London-based broker Fox-Davies Capital welcomed Exco Resources' (ASX:EXS) announcement it has repaid the gold loan to Barclays Capital (NYSE:BRC), which financed Exco’s share of the development cost of the White Dam Gold Production joint venture in South Australia.
The last repayment was completed yesterday, just seven months after the start of production and two months before the first of three scheduled part-delivery dates, which Fox-Davies said was made possible by a combination of better-than-expected production rates and higher gold prices.
Fox-Davies called the news “excellent” as the company was now unencumbered and could benefit from the high gold prices now pertaining.
As a result, it upholds its 'buy' recommendation for the stock.
The broker also noted that the JV partners are currently completing an exploration and resource development programme for the nearby Vertigo deposit and White Dam North, White Dam South and Ambush prospects to extend the life of the mine and increase life of mine production.
Extensions to the current pit are also being investigated.
The White Dam Gold Project (Exco 75%, Polymetals Group Pty Ltd 25%) is located in South Australia approximately 80km west of Broken Hill. The project contains a resource inventory of 9.6 million tonnes (Mt) grading 1.05 grammes per tonne (g/t) of gold for 325,000 ounces contained.
38,900 ounces of gold (Exco’s share 29,175 ounces) have been produced to date at the project, exceeding expectations by approximately 30%.
With costs of A$600/oz, the project is already delivering significant revenues. The relatively short-life project is currently expected to produce a total of 120,000 ounces (Exco’s share 90,000 ounces).