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Unformatted text preview: CGU. Costs incurred in currencies other than the US dollar are translated to US dollar equivalents
based on long-term forecasts of foreign exchange rates, on a currency by currency basis, obtained from
independent sources of economic data. Oil prices are a significant component of cash costs of production and
are estimated based on the current price, forward prices, and forecasts of future prices from third party sources.
For the 2012 annual goodwill impairment analysis, an estimated 2013 and long-term oil price of $90 per barrel
was used. For the 2011 annual goodwill impairment analysis, an estimated 2012 and long-term oil price of $95
and $90 per barrel, respectively, was used.
The discount rate applied to present value the net future cash flows is based on a real weighted average cost of
capital by country to account for geopolitical risk. For the 2012 annual goodwill impairment analysis, real
discount rates of between 4.04% and 7.90% were used. For the 2011 annual goodwill impairment analysis, real
discount rates of between 4.37% and 8.54% were used.
Since public gold companies typically trade at a market capitalization that is based on a multiple of their
underlying NAV, a market participant would generally apply a NAV multiple when estimating the fair value of a
gold mining property. Consequently, the Company estimates the fair value of each CGU by applying a market
NAV multiple to the NAV of each CGU.
When selecting NAV multiples to arrive at fair value, the Company considered the trading prices and NAV
estimates of comparable gold mining companies as at December 31, 2012 and December 31, 2011 in respect of
the fair value determinations at those dates, which ranged from 0.8 to 1.3 and 0.7 to 1.2, respectively. The
selected ranges of multiples applied to each CGU, which may be different from the ranges noted above, took
into consideration, among other factors: expected production growth in the near term; average cash costs over
the life of the mine; potential remaining mine life; and stage of development of the asset.
x. Exploration and evaluation (“E&E”) costs
Exploration and evaluation costs are those costs required to find...
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This document was uploaded on 03/30/2014.
- Spring '14