Kinross is not subject to margin requirements on any

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Unformatted text preview: contracts or similar instruments if hedges are acquired in a business acquisition, if hedges are required under project financing requirements, or when deemed advantageous by management. As at December 31, 2012, there were no gold or silver derivative financial instruments outstanding. Foreign Currency Exchange Risk Currency fluctuations may affect the revenues which the Company will realize from its operations since gold is sold in the world market in United States dollars. The costs of Kinross are incurred principally in Canadian dollars, United States dollars, Chilean pesos, Brazilian reais, Russian roubles, Mauritanian ouguiya and Ghanaian cedis. The appreciation of non-U.S. dollar currencies against the U.S. dollar increases the cost of gold production in U.S. dollar terms. Kinross’ results are positively affected when the U.S. dollar strengthens against these foreign currencies and are adversely affected when the U.S. dollar weakens against these foreign currencies. Where possible, Kinross’ cash and cash equivalent balances are primarily held in U.S. dollars. From time to time, Kinross transacts currency hedging to reduce the risk associated with currency fluctuations. While the Chilean peso, Brazilian real, and Russian rouble are currently convertible into Canadian and United States dollars, they may not always be convertible in the future. The Mauritanian ouguiya and Ghanian cedis are convertible into Canadian and United States dollars, but conversion may be subject to regulatory and/or central bank approval. The sensitivity of the Company’s pre-tax earnings to changes in the U.S. dollar is disclosed in Note 12 of the Company’s audited consolidat ed financial statements for the year ended December 31, 2012. Credit, Counterparty and Liquidity Risk Counterparty risk is the risk that a third party might fail to fulfill its performance obligations under the terms KINROSS GOLD 2012 ANNUAL REPORT MDA53 of a financial instrument. The Company is subject to counterparty risk and may be affected, in the event that a counterparty becomes insolvent. To manage both counterparty and credit risk, the Company proactively manages its exposure to individual...
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This document was uploaded on 03/30/2014.

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