UBS-Australian Gold Whos still sitting on the hedge？-20251201

Hedgebooks shrinking

Hedgebooks have continued to roll off through 2025 and we are continuing to seecorporates pay down volumes in advance in order to maximise their exposure to priceupside amid ongoing gold tailwinds. Noting we expect gold prices to rise further (US$4,750/oz in 2H26e), NST and BGL remain the most hedged across our coverage (>25%production hedged remaining in FY26 & FY27), whilst we expect VAU, RMS and PRU toroll off their positions by FY27. We remain overweight the sector and Buy-rated onNEM, NST, GMD, PRU, RMS, RRL, VAU and BGL and retain our sell rating on EVN.

How will corporates approach hedging in CY26?

Broadly, those corporates with hedgebooks are prioritising paying them down with'puts', a preferred option for some. Last week, VAU announced that it had bought backits 2H-FY26 hedges totalling 47,319oz at A$2,797/oz for A$173m (a value-accretivemove based on our gold forecast) and we note BGL has been using excess cash toreduce its liability. In July, NST announced it had discontinued its hedging policy (link).Across the sector, we see very healthy cash margins even with costs/capex escalation(sector FY26e AISC ~A$2,500/oz) and with our forecast for A$7,300/oz from next half.

Mid cap names with growth are most attractive

Key gold picks are NST, GMD, PRU and VAU. We make minor modelling adjustments forVAU (upgraded PT 2% following the hedge payment), with no changes to any other PTsacross our coverage.