1 July 2016
Gold Road Resources (GOR)
Adding value around the Gruyere stalwart
Recommendation
Hold
(Buy)Price
$0.655
Valuation
$0.76
(previously $0.65)Risk
Speculative
Analyst Peter Arden 613 9235 1833 Authorisation David Coates 612 8224 2887 Expected Return Capital growth 16% Dividend yield 0%
Total expected return 16%
Company Data & Ratios
Enterprise value $483m
Market cap $569m
Issued capital 868.9m
Free float 78%
Avg. daily val. (52wk) $0.7m
12 month price range $0.29 - $0.665
GICS sector
Materials
Price Performance
BELL POTTER SECURITIES LIMITED DISCLAIMER AND DISCLOSURES: THIS REPORT MUST BE READ WITH THE DISCLAIMER AND
Page 1 (1m) (3m) (12m) Price (A$) 0.57 0.45 0.40 Absolute (%) 16.7 48.4 66.9 Rel market (%) 19.2 44.7 69.4
Speculative
See key risks on page 13. Speculativesecurities may not be suitable for Retail clients.
Looking hard around Gruyere to maximise its standout value
Having discovered the large Gruyere gold deposit within its extensive Yamarna Gold Project in WA, and with ongoing success from its regional exploration of priority targets that continue to be actively explored, GOR is now also directing its attention to the area around Gruyere. With Gruyere set to become a large and highly profitable gold operation, subject to a positive development outcome, the company wants to maximise the value of the new highly efficient gold processing infrastructure being planned for the Gruyere deposit. Initial follow-up exploration on the Dorothy Hills Trend has yielded positive results at the YAM14 Prospect.Gruyere Feasibility Study on track for end 2016 completion
The Gruyere Gold Project continues to progress well along the Feasibility Study (FS) path. Lower capital and operating costs mean conditions are currently very favourable for new mine development. As the FS proceeds towards its expected completion by the end of 2016, GOR continues to clear the necessary regulatory hurdles, having signed an historic native title agreement, been granted a mining licence and been advised of the EPA’s decision on the assessment path, which indicates that the EPA regards the Gruyere Project proposal as an environmentally acceptable one.
Investment thesis – Hold (Spec.) Valn $0.76/sh (prev $0.65, Buy)
GOR continues to demonstrate tangible momentum as it progresses with the Gruyere FS while moving along the regulatory pathway and expanding the scope of exploration on its large Yamarna tenements. As the FS progresses, the potentially attractive economics of the large and still growing deposit become even more evident while the case for other similar but smaller deposits, that could maximise the strategic benefits of the Gruyere infrastructure, is enhanced by new exploration results. GOR is very well funded to complete the FS and order long lead time items of equipment. After incorporating the impact of the recent capital raisings and regional exploration successes plus a further equity raising, we have lifted our 12-month forward valuation by 17% to $0.76 per share. Recommendation moved to Hold (Speculative) from Speculative Buy on expected total return considerations.
Absolute Price Earnings Forecasts
Year end June 2015a 2016e 2017e 2018e
Revenues (A$m) 0.0 0.0 0.0 0.0
EBITDA (A$m) (4.0) (18.3) (17.8) (19.7)
NPAT (reported) (A$m) (3.9) (18.5) (18.2) (20.7)
NPAT (adjusted) (A$m) (3.9) (18.5) (18.2) (20.7)
EPS (adjusted) (¢ps) (0.7) (2.4) (1.9) (2.1) EPS growth (%) na na na na PER (x) na na na na FCF Yield (%) na na na na EV/EBITDA (x) na na na na Dividend (¢ps) - - - - Yield (%) - - - - Franking (%) - - - - ROE (%) na na na na
SOURCE: IRESS SOURCE: BELL POTTER SECURITIES ESTIMATES
$0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70
Jul 14 Jan 15 Jul 15 Jan 16 Jul 16 GOR S&P 300 Rebased
Gold Road Resources (GOR)
1 July 2016
Gruyere Resource at 6.2Moz, still growing
As Gruyere resource grows, it’s most unlikely to be on its own
As GOR continues to follow up its earlier discoveries of gold mineralisation at all of its camp-scale targets tested so far in its large tenement holding in the Yamarna Greenstone Belt of the Eastern Goldfields of WA, it is demonstrating the potential for multiple significant shallow deposits of gold mineralisation to occur (Figure 1). The recent upgrade of the large Gruyere Mineral Resource to 5.6Mozs at 1.36g/t shows it is the dominant component in the company’s recently updated Mineral Resource Estimate of 6.2Mozs at 1.30g/t, which has all been done to the latest JORC 2012 standard for its Yamarna area (Table 1 over page). As the size of the Gruyere Resource continues to be increased, it also becomes clearer that, as has been seen in all other major goldfields around the world, the prospectivity of the surrounding district is enhanced because very large gold deposits don’t just occur on their own. The EIS drill hole completed late in 2015 proved the continuity of the Gruyere gold mineralisation to a vertical depth of at least 1,100m and pointed to the potential for the Mineral Resource at Gruyere to be significantly larger than 6.1Moz. While Gruyere may well be the largest single deposit in the Yamarna district, gold and mineral deposit distributions around the world strongly indicate the likelihood that there will be multiple other smaller, but still potentially very significant (multi-million ounce), gold deposits in the Yamarna district.
Figure 1 - Map of GOR's Yamarna Gold Project tenements
SOURCE: GOLD ROAD RESOURCES LTD
Underground resource potential indicated by conceptual mining study
A conceptual level study in late 2015 into the potential for underground mining at Gruyere by AMC Consultants showed that there is potential to generate an Underground Mineral Resource to complement the current Mineral Resource, which is constrained within a A$1,600 per ounce optimised pit shell (Figure 1). GOR has indicated that it will consider further assessment of the higher grade mineralisation trend at depth in Gruyere (which is interpreted to be best developed approximately 450m to the south of the EIS hole) in the future.
Gold Road Resources (GOR)
1 July 2016
Increased Gruyere Resource takes Yamarna total to 6.6Moz
The increase in the Gruyere Resource to 6.2Moz lifts the total Mineral Resource in GOR’s Yamarna area to 6.6Moz after inclusion of the Mineral Resources for Central Bore and the Attila Trend (Table 1).
Table 1 - Updated Gruyere and overall Yamarna Mineral Resource Estimates as at April 2016
SOURCE: GOLD ROAD RESOURCES LTD
Gruyere Ore Reserve also has scope to be increased
Having been estimated on the available data in February 2016, the Gruyere Ore Reserve (Table 2) is regarded as having been done quite conservatively given that it was based on a gold price of A$1,400 per ounce (approximately US$1,022 per ounce at $US/$A exchange rate of 0.73). The current gold price is about 27% higher than that in A$ terms at around A$1,780 per ounce (US$1,320 per ounce at $US/$A exchange rate of 0.74). Since the announcement of that Ore Reserve estimate, GOR has updated the Mineral Resource estimate for Gruyere (Table 1), resulting in the Measured Resource component increasing from 1.6Mt at 1.4g/t gold to 13.9Mt at 1.2g/t gold while the Indicated Resource component was little changed at around 92Mt at 1.3g/t gold, which points to the potential for a significant increase in the Ore Reserve for Gruyere in due course.
Table 2 - Ore Reserve estimate for Gruyere at February 2016
SOURCE: GOLD ROAD RESOURCES LTD
FS progresses for end 2016 completion as permitting advances well
The Gruyere FS continues to progress well according to GOR and it remains on track to be completed towards the end of 2016. Besides taking advantage of the very favourable conditions for developing a new mining and mineral processing operation because the downturn in the resources sector has made for improved availability and costings for
Gold Road Resources (GOR)
1 July 2016
mining services, the company is doing its work on the FS to a very high standard and has completed metallurgical test work and geotechnical drilling. We understand the FS will include actual quotes and potentially firm contracts for major components of the development such as the engineering and procurement work and the earthworks, which should increase the confidence in the project and have multiple benefits including for the purposes of budgeting and for project financing. The FS may result in enhanced project economics as some costings and technical outcomes from it are likely to be improvements on those assumed in the PFS, reflecting more favourable outcomes since the PFS. While the FS has been progressing, GOR has also been advancing steadily with obtaining all the necessary approvals for the Project. In May 2016 the company signed an important and historic native title agreement for the Project and the Gruyere mining lease was granted. Recently GOR has been advised of the decision of the Environment Protection Authority of Western Australia (EPA) for the Project assessment path to be done as an Assessment on Proponent Information. The EPA decision indicates that the EPA regards the Gruyere Project proposal as an environmentally acceptable one. GOR has already invested a very significant effort in the preparation of environmental background information, which we believe has been vindicated by that EPA decision.Well based logic of exploring around Gruyere for more
With the development of the major new processing plant underway at Gruyere, we believe it makes good sense for GOR to more thoroughly explore for additional near surface mineralisation to supplement the early years of ore production from Gruyere in the immediate vicinity of the proposed plant site. The company is stepping up exploration of the Dorothy Hills trend, which involves revisiting and extending the exploration drilling at a number of prospects such as YAM14, Monteith and Toto (Figure 2), where it had discovered relatively small but significant occurrences of gold mineralisation at shallow depths that were incompletely evaluated previously. We do not envisage any change being made to the proposed 7.5 million tonnes per annum processing plant that is planned for the Gruyere Project or to the early years of the Gruyere mine plan (when ore is planned to be mined virtually from surface) but we would expect that the if the company can locate several deposits of 1 - 3 million tonnes (Mt) each of relatively soft, shallow gold mineralisation grading around 1.5g/t to 3g/t gold, it could progressively process that material with, or partly to replace, material from deeper parts of the Gruyere open pit.
Figure 2 - Map of southern extent of Dorothy Hills Shear Zone from Gruyere to Monteith
Gold Road Resources (GOR)
1 July 2016
High grade gold mineralisation intersected at YAM14 in discrete shear zone
We previously estimated that the results of the limited amount of RC drilling at the YAM14 Prospect indicated that it may contain a very small tonnage of supergene and primary shear hosted mineralisation (less than 10koz) at up to about 2g/t, which is at a shallow depth. Recent initial diamond drilling at YAM14, which is located 9km south of the Gruyere Project, has intersected primary mineralisation consisting of 3.05m at 4.89g/t gold from
138m down hole in hole 16DHDD0002 (Figure 2). This mineralisation, which occurs over
a strike length of 850m (Figure 3), is hosted in a discrete shear zone (Figure 4) and contains some visible gold. The mineralisation remains open along strike and down dip.
Figure 3 - Magnetic image of YAM14 with plan of drill intercepts Figure 4 – Cross section of YAM14 Prospect gold mineralisation
SOURCE: GOLD ROAD RESOURCES LTD SOURCE: GOLD ROAD RESOURCES LTD
Stratigraphic diamond hole at Monteith to help understand Dorothy Hills Shear Zone
Diamond drilling was also carried out recently at the Monteith Prospect (Figure 2). A stratigraphic hole (16DHDD0003) was drilled to provide geological and structural information about the Dorothy Hills Shear Zone as a means of advancing the company’s understanding of this important regional structural feature. Results are pending.
Gold Road Resources (GOR)
1 July 2016
Successful regional exploration continues
Regional drilling continues to demonstrate widespread gold
GOR continues its active regional exploration that continues to demonstrate widespread gold mineralisation in drilling programs at its high priority (camp scale) target areas. Besides recent near Gruyere on the Dorothy Hills Trend (referred to earlier), exploration drilling programs have been directed at the Wanderrie target and Santana Prospect in the North Yamarna area and at the Smokebush and Toppin Hill targets and Yaffler Prospect in the South Yamarna Joint Venture (SYJV) area (Figure 5) with Sumitomo (50% each).
Figure 5 – Map showing GOR’s Yamarna tenements and the main regional (camp scale) targets
Gold Road Resources (GOR)
1 July 2016
High grade gold intersected at the Wanderrie Target
Bedrock gold mineralisation has been identified by follow-up drilling of at least four prospects within the Wanderrie camp scale target in the North Yamarna area (100% GOR, Figures 5 and 6). Targeted diamond and reverse circulation (RC) drilling to follow up and test a previously defined six kilometre long aircore gold anomaly (that contained a best intersection of 7m averaging 9.55g/t from 44m downhole) has identified the bedrock gold mineralisation, which occurs over a five kilometre strike length. The follow-up drilling program comprised six widely spaced diamond drill holes and 13 RC drill holes. Besides testing the aircore anomalies, the diamond drilling also provided important initial geological information relating to the primary structure and stratigraphy of the Wanderrie Target.
Best bedrock gold result at Santana Prospect
The best intersection from the follow-up drilling was 1.97m averaging 6.50g/t from 181m downhole in hole 16TADD0002 at the Santana Prospect (Figure 7). That intersection occurs in the middle of three drill traverses designed to test the gold anomalism at Santana. The intersection occurred within a broad zone of gold mineralisation comprising an intersection of 21.35m averaging 0.75g/t gold from 180m downhole.
Vai Prospect sits on a second, separate and parallel mineralisation trend
A second diamond drill hole that tested the aircore anomalism at the Vai prospect (Figure 6) intersected 1.0m at 2.16g/t gold from 128m downhole in a shear zone in hole 16WDDD0002. That intersection is about 700m to the east of the trend of the main Wanderrie mineralisation and it represents a completely separate and parallel mineralised structure.
Figure 6 - Sun River – Wanderrie prospects, North Yamarna area Figure 7 – Cross section through the Santana Prospect
Gold Road Resources (GOR)
1 July 2016
Further exploration planned to test gold mineralisation at multiple prospects
Overall, gold mineralisation grading over 0.5g/t was identified in 11 of the 19 holes drilled in the latest program that tested aircore gold anomalism at the Santana, Blackmore, Hendrix, Vai and Satriani Prospects (Figure 6). Those results are regarded as a very successful first pass test of the anomalism. Other significant intersections, which were in RC drill holes, included 1.0m at 1.79g/t gold from 117m downhole at the Blackmore Prospect; 1.0m at 1.11g/t gold from 61m downhole at the Santana Prospect; and 1.0m at 1.01g/t gold from 92m downhole at the Satriani Prospect. Following analysis and interpretation of the results, further exploration will be planned to test the better bedrock gold intersections at the Santana, Satriani, Blackmore and Vai Prospects.
Aircore drilling results still pending for southern part of the Wanderrie anomaly
Results are also pending for an aircore drilling program of 108 holes that was conducted in April 2016 along the previously untested five kilometre long southern strike extent of the Wanderrie anomaly. Samples from that drilling have been submitted to the laboratory and for analysis and results are expected to be available in the September 2016 quarter. The geology in the Wanderrie Target is regarded as an excellent host for gold mineralisation, which GOR regards as analogous to the major gold district of Kundana.
Widespread gold mineralisation in more areas in SYJV area
Gold mineralisation extended at Toppin Hill, Yaffler and Smokebush Prospects
Recent drilling programs at several prospects in the SYJV area such as Toppin Hill, Yaffler and Smokebush (Figures 5, 8 and 9) have confirmed and extended the gold mineralisation previously identified by earlier stage exploration there.
Figure 8 – Toppin Hill gold anomalies on magnetics image Figure 9 – Gold anomalies at Yaffler and Smokebush Prospects
Gold Road Resources (GOR)
1 July 2016
Widespread gold in bedrock from RC drilling at Toppin Hill and Yaffler Prospects
The Toppin Hill Prospect occurs within the Breelya-Toppin Hill camp scale target area and the Yaffler Prospect occurs in the Riviera-Smokebush camp scale target area (Figure 5). RC drilling at Toppin Hill and Yaffler has intersected widespread anomalous gold mineralisation in bedrock in several areas.
A total of 12 RC holes were drilled at Toppin Hill on traverses 400m to 1,800m north of previous RC drilling to test the northern extensions of significant mineralisation identified in 2014 – 2015. The recent drilling results confirmed the continuation of the mineralisation system with five holes intersecting over 1.0g/t gold. Two styles of gold mineralisation were identified – mafic-hosted mineralisation consisting of narrow, discrete shear zones in basalt that gave a best assay of 4m at 1.24g/t gold from 149m downhole; and wider zones of lower grade mineralisation in dacite-hosted shear zones with trace disseminated pyrite and a best result of 36m at 0.52g/t gold from 56m downhole. These latest results increase the strike length of bedrock gold mineralisation containing over 1.0g/t gold to over 3km. A total of 19 RC holes was drilled at Yaffler to test for primary bedrock gold mineralisation below an extensive saprolite gold anomaly defined by GOR’s previous aircore drilling. Gold mineralisation grading over 0.1g/t was intersected in 12 holes with a best result of 4m at 0.61g/t gold from 134m downhole. The RC drilling identified a sequence of interlayered mafic sediments and intrusions, which included quartz dolerite units similar to the Smokebush Dolerite that is located 2km to the east (Figure 9). Anomalous gold is generally hosted within the dolerites and is associated with shearing, quartz veining and pyrite-dominant sulphide alteration. The potential for a significant gold system underlying such a large gold anomaly is enhanced by the recent first stage of RC drilling. Analysis of 1m samples from re-sampling of anomalous 4m composite samples from both prospects is underway as part of the process to identify specific targets for follow-up drilling.
Extensional RC drilling adds to mineralisation at Smokebush Dolerite Target
Assaying of 1m samples from the re-sampling of anomalous (greater than 0.1g/t gold) 4m composites from the most recent drilling program at the Smokebush dolerite target has defined a coherent hangingwall structure to the main mineralised shear (Figure 10). A best result from the re-sampling of 1.0m at 4.01g/t gold from 95m downhole provides further encouragement that the remaining 1.5km strike length of dolerite to the north remains prospective for high grade gold mineralisation. A high resolution ground magnetic survey on a 10m line spacing has been completed over the length of the prospective dolerite and the data is currently being interpreted to identify features that may indicate the presence of high grade gold-bearing shoots that will be subject to further exploration drilling.
Figure 10 – Cross section of drilling at the Smokebush dolerite
Gold Road Resources (GOR)
1 July 2016
Extremely well funded for advancing on all fronts
Following the successful retail and institutional capital raisings that saw the company raise a total of $74m and introduced another three institutional investors to the GOR register, the company is in an extremely strong financial position to advance all of its activities. This includes maintaining a high level of exploration; purchase of long lead time capital items for Gruyere; completion of early works and front end engineering and design (FEED) for Gruyere; and corporate expenditure as follows:
$32m for purchase of long lead time capital items for the Gruyere Project;
$18m for completion of early works and FEED for the Gruyere Project;
$5m for additional drill-out of the Gruyere open pit extension;
$5m for continued drilling programs in the company’s Yamarna tenements; and
$14m for transaction costs, corporate expenditure and working capital.
As a result of the recent capital raisings and assuming GOR met its planned expenditure for the June 2016 quarter, which was budgeted at $10.6m, we estimate that GOR will have cash of about $87m at June 30 2016 with no debt.
Multiple funding options for Gruyere under consideration
As the Gruyere FS progresses, GOR has also been actively considering multiple funding options for the development and operation of the Gruyere Gold Project. These considerations have included traditional debt and equity project financing structures and the company has also held discussions on a potential mutually acceptable and recommended joint venture proposal with a number of leading Australian and overseas mining companies, which had been granted due diligence access to facilitate such discussions. GOR has stated that it has not received any formal joint venture proposal from any party and the company cannot provide any assurance as to whether or not any joint venture proposal will eventuate. Given the size and quality of the Gruyere deposit, the dearth of similar such deposits globally, and the strong financial position of GOR, we believe the company is in a very strong position to determine the optimum funding arrangements for Gruyere and does not need to rush such a decision.
We still assume conventional debt and equity funding for Gruyere development
We still assume that GOR will seek to retain 100% of the Gruyere Project and to fund it by a mixture of conventional debt and equity. We assume that the company will raise about a further $80m (net) in equity in FY17 (see Table 3 and discussion on page 12) and a total of about $330m of debt progressively over FY17 and FY18.
Gold price reacts after Brexit and likely extended deferral of
any US rate rise
The gold price has reacted to the instability in financial markets resulting from Great Britain’s decision to leave the European Union (Brexit decision). Gold rose to its highest level (US$1,358 per ounce) in over two years immediately following the Brexit decision and has since settled at around US$1,320 per ounce. This gold price is equivalent to around A$1,780 per ounce, which is within 2% of the all-time nominal peak A$ gold price in September 2011. The current strength in the world gold price relates to the widely held view that the instability in global financial markets from the Brexit decision now means that the US Federal Reserve is likely to defer any interest rate rises for an extended time.
Gold Road Resources (GOR)
1 July 2016
Valuations reflect progress on all fronts
We have increased our equity adjusted 12-month forward valuation for GOR by 17% to $0.76 per share from the net impact of: The effects of the recent $74m capital raising;
Revised valuation estimates for Gruyere based on the increased Resource and recent PFS data;
Supportive regional exploration results at Dorothy Hills Trend, Wanderrie, and Smokebush Targets and various prospects within them that sees us increase our valuations for GOR’s interests in the regional exploration projects to $115m; and
The dilution from the assumption of the estimated remaining additional equity to be raised in FY17 as part of the project financing arrangements for Gruyere.
Our valuations (Table 4) are equity adjusted to take into consideration the likely impact of additional equity that we have assumed that GOR raises in FY17. While the company has quite appropriately been considering various options for funding development of the Gruyere Project, we are still assuming that GOR will seek to retain 100% of the Project and to fund it by a combination of conventional debt and equity. We assume that the company will raise about a further $80m (net) in equity in FY17 (Table 3) and a total of about $330m of debt that is drawn down progressively over FY17 and FY18.
We have conservatively assumed that the FY17 raising will be done at the same share price as the current share price, even though we would actually expect the development studies (such as the PFS and subsequent FS) on Gruyere will enhance the value of the project and that there will be further positive exploration results from the active follow-up programs on the multiple regional exploration discoveries. A successfully de-risked project provides the potential for a higher share price over time.
Table 3 - Forecast additional equity to be raised in FY17
Year to June 2017e
Net amount to be raised1
($ m) 80.0 Share price assumed ($) 0.655 Number of shares to be issued (m) 130.6 Total number of shares on issue at year end(m) 999.5
SOURCE: BELL POTTER SECURITIES NOTE 1. AFTER CAPITAL RAISING COSTS
Our Gruyere/Central Bore/Attila valuations are largely based on Net Present Value (NPV) methodology. Our valuations for GOR’s other exploration assets at Yamarna are based on our risked estimates, which are related to target size, style, and geological characteristics.
Table 4 - Summary valuations for GOR
Assets
Now +12 Months + 24 Months +36 Months
$ M1 $/share1,2 $ M1 $/share1,2 $ M1 $/share1,2 $ M1 $/share1,2
Yamarna Gold Project – Gruyere, Central Bore and Attila (NPV) 637 0.63 650 0.65 751 0.75 737 0.73 - Other wholly-owned areas 69 0.07 69 0.07 69 0.07 69 0.07 - SYJV areas3 46 0.05 46 0.05 46 0.05 46 0.05 Total exploration assets 752 0.75 765 0.76 865 0.86 851 0.85
Corporate (18) (0.02) (18) (0.02) (18) (0.02) (16) (0.02) Net Cash4 87 0.09 16 0.02 (259) (0.26) (280) (0.28)
TOTAL ASSETS 820 0.81 762 0.76 589 0.58 555 0.55
SOURCE: BELL POTTER SECURITIES ESTIMATES NOTES: 1. MAY NOT ADD DUE TO ROUNDING AND DILUTION EFFECTS
2. BASED ON EQUITY ADJUSTED, FULLY DILUTED CAPITAL OF 1,008.8M SHARES 3. SYJV = SOUTH YAMARNA JOINT VENTURE. SUMITOMO HAS 50% INTEREST
4. BASED ON ESTIMATED CASH BALANCE AT 30 JUNE 2016 FOR NOW AND THEN INCLUDES FORECAST EQUITY TO BE RAISED IN FY17 AND DEBT TO BE PROGRESSIVELY DRAWN DOWN FROM FY17
Gold Road Resources (GOR)
1 July 2016
Capital Structure, board and management
changes, and major shareholders
Capital Structure
GOR currently has 868.9m shares and 4.6m employee options on issue, all of which are currently in the money. There are also 4.7m performance rights on issue (Table 5).
Table 5 - GOR capital structure
Issued shares m 868.9 Share price $/sh 0.655 Market cap $m 569.1 Net cash1 $m 86.5 EV (undiluted) $m 482.6
Options (in the money) m 4.6 Performance rights m 4.7 Issued shares (diluted) m 878.2 Market cap (diluted) $m 575.2 Net cash + options $m 87.7
EV (diluted) $m 487.6
SOURCE: COMPANY DATA AND BELL POTTER SECURITIES ESTIMATES NOTE 1. ESTIMATE BASED ON CASH AT 31/3/2016 LESS GOR’S FORECAST QUARTERLY EXPENDITURE ALONG WITH THE PROCEEDS OF RECENT CAPITAL RAISING
Board and management changes
GOR has announced changes to its board of directors to become effective from 1 July 2016 and that a number of management changes have been made. Highly respected company director, Tim Netscher, who is currently a Non-executive Director of the company is to become Non-executive Chairman. Upon Mr Netscher’s appointment, incumbent Executive Chairman, Ian Murray, is to become Managing Director and Chief Executive Officer. The responsibilities of Executive Director, Justin Osborne, have been expanded to include exploration, business development, investor relations and technical services. Development Manager, Sim Lau, has been appointed to the newly created position of Project Director – Gruyere Gold Project. Tim Manners has been appointed General Manager – Finance. The changes at the board level reflect the transition of GOR from an explorer to mine developer but they still see the company maintaining its focus on the development of Gruyere and on regional exploration, which are the key drivers of value for the business.
Major shareholders
GOR has three substantial shareholders (Table 6) and the company reports that it has also seen three new overseas institutions join its register following the recent capital raising.
Table 6 - GOR major shareholders
Major shareholders million shares % of total
Resource Capital Fund VI LP 67.5 8 Platypus Asset Management 61.7 7 Van Eck Fund 40.1 5 Directors and Management 24.3 3 Other (free float) 675.2 78
Total 868.9 100
Gold Road Resources (GOR)
1 July 2016
Gold Road Resources Ltd (GOR)
Company description
GOR owns 100% of the northern part of the very large Yamarna Gold Project, which covers about 4,900km2 on the eastern edge of the Yilgarn Craton in Western Australia, which it has been exploring since 2006. GOR is the Manager of the Project and it has a joint venture with Sumitomo Metal Mining, which has earned 50% in the southern part of the Project (SYJV) after expenditure of $8M since July 2013. GOR has a total gold resource base at Yamarna (all in 100% owned Northern part) of 6.6Moz at an average grade of 1.34g/t, which is made up of 6.2Moz at 1.30g/t at Gruyere, 0.2Moz at 9.0g/t at Central Bore and 0.3Moz at 1.59g/t at the Attila Trend. GOR is actively exploring the six high priority gold camp-sized regional targets across the Project.
Investment Thesis – Speculative Buy, Valuation $0.76/sh (prev. $0.65/sh)
GOR continues to demonstrate tangible momentum as it progresses with the Gruyere FS while moving along the regulatory pathway and expanding the scope of exploration on its large Yamarna tenements. As the FS progresses, the potentially attractive economics of the large and still growing deposit become even more evident while the case for other similar but smaller deposits, that could maximise the strategic benefits of the Gruyere infrastructure, is enhanced by new exploration results. GOR is very well funded to complete the FS and order long lead time items of equipment. After incorporating the impact of the recent capital raisings and regional exploration successes plus a further equity raising, we have lifted our 12-month forward valuation by 17% to $0.76 per share. Recommendation moved to Hold (Speculative) from Speculative Buy on expected total return considerations.
Valuation
Our valuation of GOR is based on a risked sum-of-the-parts DCF valuation for the Gruyere, Central Bore and Attila Trend resources (using a discount rate of 10%) plus an estimated valuation for GOR’s other various exploration prospects in its large Yamarna Gold Project, which includes 100% of the North Yamarna area and 50% in the SYJV.
Risks
The key risks for resources investments include, but are not limited to:
Gold price volatility: The relatively liquid nature of gold makes it subject to wide fluctuations in price, particularly during more difficult economic times or major world events. Associated with gold price volatility are potentially different gold price and foreign exchange rate outcomes to our forecasts.
Lack of exploration success: The difficulty of exploring in the Yamarna district is related to the fact that the region has variable sand cover that overlies a variable but generally thin Permian sandstone sequence, which sits on the Archaean bedrock that hosts the gold mineralisation. This means that there is little or no outcrop and further complexity comes from the nature of the Archaean bedrock, which has suffered variable alteration and weathering and may contain greater than expected geological complexities that may be difficult to resolve without extensive drilling programs and may inhibit the definition of adequate resources and reserves.
Gold Road Resources (GOR)
1 July 2016
Lack of funding: Exploration companies generally do not have a source of revenue and so they require access to funding to enable them to carry out adequate exploration and related development activities in order to continue to develop their operations.
Metallurgical issues: Notwithstanding that preliminary and more detailed metallurgical test work has consistently given very positive outcomes with encouragingly very high gold recovery results from gravity and conventional CIL processing test work, subsequent identification of adverse metallurgical characteristics may result from more detailed metallurgical investigations that could lead to the need for more complicated and expensive processing requirements.
Regulatory and social licence approvals: GOR is making steady progress along the permitting path for Gruyere. While there are currently no indications it will have any difficulties completing the necessary regulatory and social licence approvals processes to enable a suitable mining operation to be established, prolonged delays can result from adverse regulatory issues and from the need to progress the related negotiations in a very careful and sensitive manner. Various stages of the regulatory approvals process can sometimes suffer unforeseen delays related to changes in personnel involved or from the need to resolve differences in interpretations. There may be some tenements in which the company has an interest or may acquire an interest in future which may contain areas over which legitimate common law native title rights of Aboriginal Australians exist. If native title rights do exist, the ability of the company to gain access to such tenements (through obtaining the consent of any relevant landowner) or to progress from the exploration phase to the development and mining phases of operations may be affected.
Weather impacts: Cost overruns or operational delays can be caused by severe weather events because site access may be restricted due to the unsealed nature of roads and airstrips in the remote regions in which the company operates.
Inappropriate acquisitions: The acquisition of other assets can divert management effort from the current focus and may yield inadequate returns.
Gold Road Resources (GOR)
1 July 2016
PROFIT AND LOSS FINANCIAL RATIOS
Year ending 30 June Unit 2013a 2014e 2015e 2016e 2017e Year ending 30 June Unit 2013a 2014e 2015e 2016e 2017e
Revenue A$m 0.4 2.9 0.7 1.0 1.2 NPAT (adjusted) A$m (10.9) (1.5) (15.8) (9.9) (10.4)
Expenses A$m (23.7) (7.3) (23.0) (14.8) (10.1) Adjusted EPS (Basic) A¢/shr (5.5) (0.3) (2.8) (1.6) (1.4)
EBITDA A$m (23.3) (4.4) (22.3) (13.9) (8.9) EPS grow th % na na na na na
Depreciation and amortisation A$m (0.4) (0.5) (0.5) (0.5) (0.2) PER x na na na na na
EBIT A$m (23.7) (4.8) (22.8) (14.4) (9.1) DPS A¢/shr - - - -
-Net interest expense A$m 0.4 2.7 0.2 0.3 (5.8) Franking % - - - -
-PBT A$m (23.3) (2.1) (22.6) (14.1) (14.9) Yield % - - - -
-Tax (Expense) Benefit A$m 0.6 0.6 6.8 4.2 4.5 Free Cash Flow (FCF) A$m (1.9) (0.7) (4.8) (5.7) (298.2)
NPAT (reported) A$m (22.7) (1.5) (15.8) (9.9) (10.4) FCF / share A¢/shr (0.5) (0.1) (0.9) (0.9) (40.8)
Adjustments (after-tax) A$m 11.8 Price / FCF x na na na na na
NPAT (adjusted) A$m (10.9) (1.5) (15.8) (9.9) (10.4) FCF yield % na na na na na
EV / EBITDA x (8.3) (43.9) (8.7) (13.9) (21.7)
PROFIT AND LOSS (INTERIM) EV / EBIT x (8.1) (39.8) (8.5) (13.4) (21.2)
Half year ending Unit Dec-12a Jun-13a Dec-13a Jun-14a Dec-13e EBITDA margin % na na na na na
Revenue A$m 0.2 0.2 0.2 2.7 0.4 EBIT margin % na na na na na
Expenses A$m (1.6) (22.1) (1.5) (5.8) (13.1) Return on assets % na na na na na
EBITDA A$m (1.4) (21.9) (1.3) (3.1) (12.7) Return on equity % na na na na na
Depreciation and amortisation A$m (0.2) (0.2) (0.2) (0.2) (0.2) LIQUIDITY & LEVERAGE
EBIT A$m (1.6) (22.1) (1.6) (3.3) (12.9) Net Debt (Cash) A$m (9) (19) (4) (6) 246
Net interest expense A$m 0.2 0.2 0.2 2.5 Net Debt / Equity % -35% -58% -24% -19% 312%
PBT A$m (1.3) (22.0) (1.3) (0.8) (12.9) Net Debt / (Net Debt + Equity) % -53% -136% -32% -23% 76%
Tax (Expense) Benefit A$m (1.3) 1.9 2.3 (1.6) 3.2 Net Debt / Total Assets % -33% -48% -28% -28% 81%
NPAT (reported) A$m (2.6) (20.1) 1.0 (2.5) (9.7) Net Debt / EBITDA % 38% 442% 20% 43% -2764%
Adjustments (after-tax) A$m EBITDA / Interest x na na na na na
NPAT (adjusted) A$m (2.6) (20.1) 1.0 (2.5) (9.7)
ASSUMPTIONS - Prices
CASH FLOW Year ending 30 June Unit 2014e 2015e 2016e 2017e LT real
Year ending 30 June Unit 2013a 2014e 2015e 2016e 2017e GOLD
OPERATING CASH FLOW Spot US$/oz 1,295 1,208 1,175 1,245 1,150
Receipts A$m 0.7 2.7 0.5 0.6 0.8 Hedged A$/oz
Payments A$m (2.9) (3.6) (5.5) (6.6) (4.2) Realised A$/oz
Tax A$m CURRENCY
Net interest A$m 0.4 0.2 0.2 0.3 (5.8) USD / AUD US$/A$ 0.92 0.88 0.85 0.85 0.85
Other A$m 0.0 0.0 0.0 0.0 0.0
Operating cash flow A$m (1.9) (0.7) (4.8) (5.7) (9.2) RESOURCE BASE - Equity Share
INVESTING CASH FLOW Deposit Unit Measured Indicated Inferred Total g/t Au
Cap Ex and exploration A$m (9.0) 0.0 (10.0) (12.4) (292.0) Gruyere kozs 62 1,515 2,260 3,837 1.2
Other A$m (0.1) 1.8 (0.3) (0.4) (0.5) Central Bore kozs 37 119 45 201 7.7
Investing cash flow A$m (9.1) 1.8 (10.3) (12.8) (292.5) Atilla Trend kozs 389 373 298 1,060 1.3
FINANCING CASH FLOW Total kozs 488 2,007 2,603 5,098 1.3
Net equity proceeds A$m 7.0 9.4 0.0 20.0 50.0
Debt proceeds A$m 0.0 0.0 0.0 0.0 249.0 CAPITAL STRUCTURE
Debt repayments A$m 0.0 0.0 0.0 0.0 0.0 Issued Securities Unit
Dividends A$m 0.0 0.0 0.0 0.0 0.0 Ordinary shares m 594.9
Other A$m 0.0 0.0 0.0 0.0 0.0 Unlisted options (14.7m) and performance rights (4.7m) m 19.5
Financing cash flow A$m 7.0 9.4 20.0 299.0 Total Securities m 614.3
Change in cash A$m (4.0) 10.5 (15.1) 1.5 (2.7)
Major Shareholders
Balance Sheet ($M) M (%)
Year ending 30 June Unit 2013a 2014e 2015e 2016e 2017e J P Morgan Nominees Australia Ltd 37.4 6.3% 16/09/14
ASSETS Van Eck Associates Corporation 30.9 5.2% 18/02/14
Cash and short term investments A$m 8.9 19.4 4.4 5.9 3.2 Resource Capital Funds VI LP 30.9 5.2% 14/11/14 Accounts receivable A$m 0.1 0.7 1.3 5.0 14.3
Inventory A$m 0.0 0.0 0.0 5.6 7.1 VALUATION
Property, Plant & Equipment A$m 1.5 2.8 4.1 5.4 7.2 Exploration & development A$m 16.6 16.6 4.6 (2.3) 271.0
Other A$m 0.1 0.6 1.2 1.7 2.3 Exploration Assets - Gruyere/CB/A 202 0.25 459 0.56
Total assets A$m 27.1 40.1 15.5 21.2 305.0 - Other Yamarna 71 0.09 153 0.19
LIABILITIES - Other 1 0.00 3 0.00
Accounts payable A$m 1.3 1.6 1.8 6.6 14.4 - Total 324 0.39 705 0.85
Borrow ings A$m 0.0 0.0 0.0 0.0 249.0 Net Financials2
75 0.09 75 0.09
Other A$m 0.1 0.1 0.1 0.1 3.1 Total 399 0.49 780 0.95
Total liabilities A$m 1.4 1.8 2.0 6.8 266.5
SHAREHOLDERS EQUITY Current price $0.355
Share capital A$m 60.8 70.9 70.9 92.4 146.2 Recommendation Buy
Reserves A$m 3.1 2.5 2.5 4.2 8.4 Risk rating Speculative
Retained earnings A$m (38.2) (39.7) (55.5) (65.4) (75.8) Valuation $0.49
Total equity A$m 25.7 33.7 17.9 31.2 78.8
Weighted average shares m 415 479 555 625 730 Notes: 1. On an equity diluted basis assuming share issues in FY16 and FY17 resulting in total securities of 828.9m; may not add because of rounding and dilution effects. 2. Includes cash, corporate costs and assumed additional equity.
Date of change
Base Case Upside Case
$ M $ pe r s ha re1 $ M $ pe r s ha re1
Gold Road Resources
as at 1 July 2016
Recommendation
Hold, Speculative
Price
$0.655
Valuation
$0.76
Table 7 - Financial summary
SOURCE: BELL POTTER SECURITIES ESTIMATES
PROFIT AND LOSS FINANCIAL RATIOS
Year ending 30 June Unit 2014a 2015a 2016e 2017e 2018e Year ending 30 June Unit 2014a 2015a 2016e 2017e 2018e
Revenue A$m 0.0 0.0 0.0 0.0 0.0 NPAT (adjusted) A$m 0.4 (3.9) (18.5) (18.2) (20.7)
Expenses A$m (2.5) (4.0) (18.3) (17.8) (19.7) Adjusted EPS (Basic) A¢/shr 0.1 (0.7) (2.4) (1.9) (2.1)
EBITDA A$m (2.5) (4.0) (18.3) (17.8) (19.7) EPS grow th % na na na na na
Depreciation and amortisation A$m (0.4) (0.5) (0.5) (0.7) (1.1) PER x na na na na na
EBIT A$m (2.9) (4.4) (18.8) (18.5) (20.8) DPS A¢/shr - - - -
-Net interest expense A$m 0.3 0.6 0.3 0.4 0.1 Franking % - - - -
-PBT A$m (2.6) (3.9) (18.5) (18.2) (20.7) Yield % - - - -
-Tax (Expense) Benefit A$m 3.0 - - 0.0 0.0 Free Cash Flow (FCF) A$m (8.9) (19.3) (35.4) (150.3) (237.4)
NPAT (reported) A$m 0.4 (3.9) (18.5) (18.2) (20.7) FCF / share A¢/shr (1.9) (3.3) (4.6) (16.1) (23.8)
Adjustments (after-tax) A$m Price / FCF x na na na na na
NPAT (adjusted) A$m 0.4 (3.9) (18.5) (18.2) (20.7) FCF yield % na na na na na
EV / EBITDA x na na na na na
PROFIT AND LOSS (INTERIM) EV / EBIT x na na na na na
Half year ending Unit Dec-13a Jun-14a Dec-14a Jun-15a Dec-15e EBITDA margin % na na na na na
Revenue A$m 0.0 0.0 0.0 0.0 0.0 EBIT margin % na na na na na
Expenses A$m (1.3) (1.1) (2.0) (2.0) (7.3) Return on assets % 1% na na na na
EBITDA A$m (1.3) (1.1) (2.0) (2.0) (7.3) Return on equity % 1% na na na na
Depreciation and amortisation A$m (0.2) (0.2) (0.2) (0.2) (0.2) LIQUIDITY & LEVERAGE
EBIT A$m (1.6) (1.3) (2.2) (2.2) (7.5) Net Debt (Cash) A$m (10) (50) (87) (16) 259
Net interest expense A$m 0.2 0.1 0.3 0.3 0.1 Net Debt / Equity % na na na na 138%
PBT A$m (1.3) (1.2) (1.9) (1.9) (7.4) Net Debt / (Net Debt + Equity) % na na na na 58%
Tax (Expense) Benefit A$m 2.3 0.7 Net Debt / Total Assets % na na na na 47%
NPAT (reported) A$m 1.0 (0.5) (1.9) (1.9) (7.4) Net Debt / EBITDA % na na na na na
Adjustments (after-tax) A$m EBITDA / Interest x na na na na na
NPAT (adjusted) A$m 1.0 (0.5) (1.9) (1.9) (7.4)
ASSUMPTIONS - Prices
CASH FLOW Year ending 30 June Unit 2014a 2015a 2016e 2017e LT real
Year ending 30 June Unit 2014a 2015a 2016e 2017e 2018e GOLD
OPERATING CASH FLOW Spot US$/oz 1,295 1,224 1,200 1,250 1,214
Receipts A$m 3.4 0.4 0.5 0.6 0.8 Hedged A$/oz
Payments A$m (2.6) (3.3) (6.0) (8.3) (9.5) Realised A$/oz
Tax A$m CURRENCY
Net interest A$m 0.3 0.5 0.6 0.8 0.6 USD / AUD US$/A$ 0.92 0.83 0.73 0.70 0.75
Other A$m 0.0 0.0 0.0 0.0 0.0
Operating cash flow A$m 1.2 (2.4) (4.9) (6.8) (8.2) RESOURCE BASE - Equity Share
INVESTING CASH FLOW Deposit Unit Measured Indicated Inferred Total g/t Au
Cap Ex and exploration A$m (10.0) (16.9) (30.5) (143.5) (229.3) Gruyere kozs 526 3,787 1,847 6,160 1.30
Other A$m 0.0 (0.1) (0.2) (0.3) (37.0) Central Bore kozs 37 116 31 183 9.00
Investing cash flow A$m (10.0) (17.0) (30.7) (143.8) (266.3) Atilla Trend kozs 42 189 40 270 1.59
FINANCING CASH FLOW Total kozs 604 4,092 1,918 6,613 1.34
Net equity proceeds A$m 9.6 59.5 72.1 80.0 0.0
Debt proceeds A$m 0.0 0.0 0.0 45.0 285.0 CAPITAL STRUCTURE
Debt repayments A$m 0.0 0.0 0.0 0.0 0.0 Issued Securities Unit
Dividends A$m 0.0 0.0 0.0 0.0 0.0 Ordinary shares m 868.9
Other A$m 0.0 0.0 0.0 0.0 0.0 Unlisted options (4.6m) and performance rights (4.7m) m 9.3
Financing cash flow A$m 9.6 59.5 72.1 125.0 285.0 Total Securities m 878.2
Change in cash A$m 0.8 40.1 36.5 (25.6) 10.6
Significant Shareholders
Balance Sheet ($M) M (%)
Year ending 30 June Unit 2014a 2015a 2016e 2017e 2018e Resource Capital Funds VI LP 67.5 7.8% 11/06/15
ASSETS Platypus Asset Management 61.7 7.1% 6/05/16
Cash and short term investments A$m 9.7 50.0 86.5 60.9 71.4 Van Eck Associates Corporation 40.1 4.6% 11/06/15 Accounts receivable A$m 0.4 0.5 0.5 0.5 0.5 Directors and management 24.3 2.8% various
Inventory A$m 0.0 0.0 5.6 7.1 8.6
Property, plant & equipment A$m 1.3 1.4 2.7 141.2 402.4 VALUATION
Exploration & development A$m 27.3 44.0 61.9 61.2 62.0 Now +12 m onths
Other A$m 0.1 0.3 1.1 1.1 1.1 $ m $ pe r s ha re1
Total assets A$m 38.8 96.1 158.3 272.0 546.2 Exploration - Gruyere/C. Bore/Attila 637 0.63 650 0.65 751 0.75
LIABILITIES - Other North Yamarna 70 0.07 70 0.07 70 0.07
Accounts payable A$m 2.4 3.7 8.5 15.3 22.2 - SYJV area 45 0.05 45 0.05 45 0.05 Borrow ings A$m 0.0 0.0 0.0 45.0 330.0 - Total 752 0.75 765 0.76 865 0.86
Other A$m 0.2 0.3 4.1 4.1 7.1 Corporate costs (18) (0.02) (18) (0.02) (18) (0.02)
Total liabilities A$m 2.6 4.0 12.6 64.4 359.3 Net financials2
87 0.08 16 0.02 (259) (0.26)
SHAREHOLDERS EQUITY Total 820 0.81 762 0.76 589 0.58
Share capital A$m 70.4 129.9 202.0 282.0 282.0
Reserves A$m 3.6 3.9 3.9 3.9 3.9 Notes: 1. On an equity diluted basis assuming a capital raising in FY17 resulting in total securities Retained earnings A$m (37.8) (41.7) (60.2) (78.3) (99.1) used for dilution of 1,008.8m; may not add because of rounding and dilution effects.
Total equity A$m 36.2 92.1 145.8 207.6 186.9 2. Includes cash, corporate costs and assumed additional equity and debt from FY17.
Weighted average shares m 472 579 777 934 1,000
+24 m onths
$ m $ pe r s ha re1 $ m $ pe r s ha re1
Gold Road Resources (GOR)
1 July 2016
Bell Potter Securities Limited
ACN 25 006 390 7721 Level 38, Aurora Place 88 Phillip Street, Sydney 2000
Telephone +61 2 9255 7200
www.bellpotter.com.au
Recommendation structure Buy: Expect >15% total return on a
12 month view. For stocks regarded as ‘Speculative’ a return of >30% is expected.
Hold: Expect total return between -5% and 15% on a 12 month view
Sell:Expect <-5% total return on a 12 month view
Speculative Investments are either start-up enterprises with nil or only prospective operations or recently commenced operations with only forecast cash flows, or companies that have commenced operations or have been in operation for some time but have only forecast cash flows and/or a stressed balance sheet. Such investments may carry an exceptionally high level of capital risk and volatility of returns. Research Team Staff Member TS Lim Industrials Sam Haddad John O’Shea Chris Savage Jonathan Snape Sam Byrnes John Hester Tanushree Jain Financials TS Lim Lafitani Sotiriou Resources Peter Arden David Coates Associates Hamish Murray Tim Piper Title/Sector Head of Research Industrials Industrials Industrials Industrials Industrials Healthcare Healthcare/Biotech Banks/Regionals Diversified Resources Resources Associate Analyst Associate Analyst Phone 612 8224 2810 612 8224 2819 613 9235 1633 612 8224 2835 613 9235 1601 612 8224 2886 612 8224 2871 612 8224 2849 612 8224 2810 613 9235 1668 613 9235 1833 613 9235 1782 613 9256 8761 612 8224 2825 @bellpotter.com.au tslim shaddad joshea csavage jsnape sbyrnes jhester tnjain tslim lsotiriou parden dcoates hmurray tpiper
The following may affect your legal rights. Important Disclaimer:
This document is a private communication to clients and is not intended for public circulation or for the use of any third party, without the prior approval of Bell Potter Securities Limited. In the USA and the UK this research is only for institutional investors. It is not for release, publication or distribution in whole or in part to any persons in the two specified countries. In Hong Kong this research is being distributed by Bell Potter Securities (HK) Limited which is licensed and regulated by the Securities and Futures Commission, Hong Kong. This is general investment advice only and does not constitute personal advice to any person. Because this document has been prepared without consideration of any specific client’s financial situation, particular needs and investment objectives (‘relevant personal circumstances’), a Bell Potter Securities Limited investment adviser (or the financial services licensee, or the representative of such licensee, who has provided you with this report by arraignment with Bell Potter Securities Limited) should be made aware of your relevant personal circumstances and consulted before any investment decision is made on the basis of this document.
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Bell Potter Securities Limited, its employees, consultants and its associates within the meaning of Chapter 7 of the Corporations Law may receive commissions, underwriting and management fees from transactions involving securities referred to in this document (which its representatives may directly share) and may from time to time hold interests in the securities referred to in this document.
Disclosure: Bell Potter Securities was a participant in the $39m placement in June 2015 for Gold Road Resources Ltd and received fees for that service.
Exploration Risk Warning:
The stocks of resource companies without revenue streams from product sales should always be regarded as speculative in character. Since most exploration companies fit this description, the speculative designation applies to all exploration stocks. The fact that the intellectual property base of an exploration company lies in science and is generally only accessible to the layman in a limited summary form adds further to the riskiness with which investments in exploration companies ought to be regarded. Stocks with ‘Speculative’ designation are prone to high volatility in share price movements. Exploration and regulatory risks are inherent in exploration stocks. Exploration companies engage in exploration programs that usually have multiple phases to them where positive results at some stages are not indicative of ultimate exploration success and even after exploration success, there is often insufficient economic justification to warrant development of an extractive operation and there is still significant risk that even a development project with favourable economic parameters and forecast outcomes may fail to achieve those outcomes. Investors are advised to be cognisant of these risks before buying such a stock including Gold Road Resources (of which a list of specific risks is highlighted within).
ANALYST CERTIFICATION:
Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers and were prepared in an independent manner; (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in the research report; and (3) the Analyst does hold an interest of 49,500 shares in Gold Road Resources Limited at the date of this report.
