IGO Interactive Annual Report 2020

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE 2020 Notes to the consolidated financial statements 30 June 2020 (continued) 16 Exploration and evaluation Nova Operation $'000 Windward $'000 Stockman Project $'000 Other $'000 Total $'000 Year ended 30 June 2020 Opening net book amount 34,100 17,823 13,052 30,222 95,197 Additions - - - 3,111 3,111 Transfer to mine properties under construction - - - (2,260) (2,260) Impairment loss - (1,018) - - (1,018) Closing net book amount 34,100 16,805 13,052 31,073 95,030 Year ended 30 June 2019 Opening net book amount 34,100 17,823 13,052 5,518 70,493 Additions* - - - 27,478 27,478 Transfer to mine properties under construction - - - (2,774) (2,774) Closing net book amount 34,100 17,823 13,052 30,222 95,197 * Additions during the previous financial year includes $22,243,000 relating to acquisition of the Southern Hills tenements which are contiguous to the Nova Mining Lease. (a) Impairment The Group recognised impairment charges during the current reporting period of $1,018,000 (2019: $nil) relating to the relinquishment of tenements. (b) Recognition and measurement Exploration for and evaluation of mineral resources is the search for mineral resources after the entity has obtained legal rights to explore in a specific area, as well as the determination of the technical feasibility and commercial viability of extracting the mineral resource. Exploration and evaluation expenditure is expensed to the profit or loss as incurred except in the following circumstances in which case the expenditure may be capitalised: • The existence of a commercially viable mineral deposit has been established and it is anticipated that future economic benefits are more likely than not to be generated as a result of the expenditure; and • The exploration and evaluation activity is within an area of interest which was acquired as an asset acquisition or in a business combination and measured at fair value on acquisition. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. An impairment exists when the carrying value of expenditure exceeds its estimated recoverable amount. The area of interest is then written down to its recoverable amount and the impairment losses are recognised in profit or loss. Upon approval for the commercial development of an area of interest, exploration and evaluation assets are tested for impairment and transferred to 'Mine properties in development'. No amortisation is charged during the exploration and evaluation phase. (c) Key estimates and judgements The recoverability of the carrying amount of the exploration and evaluation assets is dependent on the successful development and commercial exploitation, or alternatively, sale of the respective area of interest. The Group reviews the carrying value of exploration and evaluation expenditure on a regular basis to determine whether economic quantities of reserves have been found or whether further exploration and evaluation work is underway or planned to support continued carry forward of capitalised costs. This assessment requires judgement as to the status of the individual projects and their estimated recoverable amount. Notes to the consolidated financial statements 30 June 2020 (continued) Capital structure and financing activities This section of the notes provides further information about the Group's borrowings, contributed equity, reserves, retained earnings/(accumulated losses) and dividends, including accounting policies relevant to understanding these items. 17 Borrowings 2020 $'000 2019 $'000 Current Unsecured Bank loans 56,937 56,226 Total current borrowings 56,937 56,226 Non-current Unsecured Bank loans - 28,363 Total non-current borrowings - 28,363 (a) Corporate loan facility In July 2015, the Company entered into a Syndicated Facility Agreement (Facility Agreement) with National Australia Bank Limited, Australia and New Zealand Banking Group Limited and Commonwealth Bank of Australia Limited for a $550,000,000 unsecured committed term finance facility comprising: a five year $350,000,000 amortising loan facility and a five year $200,000,000 revolving loan facility. Subsequent restructures, cancellations and repayments of the Facility Agreement have resulted in an outstanding balance of the amortising loan facility of $57,145,000 which expires in September 2020. In response to the COVID-19 outbreak, and as a precautionary measure, the Group proactively sought to defer the payment of the scheduled debt repayment due in March 2020 to September 2020. Transaction costs are accounted for under the effective interest rate method. These costs are incremental costs that are directly attributable to the loan and include loan origination fees, commitment fees and legal fees. At 30 June 2020, a balance of unamortised transaction costs of $208,000 (2019: $1,127,000) was offset against the bank loans contractual liability of $57,145,000 (2019: $85,716,000). Total capitalised transaction costs to 30 June 2020 are $5,495,000 (2019: $5,495,000). The Facility Agreement has certain financial covenants that the Company has to comply with. All such financial covenants have been complied with in accordance with the Facility Agreement. (b) Assets pledged as security There were no assets pledged as security at 30 June 2020 (2019: $nil). IGO Limited 33 Notes to the c ns lidated financial statements 30 June 2020 (continued) 17 Borrowings (continued) (c) Financing arrangements The Group had access to the following financing arrangements at the reporting date: 2020 $'000 2019 $'000 Total facilities Corporate debt facility 57,145 85,716 Contingent instrument facility 1 1,211 1,131 58,356 86,847 Facilities used as at reporting date Corporate debt facility 57,145 85,716 Contingent instrument facility 1,211 1,131 58,356 86,847 1. This facility provides financial backing in relation to non-performance of third party guarantee requirements. (d) Recognition and measurement (i) Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently 100 — IGO ANNUAL REPORT 2020 IGO ANNUAL REPORT 2020— 101