VANCOUVER – Not much is heard of hedging strategies these days, especially as gold producers have largely abandoned the practice. However, QUADRA MINING has instituted a copper hedging program to secure cash flow from its Robinson mine in Nevada.
The company says it has established a hedge program that delivers an average price of US$1.70/lb of copper for the estimated 135 million lb that Quadra expects to receive final settlement for in 2006. As a result of the lag time between mine production and final sales, the hedge prices apply to approximately 44 million lb of copper produced in 2005 and 91 million lb of 2006 production. The remaining estimated 2006 production of approximately 57 million lb is unhedged.
Although final settlement of this remaining copper production will occur in 2007, Quadra expects to receive provisional payment in 2006 generally in line with the spot LME price upon shipping. The hedge program requires no cash margin from the company.
Quadra expects its 2006 production figures to be 145 million to 150 million lb of copper, 55,000 to 60,000 oz of gold, and a “potential molybdenum byproduct” of 1.0 million to 1.6 million lb. Visit the website at www.QuadraMining.com.