Don''t despair, for even Richard Russell is coming around to our side

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NEW YORK, June 11 (Reuters) -- The chief executive of
world No. 1 gold miner Newmont Mining Corp. said
Wednesday the company's controversial Australian gold
hedge book had shrunk close to zero after it assumed of
most of the unprofitable hedges of its Yandal operations
from its bankers.

quot;You can't quite say 'zero,' but we're getting close. It's
zero for all intents and purposes, in my mind,quot; said
Newmont CEO Wayne Murdy, in response to a question
from Reuters after delivering a speech at a conference.

Newmont Mining last week announced a $77 million
payout to six of seven counterparties to pay 50 cents
on the dollar for the money-losing hedge positions of
Newmont Yandal Operations Ltd. (Yandal), acquired in
Newmont's 2002 merger with Normandy Mining and
Canada's Franco-Nevada Corp.

Newmont has maintained an anti-hedging philosophy
and has been unwinding and delivering into the
Normandy hedges steadily as market conditions
allowed.

Hedging with options and forward sales can protect
a company from falling gold prices, but the strategy
backfired on some producers during the rally in gold
prices since early last year. The strength of gold
priced in Australian-dollar terms put the Normandy
hedges under water.

Newmont inherited about 10 million ounces of gold
sales and derivatives commitments from Normandy.

At the end of the first quarter, Newmont said the Aussie
hedge book stood at about 3.7 million ounces
committed through forward sales and 1.4 million
ounces of noncommitted ounces related to derivatives
positions.

Overhedging was disastrous for some mining companies
in 1999, when gold prices began to recover from 20-year
lows.Murdy blamed the bankers for overextending credit
to mining companies, many of which did not understand
the sophisticated financial products or the risk they were
assuming.

It is difficult for companies to know how reserves will pan
out over time and risky to hedge prices on estimated
production years in the future, he said.quot;I think the bullion
banks have just gotten carried away and there were
deals done on top of deals, super-exotic instruments
that frankly very few people understand,quot; Murdy said.

quot;It's a tool and it can be used to a degree. But when
people start going out so far, I think they are kidding
themselves. I don't think anybody has the vision to go
out five years or 10 years,quot; he said.