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AXIOM MINING LIMITED
ANNUAL REPORT 2015
Notes to the
financial statements
for the year ended 30 September 2015
COMPANY FINANCIAL REPORT
4. Summary of significant accounting
policies (continued)
When production commences, the accumulated costs
for the relevant area of interest are amortised over the
life of the area according to the rate of depletion of the
economically recoverable reserves.
A regular review is undertaken of each area of interest to
determine the appropriateness of continuing to capitalise
costs in relation to that area.
Costs of site restoration are provided for over the life
of the project from when exploration commences and
are included in the costs of that stage. Site restoration
costs include the dismantling and removal of mining
plant, equipment and building structures, waste removal,
and rehabilitation of the site in accordance with local
laws and regulations and clauses of the permits. Such
costs have been determined using estimates of future
costs, current legal requirements and technology on an
undiscounted basis.
Any changes in the estimates for the costs are accounted
for on a prospective basis. In determining the costs of site
restoration, there is uncertainty regarding the nature and
extent of the restoration due to community expectations
and future legislation. Accordingly, the costs have been
determined on the basis that the restoration will be
completed within one year of abandoning the site.
The carrying amount of the mineral exploration
expenditure is reviewed annually and adjusted for
impairment whenever one of the following events or
changes in circumstances indicates that the carrying
amount may not be recoverable:
–
The period for which the Company has the right to
explore in the specific area has expired during the
period or will expire in the near future, and is not
expected to be renewed
–
Substantive expenditure on further exploration for and
evaluation of mineral resources in the specific area is
neither budgeted nor planned
–
Exploration for and evaluation of mineral resources
in the specific area have not led to the discovery of
commercially viable quantities of mineral resources
and the Company has decided to discontinue such
activities in the specific area, or
–
Sufficient data exist to indicate that, although a
development in the specific area is likely to proceed,
the carrying amount of the mineral exploration
expenditure is unlikely to be recovered in full from
successful development or by sale.
An impairment loss is recognised in profit or loss
whenever the carrying amount of an asset exceeds its
recoverable amount.
Impairment of non-financial assets
–
The Company assesses at the end of each reporting
period whether there is an indication that an asset may
be impaired. If such an indication exists, the Company
makes an estimate of the asset’s recoverable amount.
–
The recoverable amount of an asset is the higher of its
fair value less costs of disposal and its value in use. In
assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax
discount rate that reflects current market assessments
of the time value of money and the risks specific to
the asset. Where an asset does not generate cash
inflows largely independent of those from other
assets, the recoverable amount is determined for the
smallest group of assets that generates cash inflows
independently (i.e., a cash-generating unit).
–
An impairment loss is recognised in profit or loss
whenever the carrying amount of an asset, or the
cash-generating unit to which it belongs, exceeds its
recoverable amount. The impairment loss is reversed
if there has been a favourable change in the estimates
used to determine the recoverable amount. A reversal
of the impairment loss is limited to the asset’s carrying
amount that would have been determined had no
impairment loss been recognised in prior years. The
reversal of the impairment loss is credited to the
statement of profit or loss in the year in which it arises.
Leases
Where the Company is the leasee, rental payable under
operating leases, net of any incentives received from the
lessor, are charged to profit or loss on a straight-line basis
over the lease terms.
Financial instruments
a. Financial assets
–
The Company’s financial assets include cash and
cash equivalents, prepayment and other receivables
and amounts due from subsidiaries are classified and
accounted for as loans and receivables. Financial
assets are recognised on the trade date.
–
Loans and receivables are non-derivative financial
assets with fixed or determinable payments that are
not quoted in an active market. Loans and receivables
are initially recognised at fair value and subsequently
measured at amortised cost using the effective interest
rate method, less any impairment losses. Any changes
in their value are recognised in profit or loss.
–
Derecognition of financial assets occurs when the
rights to receive cash flows from the financial assets
expire or are transferred and substantially all of the
risks and rewards of ownership have been transferred.