News Release
Monday 28 July 1997 21:21 GMT
Monday 28 July 1997
BUSINESS
Newmont Gold
NEWMONT GOLD UNWINDS 1.1 MILLION OUNCE GOLD HEDGE POSITION
London, July 28
Distributed by PR Newswire Europe on behalf of Newmont Gold.
Denver, July 28 - Newmont Gold Company today purchased approximately 1.1 million ounces of gold to offset the hedge position it acquired in the merger with Santa Fe Pacific Gold Corporation. Newmont will realize a gain of approximately US$100 million on the transaction.
"The gold market has been caught in a frenzy of fears and phobias in which exaggerated worries over potential central bank sales is overshadowing the strongest physical demand for gold in history," said Ronald C. Cambre, Newmont's Chairman, President and CEO.
"As the lowest cost producer in North America, we think this is a time to reassert our confidence in the metal and provide our shareholders with the opportunity to fully participate in any rally in the gold market."
Mr. Cambre noted that the ratio of speculators who have sold gold short is ten times that of traders with long positions in the metal. "This is the widest ratio in a decade and a clear indication that the market is oversold."
James P. Riley, managing director of Goldman Sachs, said, "Gold had one of its best performances in recent days, being up $3 to close at $329, reflecting this oversold position. I would look for continued rallies of this nature in the weeks to come."
The Santa Fe hedge, at $420 an ounce, covered one-quarter of Newmont's anticipated production of 4 million ounces over the next year. By closing out the position, Newmont essentially locked in a price differential of approximately $90 an ounce over the price of gold in future periods. The gain will be recorded as the gold is produced over the next 12 months.
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