Ann: Endeavour Mining Produced 124,000 OZ in Q1 2015, page-16

Cheers Loki,

"If they had hedged at USD1250, are you saying it would have cost them $150/ounce, which is about what the gold price has fallen already? I doubt it, but please convince me otherwise. What happens if the USD POG drops to USD900 which would mean a drop of USD350/ounce, is that what the hedge would have cost them?"

Sure, if you bet on black you might win once or twice, but over the long term I guarantee you will lose to the house same with gold hedges, the story of the last decades was the number of gold miners who had to raise capital to cover their short hedges. There is zero argument or doubt, over long periods hedging strategies will lose you the hedge expense, and if you're impatient, then also the cost of the spread.

What happens if the USD POG falls to USD900?
Mines shut down, cost cutting, the strong survive...

What happens if the USD POG rises to USD1500?

Party time!
or if you hedge... DISASTER... tap shareholders to cover the hedge position...

"How can they close their operations and not be bankrupted? Have a look at their debt covenants. Closing down mines on C&M costs money plus they need to service their debt and have payables due to the tune of around USD100m."

Are we in a position where we have to consider hedging our production? I don't think so... hypothetical.

"I really am surprised by what you have written. That is not astute risk management - its just gambling because we do not want to pay a price to cover downside."

Hedging is not astute risk management... it's paying a stupid banker 2% + spreads sitting behind a desk, because he wants to pay for the risk that you don't want! The bank will win every day of the week, except in a leap year and only on the 4th day of the 2nd week of June, on that day you will win and only because the banker is holidaying in the Bahamas and decided to sleep-in that day.

Golden rule of Risk Management #1: Never Hedge
Golden rule of Risk Management #2: If someone wants to hedge a position, then say Absolutely! I'll take the other side.

Why are you so adamant for EVR to take up a hedge? the ultimate plaything of gamblers and speculators and another product the Bankers love selling to the masses.