Could somebody explain LHG's real leverage to spot?
From all the information I have seen, I see LHG as a very well hedged producer, at least for the next few years. From their latest report, my recollection was that the company only seems to be hedged from 2010 onwards (could be wrong in that it may be a couple of years earlier).
Anyway, I also noted that it has quite a bit of exposure on its financial instruments. In fact, it has noted that it has a -$66m mark to market liability on its forex contracts.
While I hold LHG, there are a few snippets in the company's reports which suggest that while they might be producing record amounts of gold - their costs are high, their exposure to spot gold is minimal at the moment, whereas their exposure to forex contracts is quite high.
I dunno, could all be me wandering off on a tangent but if the US$ declines against the AUD and LHG sells in US$ - do we have a problem here?
Could explain why a lot of golds are starting to hit walls. Profits maketh the company - where there ain't none, co. goes nowhere.
Only thing holding LHG at the moment is its reserves. Other than that, it's anybody's guess.
Comments please!
LHG
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