Metorex restructures copper hedge

[] — METOREX has restructured its copper forward sales book obtaining a 53% increase on the price to be received on more than half the 29,250t of copper still hedged between December this year and June 2011.

Metorex was forced to hedge part of its expected production as a condition of the funding provided in December last year by Standard Bank to refinance the company after the problems experienced with the ramp-up of production from its Ruashi project in the Democratic Republic of Congo (DRC).

The company had originally sold forward 5,275t of copper at a strike price of $3,900/t for delivery during the period July to 2010 to September 2010. It had also taken out fully paid up put options for 34,425t of copper at $3,900/t for the period October 2010 to June 2012.

These have all been closed out and replaced by forward sales contracts for a total of 29,250t of copper of which 16,200t will be sold at $5,972/t between July 2010 and June 2011. The balance of 13,050t will be sold at $3,900/t between December 2009 and June 2010.

Metorex CEO Terence Goodlace said the restructuring “closed out a portion of the hedge book entered into during the low commodity price cycle and secured higher forward prices for Ruashi’s copper production during the 2011 year.’

He added the restructuring did not cost Metorex any cash outflow because the costs had been absorbed by the new hedge.

Metorex also reported Ruashi production numbers for November which showed a rise in tonnage processed to 112,093t (October 107,247t) but a drop in copper produced to 2,491t (2,512t) because of a dip in grade to 2,67% copper (2.87% copper).

Goodlace commented, “my focus at present is to get throughput at the processing plant to reach the design capacity of 120,000t/month. After that we will start making adjustments on the mining side.’