10 10 weakening in us effect on oci before taxes

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Unformatted text preview: e to, which may be to earnings or property, plant and equipment. Interest rate risks The Company is exposed to interest rate risk on its variable rate debt. During 2008, the Company entered into an interest rate swap for KBM in order to fix the interest rates on 50% of the Paracatu term loan, which was maturing in February 2012. Under the contract, KBM was to pay a rate of 3.83% and receive LIBOR plus 1%. The Paracatu term loan was repaid in February 2012, and accordingly, the interest rate swap was settled. Concurrent with completing the three-year, floating rate term loan in August 2012 (see Note 13(i)), the Company entered into an interest rate swap to swap the underlying LIBOR into a fixed rate of 0.49% for the entire three year period. At December 31, 2012 with other variables unchanged, a 50 basis point downward shift in the interest rate curve would decrease OCI before taxes by $14.0 million, and a 50 basis point upward shift in the interest rate curve would increase OCI before taxes by $14.1 million. v. Energy price risk The Company is exposed to changes in energy prices through its consumption of diesel and other fuels, and the price of electricity in some electricity supply contracts. The Company entered into energy forward contracts that protect against the risk of fuel price increases. Fuel is consumed in the operation of mobile equipment and electricity generation. At December 31, 2012, with other variables unchanged, the following represents the effect of the Company's energy forward contracts on earnings before taxes, and OCI before taxes from a 10% change in oil, gasoil, and diesel prices. 1 0% increase in price Effect on earnings before taxes, gain (loss) Oil price Gasoil price Diesel price (a) FS44 $ $ $ - 10% decrease in price Effect on OCI before taxes, gain (loss) $ $ $ (a) 5.2 5.1 2.1 Effect of on earnings before taxes, gain (loss) $ $ $ - Effect on OCI before taxes, gain (loss) (a) $ $ $ (5.1) (5.2) (2.1) Upon maturity of these contracts, the amounts in OCI before t...
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