Re-evaluating the hedge book

Gold mining companies have unwound their hedge books over the past five years to increase their exposure to rising gold prices. However, with signs that the prices have stalled, are firms reconsidering their risk management strategies? By Hann Ho

Gold mining companies have been under intense pressure from shareholders to reduce their hedge books over the past five years. Since a spike in prices in 1999, investors have been bullying mining firms to increase their direct exposure to gold, pressure that intensified after Ghana-based Ashanti Goldfields revealed a hefty mark-to-market loss on its derivatives portfolio of $231 million in 1999.

Since then, mining companies led by Ashanti, Australia's Newcrest Mining and Toronto-based Barrick