re : NEM positions
just received this from IR.
In recent months, we have entered into 3 contracts:
First, a prepaid forward sales contract, essentially a gold loan, in which we ag reed to deliver 161,100 onces of gold per year in years 2005, 2006 and 2007. We will receive a minimum of $300 plus all additional revenue up to $380 an ounce at the time of delivery. This gold loan was used to reduce revolving credit debt ($137.2 million).
Secondly, we puchased puts for 2.85 million ounces to be delivered over the next two years at a strike price of $270. This was done for price protection only and does not involve forward sales. The puts were purchased through the issuance of long-term call options which is a hedge.
The calls are our third transaction.
This involved the issuance of call options for 250,000 ounces a year in 2004 and 2005 at $350 an ounce; 500,000 ounces in 2008 and 2009 at $380 an ounce, and 50,000 ounces a month for for 17 months beginning in March 2008 at $392 an ounce. If the gold price reaches these levels in those years, we have the option of rolling the contracts into a spot deferred contract.
The put/call contracts create a floor price for one-third of our production over the next 2 years while potentially committing only 4 percent of our reserves.
All three transactions therefore involve the commitment of only 5 percent of our reserves, leaving us the most leveraged of any company to the gold price.
I hope this answers your question. If I can be of any further assistance, please send an email or call at 1-800-810-6463.
Jodi Bochert
Shareholder Relations |
