Gold Road Resources has announced cost increases and schedule delays due to recent heavy rainfall at its half-owned Gruyere gold project near Laverton.
Gold Road Resources has announced cost increases and schedule delays due to recent heavy rainfall at its half-owned Gruyere gold project near Laverton.
With an initial cost estimate of $532 million, and a range of $506 million to $585 million, the company said today that the capital cost of the project will now move towards the upper end of the forecast range.
Gold Road said first gold is likely in the early stages of the June quarter next year, rather than the end of the March quarter, as previously forecasted.
“As previously reported, the Yamarna region in which Gruyere is located experienced abnormally high rainfall during the March quarter, leading to localised flooding and access constraints to certain parts of the project area,” Gold Road said in a statement to the ASX.
“The impact of the weather has been incorporated into the schedule, and an additional allowance has been factored in for possible further weather interruptions in the 2018-2019 summer.”
The project is a 50:50 joint venture between Gold Road Resources and Gold Fields.
Under the terms of the JV agreement, Gold Fields is responsible for the first $50.7 million of project cost overrun which excludes scope change or force majeure costs.
Flooding during February forced bulk earthworks contractor MACA to temporarily halt work on the tailings storage facility and the upgrade of the Mt Shenton‐Yamarna Road, and defer works on the Yeo borefield.
In March, MACA was able to continue work on the road upgrade and commence work on the previously inaccessible sections of the Yeo borefield.
Gold Road said at the end of the March quarter, overall project engineering was 84 per cent complete and overall construction was 44 per cent complete, with EPC (process plant and associated infrastructure) construction 17 per cent complete.
Mining services contractor Downer EDI has a small number of staff currently on-site and will begin mobilising a larger contingent to site in the December quarter in preparation for mining activities.
“This abnormally wet weather was mentioned in our recent exploration activities report,” Gold Road managing director Ian Murray said.
“We are working with Gold Fields, as manager, and the project team to ensure that the cost increases in the provisional definitive estimate are minimised.
“Gold Road is well positioned to manage these unexpected delays and cost increases with the Gold Fields cost overrun guarantee and the company having recently signed documents for the new finance facilities.”
