Aeris Annual Report 2022

Aeris Resources Limited
Notes to the consolidated financial statements
30 June 2022
23. Fair value measurement (continued)
Level 1 Level 2 Level 3 Total
2021 $'000 $'000 $'000 $'000
Assets
Australian listed equity securities 6,087 - - 6,087
Total assets 6,087 - - 6,087
Liabilities
Hedging derivatives - 3,641 - 3,641
Contingent consideration payable - - 20,418 20,418
Total liabilities - 3,641 20,418 24,059
There were no transfers between levels during the financial year.
Valuation techniques for fair value measurements categorised within level 2 and level 3
The fair value of forward commodity contracts – cashflow hedges is determined using market rates and inputs at the
reporting date and are considered a level 2 valuation.
The fair value of the contingent consideration (Net Value Royalty) payable in relation to the Cracow acquisition was
estimated by calculating the present value of future probability-weighted cash flows using a Weighted Average Cost of
Capital and is considered a level 3 valuation.
Level 3 assets and liabilities
Movements in level 3 assets and liabilities during the current and previous financial year are set out below:
Contingent
consideration
$'000
Balance at 1 July 2020 -
Additions - acquisition of Lion Mining Pty Ltd (19,623)
Unwinding of discount recognised through net finance costs (795)
Balance at 30 June 2021 (20,418)
Unwinding of discount recognised through net finance costs (1,598)
Balance at 30 June 2022 (22,016)
The level 3 assets and liabilities unobservable inputs and sensitivity are as follows:
Description
Unobservable inputs
Range
(weighted average)
Contingent
Weighted average cost
consideration payable of capital
Sensitivity
7.0% A change in the discount rate by 100 bps would
increase/decrease the fair value by $0.469
million.
Expected revenues $550 - $600 million If expected revenues were 10% higher or
lower, the fair value would increase/decrease
by $4.7 million.
AERIS ANNUAL REPORT 2022
Accounting policy for fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the
fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the
principal market; or in the absence of a principal market, in the most advantageous market.
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