Annual Report and Accounts 2013
Petra Diamonds Limited 109
Overview
Performance Review
Strategic Review
Sustainability
Corporate Governance
Group Accounts
8. Impairment of operational assets and investments
continued
30 June 2013
At 31 December 2012, the Group had, in conjunction with its BEE partners, decided to undertake a sale process in respect of its
fissure mine operations, comprising the Helam, Sedibeng JV and Star mines in South Africa (the “Fissure Mines”). On initial
reclassification of the Fissure Mines as held for sale, the Group recognised Consolidated Income Statement charges of US$17.8 million,
being management’s re-measurement to fair value less costs to sell the discontinued Fissure Mines in a disposal group, allocated
to property, plant and equipment. During H2 FY 2013, the sale process was concluded without an acceptable funded offer being
received. The mines were declassified out of held for sale status accordingly and the fair value adjustment of US$17.8 million was
reversed to the extent of the lower of carrying value (adjusted for depreciation that would have arisen), value in use and fair
value less cost to sell of each mine as assessed following the end of the sale process. The reversal totalled US$5.2 million.
Accordingly, the Group recognised an impairment loss for the year relating to operational assets at Sedibeng JV and Star of
US$12.6 million (30 June 2012: US$nil). The Group has formally decided to put both Sedibeng JV and Star on care and maintenance,
meaning that they will not be actively mined until the economic viability of those mines improve. Management reviewed the
Helam operational assets for indicators of impairment and following the assessment no impairment of property, plant and
equipment was considered appropriate. Details of the impairment test assessments are shown in notes 8.1 and 8.2.
Impairment
Carrying
(US$ million)
Asset class
Segment
Impairment
value
Sedibeng JV
Property, plant
and equipment
Fissure mines
11.8
1.8
Mineral properties
3.4
Underground development
3.4
Buildings
0.9
Mining property, plant
and equipment
4.1
Star
Property, plant
and equipment
Fissure mines
0.8
0.5
Mineral properties
Underground development
0.2
Buildings
Mining property, plant
and equipment
0.6
Total
12.6
2.3
30 June 2012
During the year ended 30 June 2012, the Group had reviewed the carrying value of its investments and operational assets for
indicators of impairment and following the assessment no impairment of investments, property, plant and equipment or reversal
of impairment gains in prior years were considered appropriate.
8.1 Impairment testing assumptions
a) Impaired operations: Sedibeng JV and Star
30 June 2013
The recoverable values for Sedibeng JV and Star were derived by estimating the expected values to be recovered through the sale
of these assets, less cost to sell, which gave rise to a value in excess of the value in use.
30 June 2012
Subsequent to the 30 June 2012 year end, the Group announced its intention to sell the Fissure Mines. In the absence of appropriate
comparable transactions or market prices, a value in use basis was used to assess year-end asset carrying values for Sedibeng JV
as well as the Helam mine (which is not impaired at 30 June 2013 and is therefore detailed in note 8.2). The key assumptions used
in determining the recoverable value calculations for Helam and Sedibeng JV at 30 June 2012, determined on a value in use basis, were
diamond prices, a before-tax risk-free rate per RSA Government bonds adjusted for market risk and volatility, diamond prices,
inflation rates, exchange rates, life of mine ore reserves and resources and life of mine capital expenditure. No impairment was
considered to exist based on the value in use models but it was noted that the carrying values were sensitive to diamond prices
and achieving forecast production growth rates.
The recoverable amount of Star was assessed using fair value less cost to sell.
1...,101,102,103,104,105,106,107,108,109,110 112,113,114,115,116,117,118,119,120,121,...142