Yes, I think it's a buy. The shareholders who held prior to and at the time of the $1.2bn capital raising in 2007 suffered massive dilution. They lost out.
One point to realize is how bad LGL's hedges actually were. In most cases, a company's hedging losses are opportunity costs (eg. could have sold at $850, but had to sell at $600). However, at sub-$360, LGL's hedges were below the cost of production (which is about $420 this year), so the hedges were creating real, cash losses. Not just accounting losses. That's why there was such an urgency to get rid of them.
Now, they're gone and LGL is back to producing huge licks of cash, even if it'll be a couple of years before they start appearing in the P&L statement. The thing is, LGL is still trading at the same price it was before it disposed of its hedges. It's a very different company, today. It will make loads of money unless the gold price absolutely collapses. It doesn't need any more equity, so no more dilution, and it is a hugely attractive takeover target for a major like Barrick.
JMO
LGL Price at posting:
$2.92 Sentiment: Buy Disclosure: Held
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