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Curum Metals Limited ( CM ) is a Pakistan - based company located in the province of Balochistan. CM is in the metallic mining industry

Curum Metals Limited (CM) is a Pakistan-based company located in the province of Balochistan. CM is in the metallic mining industry and currently has two mines in operation.
Copper metal ore is the primary deposit, though the company has also been successful in retrieving gold, silver, iron and sulphur deposits from these mines.
The price of copper fluctuates depending on market demand and supply for the metal, along with the availability of copper substitute metals.
CM is in the final stages of negotiations with Akum Build Limited (AB), a company based in Argentina. AB requires 300,000 pounds of copper in six months' time on 31 December 2022.
AB wants that the contract price is set at the prevailing market rate when delivery takes place at the end of December.
CM's Finance Director, Maryam Ghafoor, is proposing that CM should hedge against a likely fall in the value of copper. She has obtained relevant financial information included below and would like your help in evaluating if a futures contract hedge on the price of copper is worthwhile.
Copper prices are quoted in the global commodity market as US dollars (USD) per pound.
Relevant financial information for copper hedge
Financial information
June 2022
Estimated December 2022
USD/pound
USD/pound
Spot price
4.3525
4.2835
Futures contracts (December dated)
4.3675
4.2845
Contract size
25,000 pounds
Tick size
0.0005 USD/pound

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