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.

Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: vampire who wrote (81247)	6/19/2002 1:06:36 PM
From: Mike M	Respond to of 99280

Patrick, I'm not sure what the figures really suggest. 100% of what! If its 100% of yearly output but commodity pricing spread over three years then that would actually reflect roughly a third of overall production hedged. The number is meaningless until we know that. On the other hand, 0% hedged or 800% hedged tell an awful lot. Frankly I did not believe NEM to be significantly hedged. I am looking into that with the company.

To: vampire who wrote (81247)	6/19/2002 3:21:41 PM
From: Mike M	Read Replies (1) \| Respond to of 99280

Ok, here is the skinny regarding hedging for NEM. The figures were somewhat deceiving. The only reason NEM isn't about 2% is because they recently purchased Normany Mng which was hedged to the tune of 7.3M oz over the next ten years. That is roughly what NEM delivers annually hence the 120%. NEM's plan is to unwind about 10% a year (albeit this year about 1M oz-roughly Normandy's output) of Normandy's commitment through delivery. Hedge is currently under water but if the price were to soften they would deliver forward in order to unwind as quickly as possible. Those companies that are 800% are simply delivering at pre arranged prices for the next 8 to ten years and will benefit little from any price increases. It stands to reason, if these highly hedged companies get caught up in the share price inflation they should be some of the first to implode when the pin pricks the golden balloon.