on high for the day, page-6

GOLD - A Portent of things to come Sorry to disagree with you Jolly.

CRS has a long way to run - this is just the start.

The correction was healthy - it has fluhed out weak holders and we will see the next move of CRS take it up into the 80c level.

Why? Because the fundamnetal value ofthe stock has not changed AND, MORE IMOPTANTLY because:

THE GOLD PRICE WILL MOVE MUCH HIGHER

WHY?

Consider this ... why has Barrick Gold, the world's largest gold producer, suddenly reversed tack and begun to unwind its long held hedging position?

The answer? Because Barrick knows that gold is on a steady and inexorable uptrend.

This is a follow the leader syndrome - other major producers will be forced to follow suit or suffer losses as the POG explodes.

Look at the Aussie producers that are already reducing their hedging positions.

The trend is established and it it a portend of things to come.

Hang on to CRS and ride the wealth train.

Read the following report about Barrick and judge for yourself:

"Date: May 9, 2002


Barrick Gold, The King Of The Hedgers, Changes Tactics.

The scales have dropped from the eyes of analysts and criticism of hedging is no longer politically incorrect. They now see it for what it is - a useful protection against movements in currency and metal prices as long as those prices are on a steady bull or bear tack. When that tack changes, however, there is not a lot companies can do to protect themselves except cut their positions and accept the pain. The only alternative is to restructure their hedging programmes to meet the new circumstances, but that gets expensive and can prove disastrous if the new trend is short lived.

One of the bellwethers for this change was John Doody, editor of the Gold Stock Analyst newsletter. He took a close look at the figures revealed in its latest quarterly report by Barrick Gold, the king of the hedgers and apparently concluded that the mark-to market value of its hedge book had dropped from a positive US$380 million at the end of last June when gold was in the doldrums, to a loss of US$121 million at the end of March. This amounted to a negative swing of US$501 million which is way more than the total net profits earned in these three quarters. In fact, as Mr Doody points out, the true position is that the company incurred a net loss of US$307 million.

Barrick, which the largest gold producer in the world, has always made a great play of its success at hedging. Minews does not claim to be an expert on the subject, but the Barrick hedging programme uses a wide range of written call option contracts, forward sales and other derivative tactics to enhance the price the company gets for its gold. Douglas Pollitt, of Pollitt & Co in Toronto has attempted to untangle this hedging and has come to the conclusion that the sensitivity of the derivative portfolio now stands at about US$21 million an ounce.

On this basis every US$1/oz advance in the price of gold hits Barrick's negative mark-to-market position by a negative US$21 million. If this is so, and Mr Pollitt has clearly done his homework, by the time gold hits US$350 million Barrick's mark- to- market would be over US$1 billion in the red. Worse, Mr Pollitt has calculated that the company is short of around 23 million ounces of gold which would be physically impossible to cover at prices that made any sense if push came to shove.

Barrick's response has been swift and it has just announced at its Annual Meeting that it is simplifying its Premium Gold Sales Programme. For 'simplifying' read 'changing policy'. It will no longer renew its gold call and variable price sales contracts, which should result in a 3-million ounce reduction in the position by the end of the year. The spin put on this change by Jamie Sokalsky, the chief financial officer, runs as follows, "The overall Programme will be simpler, smaller and better positioned to take greater advantage of rising gold prices. At the same time, it will continue to generate significant additional revenues and provide secure and predictable cash flows."

Overall, at the end of the first quarter, Mr Sokalsky admitted that Barrick had 18 million ounces of spot deferred contracts, representing 22 per cent of reserves, and 6 million ounces of call and variable price sales contracts in the Premium Gold Sales Programme. Douglas Pollitt, therefore, was not far off the mark. And the changes announced today come on top of the decision made a short time ago that the company would sell 50 per cent of its production at the spot price, for the first time in 14 years. In prior years, 100 per cent of annual production was delivered against the Premium Gold Sales Programme.

It will be interesting to see whether some of the big hedgers in Australia follow suit."