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Gold/Mining/Energy : DROOY Durban Deep- Best S. African Mine -- Ignore unavailable to you. Want to Upgrade?

To: POLARBEAR who wrote (512)	5/4/2000 11:31:00 PM
From: POLARBEAR	Read Replies (1) \| Respond to of 851

gold-eagle.com

To: POLARBEAR who wrote (512)	5/5/2000 3:02:00 AM
From: baystock	Read Replies (1) \| Respond to of 851

Polarbear, You're post on Durban's hedgebook has revived some uneasiness for me. I am not sure where that 600K oz of closing out of hedges came from, since when I look at there hedge book for the quarter ending March 31, 2000, I don't see much change from 6 months ago. One thing that has made the comparison difficult is they use to break it out by calendar year. Now in their latest quarterly they've changed to using fiscal year breakouts (ie. July to June). Looking at the closest 2 upcoming years I observe the following: July 2000 thru June 2001: Forward sales = 470K oz @ 1753 Rand per oz Calls bought = 500K oz @ $320 per oz I believe the considerable Rand depreciation has hurt them here. Their forward sales are locked into a depreciating rand and their calls into a rising dollar. July 2001 to June 2002: Forward sales of 430K oz at 1753 rand per oz. This is an excessive amount of hedging for one year (more than 1/3 rd their annual production) and has not been reduced at all. Once again is locked into a depreciating Rand price...I think the Rand is now nearing 7 per dollar. The first year is not too bad, since their call offsets their forward sales. But the hedge book for the second year is still considerable. So I am not sure where they are coming from when they crow about closing hedges. Unfortunately, though I have faith in DROOY's mining abilities, this faith does not extend to their dabbling in financial derivatives. I suspect I am not alone in this nervousness, which is probably why DROOY is currently so depressed. Ram