Pan American Silver to Close Silver, Gold Hedge Contracts

Mineweb reported that after hedging 20 and 18 percent of silver and gold production, respectively, for 12 months, Pan American Silver Corp. (TSX:PAA,NASDAQ:PAAS) now plans to close out its outstanding hedge contracts. It believes its actions may have “sent the wrong message to the market and to the company’s shareholders.”

As quoted in the market news:

In a news release issued Tuesday, Pan American CEO Geoff Burns said, ‘We decided to put the hedges in place as a short term tactical response, to reduce risk during 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.’

‘We have become more comfortable that we will realize the benefits of our cost reduction initiatives and are considerably more optimistic about the short term prospects for both silver and gold, therefore negating the conditions that initially lead us to enter into the hedges,’ he stressed. ‘More importantly, we need to unequivocally reassure our shareholders that the company’s fundamental philosophy is still that of not hedging our precious metal production, thereby providing maximum exposure to the price of silver.’

Click here to read the full Mineweb report.