RE: RE: RE: RE: RE: Q2 out Note 12 formated for Stockhouse to make them more understandable. Unrealized mark-to-market changes in value are much greater then actual settlements.
12. Financial instruments
Pursuant to the terms of the EVBC Loan, the Company entered into a number of gold, copper, and Euro/US dollar forward contracts (economic hedges) relating to a portion of the expected gold and copper production from the EVBC Mine and relating to operating costs of Kinbauri incurred in Euros, while revenue is earned in US dollars.
Changes in the fair value of financial instruments are recognized through earnings. The mark-to-market fair value of all contracts is based on independently provided market rates and determined using standard valuation techniques, including the impact of counterparty risk.
The gain resulting from the mark-to-market fair valuation of these contracts was $7,948 and $21,247 for the three and six months ended March 31, 2013 (losses for the three and six months ended March 31, 2012 of $15,358 and $17,145 respectively) and related deferred income tax expense was $2,384 and $6,374 respectively (and tax recoveries for the three and six months ended March 31, 2012 of $4,607 and $5,144 respectively).
The Company realized losses for the cash settlement of contracts that matured during the three and six months ended March 31, 2013 of $1,403 and $2,954 respectively (three and six months ended March 31, 2012 of $1,909 and $2,078 respectively) and related deferred income tax recoveries of $421 and $886 respectively (for the three and six months ended March 31, 2012 of $573 and $623 respectively).
For the three months ended: March 31, 2013 March 31, 2012
Change in unrealized fair value during the period (gain) loss $ (7,948) $ 15,358
Realized loss on cash settlements of financial instruments 1,403 1,909
Financial instrument (gain) loss $ (6,545) $ 17,267
For the six months ended: March 31, 2013 March 31, 2012
Change in unrealized fair value during the period (gain) loss $ (21,247) $ 17,145
Realized loss on cash settlements of financial instruments 2,954 2,078
Financial instrument (gain) loss $ (18,293) $ 19,223