Great Panther Mining Limited (TSE:GPR) (NYSEAMERICAN:GPL) announced Tuesday that it has received US$11.25 million as part of a gold doré prepayment agreement with Samsung C&T UK Ltd.
The Vancouver-based miner also set a limited gold floor price of US$1,500 through the purchase of financial put options to protect its margins from any price fluctuations.
The firm purchased put options on 45,000 gold ounces that mature from March through to the end of June 2020 at an average cost of US$9.33 per gold ounce, ensuring a minimum sale price of US$1,500 for the majority of gold production from its Tucano mine in Brazil.
The move was stimulated by the recent weakness of Brazil’s currency, the real (BRD), which is trading at historic lows to the US dollar (USD).
The firm said in a statement that on January 31, 2020, Great Panther's non-deliverable forward foreign exchange contracts for BRL against the USD totaled approximately BRL 506 million (US$120 million), with pre-determined exchange rates ranging from BRL 4.11 to BRL 4.32 against the USD through the remainder of 2020.
This compares to BRL 355 million at rates ranging from BRL 3.99 to BRL 4.18 as reported on September 30, 2019, the firm said. “This represents the majority of the Company's BRL-denominated expenses for the balance of 2020,” Great Panther told shareholders.
"With the recent weakening of the Brazilian real, and gold prices reaching multi-year highs, we are taking the opportunity to increase certainty of cash flow in 2020," Jeffrey Mason, interim CEO of Great Panther said.
"Importantly, our business will continue to fully benefit from rising gold prices, while limiting downside at minimal cost. Together with the closing of the Samsung facility, our financial position continues to strengthen."
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