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PERTH (miningweekly.com) – ASX-listed Gold Road Resources has signed a gold forward sales facility for up to 100 000 oz of gold sourced from the planned Gruyere project, in Western Australia.
The forward sales facility was signed with the Commonwealth Bank of Australia and allowed Gold Road to take advantage of the current historically high gold prices, the company said on Thursday.
The agreement also allowed the option to increase the facility size to 150 000 oz on the satisfactory completion of a feasibility study for the Gruyere project.
To date, Gold Road has locked in forward sales contracts for 50 000 oz of gold, at an average price of A$1 791/oz.
Gold Road was awarded a mining lease over the Gruyere project in May this year, and a feasibility study on the project will likely be completed by the end of 2016, allowing for a final investment decision shortly thereafter.
Should project financing be selected as the preferred funding solution for the funding of the gold project, the forward sales agreement agreed to with the Commonwealth Bank of Australia will be rolled into a longer dated hedging programme, enhancing the debt carrying capacity for the project.
Should a joint venture development option be selected, the forward sales agreement will support a strong operating margin on Gold Road’s share in the gold produced from the project, the company said.
The Gruyere project is expected to deliver some 265 000 oz of gold over a mine life of 12 years and will require a capital investment of about A$455-million.
The project development is based on a single large openpit mine and a conventional carbon-in-leach plant with a throughput of between 7.5-million tonnes and 8.8-million tonnes a year.