Ann: Change to Hedging Structure, page-7

Saracen undertook massive hedging to buy their half of the superpit. They bought the super pit at much lower POG. Over the Top hedging is generally a function of banking covenants. This was the case with Saracen.

I don't know if RRL undertook more than years 1.5 years of production to secure fundng.... anyone here such a long term owner to know the answer?

All things equal a typical hedging policy is 30-50% hedging of annual production rolling, to take it out to more than 1.5 years tells me they did it to build the company on the back of funding a company generating asset, as they did with Sarecn.

All speculation........... but my simple thoughts are excessive hedging is a sign of debt covenants to secure a future instead of dilution.

Which brings us to t he question, is diluution better than excessive hedging?

My answer to that is depends on the direction and price of gold. I think this time is better......debt increase was minimal - 20%, supported by 20% cash - cash on hand basically marries new debt. The cap dilution was a future (POG) proof strategy to avoid additional hedging.