Hillgrove Resources has secured a new 12-month copper hedge covering 3,600 tonnes at a fixed price of A$20,046 per tonne, balancing fixed-cost protection with upside exposure.
- 3,600 tonnes copper hedged for 12 months
- Fixed price set at A$20,046 per tonne
- Previous hedge book closed out July 2026
- Hedge covers fixed costs while preserving spot price upside
- Hedging done via fixed-price swap with Commonwealth Bank
New Hedge Provides Cost Certainty Amid Market Volatility
Hillgrove Resources (ASX:HGO) has entered a fresh copper hedge agreement with Commonwealth Bank of Australia, locking in a fixed price of A$20,046 per tonne for 3,600 tonnes of copper production from September 2026 through August 2027. This move follows the full closure of its previous hedge book with Freepoint Metals in July 2026.
The hedge employs a fixed-price swap structure, converting copper prices into Australian dollars, and is designed to cover a significant portion of the company's fixed costs. Importantly, it leaves the majority of Hillgrove's production exposed to spot market prices, allowing the company to benefit from potential upside in copper prices.
Risk Management Strategy Balances Stability and Opportunity
Hillgrove CEO Bob Fulker described the hedge as a "measured step" in the company's risk management framework. By securing pricing for a portion of production, Hillgrove aims to shield itself from downside price risk while maintaining flexibility to capitalise on favourable market movements. This approach aligns with the company’s broader operational and development priorities amid a copper market that remains subject to volatility.
The hedge does not impact production guidance or operational expectations, suggesting Hillgrove remains confident in its output trajectory. This is consistent with recent production ramp-ups at the Kanmantoo mine, which has achieved a 1.8 million tonnes per annum run rate, underpinning the company’s copper growth ambitions.
Implications for Investors and Market Participants
While the announcement does not disclose the total production volume for the hedge period, the 3,600 tonnes covered represents a meaningful fixed-cost buffer. Investors will be keen to assess how this partial hedge influences Hillgrove's earnings stability, particularly in the context of fluctuating copper prices and ongoing development projects such as Emily Star.
Hillgrove’s decision to work with Commonwealth Bank as its new banking partner for hedging arrangements also signals a strategic shift in its financial partnerships. The company will continue to monitor its hedge position, potentially adjusting coverage in response to market conditions and operational developments.
Bottom Line?
Hillgrove’s partial copper hedge offers cost stability without sacrificing exposure to rising prices, a cautious but strategic risk management move.
Questions in the middle?
- What percentage of total production does the 3,600 tonnes hedge represent over the next year?
- How will copper price movements beyond the hedge affect Hillgrove’s financial performance?
- Will Hillgrove expand or adjust its hedge program as market conditions evolve?