Annual Report 2011 - Syrah Resources Ltd

Syrah Resources Limited
Notes to the financial statements
30 June 2011
Note 2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions
that affect the reported amounts in the financial statements. Management continually evaluates its judgements and
estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its
judgements, estimates and assumptions on historical experience and on other various factors, including expectations
of future events, management believes to be reasonable under the circumstances. The resulting accounting
judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions
that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the
next financial year are discussed below.
Share-based payment transactions
The consolidated entity 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 using either the
Binomial or Black-Scholes model taking into account the terms and conditions upon which the instruments were
granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no
impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit
or loss and equity.
Tax losses
The Company has not recognised a deffered tax asset with regard to unused tax losses and other temporary
differences, as it has not been determined whether the Company will generate sufficient taxable income against
which the unused tax losses and other temporary differences can be utilised in the foreseeable future.
Long service leave provision
As discussed in note 1, the liability for long service leave is recognised and measured at the present value of the
estimated future cash flows to be made in respect of all employees at the reporting date. In determining the present
value of the liability, estimates of attrition rates and pay increases through promotion and inflation have been taken
into account.
Exploration and evaluation assets
At each reporting period the directors review the carrying amount of each of the tenements by assessing whether any
of the indicators of impairment outlined in AASB 6 Exploration for and Evaluation of Mineral Resources are in
existence.
Note 3. Operating segments
The Company operated predominately as an explorer for base and precious metals with exploration activities being
performed in both Australia and Saudi Arabia.
The Group has adopted AASB 8 Operating Segments with effect from 1 January 2009. AASB 8 requires operating
segments to be identified on the basis of internal reports about the components of the Group that are regularly
reviewed by the chief decision maker in order to allocate resources to the segment and to assess its performance.
During the year, the Board started to review the performance of the Australian and Saudi Arabian operations
separately and as such the consoldiated entity for first time, now includes two operating segments: Australian
exploration and Saudi exploration.
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