AOR - How do holders of AOR shares view the future, page-7

I have received a response from Aurion in relation to questions that I raised about their hedge book. Can anybody clarify the following statement?

"If you refer to the hedging disclosure detailed in the June quarterly, we have 5,952,000 ounces hedged. 13% of these hedges are by way of forwards, with the balance representing purchased put options. This gives AurionGold the ability to participate in upward gold price movements."


Here is the remainder of their reply.

I am writing to you in reponse to your request regarding the AurionGold
Limited groups' hedging position.

Firstly I'd like to thankyou for your continued support during the years
you have been a shareholder with Ross/Delta/AurionGold.

You have requested the following:
- Clarification on the increased level of hedging between our quarterly
reports
- Clarification on deliveriies into outstanding hedging contracts.

You are correct in your calculations that the level of hedging has in fact
increased by 450,000 ounces from December 2001 to June 2002. The reason for
this increase is due to the redesignation of the Solomon Islands gold
hedging positions.

As a result of the deconsolidation of Solomon Islands Mining NL in 2001,
related gold and currency positions had not been previously included in the
hedge book. Given the longer production profile of the merged Group, part
of these positions was redesignated as Group hedges in the March quarter
with the balance being redesignated in the June quarter.

The Hedging Disclosure on page 10 of the December 2001 quarterly report
does not include any of these Solomon Islands gold hedging positions of
which were, at the time, not considered to be effective hedges. The same
Hedging Disclosure on page 8 of the June quarterly report does include
these positions.

The mark to market of the hedge book at 31 December 2001 was negative
$287.5 million. This valuation was based off a US$ gold price of $276.50
and A$/US$ 0.5114 (A$ gold of $541).

The mark to market of the hedge book at 30 June 2002 was negative $437.8
million. This valuation was based off a higher US$ gold price of $318.50
and higher A$/US$ 0.5664 (A$ gold of $562). This increased US$ gold price
was the major driver for the decline in mark to market.

If you refer to the hedging disclosure detailed in the June quarterly, we
have 5,952,000 ounces hedged. 13% of these hedges are by way of forwards,
with the balance representing purchased put options. This gives AurionGold
the ability to participate in upward gold price movements. When gold
hedging contracts mature over time, it is AurionGold's intention to deliver
into these.

Should you have any further enquiries you can contact me directly by email
or phone.

I hope this helps with your assessment of AurionGold Limited, a great
Australian gold company.


Thanks and regards

Kerry Suffolk
Assistant Treasurer
AurionGold Limited