Newcrest Raises $1.33 Billion in Institutional Offer


Australia's Newcrest Mining said on Monday it had raised A$1.586 billion (US$1.33 billion) in an institutional entitlement offer to close out its gold hedge book, sending its shares up as much as 12.5%.

About 96.5% of eligible institutional shareholders took entitlements, indicating strong support for the restructuring, Newcrest said in a statement. The offer price for about 91.1 million in new shares was A$17.40.

The gold miner also said it expected to raise a further A$456 million in a retail entitlement offer which opens on Monday. 

Its shares were up as much as 12.5%, having peaked at A$12.75 after trading resumed on Monday following the fund raising.

Newcrest is raising money to exit its gold price hedges -- where a price is fixed for gold that has yet to be mined -- to give it more exposure to rising bullion prices on the spot market.

Newcrest Managing Director Ian Smith said last week the company over the last few weeks had purchased 2.3 million ounces of gold on the open market at an average price of A$831 an ounce to fund a plan to unwind a massive out-of-the-money hedge book.

Newcrest is the latest in a line of gold miners globally reducing their hedges, including Barrick Gold, Newmont Mining, Lihir Gold, Harmony Gold, AngloGold Ashanti and Buenaventura.

Unwinding the hedges will meet demands by Newcrest's shareholders for the company to become fully exposed to market prices, which have mostly been on the up for the last six years.