PERTH (miningweekly.com) – Gold miner Doray Minerals has agreed to refinance and restructure its project finance facility, allowing the company improved access to cash flow to fund exploration and business development activities.

MD Allan Kelly said on Thursday that following discussions with a number of domestic and international lenders, financial firm Westpac Banking Corporation had agreed to refinance and restructure Doray’s existing A$55-million project finance facility, which has been in place since 2012.

“Since the start of production at Andy Well, back in August 2013, we have effectively paid off A$43-million of the original A$55-million we borrowed to build the project. The terms of that original debt facility are much more restrictive than what is now available to Doray as a proven gold producer,” Kelly said.

He noted that as part of the refinancing and restructuring, Westpack would pay the outstanding A$17-million on the project loan facility, and would provide an additional A$6-million to assist with costs relating to the takeover of fellow listed Mutiny Gold, and the expenses relating to the start of the Stage 2 operations at Andy Well.

Doray recently declared its takeover offer for Mutiny unconditional, and was offering that company’s shareholders one of its own shares for every 9.5 Mutiny shares held, valuing Mutiny shares at 5.4c each.

The repayment term of the new debt facility has been extended from September 2015 to June 2016, which Kelly said would reduce the average quarterly debt repayments, despite the overall increase in the loan tenor.

Near-mine and selected regional exploration would also be funded directly from the Andy Well project cash flow, and a cash sharing mechanism has been introduced to allow access to project cash flows for further regional exploration and corporate activities.

As part of the refinancing, Doray would be required to hedge some 35% of forecast production between October this year, and June 2016.

Kelly said that the company has taken advantage of the recent increase in Australian dollar gold prices, and hedged 9 600 oz across October, November and December this year, at a weighted average price of A$1 510/oz, while a further 9 000 oz would be hedged between January and March at A$1 562/oz.

The remaining 5 000 oz was yet to be hedged.

The miner said that it now had 55 263 oz hedged between January 2015 and March 2016, accounting for about 47% of the forecast gold production during the same period, at a weighted average price of around A$1 506/oz. The company would continue to evaluate opportunities to hedge future gold production in order to reduce the impact of the current volatility in the spot gold price on the company’s earnings.