Placer Dome Inc. said Tuesday it has cut the amount of gold committed under its hedging program by 1.1 million ounces in the first quarter and expects its full-year reduction of 20 per cent.
Vancouver, B.C.-based Placer said in a statement it had converted 920,000 ounces under forward sales for 2004 through 2006 to put options through purchase of overall call options at a cost of $9.4-million (U.S.) or about $10 an ounce.
As of March 31, Placer said its maximum committed ounces totalled 11.5 million or about 22 per cent of gold reserves at an average expected realized price of $380 an ounce.
"We are moving quickly to simplify and reduce the hedge position that increased as a result of the AurionGold acquisition," Placer chief financial officer Rex McLennan said.
"More than 75 per cent of our production in 2003 remains fully leveraged to a rising gold price. We have now brought our 2004-2006 committed ounces more in line with our financial strategy and we will continue to reduce our commitments further."
Placer Dome took over Australia's AurionGold Ltd. following a long-running hostile bid last year. In October, AurionGold's board recommended its shareholders accept the offer after it failed to find a rival bidder.
Looking ahead, Placer said it expects to reduce its committed ounces to below 10 million by Dec. 31.
"This would represent a cumulative decrease in committed ounces of more than 20 per cent for the year," the company said.
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