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  • Effective life of intangible depreciating assets that are mining, quarrying or prospecting rights

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    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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    The effective life of a mining, quarrying or prospecting right is provided in the table below:

    Asset

    Effective life in years

    1

    A mining, quarrying or prospecting right relating to mining operations (except obtaining petroleum or quarry materials)

    The life of the mine or proposed mine or, if there is more than one, the life of the mine that has the longest life

    2

    A mining, quarrying or prospecting right relating to mining operations to obtain petroleum

    The life of the petroleum field or proposed petroleum field

    3

    A mining, quarrying or prospecting right relating to mining operations to obtain quarry materials

    The life of the quarry or proposed quarry or, if there is more than one, the life of the quarry that has the longest estimated life

    If you acquire a mining, quarrying or prospecting right listed in the above table, you will need to work out the effective life yourself. You will do this by estimating the period until the end of the life of the mine or proposed mine to which the right relates or, if there is more than one such mine, the life of the mine that has the longest estimated life.

    You will have a choice of using either the prime cost or diminishing value method to work out the decline in value of the mining, quarrying or prospecting right.

    You will also be able to recalculate the effective life of the mining, quarrying or prospecting right if there are changed circumstances. Some examples of circumstances that could cause a variation include:

    • a considerable structural price change for the mineral being extracted which leads to the mine's premature permanent closure
    • previously uneconomically mineable geologies becoming economically mineable
    • a noticeable improvement in extraction methods or transport arrangements from the mine which leads to faster extraction of the mineral and a consequential shortening of the remaining life of the mine
    • new information becoming available as a result of further exploration or prospecting on the mining tenement as to the presence of minerals likely to be recoverable which leads to an increase in the remaining life of the mine, or
    • a change to the accepted industry practice that affects the estimation of the life of the mine.
    Last modified: 06 Oct 2009QC 21774