Barrick Gold To Eliminate Hedges, Plans Offer

ROB GILLIES

TORONTO (AP) — Barrick Gold Corp., the world's biggest gold producer, said Tuesday it plans to eliminate all of its gold hedges and raise $3 billion in a share offering to help pay for the move.

The Toronto-based company cited the bullish outlook for gold. Its announcement came on a day the price of the metal rose above $1,000 per ounce to its highest level since March 2008.

Gold hedges are futures contracts that commit a company to selling the metal at set prices. While hedges guarantee certain cash flows, they often commit a metals producer to ship the gold at prices lower than the current spot price. Barrick's decision to pay off its hedges amounts to a bet that gold prices will keep rising.

Barrick said it believes holding the hedges hurt its appeal among investors and weighed on its share price.

The company said it will take a $5.6 billion charge to its earnings in the third quarter as a result of a change in accounting treatment for the contracts.