Mining company OceanaGold says it is set to produce “robust” margins from its New Zealand operations after it sold out its hedge facilities to become a wholly unhedged gold producer.The dual-listed company (NZX:OGC, ASX:OGC) will now sell all
Mining company OceanaGold says it is set to produce “robust” margins from its New Zealand operations after it sold out its hedge facilities to become a wholly unhedged gold producer.
The dual-listed company (NZX:OGC, ASX:OGC) will now sell all its gold production into the spot market for the rest of 2010 – increasing margins by about 200%.
After an institutional equity raising shareholders agreed to in March, the company bought back all remaining fixed forward contracts and call options, set to mature this year.
It closed out a total of 74,880 fixed forward contracts (averaging $773 an ounce) and 78,018 call option contracts (averaging $1062 an ounce).
It cost more than $100 million.
Chief executive Paul Bibby said eliminating the hedge contracts was “transformational” for the company.
“The robust margins that will now be generated from our New Zealand operations annual production base of 270,000 - 290,000 ounces will be substantially improved going forward.
“The company is now in a position to generate considerable cashflow which will further strengthen our balance sheet, increase our attractiveness as a gold investment vehicle in the global marketplace and provide a multitude of new opportunities for us to consider in order to further grow the business.”
