Ann: Corporate Presentation, page-22

how is the hedge underwater when the production cost is below the hedge? As long as a miner makes $$ on the sale of their product all is good. Yes they are not making the same $$ as they would have as POG spiked above hedge price but then same is true if POG crashed below hedge price. In such a scenario the offtake company will be obligated to buy the gold at the hedge price even though POG is considerably lower.

The only time a hedge is underwater is if a company cannot deliver the oz pledged on the hedge. If that happens a company will need to buy the Oz in the market to cover.