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## Notes to the Consolidated Financial Statements 

For the year ended 30 June 2011 

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The Group is party to derivative financial instruments in the normal course of business in order to hedge exposure to future price and currency fluctuations in the primary commodity markets in which it operates. This is done in accordance with the Group’s financial risk management policies. 

## Forward metal contracts – cash flow hedges: 

The Group uses cash flow designated USD forward metal contracts to hedge movements in USD base metal prices on its anticipated sales of gold. At 30 June 2011 there were cash flow designated hedge contracts in place for 230,000 ounces of gold with settlements scheduled between March 2012 and December 2014. These hedge contracts were designated as effective cash flow hedges beginning 1 October 2010. 

Some contracts were in place prior to 1 October 2010, and were previously treated as though they would be settled by physical delivery. However, the Group may settle by other means including by cash or by exchanging for other financial instruments. As some contracts were in place prior to 1 October 2010 when hedge accounting criteria were not met, and given the increase in gold price from the date of the contracts to 30 September 2010, they carried a negative value of US$22.4 million (AUD23.0 million at 1 October 2010), which has been recognised in the statement of comprehensive income. 

From 1 October 2010 the portion of the gain or loss on these hedging instruments that are determined to be an effective hedge are recognised and retained directly in equity. The ineffective portion will be recognised in statement of comprehensive income. 

## Risk exposures and fair value measurements 

Information about the Group’s exposure to credit risk, price risk and liquidity risk related to the undiscounted cash flow exposure from derivative contracts is provided at note 17. 

## 16. BORROWINGS 

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(i) The Group drew down on its finance facility provided by Macquarie Bank Limited and Credit Suisse AG during the year. This is a secured loan facility with fixed repayments, with the balance repayable by September 2014. Interest is based on LIBOR plus a 3.75% margin pre completion, 3.25% margin post completion. 

## Secured liabilities and assets pledged as security 

The debt and hedge facilities provided by Macquarie Bank Limited and Credit Suisse AG are secured by a guarantee and indemnity from the company covering all money due under the facilities as well as mortgages over certain of the company’s assets including its shares in Kojina Resources Ltd (“Kojina”) and receivables under intercompany loan arrangements with subsidiaries. In addition, the security package includes fixed and floating charges over all of the assets and undertakings of both Koijina and Central Ashanti Gold Limited including a first ranking mortgage over CAGP tenements. 

## Risk exposures and fair value measurements 

Information about the Group’s exposure to interest rate and foreign currency changes is provided in note 17. 

