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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Snowshoe who wrote (55046)	10/28/2004 6:24:32 PM
From: Snowshoe	Read Replies (1) \| Respond to of 74559

Newmont Mining implements 50-year hedge - on oil! All That Glitters Isn't Gold at Newmont Thursday October 28, 3:41 pm ET By Bill Mann biz.yahoo.com There were two elements in this quarterly report that are quite noteworthy. The first of these is that Newmont, which uses an estimated 2.5 million barrels of fuel each year, entered into a Canadian oil sands trust position that essentially gives Newmont a hedge on oil at $27 for the next 50 years. With oil prices currently above $50, the ability to buy oil hedged to nearly half the price comes out to be a substantial advantage for the company. Most investors do not realize just how much fuel prices impact mining companies -- they are quite energy intensive, so hedging the right direction can make or break a company from a profitability standpoint. Newmont's CEO, Pierre Lassonde, was fairly clear about why Newmont took the route of tying up so much capital in an oil sands trust that is just ramping up production: "We take the view that oil prices are not coming back under $30, ever."