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Mix-Ansicht- Newmont news - gold hedges - Popeye, 05.08.2002, 08:11
- "At $300 (an ounce) the pain is a little less, but we will not survive," - Koenigin, 05.08.2002, 08:45
Newmont news - gold hedges
UPDATE 2-Newmont eyes quick
end to Normandy gold hedges
August 05, 2002 12:34 AM ET
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(Adds US dollar value of hedge
positions in third paragraph)
By James Regan
KALGOORLIE, Australia, Aug 5
(Reuters) - Newmont Mining Corp
NEM.N, the world's largest gold
miner, said on Monday it would
look at ways to accelerate the
unravelling of millions of ounces of
gold pre-sold at fixed prices.
The mining house has already extinguished some two million ounces of
a total 10 million ounces inherited with the takeover of Australia's
Normandy Mining in February, but has vowed to rid itself of all positions
as soon as possible.
As of the end of March, the Normandy hedges were valued at negative
US$411 million, Newmont President Pierre Lassonde said.
Lassonde earlier told the Diggers and Dealers mining conference here
that one of the company's goals in 2002 was to"review opportunities"
to accelerate delivery or to close out the positions.
Newmont, which forecast gold production of over seven million ounces
this year, is among a growing legion of big miners with an aversion to
hedging -- the practice of selling yet-unmined nuggets at fixed prices.
Newmont has criticised hedging as hurting the gold price by erecting a
false ceiling on upward price movements.
"This has been the bane of this industry for the past three years,"
Lassonde said.
However, some firms defend hedging as a way to protect margins when
bullion prices fall.
Normandy's multi-year hedges stood at around 7.3 million ounces at the
end of the first quarter, down from 9.5 million ounces in February.
Gold is trading around US$307 an ounce, up from $279 in January,
encouraging less hedging industry-wide.
Lassonde said at current bullion prices, mining houses faced difficulty
surviving.
He said when gold traded around $275 an ounce for much of last year,
"nobody was making money".
"At $300 (an ounce) the pain is a little less, but we will not survive,"
Lassonde said.
He predicted further declines in the value of the U.S. dollar -- making
gold cheaper to buy outside the United States -- would eventually push
gold to between $325 and $350 an ounce.
Newmont also aims to save between $70 million and $80 million via
merger-related synergies this year, while reducing net debt to 20
percent of total capital, Lassonde said.
Quelle: Reuters
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