12 month low, page-11

BosetoHedging

As at 31 December 2012, the Company has hedged approximately 47% of copper and 65% of silver (for the scheduled period of the loan repayment). The hedge contracts provide downside price protection on a portion of the Boseto production. Approximately 53% of the copper production will be sold at spot market prices. The total hedged quantities are 37,521 tonnes of copper and 1,620,939 ounces of silver. The average prices attained for these hedge contracts are US$3.94 per pound (/lb) for copper and US$35.78 per ounce (/oz) for silver. These compare very favourably to the Bankable Feasibility Study (BFS) prices of US$3.00/lb for copper and US$17/oz for silver.
Hedging derivative swap contracts have been put in place with the 3 banks to provide price protection for the revenue stream from Boseto Copper Project during the scheduled debt repayment period from early 2012 until early 2015. The term for the Boseto contracts ranges from 0.30 to 2.24 years.
At 31 December 2012, the fair value of these hedges totalled US$37.9 million (30 June 2012: US$62.0 million) ‘in-the-money’ and recognised as assets by the Consolidated Group. The movement in the asset value net of 22% tax during the period of US$18.1 million is recognised as other comprehensive income.

Very good protection with hedge book well in the money. Screaming buy if ever there was one.