Multinational Mid-Tier Gold Mining – Ocean Gold – Accounting and Finance Assignment Help

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Assignment Task :
Assignment overview 
In this assignment, you will work in teams of 3 to create a 4000-word report for OceanaGold, a multinational mid-tier gold mining company based in New Zealand.  
Your eLA will allocate you to groups for this assignment in week 1 of the teaching period. Together you will complete a Team charter (DOC 57 KB) , which will help you agree on the roles and responsibilities of each team member.
 
Assignment details 
Background 
OceanaGold is a multinational mid-tier gold mining company based in New Zealand engaged in the extraction and processing of gold at various sites globally. OceanaGold’s forecast quarterly production (scaled down for ease of calculation) for the next two quarters is presented in the following table. 
Quarter
 
OceanGold’s forecast quarterly production (2019) created by Swinburne Online 
OceanaGold’s sales of gold metals are denominated in US dollars. In addition, OceanaGold has a long-term variable rate loan (5-year maturity) of AUD$50 million and a variable rate loan (3-year maturity) USD $20 million. The next reset dates are 30 March and 30 June 2020, respectively. 
Requirements 
You are required to assume that you are a recently appointed hedge strategist with OceanaGold and that you have been requested to prepare a report for presentation to their Investment Strategy Committee at its next meeting. You have been specifically requested to address the following. Note that the following content will form 75% of your total grade for this assignment.  
 
Section 1  
(a) Identify the specific financial risk exposures faced by OceanaGold (please limit the financial risks to what is taught in this unit). In this section you must discuss the outlook (forecast) for each underlying variable and identify whether it will present a risk to the firm. You need to provide adequate justification for your responses.  
(b) Make firm recommendations on whether to hedge all, part or none of the financial risk exposures that you identified in part (a) above. You must provide some explanation for each of your recommendations—i.e. the reasons for suggesting this strategy. (You are not required to specify the type of derivative to be used to hedge in response to this question). 
Section 2  
(c) Make recommendations on which derivative instruments (for example, options, futures etc) to use to implement any hedges that you have recommended in part (b) above. Once again, you must explain your recommendations (i.e. justify the choice of derivative instrument). This means that you will need to provide very well researched and fully explained reasons for your responses to parts (a) and (b). (15%). 
(d) Irrespective of your recommendations in parts (b) and (c) above, assume that OceanaGold wishes to hedge 100 percent of its gold deposits with exchange traded futures or options. Provide a schedule that shows:
the risk you are hedging against the number of futures and/or option contracts that would be required the reason for choosing futures or options the contract months used whether you are going long or short futures and, in the case of options, whether you are buying puts or calls the option strike prices that you recommend and the premium costs involved.  
 
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