2.2.0.25falsefalse10301 - Disclosure - Derivative Instrumentstruefalsefalse1falsefalseUSDfalsefalse1/1/2011 - 3/31/2011
USD ($)
USD ($) / shares
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<div style="margin-top: 18pt; font-size: 10pt;" align="center"><b>NOTE 3<br />DERIVATIVE INSTRUMENTS</b> </div>
<div style="margin-top: 6pt; font-size: 10pt;" align="left"> The Company uses various derivative instruments to manage its exposure to changes in PGM market commodity prices. Some of these derivatives are designated as hedges. Because the Company hedges only with instruments that have a high correlation with the value of the underlying exposures, changes in the derivatives' fair value are expected to be offset by changes in the value of the hedged transaction. </div>
<div style="margin-top: 6pt; font-size: 10pt;" align="left">Commodity Derivatives </div>
<div style="margin-top: 6pt; font-size: 10pt;" align="left"> The Company customarily enters into fixed forward contracts and on occasion it also enters into financially settled forward contracts to offset the price risk in its PGM recycling activity. From time to time, it also has entered into these types of contracts on portions of its mine production. Under these customary fixed forward transactions, the Company agrees to deliver a stated quantity of metal on a specific future date at a price stipulated in advance. The Company uses fixed forward transactions primarily to price in advance the metals acquired for processing in its recycling segment. Under the occasional financially settled forward transactions, at each settlement date the Company receives the net difference between the forward price and the market price if the market price is below the forward price and the Company pays the net difference between the forward price and the market price if the market price is above the forward price. These financially settled forward contracts are settled in cash at maturity and do not require physical delivery of metal at settlement. The Company typically has used financially settled forward contracts with third parties to reduce its exposure to price risk on metal it is obligated to deliver under long-term sales agreements. </div></div>
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<div style="margin-top: 6pt; font-size: 10pt;" align="left">Mine Production </div>
<div style="margin-top: 6pt; font-size: 10pt;" align="left"> At present the Company has no outstanding derivative contracts pertaining to its mined production. </div>
<div style="margin-top: 6pt; font-size: 10pt;" align="left">PGM Recycling </div>
<div style="margin-top: 6pt; font-size: 10pt;" align="left"> The Company regularly enters into fixed forward sales relating to its recycling of PGM catalyst materials. The metals from PGM recycled materials are typically sold forward at the time of purchase and delivered against the fixed forward contracts when the ounces are recovered. All of these fixed forward sales contracts open at March 31, 2011, will settle at various periods through August 2011. The Company has credit agreements with its major trading partners that provide for margin deposits in the event that forward prices for metals exceed the Company's hedged prices by a predetermined margin limit. As of March 31, 2011, no such margin deposits were outstanding or due. </div>
<div style="margin-top: 6pt; font-size: 10pt;" align="left"> Occasionally, the Company also has entered into financially settled forward contracts on its recycled materials. Such contracts are utilized when the Company wishes to establish a firm forward price for recycled metal on a specific future date. No financially settled forward contracts were entered into during the first quarter of 2011. The Company generally has not designated these contracts as cash flow hedges, so they are marked to market at the end of each accounting period. The change in the fair value of the derivatives is reflected in the consolidated statement of operations and comprehensive income. </div>
<div style="margin-top: 6pt; font-size: 10pt;" align="left"> The following is a summary of the Company's outstanding commodity derivatives as of March 31, 2011: </div>
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<tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;" nowrap="nowrap" align="left"><b>PGM Recycling:</b></td>
<td> </td>
<td colspan="6" nowrap="nowrap" align="center"> </td>
<td> </td>
<td> </td>
<td colspan="6" nowrap="nowrap" align="center"> </td>
<td> </td>
<td> </td>
<td colspan="6" nowrap="nowrap" align="center"> </td>
<td> </td></tr>
<tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 0px solid;" nowrap="nowrap" align="left"><b>Fixed Forwards</b></td>
<td> </td>
<td colspan="6" nowrap="nowrap" align="center"> </td>
<td> </td>
<td> </td>
<td colspan="6" nowrap="nowrap" align="center"> </td>
<td> </td>
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<td colspan="6" nowrap="nowrap" align="center"> </td>
<td> </td></tr>
<tr style="font-size: 8pt;" valign="bottom"><td> </td>
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<td style="border-bottom: #000000 0px solid;" colspan="6" nowrap="nowrap" align="center">Platinum</td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 0px solid;" colspan="6" nowrap="nowrap" align="center">Palladium</td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 0px solid;" colspan="6" nowrap="nowrap" align="center">Rhodium</td>
<td> </td></tr>
<tr style="font-size: 8pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;" nowrap="nowrap" align="left">Settlement Period</td>
<td style="border-bottom: #000000 1px solid;"> </td>
<td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center">Ounces</td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center">Avg. Price</td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center">Ounces</td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center">Avg. Price</td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center">Ounces</td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center">Avg. Price</td>
<td> </td></tr>
<tr valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;">Second Quarter 2011</div></td>
<td> </td>
<td> </td>
<td align="right">24,895</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,788</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">26,642</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">788</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4,308</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2,396</td>
<td> </td></tr>
<tr valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;">Third Quarter 2011</div></td>
<td> </td>
<td> </td>
<td align="right">1,623</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,740</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">672</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">740</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,105</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2,363</td>
<td> </td></tr></table></div></div> </div>NOTE 3DERIVATIVE INSTRUMENTS
The Company uses various derivative instruments to manage its exposure to changes in PGM marketfalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringThis element can be used to disclose the entity's entire derivative instruments and hedging activities disclosure as a single block of text. Describes an entity's risk management strategies, derivatives in hedging activities and non-hedging derivative instruments, the assets, obligations, liabilities, revenues and expenses arising there from, and the amounts of and methodologies and assumptions used in determining the amounts of such items.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 45
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 44
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