ANNUAL Report June 2024 Notes to the Consolidated Financial Statements 49 Consolidated – 2023 Level 1 Level 2 Level 3 Total Total assets - - Deferred acquisition costs 221,729 - - 221,729 Capitalised borrowing costs 308,500 - - 308,500 Shares held in listed entities 5,156 - - 5,156 Unexpired Interest - 2,840,732 - 2,840,732 535,385 2,840,732 - 3,376,117 Total liabilities Deferred interest - 316,385 - 316,385 Financial liability - 12,840,732 - 12,840,732 - 13,157,117 - 13,157,117 There were no transfers between levels during the financial year. Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. The following table shows the valuation techniques used in measuring fair values for financial instruments in the Statement of Financial Position: Type Valuation technique Equity securities Quoted market share price. Deferred Costs Actual costs incurred. Other financial assets & liabilities* Discounted cash flows: the valuation model considers the present value of expected payments, discounted using a risk-adjusted discount rate.** * Other financial assets include unexpired interest. Other financial liabilities include deferred interest and financial liabilities. ** Refer Note 25 for the inputs used in the discounted cash flows valuation model. (d) Commodity Price Risk The Company is exposed to commodity price risk. This risk arises from its activities directed at exploration and mining development of mineral commodities. If commodity prices fall, the market for companies exploring and/or mining for these commodities is affected. The Company does not currently hedge its exposures. (e) Fair Values For financial assets and liabilities, the fair value approximates their carrying value. No financial assets and financial liabilities are readily traded on organised markets in standardised form other than listed investments. The Company has no financial assets, including derivative financial assets and liabilities, where the carrying amount exceeds the net fair values on the reporting date. The Company’s receivables at the reporting date comprise of GST input tax credits refundable by the Australian Taxation Office and other receivables. The balance (if any) of receivables comprises prepayments (if any). The credit risk on the Company's financial assets, which has been recognised on the Statement of Financial Position, is generally the carrying amount. (f) Capital Risk Management The consolidated entity’s objectives when managing capital are to safeguard its ability to continue as a going concern so that it can provide returns for shareholders and benefits for other stakeholders and maintain an optimum capital structure to reduce the cost of capital. Consistently with others in the industry, the consolidated entity monitors capital based on the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings less cash and cash equivalents. Total capital is calculated as “equity” as shown in the Statement of Financial Position plus net debt. The gearing ratio as at 30 June 2024 was 65% as opposed to 57% at 30 June 2023. EQ Resources Limited Annual Report 2024 115
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