I can sympathise with locking in some revenue to fund the upcoming capex (~$70m Fed, $25m Peak mill expansion, ~$40m Great Cobar).. but once the capex is sunk and operations sitting much lower in the cost curve as a result of the investment you want exposure to commodity prices. But I definitely think they could better do this with put options - especially for the liquid contracts like gold.
What pisses me off a little is they lock in revenue but they don’t lock in cost/capex. If inflation runs hot and the Peak capex blows from $25m to $35m you’ve shot yourself as gold/commodity prices typically move with inflation and would “hedge” this cost inflation.. but you’ve locked them flat. So in some sense it isn’t a “hedge” if ur not locking in the capex spend part.. it’s more a speculation by mgmt on price direction.
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