Atlas hedges copper sales
11-OCT-2008 Intellasia | bworldonline
Oct 11, 2008 - 7:00:00 AM
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Listed Atlas Consolidated Mining and Development Corp expects to generate US$62 million in gross revenues by hedging copper concentrates produced at its recently rehabilitated Cebu mine for a Swiss metal trader.
In a disclosure to the Philippine Stock Exchange yesterday, the miner said it had hedged 30,000 metric tonnes of copper concentrates from its Toledo Mine at US$7,612.50 per metric tonnes.
On August 26, Atlas signed a deal to sell 60,000 metric tonnes of copper concentrates-copper mixed with ore-to Swiss MRI Trading AG. It will complete the deliveries in June. Copper under the hedge deal with the Swiss trader amounted to 8,250 metric tonnes.
"We are enjoying an attractive price because we [sold copper] based on August prices," Martin C. Buckingham, Atlas executive vice-president and chief finance officer, said in a phone interview. August copper prices ranged from US$7,600 and 7,700.
Copper prices have fallen to US$5,504 per metric tonne for cash buyers from US$6,875 a month ago, data from the London Metal Exchange show.
However, Buckingham expects metal prices to go up due to rising demand from emerging economies like China, India and Russia. On Monday, Atlas said it had completed the first phase of rehabilitating the Toledo Mine, which will allow its unit to start operations this month.
The Toledo copper mine, operated by subsidiary Carmen Copper Corp., will be processing 20,000 metric tonnes of ore daily. In the first half of 2009, the mine is expected to process 42,000 metric tonnes after the second phase of rehabilitation.
The drop in global copper prices led to the closure of the Toledo mine in 1994. The rehabilitation of the copper mine started two-years ago when Carmen Copper received a US$40 million loan from a foreign investment fund.
Ore stockpiles have exceeded 235,000 metric tonnes, which will be delivered to newly built concentrate bins at Sangi Pier, Atlas said.
Once fully operational, the Toledo mine will produce as much as 54,000 metric tonnes of copper, 70,000 ounces of gold, 260,000 ounces of silver, 160,000 dry metric tonnes of pyrite and 440,000 dry metric tonnes of magnetite concentrates per year.
The Toledo mine has an expected life of 12 years.
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