Barrick Gold eliminates all gold hedges

AP News
Posted: Dec 01, 2009 9:28 AM

Barrick Gold Corp. on Tuesday said it completed the elimination of all gold hedges in an effort to fully gain from surging gold prices.

Gold hedges are contracts to sell gold ounces in the future at a fixed price. By eliminating its gold hedges, Barrick sets itself free from past commitments to sell gold at prices that now seem unusually cheap.

Gold has become a safe haven for investors moving away from the weakening dollar, a shift that has pushed gold prices to record highs. The Canadian gold mining company wanted to benefit from these climbing prices _ as it expects gold to remain strong _ so it unwound its gold hedges.

"Our positive view on the gold price led us to accelerate the elimination of these contracts ahead of the schedule we had established," said Aaron Regent, Barrick's CEO.

In September, Barrick announced its plan to eliminate all of its gold hedges within 12 months. It estimates a final $300 million fourth-quarter charge as a result of the change.

Looking ahead to 2010, the company expects gold production to grow between 7.7 and 8.1 million ounces, with lower total cash costs than 2009.