High River Gold Mines Ltd HRIVF

RE: RE: Always look beyond the claims....

[franzneuman]

There are some compelling features to OGC. I was in at .40 and .46 and sold after their Q4 financials and made a decent little profit. I got out because management decided to hedge again and had previously indicated that they'd stop doing so. That gives me the willies and it certainly keeps institutional investors away.

They have 300,000 oz of gold hedged over the next two years at very low prices - 200,000 @ ~$400 and 100,000 @ ~$500. The prices are actually locked in NZ currency, whiclh is currently very weak. If it strengths against the greenback, these values could increase (but so would costs).

Whatever the case, about half of OGC's production will be done at or below cost over the next two years. That looks like a lead weight that will be hanging round it until 2011.

I wouldn't be anywhere near HRG right now if Mosher et al were still in charge. At OGC, however, you have the same management in place who made some very imprudent judgements in the past. It makes me very nervous.

Add to this, substantial debt and the need to finance a huge project in the Phillipines -- best to sit on the sidelines and see how it all pans out, imo. The hedges will keep it from flying anywhere too far north in the meantime.

The bottom line is that both OGC and HRG have significant issues to resolve. HRG's situation looks a lot better though in terms of a healthy rebound over the next two years. It's not hedged, its production will be similar, past bad management has been canned, we have a serious backer ... much better potential for a multibagger, imo.

Yes, we have significant debt issues. But I find it hard to believe that Severstal is going to let that ruin their investment.

franz