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Didn't NCM raise $2 billion last year to close out most of it hedge book? Imagine if they kept if going at these prices.
If any gold company I own, hedge the gold price, I would sell the minute it looked like going above that hedged price. Too dangerous.
Sons of Gwalia had no way out, its hedge book was about $350 million underwater. A rising Australian dollar gold price was exerting further pressure.
This was not due to production targets (it was producing 500,000oz/year at the time) but to a review from it's new management that the resource and reserves had "disappeared".
It had committed to deliver 1.3 million ounces of gold to hedge-book counter parties but the review had revealed a shortfall in economic reserves of about 500,000 ounces.
