At least one gold producer is looking to lock-in the recent gains seen within the gold market. Argonaut Gold (TSX: AR) this morning announced that it has entered into forward gold sales contracts due to the recent extreme volatility seen in the precious metal.
The company has reportedly entered forward gold sales contracts for April 2022 through to March 2023, as it looks to provide a degree of certainty for its cash flow estimates. Argonaut has entered into contracts for 7,500 ounces of gold per month for the period, amounting to a total of 90,000 ounces of gold over the next twelve months.
The price was locked in at $1,916 per ounce, suggesting that they may view recent positive momentum in the price of the metal as temporary.
That being said, the contracts are expected to reflect between 40% and 45% of the firms expected gold production for the period, enabling the firm to still capture upside if gold continues to see positive momentum. The company has indicated that it intends to conduct a potential debt financing in the second quarter, for which the cash flow certainty of such contracts can be beneficial. The firm is notably entering the final year of construction for its Magino project, which the potential debt deal is believed to be related to.
Argonaut Gold last traded at $2.30 on the TSX.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.