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59<br />
2. Basis of Preparation (continued)<br />
b) Basis of Consolidation<br />
NORTHERN MINERALS LIMITED<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
The consolidated financial statements comprise the financial statements of Northern Minerals Limited<br />
and its subsidiaries as at and for the year ended 30 June 2021. A list of controlled entities at year end<br />
is contained within note 13.<br />
The financial statements of subsidiaries are prepared for the same reporting period as the parent<br />
company, using consistent accounting policies.<br />
3. Critical Accounting Judgements, Estimates, Assumptions and Errors<br />
(a)<br />
Significant estimates and judgements<br />
In applying the Group’s accounting policies management continually evaluates judgements, estimates<br />
and assumptions based on experience and other factors, including expectations of future events that<br />
may have an impact on the Group. All judgements, estimates and assumptions made are believed to<br />
be reasonable based on the most current set of circumstances available to management. Actual results<br />
may differ from the judgements, estimates and assumptions. Significant judgements, estimates and<br />
assumptions made by management in the preparation of these financial statements are outlined below:<br />
Taxation<br />
Balances disclosed in the financial statements and the notes thereto related to taxation are based on<br />
the best estimates of the Directors. These estimates take into account both the financial performance<br />
and position of the Group as they pertain to current income taxation legislation, and the Directors<br />
understanding thereof. No adjustment has been made for pending or future taxation legislation. The<br />
current income tax position represents the directors’ best estimate, in respect of R & D and the decline<br />
in value of the pilot plant.<br />
Details of the tax assessment are further discussed in note 7.<br />
Share-based payment transactions<br />
The Company measures the cost of equity-settled transactions with employees, vendors and suppliers<br />
by reference to the fair value of the equity instruments at the date at which they are granted. The fair<br />
value is determined by an internal valuation using a Black-Scholes option pricing model, using the<br />
assumptions detailed in note 17.<br />
Rehabilitation provision<br />
The recognition of closure and rehabilitation provisions require significant estimates and assumptions<br />
such as requirements of the relevant legal and regulatory framework and the timing, extent and costs<br />
of required closure and rehabilitation activity. These uncertainties may result in future actual expenditure<br />
differing from the amounts currently provided. Refer to note 10(c).<br />
Convertible notes<br />
The fair value of convertible notes is determined at the end of each reporting date. The fair value is<br />
determined using a market interest rate. The compound convertible notes are subsequently recognised<br />
on an amortised cost basis until extinguished on conversion or maturity of the bonds. The remainder of<br />
the proceeds is allocated to the conversion option and recognised in shareholders equity. All other<br />
convertible notes are recognised at fair value through profit and loss. Refer to note 8(e).<br />
27<br />
NORTHERN MINERALS _ ANNUAL REPORT 2021
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