Another 10 000 oz fixed at Cannon
PERTH (miningweekly.com) – Junior gold miner Southern Gold and its joint venture (JV) partner Metals X have agreed to fix the price of a second batch of 10 000 oz of gold from the Cannon mine, in Western Australia.
Southern Gold said on Friday that the new fixed price of A$1 560/oz for the 10 000 oz, followed a November price set for the first 10 000 oz of production from the Cannon mine.
The November ounces were set at a price of A$1 500/oz, implying an average sales price of A$1 530/oz for the first 20 000 oz of gold produced from the Cannon mine.
“Fixing the price on the initial stages of production from the Cannon mine is prudent, given the current volatility in global markets,” said Southern Gold MD Simon Mitchell.
“This price fixing programme ensures we achieve a margin in the order of 50%, given our cash costs of production are circa A$1 000/oz, and essentially de-risks our cash flow over the coming months.”
Mitchell added that the company retained exposure to the gold upside on the unfixed portion of the future gold production.
Southern Gold could elect to fix up to the first 30 000 oz of production at a A$25/oz discount to the spot price, at the time of election.
The Cannon mine poured its first gold in November of last year.
The Stage 1 openpit mine would result in about 152 000 t of ore mined, at an average diluted grade of 3.1 g/t gold, containing some 15 000 oz of gold, with 13 500 oz of gold recovered.
The JV partners recently agreed to expand the Cannon gold mine to develop both the Cannon and Georges Reward deposits in a single pit, using common infrastructure.
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