"Management with their hedging policy are destrying this company! The next SOG's / Croesus if they don't wake up and see the light! As I said in the past, I had our Finance Manager look at their hedges at $500 and he told me to steer clear. At $550, its just that much worse!"
"I agree PhillW, this whole b.s. of describing hedges as & of resource is hiding where the real problems emerge ie hedge as % of production.
The throw out line that these loonies use, that they can "roll forward" the hedge, only creates a bigger problem for that forward delivery period ie they will have 2x the hedge liability in that period !
In a rising market ANY & ALL hedges are toxic
Unfortunately those co's already caught in the spider's web are at the mercy of everyone's mortal enemy - the banks !"
"Gold approaching AUD$800 per ounce! These guys are fools! Sep 2005 hedge book was neg -$34M. Dec 2005 neg -$65M and now I calculate neg -$81M. Their costs are around AUD$500 and their average hedge is AUD$575. They have to pay $2M per quarter on Ravenswood plus interest on other debt. It would not take much for these guys to do a Croesus! Warning signs could be the drought effecting Golden Pride production. Now if Golden Pride was forced to cut back to 50% production, these guys are in real trouble! If you want their uranium buy VUL! Then again, these clowns willl probably hedge that too!
A good stock ruined by managements inability to change with the times. And why do they hedge?? because that's the way we've always done it! How do we justify the hedges? We throw in the "Its a prudent and good business practice" line.
These guys through their hedging are losing AUD$60M worth of cash flow or $42M in profit! sounds like they know what theyre doing, doesn't it! Two years of that and they would have funded Syama from cash on hand!!
Fools, Fools Fools!!"
"always easy in hindsight. i think that i have mentioned this in a previous post. eg - there would have been required hedging for eg - the purchase of the ravenswood operations. the alternative, would have been a share issue. it may well be that ravenswood could turn out to be a bargain, once mt wright comes on stream. the purchase price was US$45m, but A$50m had just been spent on a plant upgrade. in other words, rsg, got the ore, for a song - and there could be 2-3m oz there. the gold price is now us$150 higher, than when the purchase was made
at least the company was a bit smarter, and purchased put options for 410,000 oz, at $620 per oz. this in effect underwrote the profitability of the mt wright development. lucky for rsg, they do not have to deliver into the put option, and the value of not having to deliver into this, is now worth an extra $75m. the company states that 285,000 oz , of forward sales, (at $600 per oz) can be rolled into the extended ravenswood production. as rotten as this is, it will be hoped that the production costs will be a lot less than this"