The Gold Road Resources Ltd (ASX: GOR) share price is currently one of the best performers in the ASX 200 (ASX: XJO) after its June 2021 update.
Gold Road’s June quarter
The gold miner said that its gold mine Gruyere produced 53,132 ounces of gold during the quarter. This was down from the March quarter of 66,213 ounces.
It said that it delivered its June 2021 quarter production at an all-in sustaining cost (AISC) of A$1,659 per ounce, which was slightly better than the quarterly guidance provided on 28 June 2021 of A$1,675 to A$1,800 per ounce. However, this was still an increase on the March quarter AISC of A$1,386 per ounce.
Lower production ounces and higher costs quarter on quarter were because of a torn conveyor belt and subsequent delays restarting the ball mill as announced on 28 June 2021.
Gold Road Resources said that progress continues towards an updated Gruyere Ore Reserve, which is expected in the second half of 2021.
Another update from the company was that during the quarter, it commenced a 12,000m deep diamond drilling programme beneath the Gruyere Open Pit. It said the first two holds have returned encouraging results of 105 metres at 1.12 grams of gold per tonne (g/t) from 1,026 metres and 47 metres at 1.61 g/t from 957 metres. In summary, it seems there might be some more gold. The programme is now progressing to phase two.
Financial update
Gold sales totalled 28,425 ounces at an average priece of A$2,145 per ounce and included delivery of 10,300 ounces at an average price of A$1,823 per ounce into forward sales contracts. Gold ore and bullion on hand at 30 June 2021 was 1,800 ounces.
Free cashflow was negative $3.9 million for the quarter, down from positive $15.1 million in the March quarter. Cashflow was lower because of the lower production and an income tax payment of $7.4 million, as well as accrued royalties ($3.5 million).
It finished with cash of $128.6 million (down from $149.8 million in March) and no drawn debt.
Summary thoughts on Gold Road
Gold miners can suffer disruptions to work, just like any other commodity business. Gold Road is expecting that 2021 calendar year gold production will be at the lower end of its guidance of 260,000 to 300,000 ounces, with an AISC of between $1,325 and 1,475 per ounce.
The business is looking for growth, but for now it’s not one of my preferred miners in the industry. That would be Evolution Mining Ltd (ASX: EVN).
