ANNUAL%20REPORT%202015%20eng

Notes to Consolidated Financial Statements
3 ACCOUNTING JUDGEMENTS AND ESTIMATES (Continued)
(a)
Critical accounting judgements in applying the Group’s accounting policies (Continued)
(vii) Exploration and evaluation expenditure
The application of the Group’s accounting policy for exploration and evaluation expenditure
requires judgement in determining whether it is likely that future economic benefits will flow to the
Group. It requires management to make certain estimates and assumptions about future events
or circumstances, in particular, whether an economically viable extraction operation can be
established. Estimates and assumptions made may change if new information becomes available.
If, after expenditure is capitalised, information becomes available suggesting that the recovery of
expenditure is unlikely, the amount capitalised is written off in profit or loss in the period when the
new information becomes available.
(viii) Capitalised stripping costs
The process of removing overburden and other mine waste materials to access mineral deposits
is referred to as stripping. In open-pit mining, stripping costs are accounted for separately for
each component of an ore body unless the stripping activity provides improved access to the
whole of the ore body. A component is a specific section within an ore body that is made more
accessible by the stripping activity. The identification of components is dependent on the mine
plan.
There are two types of stripping activity:
• Development stripping is the initial overburden removal during the development phase to
obtain access to a mineral deposit that will be commercially produced; and
• Production stripping is the interburden removal during the normal course of production
activity.
Development stripping costs are capitalised as a stripping activity asset, in construction in
progress and forming part of the cost of constructing the mine, when:
• It is probable that future economic benefits associated with the asset will flow to the entity;
and
• The costs can be measured reliably.
Capitalisation of development stripping costs ceases and these costs are transferred to mine
properties in property, plant and equipment when the ore body or component of ore body is ready
for its intended use.
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Annual Report 2015