JOHANNESBURG (miningweekly.com) – Gold development and exploration company Gold Road, which is building the Gruyere gold mine in a joint venture with South Africa’s Gold Fields, has entered into forward sales with two major banks for up to 200 000 oz of Australian dollar denominated forward sales.
To date, the company has locked in forward sales contracts for 25 000 oz at an average price of A$1 705 under the hedging facilities with the banks.
Gold Road said on Monday that the hedging facilities were unsecured, but that they required cash backing if the mark-to-market increases beyond A$25-million with any bank. The hedging facilities would expire on June 30, 2018, unless extended.
The company further said that it was reviewing options for standby revolving credit or working capital facilities, which would also include discretionary gold hedging facilities. The intention would be to merge these early hedges into the standby facility and to roll the delivery dates of the hedged ounces to meet forecast gold production dates.
Production at Gruyere, which will produce 270 000 oz/y, is expected to start in 2019.
“With the gold price currently 14% above the modelled Gruyere feasibility study price of A$1 500/oz, we believe it is prudent to lock in a small portion of our forecast production. The combination of these higher gold prices and the standby facilities lowers our risk and ensures we have flexibility in an environment which can be volatile,” said Gold Road MD Ian Murray.