It comes after a high-grade zone at Gruyere was confirmed at depth.

A single deep diamond hole returned 87.6m at 1.66 grams per tonne gold from 736.8m within a mineralised porphyry intersection of 172.4m at 1.27gpt gold.

A wedge, drilled up-dip of the parent hole, hit 85m at 1.53gpt gold from 699m within a porphyry intersection of 146m at 1.38gpt gold.

Gold Road executive director, exploration and growth Justin Osborne said the results confirmed the southerly plunge of the higher grade mineralisation at Gruyere.

“We are excited that our staged drilling programme has again confirmed that there is the real potential to identify a large-scale underground resource which we will be assessing during the remainder of 2016,” he said.

“If we embark on further drilling in 2017, the target would be a resource capable of supporting a bulk underground mine which could significantly add to the profitability and life of the already robust Gruyere operation in excess of the current 12 years.”

Last year, AMC Consultants completed a conceptual underground mining study at Gruyere, concluding the project had underground mining potential.

“Due to the low grade and high-tonnage nature and geometry of the deposit, AMC considers that only low-cost caving methods such as sub-level caving or panel caving would be appropriate,” AMC said.

Gold Road is planning a high-level underground review in the December quarter to determine if further drilling is warranted to infill and extend the higher grade shoot to an inferred resource level, as well as a possible scoping study.

The news comes ahead of presentations by Gold Road at the Precious Metals Summit and Denver Gold Forum in Colorado over the next week.

Gold Road is one of the preferred Australian gold developers of both Argonaut Securities and Macquarie.

Argonaut this week upgraded Gold Road to buy from speculative buy and upped its price target to A93c per share from 84c/share.

“Within 12 months Gold Road will have completed its feasibility, arranged financing and commenced construction,” Argonaut said.

“We argue that Gold Road still trades at a discount to its net asset value despite its tier one project size, its near-term timeline to production and significant land holding which could yield additional gold endowment translating to long-term mine life.”

Gold Road is due to complete the feasibility study for Gruyere by December, followed by a development decision.

“Rarely has there been a better time to be building gold mines in Australia, operating and capital costs are low, highly skilled workforces and contractors are plentiful and capital is available,” Macquarie said.

“In addition the Aussie currency should provide a hedge against any US dollar gold weakness.”

Macquarie has an outperform rating for Gold Road with $1.20 price target.

Gold Road shares were off half a cent to 60c.