THE BOURSE WHISPERER: Gold Road Resources (ASX: GOR) has moved to take advantage of the current historically high gold prices by entering into a margin gold Forward Sales facility with Commonwealth Bank of Australia.
The facility is worth up to 100,000 ounces of Australian dollar denominated forward sales, with Gold Road having the option to increase the facility size to 150,000 ounces on the satisfactory completion of the Feasibility Study for the company’s Gruyere gold project.
Gold Road explained that under the terms of the margin facility it is required to lodge $1 million as cash security for every $1 million the mark to market difference exceeds $15 million, otherwise the facility is unsecured with a negative pledge condition.
This takes Gold Road’s locked in forward sales contracts to date to 50,000 ounces at an average price of $1,791 per ounce.
“Should project financing be selected as the preferred funding solution for the development of the Gruyere gold project, the forward sales executed with CBA, at close to record high Australian dollar prices, are expected to be rolled into a longer dated hedging program, enhancing the debt carrying capacity for the project,” Gold Road Resources said in its ASX announcement.
“If a Joint Venture is the selected development route for the project, then the forward sales will support a strong operating margin on Gold Road’s share in the gold produced from the Gruyere gold project.”