Mine Development Assets

Developing a mine is a capital-intensive process.

In this article we will touch on some of critical IAS16 considerations an entity would have to make when they are in a mine that is still under development, to clearly indicate how essential it is for an entity to have a more accurate and detailed definition of a directly attributable cost. We will also highlight some pitfalls management have to consider in the application of IAS 16. 

Under IAS 16 Property, Plant and Equipment, all direct costs incurred to bring an asset into the location and condition necessary for its intended use must be capitalised as Mine Development Assets until the operation reaches commercial production.

The development phase of a mining project requires distinct accounting treatments, strict cost categorisations, and compliance with local statutory requirements. Below is an overview of some considerations in terms of IAS 16 applications for both underground and surface mining assets.