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29Metals Appendix 4E and Annual Financial Report for 29Metals Limited and its Controlled Entities for the year ended 31 December 2023
92
Consolidated Financial Statements
Note 21: Impairment of non-current assets
In accordance with the Group’s accounting policies, each asset or, where appropriate, each cash generating unit (‘'h’), is evaluated to determine
whether there are an indicators of impairment. If an such indicators of impairment e ist, a formal estimate of the recoverable amount of each asset
or CGU is underta en. In assessing whether an impairment is re uired, the carr ing value of the asset or CGU is compared with its recoverable amount.
The recoverable amount is the higher of the asset or CGU’s
▪
fair value less costs of disposal (‘&s>’); and
▪
value in use (‘s/h’).
ecoverable amount has been determined based on
C .
In the absence of a uoted price, the
C for each CGU is estimated based on discounted future estimated cash flows (e pressed in real terms)
e pected to be generated from the continued use of the CGUs using mar et based metal price assumptions, the level of WƌŽǀĞĚ and WƌŽďĂďůĞ re
eserves and DĞĂƐƵƌĞĚ, /ŶĚŝĐĂƚĞĚ and /ŶĨĞƌƌĞĚ ineral esources included in the current mine plan, estimated uantities of recoverable metal,
production levels, operating costs and capital re uirements (including an e pansion pro ects), and the CGU’s eventual disposal, based on the CGU’s
latest life of mine (‘>KD’) plans. These cash flows are discounted using a real post ta discount rate that reflects current mar et assessments of the
time value of mone and the ris s specific to the CGU. hen
plans do not full utilise e isting mineral properties for a CGU, and options e ist for
the future e traction and processing of all or part of those unmined resources, an estimate of the value of mineral properties is included in the
determination of fair value.
The determination of
C for each CGU is considered to be evel fair value measurements, as the determination is derived from valuation
techni ues that include significant inputs that are not based on observable mar et data. The Group considers the inputs and the valuation approach to
be consistent with the approach ta en b mar et participants.
/ŵƉĂŝƌŵĞŶƚŝŶĚŝĐĂƚŽƌƚĞƐƚŝŶŐ
▪
▪
▪
▪
uring the ear ended
ecember 0 , the following indicators of potential impairment e isted
etals’ uoted mar et capitalisation was lower than its’ net assets;
a reduction in copper and inc prices relative to those in the prior corresponding periods;
an increase in ris free rate that underpins the applicable weighted average cost of capital when compared to
the temporar suspension of Capricorn Copper’s operations following the treme eather vent in arch 0
ecember 0 ; and
. efer to ote .
These factors are considered indicators of impairment. s a result, an impairment test was performed to determine the recoverable amounts for all
CGU’s of the Group, being the Golden Grove ine and the Capricorn Copper ine using the
C method.
Golden Grove CGU
Golden Grove indicator assessment
s a result of the general indications of impairment noted above (as applicable), a formal impairment test was performed to determine the recoverable
amount of the Golden Grove CGU.
Key Assumptions
The table below summarises the e assumptions used in the carr ing value assessment.
31 December
2023
Copper price (long term)
inc price (long term)
U
U
e change rate long term
U $t
U $t
U U
,
,
0.
.0
iscount rate (post ta real)
air value of resources not included in
$’000
,000
verage mining costs over
$’000 p.a.
0 ,
verage processing costs over
$’000 p.a.
,
DĞƚĂůƉƌŝĐĞƐĂŶĚ&ŽƌĞŝŐŶdžĐŚĂŶŐĞ
etal prices and foreign e change rates are estimated with reference to a consensus of e ternal mar et forecasts.
ŝƐĐŽƵŶƚƌĂƚĞ
The discount rate represents the current mar et assessment of the ris s specific to the CGU, ta ing into consideration the time value of mone and
individual ris s of the underl ing assets that have not been incorporated in the cash flow estimates. The discount rate calculation is based on what a
mar et participant would use ta ing into account the specific circumstances of the CGU and is derived using its weighted average cost of capital.
92
