Fortis hedging and financial gold report · Fortis/VM Group May 2008 | Fortis hedging and financial...

Fortis hedging and financial gold reportMay 2008

Merchant Banking INVESTMENT RESEARCH

The quarterly survey of global gold hedging and financial gold movements.

VM Group

Tel. +44 20 7487 [email protected]

Fortis/VM Group May 2008 | Fortis hedging and financial gold report | 1

Contents

Executive summary 3

Focus � the final countdown 4

Global hedging roundup Q1 08 6

Regional and company focus 9

Financial & investment gold 11

Gold price, exchange rates & lease rates 12

Footnotes to Appendices 14

Appendix 1: Company hedge commitments 16

Appendix 2: Detail of company hedge positions in Q1 08 18

Disclaimer and copyright 26

About the report and methodology 27

About VM Group and Haliburton Mineral Services 28

Fortis commodities contact list 29

Fortis hedging and financial gold report is an exclusive precious metals research joint venture between Fortis Bank SA/NV, the VM Group (incorporating Virtual Metals Research and Consulting, and Haliburton Mineral Services).


Executive summary Global gold hedging in Q1 08 falls 4.8 Moz to 22.0 Moz

Quarterly change in global hedging, Moz (delta-adjusted)

-6

-5

-4

-3

-2

-1

0

Q12005

Q2 Q3 Q4 Q12006

Q2 Q3 Q4 Q12007

Q2 Q3 Q4 Q1

<0.1

Source: VM Group, Haliburton Mineral Services

� Gold hedging fell by a huge 4.8 Moz in Q1 08, taking the delta-adjusted total to just 22.0 Moz. In percentage terms this was the largest decline on record at over 18%. On the committed ounces measure the decline was slightly larger but still 4.8 Moz.

� The decline was mainly due to four companies, who contributed 4.0 Moz

of reductions. AngloGold Ashanti led the way, with a reduction of 1.2 Moz (in committed ounces), followed by Barrick who lopped off 1.1 Moz. Buenaventura closed out their entire hedge book of 0.9 Moz, whilst Newcrest removed 0.7 Moz from its hedge position and now only have 0.2 Moz left of their hedge commitments. Another 32 companies made reductions.

� Only two companies added to their hedge commitments and then with an

amount of just 7,137 oz. � Looking ahead for the rest of 2008 AngloGold Ashanti�s announcement

that it is to close another 3.8 Moz of hedging means we have upped our 2008 forecast to 10-12 Moz. This would mean the global book will be just 15-17 Moz at the end of the year, and as such, the support the market has had from producer buybacks is nearing its end.

� The mark-to-market valuation (MTM) of the global book improved

slightly in Q1 08, when we estimate it was a negative $11.2bn, $0.1bn better than at the end of Q4 07. That the improvement was so small despite the large reduction in hedging is because of the soaring gold price, which rose $97/oz over the quarter.

� Exchange-traded funds in April suffered their worst month on record for

outflows. The StreetTRACKs product fell by 62.5 tonnes, although it has since staged a small recovery.

� Official sector sales have slowed as Central Bank Gold Agreement

signatories have struggled to reach their 500 tonne maximum sales limit. Unless a central bank such as that of Spain or Portugal resumes sales it is likely that collectively they will undershoot the limit by over 100 tonnes.

Analysts Matthew Turner Tel: +44 20 7487 3600 Email: [email protected]

Ted Reeve Tel: +1 416 447 7524 Email: [email protected]

2008

4 | Fortis hedging and financial gold report | May 2008 Fortis/VM Group

Focus � the final countdown The news that AngloGold Ashanti is to launch a rights issue to raise the equivalent of $1.6bn in order to reduce its hedge book can be viewed as the start of the final period of the dehedging phenomenon that has been a major feature of the gold market. Theirs was the last major hedge book that had not seen radical pruning and as such pressure had been building, particularly since the other major hedger, Barrick, had made such large cuts in their own hedge position. At the end of 2007, AngloGold Ashanti�s book in committed ounces was 11.3 Moz, 41% of the total global gold hedging outstanding. This was only 2.4 Moz lower than in Q2 04, when AngloGold Ashanti was formed, and when its hedge book accounted for a smaller 20% of global hedging.

AngloGold Ashanti�s new plan, which we outline in more detail in our Regional and Company section, will see the proceeds of the rights issue go to slashing the hedge position during 2008 by 5 Moz (of which 1.2 Moz was done in Q1 08). Once completed this will leave their hedge book at 6.25 Moz, 45% lower than at the end of 2007.

Will that then be the end of large-scale global dehedging? Every year since 2002, with the exception of 2005, has seen annual reductions in the global delta-adjusted hedge book of 11 Moz or more. The last two years saw reductions of over 13 Moz. But by the end of 2008, given our estimates of other company dehedging (5 Moz to 7 Moz), the global book should by then be down to between 15 Moz and 17 Moz, of which AngloGold Ashanti and Barrick are likely to account for 11-12 Moz (the actual figure will depend on what Barrick do to their hedge book this year � currently their position stands at 6.66 Moz).

It is possible then, that we would get one more year in 2009 of double-digit dehedging, but it seems unlikely. Excluding Barrick and AngloGold Ashanti, the other mining companies will by end 2008 have only about 5 Moz of hedging left. Furthermore a sizeable proportion of this is for project-finance reasons, and although that doesn�t mean it can�t be closed out, it makes it less likely. Therefore for dehedging to continue at recent levels it would need renewed dehedging from AngloGold Ashanti or Barrick. AngloGold Ashanti will have closed out all of their 2008 and 2009 hedges, and a fair chunk of 2010. So it will not need to deliver into any hedges in 2009, and as such we assume its rate of dehedging will slow significantly. Barrick is as always hard to call � its spot-deferred contracts allow it to defer delivery for years so the delivery guide is no help. Furthermore while it has finished its stated dehedging programme, the company continues to convert fixed-price contracts into floating-price contracts, which is another form of dehedging - it did 1.14 Moz of these in Q1 08. This process could continue, or even reverse, with the company refixing the contracts (which would count as new hedging). In our full year 2008 forecast for dehedging we have assumed that Barrick could convert another 1 Moz to 2 Moz into floating price contracts, but this is an area of considerable uncertainty.

Our best estimate therefore is that dehedging will continue for some time but slow markedly from 2009 with an annual rate of about 5 Moz rather than the rate of 11 �14 Moz seen in recent years. Given there will also be some new hedging for project-finance reasons, dehedging will be much less significant for the gold market as a whole than it has been. Of course there is then the whole question of whether we will see a return to price-protection hedging on a large scale. We have discussed this many times in recent issues and our conclusion remains whilst price protection hedging serves a useful function and so will always be an option, in the current climate it is highly unlikely we will see any major programmes. If the price was to show signs of being in a new bear market, then this would make it more likely, but even then we expect it will take a few years given the weight of opposition both in companies and from their shareholders.

Annual changes in dehedging - delta-adjusted

Moz Tonnes 2002 (14.1) (438) 2003 (11.0) (340) 2004 (14.7) (455) 2005 (4.5) (141) 2006 (13.2) (410) 2007 (13.6) (421) 2008 (11.0) (342) Source: VM Group/Haliburton Note: 2008 mid-range of forecast


What about the other measures of financial gold that we look at? Central bank sales, as we argue in that section, are likely to undershoot the 500t limit agreed to by the Central Bank Gold Agreement (CBGA) signatories in this CBGA year (which ends in September 2008) by up to 120t unless some major sellers of the last few years start to sell again, such as Spain or Portugal. In the calendar year they are likely to be even less, for sales so far in 2008 have been very sluggish whilst announced or expected sales in the final CBGA year, which starts in October 2008, are at the moment looking like being hundreds of tonnes short of the 500t maximum, unless the IMF, which wishes to sell 403 tonnes of gold, gets permission to go-ahead this year and fills the obvious gap. This is possible, and we do expect IMF sales to happen, but for them to start this year would be a very tight time scale and so less likely than more. So to some extent and assuming the IMF is slow in getting Congressional opinion for sales, the shortfall from slowing dehedging will be alleviated by a dearth of central bank gold. However we believe over the medium-term central banks will remain a significant supplier of gold to the market.

That leaves exchange-traded funds (ETFs), which suffered their largest monthly outflows in history during April. However we believe they tend to follow price movements more than lead them (although they might exacerbate them) and so it is hard to come to any firm conclusions about their annual offtake, except to say that it seems to us unlikely that new launches of ETFs in areas such as Japan and the Middle East are unlikely to add much to their current holdings.

In short then, as the support from dehedging fades from 2009 onwards, the market might be supported by weaker supply from central banks, although this will depend on the IMF and also other large holders, notably Germany, and over the medium-term we expect central bank sales to continue at near to recent levels. Thus from these sources of demand it will be the private investor, through ETFs or other products, who will need to buy hold more gold in order to maintain prices at these high levels.


Global hedging roundup Q1 08 Major reductions by AngloGold Ashanti, Barrick, and Newcrest, in addition to Buenaventura�s closing out of their hedge book, meant global gold hedging on the delta-adjusted measure fell for the 24th consecutive quarter, and by a remarkable 4.8 Moz (148.8 tonnes). On the committed ounces measure the decline was also 4.8 Moz but slightly larger (149.7 tonnes). Although this quarter�s reduction is not the largest absolute fall we have seen � more than 5 Moz was removed in Q2 07 and Q2 06 � the global book is now much smaller and so in percentage terms it is easily the biggest, with 18% of the outstanding global book being removed.

The Q1 08 reduction leaves the delta-adjusted measure of the global hedge book at just 22.0 Moz, less than half the size it was just two years ago and more than 80 Moz less than it was at its peak in Q3 01. The decline since its peak using the committed ounces measure has been of a similar size.

Global hedging (Moz), end-quarter

2006 2007 2008 Change Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1/Q4

Net delta Net Forwards 38.3 33.6 31.3 29.7 26.9 22.7 20.0 18.0 14.1 (3.9) Net Calls 9.1 8.7 9.2 9.4 8.5 7.9 8.4 8.1 7.6 (0.5) Other Products 1.2 1.2 1.2 1.1 0.9 0.4 0.1 0.1 0.1 (0.0) Net Puts 0.2 0.2 (0.1) 0.2 0.1 0.1 0.5 0.5 0.3 (0.3) Total Hedge Impact (Delta) 48.8 43.7 41.5 40.4 36.4 31.1 29.1 26.8 22.0 (4.8) Quarterly change (4.7) (5.2) (2.1) (1.2) (3.9) (5.3) (2.0) (2.3) (4.8) Committed Ounces Net Forwards 39.1 34.3 31.8 30.1 27.4 23.6 20.4 18.4 14.4 (4.0) Net Calls Sold 10.6 10.2 12.1 11.6 10.4 10.4 9.8 9.2 8.4 (0.8) Other Products 1.3 1.2 1.2 1.2 0.9 0.4 0.1 0.1 0.1 (0.0) Total Committed 50.9 45.7 45.0 42.8 38.7 34.5 30.3 27.8 23.0 (4.8) Quarterly change (4.8) (5.2) (0.7) (2.3) (4.1) (4.2) (4.1) (2.5) (4.8) Puts Bought 6.6 6.5 6.8 6.3 5.0 4.8 7.2 6.5 6.1 (0.4) Puts Sold 1.1 1.0 1.8 1.6 2.2 1.7 1.7 1.5 1.2 (0.3)


Global gold hedging, committed and delta-adjusted, Moz

0

10

20

30

40

50

60

70

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2005 2006 2007 2008

Delta-adjusted ounces Committed Ounces



The reduction was concentrated in the forward contracts, with the net forward position (forwards sold less forwards bought) declining by 4.0 Moz to 14.1 Moz. This category has halved in just over a year, mainly due to Barrick�s large dehedging programme that is still ongoing. The rest of the reduction was due to a decline in net calls sold of 0.5 Moz and a decline in the net puts of 0.3 Moz. The decline in the net calls sold is particularly impressive given the rising gold price, which closed the quarter at $933.50/oz, up from $836.50/oz at the end of 2007. This has the impact of increasing the delta of net calls sold, as a call is an option to buy gold at a fixed price and becomes more likely to be exercised (and hence a higher delta) as the gold price rises. Measured in committed ounces the decline in net calls sold was a larger 0.8 Moz.

In terms of regions the decline was broadly based with the Americas seeing a fall of 2.3 Moz, Africa 1.2 Moz and Australia 1.2 Moz (see and Regional and Company focus for more details).

The large reduction in hedging was enough to see an improvement in the negative mark-to-market valuation of the global hedge book. This represents the cost to mining companies of closing out their hedge books today (if they so choose), and at end Q1 08 we estimate it was $11.2bn, $0.1bn better than at the end of Q4 07. That this is such a small improvement despite the sums of money spent on closing out contracts is because of the sharply higher gold price over the quarter.

MTM valuation

-14

-12

-10

-8

-6

-4

-2

0

Q1 2004 Q4 2004 Q3 2005 Q2 2006 Q1 2007 Q4 2007

350

450

550

650

750

850

950

1,050

MTM valuation Gold price

Gold price ($/oz, inversed)MTM position, $bn

Source: VM Group

Looking ahead to the rest of 2008, our forecast made last quarter of 6 Moz to 8 Moz (in the absence of any major AngloGold Ashanti dehedging) looks likely to be an underestimate given we have already had 4.8 Moz of dehedging in the first quarter. AngloGold Ashanti�s announcement of a $1.6bn rights issue in order to reduce its book means another 3.8 Moz to come over the rest of 2008 from that source. There is also another 1.4 Moz of hedging due to be delivered in 2008 from other mining companies (assuming Anglo�s 3.8 Moz includes all the rest of their 2008 commitments). That makes 10 Moz in total without taking into account any other opportunistic dehedging. Complicating the forecast is that the other major hedge book, Barrick�s, seems to be back in play as the company continues to convert its fixed-price contracts to floating-price contracts, which we do not count as hedges (for more details see the Regional and Company focus). This process is likely to continue and thus increase dehedging but � adding to the uncertainty � could be reversed, with the company refixing some of the contracts, in which case we would count it as an increase in hedging.


Delivery schedule by region, 2008 - 2011 (Moz), adjusted for AngloGold Ashanti dehedging

programme

0

1

2

3

4

5

6

2008 2009 2010 2011

Milli

ons

Americas Africa Australasia Eurasia

Source: VM Group/Haliburton Mineral Services

Dehedging then in 2008 is likely to be around 10-12 Moz assuming some continued dehedging from Barrick and very little new hedging. Indeed the latter has all but dried up (just 7,137 oz in Q1 08) and unless there is a major reversal in gold�s bull market it is unlikely to make a major comeback in 2008. Thus the rate of dehedging is almost certain to slow from Q1 08�s rapid pace, but will remain at relatively high levels with an average quarterly decline of between 1.7 Moz and 2.7 Moz.

Largest remaining hedge books (oz)

Ounces committed Q1 08

AngloGold Ashanti 10,034,538 Barrick Gold 6,660,000 Kinross Gold 898,150 Western Goldfields 429,000 European Minerals 428,500 OceanaGold 423,812 Xstrata 395,450

Source: VM Group/Haliburton Mineral Services


Regional and company focus In total in Q1 08 36 mining companies made reductions to their hedge position, totalling 4.8 Moz. Only two companies increased their positions, and then by a miniscule 0.01 Moz collectively.

The bulk in hedging in Q1 08 of 4.8 Moz on the committed ounces measure was due to major cuts by four companies, who accounted for 4.0 Moz of the decline. The largest of these was AngloGold Ashanti, who cut their committed positions by 1.24 Moz, and by a similar 1.13 Moz on a delta-adjusted measure. This was the company�s largest committed ounces reduction since Q1 04, and was effected through a mixture of delivering into maturing contracts and buybacks. The reduction was solely in their 2008 hedge commitments, and mostly in the US dollar denominated forwards and calls sold.

Even more importantly, AngloGold Ashanti announced that it planned to launch a rights issue1 of 12 billion rand ($1.6bn) in order to reduce its hedge position in 2008 by a further 3.8 Moz. Detailing the rights issue, the company said although it had been following various strategies to reduce the hedge position and its impact on revenues, such as delivering into hedges and opportunistic buybacks, acquiring assets to dilute the impact of the hedge book as a percentage of total production and reserves and increasing exploration to the same end, the hedge book was continuing to have �an adverse affect upon its financial performance�. Therefore the company planned to reduce the hedge position �significantly� through delivery of contracts maturing in 2008, and the buyback in 2008 of contracts that were due to mature in 2009 and 2010, and would also aim to reduce the hedge book�s impact thereafter by gaining more exposure to spot prices in the remaining contracts. These plans, the company said, would reduce the hedge book to 6.25 Moz, and although it meant the company would receive just $475/oz in 2008 for its gold production of 3.8 Moz between Q2 and Q4 (on a gold price of $900/oz), it meant in 2009 it would only suffer a loss of 6% on spot gold prices (again assuming a gold price of $900/oz).

Barrick continued to dehedge by the mechanism of converting its fixed price forward contracts into floating price forward contracts. We have never considered these as hedges because they perform no hedging function � the price received by Barrick varies in line with the gold price � and as such the counterparty to the transaction does not use loaned central bank gold to offset their position, i.e. these contracts have no market impact. In Q1 08 the company converted another 1.14 Moz of fixed price contracts into forward price contracts, meaning it now has 2.84 Moz of floating price contracts and just 6.66 Moz of fixed price contracts. The floating price contracts are at a strike price of the spot gold price less $482/oz. Although Barrick could fix these contracts again, which we (and we believe they) would count as hedging, Barrick�s CEO, Greg Wilkins, told a conference that Barrick would not consider a new programme of hedging production, even 3-5 years from now. He said that the company hedged when it was a gold-only producer, and now it has a copper business and is more diversified there is no need.

Buenaventura, the Peruvian miner, closed out its remaining 922,000 oz of forward sales in two stages, on January 24th and February 6th. The first stage saw 140,000 oz of 2010 forwards cut at a cost of $82.6m, whilst the second saw 782,000 oz of 2010-2012 forwards reduced at a cost of $351m, meaning the total reduction cost $434m.

Newcrest Mining are close to completing their hedge closure programme which began in Q3 07 when it had 4.2 Moz of hedging. In Q1 08 the company closed out another 0.7 Moz of its position, leaving it with just 0.2 Moz of its hedge � 1 For more details see http://www.anglogold.com/NR/rdonlyres/46FB448E-1D37-4109-8DC7-B6A5586570B5/0/CirculartoShareholders7May2008.pdf

Largest change in hedging by company

(000 oz)

Moz (Committed) Q4 07 Q1 08 Change

AngloGold Ashanti 11,278 10,035 (1,243) Barrick Gold 7,800 6,660 (1,140) Buenaventura 922 0 (922) Newcrest Mining 922 209 (713) Perseverance 162 0 (162) Crescent Gold 102 25 (77) SEMAFO 79 27 (52) Resolute 381 345 (36) Penoles 162 135 (27) CVRD (Vale) 112 90 (22) Equigold 360 338 (22) Xstrata 417 395 (21) IAMGOLD 122 102 (19) Sino Mining 303 285 (18) Inmet Mining 78 60 (18) Norton Goldfields 315 298 (18) Randgold Resources 207 190 (17) Aurizon Mines 228 211 (17) Ok Tedi 88 73 (15) Kinross Gold 913 898 (15) Etruscan Resources 236 221 (15) European Minerals 443 429 (15) Yukon-Nevada Gold 49 37 (12) Boliden 182 170 (11) Teck Cominco 87 76 (11) Intrepid Mines 44 33 (11) Allied Gold 102 92 (10) GBS Gold International 20 10 (10) Pamodzi Gold 134 125 (9) Century Mining 24 17 (7) EURO Ressources 38 31 (6) Metorex 15 12 (3) Sherwood Copper 54 52 (2) Pacific Rim 1 0 (1) Dragon Mining 10 9 (1) OceanaGold 424 424 (0) Western Goldfields 429 429 0 Avocet Mining 190 190 0 Austindo Resources 158 158 0 Pan Australian Res. 70 70 0 Alamos Gold 0 2 2 Dominion Mining 33 38 5



commitments to go (it has 2.1 Moz of puts). The company has said it will be unhedged (on a committed basis) by September 2008 at the latest, but it seems likely this target will be reached by the end of the current quarter.

One other company made a cut of more than 0.1 Moz, Australian Perseverance Mining, whose book of 0.18 Moz was closed out when Northgate Minerals acquired the company.

New hedging reached another all-time quarter low, with just two companies, Alamos Gold and Dominion Mining, adding to their positions, and the largest of those (Dominion) being just over 5,000 oz.

In terms of regional trends, the decline in hedging has been so swift and so pronounced that regional differences are now much less clear than they were. It is interesting to note, however, that the Americas hedge book at 8.7 Moz is now smaller than the African hedge book at 9.5 Moz, despite AngloGold Ashanti�s major dehedging in Q1 08, and the Australia hedge book, once one of the defining features of the industry there, is now just 2.8 Moz. In terms of months production committed, the Americas falls to 3.8, from 4.8 last quarter and 9.2 two years� ago. Australia, long the most hedged region as a proportion of production, has now just 5 months� production hedged, down from 21 in Q1 07, an astonishing decline. Africa fell from 11.3 in Q4 07 to 10.1 in Q1 08, and should show fall considerably in the next few quarters.

Hedging by region, delta-adjusted (Moz)

2006 2007 2008 Change Q1 08 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q on Q Y on Y

Americas 19.58 18.91 17.38 15.16 12.97 11.58 11.04 8.72 (2.32) (6.45)Africa 11.98 11.22 11.50 10.26 9.13 10.95 10.67 9.47 (1.20) (0.79)Australia 10.38 9.67 9.55 9.22 7.45 5.12 3.97 2.76 (1.21) (6.46)Eurasia 1.71 1.75 1.95 1.79 1.59 1.45 1.15 1.10 (0.06) (0.69)Total 43.66 41.54 40.38 36.44 31.14 29.10 26.83 22.05 (4.78) (14.39)


Hedging by region, delta-adjusted (Moz)

0

5

10

15

20

25

1Q06 3Q06 1Q07 3Q07 1Q08

Americas Africa

Australia Eurasia



Financial & investment gold Exchange Traded Funds (ETFs)

Exchange Traded Fund holdings (tonnes) � part I

US UK Swiss Australia S.Africa Street TRACKS BGI Gold Bullion Securities ETF Securities ZKB

2003 0.0 0.0 23.5 8.4 0.0 2004 94.9 0.0 51.1 7.5 3.0 2005 263.3 22.2 63.0 8.4 7.7 2006 453.2 44.5 85.4 13.1 10.5 10.2 2007 627.9 55.2 97.5 19.8 25.8 16.4 23.7 Apr-07 493.3 44.7 90.9 0.3 18.0 11.5 11.3 May-07 468.2 45.9 90.8 0.9 19.0 11.9 12.8 Jun-07 464.4 45.9 93.1 1.9 21.8 12.3 13.2 Jul-07 496.5 46.5 94.6 2.3 22.2 12.5 14.3 Aug-07 515.4 47.3 88.1 10.2 23.3 12.7 16.4 Sep-07 578.0 50.0 95.5 10.8 24.0 14.3 17.7 Oct-07 597.5 52.3 97.9 17.0 24.5 15.1 18.3 Nov-07 601.7 54.1 96.9 19.2 26.0 15.9 19.2 Dec-07 627.9 55.2 97.5 19.8 27.5 16.4 23.7 Jan-08 632.0 59.9 105.2 21.5 30.3 17.6 27.2 Feb-08 639.4 59.9 107.9 25.4 31.3 19.0 27.0 Mar-08 642.0 64.1 113.9 30.9 32.8 20.6 29.0 Apr-08 580.5 64.0 114.0 35.8 35.5 20.9 27.0

Source: Fortis

Exchange Traded Fund holdings (tonnes) � part II

India Turkey Germany Part I+II Benchmark UTI Kotak Reliance Capital Xetra-Gold Total Change

2003 32 32 2004 156 125 2005 365 208 2006 1.3 618 254 2007 1.3 1.3 0.4 1.4 1.3 0.3 872 254 Apr-07 1.1 1.4 1.3 671 14 May-07 1.3 1.5 1.3 650 (21) Jun-07 1.4 1.6 1.3 652 2 Jul-07 1.4 1.6 0.5 1.3 689 37 Aug-07 1.4 1.6 0.5 1.3 714 24 Sep-07 1.4 1.5 0.6 1.3 792 78 Oct-07 1.4 1.5 0.6 1.3 825 33 Nov-07 1.3 1.4 0.5 1.5 1.3 836 11 Dec-07 1.3 1.3 0.4 1.4 1.3 0.3 874 35 Jan-08 1.2 1.3 0.3 1.2 1.3 3.5 902 28 Feb-08 1.1 1.2 0.3 1.1 1.3 4.8 920 18 Mar-08 1.3 1.3 0.3 1.1 1.3 6.0 945 25 Apr-08 1.3 1.3 0.3 1.1 1.3 6.9 890 (55)

Source: VM Group

ETFs saw their largest monthly outflow on record in April 2008, losing 55 tonnes, with the largest fund, the US StreetTRACKs fund, dropping by 62.5 tonnes. As the other funds tended to add metal, this meant its share of global gold ETF holdings fell to 65.2%, its lowest since it was launched back in November 2004. Early May saw a small recovery, with the StreetTRACKs fund adding nearly 10 tonnes.


Central Banks and other official gold holders

Central Banks (part I) (tonnes) - Old industrialised countries

CBGA Eurozone Other CBGA US& Canada Other industrialised

2004 12,138 1,540 8,140 1,2262005 11,696 1,458 8,139 1,2242006 11,364 1,449 8,137 1,2242007 11,001 1,294 8,137 1,224Apr-07 11,246 1,445 8,137 1,238May-07 11,207 1,445 8,137 1,238Jun-07 11,159 1,430 8,137 1,238Jul-07 11,119 1,395 8,137 1,238Aug-07 11,111 1,359 8,137 1,238Sep-07 11,102 1,328 8,137 1,238Oct-07 11,065 1,317 8,137 1,238Nov-07 11,051 1,304 8,137 1,238Dec-07 11,001 1,294 8,137 1,238Jan-08 11,000 1,282 8,137 1,238Feb-08 10,988 1,270 8,137 1,238Mar-08 10,981 1,260 8,137 1,238Apr-08 10,976 1,247 8,137 1,238

Source: VM Group from IMF, and individual central bank websites

Central Banks (part II) (tonnes) � Developing economies and institutions

Asia Eastern Middle Latin Africa Institutions World Part I+II Europe East America Change Change CBGA

2004 2,092 933 949 590 412 3,426 31,444 (516) (389)2005 2,024 953 948 586 413 3,403 30,844 (600) (523)2006 1,998 979 948 580 413 3,389 30,481 (364) (341)2007 1,985 1,021 961 580 413 3,352 29,968 (512) (518)Apr-07 1,992 962 956 580 413 3,367 30,335 (64) (49)May-07 1,992 964 959 580 413 3,364 30,299 (36) (39)Jun-07 1,992 968 959 580 413 3,365 30,241 (58) (63)Jul-07 1,993 967 959 580 413 3,363 30,164 (77) (75)Aug-07 1,997 971 960 581 414 3,362 30,130 (34) (44)Sep-07 1,980 978 958 581 413 3,360 30,075 (56) (41)Oct-07 1,983 987 960 581 413 3,356 30,036 (39) (48)Nov-07 1,986 1,001 961 580 413 3,352 30,024 (13) (26)Dec-07 1,987 1,008 961 580 413 3,355 29,975 (49) (60)Jan-08 1,985 1,006 961 580 413 3,354 29,956 (18) (27)Feb-08 1,985 1,010 963 580 413 3,352 29,934 (22) (23)Mar-08 1,982 1,015 963 580 413 3,352 29,922 (12) (17)Apr-08 1,982 1,015 963 580 413 3,352 29,904 (18) (18)

Source: VM Group from IMF, and individual central bank websites

Central bank sales have slowed considerably in 2008, with an estimated 70 tonnes of gold sold in the first four months, an annual rate of just 213 tonnes (although note April�s figures are provisional). The reason for this is a slowdown in CBGA sales. In the first 13 weeks of the 2007-2008 CBGA year (year 4 of the second round of the agreement), sales averaged 9.9t/week. This was slightly ahead of what is needed to achieve 500t/year. But since the start of 2008 the pace has significantly eased to just 4.8t/week. Thus, with 33 weeks of the CBGA year gone, sales have totalled some 225t, an average rate of less than 7t/week.

The �known� sellers, the central banks of countries such as France and Switzerland who have announced how much they intend to sell and over what time period, have been selling broadly in line with those plans. It is the �unknown� sellers, those who have sold gold but have not yet given any intention of how much and over what time period they intend to sell, who have been conspicuous by their absence in this CBGA year - most obviously Spain and Portugal. Unless these central banks start to sell, it looks likely that CBGA sales for the CBGA year 2007/2008, which ends on 26th September, will be more than 100 tonnes short of the maximum 500 tonnes.


Gold price, exchange rates & lease rates

End-quarter

2006 2007 2008 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Gold price, $/oz 614 599 636 663 649 743 837 934Exchange Rates per $ Canadian Dollar 1.11 1.12 1.17 1.16 1.06 1.00 1.01 1.03Euro 0.78 0.79 0.76 0.75 0.74 0.70 0.68 0.63South African Rand 7.27 7.65 7.05 7.31 7.13 6.92 6.81 8.11Australian Dollar 1.35 1.34 1.27 1.23 1.18 1.13 1.13 1.09Lease Rates 5-yr 0.55 0.44 0.48 0.51 0.45 0.40 0.34 0.4310-yr 0.78 0.75 0.68 0.71 0.62 0.54 0.49 0.89

Source: Fortis, VM Group, Haliburton Mineral Services


Footnotes to Appendices Hedge positions shown are based on a calendar year basis unless otherwise noted. All hedge positions are presented in the currency in which they were disclosed or denominated. These tables constitute summaries of hedge positions reported by individual producers. Such reports often provide additional data and detail such as the duration of hedge positions, information on whether interest rates are fixed or floating, on floor prices on some contracts, on knock-ins and knock-outs etc. For companies where quarterly data is not available, or detail is not provided, the data have either been projected, interpolated, adjusted or repeated from adjacent quarters. In some cases aggregated positions have been allocated over a number of years. Thus we strongly refer the reader to the websites of the various companies for a more complete picture than is presented here. For this report the reader should be particularly aware that in the interests of publishing in a timely fashion we have estimated the March 31, 2008 hedge positions for a number of companies who have not yet reported as we go to press (see notes below).

Americas � For Anaconda Mining, Capital Gold, Central Sun Mining, Century Mining,

Coeur d�Alene, CVRD (Vale), Crystallex, Etruscan Resources, Gold-Ore, High River Gold, Jinshan Gold Mines, Kirkland Lake Gold, La Mancha Resources, Metallica Resources, Nevsun Resources, Orvana, Pacific Rim, Penoles, Rusoro Mining, SEMAFO, Sherwood Copper, Uruguay Mineral Exploration, Wesdome Gold Mines and Yukon-Nevada Gold: The March 31, 2008 position if any is adjusted from or repeated from December 31, 2007 or prior disclosure.

� Anaconda Gold and Uruguay Mineral Exploration: Companies have a May

31 year-end but positions shown if any are based on a calendar year. � Capital Gold: Company has a July 31 year-end but positions shown if any are

based on a calendar year. � Etruscan Resources and Gold-Ore Resources: Companies have a November

30 year-end but positions shown if any are based on a calendar year. � Kirkland Lake Gold and Pacific Rim: Companies have an April 30 year-end

but positions shown if any are based on a calendar year. � Orvana: Company has a September 30 year-end but positions shown if any

are based on a calendar year basis. � Red Back Mining and Royal Gold: Companies have June 30 year-ends but

positions shown if any are based on a calendar year. Africa � For Central African Gold, Metorex, and Simmer and Jack: The March 31,

2008 position if any is adjusted from or repeated from December 31, 2007 or prior disclosure.

� DRD, Gold Fields, Harmony and Metorex: Companies have June 30 year-

ends. � Simmer and Jack: Company has a March 31 year-end Australia � For Lion Selection and Pan Australian: The March 31, 2008 position if any is

adjusted from or repeated from December 31, 2007 or prior disclosure.


� For Allied Gold, Beaconsfield Gold, Crescent Gold, Dominion Mining, Dragon Mining, Equigold, Kingsgate Consolidated, Newcrest Mining, Norseman Gold, North Queensland Metals, Norton Gold Fields, Perseverance, Resolute, St. Barbara, Tanami Gold, Troy Resources: Companies have June 30 year-ends.

� Dragon Mining: Company has a June 30 year-end but positions shown if any

are based on a calendar year. � Heemskirk Consolidated: Company has a September 30 year-end but

positions shown if any are based on a calendar year. � Lion Selection Trust: Company has a July 31 year-end but positions shown if

any are based on a June 30 year-end and are adjusted from or repeated from prior disclosure.

� Ok Tedi: Positions shown are calculated from Inmet�s disclosed or estimated

Ok Tedi hedge position and are based on a calendar year.. Eurasia � For Avocet Mining, Crew Gold, European Minerals, KazakhGold,

Kazakhmys, Oxus Gold, Peter Hambro Mining, Polymetal, Polyus, Rio Tinto, Serabi Mining, Xstrata and Zijin Mining: The March 31, 2008 position if any is adjusted from or repeated from December 31, 2007 or previous disclosure.

� Avocet Mining: Company has a March 31 year-end. � Crew Gold and Oxus Gold: Companies have June 30 year-ends.


Appendix 1: Company hedge commitments

Hedging by company by quarter (ozs)

Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Change over quarter Change over year

Americas Agnico-Eagle (420,000) 0 0 0 0 0 420,000 Alamos Gold 6,100 2,700 8,000 0 2,000 2,000 (4,100)Anaconda Mining 0 0 0 0 0 0 0 Aurizon Mines 273,062 259,631 243,971 227,962 210,851 (17,111) (62,211)Barrick Gold 9,500,000 9,500,000 8,000,000 7,800,000 6,660,000 (1,140,000) (2,840,000)Breakwater 0 0 0 0 0 0 0 Buenaventura 1,410,000 922,000 922,000 922,000 0 (922,000) (1,410,000)Campbell Resources 0 0 0 0 0 0 0 Capital Gold 0 0 0 0 0 0 0 Centerra Gold 0 0 0 0 0 0 0 Central Sun Mining 0 0 0 0 0 0 0 Century Mining 5,870 0 30,000 24,000 17,000 (7,000) 11,130 Claude Resources 0 0 0 0 0 0 0 Coeur d'Alene 0 0 0 0 0 0 0 Crystallex Mining 0 0 0 0 0 0 0 CVRD (Vale) 177,490 155,740 133,990 112,240 90,490 (21,750) (87,000)Dundee Precious Metals 0 0 0 0 0 0 0 Eldorado 0 0 0 0 0 0 0 Etruscan Resources 246,296 246,296 242,778 235,740 221,213 (14,527) (25,083)EURO Ressources 62,700 57,000 51,300 37,600 31,200 (6,400) (31,500)Freeport Copper & Gold 0 0 0 0 0 0 0 Gammon Gold 0 0 0 0 0 0 0 GBS Gold International 0 0 0 20,000 10,000 (10,000) 10,000 Goldcorp 0 0 0 0 0 0 0 Golden Star Resources 0 0 0 0 0 0 0 Gold-Ore Resources 0 0 0 0 0 0 Hecla Mining 0 0 0 0 0 0 0 High River Gold 0 0 0 0 0 0 0 HudBay Minerals 0 0 0 0 0 0 0 IAMGOLD 219,580 182,863 145,450 121,664 102,220 (19,444) (117,360)Imperial Metals 0 0 0 0 0 0 0 Inmet Mining 122,150 116,750 98,900 77,600 59,700 (17,900) (62,450)Jaguar Mining 70,313 64,500 55,654 48,556 0 (48,556) (70,313)Jinshan Gold Mines 0 0 0 0 0 0 0 Kinross Gold 800,400 963,900 927,650 912,900 898,150 (14,750) 97,750 Kirkland Lake Gold 0 0 0 0 0 0 0 La Mancha Resources 0 0 0 0 0 0 0 Metallica Resources 0 0 0 0 0 0 0 Nevsun Resources 0 0 0 0 0 0 0 Newmont Mining 1,846,111 0 0 0 0 0 (1,846,111)Northgate Minerals 30,000 30,000 18,000 0 0 0 (30,000)Orvana 0 0 0 0 0 0 0 Pacific Rim 1,500 0 0 1,000 0 (1,000) (1,500)Peak Gold 0 0 0 0 Penoles 238,575 213,150 187,725 162,300 135,225 (27,075) (103,350)Red Back Mining 289,000 267,500 245,500 0 0 0 (289,000)Richmont 0 0 0 0 0 0 0 Royal Gold 0 0 0 0 0 0 Rusoro 0 0 0 0 0 0 0SEMAFO 100,000 96,000 92,000 83,000 27,000 (56,000) (73,000)Sherwood Copper 42,202 55,600 54,590 50,726 54,095 (2,311) 9,582 Silver Wheaton 0 0 0 0 0 0 0 Teck Cominco 128,000 113,000 102,000 87,000 76,000 (11,000) (52,000)Uruguay Mineral Exploration 0 0 0 0 0 0 0 Wesdome 0 0 0 0 0 0 0 Western Goldfields 429,000 429,000 429,000 429,000 0 429,000 Yamana Gold 0 0 0 0 0 0 0 Yukon-Nevada Gold 0 0 0 48,800 36,600 (12,200) 36,600 Total 15,679,914 13,752,045 12,043,722 11,449,815 9,016,833 (2,441,351) (6,667,081)

Continued overleaf


Hedging by company by quarter (ozs)

Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Change over quarter Change over year

Africa AngloGold Ashanti 11,110,013 11,132,422 11,660,788 11,277,711 10,034,538 (1,243,173) (1,075,475)Central African Gold 0 0 0 0 0 0 0 DRDGOLD 0 0 0 0 0 0 0 Gold Fields 0 0 0 0 0 0 0 Harmony 220,000 0 0 0 0 0 (220,000)Metorex 21,340 19,950 15,963 15,432 12,215 (3,217) (9,125)Pamodzi Gold 160,500 151,500 142,500 133,500 124,500 (9,000) (36,000)Randgold Resources 264,994 245,747 226,493 207,240 189,741 (17,499) (75,253)Simmer and Jack 0 0 0 0 0 0 0 Total 11,776,847 11,549,619 12,045,744 11,633,883 10,360,994 (1,272,889) (1,415,853) Australia Allied Gold 102,000 102,000 92,178 (9,822) 92,178 Antam 0 0 0 0 0 0 0 Austindo Resources 171,708 157,998 157,998 157,998 157,998 0 (13,710)Beaconsfield Gold 12,000 10,613 45,494 0 0 0 (12,000)Crescent Gold 125,478 120,478 110,453 102,053 25,478 (76,575) (100,000)Dominion Mining 43,800 36,238 41,000 32,863 38,000 5,137 (5,800)Dragon Mining 88,549 81,849 11,150 9,950 9,250 (700) (79,299)Equigold 379,598 359,896 345,886 359,976 338,454 (21,522) (41,144)Heemskirk Consolidated 0 0 0 0 0 0 0 Intrepid Mines 81,920 69,270 55,214 43,971 33,310 (10,661) (48,610)Kingsgate Consolidated 15,000 0 0 0 0 0 (15,000)Lihir Gold 1,414,500 0 0 0 0 0 (1,414,500)Lion Selection Trust 86,200 66,300 0 0 0 0 (86,200)Newcrest Mining 4,338,251 4,200,000 1,656,932 921,577 209,000 (712,577) (4,129,251)Norseman Gold 0 0 0 0 0 0 North Quensland Metals 0 0 0 0 0 0 0Norton Goldfields 330,000 315,000 297,500 (17,500) 297,500 OceanaGold 461,021 454,399 441,271 424,024 423,812 (212) (37,209)Ok Tedi 92,250 134,151 118,900 88,378 72,889 (15,489) (19,361)Oxiana Gold 0 0 0 0 0 0 0 Pan Australian Resources 0 0 70,000 70,000 70,000 0 70,000 Perseverance 190,275 181,035 164,375 161,876 0 (161,876) (190,275)Resolute 519,306 480,603 432,667 381,334 345,134 (36,200) (174,172)Sino Mining 335,000 335,000 319,925 303,173 284,786 (18,387) (50,214)St. Barbara 31,683 0 0 0 0 0 (31,683)Tanami Gold 0 0 0 0 0 0 0 Troy Resources 0 0 0 0 0 0 0 Total 9,111,363 7,216,616 4,733,938 3,430,202 2,397,789 (1,032,413) (7,056,153)

Eurasia Avocet Mining 240,000 210,000 190,000 190,000 190,000 0 (50,000)Boliden 283,027 256,056 209,077 181,500 170,060 (11,440) (112,967)Crew Gold 0 0 0 0 0 0 0 European Minerals 443,000 443,000 443,000 443,000 428,500 (14,500) (14,500)Highland Gold 0 0 0 0 0 0 0 Hochschild 30,025 0 0 0 0 0 (30,025)KazakhGold 0 0 0 0 0 0 0 Kazakhmys 0 0 0 0 0 0 0 Oxus Gold 0 0 0 0 0 0 0 Peter Hambro Mining 0 0 0 0 0 0 0 Polyus Gold 0 0 0 0 0 0 0 PolyMetal 0 0 0 0 0 0 0 Rio Tinto 0 0 0 0 0 0 0 Seribi Mining 0 0 0 0 0 0 0 Xstrata 684,626 605,750 526,876 416,500 395,450 (21,050) (289,176)Zijin Mining 137,600 137,600 134,100 0 0 0 (137,600)Total 2,098,278 1,932,406 1,503,053 1,262,500 1,184,010 (78,490) (914,268) Global Total 38,666,402 34,450,686 30,326,457 27,776,400 22,966,001 (4,810,399) (15,700,401)



Appendix 2: Detail of company hedge positions in Q1 08

Q1 08 breakdown by maturity, Americas (oz)

2008 $/oz 2009 $/oz 2010 $/oz 2011 $/oz 2012+ $/oz

Agnico-Eagle Commitments - - - - - - - - - -

Alamos Gold Forward sales 2,000 926 - - - - - - - -Total Committed 2,000 - - - - - - - - -

Anaconda Mining Forward sales 10,000 684 - - - - - - - -Calls - bought 10,000 750 - - - - - - - -Total Committed 0

Aurizon Mines Calls - sold 60,195 852 84,842 882 65,814 908 - - - -Total Committed 60,195 0 84,842 0 65,814 0 - - - -Puts - bought 60,195 500 84,842 500 65,814 500

Barrick Gold Project Forward Sales 6,660,000 342 - - - - - - -Floating Spot Priced Contracts* 2,840,000 Spot -482 - - - - - - -Total Committed 6,660,000

Breakwater Commitments - - - - - - - - - -

Buenaventura Commitments - - - - - - - - - -

Campbell Resources Commitments - - - - - - - - - -

Capital Gold Forward sales 25,239 500 33,200 500 25,033 500 - - - -Calls-bought 25,239 535 33,200 535 25,033 535 - - - -Total Committed 0 0 0

Centerra Gold Commitments - - - - - - - - - -

Central Sun Mining Commitments - - - - - - - - - -

Century Mining Calls - sold 17,000 720 - - - - - - - -Total Committed 17,000

Claude Resources Commitments - - - - - - - - - -

Coeur d'Alene Commitments - - - - - - - - - -

Crystallex Mining Commitments - - - - - - - - - -

CVRD (Vale) Calls � sold 90,490 382 - - - - - - - -Total Committed 90,490 Puts � bought 74,700 324 - - - - - - - -

Continued overleaf * We do not consider these hedges hence they are not included in our totals



2008 $/oz 2009 $/oz 2010 $/oz 2011 $/oz 2012+ $/oz

Dundee Precious Metals Commitments - - - - - - - - - -

Eldorado Commitments - - - - - - - - - -

Etruscan Resources Calls � sold 30,791 700 59,142 700 50,682 700 48,750 700 31,848 1,771Total Committed 45,331 59,142 50,682 48,750 31,848Puts � bought 57,019 629 109,512 629 93,846 629 90,276 629 58,974 1,592

EURO Ressources Forward sales 8,400 459 22,800 459 - - - - - -Total Committed 8,400 22,800

Freeport Copper & Gold Commitments - - - - - - - - - -

Gammon Gold Commitments - - - - - - - - - -

GBS Gold International Australian Dollar Gold Calls sold 5,000 1,000 - - - - - - - -Short-term spot-deferred 5,000 1,000 - - - - - - - -Total Committed 10,000 - - - - - - - - -

Gold-Ore Resources Commitments - - - - - - - - - -

Goldcorp Commitments - - - - - - - - - -

Golden Star Resources Commitments - - - - - - - - - -

Hecla Mining Commitments - - - - - - - - - -

High River Gold Commitments - - - - - - - - - -

HudBay Minerals Commitments - - - - - - - - - -

IAMGOLD Flat Forward sales 58,332 402 38,888 402 - - - - - -Flat Forward sales - - 5,000 442 - - - - - -Calls - sold - - - - - - - - - -Total Committed 77,776 43,888

Imperial Metals Commitments - - - - - - - - - -

Inmet Mining Forward sales 58,200 352 - - - - - - - -Forward sales 6,800 372 - - 3,600 748 3,600 775 5,400 -Total Committed 65,000 3,600 3,600 5,400

Jaguar Mining Commitments - - - - - - - - - -

Continued overleaf



2008 $/oz 2009 $/oz 2010 $/oz 2011 $/oz 2012+ $/oz

Jinshan Gold Mines

Commitments - - - - - - - - - -

Kinross Gold

Forward sales 45,000 511 218,600 641 218,600 642 394,200 631 - -

Calls-sold 21,750 468 - - - - - - - -

Total Committed 66,750 0 218,600 218,600 394,200

Puts - bought 28,875 405 - - - - - - - -

Kirkland Lake Gold

Commitments - - - - - - - - - -

La Mancha Resources

Commitments - - - - - - - - - -

Metallica Resources

Commitments - - - - - - - - - -

Nevsun Resources

Commitments - - - - - - - - - -

Newmont Mining

Commitments - - - - - - - - - -

Northgate Minerals

Commitments - - - - - - - - - -

Orvana

Commitments - - - - - - - - - -

Pacific Rim

Commitments - - - - - - - - - -

Peak Gold

Commitments - - - - - - - - - -

Penoles

Forward sales 7425 652 - - - - - - - -

Contingent forwards 40,500 355 54,000 355 - - - - - -

Calls - sold 33,300 913 - - - - - - - -

Total Committed 81,225 54,000

Puts - bought 33,300 514 - - - - - - - -

Red Back Mining

Total Committed - - - - - - - - - -

Richmont

Commitments - - - - - - - - - -

Royal Gold

Commitments - - - - - - - - - -

Rusoro Mining Commitments - - - - - - - - - -

SEMAFO

Fixed Forward 36,000 375 35,000 375 - - - - - -

Forward purchases 32,000 942 12,000 1,035


Sherwood Copper Flat Forward 9,815 653 14,424 653 14,025 653 13,520 718 - -

Total Committed 9,815 0 14,424 14,025 13,520

Silver Wheaton

Commitments - - - - - - - - -

Continued overleaf



2008 $/oz 2009 $/oz 2010 $/oz 2011 $/oz 2012+ $/oz

Teck Cominco

Forward sales 33,000 350 43,000 350 - - - - - -


Uruguay Mineral Exploration

Commitments - - - - - - - - - -

Wesdome Gold Mines

Commitments - - - - - - - - - -

Western Goldfields

Forward sales 33,000 801 66,000 801 66,000 801 66,000 801 198,000 1068

Total Committed 33,000 66,000 66,000 66,000 198,000

Yamana Gold

Commitments - - - - - - - - - -

Yukon-Nevada Gold

Forward sales 36,600 814 - - - - - - - -

Total Committed 36,600

COMMITTED BREAKDOWN Total Forwards 6,941,311 464,912 327,258 477,320 203,400Total Calls sold 268,526 143,984 116,491 48,750 31,848Total Calls bought 35,239 33,200 25,033 - -Total Other Products 40,500 54,000 - - -Total Committed 7,207,098 629,696 418,721 526,070 235,248Total Puts bought 259,089 199,354 164,660 135,276 58,974Total Puts sold - - - - -



Q1 08 breakdown by maturity, Africa (oz)

2008 $/oz 2009 $/oz 2010 $/oz 2011 $/oz 2012+ $/oz

AngloGold Ashanti

US Dollar Gold

Forward sales 550,196 309 698,893 316 464,964 347 415,741 397 781,520 418

Forward sales (long) (651,181) 846 - - - - - - - -

Calls-sold 1,332,166 506 1,477,327 498 1,183,276 492 1,266,257 517 2,069,994 611

Calls-bought 226,598 428 - - - - - - - -

Total 1,004,582 2,176,220 - 1,648,240 - 1,681,999 - 2,851,514 -

Puts-sold 563,635 810 120,501 530 60,508 410 60,508 420 181,523 440

Rand Gold - - - - - - - -

Forward sales (15,014) 5,013 29,997 3,618 - - - - - -

Calls-sold 96,002 6,285 96,002 6,735 96,002 7,185 - -

Total (15,014) 125,999 - 96,002 - 96,002 - - -

Australian Dollar Gold

Forward sales 349,993 858 108,991 644 99,989 685 - - - -

Calls-sold 49,994 948 - - - - - - - -

Calls-bought 99,989 680 39,996 694 99,989 712 - - - -

Total 299,999 68,996 - - - - - - -

Puts-sold 210,009 972 - - - - - - - -

Total Committed 1,289,567 2,371,214 1,744,242 1,778,001 2,851,514

Central African Gold

Commitments - - - - - - - - - -

DRDGold

Commitments - - - - - - - - - -

Gold Fields

Commitments - - - - - - - - - -

Harmony

Commitments - - - - - - - - - -

Metorex

Rand gold

Flat forwards 3,215 3,421 9,000 3,452 - - - - - -


Pamodzi Gold

Contingent forwards 25,500 350 30,000 350 30,000 350 27,000 350 12,000 350

Total Committed 25,500 30,000 30,000 27,000 12,000Puts - bought 28,985 290 - - - - - - - -

Randgold Resources

US Dollar Gold

Forward sales 62,997 429 84,996 435 41,748 500 - - - -

Total Committed 62,997 84,996 41,748

Simmer & Jack Mines

Commitments - - - - - - - - - -

COMMITTED BREAKDOWN Total Forwards 326,080 961,879 636,701 442,741 793,520Total Calls sold 1,382,161 1,573,329 1,279,278 1,362,259 2,069,994Total Calls bought 326,587 39,996 99,989 - -Total Other Products Total Committed 1,381,654 2,495,212 1,815,990 1,805,001 2,863,514Total Puts bought 28,985 - - - -Total Puts sold 773,643 120,501 60,508 60,508 181,523



Q1 08 breakdown by maturity, Australia (oz)

2008 $/oz 2009 $/oz 2010 $/oz 2011 $/oz 2012+ $/oz

Allied Gold AU Dollar Gold Calls sold 25,698 700 26,640 700 26,640 700 13,200 700Total Committed 25,698 26,640 26,640 13,200Puts - bought 42,830 700 44,400 700 44,400 700 22,000 700

Antam Commitments - - - - - - - - - -

Austindo Resources Forward sales 17,173 651 48,615 651 48,615 651 43,595 658 Total Committed 17,173 48,615 48,615 43,595 - -

Beaconsfield Gold Commitments - - - - - - - - - -

Crescent Gold AU Dollar Gold Forward sales 43,479 860 13,596 860 - - - -Calls � bought 43,479 860 13,596 860 Gold loans 25,478 785 Total Committed 25,478 0 0 Puts - bought 7,056 850 28,224 850 9,408 850 - - - -

Dominion Mining AU Dollar Gold Forward sales 38,000 906 - - - - - - - -Total committed 38,000

Dragon Mining Forward sales 9,250 414 - - - - - - - -Total committed 9,250

Equigold AU Dollar Gold Flat Forward sales 30,976 600 61,356 600 56,596 600 13,184 600 - -Spot deferreds 24,362 995 - - - - - - - -Calls - sold - - - - - - 45,000 700 106,980 700Total Committed 55,338 61,356 56,596 58,184 106,980 Heemskirk Consolidated AU Dollar Gold Puts � bought 16,000 900 - - - - - - - -

Intrepid Mines

AU Dollar Gold

Forward sales 33,310 627 - - - - - - - -

Total Committed 33,310 - - - - - - - - -

Kingsgate Consolidated Total Committed - - - - - - - - - -

Lihir Gold Commitments - - - - - - - - - -

Lion Selection Trust AU Dollar Gold - - - - - - - - - -Commitments - - - - - - - - - -Puts - bought 26,400 664 26,700 684 - - - - - -

Newcrest Mining Forward sales - - - - - - - - 209,000 386Total Committed 209,000 Puts - bought 125,000 800 500,000 800 500,000 800 500,000 800 500,000 800

Continued overleaf


Q1 08 breakdown by maturity, Australia (oz)

2008 $/oz 2009 $/oz 2010 $/oz 2011 $/oz 2012+ $/oz

Norseman Gold

Commitments - - - - - - - - - -

North Queensland Metals Commitments - - - - - - - - - -

Norton Goldfields AU Dollar Gold Forward sales 17,500 875 70,000 875 70,000 875 70,000 875 70,000 875Total Committed 17,500 70,000 70,000 70,000 70,000Puts - bought 25,000 760 60,000 760 60,000 760 - - - -

OceanaGold NZ Dollar Gold Forward sales 113,712 773 106,236 773 99,840 773 - - - -Calls - sold - - - - 104,024 1,062 - - - -Total Committed 113,712 106,236 203,864 Puts - bought 81,042 1,000 85,416 1,000 82,080 1,000 - - - -

Ok Tedi US Dollar Gold Forward sales 15,489 372 - - 16,400 748 16,400 775 24,600 810Total Committed 15,489 16,400 16,400 24,600 810

Oxiana Gold Commitments - - - - - - - - - -Puts - bought 47,025 370 29,500 370 - - - - - -

Pan Australian Resources AU Dollar Gold Forward sales - - 14,000 749 14,000 775 14,000 802 28,000 844Total Committed 14,000 14,000 14,000 28,000 844Puts - bought 15,425 700 20,566 700 20,566 700 20,566 700 41,134 700

Perseverance AU Dollar Gold Total committed 48,312 56,782 56,782

Resolute AU Dollar Gold Forward sales 46,667 697 84,333 697 88,334 699 - - - -Puts - bought 40,000 665 55,000 673 - - - - - -US Dollar Gold Forward sales 26,050 545 99,750 540 - - - - - -Puts - bought 30,000 441 30,000 446 - - - - - -Total Committed 72,717 184,083 88,334 - - - - -

Sino Mining Fixed forwards 55,161 524 64,612 525 64,612 525 64,612 525 35,789 530Total Committed 55,161 64,612 64,612 64,612 35,789Puts - bought 55,638 400 74,178 400 - - - - - -

St. Barbara Commitments - - - - - - - - - -Puts - bought 42,200 760 121,090 700 100,910 700 163,911 700 942,489 700

Tanami

Commitments - - - - - - - - - -

Troy Resources

Commitments - - - - - - - - - -

COMMITTED BREAKDOWN Total Forwards 453,128 592,381 471,993 221,791 367,389Total Calls sold - 25,698 130,664 71,640 120,180Total Calls bought - 43,479 13,596 - -Total Other Products - - - - -Total Committed 453,128 574,600 589,061 293,431 487,569Total Puts bought 484,575 1,073,504 817,364 728,877 1,505,623Total Puts sold - - - - -



Q1 08 breakdown by maturity, Eurasia (oz)

2008 $/oz 2009 $/oz 2010 $/oz 2011 $/oz 2012+ $/oz

Avocet Mining Calls Sold - - - - 120,000 755 70,000 755 - -Total Committed 120,000 70,000 Puts - bought 90,000 600 120,000 600 120,000 600 70,000 600 - -

Boliden Forward sales 68,060 723 102,000 702 - - - - - -Total Committed 68,0600 102,000

Crew Gold

Commitments - - - - - - - - - -

European Minerals Flat Forward 43,500 574 68,000 574 71,000 574 61,000 574 185,000 574Total commitments 43,500 68,000 71,000 61,000 185,000

Highland Gold

Commitments - - - - - - - - - -

Hochschild

Commitments - - - - - - - - - -

KazakhGold

Commitments - - - - - - - - - -

Kazakhmys

Commitments - - - - - - - - - -

Oxus Gold

Commitments - - - - - - - - - -

Peter Hambro Mining

Commitments - - - - - - - - - -

Polymetal

Commitments - - - - - - - - - -

Polyus Gold

Commitments - - - - - - - - - -

Rio Tinto

Commitments - - - - - - - - - -

Serabi Mining

Commitments - - - - - - - - - -

Xstrata US Dollar Gold Calls sold 94,500 594 150,000 640 - - - - - -Total 94,500 - 150,000 - - - - - - -Puts - bought 70,875 475 150,000 495 - - - - - AU Denominated stated in US$ Forward sales 46,275 648 87,800 655 - - - - -Total Committed 157,650 237,800

Zijin Mining Yuan Gold ($) Commitments - - -

COMMITTED BREAKDOWN Total Forwards 174,710 257,800 71,000 61,000 185,000Total Calls sold 94,500 150,000 120,000 70,000 -Total Calls bought - - - - -Total Other Products - - - - -Total Committed 269,210 407,800 191,000 131,000 185,000Total Puts bought 184,500 270,000 120,000 70,000 -Total Puts sold - - - - -



Disclaimer and copyright The information and opinions in this report were prepared by Virtual Metals Research and Consulting, a subsidiary of VM Group, and Haliburton Mineral Services (hereafter �Virtual Metals/Haliburton Mineral Services�). Virtual Metals/Haliburton Mineral Services have made all reasonable efforts to ensure that all information provided in this report is accurate and reliable at the time of inclusion, however, there may be inadvertent and occasional errors and lack of accuracy or correctness, for which Virtual Metals/Haliburton Mineral Services cannot be held responsible. Virtual Metals/Haliburton Mineral Services and its employees have no obligation to inform the reader when opinions and information contained in this report change.

Virtual Metals/Haliburton Mineral Services make no representation or warranty, express or implicit, as to the accuracy or completeness of contents of this report. This report is not and cannot be construed as an offer to sell, buy or trade any securities, equities, commodities or related derivative products and the report in no way offers investment advice. Therefore Virtual Metals/Haliburton Mineral Services and its employees accept no liability for any direct, special, indirect, or consequential losses or damages, or any other losses or damages of whatsoever kind, resulting from whatever cause through the use of any information obtained either directly or indirectly from this report.

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About the report and methodology Methodology

Dehedging has been an important positive feature of the gold market over the last six years. Global gold mining companies, which had sold forward more than 100 Moz of their output by 2001, have steadily reduced that to less than 30 Moz today.

The VM Group and Haliburton Mineral Services, whose collective experience in hedging research goes back almost twenty years, have tracked these developments in detail since 2003. We aim to be both comprehensive � the report contains full details of the hedging programmes of 113 companies� and insightful into the trends in global gold hedging.

The gold bull market has reminded participants of gold�s unique status among commodities as a financial asset, and the Fortis Hedging and Financial Gold report will also provide detailed analysis of other financial gold transactions, such as central bank activity, investment, speculation and lending.

The results and details of this quarterly research will be made available to all interested parties on a complimentary basis in the hope that our readers will not only enjoy the read but will benefit from our shared gathering of intelligence. We will also make the data available in Microsoft Excel format.

Methodology There are two distinct measures of gold hedge books used in this document, committed ounces and delta-adjusted. Committed Ounces is a simple summation of all mining company hedge commitments, which include forwards and call options (but not put options, which are not a commitment). For example, if a mining company has sold 200,000 ounces of call options, bought 100,000 oz of put options, and sold 150,000 ounces of forward then their commitments total 350,000 ounces. This is a good guide to the extent and size of company and global hedging.

One of the important features of gold hedging, however, is its impact on the spot market. Bullion banks hedge their transactions with mining companies by using borrowed central bank gold which is sold into the spot market.

The market impact of a forward sale is straightforwardly the number of ounces involved, i.e. a 100,000 forward sale will see 100,000 oz gold sold into the spot market.

The market impact of options, however depend on their likelihood of being exercised, which in turn depends on the gold price (and other factors such as time to maturity, price volatility, and interest and lease rates). The delta-adjustment essentially adjusts for the probability an option will be exercised.

To understand the delta concept in a practical example consider the following: A mining company at December 31, 2007 sells 100,000 ounces of one year call option exercisable on December 31, 2008 at $900. This gives the buyer the right (but not the obligation) to purchase 100,000 oz of gold from the mining company at $900/oz at year end 2008. Given that the price of gold was only $836/oz when the contract was sold the probability of its being exercised was certainly less than one. In fact based on volatility, time to expiry etc, the delta-adjustment suggests there is a 47% chance of exercise. Thus our delta-adjusted total would include 47,000 oz of calls. Now carry the example forward to say June 30, 2008 and hypothesize that gold is trading at $750. The time to expiry is now only six months and the market price is well below the option exercise price. The calculated delta is 14%, and so our delta-adjusted total would include just 14,000 oz of calls.


About VM Group and Haliburton Mineral Services VM Group 85 Albany Street London NW1 4BT

Tel: +44 20 7487 3600 Fax: +44 (0) 870 051 2261

VM Group is a commodities research consultancy. The VM Group, which through its subsidiary Virtual Metals covers precious and base metals, comprises a uniquely skilled team, highly experienced in the analysis of the fundamentals of commodities and their geopolitical impact and contexts.

VM Group work excels in macro-economic analysis, the generation of supply and demand scenarios, costs analysis, derivative research and price forecasting. Confidentiality, experience and independence are key elements of such advisory roles. Our aim is to assist those in need of external expertise, as well as those who wish to supplement their own in-house resources. With our extensive international contacts, we are able to broaden our services through links with experienced associates in related fields worldwide.

To see further how we can meet your research and consulting requirements, please email [email protected] or call or fax on the numbers above.

Haliburton Mineral Services 46 Hemford Crescent Toronto, Ontario Canada M3B 2S5 Tel: +1 416 447 7524 Fax: +1 416 447 7750

Founded in 2002 Haliburton Mineral Services is a private mining research and advisory business based in Toronto, Canada. The company�s President, Ted Reeve, has a background as a mining analyst and has published quarterly gold producer hedge research since 1990.


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