Barrick Gold said after the close today that it plans to raise up to US$3.5B through a share offering that will eliminate most of its remaining Gold hedging contracts, giving the world’s biggest gold producer full exposure to changes in the precious metal’s market price. The Toronto-based company announced the move hours after Gold climbed above US$1,000oz for the first time since March 2008. Investors’ renewed interest has been ascribed to weakness in the US$ and continuing low interest rates that have dampened returns on holding cash and other liquid investments. Barrick explained its move by pointing to an “increasingly positive” outlook for Gold. It added that it expects “global monetary and fiscal re-inflation will be necessary for years to come, resulting in an increased risk of higher inflation and a future negative impact on the value of global currencies”, also it cited a continuing robust balance between the metal’s supply and demand. A group of banks, led by RBC Capital Markets, Morgan Stanley, JP Morgan and Scotia Capital, has agreed to buy the newly-issued shares at US$36.95 each, diluting Barrick’s existing share capital by about 8.3%. Barrick shares fell almost 2% to US$39.30 on the day.
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