ncm to close out hedge book restructure financ

NEWCREST HEDGE AND LOAN CLOSURES

Top Aussie gold miner to close out hedge book, restructure finances

Australia’s dominant domestically-owned gold miner Newcrest seeks to raise $A2 billion in new equity funds to close out its existing hedge book, repay gold loans and also a $US bilateral loan facility.

Author: Ross Louthean
Posted: Monday , 10 Sep 2007

PERTH -

Newcrest Mining Ltd will offer shareholders a seven-for-20 accelerated renounceable entitlement of shares aimed at raising $A2 billion ($US1.644 B) to restructure its hedge book, restructure other loan facilities and to use $A80 M ($US65.76 M) to purchase gold put options.

The leading Australian gold miner owns the Cadia Valley mines in New South Wales, the Telfer gold mine in Western Australia's far north hinterland, controls the Cracow mine in southern Queensland and has a small high grade mine in the Halmahera Islands of Indonesia.

This latest big de-hedging by a major global gold miner, involves the close-out of hedge contracts totalling 2,049,017 ounces, though the company says it will purchase 2.25 M oz of gold put options equivalent to an average of 500,000 oz per annum over 4.5 years, beginning in January 2008. The strike price is $A800/oz ($US657.6/oz).

Separately, Newcrest released its 2006/07 fiscal years result which was for a net profit after tax and minority interests of $A72 M ($US59.18 M) compared to the previous year's $A349.5 M ($US282.7 M). The fiscal 2007 result was negatively impacted by $A122.5 M ($US96.17 M) the 2006 hedge book restructure, while the fiscal 2006 result was positively affected by $A218.2 M ($US179.36 M) from the sale of the company's 22.22% stake in the Boddington gold project in WA.

The company said the hedging commitments reduced the ability to fully benefit from the higher spot gold and copper prices, resulting in an achieved hedged gold price of $A682/oz ($US560.6 /oz) and an achieved hedged copper price of $A2.94/lb ($US2.14/lb). For unhedged production the average spot price for the 12 months was $A814/oz ($US669.1/oz) gold and $A4.08/lb ($US3.53/lb) copper.

"Newcrest intends to close out all its gold hedging contracts and gold loan embedded gold forward sales contracts totalling 2,323,642 oz for an approximate cost of $A842 M," said chief executive Ian Smith.

"Newcrest has pre-purchased 2.3 M oz at an average price of $A831 per oz to enable settlement of these contracts when the proceeds of the entitlement offer are received."

He said the company plans to temporarily leave the longer-dated gold bullion forward sales contracts in place. These would be closed out within 12 months, subject to the gold price, market liquidity and agreeing the terms with hedge counterparts.

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at http://www.mineweb.co.za/mineweb/view/mineweb/en/page34?oid=26853&sn=Detail

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