Vault Minerals Accelerates Exit from Gold Hedging, Unlocking Price Upside
Vault Minerals has settled all its gold forward sales contracts for the second half of FY26 six months early, boosting its exposure to rising gold prices and reinforcing its shareholder value strategy.
- Early settlement of H2 FY26 gold hedges totaling 47,319 ounces
- Settlement cost of A$172.7 million fully funded from cash reserves
- Elimination of all H2 FY26 hedging with no dilution to shareholders
- Retention of minimal hedges for Q1 FY27 with potential acceleration
- Ongoing share buy-back program signals confidence in growth outlook
Early Hedge Settlement Signals Strategic Shift
Vault Minerals Limited (ASX, VAU) has taken a decisive step to enhance its exposure to gold price movements by settling all its forward sales contracts for the second half of fiscal year 2026 ahead of schedule. This proactive move, completed six months earlier than planned, effectively removes the company’s hedging obligations for that period, positioning Vault to benefit fully from any upward swings in gold prices.
Financial Strength Enables Opportunistic Capital Management
The early settlement involved 47,319 ounces of gold at an average delivery price of A$2,797 per ounce, costing Vault A$172.7 million. Importantly, this was funded entirely from the company’s robust cash reserves of A$703 million as of September 30, 2025, avoiding any shareholder dilution. This financial flexibility underscores Vault’s strong balance sheet and its ability to manage capital in a way that maximizes shareholder returns.
Maintaining Flexibility with Minimal Remaining Hedges
While the company has cleared its hedging commitments for the latter half of FY26, it retains a small hedge position of 10,223 ounces scheduled for delivery in the first quarter of FY27. Vault has indicated it may choose to accelerate these deliveries opportunistically, further enhancing its exposure to spot gold prices. These remaining hedges represent a mere 2.7% of expected FY27 production and only 0.3% of ore reserves, signaling a near-unhedged profile moving forward.
Growth Outlook and Shareholder Rewards
The timing of this hedge closure aligns with Vault’s forecasted organic production growth, targeting 370,000 to 400,000 ounces annually over the next three years. The company’s strong free cash flow generation not only supports reinvestment in growth projects but also underpins its ongoing capital management initiatives, including a share buy-back program initiated in September 2025. This buy-back, allowing up to 10% of ordinary shares to be repurchased, reflects Vault’s confidence in its operational outlook and commitment to delivering accretive value to shareholders.
Strategic Implications for Investors
By accelerating its exit from hedging, Vault Minerals is effectively increasing its sensitivity to gold price fluctuations, which could amplify earnings volatility but also enhance upside potential in a rising gold market. The company’s strong liquidity position and disciplined capital management provide a solid foundation for navigating this transition while rewarding shareholders through buy-backs and growth investments.
Bottom Line?
Vault’s early hedge exit marks a bold pivot to gold price exposure, setting the stage for potential upside amid production growth.
Questions in the middle?
- Will Vault accelerate delivery of Q1 FY27 hedges to further increase spot price exposure?
- How will the early hedge settlement impact Vault’s earnings volatility in a fluctuating gold market?
- What are the potential effects of the ongoing share buy-back on Vault’s share price and investor returns?