NRDS Hedging - REVISED post
Copper Hedging Program
In connection with the Credit Agreement with Nedbank dated June 28, 2007, the Company has agreed to implement a hedging program with respect to a specified percentage of copper output from the Johnson Camp Mine. The hedging program will consist of a synthetic put structure whereby the Company will enter into a combination of forward and call option contracts for copper quantities, based on a portion of the estimated production from the Johnson Camp Mine during the term of the loan. The hedging program covers approximately 27% of the estimated copper production from the Johnson Camp Mine during the term of the loan. The Company entered into forward sales contracts for 41% of its estimated copper production in 2009, 32% of its estimated copper production for 2010 and 21% of its estimated copper production for 2011 at a net forward price of $5,538, $4,841 and $4,413 per metric ton of copper, respectively. The program also included the purchase of long call options for the same quantities with an average strike prices of $8,781, $8,523 and $8,723 per metric ton of copper, respectively, thereby permitting the Company to participate in price increases in the event that copper prices exceed the strike price of the long call options. The program requires no cash margins, collateral or other security from the Company.
My prior post had info from a prior release and is out of date.