ANNUAL%20REPORT%202015%20eng

Notes to Consolidated Financial Statements
2 SIGNIFICANT ACCOUNTING POLICIES (Continued)
(h)
Property, plant and equipment
Property, plant and equipment, which consist of buildings, plant and equipment, motor vehicles,
office equipment, mining properties are stated at cost less accumulated depreciation and impairment
losses (see Note 2(k)). The cost of an asset comprises its purchase price, any directly attributable
costs of bringing the asset to its present working condition and location for its intended use, the
cost of borrowed funds used during the period of construction and, when relevant, the costs of
dismantling and removing the items and restoring the site on which they are located, and changes in
the measurement of existing liabilities recognised for these costs resulting from changes in the timing
or outflow of resources required to settle the obligation or from changes in the discount rate.
The Group recognises in the carrying amount of an item of property, plant and equipment the cost
of replacing part of such an item when that cost is incurred if it is probable that the future economic
benefits embodied with the item will flow to the Group and the cost of the item can be measured
reliably. All other cost is recognised as an expense in profit or loss in the period in which it is incurred.
In open pit mining operations, the removal of overburden and waste materials, referred to as stripping,
is required to obtain access to the ore body. Stripping costs incurred during the development phase
of a mine are capitalised as stripping activity asset forming part of the cost of constructing the mining
properties.
Stripping costs incurred during the production phase of a surface mine are variable production costs
that are included in the costs of inventory produced during the period that the stripping costs are
incurred (Note 2(l)), unless the stripping activity can be shown to give rise to probably future economic
benefits from the mineral property by improving the access to the ore body, the component of the ore
body for which assess has been improved is identifiable and the costs associated with that component
can be reliably measured, in which case the stripping costs would be capitalised as stripping activity
asset included in property, plant and equipment – mining properties.
All other expenditures, including the cost of repairs and maintenance and major overhaul, are expensed
as they are incurred.
Construction in progress represents property, plant and equipment under construction and equipment
pending installation, and is initially recognised at cost less impairment losses (Note 2(k)). Cost
comprises cost of materials, direct labour and an appropriate proportion of production overheads and
borrowing costs (Note 2(w)). Capitalisation of these costs ceases and the construction in progress is
transferred to property, plant and equipment when the asset is substantially ready for its intended use.
No depreciation is provided in respect of construction in progress until it is completed and substantially
ready for its intended use.
Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are
determined as the difference between the net disposal proceeds and the carrying amount of the item
and are recognised in profit or loss on the date of retirement or disposal.
Depreciation is calculated to write off the cost of items of property, plant and equipment, other than
mining properties, over their estimated useful lives using the straight-line method, after taking into
account the estimated residual values.
Annual Report 2015
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