huge sellers, page-37

re: huge sellers ... reason = hedge book 2002/02/25

http://www.mips1.net/MGGold.nsf/UNID/SBAY-57P64E?OpenDocument

Hedging: carry on regardless

Lihir’s strategy of hedging one-third of its production over a twelve-year horizon is unlikely to alter much as production and reserves increase. Antal says the most recent 3-million ounce reserve upgrade was taken into account by the board when reviewing its forward selling policy at the end of last month. “We decided we were happy with where it stands at the moment,” he said. “On a fixed-cost basis we look at what we need to keep the wolves from the door.”

The hedge book looks like it does more than keep the wolves away, though. It is one of the better looking hedge books in the gold business, carrying a positive mark to market value of $59.7 million. Lihir has 486,973 ounces of its production for this year sold forward at an average price of $342 an ounce, which looks increasingly attractive as the gold price remains mired below $300 an ounce. This was eloquently illustrated in the fourth quarter, during which Lihir realised an average gold price of $385 an ounce against an average spot price of $271 an ounce.

http://www.lihir.com.pg/reports/july02/q2_2002.pdf

CEO’s REVIEW
Commenting on results, the CEO, Alan Roberts said, “I am pleased that we
made up production after the First Quarter unscheduled shutdown, to finish
back on track at Half-year. Another solid profit result before tax of US$20.7
million was booked.
This Quarter we release the best ever intersection in the many years of
exploration at Lihir, and we look forward to the release of a revised reserve
statement in September.
We have had a thorough look at our hedge book, and our intention is to roll out
less favourably priced positions, which will both increase the average
realization price of hedged gold and provide more leverage to the spot gold
price in the near term.”