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) 7 Cash and cash equivalents (continued) (c) Recognition and measurement Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the purpose of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. Bank overdrafts are included within borrowings in current liabilities on the balance sheet. 8 Trade and other receivables 2020 $'000 2019 $'000 Current Trade receivables at amortised cost: Trade receivables (subject to provisional pricing) - fair value 46,595 24,568 GST Receivable 1,726 2,463 Other receivables 17,585 18,556 Prepayments 3,159 2,161 69,065 47,748 Non-current Other receivables 4 14,998 4 14,998 (a) Recognition and measurement (i) Trade receivables Trade receivables are generally received in the current month, or up to three months after the shipment date. The receivables are initially recognised at fair value, less any allowance for expected credit losses. The Group has applied the simplified approach to measuring expected credit losses, which applies a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Trade receivables are subsequently revalued by the mark-to-market of open sales. The Group determines mark-to-market prices using forward prices at each period end for nickel, copper and cobalt sales. (ii) Other receivables Other receivables include amounts outstanding on the sale of the Jaguar Operation in May 2018. The discounted value (using a discount rate of 3.5%) of the outstanding cash proceeds of $15,519,000 (2019: $15,519,000) is shown in current receivables. There are no amounts relating to the sale of the Jaguar Operation shown in non-current receivables at 30 June 2020 (2019: $14,994,000). (iii) Impairment and risk exposure Note 22(b)(i) sets out information about the impairment of financial assets and the Group's exposure to credit risk. Given the Group's credit risk management processes, the resulting level of expected credit losses are insignificant. IGO Limited 20 Notes to the consolidated financial statements 30 June 2020 (continued) 8 Trade and other receivables (continued) (b) Key estimates and judgements Allowance for expected credit losses The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit loss rate for each group. These assumptions include recent sales experience, historical collection rates, the impact of the COVID-19 pandemic and forward-looking information that is available. The allowance for expected credit losses is calculated based on the information available at the time of preparation. The actual credit losses in future years may be higher or lower. 9 Inventories 2020 $'000 2019 $'000 Current Mine spares and stores 20,653 19,023 ROM inventory 44,656 32,866 Concentrate inventory 5,452 12,006 Gold in circuit 1,980 1,454 Gold dore 2,929 4,925 75,670 70,274 Non-current ROM inventory 67,911 52,594 67,911 52,594 (a) Classification of inventory Inventory classified as non-current relates to low grade (0.6g/t to 1.2g/t) gold ore stockpiles which are not intended to be utilised within the next 12 months but are anticipated to be utilised beyond that period. (b) Recognition and measurement (i) Ore, concentrate and gold inventories Inventories, comprising nickel, copper and cobalt in concentrate, gold dore, gold in circuit and ore stockpiles, are valued at the lower of weighted average cost and net realisable value. Costs include fixed direct costs, variable direct costs and an appropriate portion of fixed overhead costs. A portion of the related depreciation, depletion and amortisation charge is included in the cost of inventory. (ii) Mine spares and stores Inventories of consumable supplies and spare parts are valued at the lower of cost and net realisable value. Cost is assigned on a weighted average basis. Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion, and the estimated costs necessary to make the sale. The recoverable amount of surplus items is assessed regularly on an ongoing basis and written down to its net realisable value when an impairment indicator is present. (c) Key estimates and judgements The Group reviews the carrying value of inventories regularly to ensure that their cost does not exceed net realisable value. In determining net realisable value various factors are taken into account, including estimated future sales price of the product based on prevailing spot metals prices at the reporting date, less estimated costs to complete production and bring the product to sale. Notes to the consolidated financial stateme ts 30 June 2020 (continued) 9 Inventories (continued) (c) Key estimates and judgements (continued) Stockpiles are measured by estimating the number of tonnes added and removed from the stockpile, the amount of contained metal based on assay data, and the estimated recovery percentage based on the expected processing method. 10 Financial assets at fair value through profit or loss 2020 $'000 2019 $'000 Shares in listed companies - at fair value through profit or loss 107,759 27,531 107,759 27,531 (i) Amounts recognised in profit or loss 90 — IGO ANNUAL REPORT 2020 IGO ANNUAL REPORT 2020— 91