CONTENTS FINANCIAL STATEMENTS YEAR IN REVIEW DIRECTORS’ REPORT CORPORATE DIRECTORY SHAREHOLDER INFORMATION 8. Investment in joint venture (continued) Right of use assets Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. The Group’s lease portfolio includes buildings, plant and equipment, these leases have an average of 10 years as the An impairment review is undertaken for any right of use lease asset and shows indicators of impairment and an impairment loss is recognised against any right of use lease assets that is impaired. The right of use asset is depreciated over the lease term. Mine properties and development Mine development costs are accumulated when economically recoverable reserves have been identified and a decision to develop has occurred. This expenditure includes all capitalised exploration and evaluation expenditure in respect of the area of interest, direct costs of construction, overheads and where applicable borrowing costs capitalised during construction. Once mining of the area can commence, the aggregated capitalised costs are classified under non-current assets as an appropriate class of property, plant and equipment. Accumulated mine development costs are depreciated on a units of production (UOP) basis over the economically recoverable reserves of the mine. KMS’ carrying amount of the non-current assets are as follows: Joint venture (100%) 2025 Property, plant and equipment $’000 (Audited) Right of use assets $’000 (Audited) Mine assets under development $’000 (Audited) Total $’000 (Audited) Non-current assets Carrying amount – at cost 495,465 104,648 85,594 685,707 Accumulated depreciation (28,259) (23,029) (880) (52,168) 467,206 81,619 84,714 633,539 Reconciliation Opening balance at the beginning of the year 255,249 94,700 268,797 618,746 1,2,3,4,5Additions 22,317 1,778 – 24,095 Transfer between asset classes5 204,731 (204,731) – Derecognition of right of use asset – (1,052) – (1,052) Changes in rehabilitation provision6 – – 7,368 7,368 Capitalised borrowing costs7 – – 13,916 13,916 Depreciation expenses (15,091) (13,807) (636) (29,534) 467,206 81,619 84,714 633,539 Note 1: Right of Use Assets: The Group entered into lease contracts for various items used in its operations. During the period, the Group mine site light vehicles (LV’s) ($0.2m), staff residential leases (Broome) ($0.3m) and capital improvements to the DMU ROU asset ($1.2m). Note 2: Plant and equipment: The Group recognised a deferred stripping asset of $0.1m during the period relating to the removal of overburden in the development phase of the mine. Note 3: Plant and equipment: The Group recognised a stripping activity asset of $2.5m during the period relating to the removal of overburden in the production phase of the mine. Note 4: Plant and equipment: The Group recognised purchased additional IT equipment $0.5m during the period. Note 5: Plant and equipment: During the period the Group recognised additions to the mine development asset attributable Tailings Storage Facility (TSF) of $14.8m and the InPit storage facility $1.2m. Note 6: Changes in rehabilitation provision: The Group recognised an increase in the rehabilitation provision of $7.4m due to additional disturbance in the period attributable to the commencement of mining operations. Note 7: Capitalised borrowing cost: The Group capitalised $13.9m of interest and interest accretion costs to mine development in line with AASB 123 (Borrowings Costs). 57 Sheffield Resources Limited Annual Report 2025
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