Pantoro (ASX:PNR) has executed a gold price protection facility via an option trade for its 2025 calendar year production in the form of a zero-premium collar.
The Western Australia-based gold producer says the price protection facility is for about 24% of next year’s production ounces, and “as the name suggests”, the trade was executed without any payment to counterparty Commonwealth Bank (ASX:CBA).
Commenting on the collar facility and diesel hedge, Managing Director Paul Cmrlec says these trades are a prudent risk management step which continues to provide Pantoro with full exposure to gold prices up to $4,200 per ounce, with minimal downside as and when prices rise higher.
“Stability in our diesel pricing at current low rates provides further protection to operating margins at the Norseman Gold Project,” Cmrlec says.
The facility includes 2,000 ounces per month with a put value (protection value) of $3,500 per ounce for 12 months from January to December 2025; and 1,000 ounces per month with a call value of $4,200 per ounce expiring monthly between January and December 2025.
Gold’s current spot price is just under $3,907 as of 11am AEDT today (7 October).
Pantoro notes the 2:1 put to call ratio provides protection for 24% of production at 100,000 ounces per annum, while the call option value ensures that only 12% of production at 100,000 ounces per annum has its upside limited by the trade.
The company notes this structure has a minimal effect on the realised price of gold in a high price environment and as gold production increases above 100,000 ounces, the realised gold price improves further.
Pantoro has also hedged 800,000 litres of diesel per month for 12 months from January to December 2025 at current prices, equating to just under half of its projected diesel consumption for the year. Diesel prices are currently at their lowest since Pantoro commenced construction at Norseman in 2021.
A re-escalation of diesel prices is considered likely in the near-term due to the emerging conflict in the Middle East.
Write to Adam Orlando at Mining.com.au
Images: ABC Bullion & Pantoro
