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Hedging/Derivatives (Reviewed)The Group's policy is to remain unhedged to the gold price. However, hedges are sometimes undertaken as follows:
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 mark-to-market value on the hedge was negative US$10.0m with a realised loss of US$6.8m and unrealised loss of US$10.1m for the year ended 31 December 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. In 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 mark-to-market value on the hedge was nil as all instruments had matured, with a realised loss of US$114.6m, partially offset by an unrealised gain and prior year mark-to-market reversals of US$36.4m of for the year ended 31 December 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 mark-to-market value on the hedge was negative A$6.6m (US$5.1m) with a realised loss of A$4.9m (US$3.4m) and an unrealised loss of A$8.0m (US$5.5m) for the year ended 31 December 2020. Australia – Gold hedge In January 2019, a total of 456,000oz of the expected production for the Australian region was hedged for the period January 2019 to December 2019 using cash settled zero cost collars. The average strike prices are A$1,800/oz on the floor and A$1,869/oz on the cap. 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, 400,000oz of the expected production for 2021 was hedged for the period January 2021 to December 2021 using bought puts. Between July and October 2020, an additional 600,000oz of the expected production for 2021 was hedged for the period January 2021 to December 2021 using bought puts. The average strike price of the total 1,000,000oz hedged is A$2,190/oz. At the reporting date, the mark-to-market value on the remaining puts was a positive A$35.5m (US$27.3m) with a realised loss relating to all instruments of A$292.2m (US$201.4m), partially offset by an unrealised gain and prior year mark-to-market reversals of A$104m (US$71.8m) for the year ended 31 December 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 mark-to-market value on the hedge was nil as all instruments had matured with a realised loss of R1,562.6m (US$95.4m), partially offset by an unrealised gain and prior year mark-to-market reversals of R176m (US$10.7m) for the year ended 31 December 2020. Salares Norte – Currency hedge In March 2020, a total notional amount of US$544.5m was hedged at a rate of CLP/US$836.45 for the period July 2020 to December 2022. At the reporting date of 31 December 2020 the mark-to-market value on the hedge was a positive US$86.0m with a realised gain of US$5.2m and an unrealised gain of US$86.0m for the year ended 31 December 2020. La Cima – Copper hedge In October and November 2020, a total of 24,000 metric tonnes of copper were hedged using cash settled zero cost collars. The hedges are for the period January 2021 to December 2021 and represent the total planned production for 2021. The average strike price is US$6,525/Mt on the floor and US$7,382/Mt on the cap. At the reporting date of 31 December 2020 the mark-to-market valuation on the hedge was a negative US$14.0m. Outstanding hedges At 31 December 2020, the following hedges are outstanding:
*Have not been designated for hedge accounting and are accounted for as derivative financial instruments in the income statement. |
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