Notes to the Financial Statements
72
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m . Deferred stripping costs
Stripping costs represent mining costs of waste 
materials. Stripping costs incurred by the Group 
prior to production in relation to accessing 
recoverable reserves are carried forward as part 
of ‘Mine properties’ when future economic 
benefits are established, otherwise such expend-
iture is expensed as part of the cost of 
production. 
Amortisation of costs is provided on the units-
of-production method. The units-of-production 
basis results in an amortisation charge propor-
tional to the depletion of the estimated recover-
able reserves.
Where there is a change in the reserves during a 
six month period, depreciation and amortisation 
rates are adjusted prospectively from the begin-
ning of that reporting period.
Deferred stripping costs (pre-production) are 
included under ‘Mine properties’.
The Group also defers stripping costs incurred 
during production where this is the most appro-
priate basis for matching the costs against the 
related economic benefits and the effect is 
material. This is generally the case where there 
are fluctuations in waste costs over the life of a 
pit, and the effect is material. 
The amount of stripping costs deferred is based 
on the ratio (“Ratio”) obtained by dividing the 
amount of waste mined by the ore mined. Waste 
costs incurred in the period are deferred to the 
extent that the current period Ratio exceeds the 
life of the pit Ratio. Such deferred costs are then 
charged to profit or loss to the extent that in 
subsequent periods the current period Ratio 
falls short of the life of the pit Ratio. The life of 
pit Ratio is based on ore reserves of the pit.
The life of pit waste-to-ore ratio is a function of 
the pit design(s) and therefore changes to that 
design will generally result in changes to the 
Ratio. Changes in other technical or economic 
parameters that impact on reserves will also 
have an impact on the life of the pit Ratio even if 
they do not affect the pit design(s). Changes to 
the life of the pit Ratio are accounted for 
prospectively.
Deferred stripping costs incurred during the 
production stage of operations are included in 
‘Other assets’.
n . Deferred mining services costs
Provisions to the group of mining services by its 
contractor do not systematically align with the 
billing made by the contractor employed for 
these services. When there is a material differ-
ence between the provisions of the mining 
services and the amount paid for these services, 
a portion of the billing is deferred on the state-
ment of financial position. These amounts are 
subsequently recognised in the profit or loss. 
Mining services are recognised in the profit or 
loss on a systematic basis based on bank cubic 
metres mined by the contractor.
o .  Exploration, evaluation and  
feasibility expenditure
Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred 
by or on behalf of the Group is accumulated 
separately for each area of interest. Such 
expenditure comprises direct costs and depre-
ciation and does not include general overheads 
or administrative expenditure not having a 
specific nexus with a particular area of interest.
Exploration expenditure for each area of interest 
is carried forward as an asset provided the rights 
to tenure of the area of interest are current and 
one of the following conditions is met:
〉〉 the exploration and evaluation expenditures 
are expected to be recouped through 
successful development and exploitation of 
the area of interest, or alternatively, by its 
sale; or
〉〉 exploration and evaluation activities in the 
area of interest have not at the reporting 
date reached a stage which permits a reason-
able assessment of the existence or other-
wise of economically recoverable reserves, 
and active and significant operations in, or in 
relation to, the area of interest are 
continuing.