Notes to the consolidated financial statements 30 June 2022 (continued) 22 Financial risk management (continued) (d) Recognised fair value measurements (i) Fair value hierarchy The fair value of financial assets and liabilities must be estimated for recognition and measurement or for disclosure purposes. AASB 13 Fair Value Measurement requires disclosure of fair value measurements by level of the following fair value measurement hierarchy: (a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1); (b) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2); and (c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3). The following table presents the Group’s assets and liabilities measured and recognised at fair value at 30 June 2022 and 30 June 2021 on a recurring basis. Level 1 $M Level 2 $M Level 3 $M Total $M At 30 June 2022 Financial assets Financial assets at fair value through profit or loss 126.8 - - 126.8 Financial assets at fair value through other comprehensive income 81.6 - - 81.6 Derivative financial instruments - commodity hedging contracts - 49.0 - 49.0 208.4 49.0 - 257.4 Level 1 $M Level 2 $M Level 3 $M Total $M At 30 June 2021 Financial assets Financial assets at fair value through profit or loss 110.9 - - 110.9 Derivative instruments Diesel hedging contracts - 2.8 - 2.8 110.9 2.8 - 113.7 The Group did not measure any financial assets or financial liabilities at fair value on a non-recurring basis as at 30 June 2022 and did not transfer any fair value amounts between the fair value hierarchy levels during the year ended 30 June 2022. (ii) Valuation techniques used to determine level 1 fair values The fair value of financial instruments traded in active markets (such as publicly traded derivatives and trading and available-for-sale securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1. (iii) Valuation techniques used to determine level 2 and level 3 fair values The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. Notes to the consolidated financial statements 30 June 2022 (continued) 22 Financial risk management (continued) (d) Recognised fair value measurements (continued) (iii) Valuation techniques used to determine level 2 and level 3 fair values (continued) Specific valuation techniques used to value financial instruments include: • The use of quoted market prices or dealer quotes for similar instruments. • The fair value of commodity and forward foreign exchange contracts is determined using forward commodity and exchange rates at the reporting date. • Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments. All of the resulting fair value estimates are included in level 2. (iv) Fair value of other financial instruments The Group also has a number of financial instruments which are not measured at fair value in the balance sheet. These instruments had the following fair value at the reporting date. 30 June 2022 30 June 2021 Carrying amount $M Fair value $M Carrying amount $M Fair value $M Current liabilities Lease liabilities 20.1 22.0 4.4 5.3 20.1 22.0 4.4 5.3 Non-current liabilities Lease liabilities 37.3 39.3 20.6 22.3 37.3 39.3 20.6 22.3 The fair value of borrowings are not materially different from the carrying amount, since the interest payable on the borrowings is close to current market rates. Notes to the consolidated financial statements 30 June 2022 Notes to the consolidated financial statements 30 June 2022 134 — IGO ANNUAL REPORT 2022 IGO ANNUAL REPORT 2022 — 135
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