ANNUAL REPORT 2006

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) Significant accounting judgments, estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and
assumptions of future events. The key estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting
period are:
Share-based payment transactions:
A N N U A L R E P O R T 2 0 0 6
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. The fair value is determined by an external valuer
using a Binomial Tree model, using the assumptions detailed in Note 10.
The Group measures the cost of cash-settled share-based payments at fair value at the grant date using the
Binomial Tree formula taking into account the terms and conditions upon which the instruments were granted,
as discussed in Note 10.
(e)
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and
the revenue can be reliably measured. The following specific recognition criteria must also be met before
revenue is recognised:
(i) Sale of goods
Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the
buyer and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Risks
and rewards of ownership are considered passed to the buyer at the time of delivery of the goods to the
customer.
(ii) Rendering of services
Revenue from the rendering of services is recognised by reference to the stage of completion of the
contract.
(iii) Interest income
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the
financial asset.
(f)
Exploration, evaluation and exploration tenement acquisition expenditure
Exploration, evaluation and exploration tenement acquisition expenditure is expensed in the year in which it
is incurred.
page 35