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

To: Ron Everest who wrote (1240)	6/4/1999 5:32:00 PM
From: Ron Everest	Read Replies (2) \| Respond to of 3558

Thread.....PLEASE READ THE FOLLOWING INFORMATION....which I gleaned from Barrick today. This has been my understanding for some time. There is persistent misinformation on the threads which needs to be corrected. The assumption that Barrick would expose itself to financial ruin with their hedging strategies is erroneous. Barrick's "Premium Gold Hedging Program". From the first quarter financial reporting and activities update (June 4, 1999) we see that Barrick has 12.5 million ounces of gold sold forward for a net price of US$385 per ounce. My question to Barrick was: "Is there negative financial exposure to Barrick should prices fluctuate up or down?" Their explanations are as follows: Barrick's Premium Gold Hedging Program works like this: The Gold is borrowed from Sovereign Central Banks (CB) by Gold Banks (GB) with time commitments for return of the physical metal. The GBs have sold the gold into the market place. The GBs find parties such as Barrick who will commit future production to the GBs at a price. Barrick has negotiated provisions to return the gold at fixed times. Further, ABX has also negotiated a right to cancel the contract(s) early (with penalties) should they wish to do this. The GB has borrowed gold from a CB for an interest fee, which is currently approximately 1% per annum. The GB has sold the borrowed gold into the marketplace. Barrick has agreed to supply at future dates or cancel. The GB has invested the moneys received from the sale of the gold at a rate higher than is paid to the CBs. The GB and Barrick have a sharing arrangement for the interest. Barrick is responsible for the CB interest cost, however, Barrick has negotiated a fixed rate for the term involved. The GBs must have assurance that this forward selling program will deliver, thus, they find Barrick an excellent counter-party as it has the highest credit rating of all of the gold producers. Barrick does not want to see the price of gold at these low levels as it shuts in higher cost reserves. Barrick clearly has the ability to ramp up production of these higher cost reserves when gold prices increase. I will be asking Barrick through their IR department to show clear and detailed explanations of the mechanics of their "Premium Gold Hedging Program. It is desirable that ABX make this explanation in order to dispel misinformation which is in the marketplace. This misinformation appears to conclude that Barrick has a large negative exposure to rising gold prices, such conclusions are erroneous given the above explanations. Comment would be appreciated. Input will be forwarded as per the preceding paragraph. If you want to make a private communication to me on this matter, please do so on the SI Thread. At all times, it is encumbent on the investor to do their own due dilligence. So....if you do not agree with the above, please contact Barrick. Their contact points are: Toll Free phone US or Canada: 1-800-720-7415 Web Page: http://www,barrick.com/ Email: investor@barrick.com