hedge book, page-2

If they extinguish the hedgebook to plan, at 55koz per quarter, by the December q 2013 they should be cashflow positive @ around $120m/pa (assuming 1550 gold price).

Prior to that, I calculate $10m for this June q, break even cashflow wise for Sept & Dec, then back to $10m for March & June next year, then $18m for Sept, then $30m per q thereafter (all assuming $1550 gold price).

If gold corrects some more from here, they have the ability push the hedge book out further into the future in order to maintain at least break even levels on the cashflow front.

So, once December 2013 comes along, assuming a stable gold price, we'll be sitting on a free cashflow ratio of under 4. If gold is up by that time next year, which I think it will be, then that ratio will be a lot less & today's share price even more of a bargain.

In summary, given the flexibility in extending the time frame for paying down the hedge, and longer term probability of a higher gold price, I think TGZ will have no problem getting through this current climate without having to raise capital. This to me is very important & gives me comfort in holding my position.