[miningmx.com] – UK-listed Tanzanian gold mining firm, Acacia Mining, said it had hedged the dollar denominated production from its Buzwagi mine in 2016 which it may extend to 2017.
Brad Gordon, CEO of Acacia Mining, said of his firm’s hedging strategy for Buzwagi that: “We are taking a prudent step in locking in a gold price in excess of our planning price at Buzwagi, our shortest life asset which is in harvest mode”.
In terms of its hedge, the agreements provide a guaranteed floor price of $1,150/oz and provide exposure to the gold price up to an average of $1,290/oz covering 136,000 oz of production in 2016. Similar agreements may be made for 120,000 oz of Buzwagi production in 2017, it said.
“The mine generates the majority of its future cash flows over the next two years, and by putting in place these zero cost collars we reduce the gold price risk associated with this cash flow, while maintaining some exposure to future upside,” said Gordon.
The maximum gold production covered by the hedges represents around 15% to 20% of Acacia’s planned group production in both 2016 and 2017. “We are, and plan to remain, fully unhedged at our long-life assets, Bulyanhulu and North Mara,” said Gordon.
