Final Results -23-
March 25 2009 - 3:01AM
UK Regulatory
| depreciation and | | | | | | | | | | | | | | | | | |
| impairment | | | | | | | | | | | | | | | | | |
+------------------+-+-------------+-+-------------+-+-----------+-+--------------+-+----------+-+---------+-+--------------+-+---------+-+
| At 1 January | | _ | | 50,027 | | 12,858 | | 31,749 | | 860 | | 31,703 | | _ | | 127,197 | |
| 2008 | | | | | | | | | | | | | | | | | |
+------------------+-+-------------+-+-------------+-+-----------+-+--------------+-+----------+-+---------+-+--------------+-+---------+-+
| Depreciation for | | _ | | 19,732 | | 7,697 | | 13,729 | | 455 | | 730 | | _ | | 42,343 | |
| the year | | | | | | | | | | | | | | | | | |
+------------------+-+-------------+-+-------------+-+-----------+-+--------------+-+----------+-+---------+-+--------------+-+---------+-+
| Impairment(b) | | 15,754 | | 10,076 | | 754 | | 6,286 | | 105 | | 943 | | 788 | | 34,706 | |
+------------------+-+-------------+-+-------------+-+-----------+-+--------------+-+----------+-+---------+-+--------------+-+---------+-+
| Disposals | | _ | | _ | | _ | | (54 | )| (84) | | _ | | _ | | (138 | )|
+------------------+-+-------------+-+-------------+-+-----------+-+--------------+-+----------+-+---------+-+--------------+-+---------+-+
| Write-off | | _ | | _ | | _ | | (4 | )| _ | | _ | | _ | | (4 | )|
+------------------+-+-------------+-+-------------+-+-----------+-+--------------+-+----------+-+---------+-+--------------+-+---------+-+
| Sales during | | _ | | (12 | )| _ | | _ | | _ | | _ | | _ | | (12 | )|
| preoperating | | | | | | | | | | | | | | | | | |
| stage in Minera | | | | | | | | | | | | | | | | | |
| Santa Cruz | | | | | | | | | | | | | | | | | |
+------------------+-+-------------+-+-------------+-+-----------+-+--------------+-+----------+-+---------+-+--------------+-+---------+-+
| Foreign exchange | | _ | | _ | | 2 | | (78 | )| (30 | )| _ | | _ | | (106 | )|
+------------------+-+-------------+-+-------------+-+-----------+-+--------------+-+----------+-+---------+-+--------------+-+---------+-+
| At 31 December | | 15,754 | | 79,823 | | 21,311 | | 51,628 | | 1,306 | | 33,376 | | 788 | | 203,986 | |
| 2008 | | | | | | | | | | | | | | | | | |
+------------------+-+-------------+-+-------------+-+-----------+-+--------------+-+----------+-+---------+-+--------------+-+---------+-+
| Net book amount | | 44,726 | | 157,995 | | 79,082 | | 131,617 | | 2,114 | | 8,305 | | 65,145 | | 488,984 | |
| at 31 December | | | | | | | | | | | | | | | | | |
| 2008 | | | | | | | | | | | | | | | | | |
+------------------+-+-------------+-+-------------+-+-----------+-+--------------+-+----------+-+---------+-+--------------+-+---------+-+
+----------+-----------------+
| a) | The |
| | carrying |
| | value of |
| | plant |
| | and |
| | equipment |
| | held |
| | under |
| | finance |
| | leases at |
| | 31 |
| | December |
| | 2008 was |
| | US$7,482,000. |
| | Additions |
| | during the |
| | year include |
| | US$7,872,000 |
| | of plant and |
| | equipment |
| | under finance |
| | leases. |
| | Leased assets |
| | are pledged |
| | as security |
| | for the |
| | related |
| | finance |
| | lease. |
+----------+-----------------+
| b) | The |
| | amount |
| | of |
| | impairment |
| | losses |
| | recognised |
| | in profit |
| | and loss |
| | during the |
| | period was |
| | US$34,706,000. |
| | As a result of |
| | the impairment |
| | testing, the |
| | Group has |
| | impaired the |
| | Selene mine by |
| | US$ |
| | 13,651,000, |
| | the Moris mine |
| | by US$ |
| | 5,652,000 and |
| | the San Felipe |
| | project by |
| | US$15,403,000. |
| | The triggers |
| | for the |
| | impairment |
| | test were |
| | primarily the |
| | effect of the |
| | current |
| | economic |
| | environment |
| | and |
| | significantly |
| | reduced gold, |
| | silver and |
| | zinc prices. |
| | The Group |
| | tested all its |
| | mining units |
| | for |
| | impairment: |
| | Arcata, Ares, |
| | Selene, |
| | Pallancata, |
| | San José, |
| | Santa Maria de |
| | Moris and its |
| | project San |
| | Felipe. In |
| | assessing |
| | whether |
| | impairment is |
| | required to |
| | the carrying |
| | value of the |
| | assets related |
| | to each mining |
| | unit, its |
| | carrying value |
| | is compared |
| | with its |
| | recoverable |
| | amount. The |
| | recoverable |
| | amount is the |
| | higher of the |
| | asset´s fair |
| | value less |
| | costs to sell |
| | and the value |
| | in use. Given |
| | the nature of |
| | the Group´s |
| | activities, |
| | information on |
| | the fair value |
| | of an asset is |
| | usually |
| | difficult to |
| | obtain unless |
| | negotiations |
| | with potential |
| | purchasers or |
| | similar |
| | transactions |
| | are taking |
| | place. |
| | Consequently, |
| | unless |
| | indicated |
| | otherwise, the |
| | recoverable |
| | amount used in |
| | assessing the |
| | impairment |
| | charges |
| | described |
| | below is value |
| | in use. The |
| | Group |
| | generally |
| | estimates |
| | value in use |
| | using a |
| | discounted |
| | cash flow |
| | model for each |
| | mining unit |
| | covering its |
| | remaining |
| | useful life. |
+----------+-----------------+
| | The |
| | calculation |
| | of value in |
| | use is most |
| | sensitive |
| | to the |
| | following |
| | assumptions: |
+----------+-----------------+
| | * Commodity |
| | prices - |
| | Commodity |
| | prices of |
| | gold and |
| | silver are |
| | based on |
| | external |
| | market |
| | consensus |
| | forecasts. |
| | Gold prices |
| | range from |
| | US$750 to |
| | US$879, |
| | silver |
| | prices range |
| | from |
| | US$11.84 to |
| | US$13.00 and |
| | zinc prices |
| | range from |
| | US$1.521 to |
| | US$1.984. |
| | * |
| | Estimation |
| | of reserves |
| | and |
| | resources - |
| | Reserves and |
| | resources |
| | are based on |
| | management's |
| | estimate |
| | using |
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