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Westgold (ASX:WGX) changes hedging arrangements to benefit from higher gold price
  • Westgold (WGX) has restructured its gold hedging arrangements to increase the company's opportunity to capitalise on higher gold prices
  • The new hedge position is now 192,000 ounces at an average price of $2082 per ounce
  • The new hedge book will see Westgold deliver 6000 ounces of gold per month from September 2020 to December 2021
  • This will give the company an opportunity to add a further $24 million in revenue for the 2021 financial year
  • At market close, Westgold is down 1.35 per cent and is trading for $2.19 per share

Westgold (WGX) has restructured its gold hedging arrangements to increase the company's opportunity to capitalise on higher gold prices.

Hedging is when a gold producer forward sells future fold production at a fixed price to lock in guaranteed revenue, rather than the spot price. This is a common way for gold producers to protect themselves against a slump in the price of the precious metal.

The revised hedge position is now at 192,000 ounces at an average price of 2082 per ounce, which is equivalent to only 7.5 per cent of current ore reserves.

Prior to the change, Westgold's hedge book schedule through to the end of February 2022 and was 10,000 ounces per month.

"Under an agreement reached with Citibank N.A., this schedule has been revised
to enable Westgold to take advantage of the current higher gold prices in the short term," the company explained.

The new hedge book will see Westgold deliver 6000 ounces of gold per month from September 2020 to December 2021. This will give the company an opportunity to add a further $24 million in revenue for the 2021 financial year compared to its previous hedge book arrangement.

From January 2021 to December 2022, the revised schedule will see Westgold increase its hedging commitments to 8000 ounces at $2082.60 per ounce.

At market close, Westgold is down 1.35 per cent and is trading for $2.19 per share.


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