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4-Traders Homepage  >  Equities  >  Toronto Stock Exchange  >  Barrick Gold Corp    ABX   CA0679011084

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Barrick Gold : Gold miner Acacia buys put options at $1,300 per ounce

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09/06/2017 | 02:27pm CEST

Acacia Mining (>> Acacia Mining PLC), which is scaling back operations to cut losses and settle a dispute with the Tanzanian government, has spent $3.2 million on options to sell 210,000 ounces of its gold output at $1,300 per ounce.

Acacia Mining (>> Acacia Mining PLC), which is scaling back operations to cut losses and settle a dispute with the Tanzanian government, has spent $3.2 million on options to sell 210,000 ounces of its gold output at $1,300 per ounce.

Shares in Acacia, majority-owned by Barrick Gold (>> Barrick Gold Corp), have lost almost half their value since the start of the year, after Tanzania banned concentrate exports at the start of March and then, in July, demanded $190 million in unpaid taxes.

By 1218 GMT, Acacia shares were up 1.9 percent on the day at 192 pence.

Gold <XAU=> was trading around $1,340, close to a one-year high due to tensions over North Korea's missile tests and a weaker dollar. The price has risen from around $1,200 in July.

To contain losses, Acacia said on Monday it was reducing operations at its flagship Tanzanian gold mine.

On Wednesday, the firm said it had bought options giving it the right to sell the group’s expected doré bar output for the next six months above its budgeted gold price of $1,200 per ounce. Doré bars are rough gold, an alloy of gold and silver.

An option to sell at a certain price is known as a "put", while an option to buy at a certain price is known a "call".

Miners have become wary of hedging, which allows them to lock in the price of their output, since Barrick and other major miners racked up losses unwinding options that prevented them gaining from the 12-year rally that took gold prices to record highs in 2011 just shy of $2,000 per ounce. <XAU=>

Analysts at Investec bank said in a note the $3.2 million spent on the put options was "a prudent strategy, particularly given the ongoing decline in the company’s cash position".

Acacia said its options also allowed it to benefit from a rise in the gold price above $1,300 ounces.

(Reporting by Rahul B in Bengaluru and Barbara Lewis and Jan Harvey in London; Editing by Jason Neely and Edmund Blair)

Stocks treated in this article : Barrick Gold Corp, Acacia Mining PLC
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Financials ($)
Sales 2017 8 546 M
EBIT 2017 2 914 M
Net income 2017 1 688 M
Debt 2017 4 669 M
Yield 2017 0,71%
P/E ratio 2017 11,46
P/E ratio 2018 22,96
EV / Sales 2017 2,78x
EV / Sales 2018 2,75x
Capitalization 19 084 M
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Technical analysis trends BARRICK GOLD CORP
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TrendsBearishBearishNeutral
Income Statement Evolution
Consensus
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Mean consensus OUTPERFORM
Number of Analysts 23
Average target price 20,3 $
Spread / Average Target 24%
EPS Revisions
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NameTitle
Kelvin Dushnisky President & Non-Independent Director
John Lawson Thornton Non-Independent Executive Chairman
Richard J. Williams Chief Operating Officer
Catherine Phillipa Raw Chief Financial Officer & Executive Vice President
Matthew D. Gili Chief Technical Officer
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