Marketing & Hedging

Marketing

Mincor has a long term off-take agreement with BHP Billiton. In terms of this agreement, BHP Billiton toll treats Mincor’s ore at the Kambalda Nickel Operations Plant, and purchases the resulting concentrate.

The precise commercial terms of the Off-take Agreement are confidential, but are based on industry standard conditions for such agreements.

The effect of the Off-take Agreement is to provide Mincor with long-term marketing certainty. It also removes much of the risk associated with concentrate production (plant recoveries, unforeseen plant down-time etc).

Hedging

In line with its strategy of maintaining exposure to the nickel price while securing a minimum level of protection against adverse price movements, Mincor's policy is to protect its business through forward sales of nickel metal over a rolling 2 year period, provided such forward sales do not exceed 30% of forecast production.

All Mincor's hedging is a combination of two transactions, one for the foreign exchange and one for the nickel, so that Mincor locks in an Australian Dollar nickel price for its forward sales.

Mincor's hedging position is reviewed regularly, and the updated position is fully disclosed in the Company's quarterly reports to shareholders.