Gold Road Resources (ASX:GOR) has it’s kicked off underground drilling at its 50:50 Gruyere gold project to assess the prospect of an underground-based mine life extension.

Shareholders, apparently, weren’t particularly loving the news on Tuesday – lunchtime shares dipped down over -4% to $2.37/sh. That may be due to devils in the detail.

Most important of those devils is that the cost of mining gold is set to further increase for Gold Road through CY2025 (despite Australia’s otherwise on-track disinflation journey) as mining sector costs remain a burden.

The company is also grappling with its need to fix up parts of its Tailings Dam; handle more waste stripping, and, expand a workers’ village on-site.

Gold Road’s royalty burden will also increase, though at least there’s a silver lining there: As far as the company sees it, that’s a byproduct of higher gold sales revenues.

Gold Road sees 162.5Koz-177.5Koz attributable production in the next 12 months with AISC at $2.4K to $2.6K.

Three-year production outlook ranges between 335Koz – 375Koz per annum on a 100% basis (including private JV partner Gruyere Mining Company) with that increase due to improving plant throughput – but that’s only an extra 25Koz of gold each year over the current upper estimate for CY25.

A saving grace could be that “outlook requires minimal growth capital. But the company isn’t necessarily heading underground yet, either. It’s just checking whether the underground operation prospect is backed up by geological drill data.

This perhaps wasn’t immediately obvious looking at the title of Gold Road’s Tuesday release, ‘Strong Outlook and Guidance for Gruyere.’

GOR last traded at $2.38.sh.

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