NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2015
141
ANNUAL REPORT 2015
42.
SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (CONT’D)
(a)
Estimation Uncertainty (cont’d)
(vi)
Inventories
Inventories are stated at the lower of cost and net realisable value. Significant management judgement and
in certain circumstances estimate on the physical stock quantity are required to determine their cost and net
realisable value.
Inventories are written down when events or changes in circumstances indicate that the carrying amounts
may not be recoverable. Where expectations differ from the original estimates, the differences will impact
the carrying amount of inventories.
(vii)
Provision for mine restoration costs
Provision for mine restoration costs are provided based on the present value of the estimated future expenditure
to be incurred subsequent to the cessation of production. Significant management judgement and estimation
are required in determining the future expenditure, the cessation date of production and the discount rate. The
mine restoration plan was submitted by a subsidiary to the relevant authorities in prior year. The carrying amount
of provision for mine restoration disclosed in note 31 is based on modifications proposed by the consultant
appointed during the year ended 31 December 2015. As the mine restoration plan is still being reviewed by
the relevant authorities, the final amount cannot be determined at this juncture. Where expectations from the
relevant authorities differ from the plan submitted or actual amount differs from the original estimates, the
differences may significantly impact the carrying amount of provision for mine restoration costs.
(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 mine 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 investments in associates and
joint ventures, unquoted investment, mining rights, deferred exploration and evaluation expenditures, mine
properties, property, plant and equipment, goodwill, provision for mine restoration costs, recognition of
deferred tax assets and deferred tax liabilities, tax recoverable 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
TheGroup 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.
