Strategic Zinc Price and Foreign Exchange Hedging and Silver Prepays
Nyrstar NV advises that it has entered into further short-term strategic hedging arrangements utilising put and call collar structures to mitigate potential down side risks with respect to the zinc price and foreign exchange.
For H1 2018, protective hedges have now been put in place for 70% of the total free metal produced by Nyrstar's Metals Processing segment (8,300 tonnes of zinc metal per month) and Mining segment (7,500 tonnes per month of the payable zinc metal produced in concentrate). These hedges result in full exposure to the zinc price for 100% of the production volume in H1 2018 between a floating zinc price of USD 2,300/t and USD 3,094/t. Above and below these prices, Nyrstar's exposure is limited to 30% of the total free metal produced.
In Q2 2017, Nyrstar also placed protective foreign exchange hedges with collar structures for 33% of 2018 AUD/USD exposure related to direct operating costs denominated in Australian dollars and 100% of 2018 CAD/USD exposure related to direct operating costs denominated in Canadian dollars. These hedges result in full exposure to the AUD/USD in 2018 within a range of 0.675 to 0.799 and only 66% exposure outside of this range. The CAD/USD exposure is full for 2018 within a range of 1.320 and 1.362 and no exposure outside of this range.
Nyrstar's management will continue to apply strategic hedges to limit downside risks for key commodity price and foreign exchange sensitivities on a rolling six to nine month basis during the implementation of the Company's transformation and turnaround plan.