This is smart business.You do understand why PAN hedges...

This is smart business.

You do understand why PAN hedges shipments?

For most who don’t understand how the invoicing structure works - PAN issues an interim invoice once the ship departs the port. However, the final invoice (not interim) becomes payable by the customer. The final invoice is determined (on spot price) once the ore arrives to the customer (could be two weeks or 1 month after leaving the port).

In light of this, PAN will use hedging through Macquarie Bank to protect any shortfall between the interim & final invoices. I.e. You don’t want a scenario where spot is 35k once ship departs the port and then $28k once ship arrives to the customer.

I also understand that if spot is higher at final invoice then PAN will benefit from the additional revenue. I will confirm this point just so that I am not speaking out of tune.