Old API Wind-down Ltd - Ordinary Shares ARLZQ

RE: Derivative Loss Again?

[smilley]

I did a little research a while ago on the derivitave losses and near as I can figure, they relate to the forward sales hedge agreement with the lenders.  Half of the current years production is hedged at $850/oz (I think) thus reducing upside gains and guaranteeing the lenders a very nice return.  Right now, this hedging is working in ARZ's favor with prices being depressed, and you can bet the company is selling as fast as it can while the pm prices are depressed. 

I think this hedge position has several years to run as well, and could work against the share price if gold prices really take off.  There is still lots of upside to the company but some of the leverage is out of it.  For ARZ to continue growing value it must contain mining costs and expand reserves just like any other mining company. 

I sold my shares back before the correction and decided to eliminate any hedged juniors from my portfolio.  The analysts love this stock though, and it performed well during the correction period. 

smilley