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Gold-Hedging Talk Creeps In, But Miners Prefer Exposure - PowerPoint PPT Presentation


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The recent slump in gold prices may have spurred some miners to consider hedging their gold sales, but the vast majority have so far resisted doing so because they expect gold prices will recover and they want full exposure to these gains.Spot gold has fallen 21% since the year began, prompting gold miners such as Russia-focused Petropavlovsk PLC (POG.LN) and Tanzania gold explorer Shanta Gold Ltd. (SHG.LN) to hedge, locking in a portion of their future gold sales at a fixed price to manage their cashflows amid a weaker gold price environment.For Petropavlovsk, which locked in prices for about half of its production until June 2014, the move is aimed at managing its debt burden. Shanta Gold has hedged gold sales equivalent to nearly half of this year’s forecast gold output until March 2014, to help cover its debt and capital expenditure requirements as it carries out a five-year plan for gold production growth.

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