Close

Emerging gold and copper producer Mutiny Gold has revealed that it has successfully booked a profit of AU$11 million following a recent strategic gold transaction.

Taking advantage of the recent weakness in gold prices, Mutiny, in conjunction with adviser Noahs Rule, as well as a AU$75 million gold buying facility provided by Credit Suisse, traded in the gold market of the London Metals Exchange and purchased 50 000 oz of gold at an average price of US$1,491/oz.

Mutiny said that the strategic acquisition will enable the company to deliver the recently acquired gold into the current 50 000oz hedge put in place in December 2011 resulting in Mutiny achieving a total gain of AU$11 million, which will be used to repay an existing AU$11 million short-term Credit Suisse loan.

Mutinys MD John Greeve explained that the short-term loan provided by Credit Suisse had provided important momentum for the company.

The AU$11 million loan allowed us to complete the purchase of the Deflector Gold project from ATW Gold Corporation Ltd and fund the highly successful drill programmes and feasibility Studies at Deflector. The hedge developed in December 2011 was an important component of the facility agreement with Credit Suisse and it is strategically significant that the company has improved its balance sheet in anticipation of securing a Senior debt funding agreement for project financing.

We believe that the value of the Deflector Gold project has increased significantly since we negotiated our initial short term loan, and hedging position. By using the profits from this transaction to retire our short term debt, we have an opportunity to simplify our funding arrangements and reduce the level of financial exposure to our lenders, added Greeve.

PROJECT FUNDING

Mutiny also advised that it has made substantial progress in attaining bank approval for a senior debt funding agreement. One bank has received credit approval for its 50% share of the debt funding package two banks are close to reaching agreement on commercial terms, while an additional bank has expressed interest in participating in the financing agreement.

The project finance loans are in addition to the previously announced US$43 million metals purchase agreement funding from Canadian company Sandstorm Gold who remain fully supportive of the project and the Company.

DEFLECTOR DRILLING PROGRAMME

Meanwhile, Mutiny pointed out that it intends to significantly expand the scope of its 2013 Deflector drilling programme. The expanded programme is aimed at increasing the ounces to support a potential increase of gold production from 70 000 oz per annum to over 105 000 oz per annum by year three.

We are confident that we can boost our gold resources by conducting step out drilling to identify new areas of gold mineralisation close to the mine. Our objective by expanding our 2013 drilling programme is to enable the company to support a larger, longer life and more economically robust gold mining operation at Deflector, said Greeve.

Supported by the previously announced structural interpretation studies and a planned Sub Audio Magnetic survey exploration programme, the proposed drill programme will target an increase to the current Deflector deposit resource of 2.86 mt at 6.4g/t gold, 6.8g/t silver and 0.9% copper for 591 000 oz of gold, 629 000 oz of silver and 27 000 t of copper. That resource to date has been defined over 900 m of strike length, and is interpreted to be open at depth and along strike.

Further, Mutiny confirmed that the 2013 expanded drilling programme will include 4 000 m of diamond and reverse-circulation drilling, up from the 3 000 m announced in February 2013, to target high-grade extensions of Deflector, which the company believes have the potential to provide significant increases to the current resource base.

PROJECT UPDATE

According to the company, engineering works, supply contracts and floatation concentrate off-take agreement are on track to be ready for activation upon completion of project finance.

Key contracts include:
Process plant (Engineering, Procurement and Construction (EPC)
Mining
Ore haulage
Village construction and servicing
Power
Communications
Mutiny noted that there has been a high level of interest from providers of these key contracts and this has allowed it to be selective in the discussions with qualifying tenderers.

As a result of Mutinys early engagement of GR Engineering Services, the processing plant design and the detailed design of the ball mill from Citic HIC Australia are at an advanced stage. Plant procurement commitments are ready to be issued at the announcement of project financing.

Negotiations on Off-take Agreements for Mutinys flotation concentrate have been in progress for a number of months and Mutiny is close to settling the final terms.Mutinys project and technical team have been progressing the above key contracts as well as finalising Project Implementation Management Plans and Schedules so that the project is now ready to be activated.

Additional Reading?

Request Free Copy