Gold miner Avocet Mining Plc (AVM.L: Quote) hopes to use cash from selling its southeast Asian mines to reduce its hedge, which forces it to sell gold at well below the market price.
“The number one issue is our hedge,” Interim Chief Executive Brett Richards told the RBC African Gold conference on Tuesday.
Avocet had hedged — agreeing to sell in advance at fixed prices — 400,000 ounces at $970 per ounce. The gold price XAU= touched a record on Monday of about $1,264 per ounce.
Various options were being examined, but it may cost $30-$50 million to eliminate the first two years of the hedge, which runs for 54 months, Richards said.
The firm would also use cash to cut its net debt of $43 million, he added.
Avocet denied on June 10 it had sold its mines in Indonesia and Malaysia for $250 million, but said talks were ongoing.
It wants to sell its Asian mines and expand in West Africa, where it has a mine in Burkina Faso.