Dear russett,
NGX produces around 275,000 oz per year. They had written call options for 400,000 oz all due this quarter. (This is in addition to the 420,000 spot deferred contracts that can/will be rolled forward.)
They received $US1,942,500 for selling the call options. At today's price, they owe around $US10m because of this position. If they were to keep rolling this position forward, they would owe an additional $400,000 for every dollar that the POG increased.
Remember, most people investing in gold cos would like cash flow to increase as the POG increases. -g-
Fortunately, they will issue more shares and close out the position.
As I already posted, I would value this co based on reserves.
Best regards, John. |
