BUENAVENTURA MINING CO INC | CIK:0001013131 | 3

  • Filed: 4/30/2018
  • Entity registrant name: BUENAVENTURA MINING CO INC (CIK: 0001013131)
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    • ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory

    31.
    Derivative financial instruments
     
    Hedge derivative financial instruments -
    (a)
    The volatility of copper prices during the last years has caused the Management of the subsidiary El Brocal to enter into future contracts which are recorded under cash flow accounting, see note 2.4(v). These contracts managed during 2017 are intended to reduce the volatility of the cash flows attributable to the fluctuations in the cooper price, from January to December 2018, in accordance with existing copper concentrate sales commitments, which are related to 50 percent of the annual production of copper according to the risk strategy approved by the Board of Directors of this subsidiary.
     
    The counterpart fair value as of December 31, 2017, net of deferred income tax, amounts to a liability balance of US$19,602,000 (US$2,723,000 as of December 31, 2016), and it is shown in the caption "Other reserves of equity".
     
    The table below presents the composition of open transactions included in the hedge derivative financial instruments as of December 31, 2017:
     
     
     
     
     
     
    Quotations
     
     
     
    Period of settlement
     
    MT
     
    Fixed
     
    Futures
     
    Fair value
     
     
     
     
     
     
     
     
     
     
    US$(000)
     
    January 2018
     
     
    3,000
     
    5,972 – 6,050
     
     
    7,275
     
     
    (3,788)
     
    February 2018
     
     
    3,000
     
    5,972 – 6,050
     
     
    7,260
     
     
    (3,736)
     
    March 2018
     
     
    3,000
     
    5,972 – 6,050
     
     
    7,247
     
     
    (3,693)
     
    April 2018
     
     
    3,000
     
    5,805 – 6,050
     
     
    7,259
     
     
    (3,973)
     
    May 2018
     
     
    3,000
     
    5,900 – 6,300
     
     
    7,269
     
     
    (3,484)
     
    June 2018
     
     
    3,000
     
    5,900 – 6,325
     
     
    7,277
     
     
    (3,468)
     
    July 2018
     
     
    3,000
     
    5,960 - 6,350
     
     
    7,285
     
     
    (3,359)
     
    August 2018
     
     
    3,000
     
    6,520
     
     
    7,290
     
     
    (2,288)
     
    September 2018
     
     
    3,000
     
    7,100
     
     
    7,296
     
     
    (580)
     
    October 2018
     
     
    3,000
     
    7,200
     
     
    7,300
     
     
    (296)
     
    November 2018
     
     
    3,000
     
    7,300
     
     
    7,305
     
     
    (13)
     
    December 2018
     
     
    3,000
     
    7,300
     
     
    7,309
     
     
    (27)
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
    36,000
     
     
     
     
     
     
     
    (28,705)
     
     
    The table below presents the composition of open transactions included in the hedge derivative financial instruments as of December 31, 2016:
     
     
     
     
     
     
    Quotations
     
     
     
     
    Period of settlement
     
    MT
     
    Fixed
     
    Futures
     
    Fair value
     
     
     
     
     
     
     
     
     
     
     
     
    US$(000)
     
    January 2017
     
     
    2,542
     
     
    4,917
     
     
    5,526
     
     
    (1,548)
     
    February 2017
     
     
    2,270
     
     
    5,001
     
     
    5,530
     
     
    (1,199)
     
    March 2017
     
     
    1,795
     
     
    4,860
     
     
    5,535
     
     
    (1,208)
     
    April 2017
     
     
    500
     
     
    5,720
     
     
    5,536
     
     
    92
     
     
     
     
    7,107
     
     
     
     
     
     
     
     
    (3,863)
     
     
    (b)
    Embedded derivative of commercial contracts -
    The Group’s sales of concentrates are based on commercial contracts, under which a provisional sales value is determined based on future quotations (forward). The adjustment to sales is considered an embedded derivative, which is required to be separated from the host contract. Commercial contracts are linked to market prices (London Metal Exchange) at the dates of the expected settlements of the open positions as of December 31, 2017 and 2016. The embedded derivative does not qualify for hedge accounting; therefore, changes in the fair value are recorded as an adjustment to net sales.
     
    Embedded derivatives held by the Group as of December 31, 2017 are:
     
     
     
     
     
     
     
    Quotations
     
     
     
     
    Metal
     
    Quantity
     
    Period of
    quotations
     
    Provisional
     
    Future
     
    Fair value
     
     
     
     
     
    2018
     
    US$
     
    US$
     
    US$(000)
     
     
     
     
     
     
     
     
     
     
     
     
     
     
    Copper
     
    24,846 DMT
     
    January – March
     
    6,645.36 – 6,841.95
     
    7,112.50 – 7,275.00
     
     
    2,508
     
    Gold
     
    64,898 DMT
     
    January – March
     
    1,256.45 – 1,317.67
     
    1,258.00 – 1,317.10
     
     
    1,066
     
    Silver
     
    326,095 Oz
     
    January – April
     
    16.02 – 18.00
     
    16.07 – 17.21
     
     
    1,815
     
    Lead
     
    22,735 DMT
     
    January – April
     
    2,333.23 – 3,110.69
     
    2,488 – 2,579.75
     
     
    229
     
    Zinc
     
    54,603 DMT
     
    January – April
     
    3,103.72 – 3,275.47
     
    3,226.50 – 3,343.50
     
     
    1,806
     
     
     
     
     
     
     
     
     
     
     
     
     
     
    Total asset, net
     
     
     
     
     
     
     
     
     
     
    7,424
     
     
    Embedded derivatives held by the Group as of December 31, 2016 are:
     
     
     
     
     
     
     
    Quotations
     
     
     
     
    Metal
     
    Quantity
     
    Period of
    quotations
     
    Provisional
     
    Future
     
    Fair value
     
     
     
     
     
    2017
     
    US$
     
    US$
     
    US$(000)
     
     
     
     
     
     
     
     
     
     
     
     
     
     
    Copper
     
    29,121 DMT
     
    January - April
     
    2,985.28 – 5,824.00
     
    5,535.76 – 5,642.25
     
     
    397
     
    Gold
     
    15,370 DMT
     
    January – February
     
    1,139.75 – 1,145.90
     
    1,151.00 – 1,179.40
     
     
    481
     
    Silver
     
    17,124 Oz
     
    January - April
     
    16.32 – 19.35
     
    16.42 – 16.66
     
     
    (1,825)
     
    Lead
     
    23,636 DMT
     
    January - April
     
    1,871.58 – 2,380.60
     
    2,017.00 – 2,080.00
     
     
    (801)
     
    Zinc
     
    29,407 DMT
     
    January – March
     
    2,291.08 – 2,732.10
     
    2,578.00 – 2,612.50
     
     
    (172)
     
    Other
     
    15,082 Oz
     
     
     
     
     
     
     
     
    396
     
     
     
     
     
     
     
     
     
     
     
     
     
     
    Total liability, net
     
     
     
     
     
     
     
     
     
     
    (1,524)