Page 77 - Sundance Resources 2014 Annual Report

SUNDANCE RESOURCES LIMITED ANNUAL REPORT 2014 75
Depreciation is provided on property, plant and equipment, including freehold buildings but excluding land. Depreciation
is calculated on a straight-line basis so as to write off the net cost or other revalued amount of each asset over its
expected useful life to its estimated residual value. Leasehold improvements are depreciated over the period of the lease or
estimated useful life, whichever is the shorter, using the straight-line method. The estimated useful lives, residual values and
depreciation method are reviewed at the end of each annual reporting period, with the effect of any changes recognised on
a prospective basis.
The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference
between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
The following useful lives are used in the calculation of depreciation:
Buildings – 15 years
Plant & equipment – 3 to 15 years
IT& communications – 2 to 10 years
Furniture & fittings – 3 to 15 years
Note 7(d)Mine Development Assets
Mbalam-Nabeba Iron Ore Project 2014
$
2013
$
Carrying amount at beginning of year 224,963,327 163,955,498
Effect of movement in exchange rates 5,841,606 35,479,151
Additions 22,960,179 25,528,678
253,765,112 224,963,327
At 30 June 2014, the Company held a 90% interest in Cam Iron which holds the Project in Cameroon, the remaining
10% held by local minority interest shareholders. The Mbalam Convention negotiated in Cameroon entitles the state to
be granted an equity interest in the Project of 15%, 10% of which is free carry; once issued this entitlement will reduce
the Group’s interest in the Project in Cameroon from 90% to 76.5%. The Company also holds an 85% interest in Congo
Iron which holds the Project in Congo, with the remaining 15% held by local minority interest shareholders. The Nabeba
Convention in Congo entitles the state to be granted a 10% free carry interest; once issued this entitlement will reduce the
Group’s interest in the Project in Congo from 85% to 76.5%.
When the economic viability of a project is determined, capitalised exploration and evaluation expenditure is reclassified as
Mine Development and separately disclosed in the Financial Statements. All subsequent expenditure on the area of interest
is capitalised including mine infrastructure, pre-production development costs, development excavation, project execution
costs and other subsurface expenditure pertaining to that area of interest. Costs related to surface plant and equipment
and any associated land and buildings are accounted for as property, plant and equipment.
Development costs are carried forward in respect of areas of interest in the development phase until production
commences. When production commences, carried forward development costs are to be amortised over the life of
economically recoverable reserves.
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014