gold up $29au, page-18

gutfeeling,

there's no obligation to exercise puts. if the gold price doesnt drop below their strike price then they wouldn't be used. the thing that would ruin IGR is if the gold price went through the roof and there were production problems, if they had to buy on the spot market at above AUD$1359/ounce to make delivery for the forward sale then they'd be stuffed. i like the hedging strategy, its conservative and $1359/ounce makes for a healthy profit so long as they make delivery. they way i read it is in the 1st two years 91,000ounces are forward sold of a projected 150000ounces produced, so there is some exposure to upside in gold price too.