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Gold/Mining/Energy : BLACK HAWK (TSE:BHK)

BHK 9.560

-0.9%

Nov 14 4:00 PM EST

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To: robin hood who wrote (343)	11/16/1999 11:24:00 AM
From: baystock	Read Replies (2) of 545

biz.yahoo.com <<During the quarter, the Company extended the June 30th due date of its loan with Standard Bank London and is currently negotiating for the facility to be converted to a three year term loan. A condition of the extension was for the Company to establish a hedge program to ensure minimum cash flow for operating the Company and to repay the loan. In order to pay for the purchase of the put options required by the bank under the program, call options were sold to the bank. Unfortunately, the program was established prior to the September 26th announcement by the European Central Banks to limit the sale of gold from their reserves for five years and the amount of gold available for leasing during that period. The subsequent increase in the spot price of gold has exceeded the strike price of the calls sold to Standard Bank, restricting the Company's ability to participate in improved gold prices on the hedged production which represents approximately 80% of the ounces forecast to be produced during the next three years. The hedge program is ``marked to market' on a daily basis. The Company has arranged a line of credit to protect against negative marked to market situations, however, this line of credit has been exceeded by the hedge program's current value. The margin call for this excess amount is subject to a temporary standstill agreement while discussions to establish a long term standstill are ongoing. The marked to market value of the hedge book, which is dependent on the gold spot price, is $7.6 million at a spot gold price of $294, which exceeds the current credit limit and is under review. >>

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