Well we got the usual MacBank hedge deal. $US1355/ounce is...

Well we got the usual MacBank hedge deal. $US1355/ounce is probably a bit lower than what EVG could have got from another bank (eg the one IGR got its loan from), but what really sticks in my throat is the size of the hedge, 126,000 ounces (50% of production over 4 years).

Clearly if total costs are say fairly high at $US850/ounce and the hedge is $US1355 then the difference is $US505/ounce or $US63.63 million in pre-tax profits ($47.7 million post tax), which is about 22% above the $US37.5 million in loans from MacBank. Hence the size of the hedge should only have been around 100,000 ounces.

I have no idea why EVG persisted with MacBank. MacBank has forced MDL and ADU take out excessive hedges with them at well out of the money hedges. No doubt the risk with EVG's hedge will be mostly on it, and not on MacBank.

Somebody (JID) needs to talk some sense into our management. Have a look at the great funding and hedge deal IGR got from a French bank.

The positive side is that the financing delay has meant we have locked in a much better hedge than what ADU got at the start of this year (290,000 ounces at $USD1,075/ounce).

loki (not happy, but not selling my EVGs cheaply)