Hedgebook

Someone really needs to talk to the board and management about hedging their production...What point is investing in a gold miner if you have minimal exposure to the price of gold?

They produced 36k oz in Sept quarter, and are maintaining their circa 170koz production guidance. Leaving 136k oz to be produced over the next 3 quarters. Of that 170k oz... about 80k is hedged. Call it near 50k hedged at $3100/oz, and the last 30k hedged (maximum upside on the collars) at about $3750.This has cost $60M over the rest of this FY (not counting the impact of Sept quarter). Not against some hedging to protect overheads, but 50% of production is too damn high. This gets worse and worse the higher spot goes. To say nothing of the $3200 deliveries in FY27.

3 years time, if this bull run continues in gold im sure everyone has their forecasts or thoughts on where gold is headed, but over $5k/oz is a near certainty by then IMO, and i fear this may end up being very conservative indeed.

The next decent pullback in the gold price of a few hundred or more, the company should take the initiative and just close these hedges. It will be a loss they can claim against profits, but the board should not be sitting idle on these positions that are almost certain to get worse. Keep some hedged so mandatory outgoings are covered, but keep as much exposure to spot as possible if you want to attract investors during a gold bull market.

Learn from Regis Resources mistake, at least they (finally) closed their book out at the end of last year.