Nord Gold (LON:NORD) has signed a currency swap agreement to convert its 11 billion rouble (US$375.4 million) Sberbank loan into US dollars to reduce foreign exchange risks.
The loan, which was secured last month, has allowed Nord Gold to repay its outstanding debt of US$360 million to Severstal.
This repayment completed all debt arrangements between Severstal and its gold disision Nord Gold, which it decided to spin off and list it in London back in November last year.
The roubles were converted into US dollars at a rate of 29.3:1, while the annual interest rate now stands at 5.6 per cent.
“We are very satisfied with the terms of the cross-currency swap. This operation has allowed Nordgold to mitigate its exposure to foreign exchange risk,” said chief financial officer of Nord Gold Sergey Zinkovich.
“Moreover, it has brought the all-in interest rate under six per cent.”
In 2011, Nord Gold saw its production jump 28 per cent from the previous year to 754,000 ounces, which along with a 25 per cent rise in US$1,567 per ounce, drove its revenues up 57 per cent to US$1.18 billion.
The company said the increase in gold production was due to higher productivity in key business units with “particularly strong results” at the Berezitovy and Neryungri mines, up 50 per cent and 24 per cent respectively against 2010.