Gold Road Resources - Unsecured Gold Forward Sales Facility for Up To 200,000 Ounces
Well-funded development and exploration company Gold Road Resources (ASX: GOR) has struck a deal to forward sell 25,000 ounces at $1705/oz, locking in some cash certainty at a time of high gold prices. The deal is part of two 100,000oz unsecured gold forward sales facilities hedge with two banks, a move Gold Road believes is prudent. It allows Gold Road to lock in a small portion of its forecast production from the world-class under-construction Gruyere mine.
- Gold Road enters into an unsecured 200,000 ounce Gold Forward Sales Facilities
- Forward sales completed to date of 25,000 ounces at an average forward price of A$1,705 per ounce
- Gold Road is reviewing options for standby revolving credit or working capital facilities
Well-funded mid-tier gold development and exploration company, Gold Road Resources Limited (Gold Road or the Company) confirms it has signed margin Gold Forward Sales with two major banks for up to 200,000 ounces of Australian dollar denominated forward sales (100,000 ounces with each bank) (Hedging Facilities).
To date, the Company has locked in forward sales contracts for 25,000 ounces at an average forward price of A$1,705 under the Hedging Facilities.
The Hedging Facilities are unsecured but require cash backing if the mark-to-market increases beyond A$25 million with any bank. The Hedging Facilities expire at 30 June 2018, unless the parties agree to extend the Hedging Facilities.
As part of the Company’s prudent management of financial risks, Gold Road is currently reviewing options for standby revolving credit or working capital facilities, which would also include discretionary gold hedging facilities (Standby Facilities). The Company is targeting the end of March 2018 quarter to finalise any Standby Facilities. The intention is to merge these early hedges into the Standby Facility, and to roll the delivery dates of the hedged ounces to meet forecast gold production dates.
Gold Road Managing Director Ian Murray said “Construction at Gruyere is well under way to meet the forecast first gold production in 2019. With the gold price currently 14% above the modelled Gruyere Feasibility Study gold price of A$1,500 per ounce, we believe it is prudent to lock in a small portion of our forecasted production. The combination of these higher gold prices and the Standby Facilities lowers our risk and ensures we have flexibility in an environment which can be volatile.”