A US$1,500 hedge means that there is at least one hedge company willing to bet millions of dollars that the gold price is going well above US1,500 dollars for an extended period of time. This US$1,500 hedge means that someone fully expects to see a sustainable US$2,000 price - they are not betting all this money to just break even.
I know absolutely nothing about this Australian company called Catalpa Resources, but they were able to hedge 352,316 ounces of production for a price around US$1,500. That represents a gross revenue of US$500,000,000 when the ounces get delivered.
I don't think Century's share price will be $.155 per share when Century is producing 145,000 ounces (Lamaque and San Juan combined) @ US$1,500 gross revenue per oz.
Here is part of the article about Catalpa:
Neil Dowling
October 27, 2009 01:00pm
PERTH gold miner Catalpa Resources today announced it planned to pour its first gold in June next year.
In its activity statement for the September quarter, Catalpa says the timetable was based on rapid infrastructure progress at its Edna May gold project near Southern Cross.
It is buoyed by the successful raising of more than $106 million in debt and equity to advance the $92 million Edna May open-pit gold operation to production.
As part of the finance facility, Catalpa says it has sold forward 352,316 ounces of gold at an ``exceptional'' price of A$1557 an ounce.
1 comment:
1544 in Aussie dollars which leads to about $1375 USD. This is insane hedge...or is it :)
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