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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 (49540)	9/26/2007 1:40:02 AM
From: russet	Read Replies (1) \| Respond to of 78409

Slide 13 of the Denver Gold Forum Presentation shows details on gold hedge. Hedge contracts allow for gold to be sold at US$801 per oz and they will deliver 5500 oz Au per month to close them out with the counterparty over 6 years. westerngoldfields.com 13 Gold Forward Sales Program ??Required to hedge 429,000 ounces of gold (23% of recoverable reserve) ??Flat forward hedge contracts at $801 per ounce ??66,000 ounces annually –approximately 100,000 ounces of annual production remain leveraged to gold price –5,500 ounces per month July 2008–December 2014 ??Forward sales revenue pays over 90% of annual operating cost Further details of the hedge is from this press release,.. westerngoldfields.com Western Goldfields expects to produce between 160,000 and 170,000 ounces annually during the term of the Hedging Contracts. Pursuant to the Hedging Contracts, approximately 66,000 ounces will be sold annually at a price of $801 per ounce, leaving approximately 100,000 ounces annually leveraged to the gold price. Western Goldfields has entered into the Hedging Contracts to allow it to draw $87.3 million against the term loan facility. The $87.3 million is the estimate of debt required to expand operations at Mesquite. Western Goldfields has no current plans to hedge further production from the Mesquite Mine. So they entered into contracts to sell their 5500 oz gold at $801 per oz per month. Every month they can decide to take the revenue from the sales and pay off the term loan, or do something else with the revenue depending on the terms of the agreement. The contracts served as collateral for the loan, but once the mine is producing, the mine itself can be used for collateral. As they say in one slide, delivering gold to the hedge contracts will give them enough money every month to pay 90% of the projecting operating costs of the mine :-) They have unhedged monthly gold production of 8000+ oz Au in addition to the 5500. So if the agreement allowed they could advance the dehedging.