Apex Minerals NL said it is "judicious" to implement a hedging project to protect its exposure to the Australian dollar gold price over the next three years.
The company today announced a hedging program that includes a combination of forward sales and put options, which cost a total of $13.5 million to secure.
Over the three years, from 2009 to 2011, some 75,000 ounces of gold forward sales have been hedged at an average price of $A1140 per ounce, while 155,703oz have been covered in put options at an average price of $A952/oz.
Apex said the hedging covers some 63 per cent of forecast production levels for fiscal 2009, some 65 per cent for 2010 and 42 per cent in the year to June 2011.
Estimated average cash costs for the company's projects, including Wiluna and Wilsons, are $A560/oz.
"A significant proportion of the hedging is the form of put options, which ensures that our
shareholders maintain maximum upside to increases in the gold price whilst being protected against the downside," managing director Mark Ashley said.
"The hedging program is a prudent arrangement on its own basis for Apex, but also works in conjunction with the recently announced capital raising. The three year life of the program aligns with the timeframe of the issued Senior Secured Notes".
Earlier this week, Apex entered into a subscription agreement with Goldman Sach JBWere to issue $58.5 million in a package of senior secured notes.
