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26
NOTE 26
EXPLORATION AND EVALUATION ASSETS
Accounting policy
– Exploration and evaluation assets
Exploration, evaluation and relevant acquisition costs are accumulated separately for each area of interest for which
a mining tenement is current. They are initially recognised at cost and include acquisition of rights to explore,
studies, exploratory drilling, trenching, sampling and an appropriate portion of related overhead expenditure.
Costs are carried forward only if they relate to an area of interest for which rights of tenure are current and such
costs are expected to be recouped through successful development and exploitation or from sale of the area.
Exploration and evaluation expenditure which does not satisfy these criteria is written off.
Where a decision is made to proceed to the development of a mine, the relevant exploration and evaluation
costs for that area of interest are transferred to mine development (disclosed within note 25- Property, plant and
equipment).
2016
2015
$’000
$’000
Non-Current Assets
Exploration and evaluation at cost
402,298
407,831
Reconciliation
Opening net book amount
407,831
388,210
Additions
22,129
60,565
Impairment
(a)
(28,192)
(34,800)
Transfers in/(out)
530
(6,144)
Closing net book amount
402,298
407,831
Exploration and evaluation assets include New Hope Corporation Limited of $382.048 million
(2015: $377.120 million) and Exco Resources Limited of $15.385 million (2015: $19.436 million)
(a) In the current year, an impairment expense of $15.075 million relates to Copper exploration assets
(2015: $34.800 million) which are allocated to the copper cash generating unit for the purpose of assessing
recoverable value, and $13.117 million relates to oil exploration assets (2015: $3.465 million). Refer to note 25
for details of impairment testing.
Key Estimate
Exploration and evaluation expenditure
During the year, the controlled entities New Hope Corporation Limited, CopperChem Limited and Exco Resources
Limited, capitalised various items of expenditure to exploration and evaluation assets. The relevant items of
expenditure were deemed to be part of the capital cost of developing future mining operations, which would
then be amortised over the useful life of the mine.
The key judgement applied in considering whether the costs should be capitalised, is that costs are expected to
be recovered through either successful development (through mining operations) or sale of the relevant mining
interest.
Factors that could impact the exploration and evaluation costs being transferred to future mine operations
include the level of reserves and resources, changes in commodity prices and foreign exchange rates, future legal
changes and any future technology changes.