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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2016
98 Independence Group NL
Notes to the consolidated financial statements
30 June 2016
(continued)
21 Financial risk management (continued)
(a) Risk exposures and responses (continued)
(ii)
Commodity price risk (continued)
The markets for nickel, copper, zinc, silver and gold are freely traded and can be volatile. As a relatively small producer,
the Group has no ability to influence commodity prices. The Group mitigates this risk through derivative instruments,
including, but not limited to, quotational period hedging, forward contracts and collar arrangements.
At the reporting date, the carrying value of the financial instruments exposed to commodity price movements were as
follows:
Financial instruments exposed to commodity price movements
2016
$'000
2015
$'000
Financial assets
Trade and other receivables
18,520
10,702
Derivative financial instruments - commodity hedging contracts
-
4,981
Derivative financial instruments - diesel hedging contracts
1,583
-
20,103
15,683
Financial liabilities
Derivative financial instruments - commodity hedging contracts
2,487
1,479
2,487
1,479
Net exposure
17,616
14,204
The following table summarises the sensitivity of financial instruments held at 30 June 2016 to movements in the nickel
price, with all other variables held constant. Trade receivables valuation uses a sensitivity analysis of 1.5% (2015: 1.5%)
and a 20.0% (2015: 20.0%) sensitivity rate is used to value derivative contracts.
Impact on post-tax profit
Sensitivity of financial instruments to nickel price movements
2016
$'000
2015
$'000
Increase/decrease in nickel prices
Increase
177
(1,517)
Decrease
(177)
1,517
The following table summarises the sensitivity of financial instruments held at 30 June 2016 to movements in the copper
price, with all other variables held constant. Trade receivables valuation uses a sensitivity analysis of 1.5% (2015: 1.5%)
and a 20.0% (2015: 20.0%) sensitivity rate is used to value derivative contracts.
Impact on post-tax profit
Sensitivity of financial instruments to copper price movements
2016
$'000
2015
$'000
Increase/decrease in copper price
Increase
251
(572)
Decrease
(251)
572
The following table summarises the sensitivity of financial instruments held at 30 June 2016 to movements in the gold
price, with all other variables held constant.
Impact on other components of
equity
Sensitivity of financial instruments to gold price movements
2016
$'000
2015
$'000
Increase/decrease in gold price
Increase 20% (2015: 20%)
(3,018)
(6,590)
Decrease 20% (2015: 20%)
1,743
5,325
Independence Group NL
70