Crowflight hedges Q1 and Q2 2009 nickel sales

2009-01-13 10:34 ET - News Release

Mr. Mike Hoffman reports

CROWFLIGHT IMPLEMENTS ADDITIONAL METAL AND FOREIGN EXCHANGE PRICE PROTECTION

Crowflight Minerals Inc. has entered into additional forward sales contract agreements to further its risk management strategy to manage commodity price exposure on nickel sales and foreign exchange rates.

Forward sale contracts were entered into for the first and second quarters of 2009 for a total of 700,000 pounds of nickel at a price of $5.32 (U.S.) per pound. In addition, the Canadian dollar was hedged on these quantities. Details are as follows:

• First quarter 2009 -- 0.25 million pounds nickel, with the Canadian dollar hedged at 1.1965;
• Second quarter 2009 -- 0.45 million pounds nickel, with the Canadian dollar hedged at 1.1956.

As per the news releases reported in Stockwatch on July 30, 2008, and Oct. 28, 2008, Crowflight previously implemented nickel forward sale contract agreements of 2.27 million pounds of nickel at $8.49 (U.S.) per pound for 2009.

In summary, the current weighted average hedging position for Crowflight is shown in the attached table.

Period   Nickel quantity (lb)  US$/lb nickel  Currency hedge  Cdn$/lb nickel

Q1 2009              706,000         $  7.37           1.193         $  8.79
Q2 2009            1,400,000         $  7.47           1.191         $  8.90
Q3 2009              394,000         $  8.49           1.188         $ 10.09
Q4 2009              470,000         $  8.49           1.183         $ 10.04

Crowflight now has in total 2.97 million pounds of nickel hedged for 2009 at an average realized price of $7.74 (U.S.) per pound nickel or $9.21 per pound nickel, which represents approximately 30 per cent of planned 2009 production.

The forward sales contracts are considered derivative financial instruments and are used for risk management purposes and not for generating trading profits. Crowflight in conjunction with RMB may also implement future strategic currency and nickel hedges both to protect Crowflight cash flow and meet lender requirements.

Mike Hoffman, president and chief executive officer of Crowflight, commented: "Given the wide fluctuations we've seen over the last few months in metal prices, we felt it was prudent to lock in an additional portion of our 2009 production at the higher nickel prices experienced last week, while leaving room for us to benefit from any potential upside should nickel see any future price increases. We feel these measures provide the company with further assurance of generating cash from Bucko in 2009, thereby putting us in a stronger position as we ramp up to full commercial production."

Production of nickel concentrate has begun at Bucko, with the first concentrate being produced in December, 2008. Work is continuing to achieve full commercial production and preparations are being made for the first shipment of concentrate from Canada's newest nickel mine.

We seek Safe Harbor.