Der Hammer ..... Barrick fährt Hedges auf 3 Mio. zurück - 500 Beiträge pro Seite

[Traderfritz]

Addressing a presentation in New York on Friday, chief executive Randall Oliphant was unrepentant about the company`s extensive hedging, despite being vilified for it by an increasing number of money managers, analysts and retail investors.

His patient defence bears out. Without hedging Barrick would hardly be the company it is today, with hedging contributing non-mining specific gains of $1.7 billion which enabled the company to make acquisitions, buttress its balance sheet and build new mines.

Has it contributed to a depressed gold price by selling the gold it has yet to mine? Certainly, but doesn`t that also make it a shrewd competitor? Another positive way of looking at it is that hedgers have accelerated the fat burning efforts of all producers. Whereas industry production costs were running at about $350 an ounce half a decade ago, they average around $200 per ounce for 2001. With gold prices now rising, a powerful profit multiplier has come into effect.

That is no particular reward for shareholders who have been long since the late 1980s – they have had to endure a grinding readjustment from which they may never fully recover. For new investors, the reverse is true.

That percolated through Oliphant`s explanation of why the company is looking to the spot market. Hedging delivered what it promised in the tough times, but with the available premium over spot steadily declining, a new paradigm is emerging that gold producers must adapt to if they are going to beat competing investments.

Oliphant said the company`s maturing profile with multiple cash generative mines and changing financing requirements had both obviated, and made possible, the hedging review. "We know shareholders want to see the price move in response to the gold price… we can offer than and still have strong free cash flow," he noted.

Sensitivity indications provided by the company show that every $25 increase in the gold price will add 13 cents per share to earnings, with the downside protected through hedging.

Unlimited flexibility

Oliphant indicated that the company has nearly unlimited flexibility to adjust its hedging, something critics have been sceptical of, particularly its claim to be able to defer forward sales indefinitely. He added Barrick could review its delivery ratio at almost any time in response to the vicissitudes of the gold price.

Meanwhile, the roughly 3 million ounces it will sell forward this year carry a minimum price of $365 an ounce which is a rock solid margin even after the December-January improvement in the gold price.

Clearly, Barrick is proving that it can have the best of both worlds and chief financial officer Jamie Sokalsky once again reassured investors that the hedge book was fully insulated from margin calls at any price. The hedge book carries an "AA" rating and is worth $5.5 billion which has been diversified into a fixed income portfolio.

The hedge book is among three "off balance sheet" items, which have become topical since Enron`s failure. The others are the company`s gold reserves (an asset offset by the proportion pledged to contract sales) and future reclamation costs (a liability estimated at $4/oz).

Keeping the powder dry

Tipping his hat to the consolidation buzz in the industry, Oliphant said Barrick`s cash wasn`t burning a hole in its pocket, although he acknowledged it offered a lower rate of return than mining.

"We will look to our history to maintain discipline in operations and for mergers and acquisitions… we have many options." The reference to discipline could hardly be anything else but a between-the-line reference to the bidding war for Normandy which drew the ire of many investment professionals for the premium that was ultimately paid.

The company is also considering asset swaps which are likely to become more prevalent than mergers or acquisitions this year. The major producers have indicated a desire to tidy up the numerous joint ventures that could be run more efficiently by a single operator-owner.

There is also an increased focus on organic development with more aggressive early stage exploration being undertaken as the junior mining sector continues to die off, and with few quality deposits coming up for sale (or at a reasonable price). Considerable work is being done in Tanzania`s Lake Victoria Goldfields where Barrick`s recently commissioned Bulyanhulu gold mine operates. Promising exploration has also been conducted on the Cowal project in Australia (New South Wales).

The Veladero project that straddles the border between Chile and Argentina is also being pushed hard with work done on the reserves qualifying the project for capitalisation according to US GAAP. Full development will cost up to $600 million and an early feasibility study is being prepared to pour the first gold by 2005. The collapse of Argentina`s currency peg with the dollar will boost the economics of the project just as South African producers benefit from selling their output in dollars while inputs are paid for in cheap rands.

Barrick continues to insist that Pascua-Lama is part of an enlarged "Veladero district" although bringing Pascua to account will cost more than $1 billion and require gold prices well above $300 an ounce. It remains questionable whether Pascua`s reserves should still be included in (16.8 million ounces) the total (82.3moz).

The company is also pursuing the Kabanga nickel project which Carrington says could rival Voisey`s Bay in terms of tonnes and grade (hopefully there won`t be a parallel in Voisey`s dirty politics).

Mining Web SA 15-2-02

Kommentar denen muß der A... auf Grundeis gehen. Findet Ihr die Akt. als bald ungehegt kaufenswert?
TF

[Traderfritz]

KLAR IST BARRICK NACH 94Mio Verl.$ KEIN KAUF************
Wenn die jetzt für Anglo bieten, ... dann dürfte es aber bald zur Sache gehen. vgl. Abs.5, Ich setze weiterhin auf HAR/DUR/NEM*******
TF

TORONTO - Barrick Gold Corp., the biggest gold producer, lost $94 million in the fourth quarter, reflecting costs associated with the acquisition of Homestake Mining Co. to form the biggest gold miner, and a court judgment.
Bloomberg reports the Toronto-based company lost 17 cents a share in the three months ended December 31, after recording merger costs of $107 million after tax and taking a charge of $42 million. Barrick didn`t give a year-ago figure.

Barrick completed its $2.3 billion acquisition of Homestake in November, vaulting ahead of AngloGold Ltd. as the biggest producer. The company may acquire more mines to boost production after gold prices jumped to a two-year high, it said.

``We have the ability to grow organically or through disciplined acquisitions,`` Barrick President and Chief Executive Officer Randall Oliphant said in a press release distributed by Business Wire.

Barrick has $733 million of cash and short-term investments and "virtually no debt,`` the company said in the statement.

Barrick may bid for South Africa`s AngloGold or Australia`s Newcrest Mining Ltd., analysts have said.

Before the merger costs and the charge, Barrick reported net income of $55 million, or 11 cents a share, during the quarter.

A British Columbia judge last month ordered Barrick to pay Inmet Mining Corp. $59 million after Homestake backed out of an agreement to buy the Troilus gold mine. Barrick said it has appealed the ruling.

Gold production rose to a record 6.1 million ounces in 2001 from 5.95 million ounces in 2000 for the two companies combined, Barrick said. Production in 2002 is likely to drop to 5.7 million ounces as the company shuts mines, it said.

Gold reserves increased to 82.3 million ounces in 2001 from 79.3 million ounces a year earlier after the company found more gold in South America, Australia and Africa, said the news wire service.

Cash costs rose to $162 an ounce from $155 an ounce and are expected to rise to $167 an ounce in 2002, Barrick said.

[Saccard]

auf 3 mio. oz pro Jahr, also neue 3 mio oz zu den 18 mio schon bestehenden...

Gruß S.

[SchwarzGold]

Irgendetwas muss die Barrick (ABX) ja sagen, wenn sie von ihren Shareholdern nach dem flachen roten Strich ganz unten in diesem Chart befragt wird. Sie haben in einer Haussephase noch nicht einmal das Metall selbst "outperformt", eben ein echter Anti-Gold-Hedgefonds...