What is interesting is that someone on the other side to the...

What is interesting is that someone on the other side to the transaction is willing to go long vol/fat tail @ $1,615AUD/oz for 250k ounces for ~$25MM (if I read it correctly) over ~5 years. (is the $3MM, $25MM - $22MM NAB's fee??)

SBM's main problem will be whether they can contain their costs to <$900 over the 5 years. The big risk is a potential coupla arising between higher POG being a function of higher inflation which implicitly means higher costs. (orebody risk impacts on cost are another matter). i.e. only a hedge on revenue not profit. On the plus side, I'm assuming the $$ given are AUD POG, so at least SBM has covered the coupla between higher AUD & higher POG USD. (and I am thinking coupla rather than correlation because its more the fat tail that counts...)

Not entirely fussed on the deal but at least it is not SBM's core reserves "hedged" in this way.

DYOR