Ann: Noosa Mining Conference - Presentation, page-23

Thankfully more astute management are awakening to the disadvantages of selling forward production hedging during an inflationary cycle.
Any good operator understands the need for insurance.
Why not use derivative contracts as a type of insurance?
This way the purchaser is not capping the commodities upside potential.
The premium paid for the derivative contract can be looked at the same way as an insurance premium (a cost of doing business expense).
Capping future revenue whilst not being able to control cost output inflation creates a higher level of risk.