AFRICA's No.1 Gold Mining producer – AngloGold Ashanti – today announced a $1.37bn shares and bond issue so that it can close the remainder of its "hedge book", built up by forward sales during the long bear market in gold which ended a decade ago.
As a whole, the Gold Mining industry built up a hedge-book worth more than 3,100 tonnes of metal at its peak, borrowing metal from central banks and selling it into the market, for fear of yet-lower prices to come.
AngloGold is the last of the major producers to buy back its hedges, with 100 tonnes still outstanding by end-June according to VM Group analysis.
"[This will] give us full exposure to the Gold Price," said Mark Cutifani, CEO of Anglo – the world's fourth-largest listed gold miner – in a statement on Wednesday.
AngloGold Ashanti's stock has dramatically underperformed world No.1 Barrick Mining since November last year, when Barrick announced it had closed the last of its hedges.
Rising 12% against Barrick's 24% gain, Anglo has also underperformed the 17% rise in US Dollar Gold Prices over that 10-month period.
"Miner dehedging has been a big story for gold demand over the last decade, but it's now as good as finished," said GFMS chairman Philip Klapwijk on Tuesday, launching the metals-market consultancy's latest update to its 2010 data and forecasts.
"The risk at these record-high prices – although not in the near to medium term – is for some reconstruction of the [forward sales] hedgebook."
Forecasting 2.4% full-year growth in Gold Mining output worldwide, "Limited growth [in mining supply] is perhaps the new paradigm," Klapwijk told the analysts, journalists and market professionals attending the twice-annual event.
But there's still a "drought in new discoveries" said his colleague, GFMS Mine Economics managing director Mark Fellows. "World-class ore bodies just aren't being found, despite very high levels of exploration spending."
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