"Not a good time to be looking for finance,,," yes GZ it has...

"Not a good time to be looking for finance,,," yes GZ it has been for some time. Just as well the Chinese and some other Asian cash has been interested in Aussie commodities.

Lets hope that the position improves between now and Christmas.

Yes there are certain double whammy dangers with commodity and currency fluctuations. However, without some hedging and total exposure to commodity pricing has some potential fatal attraction also for small start up operations. So I think if commodity prices are high and there is a solid profit margin to buffer downside currency movements then I think there are more pros than cons for some portion of hedging of production.

I think the biggest danger is if over a couple of years we see and explosion of costs coupled with disadvantagous currency exchange rates. A few years back companies were happy to hedge gold at around US$800 - US$900 with an Aussie dollar at around 60 to 70 US cents which (which looked very good after years of gold price doldrums). A couple of years later they found their total production cost were getting up towards A$850 and A$1 was buying 90 cents US. So margins were decreasing and so were returns in A$ terms. The same scenario may also be repeated.....inflationary cost increases may be just around the corner.

Some Companies have used hedging strategies to great benefit. For example I think Mincor have done well to get through a pretty tough time with nickel prices to keep their operations producing economically and coming out the other end with plenty of cash and cash flow and ready to meet any new situation over the next few years in a strong position.

I have a feeling four years ago when Tectonic were originally seeking funding for Phillips River they were not able to gain debt funding on any reasonable terms. I would suggest anything on offer may have been potentially suicidal. I think this time around they will be in a much stronger position backed up by more bankable gold and some solid offtake agreements for base metals.