Gold Road profits halved in 2021: Strong Production growth forecast by 2023

Gold Road Resources (ASX: GOR) has reported a sharp decline in earnings for the full-year ended 31 December 2021, with the hopes of returning to production and earnings growth in the year ahead.

The company's stock is down -2.7% in early-trade.

Financials at a glance

• Revenue of $274.8m, down -6.8%

• Average realised gold price of $2,210/oz, down -5.1%

• Earnings margin of 44%, down 14 percentage points

• Net profit of $36.8m, down -44.5%

• Final dividend of 0.5 cents per share

Production rundown 

Gold Road produces gold from its flagship Gruyere mine in Western Australia. Gruyere produced 246,529 oz in 2021, down -4.5% compared to a year ago.

All-in sustaining costs were $1,558 per ounce, well above the company’s annual cost guidance between $1,450 to $1,525 per ounce. 

Costs were higher-than-expected due to lower gold production, higher processing costs and sustaining capital. Higher processing costs were due to a high proportion of harder fresh rock ore processing and costs associated with unplanned maintenance issues.

Encouragingly, Gold Road said that grades improved in the fourth quarter of the year as mining progressed through lower grade portions of the Stage 2 pit and into higher grade zones as well as commencing mining in the higher grade Stage 3 pit. 

Outlook and guidance

In February 2021, Gold Road released a 3-year production outlook with plans to increase annual production by 35-50% to 350,000 ounces by 2023.

In-line with the 3-year production outlook, Gold Road expects annual production between 300,000 to 340,000 ounces. As well as all-in sustaining costs to be between $1,270 and $1,470 per ounce. 

Grades are expected to improve in 2022 as mining progresses in the Stage 3 pit. 

M&A and exploration

Gold Road spent $33m on exploration activities in 2021, delivering new and expanded resources and identifying high prospective areas around the Gruyere gold mine.

During the year, the company increased its mineral resource by 70% to 6.4m tonnes.

The 2022 exploration budget sits at $30m to advance drill testing of mineralised gold anomalies from 2021 drilling campaigns.