It is now July 2002. A mining company has just discovered a small deposit of gold. It will take six months to construct the mine. The gold will then be extracted on a more or less continuous basis for one year. Futures contracts on gold are available on the New York Commodity Exchange.

There are delivery months every two months from August 2002 to December 2003. Each contract is for the delivery of 100 ounces. Discuss how the mining company might use futures markets for hedging.