Despite the gold price in April falling to its lowest level in two years, gold miners were not this year expected to rely on forward sales of the yellow metal to bolster revenue.
The latest instalment of Thomson Reuters GFMS Global Hedge Book Analysis for the fourth quarter of 2012 found a return to strong de-hedging that saw the outstanding producer hedge book reduced by 21%, or 1.02-million ounces (32 t).
Cash and US gold futures plunged to about $1 321/oz on April 16, and the report expected activity this year would remain on the periphery of the gold market, mainly as a result of persistent shareholder pressure for companies to remain unhedged.
The outstanding producer hedgebook as at the end of December stood at just 3.95-million ounces of gold (123 t), its lowest level since the start of the quarterly analysis in 2002. The gold-mining industry’s hedgebook peaked in 2001 at more than 2 900 t
The report had found a total of 35 companies saw reductions to their delta-adjusted positions, while just five companies added to their positions.
The fall in hedgebook volume was driven by a 500 000 oz (16 t) de-hedge by miner Minera Frisco, closure of bankrupt miner Great Basin Gold’s hedgebook and a decrease in the level of delta-hedging against producers’ outstanding sold calls.
The marked-to-market liability of the producer hedgebook nearly halved quarter-on-quarter, shrinking to negative $794-million.
For the full-year producers removed a total of 1.28-million ounces (40 t) of hedging, which was 24% year-on-year.