cl001, Alright, it looks like you were right about QUA doing the hedge program of their own volition rather than being forced to by the evil banker. But then again they announced an increase in their LOC and a bridge loan for $35 million total so maybe the banker did exert some influence. It also appears that they never expected to wrap up the hedge until the end of 2006, with carryover financial effects into 2007. Here is an old PR from them:
Vancouver, Canada - November 29, 2005. Quadra Mining Ltd. (QUA.TSX) announces that it has implemented a comprehensive copper hedging program that will secure significant cash flow from the 2006 copper sales from its 100% owned Robinson Mine in Nevada.
The Company has established a hedge program that delivers an average price of $1.70 per pound of copper for the estimated 135 million pounds of copper 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 pounds of copper produced in 2005 and 91 million pounds of 2006 production. The remaining estimated 2006 production of approximately 57 million pounds 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.
In addition the Company has entered into a commitment letter with its existing bank for:
* A corporate line of credit for up to $20M until June 30, 2006 after which the facility will convert back to the Company's current concentrate facility arrangements.
* A bridge loan of $15M for the acquisition of the Carlota project to replace a previously negotiated facility, to be repaid by March 31, 2006.
As security for the repayment of these loans, Robinson Holdings (USA) Ltd. will grant a security interest in all of its assets including Robinson Nevada Mining Company, the companies which own the Carlota project, together with the assets of these companies.
