NOTES TO FINANCIAL STATEMENTS 31 December 2025 2 SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (cont’d) Coal inventories and diesel fuel are stated at the lower of cost and net realisable value. Cost is determined using the weighted average cost method which include direct material, overburden removal (deferred stripping costs), mining, processing, labour incurred in the extraction process and an appropriate proportion of variable and fixed overhead costs directly related to mining activities. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and applicable variable selling expenses. Marketing coal inventories are recorded at fair value less costs to sell. Unrealised gains and losses from the changes in fair values are reported in cost of goods sold. DEFERRED STRIPPING COSTS - Overburden and other mine waste materials are often removed during the initial development of a mine site in order to access the mineral deposit. This activity is referred to as development stripping. The directly attributable costs are capitalised under mining properties. Capitalisation of development stripping costs ceases at the time that saleable material begins to be extracted from the mine. Production stripping commences from the point saleable materials are being extracted from the mine. Stripping costs incurred during the production phase might benefit current period production and improve access to ore bodies in future periods. Where benefits are realised in the form of inventory produced in the current period, these costs are accounted for as part of the cost of producing inventory. Where a benefit of improved access exists, the costs are recognised as part deferred stripping costs when the following criteria are met: • It is probable that the future economic benefits (improved access to the coal body) associated with the stripping activity will flow to the entity; • The entity can identify the component of the coal body for which access has been improved; and • The costs relating to the stripping activity associated with that component can be measured reliably. In identifying the components of the ore body, mining operations personnel will analyse the Group’s mine plans. Generally, a component will be subset of the total ore body and a mine may have several components, for example, certain quantities of coal within separate mining pits. The deferred stripping costs are initially measured at cost, which is the accumulation of costs directly incurred to perform the stripping activity that improve access to the identified component of ore, plus an allocation of directly attributable overhead costs. When the costs of stripping to improve access to an ore body are not clearly distinguishable from the costs of producing current inventories, i.e. there is a mixture of waste and ore being removed, the stripping costs are allocated based on a relevant measure of production. This production measure is calculated for the identified component of the ore body. The Group uses the expected volume of waste extracted compared with the actual volume for a given volume of ore production. The deferred stripping costs from development stripping is subsequently amortised using the unit-of-production method over the life of the identified component of the ore body for which access has been improved. Economically recoverable reserves, which comprise proven and probable reserves, are used to determine the expected useful life of the identified component of the ore body. PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. Construction-in-progress for qualifying assets, includes borrowing costs capitalised in accordance with the Group’s accounting policy. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use. Depreciation is charged so as to write off the cost of assets, other than construction-in-progress, over their estimated useful lives, using the straight-line method, on the following bases: Number of years Leasehold property Over terms of lease Machineries and heavy equipment 2 to 10 Building 20 Barges 8 Jetty 4 Motor vehicles 3 to 5 Temporary housing facility 2 Office equipment and furniture 4 to 5 Computer and software 4 Field equipment 3 to 10 Fully depreciated assets still in use are retained in the financial statements. 68
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