Current Price
Target Price
$0.37
$0.60
Tuesday, 24 March 2015
Gold Road Resources Smoke signalsAnalysts | Patrick Chang | Matthew Keane
Ticker: GOR
Sector: Materials
Shares on Issue (m): 594.9
Market Cap ($m): 220.1
Cash Estimate ($m): 21.3
Enterprise Value ($m): 198.8
Quick ReadGold Road (GOR) released an intersection of 59m @ 3.0g/t (GOR estimated true width
~20m) from 127m from its RC drilling program at Smokebush Dolerite. This target sits within the Southern Yamarna JV (Sumitomo earning 50%). Although early stage and further drilling is required, the ore grade intersection validates regional prospectivity and the effectiveness of GOR's exploration approach. The stock is catalyst rich and well-
st
52 wk High/Low: $0.40 $0.11
funded (A$21m at 31
December). With ~5 rigs drilling at Gruyere and deposit remaining
12m Av Daily Vol (m):
Mineral Inventory (100% basis)
1.66
open, Argonaut anticipates Resource upgrades which could translate to boosted
production and AISC parameters in the upcoming PFS. Gruyere's potential scale, geometry, long life, and favourable metallurgical properties, combined with a low sovereign risk jurisdiction, will ensure the asset attracts market and corporate attention.
Event & Impact | PositiveAn impressive hit: A modest RC drilling program at the Smokebush Dolerite target, located within the Smokebush Camp Target (Sumitomo earning 50%) returned an impressive intersection of 59m @ 3.0g/t. Whilst early stage and further drilling required, the structure has been followed NS (on three lines) over a strike of 800m. Follow up
drilling has been planned to commence in April.
Directors:
Ian Murray Executive Chairman Justin Osborne Executive Director Russell Davis Non-Executive Director Martin Pyle Non-Executive Director Kevin Hart Company Secretary
Substantial Shareholders:
Van Eck 8.3% Minco 7.2% RCF 5.2%
Share Price Graph
Significant host: The mineralisation is hosted within sheared sulphide-lode structures within a differentiated dolerite. This geological setting is well understood and this type of rock hosts prolific multi-million ounce deposits in other better explored WA goldfields including Fimiston (Superpit), Jundee and St Ives. Given improved structural understanding following the RC program, the drilling orientation appears sub-optimal, and a program incorporating west-east drill holes could unveil a well mineralised dolerite unit featuring multiple parallel lodes.
Gruyere likely to be bigger and better: The ongoing drilling campaign (3 diamond, 2 RC rigs) at Gruyere is anticipated to expand the 3.8Moz deposit. This drilling program will test extensions of the mineralisation and target previously poorly drilled area. A successful program will support the case for a larger scale operation, further improving
the project's economics and appeal.
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Regional targets pipeline: The Company is cashed up (A$21m at 31st December) and newsflow rich with a high intensity exploration program underway. Targets to be tested in CY15 include; Sun River - Wanderrie, Pacific Dunes - Corkwood, Dorothy Hills and the southern Yamarna JV targets including Smokebush Dolerite.
RecommendationJan-14 Apr-14 Jul-14 Oct-14 Jan-15
SPECULATIVE BUY recommendation and A$0.60 target price maintained.
Corporate Advisers | Stockbroking & Research | Special Situations Financing | Page 1
A modest RC program has delivered…
…an impressive intersection of
59m @ 3.0g/t at Smokebush…
…hosted in a differentiated dolerite unit
Similar rock hosts multi-Moz deposits in other better explored WA belts…
…including the Superpit, Jundee and St Ives
Follow up drilling planned
Smoke signalsEarly success
A modest RC drilling program consisting of nine RC holes for a total of 1,380m at the Smokebush Dolerite target, located within the Smokebush Camp Target (Sumitomo earning 50%) returned an impressive intersection of 59m @ 3.0g/t from 127m (estimated true width ~20m), ending in mineralisation.
Whilst early stage and further drilling required, the structure has been followed NS (on three lines) over a strike of 800m.
A welcome host
The mineralisation is hosted within sheared sulphide-lode structures within a differentiated doleriate.
This geological setting is well understood and this type of rock hosts prolific multio- million ounce deposits in other better explored WA goldfields including Fimiston (Superpit), Jundee and St Ives.
Figure 1: Smokebush drilling, cross section, looking north
Source: GOR
Further drilling planned
Given improved structural orientation understanding, the early drilling orientation appears sub-optimal, and a program incorporating west-east drill holes could unveil a well mineralised dolerite unit featuring multiple parallel lodes.
A follow up RC drilling program has been planned to drill in the opposite direction in
April.
Corporate Advisers | Stockbroking & Research | Special Situations Financing | Page 2
Argonaut is bullish on the pipeline of prospects to be tested…
…throughput CY15…
…including Dorothy Hills trend, Sun
River - Wanderrie…
…and Riviera - Smokebush
Yamarna is a highly prospective belt capably of hosting Moz deposits
Uncovering YamarnaSolid exploration pipeline
Argonaut is bullish on the pipeline of prospects to be tested in CY15. Targets include:
Gruyere extensions (H1 CY15)
Dorothy Hills Regional, including Gruyere Corridor (H1, H2 CY15)
Sun River - Wanderrie (H1, H2 CY15)
Pacific Dunes - Corkwood (H2, CY15)
Riviera - Smokebush (Sumitomo JV, H1 CY15)
Metropolitan - Beefwood (Sumitomo JV, H1, H2 CY15)
Figure 2: Structural analogues to better explored belts
Source: GOR
Argonaut considers the Yamarna belt to be highly prospective due to the presence of all critical elements required for the formation of mesothermal lode deposits, including:
The Age - recent dating suggesting Yamarna is late Archean similar to other greenstone belts in Western Australia
The Rocks - sequence of metamorphosed ultramafic/mafic/intermediate and sedimentary rocks
The Mineralisation controls - presence of structural controls similar to other belts
Corporate Advisers | Stockbroking & Research | Special Situations Financing | Page 3
RESEARCH:
Ian Christie | Director, Industrial Research
+61 8 9224 6872 ichristie@argonaut.com
Philipp Kin | Analyst, Oil & Gas Research
+61 8 9224 6864 pkin@argonaut.com
Patrick Chang | Analyst, Metals & Mining Research
+61 8 9224 6835 pchang@argonaut.com
Emily Reilly | Analyst, Industrial Research
+61 8 9224 6809 ereilly@argonaut.com
Matthew Keane | Analyst, Metals & Mining Research
+61 8 9224 6869 mkeane@argonaut.com
Helen Lau | Analyst, Metals & Mining Research
+852 3557 4804 hlau@argonaut.com
INSTITUTIONAL SALES - PERTH:
Chris Wippl | Executive Director, Head of Sales & Research
+61 8 9224 6875 cwippl@argonaut.com
John Santul | Consultant, Sales & Research
+61 8 9224 6859 jsantul@argonaut.com
Troy Irvin | Director, Institutional Research Sales
+61 8 9224 6871 tirvin@argonaut.com
Bryan Johnson | Director, Institutional Research Sales
+61 8 9224 6834 bjohnson@argonaut.com
Damian Rooney | Senior Institutional Dealer
+61 8 9224 6862 drooney@argonaut.com
Ben Willoughby | Institutional Dealer
+61 8 9224 6876 bwilloughby@argonaut.com
INSTITUTIONAL SALES - HONG KONG:
Travis Smithson | Managing Director - Asia
+852 9832 0852 tsmithson@argonaut.com
Glen Gordon | Institutional Research Sales
+852 3557 4874 ggordon@argonaut.com
CORPORATE AND PRIVATE CLIENT SALES:
Glen Colgan | Executive Director, Desk Manager
+61 8 9224 6874 gcolgan@argonaut.com
Kevin Johnson | Executive Director, Corporate Stockbroking
+61 8 9224 6880 kjohnson@argonaut.com
James McGlew | Executive Director, Corporate Stockbroking
+61 8 9224 6866 jmcglew@argonaut.com
Geoff Barnesby-Johnson | Senior Dealer, Corporate Stockbroking
+61 8 9224 6854 bj@argonaut.com
Rob Healy | Dealer, Private Clients
+61 8 9224 6873, rhealy@argonaut.com
Cameron Prunster |Dealer, Private Clients
+61 8 9224 6853 cprunster@argonaut.com
James Massey |Dealer, Private Clients
+61 8 9224 6849 jmassey@argonaut.com
Mark Sandford |Dealer, Private Clients
+61 8 9224 6868 msandford@argonaut.com
Important Disclosure
Argonaut acted as Sole Lead Manager & Exclusive Bookrunner to the Placement that raised $23.3M in September
2014 and received fees commensurate with this service. Argonaut acted as Joint Lead Manager to the Placement that raised $10M in March 2014 and received fees commensurate with this service. Argonaut currently holds or controls
150,000 GOR shares.
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Corporate Advisers | Stockbroking & Research | Special Situations Financing | Page 4
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