Foreign currency exchange gain
The Company recorded foreign currency exchange losses of $0.4 million and $4.1
million for the first nine months and third quarter ended September 30, 2009,
respectively, compared to foreign currency exchange loss of $7.4 million and a gain of
$4.7 million for the corresponding periods in 2008.
The foreign currency exchange loss in 2009 includes unrealized foreign currency
translation losses of $0.4 million and $3.3 million for the first nine months and third
quarter ended September 30, 2009, respectively, compared to a foreign currency
exchange loss of $3.4 million and a gain of $6.5 million for the corresponding periods in
2008. These unrealized gains and losses are the results of translation of future income
tax liabilities in the Venezuelan Branch. The components of the Company’s future
income tax balance include a future income tax estimate of 34% of the carrying value of
costs incurred for the Las Cristinas asset recorded in the parent entity for accounting
purposes which may not have deductibility for income tax purposes in Venezuela. It
may be determined that the parent entity will be unable to utilize in Canada the benefits
derived from any foreign tax credits generated in Venezuela as a result of the possible
reduced Venezuelan tax base of the Las Cristinas asset. These foreign currency
translation gains/losses result from the translation into U.S. dollars at the end of the
each reporting period of the Venezuelan-denominated future income tax liabilities that
are recognized in connection with expenditures on the Las Cristinas asset. A
strengthening of the BsF/USD at the parallel rate in one period relative to the previous
period results in an unrealized foreign currency translation loss and vice versa.
In addition, the foreign currency exchange results include an unrealized gain of $0.4
million and an unrealized loss of $0.2 million for the first nine months and third quarter
ended September 30, 2009, respectively, compared to an unrealized gain of $0.5 million
and an unrealized loss of $0.7 million for the corresponding periods in 2008. These
results were derived from the translation into U.S. dollars at the end of each respective
period of certain Venezuelan BsF and Canadian dollar denominated assets and
liabilities.