BTO Gold HedgingThis is an extract from the June 30, 2014 SEDAR filings for BTO:
Gold commitments
Under the terms of the Senior Credit Facility, the Company is required to maintain gold contracts, within certain
parameters, over the term of the facility in order to manage the risk of volatility in the Company’s future operating
income and reduce risk in respect of debt service obligations. These contracts are excluded from the scope of IAS
39, accounted for as executory contracts as they were entered into and continue to be held for the purpose of
delivery in accordance with the Company’s expected production schedule. No fair value gains and losses on these
commodity contracts have been recorded in the financial statements. The effect of these contracts will be to provide a
fixed price in rand for a portion of gold sales.
The Company entered into a series of rand denominated gold forward contracts in the second quarter of 2013 for
117,984 ounces of gold with settlements scheduled between January 30, 2015 and December 31, 2018 at an
average price of 14,912 rand per ounce.
During the first quarter of 2014, the Company entered into further rand denominated gold forward contracts for a
further 74,430 ounces at an average price of 16,359 rand per ounce with settlement dates scheduled between July
31, 2015 and December 31, 2018.
If I have my conversions correct, 1 rand = 0.09 USD then initial production out of Namibia of 141,000 ounces in 2015 will be at $1,325/ounce (117,000 ounces) and then at $1,450/ounce (74,000 ounces) for a combined average sale price of $1,346/ounce. No gain or loss has been recorded in the financial records for these hedge contracts.