Simmers secures forward gold agreement

Johannesburg - Junior gold miner Simmer & Jack Mines [JSE:SIM] said on Friday it has raised $20m by way of a forward gold sale through Deutsche Bank (DB).

In terms of the agreement, Simmers will deliver 2 030 ounces of physical gold a month to DB for a 12-month period, starting in November 2010.

The quantum of delivered ounces was determined with reference to a gold floor price of $850/oz. DB will settle, in cash to Simmers, the difference between the $850/oz floor price and the spot price on the day of delivery up to a maximum agreed price per ounce.

Simmers has used the proceeds from the gold forward sale to repay Rand Merchant Bank, a division of FirstRand Bank, an amount of R105m that remained outstanding under the bridge loan entered into with RMB during April 2010.

The remainder of the cash will be utilised for general business purposes, it said.