The Group’s policy is to remain unhedged to the gold price. However, hedges are sometimes undertaken as follows:
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to protect cash flows at times of significant expenditure; |
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for specific debt servicing requirements; and |
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to safeguard the viability of higher cost operations. |
Gold Fields may from time to time establish currency financial instruments to protect underlying cash flows.
Derivative instruments*
Ghana – Oil hedge
In June 2019 fixed price ICE Gasoil cash settled swap transactions were entered into for a total of 123.2 million litres of diesel for the period January 2020 to December 2022 based on 50% of usage over the specified period. The average swap price is US$575 per metric tonne (equivalent to US$75.8 per barrel). At the time of the transactions, the average Brent swap equivalent over the tenor was US$59.2 per barrel.
At the reporting date, the marked-to-market value on the hedge was negative US$17 million with a realised loss of US$3 million for the six months ended 30 June 2020.
Ghana – Gold hedge
In June 2019, a total of 275,000oz of the expected production for 2020 for the Ghanaian region was hedged for the period January 2020 to December 2020 using cash settled zero-cost collars (175,000oz) and average rate forwards (100,000oz). The average strike prices are US$1,364/oz on the floor and US$1,449/oz on the cap. The average strike price on the forwards is US$1,382/oz.
Subsequent to 30 June 2019, 100,000oz of the expected production for the Ghanaian region was hedged for the period January 2020 to December 2020 using cash settled zero cost collars. The average strike prices are US$1,400/oz on the floor and US$1,557/oz on the cap.
At the reporting date, the marked-to-market value on the hedge was negative US$59 million, with a realised loss of US$36 million for the six months ended 30 June 2020.
Australia – Oil hedge
In June 2019 fixed price Singapore 10ppm Gasoil cash settled swap transactions were entered into for a total of 75.0 million litres of diesel for the period January 2020 to December 2022 based on 50% of usage over the specified period. The average swap price is US$74.0 per barrel. At the time of the transactions, the average Brent swap equivalent over the tenor was US$57.4 per barrel.
At the reporting date, the marked-to-market value on the hedge was negative A$13 million (US$9 million) with a realised loss of A$2 million (US$2 million) for the six months ended 30 June 2020.
Australia – Gold hedge
In June 2019, a total of 480,000oz of the expected production for 2020 for the Australian region was hedged for the period January 2020 to December 2020 using cash settled zero cost collars (270,000oz) and average rate forwards (210,000oz). The average strike prices are A$1,933/oz on the floor and A$2,014/oz on the cap. The average strike price on the forwards is A$1,957/oz.
In the first six months of 2020, 300,000oz of the expected production for 2021 was hedged for the period January 2021 to December 2021 using bought puts at an average strike price of A$2,100/oz and 100,000oz at a strike A$2,200/oz. Subsequent to 30 June 2020 a further 400,000oz was hedged at an average strike price of A$2,200/oz.
At the reporting date, the marked-to-market value on the hedges was negative A$120 million (US$83 million) with a realised loss of A$141 million (US$92 million) for the six months ended 30 June 2020.
South Africa – Gold hedge
In June 2019, a total of 200,000oz of the expected production for 2020 for South Deep was hedged for the period January 2020 to December 2020 using cash settled zero cost collars (100,000oz) and average rate forwards (100,000oz). The average strike price is R660,000/kg on the floor and R727,000/kg on the cap. The average strike price is R681,400/kg on the forwards.
At the reporting date, the marked-to-market value on the hedge was negative R1,086 million (US$63 million) with a realised loss of R544 million (US$33 million) for the six months ended 30 June 2020.
Chile – Salares Norte – Currency hedge
In March 2020, a total notional amount of US$544.5 million was hedged at a rate of USD/CLP836.45 for the period July 2020 to December 2022.
At the reporting date of 30 June 2020 the marked-to-market value on the hedge was positive US$11 million.
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Have not been designated for hedge accounting and are accounted for as derivative financial instruments in the income statement. |
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