The Gascoyne Resources Ltd (ASX: GCY) share price has risen 1% to 51 cents today after the company voluntarily repaid 45% of its bank debt due to ongoing free cash flow generation.
The Dalgaranga Project gold miner from Western Australia entered into a $40 million loan facility with Investec in August 2020 as part of a recapitalisation process. It completed a repayment of $14.5 million today.
Gascoyne performance “strengthened balance sheet”
Commenting on the payment: Gascoyne Resources CEO Richard Hay said:
The voluntary prepayment of close to half of Gascoyne’s bank debt really highlights how far the business has come after more than 12 months of consistent performance of the Dalgaranga operation.
This prudent approach to capital management has further strengthened our balance sheet and is a credit to the support we have received from a range of stakeholders.
December quarter results
For the December quarter period, Gascoyne produced 20,381 ounces of gold, totalling 40,695 ounces for the first-half of the 2021 financial year.
In 2020, Dalgaranga produced in excess of 80,000 ounces of gold with targeted production over the next 4 years of between 70,000 and 80,000 ounces of gold per annum. All-in sustaining costs are expected to come between $1,200 to $1,300 per ounce.
Gascoyne had engaged gold hedges to finance its debt, but its voluntary prepayment removes the requirement for any further mandatory hedging at current spot prices, beyond its current position.
At the current spot gold price, Gascoyne’s existing hedge book has an in-the-money position of $15.7 million and will result in Gascoyne achieving an average realised price in excess of A$2,400/oz for the remainder of the 2021 calendar year.
About the Gascoyne share price
The Gascoyne share price has been one of the ASX’s biggest movers over the past two years, rising from 0.03 cents per share in May 2019 to 56 cents per share in October 2020. It has remained steady since then, never dropping below 43 cents throughout the coronavirus pandemic.
The Gascoyne share price is up 1,602% over the past 12 months and 17% this year to date, although it dropped more than 8% this week. It doesn’t pay a dividend and has current earnings per share (EPS) of 59 cents.
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Motley Fool contributor Lucas Radbourne-Pugh has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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