Bellevue Gold drops after closing hedge positions

The news: Bellevue Gold expects a significant increase in free cash flow after closing out of its near-term hedge contracts.

The numbers: The gold producer said it has now closed out $110.8 million of near-term forward gold sale contracts scheduled for delivery through the June, September and December quarters of 2025. A small number of hedges, 5,725 ounces at a contracted hedge gold price of $2,835 per ounce, remain for settlement in December. It also includes 152,000 ounces of forward gold sales at an average price of $2,843/oz with maturity dates between 31 December 2025 and 31 March 2028.

The context: Bellevue said that with the near-term hedge book close out complete, gold production until December 2025 will be predominantly delivered into the spot gold market, which is expected to result in a significant increase in free cash flow generated over this period. This will allow for continued build up in balance sheet strength and provide improved capital management options. The remaining mark-to-market position is expected to require recognition as a liability in the company’s financial statements, it said.

The move comes just days after the miner completed a discounted $156.5 million share placement to institutional and sophisticated investors, with the proceeds used for closure of near-term hedged contracts. The company last week cut its full-year production guidance for the second time in three months and scrapped its five-year growth plan after "uncharacteristic geological factors" hindered output in the March quarter.