Andrew
Online Reporter
Caledonia Mining Corporation has entered into a zero-cost contract to hedge about 25 percent of the 2022 target gold production at Blanket Gold Mine, through a cap and collar hedging contract for 20 000 ounces of gold.
The contract will run for a period of five months, from March to July 2022.
The hedging contract has a cap of $1 940 and a collar of $1 825, meaning that, for the 4 000 ounces of gold per month for the period, Caledonia will receive an effective gold price per ounce of not less than $1 825 or greater than $1 940 and will receive an effective spot gold price between these two levels.
Said Caledonia CEO Mr Steve Curtis:
“Hedging gold production is not an easy decision for a gold miner as investors usually wish to maximise exposure to gold price upside.
“However, given the fact that our capital expenditure phasing is heavily weighted towards the first half of 2022 as we ramp up gold production, the board considered it prudent to take advantage of the current strong gold price to protect the balance sheet during this phase of higher capital investment with a five-month hedging arrangement over a portion of our production.”
Online Reporter