Dundee signs $50m forward gold sale for its Bulgaria Krumovgrad
Canadian firm Dundee Precious Metals has amended the $80-million Tranche C component of its revolving credit facility to align with the improved construction and commissioning schedule of the Krumovgrad gold project, in Bulgaria, after it received the final construction permit early last month.
The Toronto-headquartered firm also entered into a $50-million prepaid forward gold transaction for about 18 000 oz and 28 000 oz of gold, for delivery in 2019 and 2020, respectively, starting monthly from May 2019 at an average forward price of $1 367/oz.
“This transaction locks in an attractive gold price on a portion of our future production and further enhances our financial strength and flexibility to advance our growth initiatives, including the construction of the low-cost Krumovgrad gold mine, in southern Bulgaria,” president and CEO Rick Howes stated.
The company said an early works programme is currently under way at Krumovgrad to support the start of construction in October, consistent with the project schedule to start operations in the fourth quarter of 2018.
BNP Paribas led the transaction, with the Canadian Imperial Bank of Commerce, Unicredit Bulbank AD and Royal Bank of Canada participating in the company’s RCF.
Proceeds from the transaction will be recognised initially as deferred revenue and thereafter as revenue when physical deliveries are made under the prepaid forward gold sales arrangement, Dundee advised.
The project plan contemplates the construction of an openpit mining operation comprising a process plant that will employ conventional crushing, grinding and flotation processing to extract gold and dispose of thickened tailings, together with the mine rock waste in an integrated mine waste facility.
The 840 000 t/y plant will produce 85 700 oz/y over an eight-year mine life. The all-in capital cost, excluding escalation, financing and sunk costs, is estimated at $178-million. This project has an estimated 25% after-tax internal rate of return based on gold and silver prices of $1 250/oz and $15/oz, respectively.
Dundee’s TSX-listed stock on Wednesday rose as much as 8.4% to C$3.36 a share, after rising 133% in the year-to-date period, on renewed investor confidence in precious metals.
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