Intrepid Mines is an international gold and copper development and exploration company operating primarily in Indonesia.
Intrepid Mine's shares leap on gold hedge book closure
Intrepid Mines (ASX/TSX:IAU) shares jumped to a two month high to 15 cents as the company announced that its Western Australian gold mine, Paulsens, has delivered the final ounces to Westpac under existing hedge arrangements.
Intrepid CEO, Brad Gordon, said: “In the current financial environment, where the ability to self-fund is critical, I am delighted that we can enjoy the benefit of full exposure to current highly favourable gold prices.”
Completion this week of hedge delivery ounces at A$627 per ounce will now allow the Company to enjoy full exposure to the spot gold price – currently A$600 per ounce higher – and significantly enhance the mine’s current positive operating cash flow.
In the eleven months to November 2008, Paulsens has produced 72,500 ounces of gold at a cash cost of US$481 per ounce, of which a total of 43,971ounces were delivered against the Westpac hedge arrangements. These hedge positions were a requirement of the project financing facility provided for construction of the process plant and site facilities at Paulsens.
The debt associated with this facility was prepaid in June 2008 and the Company is net debt free with US$12 million cash at bank as at 30 November 2008.
Brad Gordon said, “Paulsens is looking to a resource upgrade soon to extend the mine life and underpin future development,” he said. Whilst continuing to focus on extracting maximum value for shareholders from its three main assets, the Company has continued a programme of non-core exploration and non-mining asset divestments, to protect and enhance the Company’s cash position.
September '08 quarter
For the September 2008 quarter, Paulsen's gold production was 16,483 fine ounces, down 27 percent (prior quarter record production 22,687 ounces). The lower gold production resulted from lower grade stopes being mined during the quarter. Annual gold production is still expected to be close to 80,000 ounces.
Unit operating costs at Paulsens reduced to $111 per tonne (prior quarter $115 per tonne).
Site cash costs increased to $558 per ounce (prior quarter $429 per ounce) primarily due to lower ounces produced (negative impact $153/oz), slightly offset by the weakening of the Australian dollar against the United States dollar (positive impact $22/oz) and slightly lower costs (positive impact $2/oz) over the period.
Cash inflow of $0.7 million from Paulsens operating activities (previous quarter cash inflow of $9.3 million) reflecting gold sales of 15,917 ounces (of which 11,004 ounces were delivered into the hedge book at A$627 per ounce). Previous quarter gold sales of 25,703 (of which 10,862 ounces were delivered into the hedge book at A$627 per ounce).
Cash on hand at the end of the quarter was $19 million (prior quarter $46 million)