75
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)
Fair value models are used to determine the recoverable amount of cash generating units. When the recoverable amount
is assessed using pre-tax discounted cash flow techniques, the resulting estimates are based on detailed mine and/or
production plans. For value in use, recent cost levels are considered, together with expected changes in costs that are
compatible with the current condition of the business. The cash flow forecasts are based on best estimates of expected
future revenues and costs, including the future cash costs of production, sustaining capital expenditure and reclamation
and closures costs.
Where a fair value less cost to sell model is used the cash flow forecast includes net cash flows expected to be realized
from extraction, processing and sale of mineral resources that do not currently qualify for inclusion in proven or probable
reserves and the portion of resources expected to be extracted economically.
Where an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is increased
to the revised estimate of recoverable amount, but not beyond the carrying amount that would have been determined
had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment
loss is recognized into earnings immediately.
g) Borrowing Costs
Interest and other financing costs incurred that are attributable to acquiring and developing exploration and development
stage mining properties and constructing new facilities (“qualifying assets”) are capitalized and included in the carrying
amounts of qualifying assets until those qualifying assets are ready for their intended use.
Capitalization of borrowing costs incurred commences on the date the following three conditions are met:
• expenditures for the qualifying asset are being incurred;
• borrowing costs are being incurred; and,
• activities that are necessary to prepare the qualifying asset for its intended use are being undertaken.
Borrowing costs incurred after the qualifying assets are ready for their intended use are expenses in the period in which
they are incurred.
Borrowing costs, comprised of legal fees and upfront commitment fee, associated with the credit facility for general
working capital and future expansion are recorded as Accounts Receivable and Other Assets and amortized over the
term of the credit facility.
All other borrowing costs are expensed in the period in which they are incurred.
h) Provisions
i.
Decommissioning and restoration provisions
Future obligations to retire an asset, including dismantling, remediation and ongoing treatment and monitoring of the
site related to normal operations are initially recognized and recorded as a liability based on estimated future cash flows
discounted at the risk-free rate.
The decommissioning and restoration provision (“DRP”) is adjusted at each reporting period for changes to factors
including the expected amount of cash flows required to discharge the liability, the timing of such cash flows and the
risk-free discount rate.
The liability is accreted to full value over time through periodic charges to income. This accretion of provisions is charged
to finance costs in the consolidated statements of income.
The amount of the DRP initially recognized is capitalized as part of the related asset’s carrying value and amortized to
income (loss). The method of amortization follows that of the underlying asset. The costs related to a DRP are only
capitalized to the extent that the amount meets the definition of an asset and can bring about future economic benefit.
For a closed site or where the asset which generated a DRP no longer exists, there is no longer future benefit related to
the costs and as such, the amounts are expensed. For operating sites, a revision in estimates or a new disturbance will
result in an adjustment to the liability with an offsetting adjustment to the capitalized retirement cost. For closed sites,
adjustments to the DRP that are required as a result of changes in estimates are charged to income in the period in
which the adjustment is identified.
2. Basis of Consolidation and Summary of Significant Accounting Policies (Continued)
f) Asset Impairment (Continued)
