Australian miner Gold Road Resources has outlined the underground potential of the Gruyere gold mine in Western Australia, pointing to a conceptual resource of up to 1.5-million ounces and committing A$26.4-million to drilling to support a future prefeasibility study.

The company, which operates Gruyere in a 50:50 joint venture with Gold Fields, reported on Tuesday that it had received the results of a scoping study prepared by SRK Consulting, presenting a sub-level caving development option based on a A$2 240/oz gold price. The study confirms the technical and economic viability of transitioning the openpit mine into a large-scale underground operation.

Gold Road estimates an underground exploration target of 25-million to 31-million tonnes at grades ranging from 1.20 g/t to 1.47 g/t gold, for between 1-million and 1.5-million ounces on a 50% basis. The target is in addition to Gruyere’s existing mineral resource of 45-million tonnes at 1.51 g/t gold (2.2-million ounces, 50% basis) outside the current ore reserve.

“This underground mining potential has the ability to transform Gruyere into a multi-decade life mine,” said Gold Road MD and CEO Duncan Gibbs. “The results take us another step closer to realising the long-term value of this operation.”

Initial capital investment for underground infrastructure is estimated at A$470-million, rising to A$588-million including contingency and additional development costs on a 100% basis. Planned infrastructure includes bulk material handling systems, ventilation, maintenance, and services.

The JV has launched a 60 000-m drill campaign, targeting mineralisation as deep as 700 m below the final openpit design. Drilling is expected to continue through mid-2026, with aims to convert the deeper portion of the orebody to an Inferred Resource and upgrade shallower zones to Indicated status.

A PFS is planned once the drill program is complete and sufficient confidence is built in the underground model.

Gruyere, located about 200 km east of Laverton, poured first gold in 2019 and has produced more than one-million ounces to date.

The announcement comes just weeks after Gold Road rebuffed a takeover proposal from Gold Fields. The unsolicited bid, pitched at A$2.27 a share in cash plus a variable component tied to Gold Road’s stake in De Grey Mining, was unanimously rejected by Gold Road’s board as undervaluing the company and arriving at an “opportunistic” time.

Gold Road chairperson Tim Netscher said Gold Fields’ subsequent refusal to sell its own 50% interest in Gruyere at the same implied valuation highlights the long-term value both parties see in the asset.