Barrick Gold Corp. took a $5.7 billion charge in the third quarter stemming from the Toronto-based gold producer's decision to eliminate all its gold hedges.

The hedges are futures contracts that commit Barrick to sell the metal at predetermined prices.

While the contracts guarantee certain cash flows, they often commit Barrick to sell gold at prices lower than the current spot price. Barrick also has said it believes holding the hedges hurt its appeal among investors and weighed on its share price.

Aaron Regent, Barrick's president and chief executive officer, discussed the decision with analysts Thursday during a conference call.

QUESTION: Why didn't you reduce the fixed hedges more so than the floating hedges?

ANSWER: "I think they're two different animals. The floating hedges really are, as you know, just a crystallized liability; it's just money that we owe the banks.

"And so the timing of that just represents the, I guess the best opportunity that we have to pay down the banks ... in the most efficient way, and so that's really just a cash settlement.

"So there are a number of factors that go into our decision ... so that's a separate issue.

"On the fixed book, that really depends on when we go into the market and buy the gold.

"So that's market-sensitive and we want to be opportunistic in the marketplace when we buy the gold back, so that really depends on when we buy the gold, the fixed book, whereas the floating book is strictly just a ... payment obligation that we have options on."

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