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Gold Road secures A$150M in funding, gold hedging facility for Gruyere JV


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Gold Road secures A$150M in funding, gold hedging facility for Gruyere JV

Gold Road Resources Ltd. secured A$150 million in funding through an agreement with a financing syndicate for a A$100 million revolving corporate facility, a A$50 million working capital facility and a gold hedging facility.

The company said Feb. 26 that while it has no immediate plans to use the finance facilities, the funds will support its funding contribution for the preproduction-stage Gruyere gold project in Western Australia, which is part of a 50/50 joint venture with Gold Fields Ltd.

The five-year A$100 million revolving facility will be available from the financial close of the facilities and is repayable in full at maturity. The company will use the funds to support additional exploration and studies, as well as general corporate activities or to repay the working capital facility.

The A$50 million facility will support initial working capital requirements for the Gruyere property, leading up to and during commissioning. The funds will be available from financial close until the earlier of either the completion of commissioning or Dec. 31, 2019. The facility will mature either 364 days after commissioning is complete or Dec. 31, 2020, with full repayment due upon maturity through a 100% cash sweep of excess cash flow from Gruyere.

Gold Road noted that the finance facilities do not include any mandatory hedging requirements, with the gold hedging facility to support the management of its discretionary gold hedging activities. The hedging facility will be available from financial close for hedge contracts of up to five years.

The funds will also support the company's exploration plans and future business opportunities, including the A$7 million acquisition of a 50% stake in the early stage South Yamarna gold project in Western Australia from Sumitomo Metal Mining Co. Ltd.

The financing syndicate includes ING Bank Australia, National Australia Bank and Société Générale Hong Kong, with the financing facilities remaining subject to customary conditions.

Gold Road also reported that it locked in forward sales contracts for an additional 16,000 ounces of gold at an average forward price of A$1,718/oz under its existing gold hedging facilities, on top of the contracts secured in November 2017.

The company's total hedge book now stands at 41,000 ounces at a weighted average forward price of A$1,711/oz, with scheduled deliveries between March and June. Gold Road plans to roll the existing gold hedges forward to meet future gold production under the new gold hedging facility.