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1/23/09

Capstone Mining (CS.to): Nice looking hedge book


After melding, fusing and gobbling up Sherwood Copper late last year, the newly grown Capstone Mining (CS.to) published a very interesting PR last night. Here's the link so go look for yourself, and you need to look because there's plenty of info about how the company has lightened its debt burden and moved the financial shells around.

This quick post is more of a headsup about the details of the hedge book, pasted below. Lots of lines and numbers and things as per normal with these tables, but the thing to take away is that CS.to is going to sell around 40% of its 2009 copper production at around U$2.61/lb. It's also got about 30% hedged at U$2.38/lb for 2010.

The whole hedge book is worth U$115m if marked to market at current prices, with the book heavily weighted to the next three years. Of if you like, you can consider that if copper averages $1.50/lb in 2009, CS.to will sell its produce at a total average of U$1.94/lb thanks to this hedge. And as the company expects cash cost to come in at around $1.45 to $1.50/lb (and I guess that's dropping too thanks to industry price cuts) CS.to has found itself in a very good place to ride out the worst of this storm.

I'm telling you now that there's a lot more to understand about this company than my quick post shows you. The financials aren't straightforward and would take plenty more to explain even semi-properly. But with that said, Otto says there are plenty worse ways to put copper exposure into your portfolio, if that's what takes your fancy. I don't own at the moment but did reco the stock recently at various prices under $0.90 (so bite me Casey and your "nice company but not going anywhere" call at the same time last month). DYODD dude, don't waste your money at Doug's house of mediocrity.


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Weighted Averages
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Price Price
Year Tonnes lbs (US$/t) (US$/lb)
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2009 Q1 5,564 12,266,520 5,961.32 2.70
2009 Q2 5,084 11,208,301 5,808.86 2.63
2009 Q3 4,600 10,141,264 5,680.60 2.58
2009 Q4 4,281 9,437,989 5,546.56 2.52
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Total 2009 19,529 43,054,075 5,764.59 2.61

2010 Q1 4,131 9,107,296 5,380.45 2.44
2010 Q2 4,131 9,107,296 5,264.99 2.39
2010 Q3 3,765 8,300,404 5,190.35 2.35
2010 Q4 3,582 7,896,958 5,103.77 2.32
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Total 2010 15,609 34,411,955 5,240.54 2.38

2011 Q1 3,282 7,235,571 4,860.60 2.20
2011 Q2 2,402 5,295,504 5,135.88 2.33
2011 Q3 2,774 6,115,623 5,596.87 2.54
2011 Q4 1,654 3,646,446 5,985.29 2.71
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Total 2011 10,112 22,293,144 5,311.93 2.41

2012 Q1 300 661,387 7,097.50 3.22
2012 Q2 300 661,387 7,097.50 3.22
2012 Q3 300 661,387 7,097.50 3.22
2012 Q4 300 661,387 7,097.50 3.22
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Total 2012 1,200 2,645,547 7,097.50 3.22

2013 Q1 225 496,040 6,875.00 3.12
2013 Q2 225 496,040 6,875.00 3.12
2013 Q3 225 496,040 6,875.00 3.12
2013 Q4 225 496,040 6,875.00 3.12
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Total 2013 900 1,984,160 6,875.00 3.12

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TOTAL 47,350 104,388,881 5,550.05 2.52
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