Ok I get what you're saying.If they keep production stable...

Ok I get what you're saying.

If they keep production stable (e.g. not increasing) then their hedge of 50,000 tonnes @ $230 is used to pay all their costs. They profit from the remainder of their production they sell at market prices which are falling therefore profit also falls.

If you had a finite quantity of pens available to you and I offered to buy one for $5 would you sell it to me? The additional context is that you believe the market for pens is cyclical and that you might be able to get $10 for the same pen if you hold onto it for a few years. While this example is basic and probably a bit stupid I believe it captures the essence of a decision that management may need to make about whether it's better to dig up ore for lower prices or to leave in the ground until such time that they can get more for it.

As with all things I think what I've outlined above is entirely dependant on how low the price goes. If it falls to the levels some people are suggesting (sub US $100) then curtailing production could actually be a smart move as margins are improved via the hedge whilst extracting less of the resource they own..