2021 Annual Report

Notes to the consolidated financial statements 30 June 2021 (continued) 16 Exploration and evaluation 2021 $'000 2020 $'000 Opening net book amount 95,030 95,197 Additions 8,606 3,111 Transfer to mine properties in production (2,949) - Disposal of joint venture (160) - Transfer to mine properties under construction - (2,260) Impairment loss - (1,018) Closing net book amount 100,527 95,030 (a) Impairment The Group did not recognise any impairment charges during the current reporting period (2020: $1,018,000 relating to the relinquishment of tenements). (b) Recognition and measurement Exploration for and evaluation of mineral resources is the search for mineral resources after the entity has obtained legal rights to explore in a specific area, as well as the determination of the technical feasibility and commercial viability of extracting the mineral resource. Exploration and evaluation expenditure is expensed to the profit or loss as incurred except in the following circumstances in which case the expenditure may be capitalised: • The existence of a commercially viable mineral deposit has been established and it is anticipated that future economic benefits are more likely than not to be generated as a result of the expenditure; and • The exploration and evaluation activity is within an area of interest which was acquired as an asset acquisition or in a business combination and measured at fair value on acquisition. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. An impairment exists when the carrying value of expenditure exceeds its estimated recoverable amount. The area of interest is then written down to its recoverable amount and the impairment losses are recognised in profit or loss. Upon approval for the commercial development of an area of interest, exploration and evaluation assets are tested for impairment and transferred to 'Mine properties in development'. No amortisation is charged during the exploration and evaluation phase. (c) Key estimates and judgements The recoverability of the carrying amount of the exploration and evaluation assets is dependent on the successful development and commercial exploitation, or alternatively, sale of the respective area of interest. The Group reviews the carrying value of exploration and evaluation expenditure on a regular basis to determine whether economic quantities of reserves have been found or whether further exploration and evaluation work is underway or planned to support continued carry forward of capitalised costs. This assessment requires judgement as to the status of the individual projects and their estimated recoverable amount. IGO Limited 33 Notes to The Consolidated Financial Statements 30 June 2021 IGO ANNUAL REPORT 2021 — 103