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Aeris Resources embarks on gold hedging for newly acquired Cracow operations

The copper and gold producer has secured hedging for 36,000 ounces at a forward price of A$2,536.25 per ounce, for about 50% of its targeted gold production from Cracow.

Aeris Resources Ltd - Aeris Resources' subsidiary Lion Mining in unsecured gold hedging with Macquarie Bank for newly-acquired Cracow Gold Operations
The unsecured gold hedging will mature over the next 12 months in scheduled monthly deliveries of 3,000 ounces

Aeris Resources Ltd's (ASX:AIS) subsidiary Lion Mining Pty Ltd has entered into unsecured Australian dollar gold hedges with Macquarie Bank Ltd for its newly-acquired Cracow Gold Operations, an established, high-grade gold mine around 500 kilometres northwest of Brisbane, Queensland.

The company has secured hedging for 36,000 ounces at a forward price of A$2,536.25 per ounce.

These hedges, for about 50% of its targeted gold production from Cracow, will mature over the next 12 months in scheduled monthly deliveries of 3,000 ounces.

Underpinning operating cashflows

Aeris Resources executive chairman Andre Labuschagne said: “Given our commitments in the next 12 months to funding exploration activities and debt repayments, we believe it was prudent to put these hedges in place to underpin a portion of our operating cashflows whilst still providing exposure to future upside in the Australian dollar gold price.

“These hedges represent approximately 50% of our targeted gold production from the Cracow Gold Operations in FY2021 and have been strongly supported by our major shareholders and financier.”

Aeris shares have been as much as 27% higher to 4.3 cents intra-day and are up from 2.9 cents at the close on June 19.

Cracow operations

The company completed the acquisition of Cracow from Evolution Mining Ltd (ASX:EVN) earlier this month.

Under the acquisition deal announced on June 4, Aeris agreed to pay Evolution A$60 million in cash upon closing of the transaction, a deferred payment of A$15 million on June 30, 2022, plus a 10% net value royalty from July 1, 2022, to June 30, 2027, capped at A$50 million.

The acquisition was funded by a fully underwritten A$40 million equity raising and A$30 million bridge debt facility.

Describing the Cracow Gold Operations as a great fit to its operations, Aeris Resources has committed some $13 million to exploration over the next two years.

Cracow has a financial year 2021 production guidance of 70,000-75,000 ounces of gold at C1 cash cost of A$980 per ounce.

Quick facts: Aeris Resources Ltd

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ASX:AIS
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Aeris Resources chairman discusses 'transformational' acquisition of Cracow...

Aeris Resources Ltd's (ASX:AIS) executive chairman Andre Labuschagne speaks to Proactive's Andrew Scott after entering into a binding agreement with Evolution Mining Ltd (ASX:EVN) to acquire the Cracow Gold Mine in Queensland. Aeris has agreed to pay Evolution $60 million in cash upon closing...

on 8/6/20

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