The J.P. Morgan June Quarter 2002 Review, released in late August, reports that hedging by Australian-based gold companies dropped 1.75 million oz. to 22.6 million oz. as of June 2002. The decline of 7.8% from the previous quarter is the sixth-consecutive quarterly decline.
Furthermore, all Australian-based producers reduced their hedge books in the June quarter.
Tamara Stevens, chief executive of the Australian Gold Council, says the actions taken by gold producers to reduce their hedge books demonstrate confidence in the gold sector.
“Hedge reduction in each of the previous ten quarters, with the exception of December 2000, has helped fuel investor interest in the gold industry and is tipped to continue on the back of industry consolidation and reduced exploration expenditure,” she says.
Australian gold exploration spending has dropped by more than 50% during the past five years and has led to forecasts of declining gold production in coming years.
The council has asked the Australian government to help it boost gold exploration spending through the introduction of tax incentives for exploration investment.
“These incentives have been established with great success in Canada, where they have helped reinvigorate the Canadian exploration sector and been credited with many new mineral discoveries,” Stevens says.
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