Hedging Iron Ore

morning all.

I’m a bit surprised that there’s been little comment/discussion on the potential they will hedge (from the quarterly pasted below). This is a vital piece of the puzzle going forward in our aim to assess the value of FEX in the next year or two.
thanks to one of our chartists, we know FEX has been tracking the IO price reasonably well (An updated chart would be appreciated).
the biggest risk to our value/SP is the IO price. Yes it “probably” will stay strong for 1-2+ years, but as we’ve seen in previous downturns, it can and does drop very quickly. I think the last one took 12 days from memory. S##t happens. 2009 GFC, 2000 crash, 1987 crash. So we’re overdue a decent crash.Also, any other X factor can send it all tumbling down.

BUT, if we hedge, we can avoid any downturn, regardless of what the world and IO in particular might do in the next 1-3 years. They say they are looking to hedge, while maintaining an explore to IO. So that means a % will be hedged. I’m ok with that, although, as we are making truckloads of money above $200 (last nite up $3 to $219.30), I’d be happy to hedge 100%. With gold and copper, you normally get a further premium for forward selling (hedging), so we’d be locking in $220+, plus our know premiums for grade etc.
works for me.

Now what I don’t know is anything about IO hedging. I didn’t know IO companies hedged. Anyone with info about that, please let us know.

this is further evidence of the high quality management we have running our company. I’m happy to keep backing whatever they decide.

cheers,

ned.

Capital Allocation Policy
Given the Company’s healthy balance sheet, the Board of Directors is currently formulating a Capital Allocation Policy. As part of its considerations, the Board has commissioned a review of its tax position, specifically the utilisation of approximately $23 million of carried forward tax losses, the timing of corporate tax payments, and the subsequent timing of generation of franking credits.The review is in an advanced stage and the Board expects to be able to articulate a Capital Allocation policy at or before the release of its FY2021 financial accounts.
Price Protection PolicyFenix is considering a Price Protection / Hedging Policy. These considerations are also highly advanced, with the Company looking at methods to secure the future profitability of the Iron Ridge Project, whilst maintaining exposure to the iron ore market.