von wipps (re cost of hedge)
At 31st March hedge stood at 153,630 oz
Assuming production in June quarter is in the range 20 - 30koz (lets use 20koz to be on the conservative side), then remaining hedge will be c. 133 koz.
60% of hedge is at $700/oz therefore difference between current spot and hedge price is $250/oz. Hence book cost of hedge is c. $20m (ie 79,800 x $250).
ALD can participate in upside on 40% of hedge therefore I assume that 53,200 oz could be sold at full spot price.
With a rising POG I assume they will pay down the hedge commitment as fast as production allows but I cannot see how they can afford to pay off the hedge early as they do not have the cash available.
Even so, with cash costs of $363/oz they still have a reasonable margin on hedge sales at $700 of $337/oz so the situation is not too bad as long as costs can be contained.
gold hits 960, page-2
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