Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Tunica Albuginea who wrote (44623)	11/5/1999 10:47:00 AM
From: SwampDogg	Respond to of 116764

Just a look into another hedge book... Hedge Program The recent creation of the TVX-Normandy partnership resulted in TVX effectively selling one-half of its interest in its five operating mines and corresponding production. Accordingly, the company now records one-half of its silver hedge position as a designated hedge and the balanace is marked to market. Depending on certain market conditions, the company may be obligated to buy silver at market prices to deliver against the position or deposit funds in a trust account. The financial result for the third quarter includes an unrealized mark to market adjustments of $2.2 million. Recently, the company increased its hedged position in years 2003 through 2006, by an aggregate of 390,000 ounces of gold through the purchase of put options. The new transaction consists of 30,000 put options per quarter with a strike price of $360.25 per ounce with maturities from December 2003 through to December 2006. Assuming a gold price of $300 per ounce and a lease rate of 3%, the price realized, net of option premiums and lease fees, would be an average $305 per ounce on the newly purchased puts. Credit capacity for the new gold put program was attained from the credit lines made available by Normandy Mining Limited. The cost for utilizing the lines is estimated at less than $1 per ounce of gold per year or approximately $300,000 per year. In addition, existing put options total 680,000 ounces with a strike price of $280 per ounce with quarterly maturities commencing December 1999, through the first quarter of 2003. The use of gold puts protects the company from declining gold prices while allowing the company to participate fully in increases in the gold price. The silver hedge position currently stands at 4.75 million put options with a strike price of $5.06 and 15.65 million ounces of calls with a strike price of $5.99, maturing December 1999 through to 2004.