Notes to the consolidated financial statements 30 June 2022 (continued) 15 Mine properties (continued) Mine properties in development $M Mine properties in production $M Deferred stripping $M Total $M Year ended 30 June 2021 Cost - 1,448.3 - 1,448.3 Accumulated amortisation - (644.2) - (644.2) Net book amount - 804.1 - 804.1 Movements Carrying amount at beginning of the period 19.0 1,095.9 44.7 1,159.6 Additions 3.5 20.1 56.1 79.7 Transfers from exploration and evaluation expenditure - 2.9 - 2.9 Transfers to property, plant and equipment (13.5) - - (13.5) Amortisation expense - (189.1) (18.8) (207.9) Transfers from mine properties under construction (9.0) 9.0 - - Disposal of joint venture - (134.7) (82.0) (216.7) Closing net book amount - 804.1 - 804.1 (a) Recognition and measurement (i) Mine properties in development Mine properties in development represent the expenditure incurred when technical feasibility and commercial viability of extracting a mineral resource have been demonstrated, and includes the costs incurred up until such time as the asset is capable of being operated in a manner intended by management. These costs are not amortised but the carrying value is assessed for impairment whenever facts and circumstances suggest that the carrying amount of the asset may exceed its recoverable amount. (ii) Mine properties in production Mine properties in production represent the accumulation of all acquisition, exploration, evaluation and development expenditure incurred by or on behalf of the Group in relation to areas of interest in which mining of the mineral resource has commenced. When further development expenditure is incurred in respect of a mine property after the commencement of production, such expenditure is carried forward as part of the cost of that mine property only when substantial future economic benefits are established, otherwise such expenditure is classified as part of the cost of production. Amortisation is provided on a units-of-production basis, with separate calculations being made for each mineral resource. The units-of-production method results in an amortisation charge proportional to the depletion of the economically recoverable mineral resources (comprising proven and probable reserves). 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 mine properties exceeds its estimated recoverable amount. The asset is then written down to its recoverable amount and the impairment losses are recognised in profit or loss. (iii) Deferred stripping Stripping activity costs incurred in the development phase of a mine are capitalised as part of the cost of constructing the mine and subsequently amortised over the life of the mine on a units-of-production basis. Stripping activity incurred during the production phase of a mine is assessed as to whether the benefit accruing from that activity is to provide access to ore that can be used to produce ore inventory, or whether it in addition provides improved access to ore that will be mined in future periods. Notes to the consolidated financial statements 30 June 2022 (continued) 15 Mine properties (continued) (a) Recognition and measurement (continued) (iii) Deferred stripping (continued) To the extent that the benefit from the stripping activity is realised in the form of inventory produced, the Group accounts for those stripping activity costs in accordance with AASB102 Inventories. A stripping activity asset is brought to account if it is probable that future economic benefits (improved access to the ore body) will flow to the Group, the component of the ore body for which access has been improved can be identified and costs relating to the stripping activity can be measured reliably. The amount of stripping activity costs that are capitalised is determined based on a comparison of the stripping ratio in the relevant period with the life of mine stripping ratio. To the extent that there is a period of sustained stripping that exceeds the average life of mine stripping ratio, mine waste stripping costs are capitalised to the stripping activity asset. Such capitalised costs are amortised over the life of that mine on a units-of-production basis. The life of mine ratio is based on ore reserves of the mine. Changes to the life of mine are accounted for prospectively. (b) Key estimates and judgements (i) Proved and probable ore reserves The Group uses the concept of life of mine to determine the amortisation of mine properties. In determining life of mine, the Group prepares ore reserve estimates in accordance with the JORC Code 2012, guidelines prepared by the Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council (JORC) of Australia. The estimate of these proved and probable ore reserves, by their very nature, require judgements, estimates and assumptions. Where the proved and probable reserve estimates need to be modified, the amortisation expense is accounted for prospectively from the date of the assessment until the end of the revised mine life (for both the current and future years). (ii) Deferred stripping The Group defers advanced stripping costs incurred during the production stage of its open cut mining operations. This calculation requires the use of judgements and estimates, such as estimates of tonnes of waste to be removed over the life of the mining area and economically recoverable reserves extracted as a result. Changes in a mine's life and design may result in changes to the expected stripping ratio (waste to mineral reserves ratio). Any resulting changes are accounted for prospectively. 16 Exploration and evaluation 2022 $M 2021 $M Exploration and evaluation costs 242.2 100.5 242.2 100.5 Reconciliations of the carrying amounts at the beginning and end of the financial year are as follows: 2022 $M 2021 $M Opening net book amount 100.5 95.0 Additions 50.7 8.6 Transfer to mine properties in production - (2.9) Disposal of joint venture - (0.2) Impairment loss (3.0) - Acquisition of subsidiary 94.0 - Closing net book amount 242.2 100.5 Notes to the consolidated financial statements 30 June 2022 Notes to the consolidated financial statements 30 June 2022 116 — IGO ANNUAL REPORT 2022 IGO ANNUAL REPORT 2022 — 117
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