If Barricks' book is as they state and gold goes to $400; will Barrick get margin calls?
HOW dare you use such a powerful word in your questions:IF
Short answer, NO, long answer, well it depends on the definition of a
hedge. First look at this from Cambior: {consider this first} I'll add a next post in a while.}
Cambior hedging program
Cambior Inc
CBJ
Shares issued 72,890,161
1999-10-05 close $4.74
Wednesday Oct 6 1999
Mr. Robert LaValliere reports
All amounts in U.S. dollars.
The hedging program as of Sept. 30, 1999, includes the following gold hedging
positions for a total of 2.7 million ounces at an average price of $318 per ounce.
Forward Avg. Deferred
Ounces Price Gain Total
(000) ($/oz) ($/oz) ($/oz)
1999 159 335 28 363
2000 642 298 22 320
2001 640 292 9 301
2002 597 292 - 292
2003 127 330 - 330
2004 102 340 - 340
2005 102 340 - 340
2006 112 357 - 357
2007 192 357 - 357
Total 2,672 309 9 318
These forward positions include naked puts, forwards, matched put/call and spot
deferred positions allocated to their intended periods of delivery and long-term
floating rate variable volume forwards.
As of Sept. 30, 1999, Cambior had also sold call options for a total of 1.9 million
ounces at an average price of $315 per ounce with a floating lease rate swap on
648,000 ounces:
CALL OPTIONS
Ounces Average Price
(000) ($/oz)
1999 921 287
2000 299 323
2001 382 352
2002 303 348
Total 1,904 315
The counterparties to these hedging contracts consist of international banks and
financial institutions, principally lenders in the revolving credit facility. In the context
of the recent rapid rise of the gold price, Cambior has been managing its hedge
positions and will continue to monitor the situation. Cambior will pursue
discussions with such financial institutions concerning the management of this
situation.
WARNING: The company relies upon litigation protection for "forward-looking"
statements.
If, ABX is only divested into futures, forwards, swaps, swapoptions,
call/put options, and zero rate lease swaps. Then the answer is no.
I suspect the recent corrections in ABX is related to deferred
earnings being limited {capped} for the next year. But if they are
using a revolving lease rate, they better have a good cash reserve.
I doubt that they will need that. But a complete discloure such as
above would be required. Looking at the above, it's the Call options
that is hurting Cambior.
Hutch |
