RE:RE:RE:RE:RE:RE:RE:RE:RE:Hedge or dilute? How about NEITHER! kramaswamy, you can make up numbers on any commodity. What if copper drops to $1? What if silver drops to $10? What if corn drops to $1? No one can guarantee that any commodity will not drop to a ridiculous price, but the fact is that commodities cannot drop to ridiculous low prices when they are in high demand. A low price tends to bankrupt all the producers and shut off the supply. Supply must meet demand, so the market cannot allow that to happen.
I have proven to be right over and over with my predictions. I study markets and charts. Zinc is not going back to $1. Even if it did for a couple of months, Trevali would be fine because treatment costs are going to be $.10 lower. That gives the company a huge cushion. Their AISC will be around $.94 this year, and the cash costs should be around $.84. Do not worry about $1 zinc.
If you really think zinc is going to $1 long term, then you should not own this stock. Hedges only offer short term protection, and bone headed management has no idea when to hedge. I am just some guy on a message board, and I have been about 8 steps ahead of management at every turn. These bone heads could not time a 4-minute egg, no less time the zinc market. They have no business hedging because they do not know what they are doing.
That said, some hedging is fine. Yes, Caribou should be 100% hedged. It just should have been hedged at $1.35 minimum. And yes, it is fine to hedge in order to arrange RP 2.0 financing. That would be much better than more dilution. Also, hedging through Q1 was fine because the new treatment cost is not set until the end of Q1 (although it is retroactive).