Westgold Resources Limited Annual Report 2021

81 Westgold Resources Limited Annual Report 2021 18. EXPLORATION AND EVALUATION EXPENDITURE (CONTINUED) The ultimate recoupment of costs carried forward for exploration and evaluation phases is dependent on the successful development and commercial exploitation or sale of the respective mining areas. During the year, a review was undertaken for each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. In assessing the carrying value of all of the Group’s projects, certain expenditure on exploration and evaluation of mineral resources has not led to the discovery of commercially viable quantities of mineral resources. As a result, exploration and evaluation expenditure of $86,058 (2020: $356,317) was written off to the profit and loss. The amount relates to tenements which were written down to nil as the expenditure did not result in the discovery of commercially viable quantities of mineral resources and as a result no future benefits are expected. 19. RIGHT-OF-USE ASSETS Group as a lessee AASB 16 Leases requires the recognition of right-of-use assets for the remaining term of the current leases for office premises and the warehouse facility, as well as the power stations at the various mine sites. The Group has lease contracts for various items of mining equipment, motor vehicles and buildings used in its operations. Leases of mining equipment generally have lease terms between three and seven years, while motor vehicles and buildings generally have lease terms between three and five years. The Group also has certain leases of assets with lease terms of 12 months or less and leases of office equipment with low value. The Group applies the short-term lease and lease of low-value assets recognition exemptions for these leases. Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period: Power Stations Premises Mining Equipment Total As at 1 July 2020 8,478,339 2,963,092 501,146 11,942,577 Additions 2,561,880 – 760,382 3,322,262 Disposals – – (7,032) (7,032) Depreciation expense (6,640,551) (929,874) (428,495) (7,998,920) As at 30 June 2021 4,399,668 2,033,218 826,001 7,258,887 Set out below are the carrying amounts of lease liabilities (included under interest-bearing loans and borrowings) and the movements during the period: 2021 2020 As at 1 July 11,942,577 12,966,644 Additions 3,322,262 7,009,827 Disposals (7,032) – Accretion of interest 347,136 593,956 Payments (8,346,056) (8,627,850) As at 30 June 7,258,887 11,942,577 The following are the amounts recognised in profit or loss: Depreciation expense for right-of-use assets Included in cost of sales 7,482,892 7,531,333 Included in administration expenses (Note 7) 516,028 502,561 Interest expense on lease liabilities 347,136 593,956 Less interest expense capitalised to qualifying asset (347,136) (593,956) Total amount recognised in profit or loss 7,998,920 8,033,894 The interest expense of these lease liabilities has been capitalised to the qualifying assets.