Many presumptions made on the HedgesThe Total hedges is say...

Many presumptions made on the Hedges

The Total hedges is say 400,000 ounces
The Total annual production is say 400,000 ounces
The cost of production is say A$1100
The hedged price is say US$1400
(Note that the numbers above are close assumptions, not exact assumptions)


in RRL case, the hedges are to lock-in profits
Based on assumptions above, the Margin per ounce is approx. A$500
That means RRL has lock-in a profit of A$200 million on the 400,000 ounces of hedged quantity

If market price of gold goes down, RRL has no loss consequence in terms of the hedged quantity
if market price of gold goes up, RRL has foregone an opportunity to gain on the upside, on the hedged quantity; BUT RRL still has about 85% of unhedged Sales,
Clearly, RRL is positioned to gain on the market upside

Bbesides, when gold price plummet in March, RRL withheld 16,000 ounces and retained in inventory.
RRL then disposed the 16,000 ounces in April. We can presume that RRL achieved a better sell price
Well managed.

well done.

So, why then the need to provide for a "hit" on the hedged quantity?