PKF Mining Survey - Impairment Reviews

Since publishing our mining survey in 2008, which looked at the impact of the introduction of IFRS on financial reporting for the sector, the world has experienced a global economic downturn, precipitated by the banking crisis. There has also been increased volatility in commodity prices and access to additional funding has become more difficult.

In corporate reporting terms, the consequence of these changes in economic conditions may be an immediate need to write down the value of exploration assets and mineral properties. For others there may be a need for additional disclosures to explain that the value of those assets has decrease, closing the gap on its book value and that the likelihood of impairment losses in future has increased.

The aim of our survey was to identify how many of our surveyed companies had suffered an impairment and to examine:

the main causes of impairment
the minerals of the projects that have been impaired
the regions where the impaired projects are located
the stage of development of the impaired projects
the market capitalisation of the affected companies
the nature and extent of disclosures made in relation to impairment.

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