----- Original Message -----
From: Gold Anti-Trust Action Committee
To: [EMAIL PROTECTED]
Sent: Friday, February 23, 2007 10:43 PM
Subject: [GATA] Hedging to cost Barrick nearly $1 billion by mid-year
Hedging to cost Barrick nearly $1 billion by mid-year
Submitted by cpowell on 08:43PM ET Friday, February 23, 2007. Section: Daily
Dispatches
Barrick Campaign Aims
to Get a Little Respect
By Andy Hoffman
The Globe and Mail, Toronto
Friday, February 23, 2007
http://www.globeinvestor.com/servlet/WireFeedRedirect?cf=GlobeInvestor/c...
TORONTO -- Disappointed by a weak stock performance amid rising bullion prices,
Barrick Gold Corp. head Greg Wilkins said the world's largest gold producer
will embark on an ambitious campaign to increase the value of its shares.
In a presentation to analysts and investors in Toronto yesterday, Mr. Wilkins
and other Barrick executives outlined plans to boost the miner's exposure to
the price of gold in a bid to attract investors.
"I think we've done a lot of great things for the company that have not been
recognized in the marketplace. As a shareholder myself I would have thought
that at these gold prices and with our earnings we would have had much better
performance than we achieved," Barrick's chief executive officer told reporters
following the conference.
While Barrick has the world's largest gold production, reserves, and
development projects, the stock market has assigned more relative value to
smaller miners likely to be taken over as well as to some of Barrick's
faster-growing competitors at the senior producer level, such as Goldcorp Inc.
Since the beginning of 2006, the average share prices of junior and
intermediate gold companies has increased 86 percent, Goldcorp shares gained 28
percent, and the spot price of gold climbed 30 percent.
During the same period, shares of Toronto-based Barrick have risen just 13
percent.
"That's embarrassing, frankly -- that's just embarrassing," Mr. Wilkins said.
Among the initiatives unveiled yesterday was the earlier-than-expected
elimination of the company's non-project related hedge contracts, which lock
the company into selling gold at a fixed price and have limited Barrick's
ability to realize full market price for its gold production.
Barrick said it reduced hedge contracts by one million ounces during the fourth
quarter and had eliminated the fixed-price sales contracts not tied to specific
projects by getting rid of another roughly 1.5 million ounces this quarter. It
had previously pledged to be done with that part of its hedge book by 2009.
The hedge reduction cut profit by US$327 million in the fourth quarter. The
company will record a charge related to the hedge book deliveries of $564
million in the first quarter and $65 million in the second quarter.
"It's really about the valuation of the company. There's a very obvious way to
make a lot of money by buying Barrick stock today if all you have is the belief
that gold prices are going to remain pretty much at these levels into the
future," Mr. Wilkins said.
Barrick still has approximately 9.5 million ounces of project-specific hedging
contracts that could limit its ability to sell its gold at current market
prices of $680 an ounce.
Compounding investor concerns are rising costs and flat production. Barrick
reduced its 2007 gold production outlook from between 8.4 million and 8.5
million ounces to between 8.1 million and 8.4 million ounces. Costs per ounce
will increase 5 per cent from last year to between $335 and $350 per ounce.
"That is certainly the bad news," Desjardins Securities analyst Michael Fowler
said in a note to clients.
Mr. Wilkins said the higher costs were due mainly to lower grades of ore being
mined. But he added that inflationary pressures from fuel, construction, and
mining equipment costs are levelling out.
"The prognosis for costs going into the future is much more stability," he said.
The CEO and other Barrick executives also said the market has failed to
properly take into account its stable of development projects including a joint
venture nickel project in Tanzania, two platinum and palladium projects, the
Reko Diq copper and gold property in Pakistan, and Pascua-Lama, a gold and
silver project that straddles the border between Chile and Argentina.
Barrick cut probable gold reserves at Pasuca to 17 million ounces from a
previous 18 million ounces and raised expected costs to build the project to as
much as $2.4 billion from $1.5 billion.
Mr. Wilkins said Barrick is on track to achieve a further 10 to 15 percent
above the expected $200 million in cost savings related to the $10 billion
acquisition of Placer Dome that was completed early last year.
Barrick shares fell 78 cents (Canadian) to $36.47 on the Toronto Stock Exchange
yesterday.
* * *
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Eagle Ranch discussion site:
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Ted Butler silver commentary archive:
http://www.investmentrarities.com/
Recommended Gold & Bullion Dealers
Coin and precious metals dealers who have supported GATA
and been recommended by our members:
Blanchard & Co. Inc.
909 Poydras St., Suite 1900
New Orleans, Louisiana 70112
888-413-4653
http://www.blanchardonline.com
Centennial Precious Metals
Box 460009
Denver, Colorado 80246-0009
1-800-869-5115
http://www.USAGOLD.com
Michael Kosares, Proprietor
[EMAIL PROTECTED]
Colorado Gold
222 South 5th St.
Montrose, Colorado 81401
http://www.ColoradoGold.com
Don Stott, Proprietor
1-888-786-8822
[EMAIL PROTECTED]
El Dorado Discount Gold
Box 11296
Glendale, Arizona 85316
http://www.eldoradogold.net
Harvey Gordin, President
Office: 623-434-3322
Mobile: 602-228-8203
[EMAIL PROTECTED]
Gold & Silver Investments Ltd.
63 Fitzwilliam Square
Dublin 2, Ireland
...and
Tower 42, Level 7
25 Old Broad St.
London, EC2N 1HN
United Kingdom
Local Call Ireland: 1-850-GOLD-IE
UK phone: +44 (0) 207-060-4653
International: +353 1-632-5010
Fax: +353-1-6619664
www.gold.ie
Investment Rarities Inc.
7850 Metro Parkway
Minneapolis, Minnesota 55425
http://www.gloomdoom.com
Greg Westgaard, Sales Manager
1-800-328-1860, Ext. 8889
[EMAIL PROTECTED]
Kitco
178 West Service Road
Champlain, N.Y. 12919
Toll Free:1-877-775-4826
Fax: 518-298-3457
...and
620 Cathcart, Suite 900
Montreal, Quebec H3B 1M1
Canada
Toll-free:1-800-363-7053
Fax: 514-875-6484
http://www.kitco.com
Lee Certified Coins
P.O. Box 1045
454 Daniel Webster Highway
Merrimack, New Hampshire 03054
http://www.certifiedcoins.com
Ed Lee, Proprietor
1-800-835-6000
[EMAIL PROTECTED]
Lone Star Silver Exchange
Suite 635, 3521 Oak Lawn Ave.
Dallas, Texas 75219
214-632-8869
http://www.discountsilverclub.com
MRCS Canada
12303-118 Ave. NW
Edmonton, Alberta T5L 2K2
Canada
http://www.mrcscanada.com
Michael Riedel, Proprietor
1-877-TRY-MRCS
1-877-879-6727
[EMAIL PROTECTED]
Miles Franklin Ltd.
1001 Twelve Oaks Center Drive
Suite 1028
Wayzata, MN 55391
1-800-822-8080
http://www.milesfranklin.com
Contacts: David Schectman,
Andy Schectman, and Bob Sichel
Missouri Coin Co.
11742 Manchester Road
St. Louis, MO 63131-4614
[EMAIL PROTECTED]
314-965-9797
1-800-280-9797
http://www.mocoin.com
Resource Consultants Inc.
6139 South Rural Road
Suite 103
Tempe, Arizona 85283-2929
Pat Gorman, Proprietor
1-800-494-4149, 480-820-5877
[EMAIL PROTECTED]
http://www.buysilvernow.com
Swiss America Trading Corp.
15018 North Tatum Blvd.
Phoenix, Arizona 85032
http://www.swissamerica.com
Dr. Fred I. Goldstein, Senior Broker
1-800-BUY-COIN
[EMAIL PROTECTED]
The Moneychanger
Box 178
Westpoint, Tennessee 38486
http://www.the-moneychanger.com
Franklin Sanders
1-888-218-9226, 931-766-6066
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