notes to and forming part of the financial statements  for the year ended 30 June 2004 (continued) NOTE 42 - FINANCIAL INSTRUMENTS (continued) (g) Terms, conditions and accounting policies The consolidated entity’s accounting policies, including the terms and conditions of each class of financial asset, financial liability and equity instrument, both recognised and unrecognised at the balance date are as follows: (i) RECOGNISED FINANCIAL INSTRUMENTS Financial  Statement of  Accounting Policies Terms and Conditions Instruments Financial Performance Note  Financial Assets Sundry debtors 6  Sundry debtors are carried at nominal amounts Sundry debtors are less any provision for doubtful debts. generally on 30 day terms. Deferred put option  6,14 The expense recognition of the cost of purchasing put options  Put options give the Company  expenditure is deferred until the period in which the put option expires. the right, but not the obligation,  The put options purchased that have not expired at period end to sell gold to the counterparty are recorded in the accounts at historical cost. at a predetermined price on an agreed date. Investment securities 7,11 Investments held for resale are stated at the lower of cost and net realisable value. Long term investments are stated at cost. Where the cost exceeds the recoverable amount, the investments have been written down to this recoverable amount. Gold bullion 5  Gold bullion held for future delivery, which is subject to forward sales contracts, has been valued at net realisable value based on the proceeds received subsequent to year end. Financial Liabilities Trade & other  15  Liabilities are recognised for amounts to be paid in the future Trade liabilities are normally  creditors for goods and services received, whether or not billed to the settled on 30 day terms.  consolidated entity. Borrowings 16,19 The borrowings are carried at the principal amount. Interest is Details of the terms and  charged as an expense as it accrues unless a qualifying asset conditions in relation to the  is identified whereby the interest is capitalised up to the date borrowings are outlined at of commissioning or sale and amortised over the life of the asset. Note 16 and 19. Equities Ordinary shares 23 Ordinary share capital is recognised at the fair Details of the terms and  value of the consideration received by the Company. conditions are set out in Note 23. (ii) UNRECOGNISED FINANCIAL INSTRUMENTS Derivatives Gold hedging 42(b) The consolidated entity enters into gold contracts where it agrees Details of gold hedging contracts contracts to sell specified amounts of gold in the future at predetermined are provided at Note 42(b). prices. The objective is to match the contract with anticipated future production to protect the consolidated entity against the possibility of loss from future adverse movements in gold prices. Unrealised gains or losses at year end are not recognised until the gold being hedged is produced. The realised gain or loss is included in the measurement of the specifically identified transaction which was hedged. 71 RESOLUTE MINING LIMITED 2004 ANNUAL REPORT