Barrick Gold (ABX) Message Board

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Gold/Mining/Energy : Barrick Gold (ABX)

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To: Enigma who wrote (2748)	5/16/2002 8:31:53 AM
From: nickel61	of 3558

One bit of information the company provided, but which others haven't disclosed as clearly yet, illustrates some of the obfuscation used in reporting hedging proceeds. Companies routinely show gold prices received well above spot prices and attribute the difference to hedging, but Newmont added the cost of borrowing which shows the true net impact. This year, Newmont is obliged to deliver at least 1 million ounces into its hedges at a price of $303 per ounce. That seems reasonable enough except that "associated gold borrowing costs" reduce the final price by $17 per ounce to $286. With spot gold expected to average $305 an ounce this year, that's an opportunity cost of $19 million for the year on the minimum ounces to be delivered. That this sort of transparency was available in all producer reporting... Indeed, Newmont can take a bow for one of the most comprehensive and clear quarterly reports despite coming out of a tumultuous acquisition. That gave Lassonde the room to continue his aggressive promotion of Newmont as a "non-hedger" and to further its claim to be "the gold standard". Not quite, but it's certainly making progress and there is a lot more buzz about this merger than there was about Barrick-Homestake.

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