Straits exits Australia mine's copper hedges
SYDNEY, Dec 14 (Reuters) - Straits Resources Ltd (SRL.AX) said on Friday it had spent A$53.5 million ($47 million) to close out the copper hedge book of its Tritton mine in Australia.
Costs from the move, covering 12,150 tonnes worth of forward copper sales, would be expensed as a loss from February 2008 to January 2009, the company said.
By closing out the hedges, Straits said it was unlocking the potential of the lode, which would contribute substantial operating cash flow next year.
At the same time, Straits said it had paid A$9 million for put options over the copper, guaranteeing an average minimum floor price of $6,755 per tonne.
Straits in October raised A$134.4 million through a heavily oversubscribed placement of 28.6 million shares at $4.70 per share, in part to pay to close out the hedges.
At the time, London Metal Exchange three-month copper MCU3 was selling for around $8,300 a tonne, though the price has been in steady decline since then. It ended trading Thursday at $6,510 a tonne.
Straits stock was trading 0.6 percent lower at A$6.57 at midday, in a broader market down 1 percent.
The Tritton mine has been running since late 2004 and is believed to hold enough reserves to operate for 11 years, yielding about 25,000 tonnes a year of copper in concentrate.
Straits earlier ths year averted an expensive legal battle with commodities trader Sempra Metals & Concentrates Corp after the two agreed to a revised supply offtake agreement for concentrate from the mine.
Straits argued it was unable to economically produce concentrate under the terms of the original agreement. ($1=A$1.14) (Reporting by James Regan; Editing by James Thornhill)
