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Notes to the Financial Statements (cont’d)
For the financial year ended 31 December 2011
2. Summary of significant accounting policies (cont’d)
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2.11 Mine environmental expenditure
Restoration, rehabilitation and environmental expenditure incurred during the production phase of operations is
recognised in profit or loss as part of the cost of production of the mine property concerned.
Significant restoration, rehabilitation and environmental expenditure to be incurred subsequent to the cessation of
production of each mine property is provided based on the present value of the estimated expenditure to be incurred.
2.12 Property, plant and equipment and depreciation
All items of property, plant and equipment are initially recorded at cost. Subsequent costs are included in the asset’s
carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic
benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other
repairs and maintenance costs are recognised in profit or loss during the financial period in which they are incurred.
Subsequent to recognition, property, plant and equipment except for freehold land and buildings are stated at cost less
accumulated depreciation and any accumulated impairment losses.
Freehold land and buildings are stated at revalued amount, which is the fair value at the date of the revaluation less any
accumulated depreciation and accumulated impairment losses. Fair value is determined from market-based evidence
by appraisal that is undertaken by professionally qualified valuers. Revaluations are performed with sufficient regularity
to ensure that the carrying amount of a revalued asset does not differ materially from that which would be determined
using fair values at the reporting date. Any revaluation surplus is recognised in other comprehensive income and
accumulated in equity under the revaluation reserve, except to the extent that it reverses a revaluation decrease of the
same asset previously recognised in profit or loss, in which case the increase is recognised in profit or loss. A revaluation
deficit is recognised in profit or loss, except to the extent that it offsets an existing surplus on the same asset carried in
the revaluation reserve.
Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset
and the net amount is restated to the revalued amount of the asset. The revaluation surplus included in the revaluation
reserve in respect of an asset is transferred directly to retained earnings on retirement or disposal of the asset.
In the tin mining subsidiaries, plant and equipment used in mining are depreciated using the unit-of-production method
based on economically recoverable ore reserves and resources over the estimated useful lives of the assets. Changes
in estimated ore reserves and resources and the useful lives of plant and equipment are accounted for on a prospective
basis from the beginning of the year in which the change arises. Earthmoving vehicles are depreciated based on an hour
worked basis over the estimated useful life of each asset.
Freehold land has an unlimited useful life and therefore is not depreciated. Capital work-in-progress are also not
depreciated as these assets are not available for use. Depreciation of other property, plant and equipment of the Group
is provided for on the straight-line method to write off the cost of each asset to its residual value over the shorter of their
estimated economic useful lives or life of the mine where appropriate. The estimated useful lives are as follows:
Buildings 8 to 40 years or life of mine, where appropriate,whichever is shorter
Plant, equipment and vehicles 3 to 40 years
Furniture 4 to 10 years
Mine restoration Life of mine
The residual values, useful life and depreciation method are reviewed at each financial year end to ensure that the amount,
method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of
the future economic benefits embodied in the items of property, plant and equipment.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected from its use or disposal. The difference between the net disposal proceeds, if any and the net carrying amount
is recognised in profit or loss.
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