 2018
  4 ASX announcement dated 15 February 2019
  5 ASX announcement dated 9 October 2019

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Significant widths at higher than the average resource grade have been intersected in the northern portion of the Resource, including 36 metres at 2.44 g/t Au from 282.8 metres, 45 metres at 1.80 g/t Au from 270.1 metres (19GY0342) and 73 metres at 1.80 g/t Au from 288.6 metres (19GY0344). These results are all located outside of the current Ore Reserve pit design and may result in future growth of the Mineral Resource and Ore Reserve in this area.

Figure 1: South to north longitudinal projection (looking west, Gruyere Grid) of the Gruyere Mine illustrating resource categories and December 2018 Mineral Resource pit shell, final Ore Reserve pit design and planned drill intersections (Red bars)

Financial and Corporate

Financial Update

As at 30 September 2019, the Company had cash of $65.3 million and bullion valued at A$5.8 million, with A$80.4 million of debt drawn from the A$150 million Finance Facilities, equating to net debt of A$9.3 million. The net debt position at the end of the quarter is better than anticipated as a result of lower Gruyere expenditures and higher revenue.

During the quarter Gold Road sold6 12,461 ounces of gold at an average price of A$2,052 per ounce for revenue of A$25.6 million.

Gruyere expenditure incurred during the quarter was A$9.6 million on development (excluding sustaining capital, pre‐commercial production costs net of revenue received), with no JV support costs7 incurred following the first gold production at the end the June 2019 quarter (100% basis). Gold Road's share of Gruyere capital costs included the development cost estimated at A$284 million and JV support costs estimated at A$17.5 million, to give a total A$301.5 million. The total capital cost (including JV support costs), subject to final payment claims, is now forecast between A$294 million to A$298 million, slightly below the previous total capital cost estimate.

The Company's share of net payments for the development of Gruyere (including sustaining capital, pre‐ commercial production costs net of revenue received) for the quarter was A$3.1 million.

• Prior to commercial production revenue is accounted as a credit to development capital

• These costs include JV management fees, amortisation of gas and power station capital costs and native title and community relations costs up to 'first gold'. Refer ASX announcement dated 7 November 2016

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Debt Facilities

In the September 2019 quarter, Gold Road drew down an additional A$15 million on the A$150 million Finance Facilities to fund Gruyere development and commissioning activities, bringing the total draw down to approximately A$80 million. With commercial production now attained, the Company does not anticipate drawing additional debt to fund Gruyere's development. Gold Road anticipates commencing repayments on the A$50 million working capital facility next quarter, with mandatory surplus cash flow sweeps under that facility.

Current Hedging Position

During the quarter, Gold Road delivered 4,700 ounces into its hedge book at an average price of A$1,812 per ounce.

Gold Road's existing gold forward sales contracts as at 30 September 2019 are summarised in the table below.

Calendar Year	Quarter		Quarterly		Weighted Average
				Volume		Price
				Ounces		A$/oz
2019		31 December	13,600		1,780
Sub‐Total		13,600
2020		31 March	14,400		1,791
		30 June	13,200		1,806
		30 September	10,400		1,800
		31 December		10,800		1,800
Sub‐Total				48,800
2021		31 March	10,800		1,810
		30 June	10,300		1,823
		30 September	9,800		1,836
		31 December	8,800		1,851
Sub‐Total		39,700
2022		31 March	8,700		1,911
		30 June	8,700		1,977
		30 September	5,800		2,023
Sub‐Total			23,200
Total		125,300		1,837

Share Capital

As at 30 September 2019, the Company had 878,884,548 ordinary fully paid shares on issue and 6,049,850 performance rights granted with various vesting and expiration dates.

On 22 August 2019, Gold Fields sold 87,117,909 Gold Road shares at a price of A$1.45 for total gross proceeds of A$126.3 million. The share sale was conducted via an underwritten bookbuild. Gold Fields informed the Company that the sale is part of its broader debt reduction strategy and capitalises on significant gains from its original share investments in Gold Road in 20178. Gold Fields stated the sale follows positive investor feedback on other recent disposals and advised that it remains fully committed to its 50% interest in, and operatorship of, the Gruyere Joint Venture and it has no intention of exiting that interest. The share sale by Gold Fields does not impact on the standstill arrangement with Gold Road, in which Gold Fields and its affiliate must not acquire a relevant interest in any securities of Gold Road greater than 10% unless agreed in writing by Gold Road.

On 20 September 2019, Gold Road joined the ASX200 Index and the Van Eck Vectors Junior Gold Miners Exchange Traded Fund (GDXJ). These are great achievements and reflect significant share price and liquidity growth through 2019 as the Company transitions from explorer to producer.

• ASX announcement dated 23 August 2019

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