Newmont Scraps Hedges: About time too!
Friday, July 6, 2007 at 11:20AM
Gold Prices in Gold Mining Companies
Finally, Newmont Mining Corporation has scrapped their awful gold hedge book, and so it becomes the largest unhedged gold producer in the world.

Newmont Scraps Hedges About time too

The US$578 million Newmont has spent on getting rid of its hedge book is the single best thing they could have done, but it should have come a lot sooner.

In addition to unwinding the hedge book, Newmont are also planning to shut down, sell or spin off their merchant banking business, leaving the focus purely on gold. Last year Newmont was overtaken as the world's biggest gold producer when Barrick Gold took over Placer Dome. Perhaps with the added incentive of being unhedged, Newmont can strive to once again become the world's biggest gold producer.

Newmont CEO Mr O'Brien said: "Looking forward, we intend to maximise gold price leverage for our shareholders, establish a sustainable and reliable production base at competitive operating and capital costs, maintain our financial strength and flexibility and capitalise on our exploration portfolio and land position”

Without the hedges, Newmont can really begin to look like a genuine investment vehicle for investors wanting exposure to rising gold prices. Indeed, on this news alone, investors are already jumping in to buy Newmont stock as it is up 2.03 (5.13%) so far today!

Carrying a market cap of $18+ billion on its shoulders, we see Newmont as too large for us to make an investment for significant gain. We think that slightly smaller gold stocks such as High River Gold and Kinross Gold (which we signalled an Add to Holdings on at $11.66) as offering a potentially higher percentage return.

However if you are looking for a safe way to play the bull market in gold prices, now Newmont is unhedged it may be a good addition to your portfolio.

Newmont Mining Corporation trades as NEW on the NYSE and under the same symbol on the ASX.
Article originally appeared on Gold Prices (
See website for complete article licensing information.