CALIFORNIA – New Gold of Vancouver has eliminated the legacy gold hedges associated with the 2008 project financing for its Mesquite heap leach gold mine in Imperial County. The company said that it repaid the loan in 2010, four years ahead of schedule.
By unwinding the hedges, New Gold has removed the requirement to deliver 5,500 oz of gold monthly at a fixed price of $801 per ounce from May 2013 through the end of 2014. In total, an additional 110,000 oz of future production can now be sold at the prevailing spot gold price rather than the contract price. In total, the company paid $65.7 million to eliminate the gold hedges. The transaction was executed at an average spot price of $1,396 per oz.
“Our constructive view on the gold price has led us to unwind the gold hedges,” stated Randall Oliphant, executive chairman. “We believe the recent pullback in the gold price has provided us with a window to be opportunistic in eliminating the hedges. We look forward to the balance of 2013 and full year 2014 earnings and cash flow benefitting meaningfully as a result.”
Further information about the Mesquite open pit is posted at NewGold.com.