The risk of not being able to meet a forward sale contract is not very likely in the case of IGR. With IGR's stockpile of crushed ore there is no risk to plant supply. Plenty of ore crushed and stockpiled so if that part of the plant , or mining, suffers a breakdown, no super biggie. If some major breakdown were to occur to the actual processing/smelting section of the plant, IGR could send the crushed ore to another plant for toll treatment. Expensive, yes. But the forward sales would still be met and contract satisfied. That to me means the prospect of failure to meet hedge is 99% NOT likely to happen to IGR.
I was told IGR send all produced gold to the London Bullion Exchange, holders of the hedge contract, before the first two months of the quarter are over. The remainder sold at market. So certainly, by December 1 they will have fulfilled December quarter requirement. After this delivery, forward sale per quarter declines rapidly each quarter, as per contract.
IGR Price at posting:
55.0¢ Sentiment: LT Buy Disclosure: Held
