hedge position, page-2

WDR have said that they have hedged 2/3 of their production for 2014. At a run rate of 250kt per month, that means 166kt p.m. hedged. If they shipped 150kt in April and May, the shortfall would be minimal. In June they will meet their quota. As others have mentioned, the hedges are in the money, so if anything they would have got a small credit in April & May. I would guess it is not material in the context of their working capital requirements, so it didnt get a mention.

While working capital is probably tight, the bigger question is the debt amortisation. Given the slow ramp up, and the fall off in prices (and the widening gap in 58% Fe to 62% Fe), they will not meet their June debt payment and have abolutely no prospect of paying off the loans by the end of this year as agreed.

So they will enter 2015 unhedged, barely breaking even, and with a large chunk of debt to service. That is assuming best case scenario on the ramp up from here. GLTA