In a bid to keep its healthy balance sheet intact, Toronto-based Aur Resources (TSE) has made arrangements with The Chase Manhattan Bank of Canada for an $8 million gold loan.
The company is attempting to maintain a $23 million cash position while bringing its Kierens Zone gold deposit into production by the end of September.
Located on Aur’s First Canadian property 12 miles northwest of Val d’Or, Que., the Kierens deposit is scheduled to start producing gold at an initial rate of about 24,000 oz per year before accelerating to 40,000 oz eventually.
Under an agreement with Chase Manhattan, Aur has borrowed 15,000 oz gold which the company will repay in four equal installments starting on March 7, 1989.
President James Gill said the gold loan has been secured with cash plus call options designed to allow Aur to participate in any significant rise in gold prices during the life of the loan.
As Gill sees it, in addition to maintaining Aur’s current cash position after scheduled preproduction capital expenses have been accounted for, the loan has a number of other advantages.
It has allowed Aur to lock in a selling price of approximately $430U.S. per oz for 31% of Aur’s planned gold production from the Kierens zone over the next two years.
It will generate increased income of about $800,000 over the life of the loan.
“Aur will also have the financial capacity to accelerate increased gold production through acquisitions should the opportunity arise,” said Gill.
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