Placer Dome announces it will suspend hedging
PR Newswire - February 04, 2000 13:55
(all dollar amounts in U.S. currency)
VANCOUVER, Feb. 4 /CNW-PRN/ - Placer Dome Inc. announced today that it is suspending its hedging activities in expectation of improving gold market sentiment and reduced producer hedging.
According to Placer Dome President Jay Taylor, the gold producers need to rethink their current hedging policies. ``We believe that gold prices will move higher. The agreement by European central banks to limit their sales and lending was an important first step towards improving gold market sentiment, but industry needs to do its part. We acknowledge that producer hedging is an important factor,' Taylor explained. ``So as of today, the Company has ceased adding any new hedge positions. As a result, we expect to see our hedge book reduced by at least two million ounces of gold by the end of this year,' he said.
The Corporation's balanced hedging program allowed it to realize an average $480 per ounce on its gold forward sales during 1999. The average price realized on all of the Company's gold production was $341 per ounce, or $62/oz over the spot price.
During the fourth quarter of 1999, the Company added to its hedge position as the gold price rallied to two-year highs. Hedged production at December 31, 1999 was comprised of 7.4 million ounces in forward sales and 2.5 million ounces in call options at expected prices in excess of $400 per ounce with an aggregate positive mark-to-market value of $350 million. Approximately 85% of the Company's reserves remain unhedged. The details of the Corporation's hedging position will be released with the Company's year-end results on February 24, 2000.
``We have a very successful hedge program, however, we believe it is time to adjust our approach,' Taylor said. ``We will continue to manage our existing positions, but we want to be clear about the need for the industry to show leadership and confidence in gold.'
CAUTIONARY NOTE
Some of the statements contained in this news release are forward-looking statements, such as estimates and statements that describe Placer Dome's future plans, objectives or goals, including words to the effect that Placer Dome or management expects a stated condition or result to occur. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results relating to among other things, reserves, resources, results of exploration, capital costs and mine production costs could differ materially from those currently anticipated in such statements by reason of factors such as the productivity of Placer Dome's mining properties, changes in general economic conditions and conditions in the financial markets, changes in demand and prices for the minerals Placer Dome produces, litigation, legislative, environmental and other judicial, regulatory, political and competitive developments in domestic and foreign areas in which Placer Dome operates, technological and operational difficulties encountered in connection with Placer Dome's mining activities, and labour relations matters and costs.
``Placer Dome' is used in this news release to collectively mean Placer Dome Inc., its subsidiary companies and its proportionate share of joint ventures. ``Placer Dome Group' or ``Group' means collectively Placer Dome Inc., its subsidiary companies, its proportionate share of joint ventures and also companies for which it equity accounts. ``Placer Dome Group's share' or the ``Group's share' is defined to exclude minority shareholders' interest. The ``Corporation' refers to Placer Dome Inc.
Placer Dome Inc. is one of the world's largest gold mining companies, producing about 3 million ounces (90 tonnes) of gold annually at production costs that are among the lowest in the industry. The Corporation's shares are traded under the symbol PDG on the Toronto, New York, Montreal, Paris, Swiss and Australian stock exchanges. International Depository Receipts for its shares are traded on the Brussels Stock Exchange.
Complete information on the Placer Dome Group is available on most leading Databases including Stardata (CNW), Dow Jones Telerate, Bloomberg Financial Markets, Infoglobe, Infomart or QL Systems in Canada and Dow Jones News Retrieval, Bloomberg Financial Markets, Standard and Poors, Nexis, Dialog, CompuServe or First Call, in the United States.
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