RE: RE: I am on Board...First Post..
Hey Grumpymonkey007...
With all due respect...you may want to take another look.
The new deal is not a "hedge".
Regards,
Digger144
Brigus Gold To Eliminate 100% of Gold Hedge Commitments; Sells Gold Stream for US$56.3 M
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11/9/2010
Halifax, Nova Scotia; November 9, 2010– Brigus Gold Corp. (“Brigus Gold” or the “Company”) (TSX and NYSE Amex: BRD) announces that it intends to eliminate 100% of its forward gold sales contract obligations (“hedge”) effective January 2011 and will benefit from selling 100% of its Black Fox Mine gold production at spot prices going forward.
Brigus Gold also announces that it has entered into a gold stream agreement with Sandstorm Resources Ltd. (“Sandstorm”) pursuant to which Sandstorm has agreed to purchase 12% of the gold production from the Black Fox Mine beginning in January 2011 and 10% of future production from the Black Fox Extension covering a portion of the adjoining Pike River property (the “Gold Stream”). Sandstorm will make an upfront payment of US$56.3million which Brigus will use to unwind the balance of its forward gold sales contracts terminating the obligation to deliver 99,409 ounces from October 2011 to March 2013 and as a result Brigus will become an unhedged gold producer. Sandstorm will also pay Brigus ongoing per ounce payments of US$500 subject to an inflationary adjustment beginning in 2013, not to exceed 2% per annum.
Brigus Gold has the option, for a 24 month period, to reduce the Gold Stream to 6% of production from the Black Fox Mine and 4.5% of production from the Black Fox Extension for a payment of US$36.6 million.
The Black Fox Mine is located in Matheson, Ontario, Canada, in the Timmins Gold District and has been in commercial production since May 2009. Brigus Gold has operated Black Fox as an open pit mine since commencement of production and in mid 2010, began development of the underground portion of the mine.
In the 3rd quarter of 2010, the Black Fox Mine produced 21,526 ounces of gold, an increase of 19 percent over the 2nd quarter. Cash costs for the full year 2010 are expected to be within a range of $500 and $550 per ounce in line with projections.
During the current quarter (4th quarter) Brigus will be focused on construction and development to commission the underground portion of Black Fox Mine early in 2011. Mine development, including construction of the new vent raise and relocation of the underground ramp and portal, is in progress. Logistical issues related to construction and relocation of the new portal to the pit floor have resulted in a delay of approximately one month. As a result of these issues, production from the open pit will be reduced during the quarter. During this period of reduced pit production, some ores will be drawn from low grade ore stockpiles, resulting in projected 4th quarter production of between 16,000 and 19,000 ounces of gold.
Brigus Gold’s Chairman, Chief Executive Officer and President Wade K. Dawe commented, “In the four months following completion of the merger to form Brigus Gold, corporate debt has been reduced by 70 percent and the gold hedge book will be eliminated, thus increasing the Company’s leverage to the current gold market. With the restructuring of Brigus Gold’s balance sheet and with Black Fox’s higher grade production from the underground operations ramping up, we are now focused on production growth and profitability.”
He continued, “The Sandstorm deal implies a value of approximately US$475 million exclusively for the Black Fox Mine. This transactional value excludes giving any value to our Grey Fox property, the Goldfields development project, and Mexican and Dominican Republic exploration assets, yet represents an over 50% increase from our market capitalization of US$305.8 million.”
“This is a very significant and transformative deal for Sandstorm,” stated Nolan Watson, President and Chief Executive Officer of Sandstorm, “The Black Fox Mine will provide us with immediate cash flow from gold sales but we are really committing to an asset that we believe has superior growth prospects on the exploration front. Brigus Gold has assembled an excellent operating team and is in a position to grow the project effectively.”