RE:Question: what happened to that casino gamble..... Maybe you missed the news of the debt refinancing.
Current situation at end 2020 is:
100M USD facility @ Libor +3-4% to be repaid quarterly, starting end March 2021
100M USD revolving credit facility - 75M USD used @ Libor +3-4%, to be repaid by end 2023, interests paid quarterly
50M USD CAT Equipment lease facility : 35M USD oustanding @ LIbor +3.5%, repaid quarterly
About 40M USD to pay in 2021, not a big deal at current POG.
Regarding the hedging program, we have :
a) Put protecting 60000 oz below CAD 1500 --> worthless
b) Call sold : 60000 oz production capped at 1936 CAD. 15000 per quarter.. In other terms, with POG @ 2200 CAD, Victoria must pay to Macquarie 15000 * (2200-1936)= about 4M CAD. At the same time, Victoria is selling the oz produced at market.
So current POG declines isn't impacting so much the 1st quater situation for Victoria as these shoujld be the quarter with the lower production/sales numbers. 15000 oz isn't impacted by the POG decrease... Selling at a lower price but less due to Macquarie.
c) New 5000 oz/month hedged @ 1700 USD for 2021. So we have 50000 oz production (March to Dec) for 2021 with a minimum UISD 1700 sale price, whatever POG is from March to December. So at least 25% of the estimated procudtion is protected @ 1700 USD.
I do not know the cost of the put (time value, premium) so the final impact would be less but this is the normal cost of such hedging. I thought the strike price was quite low but wasn't exepcting such POG pullback..I guess the Company took into account many factors as the premium to pay as well as the rest of the hedging strategy (the call sold).