Edit: It is apparent that DAY is still losing money, and I have
no idea how much they've paid for the puts that they use to hedge
their production. However, here is the relevant info:
From Dayton's financial statements (22 May 1998) at sedar.com :
10 Hedging
At December 31, 1997, the Company's gold hedging program consisted of the
following:
1998 1999
____________ ___________
Put options (ounces) 73,500 -
Average price per ounce (US$) $ 380 -
Call options (ounces) 21,910 7,460
Average price per ounce (US$) $ 434 $ 434
The fair value of the Company's gold put options and gold call options amounts
to US$6,270,000. This fair value represents
the amount that the Company would have received on December 31, 1997 to
settle these instruments prior to their expiry dates.
Subsequent to the end of the year, the Company revised its hedging program
(refer to note 18).
The credit risk exposure related to the Company's gold hedging activities is
limited to the unrealized gains on outstanding
contracts based on current market prices. The counterparties to the gold
hedging are also lenders to the company and are large
international credit-worthy institutions.
But, Note 18 says, among other things:
18 Subsequent Events
A ) HEDGING PROGRAM
In March 1998, the Company revised its gold put hedging program. The revised
put program is:
1998 1999
___________ ___________
Put options (ounces) 72,750 84,000
Average price per ounce (US$) $ 352 $ 340
--James |
