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Operating cash flow is the key to company future even if the balance sheet shows a deficiency.

I remember a stock called Burns Philp that was thrashed down to single cent values but still had cash flow and eventually prospered again.

In the OGC situation there is a quirk in the accounting rules that forces OGC to take a loss of $NZ1000/oz against the hedges.

At an operational level the cost of production is about the same as the hedge price. Thus there is no actual cashflow lost as the hedges are met.

If you look at OGC from only an operational point of view OCG is producing gold at $NZ800/oz and selling it at $NZ1,800 per oz. This is an operational cash flow of $NZ300 million.

If OGC can work its way through the hedges which seems feasible given the strong operational report at the conference call it is a very interesting opportunity.

AS noted a high risk/high reward gold play.