Well, it looks pretty simple to me. RRL have paid up so they can 'smooth out' and extend the hedge timeline for delivery. Short term gain, for longer term lower hedge prices (which, I would argue, is actually counter to expecting a higher POG, as I would have though clearing out the hedge now would enable shareholders the most upside.
Lets look at how things stood from Feb 2021.
Average hedge (now 320k ounces actually hedged) price now reduced to $1571, from $1617, so a reduction of $46 an ounce, or $14.7m in extra costs to RRL.
Basically, they have increased the amount of hedging per quarter up by 5k and then added a heavier hedging per Q in 2024 (I assume, when McPhillamys in is production). They had to do this, or... get stuck filling the hedge much more heavily in the near term. They can dress up with lipstick, but... its still a pig.
I still struggle with management's decisions. Year's of relaxing has caused RRL to be in the position they are.
RRL Price at posting:
$2.62 Sentiment: Hold Disclosure: Held
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