RE:Did anyone notice the change in hedging for 2024?OK Kegman if you insist..You're Crazy! LOL
So by my calculations, VGCX management, since the November presentation, has decided to increase 2024 forward gold sales by another 12,000 ounces to a total of 34,500 ounces from the 22,500 ounces forward sales in the November presentation. This change slightly lowers the 2024 forward average sales price to $2057 US per ounce for the full year forward sales of 34,500 ounces versus the previous $2074 US for 22,500 ounces. So basically VGCX management gave up $17.00 US an ounces or $586,500 US to secure another 12,000 ounces of 2024 forward sales at $2057 US an ounce and bump up the forward sales price to $2120 US for 15,000 ounces in Q2 and Q3. Since Q2 and Q3 should be the best quarters for production, getting $2120 for those 15,000 ounces will help our bottom line by about $750K for each of these quarters if gold stays around the current $2020 per ounce.
For the frst 9 monhs of 2024, the average forward sales price per ounce is now $2060 US versus $2074 US per ounce as was outlined in the November presentation.
At this point, there is only 3,000 ounces of forward sales in Q4 2024, albeit at only $2025 US an ounce BUT when averaged out with all the other 2024 forward sales we're actualy getting $2057 US an ounce. Unfortunately throwing that 1,000 ounces per month at $2025 US an ounce on the last line of the presentation is a bit deceiving and catches one's attention until you actually do the math.
My conclusion is that the 34,500 ounces of 2024 foward sales is really only about 25% of the 180 to 190K ounces of full year 2024 production and I can live with a guaranteed $2057 US for the 34,500 ounces. If gold does happen to run up significantly higher than $2057 US in 2024, then VGCX will capitalize on the other 150,000 ounces that aren't subject to forward sales and if gold should drops significantly below $2057 US for most of 2024, then these forward sales will ensure VGCX can meet their debt obligations. The $586,500 US that this is costing VGCX to secure these forward sales is really peanuts when considering the volatility in gold prices these days.
Personally, unless WW3 breaks out soon, or the FED suddenly begins aggressively cutting interest rates I don't see the price of gold going up or down significantly from here. Every time gold runs up, the Fed comes out and says, nope not ready to lower rates just yet and down gold goes...AGAIN. The rates cuts were expected in March, now it's not likely until July, and some are saying there won't be any cuts in 2024. I'm in the camp of no rate cuts in 2024 which equates to a stagnate gold price. BUT, if for some reason gold did significanlty drop from here, these forward sales are going to look pretty good and ensure VGCX can meet their upcoming debt obligations. In the meantime, expect any run up in share price to be grabbed by the day traders and funds that are actively trading VGCX.
My opinion only, please DYODD.
And just for the record Kegman, no you're not crazy!
HB77