Gold HedgingDuring the conference call, a private investor asked Domminic to explain how the gold hedging works. Duffie explains the two separate hedging contracts fixed in US and Aud dollars and then he and Lawrence (the private investor) used $2,000 gold price as an example. Dominic and Lawrence came up with a US $800,000 loss per month or US$2.4 for the quarter, but tht was only with respect to the gold portion hedged in US dollars.
I took the above reference and came up with the following numbers:
Assumptions - gold average price for H2, 2020 - US$2,000
Gold hedge in USD - 25,000 ounces per year hedged at US $1619 or approximately 2083.3 ounces per month
2083.3 x 381 (2000- 1619) x 3 months = US$2.38 million.
Gold hedge in AUD - 25,000 ounces per year hedged at 2390 AUD or $US 1704 or approximately 2083.3 ounces per month
2083.3 x 296 (2000 - 1704) x 3 months = US$ 1.85 mill
Total gold hedge loss of US$4.23 (2.38 + 1.85)