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Monday, September 10, 2007

Hedgers are out of fashion in the Gold market.

First Barrick Gold and now NEWCREST to be Hedged is definitely becoming out of fashion. Additional demand for the Gold will push price higher.

Top Aussie gold miner to close out hedge book, restructure finances

"This latest big de-hedging by a major global gold miner, involves the close-out of hedge contracts totalling 2,049,017 ounces, though the company says it will purchase 2.25 M oz of gold put options equivalent to an average of 500,000 oz per annum over 4.5 years, beginning in January 2008. The strike price is $A800/oz ($US657.6/oz)."
""Newcrest intends to close out all its gold hedging contracts and gold loan embedded gold forward sales contracts totalling 2,323,642 oz for an approximate cost of $A842 M," said chief executive Ian Smith.
"Newcrest has pre-purchased 2.3 M oz at an average price of $A831 per oz to enable settlement of these contracts when the proceeds of the entitlement offer are received."
He said the company plans to temporarily leave the longer-dated gold bullion forward sales contracts in place. These would be closed out within 12 months, subject to the gold price, market liquidity and agreeing the terms with hedge counterparts."

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