Pan American Silver backs away from hedges
Sept 10 (Reuters) - Pan American Silver Corp will close out its silver and gold hedges before Dec. 31, the miner said on Tuesday, indicating the forward sales announced in August were not part of a long-term shift in strategy.
Chief Executive Officer Geoff Burns said in a statement that the hedges were a short-term effort to reduce risk at a time of "extreme" price volatility.
"However, our action may have inadvertently sent the wrong message to the market and to our shareholders about our hedging philosophy and our view of the long-term prospects for silver and gold," he said.
Burns said the Vancouver-based company was now more optimistic about the short-term prospects for precious metals, and it remained committed to providing maximum exposure to the price of silver.
Gold and silver prices have fallen dramatically this year, with both metals hitting nearly three-year lows in June. That has put pressure on miners to find ways to boost profitability.
In August, Pan American said it would hedge part of its production in an effort to offset the risk of further declines in precious metal prices.
The company, which operates numerous mines in Mexico, Peru, Argentina and Bolivia, plans to close out the forward contracts through accelerated metal delivery and repurchase.
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