Colorado-based Canyon Resources (CAU-X) has unwound a hedge position in order to repay debt from the Briggs gold mine in southeastern California.
The company generated US$11 million in cash by repurchasing roughly 120,000 oz. gold it had previously sold forward. Of this, US$8.6 million was used to pay down US$25.9 million in project debt; the balance of the proceeds were placed in escrow.
Canyon now has US$17.3 million in gold loans, payable over 4.5 years at interest of 4%. The debt translates into 57,499 oz. gold at a prearranged spot price of US$301.50 per oz., though the company notes that this amount is covered by short-term put options valued at over US$400 per oz.
In 1997, the Briggs mine cranked out 66,769 oz. gold and 19,215 oz. silver at an average cash cost of US$290 per oz. gold. This year’s production is expected to exceed 90,000 oz. gold at a projected cash cost of US$250 per oz.
Minable reserves are estimated at 20.5 million tons grading 0.03 oz. per ton, based on a gold price of US$300 per oz.
Meanwhile, permitting and development of the McDonald gold project in Montana is continuing. Earlier this year, the company announced its intention to seek a joint-venture partner, as it was unable to raise the US$25 million needed to advance to a production decision.
The McDonald deposit hosts resources of 187 million tons grading 0.04 oz.
gold.
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