S Africa's AngloGold Soars On Reports Of Hedge Book Cut
28 Jan 09:09
JOHANNESBUEG -(Dow Jones)- Shares in South Africa's AngloGold Ltd. (AU)
rallied Monday on news reports that it has closed out 3.5 million ounces from
its extensive hedge book over the last 12 months, with around 2 million ounces
closed out in the quarter ended Dec. 31.
Hedging is a form of risk management, which reduces the chance of loss from
price movements.
AngloGold confirmed Monday that it had reduced its hedge book, which to the
end of Sept. 30 stood at 16.3 million ounces, but declined to give further
details ahead of the release of its financial results on Jan. 31.
"It's company policy to service our hedge book, and we'll reveal all when we
release our financial results," Kelvin Williams, AngloGold's marketing director
told Dow Jones Newswires.
Around 1330 GMT on the JSE Securities Exchange South Africa, AngloGold Ltd.
(AU) was up ZAR32.80, or 7.6%, at ZAR462.00.
One analyst spoken to said that reports AngloGold have unwound 3.5 million
ounces in 2001 meant that the company had unwound close to 2 million ounces in
the quarter ended Dec. 31 alone.
He added that it also coincided with the sale of AngloGold's FreeGold assets
to Harmony Gold Mining Co. Ltd. (HGMCY) for 2.2 million rand ($1=ZAR11.5650).
"Following the sale of its FreeGold assets, AngloGold were probably sitting
with too much hedging relative to their production base. So they closed out a
number of hedges, and would have done so at a higher gold price than where it
is now," said Leon Esterhuizen, an analyst at UBS Warburg based in
Johannesburg.
"The market looks to have given AngloGold a strong message that if they want
a higher rerating, then they'll have to close out more hedges," he said.
AngloGold, which recently lost out to unhedged U.S. gold producer Newmont
Mining Corp. (NEM) for ownership of Australia's Normandy Mining (A.NDY), are
now estimated to be hedged up to 13 million ounces. |
