World’s Largest Gold Producer Barrick Completes Elimination of All Gold Hedges

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Dec. 1 (Bloomberg) — Barrick Gold Corp., the world’s largest gold producer, said it completed the elimination of its gold hedges, gaining full leverage to the price of the metal.

The change in the value of some gold hedges before they were eliminated will result in a $300 million charge against fourth-quarter earnings, Toronto-based Barrick said today in a statement.

Gold jumped to a record above $1,200 an ounce in New York today as declines in the dollar and higher commodity prices boosted investor demand for an inflation hedge. Barrick in September said it was eliminating fixed-price contracts to increase its bet that the metal will gain.

In the past two years, Barrick has eliminated a hedge position of 9.5 million ounces of gold at a weighted average price of $930 an ounce, by either settling fixed-price contracts or by converting them into floating contracts.

Barrick rose C$3.34, or 7.4 percent, to C$48.20 at 4:10 p.m. in Toronto Stock Exchange trading. The shares have gained 7.8 percent so far this year.

Gold production may grow to 7.7 million to 8.1 million ounces in 2010, Barrick projected. The company said Oct. 29 that 2009 output may be as much as 7.6 million ounces.

To contact the reporter on this story: Kevin Orland at korland@bloomberg.net; Edmond Lococo in Boston at elococo@bloomberg.net.

Last Updated: December 1, 2009 16:13 EST
By Kevin Orland and Edmond Lococo

Source: Bloomberg

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