TORONTO (miningweekly.com) – There is still no sign of producers considering adding new gold hedges, although some are looking at more creative options to fund projects, such as gold-streaming agreements, respected consultancy GFMS said on Monday.

Hedging allows companies to sell their gold forward, at predetermined prices. It ensures that a certain return for production, but can limit the benefits they see from higher prices.

With prices at record levels, gold miners have been steadily reducing their forward sales for the most of the last decade, often in response in pressure from shareholders who want to see greater exposure to the market.

“We have not observed a shift in the attitudes of producers towards hedging, and these views remain firmly in line with the anti-hedging sentiment of prospective gold equity investors,” GFMS said in its 'Q4 Global Hedge Book Analysis'.

“Although we expect that at some point in the future, mining companies will adopt a more flexible approach towards the practice of hedging, in the meantime, we are aware of the growing prevalence of alternative, creative sources of financing.

“Gold-stream agreements, such as those facilitated by the likes of Gold Wheaton, and the recent private placement of gold participating bonds closed by Atna Resources to raise finance for development of its Reward property are two examples.”

Together with the hedging of by-product metals like silver and copper, these new options can eliminate the need for extensive gold hedging in many cases of project financing, GFMS said.

While there is no significant new gold hedging forecast, the rate of dehedging is also expected to slow, simply because of the reduced size of the remaining global hedge book.

During the fourth quarter of 2009, net producer dehedging amounted to four-million ounces, which left the global hedge book at just 7,58-million ounces at the end of the year, GFMS said in its report.

“The size of the global book at end-2009 was a mere 8% of its peak seen in 1999, when it stood at just under 100-million ounces.

“With dehedging for the full-year 2009 recorded at 8,16-million ounces, and the outstanding book at end-December  at only 7,58-million ounces, it is quite clear that the volume of ongoing dehedging will diminish again in 2010, for the third consecutive year.”

Much of the fourth-quarter activity was related to Barrick Gold's decision to close out its gold fixed-price forward sales.

This year, AngloGold Ashanti is expected to be the main player, as far as dehedging is concerned, while Toronto-based Kinross Gold is also a candidate.