Gascoyne Resources has wiped off half its debt with major shareholder Deutsche Balaton AG after experiencing strong gold production in January and February.
After entering into a $20-million convertible note debt facility with Deutsche Balaton AG in December 2021, Gascoyne made a $10-million pre-payment to eat into the deficit.
The voluntary pre-payment will save Gascoyne approximately $3.1 million in interest payments across the remaining 21-month term in convertible notes.
It comes after Gascoyne enjoyed record January gold production of approximately 7,900 ounces at its Dalgaranga mine in Western Australia, which was followed by 6,867 ounces of gold in February.
February production could have been higher but Dalgaranga was hit with five days of downtime due to scheduled mill re-line and maintenance.
Gascoyne said its on track to produce more than 21,000 ounces for the March quarter, a 25 per cent increase from the December 2021 quarter.
“It is very pleasing that we are able to retire half of the convertible note through this $10 million pre-payment to Deutsche Balaton AG,” Gascoyne managing director and chief executive officer Simon Lawson said.
“Dalgaranga’s strong production performance for the quarter-to-date, combined with an unhedged gold position, has greatly improved our cash-generating ability allowing us to make this payment.
“The improved levels of cash generation sets us up well for the rest of the 2022 calendar year as we continue to increase mine life at Dalgaranga through extensions at Plymouth and further delineation of the recent Gilbey’s North discovery, combined with the near-term development of deposits such as Archie Rose.”
In early March, Gascoyne announced the discovery of multiple high-grade intercepts from an “exceptional” drill hole at Gilbey’s North. The DGRC0758 reverse circulation (RC) drill hole returned 56 metres of gold mineralisation across four intercepts.