FEX only use swaps so they are more like forward contracts...

FEX only use swaps so they are more like forward contracts rather than Options for which they would pay a lot more for them. I'm not sure on FX, but assume its similar, the price of an option is directly proportional to the risk,

Ie. in order to buy an option to fix all IO pricing above say $130 (when the price is $170) would be relatively cheap (as you will never cash in the Option - unless of course something major occurs), however locking in Options at $170 when the price is $170 provides the majority of the benefit to the purchaser of the option so it would become expensive. Its why Options are more expensive,

FEX use swaps, so they aren't buying Options, they are buying forward contracts, so they are essentially swapping the price of IO at the price of sale.

The impact on the I/S is essentially that FEX sell for $180, they make a $10 / tonne loss on the hedge (still shown in Revenue) plus an additional royalty of $1.75 / tonne (the difference between the $170 price and $180 sold at as royalties are on actual sale price).

On the contrary, should the price fall to $160, the P&L still shows $170 / tonne (in Revenue), but essentially FEX make a $10 gain on the hedge, plus they also make a gain on the royalty as $160 / tonne is a lower royalty by $1.50.

Options are designed to provide purely upside to the purchaser which is why they are more expense. Swaps provide upside to both sides so the price of acquiring the swaps is much lower.

Generally you won't find many smaller mining companies delving into Options as they are just too expensive, so they take the lower cost approach towards hedging and lock in a sale price that they are comfortable to sell at.