PERTH (miningweekly.com) – ASX-listed gold miner Doray Minerals is on track to produce its first gold from the Deflector copper/gold mine, in Western Australia, by mid-2016, after securing funding for the project.
Doray MD Allan Kelly said in a conference call on Monday that the financing for the recently acquired Deflector project comprised new corporate finance facilities worth some A$90-million, a A$13.8-million equity placement and a A$12.9-million fully underwritten nonrenounceable entitlement offer.
He explained that an outstanding amount of A$25-million from its existing finance facility over the producing Andy Well mine would be rolled into the new facilities with Westpac, and would be joined by a A$60-million debt fund and a A$5-million contingency facility.
The combined A$90-million facility would have a loan term of five years and principal repayments would only start when construction on the Deflector mine was completed.
Kelly noted that, apart from the completion of an equity component, the debt funding was also conditional on a hedging component. He said on Monday that Doray was looking to hedge between 40% and 50% of Deflector’s gold production going forward.
To date, some 30 000 oz of the mine’s production had been hedged at a price of A$1 610/oz.
Meanwhile, Doray has raised A$13.8-million through a share placement to both existing and new investors, including a major UK resources fund. Some 34.4-million fully paid shares were issued at a price of 40c a share.
The company further announced plans to undertake a fully underwritten nonrenounceable entitlement issue, offering eligible shareholders the chance to subscribe for two new shares for every 17 shares held.
The entitlement offer would also be priced at 40c a share and would raise some A$12.9-million.
“With existing cash reserves, projected cash flows from Andy Well over the next 12 months and the proceeds from the Westpac facility and equity raising, we are now fully funded for all construction, development and working capital expenditure to bring Deflector into production,” Kelly said.
“We can now focus on growing the company through the development and commissioning of our second high-grade, low-cost gold operation at Deflector.”
The project was acquired as part of a takeover offer of Mutiny Gold earlier this year and, by May, the Doray board had approved the development of the project.
The Deflector openpit was expected to deliver 61 972 oz of gold, while the underground mine would deliver 348 592 oz of gold, over a mine life of about six years.
Kelly expected openpit mining to start in February 2016, while underground mining was slated for May. The project would likely be commissioned in June 2016, with first production expected in late June or early July.