Contents
INTERNATIONAL FINANCIAL REPORTING STANDARD 6
EXPLORATION FOR AND EVALUATION OF MINERAL RESOURCES
OBJECTIVE
1
SCOPE
3
RECOGNITION OF EXPLORATION AND EVALUATION ASSETS
6
Temporary exemption from IAS 8 paragraphs 11 and 12
6
MEASUREMENT OF EXPLORATION AND EVALUATION ASSETS
8
Measurement at recognition
8
Elements of cost of exploration and evaluation assets
9
Measurement after recognition
12
Changes in accounting policies
13
PRESENTATION
15
9
Measurement after recognition
12
Changes in accounting policies
13
PRESENTATION
15
Classification of exploration and evaluation assets
15
Reclassification of exploration and evaluation assets
17
IMPAIRMENT
18
Recognition and measurement
18
Specifying the level at which exploration and evaluation assets are assessed for impairment
21
DISCLOSURE
23
EFFECTIVE DATE
26
TRANSITIONAL PROVISIONS
27
APPENDICES
A Defined terms
B Amendments to other IFRSs
EFFECTIVE DATE
26
TRANSITIONAL PROVISIONS
27
APPENDICES
A Defined terms
B Amendments to other IFRSs
APPROVAL BY THE BOARD OF IFRS 6 ISSUED IN DECEMBER 2004
APPROVAL BY THE BOARD OF AMENDMENTS TO IFRS 1 AND IFRS 6 ISSUED IN JUNE 2005
FOR THE BASIS FOR CONCLUSIONS, SEE PART C OF THIS EDITION
BASIS FOR CONCLUSIONS
DISSENTING OPINIONS
International Financial Reporting Standard 6
Exploration for and Evaluation of Mineral Resources
(IFRS 6) is set out in
paragraphs 1–27
and
Appendices A
(IFRS 6) is set out in
paragraphs 1–27
and
Appendices A
and
B
. All the paragraphs have equal authority. Paragraphs in
bold type
state the main principles. Terms defined in
Appendix A
are in
italics
the first time they appear in the Standard. Definitions of other terms are given in the
Glossary
. IFRS 6 should be read in the context of its
objective
and the
Basis for Conclusions
, the
Preface to IFRS Accounting Standards
and the
Basis for Conclusions
, the
Preface to IFRS Accounting Standards
and the
Conceptual Framework for Financial Reporting
.
Basis of Preparation of Financial Statements
provides a basis for selecting and applying accounting policies in the absence of explicit guidance.
[
Refer:
IAS 8 paragraphs 10–12
. However, in this case, refer also to
IFRS 6 paragraphs 6, 7
,
9
,
10
,
13
and
14
.]
International Financial Reporting Standard 6
,
9
,
10
,
13
and
14
.]
International Financial Reporting Standard 6
Exploration for and Evaluation of Mineral Resources
Objective
1
The objective of this IFRS is to specify the financial reporting for the
exploration for and evaluation of mineral resources
.
2
In particular, the IFRS requires:
(a)
limited improvements to existing accounting practices for
exploration and evaluation expenditures
.
(b)
entities that recognise
exploration and evaluation assets
.
(b)
entities that recognise
exploration and evaluation assets
to assess such assets for impairment in accordance with this IFRS
[
Refer:
paragraphs 18–22
]
and measure any impairment in accordance with
Impairment of Assets
.
(c)
disclosures that identify and explain the amounts in the entity’s financial statements arising from the
exploration for and evaluation of mineral resources
and help users of those financial statements
[
Refer:
Conceptual Framework
paragraphs 1.2–1.10
and
[
Refer:
Conceptual Framework
paragraphs 1.2–1.10
and
2.36
]
understand the amount, timing and certainty of future cash flows from any exploration and evaluation assets recognised.
[
Refer:
paragraphs 23–25
Basis for Conclusions paragraphs BC50–BC57
]
Scope
[
Refer:
Basis for Conclusions paragraphs BC6–BC8
]
3
An entity shall apply the IFRS to
exploration and evaluation expenditures
that it incurs.
E1
E1
[IFRIC®
Update
, January 2006, Agenda Decision, ‘
that it incurs.
E1
E1
[IFRIC®
Update
, January 2006, Agenda Decision, ‘
Exploration for and Evaluation of Mineral Resources
—Application of the "full‑cost" method’
The IFRIC was asked to clarify the effect of the limited scope of IFRS 6 on exploration and evaluation (E&E) activities
. The IFRIC was asked if this limited scope (a) reflected the Board’s intention to impose limits on current national GAAP practices only in respect of activities conducted in the E&E phase, while permitting industry practices in other extractive industry areas (eg development and exploitation) to continue unchanged, or (b) whether the IASB focused on E&E activities because it was the only area for which the IASB was willing to grant some relief from the hi
cause it was the only area for which the IASB was willing to grant some relief from the hierarchy for selection of accounting policies in IAS 8
. Under the latter view, the IAS 8 hierarchy would apply fully to an entity’s selection of IFRS accounting policies for activities outside the E&E phase
. The submission identified some inconsistencies between current extractive industry full‑cost accounting practices in respect of development and exploitation activities but questioned whether the IASB intended to require change from current practices in these areas in advance of a comprehensive extractive industry project.
The IFRIC noted that the effect of the limited scope of IFRS 6 was to grant relief only to policies in respect of E&E activities, and that this relief did not extend to activities before or after the E&E phase. The
Basis for Conclusions on IFRS 6
includes the Board’s intention of limiting the need for entities to change their existing accounting policies for E&E activities. The IFRIC believed it was clear that the scope of IFRS 6 consistently limited the relief from the hierarchy to policies applied to E&E activities and that there was no basis for interpreting IFRS 6 as granting any additional relief in areas outside its scope
. Therefore, the IFRIC believed that diversity in practice should not become established and decided not to add the issue to its agenda.]
4
The IFRS does not address other aspects of accounting by entities engaged in the
exploration for and evaluation of mineral resource
s.
5
An entity shall not apply the IFRS to expenditures incurred:
(a)
before the
exploration for and evaluation of mineral resources
, such as expenditures incurred before the entity has obtained the legal rights to explore a specific area.
(b)
after the technical feasibility and commercial viability of extracting a mineral resource are demonstrable.
Recognition of exploration and evaluation assets
Temporary exemption from
IAS 8 paragraphs 11 and 12
[
Refer:
Basis for Conclusions paragraphs BC17–BC23B
]
6
When developing its accounting policies, an entity recognising
exploration and evaluation assets
shall apply
paragraph 10 of IAS 8
Basis of Preparation of Financial Statements
.
7
Paragraphs 11 and 12 of IAS 8
Basis of Preparation of Financial Statements
.
7
Paragraphs 11 and 12 of IAS 8
specify sources of authoritative requirements and guidance that management is required to consider in developing an accounting policy for an item if no IFRS applies specifically to that item. Subject to
paragraphs 9 and 10
below, this IFRS exempts an entity from applying those paragraphs to its accounting policies for the recognition and measurement of
exploration and evaluation assets
.
exploration and evaluation assets
.
Measurement of exploration and evaluation assets
Measurement at recognition
8
Exploration and evaluation assets
shall be measured at cost.
Elements of cost of exploration and evaluation assets
[
Refer:
Basis for Conclusions paragraphs BC24–BC28
]
9
An entity shall determine an accounting policy specifying which expenditures are recognised as
exploration and evaluation assets
exploration and evaluation assets
and apply the policy consistently. In making this determination, an entity considers the degree to which the expenditure can be associated with finding specific mineral resources. The following are examples of expenditures that might be included in the initial measurement of exploration and evaluation assets (the list is not exhaustive):
(a)
acquisition of rights to explore;
(b)
topographical, geological, geochemical and geophysical studies;
(c)
(b)
topographical, geological, geochemical and geophysical studies;
(c)
exploratory drilling;
(d)
trenching;
(e)
sampling; and
(f)
activities in relation to evaluating the technical feasibility and commercial viability of extracting a mineral resource.
10
Expenditures related to the development of mineral resources shall not be recognised as
exploration and evaluation assets
. The
Conceptual Framework for Financial Reporting
and
Intangible Assets
[
Refer:
IAS 38 paragraphs 51–67
]
and
Intangible Assets
[
Refer:
IAS 38 paragraphs 51–67
]
provide guidance on the recognition of assets arising from development.
11
In accordance with
Provisions, Contingent Liabilities and Contingent Assets
an entity recognises any obligations for removal and restoration that are incurred during a particular period as a consequence of having undertaken the
exploration for and evaluation of mineral resources
.
Measurement after recognition
[
Refer:
exploration for and evaluation of mineral resources
.
Measurement after recognition
[
Refer:
Basis for Conclusions paragraphs BC29–BC31
]
12
After recognition, an entity shall apply either the cost model or the revaluation model to the
exploration and evaluation assets
. If the revaluation model is applied (either the model in
Property, Plant and Equipment
[
Refer:
IAS 16 paragraphs 31–42
]
or the model in
[
Refer:
IAS 38 paragraphs 75–87
]
[
Refer:
IAS 16 paragraphs 31–42
]
or the model in
[
Refer:
IAS 38 paragraphs 75–87
]
) it shall be consistent with the classification of the assets (see
paragraph 15
).
Changes in accounting policies
[
Refer:
Basis for Conclusions paragraph BC49
]
13
An entity may change its accounting policies for
exploration and evaluation expenditures
if the change makes the financial statements more relevant
[
Refer:
Conceptual Framework
paragraphs 2.6–2.11
]
[
Refer:
Conceptual Framework
paragraphs 2.6–2.11
]
to the economic decision‑making needs of users
[
Refer:
Conceptual Framework
paragraphs 1.2–1.10
and
2.36
]
and no less reliable,
E2
or more reliable and no less relevant to those needs. An entity shall judge relevance and reliability using the criteria in
[
Refer:
IAS 8 paragraphs 7–12
]
.
E2
[The term ‘faithful representation’, which was used in the
Conceptual Framework
]
.
E2
[The term ‘faithful representation’, which was used in the
Conceptual Framework
issued in 2010 and is also used in the revised version of the
Conceptual Framework
issued in 2018, encompasses the main characteristics that the
Framework
called ‘reliability’ (refer
Conceptual Framework
paragraphs 2.12–2.19
and
Basis for Conclusions paragraphs BC2.21–BC2.31
).]
14
To justify changing its accounting policies for
exploration and evaluation expenditures
).]
14
To justify changing its accounting policies for
exploration and evaluation expenditures
, an entity shall demonstrate that the change brings its financial statements closer to meeting the criteria in
, but the change need not achieve full compliance with those criteria.
Presentation
Classification of exploration and evaluation assets
[
Refer:
Basis for Conclusions paragraphs BC32–BC34
]
15
An entity shall classify
exploration and evaluation assets
]
15
An entity shall classify
exploration and evaluation assets
as tangible or intangible according to the nature of the assets acquired and apply the classification consistently.
16
Some
exploration and evaluation assets
16
Some
exploration and evaluation assets
are treated as intangible (eg drilling rights), whereas others are tangible (eg vehicles and drilling rigs). To the extent that a tangible asset is consumed in developing an intangible asset, the amount reflecting that consumption is part of the cost of the intangible asset. However, using a tangible asset to develop an intangible asset does not change a tangible asset into an intangible asset.
Reclassification of exploration and evaluation assets
17
Reclassification of exploration and evaluation assets
17
An exploration and evaluation asset shall no longer be classified as such when the technical feasibility and commercial viability of extracting a mineral resource are demonstrable.
Exploration and evaluation assets
shall be assessed for impairment, and any impairment loss recognised, before reclassification.
Impairment
Recognition and measurement
[
Refer:
Basis for Conclusions paragraphs BC36–BC39
]
18
Exploration and evaluation assets
[
Refer:
Basis for Conclusions paragraphs BC36–BC39
]
18
Exploration and evaluation assets
shall be assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. When facts and circumstances suggest that the carrying amount exceeds the recoverable amount, an entity shall measure, present and disclose any resulting impairment loss in accordance with
, except as provided by
paragraph 21
, except as provided by
paragraph 21
below.
19
For the purposes of
exploration and evaluation assets
only,
paragraph 20
of this IFRS shall be applied rather than
paragraphs 8–17 of IAS 36
when identifying an exploration and evaluation asset that may be impaired.
Paragraph 20
uses the term ‘assets’ but applies equally to separate exploration and evaluation assets or a cash‑generating unit.
20
One or more of the following facts and circumstances indicate that an entity should test
20
One or more of the following facts and circumstances indicate that an entity should test
exploration and evaluation assets
for impairment (the list is not exhaustive):
(a)
the period for which the entity has the right to explore in the specific area has expired during the period or will expire in the near future, and is not expected to be renewed.
(b)
substantive expenditure on further
exploration for and evaluation of mineral resources
in the specific area is neither budgeted nor planned.
in the specific area is neither budgeted nor planned.
(c)
exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area.
(d)
(d)
sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale.
In any such case, or similar cases, the entity shall perform an impairment test in accordance with
. Any impairment loss is recognised as an expense in accordance with
.
. Any impairment loss is recognised as an expense in accordance with
.
Specifying the level at which exploration and evaluation assets are assessed for impairment
[
Refer:
Basis for Conclusions paragraphs BC40–BC47
]
21
An entity shall determine an accounting policy for allocating
exploration and evaluation assets
21
An entity shall determine an accounting policy for allocating
exploration and evaluation assets
to cash‑generating units or groups of cash‑generating units for the purpose of assessing such assets for impairment. Each cash‑generating unit or group of units to which an exploration and evaluation asset is allocated shall not be larger than an operating segment
[
Refer:
IFRS 8 paragraphs 5–10
]
determined in accordance with
Operating Segments
.
22
[
Refer:
IFRS 8 paragraphs 5–10
]
determined in accordance with
Operating Segments
.
22
The level identified by the entity for the purposes of testing
exploration and evaluation assets
for impairment may comprise one or more cash‑generating units.
Disclosure
[
Refer:
Basis for Conclusions paragraphs BC50–BC57
]
23
An entity shall disclose information that identifies and explains the amounts recognised in its financial statements arising from the
exploration for and evaluation of mineral resources
.
24
To comply with
paragraph 23
, an entity shall disclose:
(a)
its accounting policies for
exploration and evaluation expenditures
including the recognition of
exploration and evaluation assets
.
(b)
the amounts of assets, liabilities, income and expense and operating and investing cash flows arising from the
exploration for and evaluation of mineral resources
.
25
An entity shall treat
exploration and evaluation assets
.
25
An entity shall treat
exploration and evaluation assets
as a separate class of assets and make the disclosures required by either
or
consistent with how the assets are classified.
Effective date
[
Refer:
Basis for Conclusions paragraph BC58
]
26
An entity shall apply this IFRS for annual periods beginning on or after 1 January 2006. Earlier application is encouraged. If an entity applies the IFRS for a period beginning before 1 January 2006, it shall disclose that fact.
26A
26A
Amendments to References to the Conceptual Framework in IFRS Standards
, issued in 2018, amended paragraph 10. An entity shall apply that amendment for annual periods beginning on or after 1 January 2020. Earlier application is permitted if at the same time an entity also applies all other amendments made by
Amendments to References to the Conceptual Framework in IFRS Standards
Amendments to References to the Conceptual Framework in IFRS Standards
. An entity shall apply the amendment to IFRS 6 retrospectively in accordance with
Accounting Policies, Changes in Accounting Estimates and Errors
.
1
However, if an entity determines that retrospective application would be impracticable or would involve undue cost or effort, it shall apply the amendment to IFRS 6 by reference to
paragraphs 23–28
,
50–53
and
54F of IAS 8
.
26B
paragraphs 23–28
,
50–53
and
54F of IAS 8
.
26B
Presentation and Disclosure in Financial Statements
issued in April 2024 amended
paragraph 6
. An entity shall apply those amendments when it applies
.
Transitional provisions
[
Refer:
Basis for Conclusions paragraphs BC59–BC65
]
27
If it is impracticable to apply a particular requirement of
paragraph 18
]
27
If it is impracticable to apply a particular requirement of
paragraph 18
to comparative information that relates to annual periods beginning before 1 January 2006, an entity shall disclose that fact.
explains the term ‘impracticable’.
[
Refer:
IAS 8 paragraphs 50–53
]
Appendices
Appendix A
Defined terms
This appendix is an integral part of the IFRS.
exploration and evaluation assets
Exploration and evaluation expenditures
exploration and evaluation assets
Exploration and evaluation expenditures
recognised as assets in accordance with the entity’s accounting policy.
[
Refer:
Basis for Conclusions paragraphs BC9–BC16
]
exploration and evaluation expenditures
Expenditures incurred by an entity in connection with the
exploration for and evaluation of mineral resources
before the technical feasibility and commercial viability of extracting a mineral resource are demonstrable.
exploration for and evaluation of mineral resources
The search for mineral resources, including minerals, oil, natural gas and similar non‑regenerative 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.
Appendix B
Amendments to other IFRSs
Appendix B
Amendments to other IFRSs
The amendments in this appendix shall be applied for annual periods beginning on or after 1 January 2006. If an entity applies this IFRS for an earlier period, these amendments shall be applied for that earlier period.
* * * * *
The amendments contained in this appendix when this IFRS was issued in 2004 have been incorporated into the relevant IFRSs published in this volume.
Board Approvals
Approval by the Board of IFRS 6 issued in December 2004
Board Approvals
Approval by the Board of IFRS 6 issued in December 2004
International Financial Reporting Standard 6
Exploration for and Evaluation of Mineral Resources
was approved for issue by ten of the fourteen members of the International Accounting Standards Board. Messrs Garnett, Leisenring, McGregor and Smith dissented. Their dissenting opinions are set out after the Basis for Conclusions.
Sir David Tweedie
Chairman
Thomas E Jones
Vice‑Chairman
Mary E Barth
Hans‑Georg Bruns
Sir David Tweedie
Chairman
Thomas E Jones
Vice‑Chairman
Mary E Barth
Hans‑Georg Bruns
Anthony T Cope
Jan Engström
Robert P Garnett
Gilbert Gélard
James J Leisenring
Warren J McGregor
Patricia L O’Malley
John T Smith
Geoffrey Whittington
Tatsumi Yamada
Approval by the Board of Amendments to IFRS 1 and IFRS 6 issued in June 2005
These Amendments to International Financial Reporting Standard 1
First‑time Adoption of International Financial Reporting Standards
First‑time Adoption of International Financial Reporting Standards
and International Financial Reporting Standard 6
Exploration for and Evaluation of Mineral Resources
were approved for issue by the fourteen members of the International Accounting Standards Board.
Sir David Tweedie
Chairman
Thomas E Jones
Vice‑Chairman
Mary E Barth
Hans‑Georg Bruns
Anthony T Cope
Jan Engström
Robert P Garnett
Gilbert Gélard
James J Leisenring
Warren J McGregor
Patricia L O’Malley
John T Smith
Gilbert Gélard
James J Leisenring
Warren J McGregor
Patricia L O’Malley
John T Smith
Geoffrey Whittington
Tatsumi Yamada
Footnotes
1
When it issued
Presentation and Disclosure in Financial Statements
in April 2024, the IASB changed the title of
to
Basis of Preparation of Financial Statements
.
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