Emerging Australian gold producer Reed Resources Ltd (ASX: RDR) (Reed) announced in May 2012 that Barclays Bank PLC (Barclays) was to act as arranger of a debt financing facility of up to $23 million for the Meekatharra Gold Project’s working capital and performance bond requirements.
Reed is pleased to announce the receipt of a Commitment Letter from Barclays confirming credit approval for the debt facility and mandatory hedging program. The commitment is subject to conditions including execution of formal documentation and completion of final due diligence. The key condition precedent to drawdown of the facility is Department of Mines and Petroleum mining approval for Stage 1 open pits Batavia, Whangamata and Surprise with the 86,200 ounce Bluebird open pit already approved. All mining approvals are scheduled for the end of August 2012 with mining scheduled to commence in September 2012. The facility also provides the ability to increase both debt and hedging limits as additional Reserves are added to the Life of Mine that satisfy Barclays debt and hedging criteria. The formal financing agreement is expected to be completed and executed in the coming weeks.
Reed has purchased Puts over 70,000 ounces with a strike price of A$1560/ounce expiring in September 2012 under an Early Access Hedging Facility with Barclays. The number of Puts is directly related to protecting the floor price received in the mandatory hedge from volatile movements in the period between signing the mandate and drawing down funds which is expected in October.