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THE STRAITS TRADING COMPANY LIMITED ANNUAL REPORT 2011
NOTES TO THE FINANCIAL STATEMENTS
For the Financial Year Ended 31 December 2011
41 SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (cont’d)
(a) Estimation Uncertainty (cont’d)
(viii) Economically recoverable ore reserves and resources
Economically recoverable ore reserves and resources are estimates of the amount of ore that can be
economically and legally recoverable from the mining properties. The Group estimates its ore reserves
and resources based on information compiled by appropriately qualified persons relating to the geological
data on the size, depth and shape of the ore body, and requires complex geological judgements to
interpret the data. The estimation of recoverable reserves and resources is based upon factors such as
estimates of foreign exchange rates, commodity prices, future capital requirements, and production
costs along with geological assumptions and judgements made in estimating the size and grade of the
ore body. Changes in the reserve or resource estimates may impact upon the carrying value of mining
rights, mining assets, deferred mine development expenditure, deferred exploration and evaluation
expenditure, mine properties, property, plant and equipment, goodwill, provision for rehabilitation,
recognition of deferred tax assets and deferred tax liabilities, and depreciation and amortisation charges.
(b) Judgements
In the process of applying the Group’s accounting policies, management has made the following judgements,
apart from those involving estimations, which has the most significant effect on the amounts recognised in the
financial statements:
(i) Income taxes
The Group has exposure to income taxes in various jurisdictions. Significant judgement is involved in
determining the group-wide provision for income taxes. There are certain transactions and computations
for which the ultimate tax determination is uncertain during the ordinary course of business. The Group
recognises liabilities for expected tax issues based on estimates of whether additional taxes will be
due. Where the final tax outcome of these matters is different from the amounts that were initially
recognised, such differences will impact the income tax and deferred tax provisions in the period in
which such determination is made.
The carrying amounts are as follows:
Group
2011 2010
$’000 $’000
Income tax receivables 4,513 11,107
Income tax payable 26,164 26,837
Deferred tax assets 8,487 10,722
Deferred tax liabilities 76,957 75,868