re: Ann: OGC Macraes Update & FY14 Production... I didn't like...

re: Ann: OGC Macraes Update & FY14 Production... I didn't like it either because I am looking for higher gold prices but the hedging only applies to NZ operations (around half of the next two years production from NZ) and not to the Philippines Didipio where almost all the profit is derived now (with the current low gold price). The move is probably designed to protect jobs in NZ as well as keep the operations cash flow positive. It also helps to keep the mines open so that they maintain some leverage to POG in NZ through the unhedged portion of production as well as the likelihood that mine life can be extended again (adding unhedged ounces) when the POG recovers. The mine life plan has been reduced a couple of times lately to allow for the lower POG and there is no reason why this can’t reverse again with a higher POG over the next couple of years. Less chance of the NZ operations starting up again if any of the mines there were shut down so this is a responsible move considering the operations there were at risk of being shut down with a lower POG and we have no guarantee that the POG would not go lower for another quarter or two. So there are positives to this hedging that might outweigh the negatives.
In any case the market seems to have taken it positively with OGC closing up 0.6% in Canada (and a similar rise over our closing price) following this update on much heavier than normal volume there despite the POG dropping modestly last night. The copper price rising strongly off a 3.15 low to close up at 3.34 was a positive offset to last nights POG pull back.