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Gold/Mining/Energy : Barrick Gold (ABX) -- Ignore unavailable to you. Want to Upgrade?

To: nickel61 who wrote (2284)	4/1/2002 7:16:07 PM
From: russet	Read Replies (1) \| Respond to of 3558

What you call a short position, Barrick calls a hedge. They have locked in a certain price for 18 million oz of their gold. A bird in the hand is worth 2 (or more) in the bush. This is a prudent course of action for Barrick, because of their large reserve base and strong balance sheet. Barrick executives have stated several times in public that gimmicks that Enron and others have used are not used by Barrick. They don't have revenue generating offshore companies where they hide their off balance sheet costs in, they are not playing with timing of revenue, channel stuffing to prebook revenues and the like. The business is pretty simple, dig up rock, process it to concentrate gold and other metals, sell the commodities, look for more and when you find it construct a new mine or take over existing assets and rationalize. I appreciate your skepticism of all companies,...but a few do tell the truth. Some comments from the latest financial statements indicate unwinding the hedge is not that difficult because they have spread the hedge over 15 years. It also indicates that they have bettered average spot prices for 14 years in a row with their hedging. It has made them $billions more than not having hedged. http://www.barrick.com/2_Press_Releases/ The Company achieved a premium over the spot price of gold for the 14th year in a row, generating US$289 million in additional revenue in 2001. Barrick realized US$341 per ounce on its gold sales (61 percent of pro forma production); a premium of US$70 per ounce over the average spot price of US$271. The number of spot deferred contracts in the Company’s Premium Gold Sales Program totaled 18.2 million ounces at December 31. This represents approximately 22 percent of reserves, deliverable over the next 15 years at an average minimum price of $345 per ounce, with a minimum floor price of $365 per ounce on 50 percent of planned production in 2002. The balance of 2002 production is expected to be sold at spot gold prices.