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Ridge to hedge 50% of platinum output
Julie Bain
Posted: Wed, 19 Mar 2008

[miningmx.com] -- RIDGE Mining, which is on track to produce platinum by the end of this year, said it may hedge as much as 50% or 150,000 oz of its future platinum output for four years at its Blue Ridge Mine in South Africa.

The junior miner plans to produce 125,000 of four platinum group elements (4PGE) a year at its Blue Ridge mine on the Eastern Bushveld and is set to send its first concentrate to be refined in the final quarter of this year.

If production is maintained at 125,000 ounces and given that platinum production is expected to be 75,000 oz a year, in a four year period the company may hedge as much as 150,000 oz.

"We are looking at selling 50% of platinum and palladium forward. We would do it for four years. We are in the process of negotiating and have a close eye on the market at the present time," CEO Terence Wilkinson told Miningmx.

The hedging transaction should be finalised in the next two to three weeks. He would not say if the agreement would be concluded with a bank or a manufacturer of perhaps auto catalysts or vehicles.

Although Ridge was required by the banking consortium with which it secured finance for the project to hedge a certain percentage of its future production, Wilkinson said: "Frankly, we were keen to oblige."

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The platinum price has slipped back on profit taking in the last few days. It closed at $1,972/oz on Tuesday, well off the $2,290/oz high hit on 4 March this year.

The fact that Ridge is willingly locking in prices at around these levels may be an indication that for now the price has maybe run as far as it is going to.

But given the wild card of power shortages in South Africa and the strong fundamentals underpinning the platinum price it is hard to predict if platinum has reached its peak.

Thebulliondesk.com said in a note this morning that the reaction to the 0.75 percentage point rate cut by the US Federal Reserve on Tuesday caused "the metal to test support of $1,940/oz again this morning".

Wilkinson said it was likely Ridge, which has its primary listing on London's AIM, would make a decision on which exchange it would take a secondary listing on -- the JSE or TSX -- in the third quarter of this year. He also said the company may consider listing on both exchanges. It is likely that the listing or listings will take place early next year.

"There is a possibility that we will list on both exchanges, the advice is certainly to consider the TSX … It also makes a lot of commercial sense to list in Johannesburg," he said.