Notes to the Financial Statements
76
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(iv) Impairment of assets
The Group assesses each cash-generating unit 
half-yearly, to determine whether there is any 
indication of impairment. Where an indicator of 
impairment exists, a formal estimate of the 
recoverable amount is made, which is deemed as 
being the higher of the fair value less costs to 
sell and value in use calculated in accordance 
with accounting policy Note 2f. These assump-
tions require the use of estimates and assump-
tions such as discount rates, exchange rates, 
commodity prices, future operating develop-
ment and sustaining capital requirements, 
mineral resources and reserves and operating 
performance (including the magnitude and time 
of related cash flows). For details of impairment 
assessment for the current year, refer to Note 5j.
(v)  Restoration and rehabilitation  
provision
Significant judgement is required in determining 
the restoration and rehabilitation provision as 
there are many transactions and factors that will 
affect the ultimate liability payable to rehabilitate 
the mine site. Factors that will affect this liability 
include change in mineral resources and reserves 
estimates, changes in technology, commodity 
price changes and changes in interest rates. 
A change in any, or a combination of, the key 
assumptions used to determine the provisions 
could have a material impact on the carrying 
value of the provisions (see Note 17). The provi-
sion recognised for each site is reviewed at each 
reporting date and updated based on the facts 
and circumstances available at the time. Changes 
to the estimated future costs for operating sites 
are recognised in the statement of financial 
position by adjusting both the restoration and 
rehabilitation asset and provision.
(vi)  Units-of-production method  
of depreciation
The Group applies the units-of-production 
method for depreciation and amortisation of  
its mine properties, mine buildings, plant and 
equipment. These calculations require the use  
of estimates and assumptions and significant 
judgement is required in assessing the estimated 
recoverable reserves used in the determination 
of the depreciation and amortisation charges. 
Factors that must be considered in determining 
estimated recoverable reserves (which includes 
both reserves and resources) and production 
capacity are the history of converting resources 
to reserves and the relevant time frames, antici-
pated mining method and costs, the complexity 
of metallurgy, markets, and future 
developments. 
(vii) Share-based payments
The Group measures share-based payments  
at fair value at the grant date. The fair value is 
determined by an external valuer using a Monte 
Carlo simulation model or other valuation tech-
nique appropriate for the instrument being 
valued.
(viii) Deferred tax balances
Deferred tax assets in respect of tax losses for 
the Kingsgate tax-consolidation group (Note 6) 
are not recognised in the financial statements as 
management considers that it is currently not 
probable that future taxable profits will be 
available to utilise those tax losses. Management 
reviews on a regular basis the future profitability 
of the entities included in the tax-consolidation 
group to consider if tax losses should be recog-
nised and to ensure that any tax losses recog-
nised will be utilised. 
Deferred tax balances for temporary differences 
in respect of Akara Mining Limited are measured 
based on their expected rate of reversal which is 
different for the two Royal Thai Board of 
Investment (“BOI”) activities (Note 6).
(ix) Income taxes
The Group is subject to income taxes in Australia 
and jurisdictions where it has foreign operations. 
Significant judgement is required in determining 
the worldwide provision for income taxes. There 
are certain transactions and calculations under-
taken during the ordinary course of business for 
which the ultimate tax determination is uncer-