The precious metal, which just over a month ago was trading in the $425-$430(US) per oz range, recently slipped to $400-$405. Release of a large amount of the metal could act to depress the price further.
Complete details of the gold loan, which is being underwritten by the Union Bank of Switzerland, Westpac Banking Corp and the Royal Bank of C anada, will not be made public until late March or early April, said Barrick’s senior vice- president finance, Greg Wilkins.
The new loan, he said, will in part be used to refinance an existing loan and to provide additional funds for the Goldstrike gold mine in Nevada which Barrick is expanding to a production rate of 900,000 oz in 1992.
The company intends to make an initial drawdown of 750,000 oz during the second quarter, 212,000 oz of which will go towards repaying an existing loan and 538,000 oz of which have been pre-sold (at $418 per oz).
Wilkins said the balance, 300,000 oz, will be available to be drawn down at any time in the future “as a hedge facility.”
The Barrick loan is slightly larger than the one-million-oz gold loan announced by Newmont Mining at the start of 1988.
A gold loan permits a company to borrow an amount of gold and sell it forward for a cash gain. The gold is loaned at a relatively low rate of interest; repayment by the company is in the form of physical gold.
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