GREY:FNKLF - Post by User
Comment by
jplaneon Sep 29, 2011 11:51am
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Post# 19098943
RE: RE: RE: RE: Lockerby back online
RE: RE: RE: RE: Lockerby back onlinethe stock isn't unhedged, it's the Nickle they will be producing that is unhedged. It means they haven't sold any nickle in forward contracts. They will get the spot price for all their production. They had hedged some production at higher prices (via forward contracts). When the price of nickle dropped they still had the option to sell their nickle at the higher forward contract prices. The value of those contracts increased by $35 million as they had sold forward at 15 million pounds at $10.80 and ni price now is $8.40. Whoever holds such contracts could essentially by ni at $8.40 and resell it at $10.80 ($2.40 difference for 15 million pounds equals 2.4 x 15 million = $36 million profit. The exact figures probably varied and now that those contracts are sold they will only receive $8.40 per pound (spot price) . So it's good if we can see the spot price increase. The drop in the Canadian dollar is helping as well.