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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers -- Ignore unavailable to you. Want to Upgrade?

To: loantech who wrote (7564)	3/4/2006 3:41:04 PM
From: tyc:>	Read Replies (1) \| Respond to of 78410

No, Tom, the loss related to "the second quarter close-out...etc". They closed out a lot of fwd sales in the second quarter of '05 , but the related loss will be apportioned to future quarterly results as if the hedges were closed according to the original schedule. As I recall, at the end of december, only $136,000 of forward sales actually remain to be closed out. They haven't decided when they will actually close them out.

To: loantech who wrote (7564)	3/4/2006 3:51:07 PM
From: tyc:>	Read Replies (1) \| Respond to of 78410

On second thoughts, the remaining unclosed hedges were for 135,000 oz of gold as at Dec 31. (Not $136,000 of fwd sales). I think ! lol

To: loantech who wrote (7564)	3/4/2006 7:01:30 PM
From: dara	Read Replies (1) \| Respond to of 78410

Hi Tom, When I was listening to the Northgate presentation at BMO's conference, I wrote down 139,000 oz of gold hedged so I am fairly confident that is the current number. The rest you have posted I agree with. The following was taken from NGX's 3Q news release last October: 3. Financial Instruments At September 30, 2005, Kemess Mines Ltd., a wholly owned subsidiary of the Corporation, had forward sales commitments with major financial institutions to deliver 139,000 ounces of gold at an average forward price of $307 per ounce. These commitments are in the form of forward sales contracts maturing between May 26, 2006 and December 31, 2007. The unrealized loss on these forward sales contracts at September 30, 2005 was approximately $26,522,000. In May 2005, the Corporation closed out 79,750 ounces of its hedge book at a cost of $10,146,000. In accordance with Accounting Guideline 13, "Hedging Relationships", losses associated with the early settlement of these contracts were capitalized and are being amortized over the same period as the forward sales contracts were originally scheduled for settlement. Of the 79,750 ounces of gold closed out in May 2005, 21,750 ounces represent gold forward sales contracts that were scheduled to be closed out in the quarter ended September 30, 2005 and 1,250 ounces in the quarter ended June 30, 2005. The associated cost for the quarters ended September 30, 2005 and June 30, 2005 was $2,684,000 and $152,000 respectively, reducing the capitalized deferred hedge loss to $7,310,000 as at September 30, 2005. Looks like whatever the loss is in closing the hedges, it can be amortized over the period up to the end of 2007 avoiding a hit to earnings in a particular quarter. Maybe someone familiar with accounting could comment.

To: loantech who wrote (7564)	3/4/2006 7:34:52 PM
From: tyc:>	Respond to of 78410

>>So does that mean if they delivered all 139,000 ounces at $307 ....that NGX would lose $250 times 139,000 = $34,750,000.00 approximately? It means that the 139,000 ounces would sell for $34.75M less than a current market price of $557. i.e The hedge loss represents what they have lost by hedging.....how much MORE profit they would have made if they had not been hedged. As NGX is producing gold at a cash cost of ~$100 per ounce, even the hedged sales @ $307 per oz are profitable. I therefore cannot see how "NGX could get hurt bad". You can bet that you would have to pay more to buy an similar unhedged producer. I remember hearing them say that there is still 1,000,000 ounces to be produced at Kemess South. The sale of 139,000 ounces at $307 doesn't dismay me. I wonder if you agree, Dara ?