Notes to the consolidated financial statements 30 June 2022 (continued) 16 Exploration and evaluation (continued) (a) Impairment The Group recognised impairment charges during the current reporting period of $3.0 million (2021: $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 2022 (continued) Capital structure and financing activities This section of the notes provides further information about the Group's borrowings, contributed equity, reserves, retained earnings and dividends, including accounting policies relevant to understanding these items. 17 Borrowings 2022 $M 2021 $M Current Secured Bank loans 180.0 - Capitalised borrowing costs (3.5) - Total current borrowings 176.5 - Non-current Secured Bank loans 720.0 - Capitalised borrowing costs (6.5) - Total non-current borrowings 713.5 - (a) Corporate loan facility In May 2022, the Company entered into a new Syndicated Facility Agreement (Facility Agreement) for facilities totalling $900.0 million. The Facility Agreement comprises: • A $540.0 million amortising term loan facility expiring in April 2025; and • A $360.0 million revolving loan facility expiring in April 2025. The Facility's term loan commitments will reduce (amortise) by $90.0 million semi-annually, commencing 31 December 2022. Interest is payable based on the BBSY bid price plus a relevant margin. Borrowings are initially recognised at fair value, net of transaction costs. 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 2022, a balance of unamortised transaction costs of $10.0 million (2021: $nil) was offset against the bank loans contractual liability of $900.0 million (2021: $nil). Total capitalised transaction costs to 30 June 2022 are $10.1 million (2021: $nil). 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 The Company has entered into a General Security Agreement that provides that it and its subsidiaries (except for Western Areas Limited and its subsidiaries) pledge all present and after acquired property as security for all debts and monetary liabilities owing under the Facility Agreement and the related finance documents. Western Areas Limited and its subsidiaries will enter into a General Security Agreement pledging all of its present and after acquired property as security for all debts and monetary liabilities owing under the Facility Agreement and the related finance documents after the required shareholder approvals are obtained at the annual general meeting of the Company to be held on 17 November 2022. There were no assets pledged as security at 30 June 2021. Notes to the consolidated financial statements 30 June 2022 Notes to the consolidated financial statements 30 June 2022 118 — IGO ANNUAL REPORT 2022 IGO ANNUAL REPORT 2022 — 119
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