THE BOURSE WHISPERER: Gold Road Resources (ASX: GOR) signed margin Gold Forward Sales with two major banks for up to 200,000 ounces of Australian dollar denominated forward sales.
Gold Road Resources explained the Hedging Facilities equate to 100,000 ounces of gold with each bank.
Gold Road has already locked in forward sales contracts for 25,000 ounces at an average forward price of $1,705 under the Hedging Facilities.
These latest Hedging Facilities are unsecured but require cash backing if the mark-to-market increases beyond $25 million with any bank and are due to expire at 30 June 2018, unless the parties agree to extend.
The company indicated, that part of a “prudent management of financial risks”, it is currently reviewing options for standby revolving credit or working capital facilities, which would also include discretionary gold hedging facilities.
Gold Road indicated the end of March 2018 quarter as a target for the finalisation of any Standby Facilities.
It stated its 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.
“Construction at Gruyere is well under way to meet the forecast first gold production in 2019,” Gold Road Resources managing director Ian Murray said in the company’s announcement to the Australian Securities Exchange.
“With the gold price currently 14 per cent above the modelled Gruyere Feasibility Study gold price of $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.”