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Strategies & Market Trends : Ride the Tiger with CD
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To: russet who wrote (12551)9/3/2004 5:39:47 PM
From: The Vet  Read Replies (1) of 312370
 
Regardless of what Barrick's hedges are, or how they came to make them, I believe that consistently quoting hedges as a percentage of reserves, and not relative to actual annual production is a tactic designed to hide the real position and mislead investors.

On the basis that Barrick use to justify their hedges, a company like Canyon Resources with over 10 million ounces P&P reserve ounces on the books should be able to forward sell 20% of their book reserves or almost 2 million ounces even though they only produce 40,000 ounces a year. CAU may eventually be able to mine the McDonald project, but until they can convert reserves to production then to be financial responsible hedging should be limited to a maximum of one years actual production.

The same would apply to Barrick. They have sold gold by hedging from book reserve figures that they will never be able to mine economically..
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