OXR oxiana limited

owen hegarty speaks

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    By Leora Moldofsdky, Kevin Morrison,
    John Reed, and Bernard Simon
    Financial Times, London
    Thursday, February 10, 2005


    Newmont Mining, the world's biggest gold producer, is lobbying US
    congressmen to block any proposal to sell a portion of International
    Monetary Fund gold reserves to fund debt relief for some of the
    world's poorest countries.

    Noting that a number of the developing countries' 41 most heavily-
    indebted nations are gold producers, a company spokesman argued
    that "the sale of IMF gold would impose a hardship on the very
    nations that they're trying to help."

    Gold fell to a four-month low yesterday of $410.20 a troy ounce, and
    has dropped $10 since IMF sales were first mooted at the weekend.

    Newmont, based in Denver, Colorado, also pointed to potential job
    losses in the western US, where most of the country's gold mines are

    Jim Saxton, a Republican member of the House of Representatives, an
    outspoken critic of the IMF, suggested in a statement that the
    organisation should use other means to fund Third World debt
    relief: "IMF gold sales would amount to hidden contributions of gold
    profits legitimately belonging to IMF donor countries and their

    Apart from political concerns, the US government, the world's
    biggest holder of gold, is sceptical about the idea because of the
    possible effect of sales on its holdings.

    Unlike European countries, which have been selling down their
    reserves, the US remains attached to its gold reserves and torpedoed
    an earlier plan for IMF gold sales in 1999.

    Mixed sentiment in Africa reflected the fact that the continent is
    both a producer of gold and potential beneficiary of the IMF debt
    relief the proposed gold sales would finance.

    Trevor Manuel, South African finance minister, who was in London on
    the margins of Saturday's G7 meeting, said the world's largest gold
    producer would not necessarily block the sales, as long as they were
    well managed. But yesterday, Phum-zile Mlambo-Ngcuka, South Africa's
    minerals and energy minister, asked by Reuters for an opinion of Mr
    Manuel's cautious support, said: "I don't know about that. I am not
    in favour of that."

    Earlier, she told a mining conference: "We are looking at the latest
    intentions of the IMF regarding gold sales, and we are looking at
    ways of avoiding it becoming a problem for gold producers."

    The G7 asked the IMF to report in April to its shareholders on the
    possible sale, among other options, of part of its store of 3,217
    tonnes of gold which it values at about $8.5 billion -- about a
    fifth of its market value.

    Not all producers are against the idea. Owen Hegarty, managing
    director of Oxiana, an Australian gold and copper producer, said an
    IMF gold revaluation "wouldn't worry us at all. It isn't a market
    transaction and it would give the IMF a stronger balance sheet and
    enable it to lend more to developing countries."

    He added: "While there has been a bit of a market reaction to the
    plan in recent days, we think it is a temporary aberration. The
    price of gold will continue to reflect the US dollar and other
    fundamentals and will soon correct to previous levels."
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