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Gold - Anglo continues to trim hedge book

  1. galloper

    1,380 posts.
    AngloGold continues to trim hedge book
    April 30, 2002
    Global gold miner AngloGold (AGG) today said it is continuing to actively manage its hedge book and increase exposure to the spot gold price.

    "In the context of the firmer price, we have continued to actively manage our hedge book and increase exposure to the spot price," chief executive Bobby Godsell said.

    Mr Godsell said in the March quarter, AngloGold reduced the book by a further 1.7 million ounces (or 120 per cent of this quarter's production), and eliminated the low-price rand gold forward contracts in the book for the remainder of this year.

    "Whereas at December 31, 2001 we had 60 per cent of our forecast 2002 gold production sold forward, today we have only 32 per cent of the remainder of this year's anticipated production sold forward."

    Mr Godsell said AngloGold continues to manage its revenue risk to ensure it is not at the mercy of the gold price, while at the same time ensuring it is reasonably leveraged to a rising price.

    "Over the past ten years, of which the last six have seen a largely declining price, this company's carefully managed forward sales program has added some $1.2 billion to our bottom line," he said.

    "In a changing price environment, the structure of our book is being judiciously risk-adjusted to reflect the new reality."

    In the March quarter, AngloGold posted a 7.3 per cent increase in operating profit from current operations (excluding the recently sold Free State assets) including realised non-hedge derivatives, of $US147 million ($A273.85 million) or R1.7 billion.

    This represents a cash operating profit of $US197 million ($A366.99 million) or R2.3 billion.
    Headline earnings - before unrealised non-hedge derivatives - was up one percent to $US89 million ($A165.80 million).

    AngloGold's average gold spot price for the quarter was $US287 per ounce, the highest since December 1999.

    Mr Godsell said the significant feature of the quarter was the company's record cash operating margin of 47 per cent or $US136 per ounce, up 1 per cent from the December quarter.

    He said that compared with the last quarter of 2001, AngloGold's production fell 340,000 ounces (of which some 300,000 are attributable to the sale of its assets in the Free State) to 1.4 million ounces.

    However the group reported higher headline earnings.

    "In comparison with the first quarter of 2001, earnings have increased by 60 per cent in dollar terms and 134 per cent in local currency," he said.

    He said AngloGold will continue to leverage off existing assets and drive the company down the cost curve.

    "All five of our organic growth projects - a key component of our ongoing strategy to grow the earnings stream of AngloGold - remain on track and within budget," he said.

    "Our brownfields and greenfields exploration has yielded promising results, particularly at Geita, Sadiola, Sunrise Dam, Red Lake in Canada and La Rescatada in Peru."

    At the close fof trade today, AngloGold shares were 15c higher at $10.20.






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