Ann: March 2014 Quarterly Production Report , page-41

The pre-payments referred to here, are really a form of hedgeing, forward selling, or even somewhat like selling future contracts but without the open ended buy-on-open-market-to-deliver price risk.

When a customer is willing to secure ore by pre-paying for it, FMG's risk is limited to any unexpected increase in the cost of production. But it substantially reduces debt and therefore interest payments. FMG knows its production costs, and I would say that the liability is limited to any unexpected rise in that number.

The benefit of having the cash and debt-reduction early is likely to be greater than any unforeseen cost of production rise.

It shows in the accounts as a liability, because that is what it is. But its hardly one that will be difficult to fulfil!