Interests in exploration properties
| | (i) | Pre-exploration costs |
Pre-exploration costs are expensed in the period in which they are incurred.
| | (ii) | Exploration and evaluation expenditures |
Once the legal right to explore a property has been acquired, costs directly related to the acquisition of interests in exploration properties are capitalized on an area-of-interest basis
. Subsequently, the mineral property rights are carried at cost, less any impairment, until such time as the assets are substantially ready for their intended use or sale, being commercial production at operating levels intended by management.
Exploration expenditures incurred during the exploration and evaluation phase are expensed as incurred and included in profit or loss.
The Company assesses interests in exploration properties for impairment when facts and circumstances suggest that the carrying amount of an asset
may
exceed its recoverable amount. Once the technical
feasibility and commercial viability of extracting the mineral resource has been determined, the property is considered to be a mine under development and is classified as “mine development costs”. Interests in exploration properties are also tested for impairment before the assets are transferred to development properties.
As the Company currently has
no
operational income, any incidental revenues earned in connection with exploration activities are applied as a reduction to property carrying values.
Interest in exploration properties are classified as intangible assets.
