Segura/Minerva,I think you need to focus more on there hedging...

Segura/Minerva,

I think you need to focus more on there hedging strategy than on their hedging already in place.

As I recall it the hedging taken out at 147 was to protect them from changes in price between production and final pricing.

In this case they missed out on some pretty good gains, but had the poc gone as far the other way without hedging they'd have been doing little better than covering cash costs and interest.

My reading of there hedging strategy infers that recently they will have been hedging quite a bit forward for the next few months at around 195/lb.

I don't think they are hedging more than about 50% and only 3 or 4 months ahead, therefore from my viewpoint I simply see their rewards lagging spot poc by about 6 weeks. For the pessimists who expect poc to fall, well PNA will still be reaping some 195/lb rewards a couple of months after the event.

The hedging doesn't bother me, it's rear view mirror stuff, whose only impact on the future is prudent smoothing of earnings.

Let's see what the sheep do today, my bet is they scramble in reverse (oh, with tight stop losses around their necks).

EL