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.
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.