60
FORTUNA SILVER MINES INC. | 2014 ANNUAL REPORT
As at December 31, 2014, the Company is exposed to currency risk through the following assets and liabilities
denominated in Canadian dollars, nuevo soles and Mexican pesos (all amounts are expressed in thousands of Canadian
dollars, thousands of nuevo soles or thousands of Mexican pesos):
Expressed in ’000’s
December 31, 2014
December 31, 2013
Canadian
Nuevo
Mexican
Canadian
Nuevo
Mexican
Dollars
Soles
Pesos
Dollars
Soles
Pesos
Cash and cash equivalents
$ 2,695 S/. 8,633 $ 56,739
$ 2,699
S/. 619 $ 10,994
Short term investments
7,696
–
–
3,286
–
–
Accounts receivable and other assets
897
4,190
15,692
306
7,917
33,818
Deposits on long term assets and long
term borrowing costs
71
–
19,096
355
–
–
Trade and other payables
(2,220)
(12,387)
(117,848)
(1,181)
(12,659)
(49,618)
Due to related parties
(11)
–
–
(22)
–
–
Provisions, current
–
(767)
(8,138)
–
(349)
(6,499)
Income tax payable
–
(37)
(143,426)
–
(2,213)
–
Other liabilities
(5,376)
–
(563)
(2,477)
–
(350)
Provisions
–-
(20,710)
(73,001)
–
(18,544)
(45,499)
Total
$ 3,752 S/. (21,078)
$ (251,449)
$ 2,966 S/. (25,229)
$ (57,154)
Total US$ equivalent
$ 3,226 $ (7,052)
$ (17,084)
$ 2,773
$ (9,023)
$ (4,371)
Based on the above net exposure as at December 31, 2014, and assuming that all other variables remain constant, a
10% depreciation or appreciation of the US dollar against the above currencies would result in an increase or decrease,
as follows: impact to other comprehensive income of $358 (2013: $308) and an impact to net income of $2,682 (2013:
$1,489).
The sensitivity analyses included in the table above should be used with caution as the results are theoretical, based on
management’s best assumptions using material and practicable data which may generate results that are not necessarily
indicative of future performance. In addition, in deriving this analysis, the Company has made assumptions based on
the structure and relationship of variables as at the balance sheet date which may differ due to fluctuations throughout
the year with all other variables assumed to remain constant. Actual changes in one variable may contribute to changes
in another variable, which may amplify or offset the effect on earnings.
c) Credit Risk
Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its
contractual obligations. The Company’s cash and cash equivalents and short term investments are held through large
Canadian, international, and foreign national financial institutions. These investments mature at various dates within
one year. All of the Company’s trade accounts receivables from concentrate sales are held with large international metals
trading companies.
The Company’s maximum exposure to credit risk as at December 31, 2014 is as follows:
Expressed in $‘000’s
December 31,
December 31,
2014
2013
Cash and cash equivalents
$ 42,867
$ 31,704
Short term investments
34,391
17,411
Accounts receivable and other assets
20,585
17,040
$ 97,843
$ 66,155
The carrying amount of financial assets recorded in the financial statements represents the Company’s maximum
exposure to credit risk. The Company believes it is not exposed to significant credit risk and overall, the Company’s credit
risk has not declined significantly from the prior year.
