Doing a little house-cleaning during the quiet summer months, TVX Gold (TVX-T) has restructured its gold hedge positions in order to eliminate its exposure to gold lease-rate swap obligations and to give the company more upside exposure to any dramatic gold rally.
The mid-tier gold miner has replaced its 390,000-oz., US$360-per-oz. long put position, which was financed with a gold lease-rate swap. The new 550,000-oz. long put position has a strike price of US$250 per oz.
The new puts mature from 2003 through to 2006, as did the previous ones.
TVX has also removed the gold lease-rate swap liability from the current 350,000-oz., $280-per-oz. long put position, with maturities to 2003. The company has converted the position to US$280-per-oz. puts.
The cost of the restructuring was US$800,000.
TVX’s restructured gold hedge book covers 100% of planned gold production from now to 2003. It then declines to 75% of planned production through to 2006.
TVX President Sean Harvey says the restructuring “eliminates TVX’s exposure to gold lease rates and strengthens our balance sheet, removing US$17.6 million in debt.”
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