Ann: Gold Price Risk Management-BLK.AX, page-9

As others have mentioned, very prudent move and whilst it does cap the upside price received, its a low cost way to ensure a good price for their product. Something that many producers cannot do in the global markets.

I also like that its only approx 35% of their overall production. As Danis mentioned, others hedged when prices were lower, but also hedged 2-3 years into the future, which whilst done for many reasons, has hurt all of the companies profits and share prices.

I really hope that any further price fixing, is done with put options, as that still gives them downside protection, whilst allowing them to even hedge later on if there are any large price spikes and to simply not use the put options.

Here is the reason I am so strongly for this, back when the price of oil was US $100+, almost no stock, anywhere in the world was hedging, they thought the prices would last forever, the entire sector was wrong. There were a select few companies that initiated rolling hedges through those years, and while it cost them very little, when the price of oil collapsed, they enjoyed 1-3 years of continued high prices. Digging up gold is bloody expensive and whilst i am a gold bull who believes we have seen nothing yet, put options with rolling additions could well be a very cost efficient way of almost guaranteeing strong profits for years to come. Also, I really hope BLK do not try and hedge any further into the future than 18 months. Put options, sure, but not hedging. Again, Danis pointed out that other stocks are going to keep on losing out with their hedges.

Rant over. Great price locked in for now and BLK should see $550-650 AUD profit per ounce for the near term.