NOTES TO FINANCIAL STATEMENTS 31 December 2025 2 SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (cont’d) Mining properties are classified as an asset under property, plant and equipment. Mining properties include mining rights and costs capitalised to develop the mine up to the production phase. The economic benefits from the assets are consumed in a pattern which is linked to the production level. These assets are depreciated on a unit-of-production basis. Depreciation starts from the date when commercial production commences. The estimated useful lives, mining reserves, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis. The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amounts of the asset and is recognised in profit or loss. DEFERRED EXPLORATION COSTS - Exploration activities involves the seeking of mineral resources and determination and assessment of technical feasibility and commercial viability of the identified resources. Such activities include, but are not limited to: • collecting exploration data through topographical, geochemical and geophysical studies; • exploration drilling, trenching and sampling; • determining and examining the volume and grade of the resource; and • surveying transportation and infrastructure requirements. Administrative costs that are not directly attributable to a specific exploration area are charged to profit or loss. License costs paid in connection with obtaining rights to explore in an area are capitalised and amortised over the term of the license or permit. Exploration costs (including amortisation of capitalised license costs) related to an area of interest are capitalised as incurred, except in the following circumstances: • before legal rights has been obtained to explore the area; • after determining the technical feasibility and commercial viability of extracting the discovered mineral resources or proven reserves. Capitalisation of exploration costs are recorded under “Deferred exploration costs” and are subsequently measured at cost less any allowance for impairment. Such assets are not depreciated but are subject to assessment for indicators of impairment. Costs that are not expected to be recoverable are charged to profit or loss to that extent of those costs. Upon commencing of mining operations, the explorations costs are capitalised to mining properties and commence depreciation. Cash flows associated with capitalisation of exploration costs are classified as investing activities in the consolidated statement of cash flows, while cash flows in respect of exploration costs that are expensed are classified as operating activities. ASSOCIATES – An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with SFRS(I) 5. Under the equity method, an investment in an associate is recognised initially in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the associate. When the Group’s share of losses of an associate exceeds its interest in that associate (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. An investment in an associate is accounted for using the equity method from the date on which the investee becomes an associate. On acquisition of the investment in an associate, any excess of the cost of the investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired. 69 GEO ENERGY | ANNUAL REPORT 2025
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