Annual Report and Accounts 2013
Petra Diamonds Limited 119
Overview
Performance Review
Strategic Review
Sustainability
Corporate Governance
Group Accounts
23. Provisions
US$ million
Retrenchment
Post-retirement
medical fund
and income tax
Rehabilitation
Total
Balance at 1 July 2011
9.5
55.8
65.3
Acquired through acquisition
5.3
23.7
29.0
Decrease in rehabilitation liability provision –
change in estimate
(3.3)
(3.3)
Increase in provisions
1.4
1.4
Unwinding of present value adjustment
of rehabilitation provision
5.9
5.9
Exchange differences
(2.2)
(8.9)
(11.1)
Balance at 30 June 2012
14.0
73.2
87.2
Current
2.2
2.2
Non-current
11.8
73.2
85.0
Balance at 30 June 2012
14.0
73.2
87.2
Balance at 1 July 2012
14.0
73.2
87.2
Decrease in rehabilitation liability provision –
change in estimate
(10.2)
(10.2)
Increase in provisions
2.6
1.3
3.9
Unwinding of present value adjustment
of rehabilitation provision
2.6
2.6
Exchange differences
(2.1)
(9.3)
(11.4)
Balance at 30 June 2013
2.6
13.2
56.3
72.1
Current
2.6
2.2
4.8
Non-current
11.0
56.3
67.3
Balance at 30 June 2013
2.6
13.2
56.3
72.1
Employee entitlements and other provisions
The provisions relate to provision for an unfunded post-retirement medical fund, retrenchment costs and income tax. The provision
for the post-retirement medical fund is further disclosed in note 32. The provision for taxation is based on estimates made, where
appropriate, from historical information and professional advice. The provision for retrenchments is based on estimates and relates
to Sedibeng JV and Star, as the care and maintenance plans and associated retrenchment plans were communicated to employees
prior to year end.
Rehabilitation
The provision is the estimated cost of the environmental rehabilitation at each site, which is based on current legal requirements
and existing technology. The Group estimates the present value of the rehabilitation expenditure at each mine as follows:
$
Koffiefontein of US$6.2 million (30 June 2012: US$6.8 million), provided over 12 years which reflects management’s current
estimated decommissioning period;
$
Cullinan of US$12.2 million (30 June 2012: US$14.7 million) provided over 52 years which reflects management’s current estimated
decommissioning period including the C-cut Phase 1 and 2;
$
Finsch of US$18.4 million (30 June 2012: US$23.0 million) provided over 20 years which reflects management’s current estimated
decommissioning period including Block 5 and certain Block 6 tonnes;
$
Kimberley Underground of US$9.0 million (30 June 2012: US$9.9 million) provided over 13 years which reflects management’s
current estimated decommissioning period;
$
Williamson of US$7.5 million (30 June 2012: US$15.3 million) provided over 20 years which reflects management’s current estimated
decommissioning period; and
$
Helam, Sedibeng JV and Star of US$3.0 million (30 June 2012: US$3.5 million) provided over 12 years which reflects management’s
current estimated decommissioning period.
The vast majority of the rehabilitation expenditure is expected to be incurred at the end of mining.
The reduction in the provisions are attributable to unrealised foreign exchange on retranslation from functional to presentational
currency, together with a reduction at Williamson arising due to changes in inflation and discount rates.
The significant assumptions and uncertainties are disclosed in note 1.23. Cash and cash equivalents have been secured in respect
of rehabilitation provisions, as disclosed in note 19.
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