It worked a treat for the company last time round:
June 2023 The cost of closure at a spot price of A$2,860 per ounce was $36.78 million, paid out of Capricorn’scash and bullion holdings of $120 million (31 March 2023). The cost included the purchase of goldput options (for the same volume and maturity as the closed hedge contracts)
June 2024 This closure follows execution of a similar strategy in June 2023 under which 51,000 ounces ofgold hedging was closed, leading to revenue enhancement in FY24 of approximately $13 millionafter closure costs as Capricorn increased its exposure to the rising gold price over that period
That's a 35.3% return with extremely low risk.
Much better strategy than bank deposit yield or divvies or buybacks or heaven forbid speculation on other equities.
You can see how far that $13m stretches in a company like CMM, which can keep it's costs under control. ALL staffing costs paid if you like? You can also see the positive tax implications of using this strategy here below.
Also shows that they are optimistic about further gains in $A spot price between now and Dec 2025.
CMM Price at posting:
$4.98 Sentiment: Hold Disclosure: Held
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