hmmmmm, page-28

Thanks D for the reply, but I think my question was danced around a little.

I think in a nutshell, what your saying is that:
1) no, the hedged $ aren't fixed in the LOI,
2) but current decline in the spot price will have little or no effect on the hedged $ negotiated because it is a fixed long term price.

Please let me know if I've misunderstood.

I agree with the first summation but not confident with the second.

To keep things simple for my little brain, my understanding of a hedging agreement is formed on the basis of two fundamental things:
1) guaranteed supply
2) what the forecasted zinc price is for the duration of the hedged period.

I suspect the much talked about "framework" set out would having a hedging calculation based amongst other things the historical spot price and the current spot price.

We all know current spot price, but out of interest (and possible relevence) I carried out some VERY loose calculations and the 12 months avg is 1.52 (US$/Lb). If the recent slamming didn't occur (ie assume last months avg was 1.95), the 12 month avg would be 1.55

I stress these figures are very loose, as I basically just looked at the graph rather that source true figures.

So what I'm trying to guage is how much will the current spot price and it's recent decline affect the offtake?