Ann: King of the Hills set for stronger March Quarter, page-50

bentleigh, Goldfarm (and other readers) I apologise for the sloppiness of my 17/2 post. I threw in numbers, admittedly done on the back of an envelope, without discussing the maths behind them. As well as sloppy, I'm reflecting it was also a bit disrespectful to readers.

At 1/1/23 293,863 ounzes were outstanding under hedges over the period Jan-23 to Sept-26. This is about 44 months or 11 Quarters.

Assuming deliveries are all of similar amount (we have no detail here, so it's just an assumption I'm making for simplicity), deliveries need to be 26,715 per Quarter or 106,860 per month to extinguish the hedgebook by Sept-26.

Using this 106,860 figure, production would need to be 267,150 p.a. if deliveries into the hedges amount to 40% of production, and production would need to be 305,314 p.a. if deliveries into the hedges amount to 35% of production.

As I mentioned in the 17/2 post, I've not seen anything to suggest annualised production will be that high.

As for additional hedging, the company has said it'll be hedging "up to 70,000 ounzes in the March Quarter". I guess it depends on what the bankers require them to do!!

I'm making an assumption that this additional hedging will be spread equally over the life of their existing hedgebook. Based on today's spot gold price in AUD, and if they lock in their AUD/USD exchange rates as well, you'd expect a forward gold price for future deliveries would be at least 1% p.a. higher than the current AUD price. In simple form, the futures prices for both commodities and currencies are simply a factor of spot prices plus or minus financing costs over the duration of the hedge contract.

If, however, the term of the hedgebook was extended, and the new hedges in the March quarter were for deliveries in 2027, then applying an additional 1% p.a. to the current AUD spot gold price, it could be that RED could achieve a delivery rate (for 2027) anywhere up to nearly $2,800 per ounze.

I hope these more detailed numbers give posters a clearer understanding of what I've been trying to say. And I guess this post will show what an absolute pedant I am!!!!