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Gold/Mining/Energy : Gold and Silver Mining Stocks
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To: Frank Pembleton who wrote (1355)6/11/2001 2:30:48 PM
From: russwinter  Read Replies (1) of 4051
 
Actually your instincts on ABX were right on. But, the truth is you actually underestimated the extent of their hedging. I presume you are using 25% as a percentage of reserves and resources. Production (and profitable) should be the basis to evaluate how deep a hole these hedgers have dug themselves into. And ABX, after adjusting for the 2001 long calls is hedged 17.7 million ounces. Depending on when, or if you think projects like Pascua get going, that's over five years of production and brings us to about the time Pierna starts to decline. By my math they are over 500% hedged. One could point out that they have good hedged prices, but that's a bit like saying wealthy people use higher grade cocaine than poor people.

<finally thru my hands up>
As well you should! These companies don't deserve your investment.
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