notes to and forming part of the financial statements  for the year ended 30 June 2004 (continued) NOTE 42 - FINANCIAL INSTRUMENTS (a) Use of derivative financial instruments (b) Gold hedging (i) Forward Sales Contracts and Put Options Bought 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. 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. 67 RESOLUTE MINING LIMITED 2004 ANNUAL REPORT Forward Sales Put Options Bought Total Price Protection Hedging Ounces Sales Price Ounces Strike Price Ounces Price $/Ounce $/Ounce $/Ounce As at 30 June 2004 AUD DENOMINATED CONTRACTS Maturity within 1 year 40,000  565  60,000  546  100,000  554  Between 1 and 2 years 40,000  603  90,000  549  130,000  566  Between 2 and 3 years 45,000  607  96,000  555  141,000  572  Between 3 and 4 years -  -  10,000  600  10,000  600  Total 125,000 592 256,000 553 381,000 566 USD DENOMINATED CONTRACTS Maturity within 1 year 113,882  306  51,500  362  165,382  324  Between 1 and 2 years 40,000  311  -  -  40,000  311  Total 153,882 307 51,500 362 205,382 321 TOTAL (CONVERTED TO AUD) Maturity within 1 year 153,882  473  111,500  535  265,382  500  Between 1 and 2 years 80,000  525  90,000  549  170,000  538  Between 2 and 3 years 45,000  607  96,000  555  141,000  572  Between 3 and 4 years -  -  10,000  600  10,000  600  Total 278,882 509 307,500 547 586,382 530 As at 30 June 2003 USD DENOMINATED CONTRACTS Maturity within 1 year 115,945  304  98,440  334  214,385  318  Between 1 and 2 years 61,281  306  24,000  346  85,281  317  Between 2 and 3 years 40,000  311  -  -  40,000  311  Total 217,226 306 122,440 336 339,666 317 TOTAL (CONVERTED TO AUD)  Maturity within 1 year 115,945  453  98,440  498  214,385  473  Between 1 and 2 years 61,281  455  24,000  515  85,281  472  Between 2 and 3 years 40,000  464  -  -  40,000  464  Total 217,226 455 122,440 501 339,666 472