I agree with you PP. Kanmantoo is a definite goer and has been significantly de-risked with the swaptions in place.
I would like a clarification on what the swaptions actually are though. Are they a mixture of puts and calls? Or is it a basic hedging program? I suspect they are put options myself, since they had to pay $8.7m for them.
Anyway, I calculate that HGO will receive AU$3.59 per pound of copper they produce, for these swaptions. That includes a deduction for the AU$8.7m paid to purchase the swaptions.
Cash costs I think were stated at US$1.50 per pound. However, as real cash costs are in AU$, I'm not too worried about fluctuations in currency. I'm not sure what exchange rate was used to get the US$1.50 per pound, but if we use the current exchange rate, we get cash costs of approx AU$1.80 per pound.
So, we can see there is plenty of margin in Kanmantoo to ride us through any turmoil in the markets. Plus, I don't see any problem in getting finance now, in fact the swaptions may have been a prerequisite.
Cheers, Z.
HGO Price at posting:
30.0¢ Sentiment: Hold Disclosure: Held
