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To: Claude Cormier who wrote (130906)	9/15/2008 11:08:36 PM
From: Amark$p	Respond to of 313161

WGW does take unrealized loss on hedging. See note 12 of 2Q08 financials. Took a 8.7M loss for 2Q and has 32.8M unrealized loss for 2Q08YTD. Unrealized gain (loss) on mark-to-market of gold forward sales contracts (Note 12) (8,708 ) ... (32,820 ) see page 5 sec.gov Yes, WGW should have a realized profit for the quarter if they meet guidance and have no unexpected expenses: "2008 Outlook - The Mesquite Mine is expected to produce between 55,000 to 60,000 ounces of gold during the third quarter of 2008 as higher-grade ore from the Rainbow Pit is placed on the leach pad. Cost of sales(1) is forecast at approximately $400 per ounce of gold. Gold production for 2008 is projected to be 135,000 -145,000 ounces of gold at an average cost of sales(1) of between $470 - $490 per ounce of gold." Note 12 12. MARK-TO-MARKET LOSS ON GOLD HEDGING CONTRACTS Under the terms of the term loan facility dated March 30, 2007 and amended and restated on May 31, 2007 (note 13), Western Mesquite Mines Inc. was required, as a condition precedent to drawdown of the loan, to enter into a gold hedging program acceptable to the banking syndicate. On June 14, 2007 the Company announced that all requirements needed to make the facility available for drawdown had been met and that it had executed flat forward sales contracts for 429,000 ounces of gold at a price of $801 per ounce. The hedging contracts represent a commitment of 5,500 ounces per month for 78 months commencing July 2008 with the last commitment deliverable in December 2014. The Company has not designated these contracts as cash flow hedges. Accordingly the hedge accounting rules of SFAS No.133 are not being applied and the period-end mark-to-market adjustment related to these contracts is immediately reflected on the income statement of the Company as unrealized losses on gold forward sales contracts and the cumulative effect is reflected as an asset or liability on the balance sheet. The contracts were marked-to-market as at June 30, 2008 using a spot price of gold of $930. The cumulative unrealized pre-tax loss of $91.8 million (2007 - $58.9 million) has been disclosed as a liability as at June 30, 2008 and the Company has recorded an unrealized loss of $8.7 million and $32.8 million for the three month and six month periods ended June 30, 2008 respectively (2007 unrealized gain – $0.8 million and $0.8 million respectively).