REG - ACG Metals Ltd. - Hedging Agreement to Derisk Construction Phase

ACG MetalsAnnouncement

28/03/2025 07:15

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RNS Number : 6647C  ACG Metals Limited  28 March 2025

28 March 2025

 

ACG METALS LIMITED

Strategic Hedging Agreement to Derisk Construction Phase

ACG Metals Limited ("ACG" or the "Company") announces the signing of a hedging
agreement to further derisk the construction phase of the Gediktepe sulphide
expansion while preserving the upside on gold prices.

Highlights

·    Zero cost structured collar options will be put in place on c.14koz
of gold production from Gediktepe, equivalent to 50% of estimated gold
production from now until January 2026, when the sulphide expansion is
expected to enter production.

·    The structure will lock-in downside protection at gold prices 15%
higher than ACG's current budgeted gold price, allowing the Company to
significantly de-risk cash flows during the Gediktepe sulphide expansion
period.

·    This agreement provides a robust financial buffer against commodity
price volatility, positioning the Company to deliver on its operational and
financial objectives.

·    The Company will continue to benefit from gold price upside on the
50% hedged portion above $3,065/oz - close to current spot prices.

Patrick Henze, Chief Financial Officer of ACG, said:

"Implementing this structured hedging strategy is a pivotal step in
strengthening ACG Metals' financial stability. As a copper-focused company,
the current oxide gold & silver production serves as a strategic bridge to
our long-term objectives. Locking in downside protection at prices 15% higher
than our budget price allows us to significantly de-risk cash flows for the
remainder of the construction period of our sulphide expansion project at
Gediktepe. This approach not only supports prudent financial management but
also delivers clear benefits to both equity and bond holders by enhancing cash
flow visibility, reducing risk, and preserving upside. It ensures we can
continue executing our strategy while delivering sustained value creation to
all stakeholders."

Gold Hedging Strategy

ACG has successfully entered into a hedging agreement following its strategy
to derisk the cash flows from gold and silver production in 2025, to provide a
significant cushion for the sulphide expansion project at Gediktepe covering
50% of its planned gold production through to January 2026, which is
equivalent to c.14koz of gold.

The hedging program has been implemented in partnership with Alpha Group, a
leading FX and treasury risk management provider, who have been selected after
a comprehensive tender process. The structure used is a zero cost structured
collar option ("Collar"), allowing the Company to secure strong downside
protection while retaining exposure to potential upside if gold prices
increase further.

The hedge was executed when the gold spot price, referenced to the LBMA PM
price, stood at $3,020/oz, enabling ACG to lock in protection 15% above its
internal budget assumptions and operational breakeven levels.

Under the terms of the structure:

1.   If the gold spot price is below $2,875/oz, ACG sells at $2,875/oz,
securing a robust floor.

2.   If the spot price is between $2,875 and $2,942.50/oz, ACG sells at
prevailing market rates.

3.   If the spot price is between $2,942.50 and $3,065/oz, ACG sells at
$2,942.50/oz.

4.   If the spot price is at or above $3,065/oz, ACG benefits from the
increase in gold prices, ensuring continued upside participation above that
level.

The Collar structure was tailored for Gediktepe's production profile and ACG's
market outlook, striking a balance between risk mitigation and value capture.
This structure ensures that ACG benefits from current near-record gold prices
while retaining the potential for enhanced revenues under favourable market
conditions.

This risk management approach will provide a robust financial buffer, ensuring
that ACG's budgeted cash flow expectations are protected again significant
gold price downward volatility. By securing pricing stability while preserving
potential for further gains, ACG remains well-positioned to deliver on its
operational and financial objectives.

The Company continues to actively monitor market conditions and will manage
its hedging program while maintaining financial flexibility.

- ENDS -

The person responsible for the release of this information on behalf of the
Company is Artem Volynets, Chief Executive Officer.

 

For further information please contact:

 

Palatine

Communications Advisor

Conal Walsh / James Gilheany/ Kelsey Traynor/ Richard Seed

acg@palatine-media.com (mailto:acg@palatine-media.com)

 

About the Company

 

ACG Metals is a company with a vision to consolidate the copper industry
through a series of roll-up acquisitions, with best-in-class ESG and carbon
footprint characteristics.

 

In September 2024, ACG successfully completed the acquisition of the Gediktepe
Mine which is expected to transition to primary copper and zinc production
from 2026 and will target annual steady-state copper equivalent production of
20-25 kt. Gediktepe produced 55koz of AuEq in 2024.

 

ACG's team has extensive M&A experience built through decades spent at
blue-chip multinationals in the sector. The team brings a significant network
as well as a commitment to ESG principles and strong corporate governance.

 

For more information about ACG, please visit: www.acgmetals.com
(http://www.acgmetals.com)

 

 

 

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