Johannesburg, South Africa — MININGREVIEW.COM — 08 October 2010 – AngloGold Ashanti Limited “’ the world’s third-largest gold miner “’ says that it remains bullish on the outlook for gold and that it expects to benefit from its rally after eliminating its hedge book.
AngloGold has been chipping away at its hedge book “’ one of the biggest among its global peers “’ to increase its exposure to big rises in the spot price of gold. The company offered shares and bonds last month to raise around US$1.6 billion (R11 billion) to help fund the elimination of the hedge.
“The completion of the hedge book restructure over the last three years has created about US$4 billion (R28 billion) of value for our shareholders,” chief executive Mark Cutifani said in a statement issued here.
By ditching its hedge book and being able to sell the gold it produces at market prices AngloGold expects to enhance its cash flow and profit margins. “We remain bullish on the outlook for gold and will now benefit from full exposure to the price as we go forward,” Cutifani suggested.
Gold rose to a third successive record high on yesterday, putting it on track for its strongest weekly performance in six months, as expectations for the Federal Reserve to prop up the US economy undermined the dollar.
AngloGold said the cost of scheduled hedge book maturities during the third quarter of 2010 had been around US$98 million (R686 million).
The additional cost of closing out all future hedge contracts amounted to approximately US$2.63 billion (R18.4 billion), representing an average buy-back price of US$1 300 per ounce for the final tranche of the hedge restructure, the company added. The cost would be reflected in adjusted headline earnings for the last two quarters of this year.