Denver-based Newmont Mining Corp. said Thursday it will close its merchant banking segment and has eliminated 1.85 million ounces in forward gold sales.
Newmont said the merchant banking unit, which acquires investments outside of the company’s core gold-mining operations, may be sold in a public offering or a private sale.
The forward gold sales, also known as hedging, were contracted in 1999, when gold prices were less than $300 an ounce. With the price now at $651, the hedged sales no longer are profitable.
“With gold now at $650 and expected to go higher, we see value in unwinding these hedges and capitalizing on high gold prices,” said Newmont spokesman Omar Jabara.
Newmont said it will report a pretax loss of $531 million on the early settlement of the hedged contracts.
The company also said it expects to incur a noncash impairment charge of about $1.7 billion related to the discontinued merchant banking unit.
Staff writer Steve Raabe can be reached at 303-954-1948 or sraabe@denverpost.com.
