Friday, January 13, 2006

Anglo Gold Sees Higher Gold Prices

By Eric Onstad

JOHANNESBURG (Reuters) - South Africa's AngloGold Ashanti is bullish enough about a strong gold price that it does not expect to resume most hedging for at least a couple of years, a top official said on Wednesday.

AngloGold, the world's second biggest gold producer, is the only major South African gold miner that has not rejected the practice of hedging -- selling bullion in advance to lock in current prices.

"We don't believe in this current market that there's any need to hedge again or add to our hedges," Marketing Director Kelvin Williams told Reuters in an interview.

Hedging is controversial and hotly opposed by certain investors who argue that gold firms should get direct exposure to the current gold price.

Williams said AngloGold still believes a certain amount of hedging is necessary to protect revenue flows against price declines so it can pay dividends and fund capital expenditure.

But prices should remain firm for the next few years, making hedging unnecessary, he said.

"Our view of the gold price is a sufficiently positive one for the immediate future and the near-term and the middle future that the need for capital expenditure and dividend payment should be adequately catered for by the spot price."

He said middle future could be taken to mean a couple of years.

The only exception might be for new mines, he added.

"If we were to look at a new project, where there was perhaps a high technical risk or geological risk or some other risk, we may wish to moderate the revenue risk by getting certainty about pricing," Williams said.

Gold surged to a 25-year peak this week after gaining 18 percent last year and another 5 percent in the past 10 days.

1/12 JOHANNESBURG (Reuters) - South African gold output fell 11.3 percent in volume terms while overall minerals production declined 3.4 percent in November compared with the same month in 2004, official data showed on Thursday. –END-

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