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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Ken Benes who wrote (60093)	10/25/2000 5:17:25 AM
From: Alex	Respond to of 116895

Gold hedging not expected -------------------------------------------------------------------------------- Analysts do not anticipate a wave of selling by SA producers SA GOLD miners and analysts said yesterday that a sharp rise in the rand gold price would not spark a wave of producer selling from the world's biggest goldproducing country. The rand has surrendered about 24% of its value against the dollar this year leading to recent record high gold prices of about R66000 a kilogram. This has fuelled speculation in world metal markets that SA producers could increase hedge sales to lock in profits from high gold prices in the local currency. But among SA's top three producers, Gold Fields and Harmony Gold said yesterday a firmer local gold price would not change their policies against hedging. AngloGold, the world's biggest gold producer with output of about 7-million ounces a year, was the only significant SA hedger. AngloGold was not immediately available to comment. The company considers itself a conservative player when using forward sales and options to enhance revenues and protect prices for its unmined reserves, targeting no more than 50% of its future output to a maximum of five years. "Of the three major producers, two of three definitely are not going to hedge," Andrew Hurwitz, a technical analyst with Incentive Holdings, said. "AngloGold could increase their hedging slightly but I don't think that would keep a cap on the gold price," he said. Hedging of future production is a way of locking in fixed revenue streams to protect against falling prices. But companies began to rethink the practice after gold's rally above $300 an ounce last year left some oversold miners with heavy losses. "Certainly you won't find Harmony doing that. We are unhedged by choice," said Bernard Swanepoel, CE of the country's third-largest gold producer. "I think the SA production is spoken for and I don't expect huge new volumes coming from that source," he said. Gold Fields, a 4-million-ounce a year producer, closed out its hedges last year, but maintains a very small hedge required by financiers for its Tarkwa gold project in Ghana. "It definitely would not be Gold Fields," a company spokesman said of the hedging speculation swirling around SA producers. Some traders have drawn parallels between SA and Australia where the local currency hit fresh record lows against the US unit last week, leading producers to take advantage of a higher local gold price. But SA analysts said the spike in rand gold prices was unlikely to force a major rethink of producer attitudes toward hedging. "I think people have established strategies and I don't think this will trigger a change in strategies. There are a limited number of producers who hedge in SA and we would have seen it already," a Johannesburg analyst said. Reuters. Oct 25 2000 12:00:00:000AM Business Day 1st Edition bday.co.za