jant, you misunderstand how hedging works. it is on obligation...

jant, you misunderstand how hedging works. it is on obligation to sell future production at an agreed fixed price, but it is still a sale generating revenue.

quote
{The Company has 1.8Mozs of silver hedging in place at an average price of A$29.60/oz maturing in 10 quarterly instalments. The first quarterly tranche of 180,000 ounces matures in December 2012.}

It means if the silver price is higher, CCU loses the opportunity to sell at higher spot prices. However if the spot silver price if lower than A$29.60, CCU gains the advantage.

Hence every quarter, a portion of production is sold at the agreed fixed price. I don't know where you get the impression that 720,000oz is given away - as this is not the case under the above hedging agreement.

720,000oz per annum hedge obligation was supposed to be less than 30% of production, so opportunity costs will be being factored into estimated earnings now using a higher % of a lower annual production.