Gascoyne clinches hedging deal with Australian banks
JOHANNESBURG (miningweekly.com) – Gascoyne Resources has entered into flat forward gold sales contracts with Commonwealth Bank of Australia (CBA) and the National Australia Bank (NAB) for 164 000 oz of gold production from its 100%-owned Dalgaranga gold project, at a delivery price of $1 712/oz.
The banks are also providing a $60-million project loan facility for the development of the project, which replaces the short-term hedge facility that was put in place in November.
Gascoyne’s strategy of securing short-term hedges has enabled the company to achieve a long-term flat forward sale price of $1 712/oz, which is a premium of $78/oz on the recent spot gold price of $1 633/oz.
The first gold delivery under the long-term hedge is due in September 2018 and the last delivery date is June 2022.
Gascoyne MD Mike Dunbar said on Friday the company’s strategy of putting in short-term gold price protection prevented it from being exposed to the recent gold price volatility.
As a result, the flat forward long term gold price of $1 712/oz has been achieved, which is a premium of around $78/oz over the recent spot gold price.
“This forward gold price is well above the gold price used in the economic evaluation of Dalgaranga and secures a very high margin for some of the gold that will be delivered during the life of the bank debt,” said Dunbar.
Dalgaranga has an initial life of six years, producing 115 000 oz/y for the first two years and then an average of 100 000 oz/y for the remaining four years at an all-in sustaining cost of about A$1 000/oz.
On Wednesday, Gascoyne executed a contract to appoint NRW Holdings as the mining contractor for Dalgaranga.
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