Forwards sales loss ~ $0.6mIn the Q1 financials, KDX announced that:-
- It had a total of $103m in liquid resources, comprising of $29m cash, $23m in credit facility and $51m in metal stocks.
- KDX forward sold 20,000 ounces at circa $1250 in the quarter, to be realised from sales in Q2.
https://www.klondexmines.com/investors/news/klondex-reports-solid-first-quarter-operating-results-with-57-633-geos-mined-reiterates-full-year-production-guidance-of-210-000-225-000-geos The POG is currently $30 above the forward sales price.
Therefore,
at today’s POG, KDX would have lost $0.6m (20,000 ounces x $30). The forward sale did not advance the timing of receipt of money from the 20,000 ounces of gold sold forward. Also, the company clearly had adequate cash resources at the end of Q1, then
this decision seems to have been a purely speculative play by the board, which backfired a second time in successive years. The potential of up to $0.6m lost on the forward sales in 2017 Q2, could have been applied to pay the executive board salaries for a long time.
Is it unreasonable to ask these questions of our board?
The market is being asked to trust them to make sound decisions ..... could they explain why they are seeking to transform KDX into a futures operator, rather than an unhedged gold miner.