Gold Road Resources' Growth Trajectory Could Reward Investors

• Gold Road Resources is a mid-tier Australian gold producer with a tier 1 mine and exploration projects across Australia.
• The company hold's a 50:50 JV with Gold Fields on the Gruyere gold mine, a low-cost, long-life asset
• Gold Road Resources has 9,000 square kilometres of exploration tenure across Western Australia and Queensland.

About Gold Road Resources

Gold Road Resources is an Australian gold mining company with a 50% interest in the Gruyere gold mine, one of Australia's largest new gold projects developed in recent years. Led by an experienced management team, Gold Road offers investors exposure to a low-cost, long-life gold operation with significant upside potential through exploration and development.

Strong Production Growth Since Gruyere Startup

The Gruyere mine, located in Western Australia, achieved its first gold production in 2019 after being developed as a 50/50 joint venture between Gold Road and South African mining major Gold Fields. Gruyere has experienced rising production since its startup, with Gold Road's attributable gold output climbing from 75koz in 2019 to 103koz in 2020 and guidance of 160-175koz for 2022.

This production growth has been driven by increased mill throughput and reliability as well as higher grades from the open pit reserve. Milling rates have increased steadily, reaching a record 892kt processed in May 2022 which demonstrates the potential 10Mtpa capacity of the plant. Gold grades are also set to improve as mining transitions to the higher-grade stages of the open pit.

Low-Cost Production Generates Strong Cash Flow

With all-in sustaining costs (AISC) of A$1,540-1,660/oz, Gruyere is one of the lower-cost gold producers in Australia. This has allowed the mine to generate strong cash flow even during the inflationary environment of 2022, with A$75 million of attributable free cash flow in the first half of 2022 despite some operational issues.

Gold Road's unhedged gold production means it is fully exposed to high Australian dollar gold prices, which have averaged around A$2,500/oz over the past year. This provides significant cash flow to support growth projects and new discoveries.

Advancing Pipeline of Organic Growth Opportunities

Beyond optimizing production at Gruyere itself, Gold Road has outlined a pipeline of incremental production sources to grow its gold output over the coming years.

The Golden Highway deposit, located near Gruyere, has the potential to provide additional mill feed from 2026 onwards based on recent drilling results. Conversion of its 300koz mineral resource to reserves is underway.

Underground mining potential also exists beneath the Gruyere open pit, with 3.5Moz in underground resources outlined. Studies are progressing to assess the economics of underground development.

Renewable Energy Investment to Maintain Low Costs

Gold Road has invested in renewable energy at Gruyere, including a 13MW solar farm, as part of its focus on reducing carbon emissions and maintaining its cost competitiveness. With energy prices forecast to keep rising, further renewable energy investments are being assessed which can provide long-term price certainty.

Well-Funded to Advance Growth Strategy

Thanks to the strong cash flow from Gruyere, Gold Road maintains a robust balance sheet with A$157 million in cash and equivalents at June 2022. This provides funding capacity to advance studies on its organic growth pipeline as well as flexibility to consider acquisitions.

Recent strategic investments have expanded Gold Road's project pipeline, including a 17% stake in De Grey Mining and its large Mallina Gold Project.

Experienced Leadership Team with Proven Track Record

Gold Road is led by a highly experienced management team with strong credentials in gold discovery, development and production. Key leaders including CEO Duncan Gibbs have track records of building value through discovery of world-class deposits like Tropicana.

The team's exploration expertise is being applied across Gold Road's expanded project portfolio in Western Australia and the Northern Territory, providing further upside potential.

ESG Performance Earns Industry Recognition

Gold Road aims to be a sustainability leader, reflected by its ranking within the top 12% of companies in the Dow Jones Australia Sustainability Index. The company has been recognized for leading gender diversity, community engagement and transparency. ISO certification of its health, safety and environmental systems provides assurance to stakeholders that Gold Road meets global best practice standards.

The Investment Thesis for Gold Road Resources

The company's strong balance sheet, experienced management team and focus on sustainability provide further reasons for confidence in its ability to deliver growth and shareholder returns in the years ahead. For investors seeking Australian gold exposure, Gold Road is worth consideration based on its current growth trajectory.

Leverage to rising gold prices

Gold prices have increased substantially over the past couple years, rising from around $1,200/oz in 2018 to over $1,800/oz today. With most analysts forecasting sustained higher gold prices due to inflationary pressures and global uncertainty, Gold Road offers leveraged exposure as an unhedged producer. If gold prices continue to rise, it will directly benefit Gold Road's cash flow and valuation.

Significant exploration potential

In addition to its current reserve base, Gold Road controls highly prospective ground in Western Australia with potential for further discoveries. Success in exploration could provide organic growth beyond its current pipeline. The company's strategic investments also give it exposure to exploration upside at De Grey's Mallina project.

Strong cash flow generation

The low costs at Gruyere ensure strong operating cash flow generation, even if gold prices decline from current levels. The project is now fully funded and capitalized, allowing operating cash flows to be directed to dividends, growth projects or acquisitions.

Growth pipeline nearing development

Near-mine growth opportunities at Golden Highway and Gruyere Underground could boost Gold Road's production within the next 3-5 years. The capital requirements are relatively modest and the timeline is short compared to developing a new greenfields project.

Potential appeal as a takeover target

Quality Australian gold assets like Gruyere could be attractive M&A targets for mid-tier or major gold producers looking to replace reserves. Gold Road's moderate valuation and strong free cash flow generation may make it appealing as a bolt-on acquisition.

Gold Road Resources offers investors exposure to growing Australian gold production, longer-term growth potential, and leverage to the gold price - underpinned by a strong financial position. For investors bullish on the gold sector, it may represent an attractive investment opportunity.