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Gold/Mining/Energy : Gold and Silver Mining Stocks -- Ignore unavailable to you. Want to Upgrade?

To: que seria who wrote (669)	4/3/2001 12:48:57 PM
From: russwinter	Respond to of 4051

<see this deal as adding unwelcome currency and market price insecurity (i.e., a bet in the wrong direction) unless they close out hedges> That's a fair analysis. IMO FN would see a problem with this. And it applies to not just one wrong way bet (gold), but two (Aussie $). We need to see the direction very soon. This afternoon's conference call?

To: que seria who wrote (669)	4/4/2001 1:42:35 AM
From: Davy Crockett	Read Replies (2) \| Respond to of 4051

I'm confused. I suppose this deal means FN sees no problem with huge hedges driven by not just gold market but also by a long-term decline in Australian currency. Since the US dollar looks toppy and its reversal would reverse the leverage that's been working for Normandy I don't understand... what leverage? I'm not a currency expert by any stretch (I still have trouble tying up my shoelaces), but if I remember correctly hasn't the Aussie $ been the inverse to the U.S $? So, if the U.S$ tops out, & starts it's long awaited decline, would that not mean that the Aussie $ might reverse it's trend? If the Aussie $ breaks its long-term decline wouldn't that add value to FN's position? I agree with you regarding your comment about the hedging aspect of this deal. I have FN as a hedge in my portfolio & am currently re-evaluating the situation. Regards, Peter

To: que seria who wrote (669)	4/5/2001 9:00:07 AM
From: russwinter	Read Replies (2) \| Respond to of 4051

Excerpt from Miningweb on FN and the NDY hedge book. Looks good. ""What's more, Franco gets to share in Normandy's greater fortunes, hustle the other gold producers who're not as well positioned and there's potential to play havoc with gold shorts that are wedded to producer hedging. Indeed, the most striking aspect of the deal is the interplay between two polar opposite philosophies on gold hedging. Franco disavows hedging in the strongest possible terms, but that didn't stop it taking what amounts to a controlling bloc in one of the largest hedge books owned by a producer steeped in the Australian industry's proclivity to sell forward. Doug Pollitt of namesake Toronto brokers Pollitt & Co. says he welcomes the deal precisely for the opportunity it affords Franco to take off Normandy's hedgebook. "Franco didn't walk in there with a presumption to hedge." Dowdall confirmed that there was a commitment to reduce both Normandy's debt and hedge book as fast as possible although no timing and structure had been agreed to. According to the latest data released in February, hedges cover 60% of Normandy's reserves. While that is a massive proportion, too much so for the liking of increasingly militant gold stockholders, statements by Normandy executive chairman Robert Champion de Crespigny increasingly disfavour hedging. Reading between the lines of recent announcements, there is tacit agreement that hedging is detrimental to gold and the company talks about its "confidence in the gold price". That is demonstrated by a series of hedge reducing measures, including substantial buy-backs. So Normandy and Franco are not as far apart on hedging as is first perceived. Further progress in reducing the hedge book will depend on the mood of Normandy's bankers who will be reluctant to lighten the load with such a low gold price. However, it is not improbable to think of a chivalrous Franco helping Normandy restructure its current debt arrangements and remove some of the bankers' influence, or at least blunt it. Immediate progress was made on that front. The deal reduced Normandy's debt by 6% to $742 million, lowering the gearing to 42% from 55%. As a result, rating agency Moody's offered its stamp of approval with a credit outlook upgrade to stable from negative.""