29/01/2015 - 11:34

Doray gets boost for Andy Well

29/01/2015 - 11:34

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Doray Minerals has refinanced a $55 million debt facility with Westpac to help fund development of its Andy Well stage 2 gold project in the Murchison region of Western Australia.

Doray gets boost for Andy Well
Doray's Andy Well project in the Murchison region of WA.

Doray Minerals has refinanced a $55 million debt facility with Westpac to help fund development of its Andy Well stage 2 gold project in the Murchison region of Western Australia.

As part of the restructure, Westpac has agreed to pay out an outstanding $17 million balance of Doray’s existing facility, and will provide an additional $6 million to assist with costs associated with the company’s takeover of Mutiny Gold.

Doray said it would also use the facility to cover expenses relating to the commencement of Andy Well’s stage 2 open pit.

Managing director Allan Kelly said the company’s existing finance facility was put in place in 2012 to assist with the construction and commissioning of Andy Well.

“Since the commencement of production at Andy Well back in August 2013, we have effectively paid off $43 million of the original $55 million we borrowed to build the project,” Mr Kelly said.

“The terms of that original debt facility are much more restrictive than what is now available to Doray as a proven gold producer.”

 The repayment term for the new facility has been extended from September 30 to the end of June next year, which will reduce Doray’s average quarterly debt repayment obligations.

Doray said it was required to hedge about 35 per cent of forecast production between October 2015 and June 2016, as part of the refinancing.

“The company has taken advantage of the recent increase in the $A gold price and hedged 9,600 ounces across October, November and December 2015, at a weighted average price of $1,510 per ounce, and 9,000 ounces across January, February and March 2016 at $1,562 per ounce,” Doray said.

“The remaining amount to be hedged, as per Westpac’s requirements, is approximately 5,000 ounces.”

Doray said it has hedged about 55,263 ounces from January 2015 until March next year, about 47 per cent of forecast production for the same period, at a weighted average  of about $1,506 per ounce.

Westpac has also allowed for near-mine exploration and selected regional exploration to be funded directly from Andy Well project cash flow and has also introduced a “cash sharing mechanism”, to allow access to project cash flows for further regional exploration.

As of last week, Doray held a 86.7 per cent interest in Mutiny and will proceed with compulsory acquisition once it reaches 90 per cent.

Doray’s share price was unchanged at 48.5 cents per share at 11:20am.

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