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## NOTE 42 - FINANCIAL INSTRUMENTS 

## (a) Use of derivative financial instruments 

As part of the risk management policy of the consolidated entity and in compliance with the conditions required by project financiers, a variety of financial instruments are used to reduce exposure to unpredictable fluctuations in the project life revenue streams. The subjective assessment of the value of these financial instruments at any given point in time, will in times of volatile market conditions, show substantial variation over the short term. These financial instruments are entered into to manage the exposure to adverse movements in the gold price and the Australian dollar (AUD)/United States dollar (USD) exchange rates. The hedging facilities provided by Resolute’s various hedging counterparties provide flexibility in the timing of the settlement of maturing positions and there are no margin calls attached to any of the hedging facilities. Details of the financial instruments used by the consolidated entity are provided at (b) below. 

## (b) Gold hedging 

As at 30 June 2004, the consolidated entity had entered into the gold hedging contracts shown below. Gold hedging denominated in USD has been converted to an Australian dollar equivalent using the year end USD/AUD spot rate of US$0.6952 (2003: US$0.6713). 

The parent entity had no forward sales contracts, put options bought or call options sold as at 30 June 2004 or 30 June 2003. 

## (i) Forward Sales Contracts and Put Options Bought 

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