Gold Road closes forward sales
PERTH (miningweekly.com) – Gold developer Gold Road Resources has closed out its margin gold forward sale facility with the Commonwealth Bank of Australia, generating pre-tax profits of A$11.92-million.
A total of 50 000 oz, at an average gold price of A$1 791/oz, was secured in support of potential project finance for the Gruyere gold project, in Western Australia.
Gold Road told shareholders on Friday that the completion of the Gruyere joint venture (JV) with gold major Gold Fields, which fully funded the Gruyere project to production, had reduced the requirement for Gold Road to have forward sales facilities in place far in advance of gold production.
As no project debt with associated mandatory hedging is required, the company deemed it appropriate to close out its forward sales position, locking in immediate profits and reducing the risks associated with the delivery of future gold.
However, Gold Road noted that it remained open to revised forward sales programs to complement its share of the future production from Gruyere, and planned to develop an ‘appropriate’ strategy aligned with its risk management programme.
Under the JV agreement, announced last month, Gold Fields will buy a 50% interest in the project for A$350-million in cash, comprising A$250-million payable on the completion of the transaction, and a further A$100-million to fund Gold Road’s initial cash calls during the construction phase.
A 1.5% net smelter return royalty will also be placed on Gold Field’s share of production from the JV tenements, once total gold production exceeds two-million ounces.
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