Hedging Policy and Position
The cornerstone of Iberian's Hedging Policy is the protection of the Company's assets. Management, reporting to the Hedging Committee, continually reviews the markets in which the Company trades, and depending on circumstances, decides if any additional or altered hedging is appropriate to enhance the future cash flow of the Company’s operations while respecting protection of the Company’s assets.
Positions as at December 31, 2009 were unchanged for Condestable Mine, except as a result of the passage of time.
As of December 31, 2009, copper production at the Condestable Mine has been hedged as follows:
|
Metal |
Period |
Contract Type |
Volume |
Unit |
Strike price per
unit (U.S. $) |
|
Copper |
2010 |
Forward |
20,475 |
FMT |
4,419 |
|
Copper |
2011 |
Forward |
20,625 |
FMT |
3,494 |
|
Copper |
2012 |
Forward |
1,750 |
FMT |
3,408 |
|
|
|
|
|
|
|
|
Gold |
2010 |
Forward |
2,400 |
Fine ounces |
742 |
|
Gold |
2011 |
Forward |
2,400 |
Fine ounces |
742 |
The hedging program for Aguas Tenidas Mine is, as of December 31, 2009 is as follows:
|
Metal |
Period |
Contract Type |
Volume |
Unit |
Strike price per
unit (U.S. $) |
|
Copper |
2010 |
Forward |
23,400 |
FMT |
4,409 |
|
Copper |
2010 |
Call options sold |
5,175 |
FMT |
4,200 |
|
Copper |
2011 |
Call options sold |
925 |
FMT |
4,200 |
|
|
|
|
|
|
|
|
Zinc |
2010 |
Forward |
27,550 |
FMT |
1,608 |
|
Zinc |
2010 |
Call options sold |
4,900 |
FMT |
1,500 |
The hedging program for Condestable Mine is fixed and in accordance with the terms of its syndicated loan. Hedge positions for Aguas Tenidas are continually reviewed and adjusted, to enhance alignment with evolving production schedules. Aguas Tenidas is currently not limited by any external hedging requirements. As part of the proposed senior debt facility, the Company expects that current 2010 hedging and call positions for Aguas Tenidas Mine will be adjusted as part of a fixed hedging program under the proposed facility.