Ann: Change to Hedging Structure, page-22

In your situation, having a “Sell” opinion on this stock I would sell and move on. I have done so with a number of stocks.

When those hedges were taken out they probably looked OK at the time. I am actually really happy that they did not add to (long term) hedging at $AUD2,800 as I can see the price of gold going much higher than that this year. Perhaps it is a case of once bitten, twice shy?

RRL is now an unhedged producer of 400k ozs per annum. My view at the current POG this justifies a $4b market capitalisation, adding 200k pa production at McPhillamys takes us to a $6b value and if the POG goes nuts we are in the $10b market cap range. This is one very undervalued company at the present.

I suspect the hedging move today had something to do with cash flow forecasting with the view to funding McPhillamys. I personally would have done things differently as the POG was moving up a couple of years ago but I am not on the Board so all I can do is watch the moves and adjust my portfolio. I have chosen to increase my RRL shareholding simply because it is currently radically undervalued. If the share price does not start moving soon I suspect that RRL will be taken out sooner rather than later.