It is a fact of the times that the hedging that the company has...

It is a fact of the times that the hedging that the company has in place is serving its original purpose in two ways:

1. the hedging of 1,100 tons per month of cathode at AUD7054t protects the company cash flows from further falls in the price of Cu when the cash cost of production are also falling as the ramp up to higher production occurs. CUO also has a further 450tons per month hedged at around AUD7900t from April next year. Hedging runs through to mid 2010. The balance of production is subject to spot pricing which itself is benefiting from the weaker Aussie dollar which has limited the recent falls in USD Cu prices.

2. the simple existence of hedging provides the company with a key advantage in the negotiation of refinance of its debt facilities because cash flow is far less subject to the vagaries of economic conditions.

In turn I believe the positives translate into support of the share price. CUO remains an extremely low cost producer and perhaps the recent selldown was mostly associated with margin calls requiring investors to sell rather than underlying lack of confidence.

regards
DF