I understand where you are coming from Macduff and I think in...

I understand where you are coming from Macduff and I think in another situation I would agree. However MSR won't need to convince nervous bankers as part of a significant debt arrangement nor are they in any way exposed to the risk of gold falling so that Shambesai is unprofitable.

Assuming MSR could get a deal similar to PRU, they would be paying 55-75/oz for hedging of 150-200k oz - effectively their entire current Shambesai scoping study minable resource (no doubt a reserve will be announced as part of current drilling and it may grow up to 300k oz). Also if it was similar to PRU this would be done at a rate about $100 under $1400 - so MSR would need gold to fall over 150/oz (for most of the life of the mine not just a brief period) just to break even. If MSRs cash costs were 7-800/oz and a Au price of $1000 would mean a payback period of 5-7yrs then yes I could see that such risk reduction would make sense. However when MSR is targeting C1 under $200/oz for the first couple of years then regardless of what happens to the gold price MSR will quickly payback its costs and provide cashflow for exploration. IMHO there is no need, in this instance, for any hedging. The additional benefit is that MSRs simple exposure to the Au price makes it more attractive to investors and potential suitors.