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EXPLORATION FOR AND EVALUATION OF
MINERAL RESOURCES (IFRS 6)
1. INTRODUCTION
1.1 IFRS 6 addresses the financial reporting for the exploration for and evaluation of mineral re–
sources, incl uding minerals, oil, natural gas , and similar nonregener ative resources. The Stand ard is
intended to provide some limited , initial guida nce about the accounting for such activ ities until the
Intern ati onal Accounting Stand ards Board (lASB) has mad e a more comprehensive review of the
accounting for extractive indu stries. In particular, the Standard modifies the requ irements of other
Standards so as to minimize disruption to entities in the extract ive indu stri es applying International
Fin anci al Reporting Standards (IFRS) for the first time.
1.2 More specifically, IFRS 6
• Identifies expenditures to be included in and excl uded from exploration and evaluation as–
se ts;
• Provides an exemption for exploration and evaluation asse ts from part of the hierarchy in
lAS 8,
Accounting Policies, Changes in Accounting Estimates. and Errors.
of criteria that an
entity shou ld use to develop an acco unting po licy if no IFRS app lies specifica lly to an item ;
• Requires an entity that recogni zes exploration and evaluation assets to assess such asset s for
impairment in accord ance with IFRS 6 and to mea sure such imp airment in accordan ce with
lAS 36 ,
Impairment ofAssets;
• Requires disclosures that identify and explain finan cial statement amount s that arise from
evaluation for and exploration of mineral resources, including
• The entity' s accounting pol icies for exploration and evaluation expenditures; and
• The amounts of assets, liab ilities, income, and expense and opera ting and investing cas h
flows arising from the ex plora tion for and evaluation of mineral reso urces .
1.3 IFRS 6 is effective for annual peri ods beginning on or afte r January I , 2006 . Earli er applica–
tion is encourag ed.
2, SCOPE
IFRS 6 applies to expenditures incurred in the exploration and evaluation of mineral resource s. It
does not apply to expenditures incurred
(a) Before an entity has obtained the legal rights to explore a specific area (i.e., pre-acquisit ion
or preexploration expenditures),
or
(b) After the technical fea sibi lity and commercial viability of extra cting a mineral resource are
demonstrable (i.e., development expenditure).
3. DE FINITIONS OF KEY TERMS (in accor dance with IFRS 6)
Exp lor a tion and evaluation expend itu r es. Expenditures incurred by an entity in connec tion
with the exp lora tion for and evaluation of mineral resources before the techn ical feasi bility
and commercial viabili ty of extracting a minera l reso urce are demonstrated . Mineral reso urce s
incl ude minerals, oil, natu ral ga s, and similar nonregenerative resources.
Explorati on for and eva luati on of mineral resources. The sea rch for mineral reso urces after
the e ntity has obtained legal rights to explore in a specific area as well as the determi nation of
the techni cal feasibility and commerci al viab ility of extracting the mineral resources.
Exploration and evaluati on assets. Exploration and evaluation ex penditures that are recog–
nized as assets in accordance with the entity' s acco untin g policy under IFRS 6. Such assets are
scoped out of lAS 16,
Property. Plant, and Equipment,
and lAS 38,
Intangible Assets.