AngloGold to Raise Capital - $1.37 billion to eliminate gold hedges

LONDON—AngloGold Ashanti Ltd., one of the world's largest producers of precious metals, plans to raise about $1.37 billion to get rid of forward gold sales contracts that are weighing on its earnings.
The Johannesburg-based miner is using the proceeds from an equity issue and a convertible-bond offering to eliminate gold hedges that locked the company into forward gold sales at an average price of less than $450 a troy ounce, compared with Tuesday's record high gold price of $1,274.80 a troy ounce.
"Removing the hedge book... [will] give us full exposure to the gold price, widening profit margins and improving cash flow," Chief Executive Mark Cutifani said.
AngloGold Ashanti, the world's No. 3 gold producer behind Barrick Gold Corp. and Newmont Mining Corp., is betting that gold prices will remain high in the future. London-based metals consultancy GFMS Ltd. forecast gold may rally close to $1,350 a troy ounce before year's end, supported by concerns about the pace and strength of the economic recovery....

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