ANNUAL%20REPORT%202015%20eng

Notes to Consolidated Financial Statements
6 LOSS BEFORE TAXATION (Continued)
(c)
Other items: (Continued)
Note: (Continued)
(ii)
Impairment of non-financial assets (Continued)
– Discount rate (Continued)
In light of a regular portfolio review, inflation pressures on operating costs, different product quality
different mine has, and also following the latest coal price environment at the year end of 2014, the
impairment loss of USD190,000,000 had been recognised as at 31 December 2014 in relation to the
mining rights of BN Mine to reflect significant downward pressure on coal prices due to persisting
oversupply situation in the coal industry (see Note 16). The BN Mine was acquired by the Company
on 31 May 2011 when the Group entered into a share purchase agreement (“Share Purchase
Agreement”) with Quincunx (BVI) Ltd. and its parent, Kerry Mining (Mongolia) Limited (collectively the
“Seller”) in relation to the acquisition of the entire issued share capital of Baruun Naran Limited (formerly
known as QGX Coal Ltd.) (the “Acquisition”). Baruun Naran Limited ultimately owns the BN Mine. The
Acquisition was completed on 1 June 2011. In order to rationalise the Seller’s structure which was
not cost-effective for the Group, Mongolian Coal Corporation Limited, a wholly-owned subsidiary of
the Company which acted as the buyer of the Acquisition, decided to wind up Baruun Naran Limited
voluntarily on 21 June 2012. Accordingly, Baruun Naran Limited (a Gibraltar registered company) was
liquidated and all of its assets were transferred to Mongolian Coal Corporation Limited on 16 July 2012.
(iii)
Tax and other services
Tax and other services fees for the year ended 31 December 2014 include the fees for tax services and
professional fees in relation to the rights issue.
(iv)
Cost of inventories
Cost of inventories includes USD50,475,000 (2014: USD79,333,000) relating to personnel expenses,
depreciation and amortisation and operating lease charges which are also included in the respective amounts
disclosed separately above for each of these types of expenses. Also included in cost of inventories was
transportation and stockpile losses amounted to USD862,000 (2014: USD3,542,000).
Annual Report 2015
149