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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: isopatch who wrote (2166)	9/26/2001 9:28:00 AM
From: katarak	Respond to of 36161

26 Sep 05:19 SYDNEY -(Dow Jones)- South Africa's second-largest gold miner Gold Fields Ltd. (GOLD) said Wednesday it is "cautiously optimistic" on the outlook for gold prices. Chairman and chief executive Chris Thompson said in a teleconference briefing for reporters that the convergence of several factors had led to a "subtle sea change" in prices prior to the Sept. 11 terrorist attacks on the U.S. Forecasts of a reduced mine supply, fewer sales from central banks not bound by the Washington Agreement, plus a weaker incentive for miners to hedge have already given the price a boost, said Thompson. "I can predict that within 18 months, the industry would be broadly talking about a coming shortage of gold," he said. The Washington Agreement was signed in 1999 by 15 European central banks to limit sales of their gold reserves, but according to Thompson, even those who aren't signatories have held fewer and sporadic sales. Asked about the bullion reaction to the terrorist attacks, Thompson said he was satisfied gold prices moved but was disapppointed "that the investment demand didn't jump as readily" as expected. After the hijacked planes rammed into the World Trade Center in New York and the Pentagon in Washington, gold prices jumped to US$295 a troy ounce, compared to US$272 previously. Although gold prices have since drifted lower, market participants have widely lifted their forecasts for the safe-haven metal, with further direction from the nature of the U.S. retaliation. At 0820 GMT Wednesday, spot gold was trading at US$291.80. "Since October/November last year, there has been a slow, definitive upturn in gold prices...and a further insecurity in the (political) system is helpful to gold," said Thompson. Still On Look-Out For Australian Gold Assets After committing to spend A$470 million on buying the St. Ives and Agnew gold operations from Australian diversified miner WMC Ltd. (WMC) Friday, Thompson said Gold Fields is still shopping for other gold assets in Australia. "In our view, it is the best place to be making acquisitions," he said, adding that the low Australian dollar means a high gold receipt. Gold Fields didn't buy WMC's Central Norseman operation, located in Western Australia, and Meliadine project in Canada, as both are too small, he added. Gold Fields' three criteria in making acquisitions are a minimum of 2 million ounces in reserves, 200,000 ounces in annual production capacity and a two-year payback in acquisition. But Thompson acknowledged Gold Fields will be "daydreaming" to fulfill the last criteria given the current gold price. As the list of Australian assets fitting the other two would be rather short, the company could go for a lower target levels. Thompson also reiterated Gold Fields is happy with the A$470 million price tag on WMC's assets. With Gold Fields' value at US$500 for every ounce in annual production and WMC's gold operations at US$375/oz, the latter was "quite a lot cheaper." Gold Fields, however, will not take over WMC's 3.5 million-ounce gold hedge book and currency hedging position, Thompson said. The South African company doesn't hedge gold production, but it intends to establish a currency hedging position on the WMC assets, he continued, while declining to specify. Gold Fields doesn't have immediate plans to seek a listing on the Australian Stock Exchange, with Thompson saying it's not averse to doing so. "The minimum conditions would be we would have to have a significant enough number of shareholders and significant degree of liquidity in Australia," he said.