AAU 0.00% 2.0¢ antilles gold limited

There was an Australian goldie called Sons of Gwalia my...

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    There was an Australian goldie called Sons of Gwalia my recollection was it got in to difficulty as it hedged gold. In its case the company was hedged to produce gold and deliver it to banks at what was then a low price . The gold price lifted but it still has to deliver at the low price , and was unable to cover its costs at the low price .
    The banks foreclosed on the company.
    Personally I like the idea of hedging providing the miner has covered its bases with taking into account an assured level of production with little chance input costs will go up . I have not been following PGI closely but would think if PGI has hedged gold at less than current spot price then it is out of the money and would have to show a paper loss on its balance sheet for that and works the other way to .
    The guaranteed power supply contract PGI has plus a very homogenous ore body of constant grade does lend itself to hedging especially given gold is probably still in contango .
 
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