EXPM:HRTFF - Post by User
Comment by
MudCreekeron Jul 25, 2020 11:29am
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Post# 31318755
RE:RE:RE:RE:Hedge Cost US$7.325 million
RE:RE:RE:RE:Hedge Cost US$7.325 millionI'm no financial wizard, but I can do math.
"As at March 31, 2020, a total of 74,764.9 ounces of the originally issued hedges remain outstanding." - from the Q1 financial report, available on Harte's website. Cal it 75k ounces, just to make the math easy.
The significant part of those hedges is the calls which are priced between $1391 and $1399 per ounce. Call it $1400 just for round numbers. If the price of gold were to fall below that level, the hedges become irrelevant, unless it falls below $1300, at which point it's the puts that matter and Harte starts to benefit from the hedges. Not likely to happen.
So what will the cost be of 75k ounces of $1400 calls if gold is at the prices you mentioned?
At $1700, it's $300 per ounce or $300x75,000 = $22.5 million total over the life of the arrangement (i.e. until June 2024).
At $1800, it's $400 per ounce or $30 million total.
At $1900, (where gold is today), it's $500 per ounce, or 37.5 million total.
Gold would have to rise to $2070 per ounce and stay there for the cost of the hedge to hit the $50 million mark in that started this discussion.