Notes to the Consolidated Financial Statements continued ANNUAL REPORT June 2026 Notes to the Consolidated Financial Statements For processed inventories, costs are derived on an absorption costing basis, comprising costs of purchasing raw materials and costs of production, including attributable mining and processing overheads, having regard to normal operating capacity. Fixed production overheads are allocated to inventory based on normal operating capacity; any unallocated overheads arising from abnormally low production or plant idle time are recognised as an expense in the period in which they are incurred. Inventory quantities are assessed primarily through surveys and assays. (m) Trade and other receivables Trade receivables are amounts due from customers for concentrate sold in the ordinary course of business. As they generally do not contain a significant financing component, they are recognised initially at the transaction price determined under AASB 15 and are subsequently measured at amortised cost, less a loss allowance for expected credit losses. Trade receivables are due for settlement within terms consistent with the Group's offtake arrangements and are classified as current assets, consistent with the Group's operating cycle, unless collection is not expected within 12 months of the reporting date. (n) Financial instruments Initial recognition and measurement Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value on initial recognition, as appropriate. Classification and subsequent measurement of financial assets Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (FVOCI) or fair value through profit or loss (FVTPL). The classification depends on the Group's business model for managing the financial asset and the contractual cash flow characteristics of the asset. • Trade receivables and other financial assets held to collect contractual cash flows that are solely payments of principal and interest are measured at amortised cost using the effective interest method, less any impairment. • Financial assets held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets are measured at FVOCI. • Financial assets that do not meet the criteria for amortised cost or FVOCI are measured at FVTPL. EQ Resources Limited Annual Report 2026 55
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