Mutiny Gold (ASX: MYG) as part of a de-risking strategy at the Deflector gold copper deposit last month entered into a $11 million project loan and hedging facility agreement with Credit Suisse.
As part of the facility Mutiny will forward sell 50,000 gold ounces, and today announced the average price of A$1,847 per ounce - which is above historical Australian gold pricing.
Importantly this forward sale represents less that 8.5% of Mutiny’s current JORC gold resource of 590,000 ounces, with the company forecasting an upgrade in the near future after an extensive drilling campaign during 2011.
John Greeve, managing director of Mutiny, commented on the good news: “the board of Mutiny is delighted by the pricing that was achieved upon execution of the hedging facility.
"To have hedged a small component of our future gold production at record gold prices will greatly assist in de-risking the company and the project as it moves towards production from Deflector in late 2012 / early 2013.”
Under the agreement Mutiny will deliver gold to Credit Suisse over the period July 2013 to December 2016.
Deflector - by the numbers
Deflector currently hosts a resource of Measured 130,000 gold ounces and 12,000 tonnes of copper, and Indicated 105,000 gold ounces and 4,500 tonnes of copper.
The deposit contains a total resource of; 3.4 million tonnes at 5.4 grams per tonne (g/t) gold, 4.7g/t silver and 0.8% copper for 590,000 gold ounces, 510,000 silver ounces and 25,500 tonnes of copper.
The company currently plans to commence production with an open pit mining operation at Deflector in the December quarter of 2012, followed by underground mining after two years.
Mutiny has an exploration target of between 1.65 million to 2.5 million gold ounces.
Deflector - Definitive Feasibility Study
Mutiny is continuing work on a Definitive Feasibility Study, with the company having engaged GR Engineering Services to head up the mechanical engineering and plant design works.
Xstract Group is conducting the mine studies and Mutiny’s in-house project manager and metallurgist, Kevin Reynolds is managing the process as well as overseeing the metallurgical test work.
Earlier in 2011 Mutiny delivered a bumper Scoping Study, which included an IRR of 83%, a NPV of $187 million – which is likely to increase significantly, and cash costs over a ten year life of mine of just A$524 an ounce.