New Century Resources (ASX: NCZ) has executed a second long-term zinc hedging transaction with Macquarie Bank over output from its flagship Century zinc mine in Queensland.
The tranche consists of fixed price, Australian dollar swaps for a total of 90,000 tonnes of payable zinc metal, spread in equal monthly volumes of 3,750t over two years from the start of 2022 through to December 2023.
The weighted average price achieved, net of fees and costs, is $3,938 per tonne.
The company said the new tranche compares favourably to the first round executed in June which remains at 80,000t of hedged payable zinc metal at 2,500t per month until mid-2024 at a weighted average price, net of fees and costs, of $3,717/t.
Total hedging for Century mine operations to 30 June 2024 now consists of 170,000t at a weighted average price, net of fees and costs, of $3,834/t.
The total value of hedging represents more than $650 million in forecast future sales from current Century tailings operations.
The transactions will be settled against the monthly average of London Metals Exchange’s daily official cash price for special high-grade zinc, which matches the underlying terms of the company’s physical sales contracts.
The settlement will be made in Australian dollars at the prevailing exchange rate.
The execution of New Century’s second tranche of major zinc hedging marks the completion of a key condition precedent associated with the company’s “transformational growth strategy” towards an environmental, social and governance (ESG) focus.
This includes a binding term sheet for a two-year option to acquire the Mt Lyell copper mine in Tasmania; a strategic investment by Sibanye-Stillwater for a 19.99% fully-escrowed position in New Century; retirement of the existing senior secured debt with Värde Partners; and replacement of an existing environmental bond at Century.
New Century managing director Patrick Walta said the strategy will give the company a “fantastic engine room for future growth”.
“We remain committed to generating significant value for shareholders through inorganic growth opportunities via further Century-style transactions and also monetisation of our established competency and track record in large scale tailings management,” he said.
“With the investment by Sibanye-Stillwater and the option over Mt Lyell, we are in an enviable position to grow through potential near-term ‘green’ copper supply while developing a client-focused tailings management services division.”