SPEC BUY

Current Price

Target Price

$0.37

$0.60

Tuesday, 24 March 2015

Gold Road Resources

Smoke signals

Analysts | Patrick Chang | Matthew Keane

Ticker: GOR

Sector: Materials

Shares on Issue (m): 594.9

Market Cap ($m): 220.1

Cash Estimate ($m): 21.3

Enterprise Value ($m): 198.8

Quick Read

Gold Road (GOR) released an intersection of 59m @ 3.0g/t (GOR estimated true width

~20m) from 127m from its RC drilling program at Smokebush Dolerite. This target sits within the Southern Yamarna JV (Sumitomo earning 50%). Although early stage and further drilling is required, the ore grade intersection validates regional prospectivity and the effectiveness of GOR's exploration approach. The stock is catalyst rich and well-

st

52 wk High/Low: $0.40 $0.11

funded (A$21m at 31

December). With ~5 rigs drilling at Gruyere and deposit remaining

12m Av Daily Vol (m):

Mineral Inventory (100% basis)

1.66

open, Argonaut anticipates Resource upgrades which could translate to boosted

production and AISC parameters in the upcoming PFS. Gruyere's potential scale, geometry, long life, and favourable metallurgical properties, combined with a low sovereign risk jurisdiction, will ensure the asset attracts market and corporate attention.

Event & Impact | Positive

An impressive hit: A modest RC drilling program at the Smokebush Dolerite target, located within the Smokebush Camp Target (Sumitomo earning 50%) returned an impressive intersection of 59m @ 3.0g/t. Whilst early stage and further drilling required, the structure has been followed NS (on three lines) over a strike of 800m. Follow up

drilling has been planned to commence in April.

Directors:

Ian Murray Executive Chairman Justin Osborne Executive Director Russell Davis Non-Executive Director Martin Pyle Non-Executive Director Kevin Hart Company Secretary

Substantial Shareholders:

Van Eck 8.3% Minco 7.2% RCF 5.2%

Share Price Graph

Significant host: The mineralisation is hosted within sheared sulphide-lode structures within a differentiated dolerite. This geological setting is well understood and this type of rock hosts prolific multi-million ounce deposits in other better explored WA goldfields including Fimiston (Superpit), Jundee and St Ives. Given improved structural understanding following the RC program, the drilling orientation appears sub-optimal, and a program incorporating west-east drill holes could unveil a well mineralised dolerite unit featuring multiple parallel lodes.

Gruyere likely to be bigger and better: The ongoing drilling campaign (3 diamond, 2 RC rigs) at Gruyere is anticipated to expand the 3.8Moz deposit. This drilling program will test extensions of the mineralisation and target previously poorly drilled area. A successful program will support the case for a larger scale operation, further improving

the project's economics and appeal.

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Regional targets pipeline: The Company is cashed up (A$21m at 31st December) and newsflow rich with a high intensity exploration program underway. Targets to be tested in CY15 include; Sun River - Wanderrie, Pacific Dunes - Corkwood, Dorothy Hills and the southern Yamarna JV targets including Smokebush Dolerite.

Recommendation

Jan-14 Apr-14 Jul-14 Oct-14 Jan-15

SPECULATIVE BUY recommendation and A$0.60 target price maintained.

Corporate Advisers | Stockbroking & Research | Special Situations Financing | Page 1

A modest RC program has delivered…

…an impressive intersection of

59m @ 3.0g/t at Smokebush…

…hosted in a differentiated dolerite unit

Similar rock hosts multi-Moz deposits in other better explored WA belts…

…including the Superpit, Jundee and St Ives

Follow up drilling planned

Smoke signals

Early success

A modest RC drilling program consisting of nine RC holes for a total of 1,380m at the Smokebush Dolerite target, located within the Smokebush Camp Target (Sumitomo earning 50%) returned an impressive intersection of 59m @ 3.0g/t from 127m (estimated true width ~20m), ending in mineralisation.

Whilst early stage and further drilling required, the structure has been followed NS (on three lines) over a strike of 800m.

A welcome host

The mineralisation is hosted within sheared sulphide-lode structures within a differentiated doleriate.

This geological setting is well understood and this type of rock hosts prolific multio- million ounce deposits in other better explored WA goldfields including Fimiston (Superpit), Jundee and St Ives.

Figure 1: Smokebush drilling, cross section, looking north

Source: GOR

Further drilling planned

Given improved structural orientation understanding, the early drilling orientation appears sub-optimal, and a program incorporating west-east drill holes could unveil a well mineralised dolerite unit featuring multiple parallel lodes.

A follow up RC drilling program has been planned to drill in the opposite direction in

April.

Corporate Advisers | Stockbroking & Research | Special Situations Financing | Page 2

Argonaut is bullish on the pipeline of prospects to be tested…

…throughput CY15…

…including Dorothy Hills trend, Sun

River - Wanderrie…

…and Riviera - Smokebush

Yamarna is a highly prospective belt capably of hosting Moz deposits

Uncovering Yamarna

Solid exploration pipeline

Argonaut is bullish on the pipeline of prospects to be tested in CY15. Targets include:

 Gruyere extensions (H1 CY15)

 Dorothy Hills Regional, including Gruyere Corridor (H1, H2 CY15)

 Sun River - Wanderrie (H1, H2 CY15)

 Pacific Dunes - Corkwood (H2, CY15)

 Riviera - Smokebush (Sumitomo JV, H1 CY15)

 Metropolitan - Beefwood (Sumitomo JV, H1, H2 CY15)

Figure 2: Structural analogues to better explored belts

Source: GOR

Argonaut considers the Yamarna belt to be highly prospective due to the presence of all critical elements required for the formation of mesothermal lode deposits, including:

 The Age - recent dating suggesting Yamarna is late Archean similar to other greenstone belts in Western Australia

 The Rocks - sequence of metamorphosed ultramafic/mafic/intermediate and sedimentary rocks

 The Mineralisation controls - presence of structural controls similar to other belts

Corporate Advisers | Stockbroking & Research | Special Situations Financing | Page 3

RESEARCH:

Ian Christie | Director, Industrial Research

+61 8 9224 6872 [email protected]

Philipp Kin | Analyst, Oil & Gas Research

+61 8 9224 6864 [email protected]

Patrick Chang | Analyst, Metals & Mining Research

+61 8 9224 6835 [email protected]

Emily Reilly | Analyst, Industrial Research

+61 8 9224 6809 [email protected]

Matthew Keane | Analyst, Metals & Mining Research

+61 8 9224 6869 [email protected]

Helen Lau | Analyst, Metals & Mining Research

+852 3557 4804 [email protected]

INSTITUTIONAL SALES - PERTH:

Chris Wippl | Executive Director, Head of Sales & Research

+61 8 9224 6875 [email protected]

John Santul | Consultant, Sales & Research

+61 8 9224 6859 [email protected]

Troy Irvin | Director, Institutional Research Sales

+61 8 9224 6871 [email protected]

Bryan Johnson | Director, Institutional Research Sales

+61 8 9224 6834 [email protected]

Damian Rooney | Senior Institutional Dealer

+61 8 9224 6862 [email protected]

Ben Willoughby | Institutional Dealer

+61 8 9224 6876 [email protected]

INSTITUTIONAL SALES - HONG KONG:

Travis Smithson | Managing Director - Asia

+852 9832 0852 [email protected]

Glen Gordon | Institutional Research Sales

+852 3557 4874 [email protected]

CORPORATE AND PRIVATE CLIENT SALES:

Glen Colgan | Executive Director, Desk Manager

+61 8 9224 6874 [email protected]

Kevin Johnson | Executive Director, Corporate Stockbroking

+61 8 9224 6880 [email protected]

James McGlew | Executive Director, Corporate Stockbroking

+61 8 9224 6866 [email protected]

Geoff Barnesby-Johnson | Senior Dealer, Corporate Stockbroking

+61 8 9224 6854 [email protected]

Rob Healy | Dealer, Private Clients

+61 8 9224 6873, [email protected]

Cameron Prunster |Dealer, Private Clients

+61 8 9224 6853 [email protected]

James Massey |Dealer, Private Clients

+61 8 9224 6849 [email protected]

Mark Sandford |Dealer, Private Clients

+61 8 9224 6868 [email protected]

Important Disclosure

Argonaut acted as Sole Lead Manager & Exclusive Bookrunner to the Placement that raised $23.3M in September
2014 and received fees commensurate with this service. Argonaut acted as Joint Lead Manager to the Placement that raised $10M in March 2014 and received fees commensurate with this service. Argonaut currently holds or controls
150,000 GOR shares.

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Corporate Advisers | Stockbroking & Research | Special Situations Financing | Page 4