[miningmx.com] — ANGLOGOLD ASHANTI LIMITED has completed the elimination of its gold hedge book, reflecting the company’s confidence in the likely direction of the gold price.
In a statement released on Thursday, the company said it will now sell the gold it produces at market prices and therefore expects to enhance cash flow and profit margins.
“We’ve moved decisively to eliminate the hedge book,” CEO Mark Cutifani said. “The completion of the hedge book restructure over the last three years has created about $4.0bn of value for our shareholders and represents one of the major building blocks for the new AngloGold Ashanti. We remain bullish on the outlook for gold and will now benefit from full exposure to the price as we go forward.”
The cost of scheduled hedge book maturities during the third quarter of 2010 was approximately $98m. The additional cost of closing out all future hedge contracts amounted to approximately $2.63bn, representing an average buy-back price of $1,300 per ounce for this final tranche of the hedge restructure. The cost will be reflected in adjusted headline earnings for the last two quarters of 2010.
This final phase of hedge restructuring has been funded with proceeds from the issue of new equity and the mandatory convertible bonds completed
in September – raising gross proceeds of about $1.6bn – as well as cash from internal sources and debt facilities.
AngloGold Ashanti has consistently executed a strategy to reduce its outstanding gold hedging position in recent years. A number of initiatives
have been undertaken to accelerate this reduction of the hedge book from 11.3 million ounces at the beginning of 2008, to 3.22 million ounces in June
2010.
