VANCOUVER (miningweekly.com) – To secure its cash flow security for 2017, Canadian miner Centerra Gold announced on Tuesday that it would hedge up to 51% of copper output from its Mount Milligan mine, in British Columbia.
The TSX-listed company entered into fixed price forward sales contracts for 24.9-million pounds of Mount Milligan's expected 2017 copper output at an average price of $2.69/lb.
The hedged production was net of copper streaming arrangements with Royal Gold and based on the midpoint for 2017 production guidance, the company said in a statement after market closed.
Centerra said its current policy was not to hedge more than 75% of its copper output, net of copper in the streaming arrangements.
The company has also entered zero-cost collars for 8.3-million pounds of copper with settlements dates during February to December at a minimum price of $2.25/lb and a maximum price of $3.21/lb of copper.
Macquarie Research analyst Colin Hamilton told a mining conference in Vancouver on Tuesday that views on copper had improved since last year, with supply disappointing and demand expectations gaining. However, some upside risks remained in the medium term, as four major mines, including Oyu Tolgoi, Grasberg, Chuquicamata and El Teniente, would have to develop new block caves over the coming years.
Centerra confirmed that it had no plans to hedge any of the unstreamed gold output from Mount Milligan.