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PROPERTY, PLANT AND EQUIPMENT
 12 Months Ended
Jun. 30, 2022
Property, plant and equipment [abstract]  
PROPERTY, PLANT AND EQUIPMENT
9
 
PROPERTY,
 
PLANT AND EQUIPMENT
Mineral reserves and resources estimates
The Group is required to determine and report
 
mineral reserves and resources in accordance with the
 
South African Code for the
Reporting
 
of
 
Exploration
 
Results,
 
Mineral
 
Resources
 
and Mineral
 
Reserves
 
(“
SAMREC Code
”).
 
In
 
order
 
to
 
calculate
 
mineral
reserves and
 
resources, estimates
 
and assumptions
 
are required
 
about a
 
range of
 
geological, technical
 
and economic
 
factors,
including but not
 
limited to quantities,
 
grades, production techniques,
 
recovery rates, production
 
costs, transport costs,
 
commodity
demand, commodity prices and exchange rates. Estimating the quantity
 
and/or grade of mineral reserves and resources
 
requires
the size, shape and
 
depth of reclamation sites
 
to be determined by
 
analysing geological data such
 
as the logging and
 
assaying
of
 
drill
 
samples.
 
This
 
process may
 
require complex
 
and
 
difficult
 
geological
 
judgements
 
and calculations
 
to
 
interpret
 
the data.
Because the assumptions used to estimate
 
mineral reserves and resources change from period
 
to period and because additional
geological
 
data is
 
generated
 
during
 
the course
 
of
 
operations, estimates
 
of mineral
 
reserves and
 
resources may
 
change from
period
 
to
 
period.
 
Mineral
 
reserves
 
and
 
resources
 
estimates
 
prepared
 
by
 
management
 
are
 
reviewed
 
by
 
independent
 
mineral
reserves and resources experts.
Changes
 
in
 
reported
 
mineral
 
reserves
 
and
 
resources
 
may
 
affect
 
the
 
Group’s
 
life-of-mine
 
plan,
 
financial
 
results
 
and
 
financial
position in a number of ways including the following:
• asset carrying values may be affected due to changes in estimated future cash flows;
• depreciation
 
charged to
 
profit or
 
loss may
 
change where
 
such charges
 
are determined
 
by the
 
units-of-production method,
 
or
where the useful lives of assets change;
• decommissioning, site restoration and environmental provisions may change where changes in
 
estimated mineral reserves and
resources affect expectations about the timing or cost of these activities; and
• the carrying value of deferred tax assets and liabilities may change due to changes in estimates of the likely recovery of the tax
benefits and charges.
Depreciation
The calculation of
 
the units-of-production rate
 
of depreciation could
 
be affected if
 
actual production in
 
the future varies
 
significantly
from
 
current
 
forecast
 
production.
 
This
 
would
 
generally
 
arise
 
when
 
there
 
are
 
significant
 
changes
 
in
 
any
 
of
 
the
 
factors
 
or
assumptions used in estimating mineral reserves and resources. These factors could include:
 
• changes in mineral reserves and resources;
• the grade of mineral reserves and resources may vary from time to time;
• differences between actual commodity prices and commodity price assumptions;
• unforeseen operational issues at mine sites including planned extraction efficiencies; and
• changes in capital, operating, mining processing and reclamation costs, discount rates and foreign exchange rates.
ACCOUNTING POLICIES
Recognition and measurement
Property,
 
plant and equipment comprise
 
mine plant facilities and
 
equipment, mine property
 
and development (including mineral
rights) and
 
exploration assets.
 
These assets
 
(excluding exploration
 
assets) are
 
initially measured
 
at cost,
 
whereafter they
 
are
measured at cost
 
less accumulated depreciation
 
and accumulated impairment
 
losses. Exploration assets
 
are initially measured
at cost, whereafter they are measured at cost less accumulated impairment losses.
Cost includes expenditure
 
that is directly attributable
 
to the acquisition
 
or construction of the
 
asset, borrowing costs capitalised,
as well
 
as the
 
costs of
 
dismantling and
 
removing an
 
asset and
 
restoring the
 
site on
 
which it
 
is located.
 
Subsequent costs
 
are
included in
 
the asset’s
 
carrying amount
 
or recognised
 
as a
 
separate asset,
 
as appropriate,
 
only when
 
it is
 
probable that
 
future
economic benefits associated with the item
 
will flow to the Group and
 
the cost of the item can be
 
measured reliably.
 
Exploration
and evaluation
 
costs are capitalised
 
as exploration assets
 
on a
 
project-by-project basis, pending
 
determination of the
 
technical
feasibility and commercial viability of the project.
Exploration
 
assets
 
consists
 
of
 
costs
 
of
 
acquiring
 
rights,
 
activities
 
associated
 
with
 
converting
 
a
 
mineral
 
resource
 
to
 
a
 
mineral
reserve - the
 
process thereof includes
 
drilling, sampling and other
 
processes necessary to evaluate
 
the technical feasibility
 
and
commercial viability of a mineral
 
resource to prove whether a mineral
 
reserve exists. Exploration assets also
 
include geological,
geochemical and
 
geophysical studies
 
associated with
 
prospective projects
 
and tangible
 
assets which
 
comprise property,
 
plant
and equipment used
 
for exploratory activities. Costs
 
are capitalised to
 
the extent that
 
they are a directly
 
attributable exploration
expenditure and classified
 
as a separate class
 
of assets on a
 
project by project basis.
 
Once a mineral
 
reserve is determined or
the project
 
ready for
 
development, the
 
asset attributable
 
to the
 
mineral reserve
 
or project
 
is assessed
 
for impairment
 
and then
reclassified to the appropriate
 
class of assets. Depreciation
 
commences when the assets
 
are available for use.
Exploration and
evaluation expenses prior to acquiring rights to explore is recognised in profit or loss.
Depreciation
Depreciation of
 
mine plant
 
facilities and
 
equipment, as
 
well as
 
mining property
 
and development
 
(including mineral
 
rights) are
calculated using the units of production method which
 
is based on the life-of-mine of each site.
 
The life-of-mine is primarily based
on
 
proved
 
and
 
probable
 
mineral
 
reserves.
 
It
 
reflects
 
the
 
estimated
 
quantities
 
of
 
economically
 
recoverable
 
gold
 
that
 
can
 
be
recovered from
 
reclamation sites
 
based on
 
the estimated
 
gold price.
 
Changes in
 
the life-of-mine
 
will impact
 
depreciation on
 
a
prospective
 
basis.
 
The
 
life-of-mine
 
is
 
prepared
 
using
 
a
 
methodology
 
that
 
takes
 
account
 
of
 
current
 
information
 
to
 
assess
 
the
economically recoverable gold from specific reclamation sites and includes the consideration of historical experience.
The depreciation
 
method, estimated
 
useful lives
 
and residual
 
values are
 
reassessed annually
 
and adjusted
 
if appropriate.
 
The
current estimated useful lives
 
are based on the
 
life-of-mine of each site,
 
currently between
two
 
(2021:
three
; 2020:
four
) and
19
years (2021:
13
; 2020:
13
) years for Ergo mining
 
assets and between
two
 
(2021:
three
; 2020:
four
) and
20
 
years (2021:
18
; 2020:
20
) years for FWGR mining assets.
Impairment
The carrying
 
amounts of
 
property,
 
plant and
 
equipment are
 
reviewed at
 
each reporting
 
date to
 
determine whether
 
there is
 
any
indication
 
of
 
impairment,
 
or
 
whenever
 
events
 
or
 
changes
 
in
 
circumstances
 
indicate
 
that
 
the
 
carrying
 
amount
 
may
 
not
 
be
recoverable. If any
 
such indication exists,
 
the asset’s recoverable
 
amount is estimated.
 
For the
 
purposes of assessing
 
impairment,
assets
 
are
 
grouped at
 
the
 
lowest
 
levels
 
for
 
which
 
there are
 
separately identifiable
 
cash flows
 
(“
CGUs
”).
 
The key
 
assets
 
of
 
a
surface retreatment operation which constitutes a CGU are a reclamation site, a metallurgical plant and a tailings storage
 
facility.
These key
 
assets operate
 
interdependently to
 
produce gold.
 
The Ergo
 
and FWGR
 
operations each
 
have separately
 
managed
and monitored reclamation sites, metallurgical plants and tailings storage facilities and are therefore separate CGUs.
The recoverable amount
 
of an asset
 
or CGU is the
 
greater of its value
 
in use and its
 
fair value less costs
 
to sell. The estimated
future cash flows are discounted
 
to their present value using a
 
pre-tax discount rate that reflects
 
current market assessments of
the time value of
 
money and the
 
risks specific to the
 
asset. An impairment loss
 
is recognised in profit
 
or loss if the
 
carrying amount
of an asset or CGU exceeds its recoverable amount.
Amounts in R million
Note
Mine plant
facilities and
equipment
Mine
property and
development
Exploration
assets
Total
June 30, 2022
Cost
2,733.9
2,419.6
14.2
5,167.7
Balance at the beginning of the year
2,604.3
2,154.0
110.5
4,868.8
Additions - property, plant and equipment owned
291.4
301.2
5.8
598.4
Additions - right-of-use assets
10.1
6.0
9.9
-
15.9
Lease modifications
10.1
-
1.2
-
1.2
Lease derecognitions
10.1
(1.6)
-
-
(1.6)
Disposals and scrapping
(185.3)
(61.6)
(0.9)
(247.8)
Change in estimate of decommissioning asset
11
(46.3)
(20.9)
-
(67.2)
Transfers between classes of property,
 
plant and
 
equipment
65.4
35.8
(101.2)
-
Accumulated depreciation and impairment
(1,017.0)
(1,056.9)
(9.7)
(2,083.6)
Balance at the beginning of the year
(1,074.0)
(975.4)
(9.7)
(2,059.1)
Depreciation
5.1
(125.1)
(142.5)
-
(267.6)
Lease derecognitions
1.6
-
-
1.6
Disposals and scrapping
180.5
61.0
-
241.5
Carrying value at end of the year
1,716.9
1,362.7
4.5
3,084.1
Comprising:
Property, plant and equipment owned
1,698.7
1,333.2
4.5
3,036.4
Right-of-use assets
10.1
18.2
29.5
-
47.7
Carrying value at end of the year
1,716.9
1,362.7
4.5
3,084.1
June 30, 2021
Cost
2,604.3
2,154.0
110.5
4,868.8
Balance at the beginning of the year
2,203.5
2,147.0
266.3
4,616.8
Additions - property, plant and equipment owned
237.7
113.3
44.7
395.7
Additions - right-of-use assets
10.1
16.7
-
-
16.7
Lease modifications
10.1
-
2.3
-
2.3
Lease derecognitions
10.1
(1.0)
-
-
(1.0)
Disposals and scrapping
(54.7)
(133.4)
-
(188.1)
Change in estimate of decommissioning asset
11
14.9
14.2
(2.7)
26.4
Transfers between classes of property,
 
plant and
 
equipment
187.2
10.6
(197.8)
-
Accumulated depreciation and impairment
(1,074.0)
(975.4)
(9.7)
(2,059.1)
Balance at the beginning of the year
(1,017.5)
(968.5)
(9.7)
(1,995.7)
Depreciation
5.1
(112.2)
(140.3)
-
(252.5)
Lease derecognitions
1.0
-
-
1.0
Disposals and scrapping
54.7
133.4
-
188.1
Carrying value at end of the year
1,530.3
1,178.6
100.8
2,809.7
Comprising:
Property, plant and equipment owned
1,509.7
1,150.1
100.8
2,760.6
Right-of-use assets
10.1
20.6
28.5
-
49.1
Carrying value at end of the year
1,530.3
1,178.6
100.8
2,809.7
CONTRACTUAL COMMITMENTS
Contractual commitments not provided for in the consolidated
 
financial statements at June 30, 2022 amounted to R
235.9
 
million
(2021: R
65.5
 
million).
Capital expenditure related to
 
material growth projects are
 
financed on a project-by-project
 
basis which may include
 
bank facilities
and existing cash
 
resources. Sustaining capital
 
expenditure is financed
 
from cash generated
 
from operations and
 
existing cash
resources.