interesting action, page-15

Hi Champ,

Not sure why you believe the company's profitability is related to the hedges? The hedges are for 180Koz per quarter (with 8 quarters to go), so if the ball mill works as planned, the hedges would only represent around one-third of CCU's production.

Profitability is far more dependent on the ball mill working and the POS. Also, the $29 hedges are settled first, so to the extent that they affect CCUs profitability, its in a more positive way in the next 7-8 months then in the ensuing period when the $23.75 hedges get settled.

With respect to Vidi's post:

"Remember it is very much in the interest for the company to have share price comfortably above 13 cents until rights issue has been finalised."

I respectfully disagree. The Board has done as good a job as it could in the circumstances. It has taken out the funding risk associated with getting the ball mill up and running (by securing the underwritten rights issue with Magna) and the debt-default risk in the period to end-2013 (by negotiating with the CBA re: closing out some hedges and deferring debt repayments). So the SP is now of little importance to the company.

There is often manipulation of the SP prior to the closing date of a rights issue, but since CCU's rights issue is effectively fully underwritten, there is no imperative to do so in this case.

The risk associated with CCU is now all about:

1. getting annual production up to the 2 - 2.5 moz range; and

2. the POS.

Worrying about ex-dates for rights issues, closing dates for rights issues, the level of Magna's ownership, the silver hedges are all (in my view) jumping at shadows.