Mark to market is irrelevant. It has nothing to do with the cashflows from mining and selling gold. Your argument that they can lose on hedges makes no sense at all. They have merely locked in prices for the gold hedged at an increasing value from the sale price as the interest piles on.
Barrick would not have made the statement you say they made. Only a misleading ANALyst would say that, or someone who doesn't understand what the ANALyst said, like you.
So why don't you admit you know nothing about Barrick's balance sheets, income statements or hedging program. It is apparent to anyone who reads and understands the financial statements you don't know about what you are talking about.
Now where is the proof that Barrick said they will lose $21 million dollars in notional value per dollar increase in POG with no limit to the loss,...you know you have no have no proof, because it is a lie you have been caught on. This sounds more like that BS Pollitt was blabbing when he was taken out of context by that nitwit reporter. It is incorrect because once the notional value of the hedge equals the actual value sitting in bonds of $5.5 billion, you don't write off anything anymore.
Now here, once again, for the fifth time for slow learners, is what Barrick really said about the effect the POG increase has on their profit.
Barrick Gold Corp ABX
Shares issued 537,813,627 May 8 close $32.75
Thu 9 May 2002 In the News
The Globe and Mail reports in its Thursday, May 9, edition that Barrick
Gold says it plans to simplify its gold hedging strategy and make it more
conservative. The Globe's Allan Robinson writes that Barrick says it will
no longer invest cash from the forward sale of gold in a corporate bond
portfolio, but will instead invest it with major financial institutions at
a slightly lower rate of interest. The hedge portfolio is currently worth
$5.5-billion of which about $758-million is in fixed-income corporate bonds
(all figures U.S.). Barrick plans to reduce its call option position by at
least 50 per cent or three million ounces by the end of the year. Its spot
deferred hedge position of 18 million ounces or 22 per cent of reserves
will stay unchanged. Since 1996, the hedge program has generated
$1.7-billion in additional revenue above the spot price of gold. Barrick
says it expects to sell half of its gold production at the spot price and
half at its hedge price of $365 an ounce. Gold traded Wednesday at $308.20,
down $3.40. Every $25 increase in the average spot gold price will increase
Barrick's earnings by about $70-million or 13 cents a share. |
