Miners seek fresh financing options, backed by resurgent gold

Tue Mar 8, 2016 8:57am EST
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* Gold has risen 20 percent so far in 2016

* Companies want to guard against gold retreat

* Also seek protection against currency volatility

By Clara Denina

LONDON, March 8 (Reuters) - This year's double-digit gold rally is opening opportunities for smaller miners to sell future output or tap markets for finance, aimed at paying back debt and strengthening balance sheets.

Miners have been hit hard by plummeting commodities prices, forcing them to cut jobs, capital expenditure and dividends.

However, bullion has risen nearly 20 percent so far in 2016 to a 13-month high around $1,280 an ounce on concern about financial and economic turmoil and a weaker dollar as markets adjust to the prospect of deferred U.S. interest rate rises.

Selling forward, or hedging, is used to lock in revenue at pre-determined rates and offers protection from falling prices.

RBC equity analyst Tyler Broda said by hedging or raising capital, companies are guarding not only against a possible gold price retreat but also volatility in local currencies against the dollar, in which the metal is priced.   Continued...