Aeris Resources Ltd (ASX:AIS) has locked in a copper price of A$8,670 per tonne for a total of 12,000 tonnes by way of a swap contract.
Given Aeris’s C1 cash costs for the recent December quarter were A$2.50 per pound (A$5,511 per tonne), the locked in price of A$8,670 supports a profitable operation.
The company will deliver the 12,000 tonnes on a 1,000 tonnes per month basis through to February 2019 (across 12 months).
Manages risk while keeping exposure to price upside
The swap contract protects Aeris from a retracement in the copper price but also allows it to benefit from upside in the copper price.
This is because the swap contract details that if the copper price goes above A$10,170 per tonne, Aeris will be leveraged to upside above this level.
Furthermore, Aeris was producing at a rate of over 2,000 tonnes of copper per month during the December quarter.
As the swap contract is for 1,000 tonnes per month, should the price rise, Aeris may have excess copper production to sell into the market at higher prices.
READ: Aeris Resources reduces debt to ensure future of growth
Aeris is an established copper producer and developer with multiple mines and a 1.8 million tonnes per annum copper processing plant at its Tritton Copper Operations in New South Wales.
In FY2017, the Tritton Copper Operations produced 23,404 tonnes of copper and in FY2018 is targeting production of 27,000 tonnes of copper.
Aeris also has a portfolio of prospective exploration projects creating a pipeline for future growth, including advanced projects at its Tritton Copper Operations.