103 Westgold Resources Limited Annual Report 2022 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Page 2 1. Impairment assessment of non-current assets Why significant How our audit addressed the key audit matter At 30 June 2022, the Group had non-current assets of $422,534,362 comprising capitalised development and mine properties expenditure, property, plant and equipment and right of use assets (refer to Notes 16, 17 and 19 of the financial report). At the end of each reporting period, the Group exercises judgment in determining whether there is any indication of impairment of these assets. If any such indicators exist, the Group estimates the recoverable amount of the applicable assets. The Group assessed whether any indicators of impairment were present at 30 June 2022 and concluded that an indicator or indicators of impairment were present in respect of its Murchison CGO, Murchison MGO and Bryah FGO cash generating units (CGUs). An impairment loss of $109,423,641 for the Murchison CGO CGU, $36,285,586 for the Murchison MGO CGU and $29,826,183 for the Bryah FGO CGU was recognised for the year ended 30 June 2022 (refer to Note 17 of the financial report). We considered this to be a key audit matter because of the: ► Significant judgment involved in determining whether indicators of impairment were present. ► Significant judgment and estimates involved in the determination of the recoverable amount of the CGUs, including assumptions relating to future gold prices, operating and capital costs, the discount rate used to reflect the risks associated with the forecast cash flows having regard to the current status of the CGUs and the reserves and resources included in the life of mine plans. We evaluated the Group’s assessment as to the presence of any indicators of impairment. Our audit procedures included the following: ► Comparison of the Group’s market capitalisation relative to its net assets. ► Reading operational reports, board reports, minutes and market announcements. ► Consideration of changes to reserves and resources and other macro-economic factors including the gold price and discount rates. Our audit procedures related to the impairment assessment made by the Group following the identification of impairment indicators included the following: ► Ensured the Group's impairment methodology was in accordance with the requirements of Australian Accounting Standards. ► Evaluated the assumptions and methodologies used by the Group, in particular, those relating to forecast cash flows, including the inputs used to formulate them. This included assessing, with involvement from our valuation specialists, where appropriate, the gold prices with reference to market prices (where available), market research, market practice, market indices, broker consensus, historical performance, discount rates and resource valuation multiples. ► Tested the mathematical accuracy of the Group's discounted cash flow impairment models and agreed relevant data, including assumptions on timing and future capital and operating expenditure, to the latest Board approved budgets and life of mine plans (as appropriate). ► Assessed the work of the Group's internal experts with respect to the capital and operating assumptions used in the cash flow forecasts. We also considered the competence, qualifications and objectivity of the experts and assessed whether key capital and operating expenditure assumptions were consistent with information in Board reports and releases to the market. ► Assessed the work of the Group's experts with respect to the reserve and resource assumptions used in the cash flow forecasts. This included understanding the estimation process. We also examined the competence, qualifications and objectivity of the Group's
RkJQdWJsaXNoZXIy MjE2NDg3