I think you'll find the hedge is made up of a series of forwards call and puts. That means they will selectively retire (let lapse) those elements as they deliver production. At the same time they will upgrade resources to reserves by drilling.
If you're saying they can't convert resource ounces into reserves by a spend of say $45/ oz over their current production cost (which will fall) and make a profit from the price they struck on the hedge of $1656.30. Then it's a sorry state of affairs. Especially since they can pick the most cost efficient part of their resource inventory to convert (least drilling) to reserves.
That little exercise is one of the best value creating perks this co. has.
Ann: Gold Hedging and Pre-Pay Update, page-6
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