- Gascoyne Resources (GCY) has made a significant dent in its bank debt to Investec after it made a $14.6 million voluntary repayment, reducing the amount owing by 45 per cent
- The company entered into a $40 million loan facility with the Australian branch in August last year, and fully drew down the loan later in October
- GCY made the prepayment off the back of a consistent performance at the Dalgaranga Gold Project in WA’s Murchison region over a period of more than 12 months
- No further mandatory gold hedging will be required with the existing hedge book to remain in place with an in-the-money portion of $15.7 million
- Importantly, the loan’s total term reduction will help the company dodge more than $750,000 in interest costs over the next 12 months
- It also halves the minimum cash balance that Gascoyne is required to hold to $5 million
- GCY is continuing its exploration activities as planned and has doubled its budget for the 2021 Financial Year to $6.3 million
- Gascoyne Resources shares are trading flat at 50 cents each
Gascoyne Resources (GCY) has made a significant dent in its bank debt to Investec after making a $14.6 million voluntary repayment — reducing the amount owing by 45 per cent.
The company entered into a $40 million loan facility with Investec — the Australian branch of Investec Bank — in August last year as part of a business recapitalisation.
Gascoyne fully drew down the loan back in October.
The early payment follows GCY’s consistent performance at the Dalgaranga Gold Project in WA’s Murchison region over a period of more than 12 months in addition to ongoing free cash flow.
The prepayment is set to reduce the explorer’s debt to $17.5 million as of March 31.
Additionally, the contribution removes the requirement for any further mandatory hedging at current spot prices — beyond the position already entered into — by decreasing the loan term by 12 months to June 30, 2022.
At a current spot gold price of 50,000 ounces at $2564 per ounce, the existing hedge book will therefore remain in place with an in-the-money position of $15.7 million at March 30.
These conditions, Gascoyne says, will lead to an average realised price in excess of $2400 per ounce for the remainder of the calendar year.
Importantly, the total term reduction of the loan will help the company dodge more than $750,000 in interest costs over the next 12 months.
It also halves the minimum cash balance that Gascoyne is required to hold under the loan facility from $10 million to $5 million.
Gascoyne Resources Managing Director and CEO Richard Hay commented on the company’s reduced debt.
“The voluntary prepayment of close to half of Gascoyne’s bank debt really highlights how far the business has come after more than 12 months of consistent performance of the Dalgaranga operation,” Richard said.
“This prudent approach to capital management has further strengthened our balance sheet and is a credit to our team and the support we have received from a range of stakeholders.”
GCY is continuing its exploration activities as planned and recently doubled its budget for the 2021 financial year to $6.3 million.
Gascoyne Resources shares are in the grey on Wednesday, last trading at 50 cents at 4:50 pm AEDT.