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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: patron_anejo_por_favor who wrote (164132)5/6/2002 5:55:11 PM
From: yard_man  Read Replies (2) of 436258
 
tee he he he

>>
Doody at Gold Stock Analyst puts the negative swing of the company's hedge book at $507 million. "This swing far offsets the net profits earned of $46 million in the first quarter of 2002 plus the $66 million in the third quarter of 2001 plus the $82 million in the fourth quarter of 2001. The net is a loss of $313 million."

In a conference call last week, Barrick's top executives assured Wall Street analysts, who asked several questions about the company's gold-hedging, that they were monitoring the situation. Yet some observers are not convinced.

"The sensitivity of the derivative portfolio now stands at about $21 million an ounce," says Douglas Pollitt at Pollitt & Co. in Toronto. "Each $1 an ounce upward move in the gold price sees the mark-to-market (of Barrick's derivative contracts) drop by about $21 million. At $350 an ounce, the mark-to-market would be over $1 billion in the


red." Gold prices this year have risen to $312 an ounce from $270 at the start of January. (See more.)

Pollitt calculates the notional value of Barrick's spot-deferred contracts at 18 million ounces. "Add to this another 5 million in written call options, (which the company now calls 'variable priced sales contracts'), and, one way or another, the company is short about 23 million ounces of gold. This is a fantastic number and begs the question: Could Barrick cover even if they wanted to?"

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