a business approach to hedging, page-7

Thanks Dagrub...I appreciate you have a different slant on issues and that's your right.

It sure is easy to be negative when the SP doesn't match the performance of peer companies, and as I have pointed out a number of times, that certainly is the case with HGO.

But...PRICE follows VALUE over TIME and that means HGO is due a significant re-rating once it gets the market to understand that it has shrugged off the monkey's on its back.

Those monkeys are:

Uncertainty over the ESG top up clause
Uncertainty over the development of Kanmantoo - both capability and time
Uncertainty over the overall direction of the company
Uncertainty over Sumba and Bird's Head
Past legacy issues with the former MD
A wait and see approach to the new MD
The share dilution & emerging status of JP Morgan
The management incentive packages
The final FID package
The out of the money hedging scenario

..and no doubt I've missed one or two.

I'm under no illusion that there are some weighty issues in there...but just as a journey of a thousand miles begins with the first step, HGO can now begin to tackle them one at a time.

FACT: If you do not believe that DS and his team can do it, the rest is purely academic.

I complained very bitterly to DS at the time FID and the CR was announced because I ripped up a lot of money; but deep down I knew that (1) the issues were not of his making and (2) the final finance package DS negotiated was appropriate to get the K mine moving.

So, I made a conscious mental adjustment (and it wasn't easy) from being bitter and twisted and playing the blame game to "what must we do to move on from here".

That's what I have done and everyone must make their own decision here.

So, I'm prepared to back DS and his management team to begin picking off all the issues as above so that ultimately we can get the SP to reflect the true value.

I say to those who are still playing the blame game and want to kick heads...let it go or get out; otherwise it will consume you.

Finally...for those who want a pure Cu play, HGO was never that by virtue of its Indonesian interests which is where it sees its future. I mean K is merely a cash cow to fund the other stuff.

Wouldn't you be better investing in Cu futures? And tell me, what would you do right now...is the Cu market going up or down over the next year?

The HGO decision is much easier given that they simply lock into a set profit margin and deliver the physical to market at a pre-determined price and I'd be happy to do so at $3.90.