31st May 2007 07:00
Albidon Limited31 May 2007 Level 1 62 Colin St West Perth 6005 ALBIDON LTD Western Australia ARBN 107 288 755 Tel:.+61.8.9211 4600 Fax:.+61.8.9211 4699 Email:[email protected] ASX Code: ALB AIM Code: ALD ALBIDON COMPLETES NICKEL HEDGING HIGHLIGHTS • A hedging programme has been finalised for the forward sale of 9,020 tonnes of nickel over the period between June 2009 and December 2013. • The amount hedged represents less than 15% of the payable nickel from production at the Munali Nickel Project. • The average realised nickel price, net to the Company, for the hedged production is US$23,606 per tonne (US$10.71/lb). • The average hedge prices achieved are substantially higher than market consensus forecast nickel prices over the hedge period. • This modest amount of hedging locks in strong operating margins while providing 85% exposure to cash nickel prices. • The other payable metals Cu, Co, Pt and Pd are unhedged. Munali Nickel Project Financing The European Investment Bank and Barclays Capital have provided a senior debtfinancing facility of up to US$60 million for the Munali project. As part ofthe requirements associated with this facility, Albidon has completed a nickelhedging programme over the debt service period between June 2009 and December2013. Nickel Hedging Programme The Company has forward hedged 9,020 tonnes (164 tonnes per month) whichrepresents less than 15% of the Munali project's expected payable nickelproduction and no more than 26% of payable nickel from production in any oneyear. The hedging commences in June 2009 which allows for full production rampup from mid 2008 and provides exposure to the spot price of nickel for the first12 months of production. The hedge prices commence at approximately US$30,831 per tonne in mid 2009,stepping down in line with the forward curve to average US$19,146 per tonne in2013, for an average hedge price of US$23,606 per tonne. These prices are substantially higher than those assumed in the Munali BankableFeasibility Study and the market consensus nickel price forecasts for the hedgeperiod. It is also noted that research by Barclays Capital indicates that only5% of cash nickel prices observed since 1990 have been higher than USD$20,750tonne and only 10% have been above US$15,022 tonne. The Company has completed the hedging agreements on very favourable terms. Thislevel of hedging is modest and ensures the project is robust by locking instrong operating margins, while at the same time providing a high degree ofexposure to upside in cash nickel prices. The production of the other payable metals from Munali is unhedged (copper,cobalt, platinum and palladium). If you have any queries please contact the Chief Financial Officer, Nicholas Dayor Managing Director, Dale Rogers on +61 8 9211 4600 or email [email protected]. Albidon's nominated adviser is RFC Corporate Finance Ltd, contact Stephen Allen+61 8 94802500. Additional information may also be viewed on Albidon's website atwww.albidon.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
ALD.L