US$-denominated copper hedging gives Taseko the edge in volatile price environment
TORONTO (miningweekly.com) – Base metals miner Taseko Mines on Thursday said it had copper put options in place to provide downside protection to the price of copper through to June 30, 2015.
For the first half 2015, the Vancouver-based company had put options in place to guarantee a floor price for 30-million pounds of output at a strike price of $3/lb in the first quarter and $2.90/lb in the second quarter.
Despite the price of copper, seen by some analysts as a bellwether for the global economy, having shown relative stability over the past year, data from China earlier this month confirmed a slowdown in economic growth and had dampened expectations of price expansion.
“We initiated our hedging strategy in 2009 and are one of a small group of copper producers that have consistently hedged to ensure stability of cash flow during times of metal price volatility. Although there appears to be a lack of direction with the copper price as a result of macroeconomic issues, we believe in the longer-term fundamentals.
“With the weakening Canadian dollar, the Canadian dollar price of copper has remained stable over the past year and is approximately C$3.35/lb today. With roughly 80% of our Gibraltar costs denominated in Canadian dollars, our US dollar hedging is advantageous to Taseko,” president and CEO Russell Hallbauer said.
Taseko owns a 75% stake in the Gibraltar copper/molybdenum mine, in south-central British Columbia.
Taseko last month closed a $79-million takeover deal with Curis Resources, that gave it control over the in-situ copper recovery and solvent extraction and electrowinning Florence copper project, in central Arizona.
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