Exploration and Evaluation Assets: Classification and Reclassification

Classification of Exploration and Evaluation Assets

• NML (presumably, the entity in question) classifies exploration and evaluation assets as either tangible or intangible.
• The classification depends on the nature of the acquired assets.
• NML applies the classification consistently.

Tangible vs. Intangible Assets

• Some exploration and evaluation assets are treated as intangible. Example: legal rights.
• Other assets are treated as tangible. Example: Stone Crushing Plant.
• If a tangible asset is consumed in developing an intangible asset, the consumed amount becomes part of the cost of the intangible asset.
• Important: Using a tangible asset to develop an intangible asset does not reclassify the tangible asset as intangible.

Re-classification of Exploration and Evaluation Assets

• An exploration and evaluation asset is reclassified when the technical feasibility and commercial viability of extracting a mineral resource is demonstrable.

NIMI's Treatment

• NIMI's treatment of given transactions in the financial statements…