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Gold/Mining/Energy : Alta Gold
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To: virgil vancleave who wrote (356)12/4/1997 1:43:00 AM
From: Brad Zelnick  Read Replies (1) of 749
 
My understanding is that via put options, Alta is hedged at a price of $335/oz. for the next 14 months. ie, it represents a 12-14 month LEAP on Gold. Why would you sell at this price? At minimum you hold. And if you feel like it, you buy. I guess that a long-term question is if this Co. can make a profit at $275-280/oz. Apparently this could be the price where even heap-leaching becomes unprofitable for many deposits. With this kind of hedge, you can only hope that the gold price goes lower and forces the shut down of a lot of capacity. There is a lot of capital cost in ramping up, and ramping down. And perhaps Alta will revisit $1/share. At which point you back up the truck.

JMHO
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