73
CONSOLIDATED FINANCIAL STATEMENTS
DRIVING GROWTH FROM WITHIN
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013
(All amounts in US$‘000’s unless otherwise stated)
2. Basis of Consolidation and Summary of Significant Accounting Policies (Continued)
c) Revenue Recognition
Revenue arising from the sale of metal concentrates is recognized when title or the significant risks and rewards of
ownership of the concentrates have been transferred to the buyer. The passing of title to the customer is based on the
terms of the sales contract. Final commodity prices are set in a period subsequent to the date of sale based on a
specified quotational period, either one, two, or three months after delivery. The Company’s metal concentrates are
provisionally priced at the time of sale based on the prevailing market price.
Variations between the price recorded at the delivery date and the final price set under the sales contracts are caused
by changes in market prices, and result in an embedded derivative in accounts receivable. The embedded derivative is
recorded at fair value each period until final settlement occurs, with changes in fair value classified as provisional price
adjustments and included in sales in the consolidated statement of income. Sales of metal concentrates are net of
refining and treatment charges.
Revenues from metal concentrate sales are subject to adjustment upon final settlement of metals prices, weights, and
assays as of a date that is typically one, two, or three months after the delivery date. Typically, the adjustment is based
on an inspection of the concentrate by the customer and in certain cases an inspection by a third party. The Company
records adjustments to revenues monthly based on quoted spot prices for the expected settlement period. Adjustments
for weights and assays are recorded when results are determinable or on final settlement.
d) Cash and Cash Equivalents
Cash and cash equivalents are designated as fair value through profit or loss (“FVTPL”). Cash and cash equivalents
include cash on hand, demand deposits, and money market instruments, with maturities from the date of acquisition of
90 days or less, which are readily convertible to known amounts of cash and are subject to insignificant changes in
value. Transaction costs are expensed when incurred through profit or loss.
e) Mineral Properties, Plant and Equipment
Costs directly related to construction projects are capitalized to work-in-progress until the asset is available for use in
the manner intended by management. Completed property, plant and equipment are recorded at cost, net of accumulated
depreciation and accumulated impairments. Assets, other than capital work in progress, will be depreciated to their
residual values over their estimated useful lives as follows:
Land and buildings
Land
Not depreciated
Mineral properties
Units of production
Buildings, located at the mine
Life of mine
Buildings, others
6 – 20 years
Straight line
Leasehold improvements
7 – 8 years
Straight line
Plant and equipment
Machinery and equipment
3 – 15 years
Straight line
Furniture and other equipment
3 – 13 years
Straight line
Transport units
4 – 5 years
Straight line
Capital work in progress
Not depreciated
Equipment under finance lease is initially recorded at the present value of minimum lease payments at the inception of
the lease and depreciated as above. Spare parts and components included in machinery and equipment, depending on
the replacement period of the initial component, are depreciated over 8 to 18 months.
Borrowing costs attributed to the construction of qualifying assets are capitalized to mineral properties, plant and
equipment are included in the carrying amounts of related assets until the asset is available for use in the manner
intended by management.
Costs associated with commissioning activities on constructed plants are deferred from the date of mechanical
completion of the facilities until the date the assets are ready for use in the manner intended by management.
On an annual basis, the depreciation method, useful economic life and the residual value of each component asset is
reviewed, with any changes recognized prospectively over its remaining useful economic life.
