BrendenIm half and half this one - have been watching for a...

Brenden

Im half and half this one - have been watching for a while. Correct my figures if they are wrong - but I dont think have really very much exposure to strong copper prices as some other players, which is maybe why the sp is not marked to market of copper spot.

In hedging strategy when they say they have "hedged 14,550 t of copper from Aug 2006 to Jan 2009" this is assumed 14,500 in total not pa. making about 853 t pm.

Back of envelope numbers.

19,800 tonnes hedged for next two years april 2006-march 2007 @ aud .69 . Call it 825 t pm @ 2364 per tonne. In addition 8/06-01/09 14,500t or 852 t pm @2,431 pt @ aud .734

Production of payabel copper in 11,000 t for 04/05. 26,000 for 05/06. 33,000 06/07. Average over mine life 24,000 tpa.

Whilst 18% reserves are hedged my sums show 30% of production hedged till Jun05 and 38% hedged for 05/06 at a price $1000 pt (aprox 30%) lower than spot. Albeit with say 10% fx gain.

Presumably these are the only hedges, I did not have time to really sift through all their reports - but there is a risk there maybe further outstanding positions on the books taken years back to satisfy lending covenants. If so then exposure to current copper is even less.

I agree it looks like a sound operation for the investor - but my guesse is that sp will move as project risk is eliminated but less so than other unhedged producers on the back of copper prices.

cheers