Gascoyne hedges its bets

PERTH (miningweekly.com) – Gold developer Gascoyne Resources has taken advantage of the strong Australian gold price, entering into a hedge agreement with the Commonwealth Bank of Australia.

The company told shareholders on Thursday that some 82 000 oz of gold from the Dalgaranga gold project, in Western Australia, have been forward sold at a price of A$1 660/oz in a short-dated structure.

“We are pleased to have entered into the hedge facility with the Commonwealth Bank of Australia, and have entered into 82 000 oz of short-dated forward gold sales, which when rolled to the final maturity dates, is expected to result in a realised gold price of around A$1 700/oz, based on the current forward curves,” said Gascoyne MD Mike Dunbar.

“The gold price is one of the largest risks to the business outside of our control and entering into this transaction at the current high gold price, significantly mitigates this risk to the project, while also providing Gascoyne significant exposure to any increase in the gold price.”

Gascoyne is required to lodge A$5-million as cash security for the hedge, which will be released upon the financial close under the project’s finance facility, which is on track for completion in late November.

Mining at Dalgaranga is expected to start in March next year. The A$86-million Dalgaranga openpit operation is expected to deliver 623 000 oz of gold over the six-year mine life.