"....but this is about Intrepid Mines. The share price has risen...

"....but this is about Intrepid Mines. The share price has risen as the company announced that it has closed out its hedge book by delivering into it. About 12 months ago it noted that it was delivering 50% of its production into a hedge which was due to be completed in December 2008. After its March, June and September quarterlies it announced that it was delivering gold into its hedge, and that it would expire in December 2008. On 16 December it announced that it had completed sales into the hedge and that production from Paulsens in WA was now being sold into the spot market. With a cash cost of US$450/oz, that gives them a cash margin of around US$350/oz on 80,000 oz per year - US$28 million per year before ongoing mine capex, development and exploration.

Apparently the market was surprised and the share price rallied.

Yesterday IAU announced a resource for a part of its Tumpangpitu oxide gold deposit. Tumpangpitu sits above a major - the term "world class" is misused, but this one really is - porphyry gold copper deposit, the Tujuh Bukit project, but that will be a multi billion dollar development, and take years of evaluation before development. Tumpangpitu is an oxide gold deposit sitting at surface. It isn't a billion dollar project, and it won't take 5 years. It is the sort of project that Intrepid can develop and manage.

The resource in Zones A and C is now 2.57 million ounces of gold equivalent - gold plus close to an ounce of silver per tonne. Both of these resources are open - not closed off by drilling. Zone B and Zone B South are currently being drilled, and we expect will add more ounces. We (I) expect that Tumpangpitu will support a 100,000 to 200,000 ounce per year open pit, conventional gold project. Sure it will cost US$200 million to develop, and at the moment IAU has around US$15 million in cash, and although it's making money at Paulsens it's spending a bit. But it's got enough to keep things going at the appropriate rate for the next couple of years, taking the project through a pre-feasibility, and most likely a feasibility study. And who knows what the debt and equity markets will be like in 2010 - or the gold price.

We mentioned that resource production has increased. Well, not in gold(and frankly, not by enough in the base metals either, but that's another story). Gold production has been in decline - both in Australia and worldwide - since 2005. Sure, it's only a very small decline, but it is a decline. And that's despite the price rise - its was US$445 for '05, US$605 for '06, US$697 for '07, and we had projected US$900 for '08. That's a bit high, but the spot price is now comfortably over US$800.

If you're in the gold market you'll be holding Lihir or Newcrest. You ought to have a few IAUs as well. If you're not in the gold market you should be."