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OceanaGold closes remaining hedge facilities

Fuseworks Media
Fuseworks Media

Wellington, April 1 NZPA - OceanaGold has closed all its remaining hedge facilities in a move being heralded as "transformational" for the company.

The hedgebook closeout meant OceanaGold would sell all its gold production into the spot market for the remainder of 2010, resulting in cash operating margins increasing by about 200 percent compared to recent margins, the company said.

Chief executive Paul Bibby said the margins that would now be generated from OceanaGold's New Zealand operations annual production base of 270,000 to 290,000 ounces would be substantially improved.

"The elimination of the hedge contracts is transformational for OceanaGold," Mr Bibby said.

Following an equity raising, the company had bought back all remaining fixed forward contracts and call options that were set to mature throughout the remainder of 2010.

In total, 74,880 fixed forward contracts averaging $773 ($US549) per ounce and 78,018 call option contracts averaging $1062 per ounce had been closed out for a total cost of $C73 million ($NZ101.3m), the company said.

OceanaGold's assets include the Macraes goldfield in Otago and the Reefton open-pit mine.

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