ANNUAL Report June 2024 Notes to the Consolidated Financial Statements 25 (g) Inventory Inventory is valued at the lower of cost and net realisable value as per AASB 102 with the exception of the 7 million tonnes of stockpiled inventory which was recognised at fair value as part of the Mt Carbine Quarries Pty Ltd business combination recognised on 28 June 2019. This inventory will be consumed on a units of operation basis. The cost of partly-processed and saleable products is generally the cost of production, including: ▪ labour costs, materials and contractor expenses which are directly attributable to the processing of quarry material or the production of tungsten concentrate; ▪ the depreciation of property, plant and equipment used in the processing of quarry material or the production of tungsten concentrate; and ▪ Production overheads. For processed inventories, costs are derived on an absorption costing basis. Cost comprises costs of purchasing raw materials and costs of production, including attributable mining and processing overheads taking into consideration normal operating capacity. Inventory quantities are assessed primarily through surveys and assays. (h) Borrowings Borrowings are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the accounting policy for borrowing costs. Borrowings are classified as current unless the Group has an unconditional right to defer the settlement of the liability for at least 12 months after the reporting date. (i) Short-term and Other Long-term Employee Benefits A liability is recognised for benefits accruing to employees in respect of wages and salaries and annual leave in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service. Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service. Liabilities recognised in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Group is respect of services provided by employees up to the reporting date. (j) Provisions Provisions are recognised when the group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. (k) Cash and Cash Equivalents Cash and short-term deposits in the Statement of Financial Position comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less. For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of any outstanding bank overdrafts, if any. EQ Resources Limited Annual Report 2024 91
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