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When an impairment review is undertaken, the recoverable amount is assessed by reference to the higher of
value in use and fair value less costs to sell.
Value in use is determined as the present value of the estimated future cash flows expected to arise from the
continued use of the asset in its present form and its eventual disposal. Value in use is determined by applying
assumptions specific to the Company’s continued use and cannot take into account future development. These
assumptions are different to those used in calculating fair value and consequently the value in use calculation is
likely to give a different result (usually lower) than a fair value calculation.
Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length
transaction between knowledgeable and willing parties. Fair value for mineral assets is generally determined as
the present value of the estimated future cash flows expected to arise from the continued use of the asset,
including any expansion prospects, and its eventual disposal, using assumptions that an independent market
participant may take into account. These cash flows are discounted by an appropriate discount rate to arrive at a
net present value or net asset value (“NAV”) of the asset.
Estimates of expected future cash flows reflect estimates of future revenues, cash costs of production and
capital expenditures contained in the Company’s long-term life of mine (“LOM”) plans, which are updated for
each CGU on an annual basis. The Company’s LOM plans are based on detailed research, analysis and modeling
to maximize the NAV of each CGU. As such, these plans consider the optimal level of investment, overall
production levels and sequence of extraction taking into account all relevant characteristics of the ore body,
including waste to ore ratios, ore grades, haul distances, chemical and metallurgical properties impacting
process recoveries, capacities of available extraction, haulage and processing equipment, and other factors.
Therefore, the LOM plan is an appropriate basis for forecasting production output in each future year and the KINROSS GOLD 2012 ANNUAL REPO...
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This document was uploaded on 03/30/2014.
- Spring '14