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To: Zardoz who wrote (37806)	7/26/1999 12:17:00 PM
From: Ahda	Read Replies (1) \| Respond to of 116885

Hutch i am confused the reason being i perhaps have lost site of the currency basket i don't like the figures coming out . There should be interest hike my eyes and that is going to hurt. I am looking at C dollar.

To: Zardoz who wrote (37806)	7/26/1999 1:25:00 PM
From: Exsrch	Respond to of 116885

Rightly (ABX vs NEM), there is alot of discussion regarding the method of hedging; however, the most important component of the hedging is not the method but the off balalnce sheet assets created by that hedging. In the case of NEM, they have stated in no uncertain terms that their hedging is temporary and will only be for a small percentage of reserves or large percentage of one years production. NEM has no intention of creating a long term off balance sheet asset that will be actively managed to optimise cantango income. They simply want a short term balance sheet repositioning that accomplishes the following: 1. Receive favorable rating, by S&P for hedging, to keep future borrowing cost low. 2. Keeps share price most sensitive to upward movement in POG. 3. Also, NEM does not want to create an expensive internal apparatus to hedge and manage assets given their tenuous cash flow (cost are too high plus difficult to hire high calibre professionals if you are doing hedging temporarially). Net, net I think NEM hedging in the short term will add to earnings volitility (especially if AU goes down or sideways) with little or no benefit dervied in cantango. If low AU persists with a downgrade to NEM credit and a future earnings squeeze (Q3 & Q4) could put shareholders into a precarious situation. Exsrch