Gold Road Resources (ASX:GOR)

February 11, 2016 | Price: $0.43

Growth Portfolio

Overview: Gold Road Resources Ltd (“Gold Road”, “the Company”) is an Australian minerals company focused on gold exploration in Western Australia. Its primary asset is the Gruyere Project near Laverton, WA, where the Pre-Feasibility Study (PFS) has determined a Maiden Ore Reserve totaling 81.1million tonnes (Mt) grading 1.24 g/t for 3.2million oz of gold. Gruyere is part of a regional exploration license holding covering 5000km2. Our latest advice was a ‘speculative buy’ recommendation in May 2015.

Catalysts: With the Pre-Feasibility Study complete and ore reserves determined, Gold Road is now targeting completion of the Feasibility Study (FS) and project execution. The PFS indicates a financially viable project generating in excess of A$1billion in free-cash-flow over 12-year project life. The Gruyere project has the potential to attract interest from established miners.

Hurdles: Gold Road is reliant on external capital and requires further funding to develop a mining operation in the Yarmana district. There is no guarantee that the bankable feasibility study or future mining operations can replicate or achieve the parameters outlined in the PFS, nor that gold prices won’t continue to trend lower in the long-term.

Investment View: Gold Road offers speculative exposure to the domestic gold mining industry. We are attracted to the magnitude of its land package in the Yarmana region, existing reserves at Gruyere, and track record of low discovery costs. Funding requirements and the volatile gold price are principal risks. Following the completion of the PFS and Maiden Ore Reserves declare, we expect takeover interest to build up and reiterate our ‘spec buy’ recommendation.

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S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this report is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

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