RE: It still be a dog!! :o)Me thinks wee'se in the money concerning the currency hedge.
The interest hedge, I am unsure of.
Please correct if I am wrong.
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1.87700 +0.01450 +0.78% | | | | Previous Close | 1.86250 | Bid | 1.87700 | | Open | 1.86250 | Ask | 1.88700 | | Day's High | 1.88000 | | | | Day's Low | 1.85600 | | | | /BRLUSD One Year Chart  |
CURRENCY HEDGING
As at December 31, 2008, the Company held forward contracts to hedge against the risk of an increase in the value of the
Real versus the United States Dollar with respect to a portion of the expected Real expenditures. These contracts fix the rate
of exchange for the sale of approximately 398.5 million Reais at an average exchange rate of 2.2545 Real to the United States
Dollar. The Company has effectively hedged approximately 70% of its Real based operating expenditures at its Brazilian mines.
The notional amounts of these forward contracts have been designated against forecast Real denominated expenditures as
a hedge against the variability of the United States Dollar amount of those expenditures caused by changes in the currency
exchange rates for 2009 through to April 2011. A total of 207.1 millionReais are hedged for 2009 and approximately 191.4 million
for 2010 through April 2011.
The currency hedge has been accounted for as a cash flow hedge with the effective portion of $46.5 million for the twelve
month period ended December 31, 2008 credited to other comprehensive income and the ineffective portion of $13.6 million
expensed in 2008.
The following table summarizes the details of the currency hedging program as at December 31, 2008:
(quantities in thousands)
Jacobina São Francisco São Vicente
Brazilian Brazilian Brazilian
Real Real Real Weighted
Year of Notional Contract Notional Contract Notional Average
Settlement Amount Fixed Rate Amount Fixed Rate Amount Contract Rate
2009 65,700 2.3264 59,818 2.1359 25,576 2.3980
2010 53,266 2.4395 60,000 1.9915 22,808 2.3980
2011 – – 20,000 1.9650 – –
118,966 2.3757 139,818 2.0467 48,384 2.3980
Fazenda Brasileiro Chapada Total
Brazilian Brazilian Brazilian Market
Real Real Real Weighted rate as at
Year of Notional Contract Notional Contract Notional Average December 31,
Settlement Amount Fixed Rate Amount Fixed Rate Amount Contract Rate 2008
2009 41,040 2.3900 14,984 2.3980 207,118 2.2928 2.3560
2010 34,200 2.3900 1,099 2.3980 171,373 2.2477 2.3560
2011 – – – – 20,000 1.9650 2.3560
75,240 2.3900 16,083 2.3980 398,491 2.2545 2.3560
63
YAMANA GOLD 2008 ANNUAL REPORT
INTEREST RATE HEDGING
The Company has interest rate swap agreements for a total amount of $550.0 million, with a notional amount of $465.8 million
as at December 31, 2008, to convert a floating rate credit facility toa fixed rate over a 5 year period. These contracts fix the
rate of interest on this portion of the Company’s long-term debt at a weighted average of 4.50% plus a margin of 1.5% to 3%
per annum, depending on the Company’s debt to Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”)
ratio. The current margin is 1.1%. Of the amount hedged the Company has settled $21.1 million of the notional amount in the
fourth quarter and $84.2 million of the notional amount in the twelve months ended December 31, 2008.
The interest rate hedge has been accounted for as cash flow hedge with the effective portion of the hedge of $13.6 million
loss for the year ended December 31, 2008 recorded to other comprehensive i