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Placer Dome to suspend hedging
Placer Dome Inc PDG
Shares issued 401,030,718 Feb 3 close $12.65
Fri 4 Feb 2000 News Release
Mr. Jay Taylor reports
All dollar amounts are in U.S. currency.
Placer Dome 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," Mr. 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
per ounce 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 Dec. 31,
1999, comprises 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 a total
positive mark-to-market value of $350-million. Approximately 85 per cent 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
Feb. 24, 2000.
"We have a very successful hedge program, however, we believe it is time to
adjust our approach," Mr. 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."
WARNING: The company relies on litigation protection for "forward-looking"
statements.
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