Accounting for exploration and mine development The manner in which a mineral or metal occurs in the earth’s crust determines the type of mining operation required to extract it and the costs to develop a mine, as well as the amount of waste produced in the extraction process. Mining companies carry out the various stages of development necessary prior to production over a long period of time, at high cost and in some cases with a high level of risk and uncertainty as to future commercial benefits. Adopting an appropriate accounting treatment for the costs incurred at each stage is therefore essential. Unfortunately, there is little specific guidance as to the extent to which costs associated with finding, acquiring and developing mineral reserves should be expensed immediately or deferred. The IASB Steering Committee, however, offered tentative conclusions for accounting for the costs incurred at each stage.
