Annual Report 2007 - Antofagasta plc

24 Financial Instruments and Financial Risk Management continuedd) Embedded derivatives – provisionally priced salesCopper and molybdenum concentrate sale agreements and copper cathode sale agreements generally providefor provisional pricing of sales at the time of shipment, with final pricing being based on the monthly averageLondon Metal Exchange copper price or monthly average molybdenum price for specified future periods. Thisnormally ranges from 30 to 180 days after delivery to the customer.Under IFRS, both gains and losses from the marking-to-market of open sales are recognised throughadjustments to turnover in the income statement and to trade debtors in the balance sheet. The Groupdetermines mark-to-market prices using forward prices at each period end for copper concentrate and cathodesales, and period-end month average prices for molybdenum concentrate sales due to the absence of a futuresmarket for that commodity.The mark-to-market adjustments at the end of each period and the effect on turnover in the income statementfor each period are as follows:Balance sheetnet mark to marketeffect on debtors2007 2006US$m US$mLos Pelambres – copper concentrate (72.8) (110.1)Los Pelambres – tolling charges for copper concentrate (5.1) 7.6Los Pelambres – molybdenum concentrate 0.1 (2.4)El Tesoro – copper cathodes (1.0) 1.3Michilla – copper cathodes 0.1 (0.6)(78.7) (104.2)FINANCIAL STATEMENTSAntofagasta plc Annual Report and Financial Statements 2007 119