New Zealand gold miner OceanaGold Corporation is to restructure its hedge facility, reaping it US$33 million ($42 million) in extra cashflow in 2008 at a gold price of US$850 per ounce.
The restructure is a step towards eliminating the hedge facility completely, the company said.
OceanaGold said the
restructure would make 2008 "an entirely unhedged production year allowing the Company to take full advantage of the strong gold price environment".
The miner says its current hedge facility has 320,000 ounces forward sold at $773 (US$611)/ounce expiring in 2010, of which 113,712 of those ounces were to be delivered at that price in 2008.
The ounces for delivery in 2008 would be rolled forward, under the restructure, to 2011, "in order to benefit from the forward curve and realise a higher price for those ounces in 2011", the company says.
"Following this adjustment, the additional cash flow generated in 2008 is expected to total US$33 million at a US$850 per ounce gold price.
"These additional funds will be used to accelerate payment of debt and for general working capital purposes."
OceanaGold said it had, over the past two years, progressively reduced the influence of its legacy hedge facility through restructuring and the addition of unhedged production from new mines.
"The Company has no intention of hedging any future gold production and is continuing its strategy to dilute the effect of the remaining hedge book," it said.
"In addition, OceanaGold continues to examine financially sensible options to eliminate the remaining hedge facility."
Gold finished above US$900 overnight in New York, for the first time.
The price of spot gold jumped more than 2 per cent on Monday to a historic high of US$914.
- AAP
