Hardinvestor - Barrick Gold: a ticking time bomb:depuis le tps qu'on le dit

captain' Inscrit le : 05 Fév 2005 Messages : 5060

Barrick Gold is a ticking time bomb :depuis le tps qu'on le dit

Source midas

Barrick Gold is a ticking time bomb … from Auckland Ed:

Hi Bill:
Any news about the Barrick hedge book? The following comments by Placer Dome in urging shareholders to reject the Barrick bid reveals that Barrick had an unrealized loss of $2.4 Billion as of Sept 30th. Well Gold is now $50 higher. In my calculations are correct and Gold holds these prices, then Barrick's Mark to market loss will exceed $3 Billion by Dec 31st. Their bankers must be about to panic seeing these kinds of numbers. Barrick is short 420 tonnes of Gold. Cheers from Auckland, Ed

Reject the Barrick Offer Conference Call Transcript

"The second issue is that their financial performance has been partially driven by deferring delivery of gold into their hedge positions. Barrick’s strategy of continuing to push 13.6 million ounces of gold hedges into the future is inconsistent with their statements to shareholders that they think the goldmarket will remain strong.

This strategy continues to mortgage the future for the benefit of short term results. The growing financial obligation that they have been accruing is significant. As of September 30, 2005, Barrick’s unrealized mark-to-market loss on installed hedges was $2.4 billion.

The average current price of their positions is about $300 per ounce or $190 per ounce below current spot prices. We do not believe the state of Barrick’s hedge book is well understood by investors. As you know, we have gold hedge position as well. But we told investors that we would reduce it consistently over time and we’ve done just that. We will reduce our hedge book by 1.5 million ounces this year or 17%. Our shareholders have taken the opportunity of cost sharing this year and that cost should not be borne for the benefit of Barrick.

So far in 2005, Barrick has delivered 400,000 ounces into their gold hedges at $375 per ounce. Clearly they’re delivering an immaterial amount of goldinto their hedges, 3% of their book year-to-date and clearly they are delivering only the higher priced positions. Both of these factors have enabled Barrick to report better financial results in the near term possibly at the expense of longer term performance."

-END-
_________________
SILVER is KING...Go GOLD...!!!

skipper Inscrit le : 05 Fév 2005 Messages : 8688

et oui ... et la ça sort de "la bouche " des gens de chez placer dome ... qui sont tb placés pour connaitre le risque d'une exposition trop lourde aux ventes à terme d'or ... et qui annoncent des chiffres de short gold pour barrick dont vous n'avez même pas idée ! .

skipper Inscrit le : 05 Fév 2005 Messages : 8688

some more , source Midas ..

__________

Save this one for down the road. The combined Barrick/Placer Doom hedgebook is more than $4 billion underwater. At some point it is likely to be $8 billion underwater. At the moment the banks carrying their positions are going to get very nervous. At that moment the banks are fine. However, when substantial market chaos kicks in down the road, the credit committees at the banks are likely to become very nervous about counterparty risk.

On the other hand, if the US Government is behind these hedges, Morgan won’t sweat much at all. Shareholder gloom is another story.

Big Barrick-Placer hedgebook manageable - analysts

Wed Dec 28, 2005 3:10 PM ET

TORONTO, Dec 28 (Reuters) - Analysts are recommending that Placer Dome Inc. shareholders tender their shares to Barrick Gold Corp.'s sweetened takeover offer and seem unperturbed by the combined company's big hedgebook.

If the $10.4 billion acquisition succeeds, Barrick will inherit Placer's hedgebook, which sits at around 8 million ounces of gold. This will push the total of Barrick's forward sales contracts to around 21 million ounces from about 12.9 million -- representing the largest hedgebook in the industry.

John Ing, president of Maison Placements Canada, said Barrick's strategy will be to either deliver into the gold contracts or buy them back.

"Unfortunately, we have a rising gold price. That makes the task difficult," he said in a recent interview.

"If you mark-to-market the portfolios together, you are looking at multibillion mark-to-market losses, particularly with gold at $500-plus."

He added: "Unquestionably (the hedgebook) is a challenge, but with a combined balance sheet it should be less of a challenge."

The merger of the two Canadian miners would create the world's largest gold producer.

Hedging, through which producers fix prices for their metal using forward sales and/or options, fell out of favor with investors when the gold price started to rise late in 2001.

Although hedging protects miners when the gold price is low, it has also prevented some producers from fully benefiting from the price rally. On the year, the price of gold is up 20 percent at around $510 an ounce amid inflation worries and as investors diversify into the safe-haven metal from currencies.

For Barrick, its strategy remains the same: to reduce the hedgebook. But exactly how and when, no one knows at this point.

Currently, 14 percent of Barrick's reserves are hedged, including those allocated to Pascua-Lama, which is an unmined project in South America. Around 13 percent of Placer's reserves are hedged.

Kerry Smith, an analyst with Haywood Securities said that Barrick's large hedgebook is manageable.

"It's not that problematic," he said. "Right now Barrick has a big hedgebook. What the new strategy is, I can't speak to that."

Robert Mantse, vice-president with DBRS, said the debt rating agency is very comfortable with the combined company's hedgebook.

"Looking at it from a debt perspective, we are comfortable with their position," said Mantse, the head of DBRS's mining and metals group. "It works out to about 15 percent of annual production, so you still have quite a bit of upside, but you've got that insurance on the downside."

He added: "Don't forget it's 10 years out and a lot can happen with the gold price over 10 years."

Last week, Placer agreed to be taken over by Barrick after Barrick sweetened its offer to $22.50 a share from $20.50. The offer expires Jan. 19.

-END-

Note the comment about Barrick reducing their hedge book. They say they are going to reduce it, but they are not. What are they waiting for $600 gold? Perhaps they are waiting for the Placer deal to go through. Then, they can delight shareholders with a quarterly report which will show gold sold at $330 instead of $520. Think about how mining costs have risen since they hedged a bunch of their forward production when gold was below $300 per ounce.
_________________
Pépite Bull

skipper Inscrit le : 05 Fév 2005 Messages : 8688

le point de Ted Butler sur le sujet ..

que dire de +? fire

sinon que j'approuve totalement ces propos chiffrés et extremement précis .. ce qui n'est pas une surprise de la part d'un master lion

comme l'est Ted Butler ..

bourrique est tristement connue pour avoir mis en oeuvre la "gestion" baissiere de l'once d'or avec le bien connu GS...

en dehors de toutes autres considérations maintes fois postées ici et ailleurs .. ce simple fait est pour ma part tout simplement rédhibitoire

je n'investis pas dans une boite qui joue contre mes intérets ... simple bon sens ...

sans même parler de l'action hautement frauduleuse sousjacente ... évidemment ..

lire plus particuliérement les § soulignés par mes soins :

-en bleu pour barrick
- et en violet pour apex ( sil )

$ qui soulignent les motifs de notre position négative sur ces 2 valeurs ..

________

January 3, 2006

Lessons Learned?

By Theodore Butler

Just this morning, my wife informed me that she just had a telephone conversation with an old friend who passed along regards for me, as well as the comment that she noticed gold had moved up quite a bit and how she hoped I wasn’t feeling too bad because silver hadn’t. When I told my wife that silver had gone up even more than gold, she was genuinely surprised, as I’m sure her friend would have been.

With 2005 now history, we can speak with precision about what occurred over the past year. The most obvious is to record and note actual price performance. For the year, silver appreciated 30% in price. This gain was 50% greater than the almost 20% increase in the price of gold. To the casual observer this might have been somewhat surprising, given the amount of publicity given to gold. But silver investors have learned to take it in stride, content with profits and value and not headlines, as silver has outperformed gold in each of the past three years

In fact, silver has cumulatively outperformed the other popular precious metals (gold, platinum and palladium) over the past three years by a wide margin, with the three-year return on silver close to almost double the equivalent gain in gold, 50% greater than platinum and almost 7 times the gain in palladium. Considering the value and fundamentals of silver, I would think that the out performance of silver compared to other precious metals (and all other natural resources) should become a regular feature in the years to come. By the time you do see silver in the headlines, the out performance should be astounding.

But, I am not using the occasion of the closing of the books on 2005 to showcase silver’s price performance. I have another thought in mind. The end of the calendar year is also the occasion for marking-to-market on a wide variety of derivatives transactions. While it will be several weeks until the publicly traded mining companies report official year-end hedge book results, it is the closing prices of December 30 that will determine those results, plus any positions that were added or liquidated during the third quarter.

I’m going to go out on a limb here and talk about two companies in particular, even though there could have been trading changes during the quarter that cause my figures to be wide of the mark. I don’t think there have been major changes and the situation is serious enough that I don’t want to wait until the companies report to get my message out. If there have been major changes that render my numbers way off, I will acknowledge my error, if and when that becomes obvious. In the meantime, I just don’t want to wait.

The first company I want to write about is Barrick Gold, which is scheduled to become the largest gold mining company in the world by virtue of its merger with Placer Dome. On December 30, that merger was not consummated, so the figures I will discuss apply to Barrick without Placer, although also being a hedger, the addition of Placer to Barrick will only increase the numbers I quote.

Barrick Gold is the largest gold hedger in the world, holding a short hedge position of almost 13 million ounces. In the last quarter alone, because the price of gold increased by roughly $43, Barrick should record a mark-to-market loss of $560 million on its gold short hedge. The loss for the year and half-year comes to a cool billion dollars. This should increase the total outstanding loss on Barrick hedge book to just shy of $3 billion. With Placer added in, the loss has to be greater than $4 billion.

The almost $3 billion open gold loss on Barrick’s books is greater than their cumulative total profits for the entire existence of the company. To my knowledge, it is the largest derivatives loss in history. I ask you to think about that for a moment. The world was atwitter with the recent $200 million copper loss by China, as well as the $500 million oil loss and bankruptcy by China Aviation Fuel (Singapore) last year. Barrick is set to report a $560 million gold hedge loss for the quarter, $1 billion for six months and almost $3 billion in total, and the financial world looks the other way.

According to Yahoo, of the 20 analysts covering Barrick, 18 rate it as a hold, buy or strong buy and 2 as a sell (there were no strong sale ratings). This, for a company that is holding the largest open trading loss in history. Why is that?

I think it is because Barrick has succeeded in doing the only thing it can do – trying to downplay the short gold position and to hide it deeply in its financial statements. It has even taken to splitting the gold short position into two pieces in its financial notes. I think this is to make it look like the loss is smaller than it actually is, although even cut in half, it still ranks as the largest single trading loss in history.

The problem with Barrick’s gold short position is that it is too large to be covered, or bought back, without major consequences, either to the company or the gold market. With a total dollar amount approaching $7 billion needed to buy back the short position, it would seem too costly for the company to buy back. A close out would also force the company to acknowledge the trade was stupid and ill advised in the first place, something the company’s reputed arrogance would argue against. And at 13 million ounces, the short position is much larger than the combined gold held in all the gold ETFs. A sudden gold buy of 13 million ounces would surely send the gold market flying, greatly compounding Barrick’s loss.

What makes the Barrick record derivatives trading loss even more shocking and remarkable is that the company was given ample time and repeated warnings about its outsized gold short position. I know this to be true because I personally warned them. Actually, I did a lot more than warn the company personally; I also warned them publicly. And I did it when gold was below $275 an ounce. In addition, I also contacted and warned their auditors, the New York Stock Exchange (where Barrick trades as ABX), the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

My main reason for attacking Barrick’s short position then was because I felt it was manipulative to gold (and silver) prices. I still do. I know Barrick denies it has manipulated the gold market, but when they put the position on and caused millions of ounces of gold to be dumped on the market, the price of gold dropped by almost $200 an ounce, and when they stopped, the price rose $200. It’s as simple as that.

Here are some articles that I offer as documentation of my claim. You decide if Barrick and the regulatory authorities were adequately forewarned.

http://www.gold-eagle.com/gold_digest_99/butler050599.html

http://www.gold-eagle.com/gold_digest_99/butler050699.html

http://www.butlerresearch.com/the_death_of_hedging.html

With the company, its auditors, the NYSE, and the SEC, I argued that the giant gold short position could jeopardize shareholders and employees. With the CFTC, I argued that Barrick was manipulating the gold market and was circumventing commodity law by being short years worth of production, way above the 12 month limit granted to hedgers. I was not successful in convincing the company or the regulators to rectify the situation.

The irony is that had any one of these organizations done anything to end the stupid and manipulative short position, Barrick would be better off by $3 billion. As an aside, I have often joked that had Barrick taken my advice, I could have earned a sizable commission for the billions I would have saved them.

The lesson here is that just because those in positions of great power and responsibility say or do something, doesn’t make that something right. Barrick and the regulators were clearly wrong not to address the issue then, when gold was way below $300. It was, and is, wrong for a company to short years of production. Too many bad things can happen. It’s just common sense.

Just like it is wrong for silver to have a COMEX short position larger than all known world inventories and to be larger than world mine production. It’s also common sense that something bad will eventually happen to the shorts there, no matter what the regulators say.

With Barrick’s rotten experience of shorting years of production so obvious, you would think no company would ever do that again. You would be wrong. Apex Silver (SIL) just did it. And they did it at precisely the wrong time. Specifically, Apex sold two years’ production of both zinc and lead during the third quarter, as well as 6 months’ production of silver. At the close on December 30th, zinc prices had climbed almost 40% since September 30th, with outsized gains in lead and silver as well, putting Apex’s shorts immediately under water. They’ve got to be many tens of millions of dollars in the hole already. We’ll see when they report 4th quarter results.

And get this; Apex is not scheduled to actually produce any metal for a couple of years. So there is no way the company could deliver material against their short sales now, even if they wanted to. What is it that makes mining executives take such big trading risks? I have seen no evidence that shareholders want mining management to take such big risks. Shareholders want management to increase production and reserves and show a profit, not to try to outsmart the market.
The purpose of this essay is not to pick on Barrick or Apex, but rather to offer something constructive. First, if you are going to invest in mining companies, you must be aware of your company’s hedging position. You don’t have to invest in a company that insists on hedging; there are plenty of companies that don’t hedge. Mining companies that hedge have not had better performance than non-hedgers, to my knowledge. Besides, most invest in resource companies precisely because they think the resource will go up in price. Shorting the resource takes away the very reason for resource investing.

Second, if you are part of management of a mining company, think long and hard before shorting the resources you produce. Your shareholders generally don’t want you to, and much can go wrong. I can’t think of any management-hedging heroes. And please remember, selling more than one year’s actual production is not hedging; it’s gambling.

et pour ceux qui préférent le verdict du graphe Wink

barrick vs hui

http://stockcharts.com/def/servlet/SC.web?c=abx:$hui,uu[l,a]dalannay[dd][pb50!b100][iLa12,26,9]&pref=G

étrange , hein comme ce ratio baisse depuis septembre 2005 ...sept 2005 démarrage de la fusée gold ..
_________________
Pépite Bull

captain' Inscrit le : 05 Fév 2005 Messages : 5060

10/18 Arthur Hailey - Letters to Barrick Gold
The Moneychangers

Arthur Hailey
Letter to Barrick Gold

From: "THE MONEYCHANGERS"
October 18, 1999

ARTHUR HAILEY

PHONE: (242) 362-4011
LYFORD CAY

FAX: (242) 362-4411
P.O. BOX N-7776

NASSAU, BAHAMAS

October 17, 1999

To: The Barrick Gold representative(s)
At Gold Group Gold Conference
Denver, CO, U.S.A.
Fax: 1-303-572-7288

Sir:

This note is from an active and enthusiastic supporter of the Gold Anti-Trust Action Committee, who until a few days ago was a long-time shareholder of Barrick Gold, first as an individual, then as a joint owner (with my wife) of Storyteller Ltd., a Bahamas company. But no more!

Disgusted with the excessive hedging (much of it concealed) by Barrick, and the present opposition to allowing the gold price to rise to natural and honest levels, I have sold our Barrick shares and am actively urging others to do the same. I tell them: "You simply cannot trust these people to put shareholder interest first, because quite clearly some at the top are looking out solely for themselves." I continue, "So don’t take a chance! After selling Barrick, buy into those gold companies who haven’t hedged, or have only done so mildly. It’s easy to find out which they are."

I happen to live in a wealthy community, Lyford Cay, Bahamas, where I fine many people are interested in what I have to say. Also, because of my activity as an international writer (my books are published in 40 languages) I also have a wide circle of friends and contacts, and am passing the word along, urging others to do the same as I have, plus tell their friends. At the moment this may not have enormous effect, but as you know, when a pebble is dropped into a pool the ripples spread outward. And oh yes, my contacts in the media, which are many ¾ something else that goes with being a long-time author ¾ are becoming increasingly interested and objective. (One thing that helps is that I am almost 80, not too active these days, so have lots of spare time to help GATA, which is so splendidly representing ordinary investors such as my wife and myself).

Of course, all of the foregoing could change if Barrick revised its stance and actively supported such believers in a free gold price as Chris Thompson, chairman of Gold Fields, who is also, I understand, attending the Gold Group Conference ¾ which is going to receive a great deal more critical attention than was probably expected.

Yours truly,

A H

BOOKS BY ARTHUR HAILEY

DETECTIVE
1997
AIRPORT
1968

THE EVENING NEWS
1990
HOTEL
1965

STRONG MEDICINE
1984
IN HIGH PLACES
1962

OVERLOAD
1979
CLOSE-UP (TV Plays)
1960

THE MONEYCHANGERS
1975
THE FINAL DIAGNOSIS
1959

WHEELS
1971
RUNWAY ZERO-EIGHT
1958
_________________
SILVER is KING...Go GOLD...!!!

skipper Inscrit le : 05 Fév 2005 Messages : 8688

some more from Bill lion

This Barrick story came out last week. With the extent of the real number of gold out on loan now exposed to the gold/investment world, it makes it more poignant. According to Barrick, almost half of their hedge book is devoted to this project. Should this project get in trouble, Barrick will be in even worse trouble that they already are with that book many billions underwater.

Barrick vs Bachelet

New Chiliean president likely to oppose Canadian gold mining company's plans.

Dateline: Monday, January 30, 2006

by Stephen Leahy

The controversial, billion-dollar Pascua-Lama gold mine project, located on the Chile-Argentina border and requiring the removal of Andean glaciers, may begin construction this year despite strong opposition from environmentalists.

Pascua-Lama is one of the world's largest untapped sources of gold ore, with the potential to produce 17.5 million ounces.

Canada's Barrick Gold Corporation owns the mining concession for Pascua-Lama and for 3000 square kilometres in the surrounding region. The company, which recently became the world's largest gold producer, plans to begin construction of the 1.5-billion-dollar project this year, despite public protest inside and outside of Chile.

http://www.straightgoods.ca/ViewFeature6.cfm?REF=68
_________________
Pépite Bull

skipper Inscrit le : 05 Fév 2005 Messages : 8688

apres parutions résultats Q4 , Butler confirme son analyse et ses chiffres
le profit trimestriel annoncé de 175 $ millions ne représente qu'un tiers de la perte du hegge book sur le même trimestre ... soit 500 $ millions ...

à bon entendeur ...

http://news.silverseek.com/TedButler/1141180479.php
_________________
Pépite Bull

skipper Inscrit le : 05 Fév 2005 Messages : 8688

http://news.silverseek.com/TedButler/1147188385.php

BARRICKS BLACK EYE en 3eme partie de l'article

ça laisse réveur sur la créativité comptable de cette boite qui transforme - sur les comptes - tout ça en profit .. affraid

skipper Inscrit le : 05 Fév 2005 Messages : 8688

Dehedging Gold -- Why Barrick's In Trouble / Bill Cara

http://gold.seekingalpha.com/article/20570

avec des tableaux de hedge books à voir absolument !
_________________
Pépite Bull

skipper Inscrit le : 05 Fév 2005 Messages : 8688

barrick... qui trompe tjs les investisseurs et actionnaires sur son carnet de hedges ..
lisez bien les chiffres de Hommel, ils sont impressionnants !

http://www.silverstockreport.com/2008/barrick.html
_________________
Pépite Bull

skipper Inscrit le : 05 Fév 2005 Messages : 8688

(A perfect example of what not to do.)

Silver Stock Report

by Jason Hommel, February 25, 2008

Since my email on Feb 23, Barrick Gold has made it easier to find information about their gold hedge book liability.
They updated their website, and replaced the link at the bottom of the page here:
http://www.barrick.com/Investors/HedgePosition/default.aspx
Now, the link goes directly to an excerpt from the recent quarterly report:
http://www.barrick.com/Theme/Barrick/files/Project%20Gold%20Sales%20Contracts.pdf
Barrick is to be commended for making this information more accessible, so we can see the bad position they are in.
On page 34, they note: "we have 9.5 million ounces of existing gold sales contracts specifically allocated to these projects."
On page 35, they note: "Based on closing spot price of $913 per ounce on February 15, 2008, the mark-to-market liability is $(5,095) [in millions]."
This is slightly less than the $6 billion loss based at a spot price of $950/oz. that I estimated yesterday, based on older estimates from the company.
Since Barrick Gold only has $2.2 billion in cash, and $1.1 billion in annual earnings, it could be some time before this hedge could be lifted, because they don't have the cash to eliminate it today. If they tried to buy back the gold today, they would have to come up with the "mark to market liability" of over $5 billion.
But Barrick Gold does not plan to deliver these ounces until 2011, 3 years from now. There could be a big problem if their project mine, Pascua Lama, which has been a project for over 7 years now, does not get built.
As Antal Fekete has noted, Barrick could have purchased offsetting call options to reduce the ever increasing exposure to a rising gold price; and that would be far cheaper than buying back the entire hedge. I wonder how high the gold price will be, 3 years from now, and I wonder how much that will cost Barrick Gold and their shareholders.
I think it is rather shameless and deceptive for company president and chief executive, Greg Wilkins, to speak as if higher gold prices are good for Barrick Gold, while having 9.5 million ounces of gold on the hedge book which exposes Barrick to nearly unlimited losses as gold prices continue to rise.
Furthermore, Barrick Gold has promoted itself has having "no company hedges;" which is extremely deceptive because the company does have hedges on several projects. It seems as if "company hedges" must be a technical term used to differentiate between "project hedges", but who in the general public, and who among TV commentators that Barrick Gold takes advantage of, will know that the word "company" is a technical term that means the opposite of "project"?
Barrick should quit playing games with words, and move aggressively to close out their rising hedge liability, or at least hedge it with options!
Another industry practice that is highly deceptive (besides being less than clear about gold hedges and their losses) is cash costs.
Cash costs only include operating costs of a pre-built mine.
Cash costs do not include:
Exploration, which includes things such as prospecting, staking, claims fees, air surveys, ground surveys, drilling, mapping, 3d modeling & resource calculations, etc.
Development, which includes things such as environmental impact studies, engineering studies, feasibility studies, and mine construction capital costs, etc.
Administration, which includes things such as office space, accountants, lawyers, annual reports, trips to mining shows, litigation expenses, share listing expenses, entertainment, emergency web site updates, commissions and premiums for acquisitions, and hedge book losses, etc.
In a rising metals market, the best way to purchase protection from downside movements is not to sell the metals short like Barrick Gold did, but rather, to buy puts. Puts give the holder the right, but not the obligation, to sell at a set price. Thus, with puts, there are not continuing losses in case the metals prices continue to rise.
(You can also sell "out of the money" puts below the market prices for metals, so that the market automatically sells to you on the dips. And if they don't, you just keep the premium from selling the puts.)

Jason Hommel
www.silverstockreport.com
_________________
Pépite Bull

piano bar Inscrit le : 03 Avr 2006 Messages : 774

Cet article là va vous faire sourire je parie!

captain' Inscrit le : 05 Fév 2005 Messages : 5060

_________________
SILVER is KING...Go GOLD...!!!

skipper Inscrit le : 05 Fév 2005 Messages : 8688

barrick n'ose plus parler d'or haedgé, mais utilise désormais le terme "project gold contrats " mdr1

chiffrage du hedge book..on notera qu'en plus d'hedger la prod de pascua lama.. qui ne verra probablement jamais le jour, barrick hedge 2 ans de production cuivre .. à 3.75$ /lb.. aaarf

source www.lemetropolecafe.com

Then, there is The Gold Cartel’s Barrick Gold, which also laughed at GATA when we mocked them for their dopey hedging and complicity in the price suppression scheme…
Bill,
Barrick’s gold hedges are reported in the Q1 report. They are using semantics to call these "hedges" by another name. they are calling them "Project Gold Sales Contracts"!!! How cute! We know what they are. Here is what they say:
QUOTE
Project Gold Sales Contracts
We have 9.5 million ounces of Project Gold Sales Contracts with expected delivery dates between 2011 and 2019. The contracts have an average future estimated realizable price of $437 per ounce, upon delivery of production from 2011-2019, the term of potential financing. This estimated value is based on current market US dollar interest rates and on an average lease rate assumption of 0.50%.
Included in the 9.5 million ounces committed under our Project Gold Sales Contracts are floating spot-price contracts under which we are committed to deliver 2.84 million ounces of gold at future spot prices less an average fixed-price adjustment of $482 per ounce.
Project Gold Sales Contracts give us the flexibility to move positions between fixed and floating contracts. When a contract is converted from a fixed rate to a floating rate, the difference between the current market price of gold and the contracted forward sales price is locked-in; i.e. the unrealized loss is fixed. Thereafter, future increases and decreases in market gold prices directly impact the final contract price. In a rising gold price environment, we have the opportunity to improve
the price of the contract (assuming the gold price appreciates at a rate more than contango) and participate in higher gold prices by resetting a fixed price
contract to a floating price contract. Conversely, a decline in gold price subsequent to the conversion would reduce the final contract price we receive. Therefore,
floating contracts increase our exposure to gold price movements, both upwards and downwards.
END
Why are they using the term "Project Gold Sales Contract"? Later in the report they talk about "Copper Hedges" for their copper production. I believe they intend never to produce the gold from Pascua Lama and so these contracts will never be delivered on.
Look what a bunch of morons they are. They have sold forward 2 years of copper production at about $3.75/lb!! Good move, Barrick!
QUOTE
We are fully hedged for our 2008 copper production and 97% hedged for 2009 while maintaining a certain amount of upside exposure to price increases through the use of option contracts. In 2008, approximately 25% of our hedge contracts (approximately 77 million pounds) are capped at $3.50 per pound, with a price floor of $3.00 per pound, through our copper denominated notes, whereas the balance (approximately 233 million pounds) has upside participation to an average price of $3.89 per pound. In 2009, approximately 47 million pounds of copper are hedged through forward sales contracts at $3.03 per pound, and 301 million pounds are covered by our copper collar contracts capped at $3.83 per pound with a price floor of $3.00 per pound.
END
Who would want to own the stock of a company like this?
Cheers
Adrian
More children stuff again. As Café members know, Barrick keeps telling Planet Wall Street they are unhedged as far as gold is concerned. Oh, I get it: See Spot Run Planet Wall Street, they have 9.5 million ounces of gold sold forward, put on when gold was not far from $350 per ounce, on a project which may never come into being, but they are not hedged because they call them Project Gold Sales Contracts.
Yet, when it comes to COPPER, they are hedged? But, not to any projects I guess. Huh again?
What a perfect tie-in to the MIDAS headline of the day: Financial Farce Of Epic Proportions. "No matter," Planet Wall Street retorts, "we bobbing head Muppets are happy because we believe Barrick that they are unhedged in gold. Everything is fine."
_________________
Pépite Bull

skipper Inscrit le : 05 Fév 2005 Messages : 8688

240.000 $, c'est ce qu'à dépensé barrick, dans des actions de lobbying en faveur de la vente des 400T or du FMI..

aaarf

http://www.canadianbusiness.com/markets/headline_news/article.jsp?content=D90PL1T80
_________________
Pépite Bull