Earnings call transcript: Gold Road Resources Q1 2025 earnings report

Gold Road Resources Ltd (GOR.AX) reported its first-quarter earnings for 2025, highlighting strong financial performance despite a slight decrease in gold production. The company’s stock saw a decline of 2.22% following the earnings release, reflecting investor concerns over production costs and future challenges. According to InvestingPro data, the company has delivered impressive returns with a 54.55% gain year-to-date and maintains a "GREAT" financial health score. Gold Road Resources remains optimistic about its growth prospects, with a focus on exploration and resource expansion.

Key Takeaways

• Gold production decreased to 71,226 ounces, affecting quarterly performance.
• The company’s balance sheet remains strong with no debt and significant cash reserves.
• Exploration programs continue to drive future growth potential.
• The Australian gold price remains robust, supporting the company’s market position.

Company Performance

Gold Road Resources demonstrated resilience in Q1 2025, with total gold sales and revenue reaching AUD 156 million. Despite a decrease in gold production compared to the previous quarter, the company maintained a solid financial position with operating cash flows of AUD 107 million and cash and equivalents totaling AUD 204 million. InvestingPro analysis shows the company’s strong financial foundation, with a healthy current ratio of 2.91 and revenue growth of 11.83% over the last twelve months. The stock is currently trading below its Fair Value, suggesting potential upside opportunity.

Financial Highlights

• Total gold sales and revenue: AUD 156 million
• Operating cash flows: AUD 107 million
• Free cash flow: AUD 34 million
• Debt-free balance sheet
• Listed investments valued at approximately AUD 1 billion

Outlook & Guidance

Gold Road Resources has set a full-year gold production guidance of 325,000 to 350,000 ounces, with an all-in sustaining cost guidance of AUD 2,004 to 2,600 per ounce. The company expects to recover lost production in 2025 and continues to invest in exploration and resource expansion. InvestingPro subscribers have access to 12 additional exclusive tips about Gold Road Resources, including detailed analysis of its growth prospects and financial health metrics. For comprehensive insights into the company’s valuation and future potential, check out the Pro Research Report, available as part of the InvestingPro subscription.

Executive Commentary

CEO Duncan Gibbs expressed confidence in the company’s future, stating, "We are now confident that the new management team at Goldfields has a solid recovery plan." He also highlighted the value of holding gold equities this year, emphasizing the company’s unhedged position in the gold market.

Risks and Challenges

• High all-in sustaining costs could pressure profit margins.
• Potential operational disruptions could impact production targets.
• Market volatility in gold prices may affect revenue.
• Regulatory changes could pose challenges to mining operations.
• Competition in the gold mining sector remains intense.

Q&A

During the earnings call, analysts questioned the company’s investment strategy in De Grey and its operational performance. The management addressed these concerns, emphasizing their strategic focus on exploration and resource expansion to drive future growth.

Full transcript - Gold Road Resources Ltd (GOR) Q1 2025:

Conference Operator: would now like to hand the conference over to Mr. Brian Massey, General Manager, Investor Relations and Corporate Development.

Please go ahead.

Brian Massey, General Manager, Investor Relations and Corporate Development, Gold Road: Thanks, Mel. Welcome, everyone, to our March 2025 quarterly results presentation. For those of you on the call who I’m yet to meet, as Mel said, I’m the General Manager, Corporate Development and Investor Relations at Gold Road. I recently joined, and I look forward to speaking with all of you in the near future if I haven’t already. On the presentation today, we’ll be referring to the quarterly results slide that can be viewed on the live webcast on our website or the ASX release.

Those on the webcast and on the phone are able to submit a question for us, which we’ll address at the end of the call. On the call today with me, I have Duncan Gibbs, Managing Director and Chief Executive Officer of Gold Road John Mullenby, Chief Financial Officer and Kealey Woodward, Joint Company Secretary. With that, I’ll now hand you over to Duncan to talk through our quarterly results. Over to you, Duncan.

Duncan Gibbs, Managing Director and Chief Executive Officer, Gold Road: Thank you, Brian, and welcome to Gold Road. Moving on to Slide four now for an overview before we get into the details of the presentation. Gruyere continues to operate safely, and there were no lost time injuries at Gold Road during the quarter. As previously flagged in the market, gold production at Gruyere was lower quarter on quarter at 71,226 ounces, with an all in sustaining cost of $2,658 per ounce. Operating cash flow was $107,000,000 and Gold Road’s free cash flow for the quarter was $34,000,000 Cash and equivalents ended the quarter stronger at $2.00 4,000,000 Despite the challenges of the quarter, we do expect Gruyere to recover the lost production over 2025, and full year guidance remains unchanged at 325,000 to 350,000 ounces for the full year.

As of market close, our list in investments, obviously, dominated by the DeGray position, was around $1,100,000,000 sorry, 1,000,000,000, and that will convert to Northern Star shares, of course, with the approval recent approval and completion of the scheme. Earlier this year, we announced the Gilmore pre feasibility study at Matenorum Reserve, a more recently outlined an exploration target of the 2025 drill program. We think the study demonstrates substantial value generated by our exploration efforts to date at Yamana with an NPV of $354,000,000 at a $4,300 gold price, which was where spot was at the time we drafted the announcement. As you’re all aware, gold has continued to rally with us strongly with an Aussie gold price of around about $5,220 this morning. During the quarter, we released results of the exploration target at Gruyere, and Gruyere joint venture is obviously committed to a very substantial 60,000 meter drill program.

We’re currently four and set to become five rigs with that program going at the moment and continuing into 2026. So we were really quite optimistic about delivering significant resource and reserve growth and non life extensions at Gruyere well beyond the open pit life that currently extends to 02/1932. Now looking at the quarter in a bit more detail. Total movement, including waste and ore mining, increased quarter on quarter to record highs with further improvements to the productivity of the mining fleet expected to continue through 2025. Mining head grades decreased quarter on quarter to just over one gram, which is below the reserve grade and largely reflected restrictive access to the higher grade northern portions of the pit, where we’ve recently completed RC and grade control drill programs and an infill diamond drill program.

Ore tonnages for milled for the quarter was down on prior quarters, reflecting the previously announced plant maintenance issues with the primary crusher and the mill conveyors. As well as impacting throughput, the crushing circuit issues resulted in processing lower than planned grades from coarse ore stockpiles, so the stockpiles created after the primary crusher and were substantially depleted during that phase of maintenance. The combination of lower throughput and head grade resulted in gold production of 21,256 ounces, in line with our market update on the March 18. Partially a result of the lower gold production, all in sustaining cost was higher at $2,658 per ounce. Higher capitalized and expensed mining costs of course reflect the higher mining volumes achieved during the quarter and sustaining CapEx is up quarter on quarter with the TSF raise and both in progress and both are tracking to plan.

Issues with the primary crusher are now resolved, actually record crusher throughput was achieved during March as we rebuilt stockpiles. We’ve made a number of operational improvements around the management of the CorSoil stockpiles during periods of the crusher maintenance. So despite the reduced plant foot performance in quarter one, we anticipate these operational changes will enable us to meet the total plant throughput for the year to be achieved, which gets us back in line with the guidance parameters provided in January. But despite the lower quarter oil production performance, we expect to maintain guidance within the 325,000 to three and fifty thousand ounces on 100% basis for the year and maintaining the all in sustaining cost guidance between AUD 2,004 to AUD 2,600 per ounce. I’ll now hand over to John to run us through the financial summary.

John Mullenby, Chief Financial Officer, Gold Road: Thanks, Duncan, and good morning, everyone. On your screens is the slide here with a chart providing a breakdown of the key elements and drivers of our cash flows for the March. The operating result and performance that Duncan has just walked you through translated into robust gold sales and revenue of AUD156 million and Provider Gold Road with AUD107 million of operating cash flows from Gruyere. Positively, as Gruyere bounced back strongly from the challenges earlier in the quarter, both the revenue and operating cash flows for the month of March alone

Hugo Nicolacchi, Analyst, Goldman Sachs: were 60%

John Mullenby, Chief Financial Officer, Gold Road: of their respective Q1 totals. This is a good proxy of how we expect the operating performance and cash flows from Gruyere to persist and grow throughout the remainder of 2025.

Paul Hissy, Analyst, Moelis: As you can see on

John Mullenby, Chief Financial Officer, Gold Road: the right hand side of the screen in the chart, we finished the quarter with NZD204 million of cash and equivalents on hand, which includes NZD17 million of unsold Dorian bullion that’s grown from NZD9 million from the December. This cash position also reflects AUD 40,000,000 of sustaining CapEx for the quarter, of which AUD 30,000,000 was capitalized stripping and the payment of a fully franked dividend of AUD 13,000,000 in respect of the year ended 2024. When we adjust for the growth in cash equivalents between December and March and this dividend, the free cash flow result was a very healthy $34,000,000 Lastly, onto our balance sheet where we continue to strengthen our financial position as we remain debt free, had close to ZAR1.1 billion liquid assets on hand at the end of the quarter, which includes our cash, cash equivalents and our listed investments. And I’m pleased to say that this trend has continued over the weeks following the March. And as of today, our investments alone are valued at just over $1,000,000,000 Thanks.

And back to you, Duncan.

Duncan Gibbs, Managing Director and Chief Executive Officer, Gold Road: Thanks, John. Drilling at so we’ve been released a number of announcements relating to Gruyere exploration and also Gilmore, which I’ll come to shortly. Drilling at Gruyere, of course, is targeting areas with below the open pit reserve, with results reported during the quarter as per this slide. And that’s largely in line with our expectations. A conceptual level study evaluating underground mining by sublevel caving, in other words, other methods was completed on behalf of the joint venture by SRK and finally delivered to Gold Road in early April.

The study underpins decisions to conduct further drilling. On a 50% basis, the exclusive mineral resource or simply the mineral resources less the open pit reserve is 2,200,000 ounces. So there’s already a lot of ounces sitting outside of the current mine plan that takes us out to 02/1932. In early April, we provided details of an underground exploration target of 1,000,000 to 1,500,000 ounces. We believe the underground mining has significant potential that could extend the life of Gruyere well beyond the open pit life, which, as I said, extends to 02/1932.

Drilling for this year is budgeted at $15,000,000 That’s part of a program of 60,000 meters estimated at $24,000,000 that is anticipated to extend into 2026. That drill program will prioritize infilling the top 400 meters of the area shown on the long section, largely the area that’s currently in inferred. And we’ll be aiming to convert that up to the indicated category, which obviously can translate into reserves with all of the technical studies and significant growth in the inferred resource, testing the exploration target down to the lower half of that slide. Moving on to the next slide. So we also updated the Gilmore prefeasibility study with details of the outcomes provided on this slide.

Following the completion of the study and the inherent value of the high grade resource, we’ve reviewed the ongoing exploration program and the potential exploration target and depth with the details of the drill program at Gilmore ore price also provided in early April ASX announcement. With that announcement, we’ve commenced the 30,000 meter or about $10,000,000 drill program at Diamond Drilling, which aims to extend the Gilmore resource at depth. We’ve also applied for a mining license at Gilmore with native title negotiations continuing during the quarter. As well as the drill program at Gilmore, drilling has continued at Renegade and Wobla, also within the Yamana area, with programs at Satriani and Irlstein planned for later in this year and designed to extend the resources across each of those prospects. In total, we have two diamond and one RC rigs operating across the Yamana tenants.

So in summary, plant issues at Gruyere are obviously disappointing with gold production well below plan. However, we are now confident that the new management team at Goldfields has a solid recovery plan and we’ll see higher throughput sustained in the future and for the rest of this year. That provides confidence in delivery of this year’s targeted plant throughput per our guidance parameters and, therefore, delivery of gold production within guidance and cost. On the organic growth front, there are multiple sources of encouragement, of course including, of course, the Gruyere underground study, which has the potential to extend the life of Gruyere well beyond the open pit. The maiden ore reserves at Yamana and obviously the Gilmore prefeasibility study that demonstrates the financial benefits of our exploration at Yamana.

And of course, the $1,000,000,000 position that we hold in De Grey, which is then converting to Northern Star shares now that the scheme has been completed and gone through the core process. And finally, of course, Goldrab maintains a strong and healthy balance sheet, is debt free and is unhedged. That brings our presentation to a close. I will now hand back the call to Mel. Thank you.

Conference Operator: Thank If you wish to ask a question via the webcast, please type your question into the ask a question box. We’ll now pause a moment to allow for any phone questioners to register. Thank you. We are showing no phone questions at this time. I’ll hand back for any webcast questions.

Oh, pardon me. Before we do that, your first phone question comes from Hugo Nicolacchi with Goldman Sachs.

Hugo Nicolacchi, Analyst, Goldman Sachs: Obviously, busy day with quarterlies. I just wanted to ask, firstly, around the De Grey state, just any updates in terms of where you’re on the thinking of holding that position versus an in specie distribution? And are there high level thoughts on what that would mean for the capital gains tax piece?

Duncan Gibbs, Managing Director and Chief Executive Officer, Gold Road: Look, I guess the scheme doesn’t close until next week. I guess I will point out, of course, that holding gold equities has been pretty high value this year. So actively doing nothing has been a pretty good strategy to date. There’s no advantage to us in starting to speculate if and when we may do something within that site. We don’t see how that’s advantageous to Gold Road shareholders or, for that matter, for Northern Star.

I will point out that an in species distribution, we have looked at that. It’s probably the least effective way that we consider in returning value to shareholders.

Hugo Nicolacchi, Analyst, Goldman Sachs: Thanks, Duncan. That’s clear. And then I guess just turning to the operations. Just getting more into the mining pace and just grades and things. You just elaborate a bit more in terms of the profile for the rest of this year and how you expect the mine material movements and grade to perform just given the first quarter?

Duncan Gibbs, Managing Director and Chief Executive Officer, Gold Road: Yes. So mining has stepped up quarter on quarter, and that’s a fairly consistent trend now over the last about nine months or more. We expect some further improvements there. Pace has really come in. There’s good operating cadence and incremental improvements, and we expect that trend to continue.

That will put us into the sort of low 70,000,000 tonne movement rates for the year is where we expect that to land, and that’s within our guidance parameters. Mill performance quarter ’1, obviously disappointing with the issues with the crusher and conveyors. We have learned, as I indicated, quite a bit around the management of CorSoil stockpiles. So we expect to be getting throughput rates up in the high 9,000,000 tonne per annum kind of rate through the rest of the year. We have got some additional maintenance and upgrades as we previously flagged in our guidance plan for quarter three.

But we’re tracking with those improvements that we’ve made. We believe that we are comfortably within the guidance parameters that we’ve put out.

Hugo Nicolacchi, Analyst, Goldman Sachs: Excellent. Thanks for that color. I’ll just squeeze one more in, if I can, just around the underground study and what the milestones from here are in terms of firming that up and what discussions, I guess, need to be had with the JV to prioritize or progress that in the near term just given a number of other discussions happening in the background?

Duncan Gibbs, Managing Director and Chief Executive Officer, Gold Road: Yes. So I mean, look, at the operational level, it’s very much business as usual. And we had a very good site trip up there last week, week before. So I mean the critical path on the underground, quite clearly, at the moment is drilling. And we need to get most of the drill program through this year done before we really get into the details of studies.

The JV is starting to formulate really all of the buildup of what would be a prefeasibility study, and we’ve got conversations around that planned over the coming weeks. And I envisage at this stage, we’ll probably go into pre feasibility kind of level studies, maybe late this year or certainly by early next year. And we obviously need to be building those up for the annual budgeting of business planning cycle for next year over the course of this year.

Hugo Nicolacchi, Analyst, Goldman Sachs: Great. Thanks for that. I’ll pass it on.

Conference Operator: Thank you. Your next question comes from Paul Hissy with Moelis. Please go ahead.

Paul Hissy, Analyst, Moelis: Thanks. I just want to circle back, I guess, a little bit on the obviously, the proposed deal or the mooted deal with Goldfields. And I appreciate, Duncan, there’ll be plenty that you won’t want to say or can’t say. But just curious, you put out the announcement with the exploration upside and flagging the potential of an underground operation. It feels like that’s probably had its chance now to be digested by investors.

There’s obviously been quite a bit of volatility in the market as well. Is there more you think you can do to help sell the merits of Gold Road or that’s kind of it and you’re really at the whims of I guess the market now in terms of the macro environment, gold price and these kind of things. I’m just keen to get a sense of where you’re at with this deal. And is there more you think you can do? Are you back in discussions with Goldfields?

Can you get any kind of update you can give us there on, I guess, your approach from here?

Duncan Gibbs, Managing Director and Chief Executive Officer, Gold Road: Yes. I mean I guess when that announcement was made public by Goldfields, the Board rejected it on value and on the basis of being very opportunistically timed. The market now has a much better sense as to why we saw it as being opportunistic, arrived just after or in the midst of production downgrades, which clearly our joint venture partner knew about that. And before the market started to understand the underground potential and a number of analysts, of course, including you, have started to put some value around the underground, which didn’t exist in the market. So I think now shareholders are a lot better informed.

We certainly do have some further news flow to put out around our exploration activities that we’re planning around Yamana. In terms of the proposal from Goldfields, I mean our view is these things are always best dealt with behind closed doors. And it’s really for Goldfields to reengage if they wish to.

Paul Hissy, Analyst, Moelis: Yes. And then just lastly, suppose the granularity around pulling apart the bid price or their prior offer, which you just expressed you thought to be undervalued. I mean, obviously the value of De Grey is a little bit more transparent now. I mean, obviously linked to Northern Star share price, but De Grey itself I mean De Grey itself over the last month or so is up 20% and you guys are notionally up 5%. So I guess that how does that change the value dynamic given that that one of the moving parts here is potentially known or at least better known?

Duncan Gibbs, Managing Director and Chief Executive Officer, Gold Road: Well, I think despite all the issues, if you really look at our share price performance space since early March relative to the rest of the market, we’re pretty much trading in line with that.

Paul Hissy, Analyst, Moelis: Yes. Yes. All right. Tough question. Appreciate the answer.

Thanks, Duncan.

Conference Operator: Thank you. There are no further phone questions at this time. I’ll now hand back for any webcast questions.

Duncan Gibbs, Managing Director and Chief Executive Officer, Gold Road: So I think that looks like it’s come to a close. Obviously, a lot of our information was released during the course of the quarter. We’ve done a fair bit of extensive engagement with investors during the quarter, obviously partly related to the Goldfield situation. So happy to wind up the call at that point. Thank you.

Conference Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.

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