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Gold/Mining/Energy : Gold Price Monitor

GDXJ 92.99

+2.9%

Nov 7 4:00 PM EST

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To: Ken Benes who wrote (75984)	10/22/2001 3:14:59 PM
From: Alex	Read Replies (1) of 116753

Newcrest in hedge-book nightmare By BARRY FitzGERALD Tuesday 23 October 2001 The reason for the sharemarket's shunning of Newcrest Mining became clear yesterday when the Melbourne-based gold group revealed its gold and currency hedge book was out of the money by more than $1 billion. The nightmare hedge-book position was detailed in Newcrest's release of its production and exploration report for the September quarter. While Newcrest traded a few cents higher afterwards, the stock remains down by 25 per cent on its level of a month ago. The $300 million stock sell-off in the past month follows growing concerns about the group's net gold/dollar hedge-book position due to both the fall in the dollar and higher local dollar gold prices. The collapse of zinc producer Pasminco, with its massive dud currency position, has amplified those fears. Newcrest is no Pasminco. Nevertheless the group reported yesterday that the marked-to-market value of its net gold/foreign-exchange position at the end of the September quarter was a negative $1.08 billion. "The fall in the Australian dollar and an increase in the Australian dollar gold price increased the negative marked-to-market value," Newcrest said. The negative position compares with the group's total market capitalisation yesterday of $959 million. Newcrest said price movements since the end of the quarter had reduced the hedge book's negative position by $350 million, reducing the group's exposure to $735 million. Newcrest did its best yesterday to talk up the stock in its quarterly report. But apart from the net hedge-book shock, the report offered nothing new. That was due to widespread briefing of analysts ahead of the report. The one-on-one briefings were an attempt by Newcrest to deal with the disquiet from the September 17 resignation of its managing director of 18 months, Russell Barwick. Mr Barwick's resignation was the latest in the board's revolving-door policy towards its chief executives. Group chairman Ian Johnson has become executive chairman pending the appointment of a new managing director. Given the shock to the share price from the hedge book, some analysts are asking if the group's next move will be a takeover defence. theage.com.au

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