NOTES TO FINANCIAL STATEMENTS 31 December 2025 3 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (cont’d) (d) Depreciation of mining properties The amounts recorded for depreciation as well as the recovery of the carrying value of mining properties depends on the estimates of coal reserves and the economic lives of future cash flows from related assets. The primary factors affecting these estimates are technical engineering assessments of producible quantities of coal reserves in place and economic constraints such as the assumptions related to anticipated commodity prices and the costs of development and production of the reserves. The carrying amounts of the Group’s mining properties are disclosed in Note 15 to the financial statements. (e) Calculation of loss allowance When measuring ECL, the Group uses reasonable and supportable forward-looking information, which is based on assumptions for the future movement of different economic drivers and how these drivers will affect each other. Loss given default is an estimate of the loss arising on default. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive, taking into account cash flows from collateral and integral credit enhancements. Probability of default constitutes a key input in measuring ECL. Probability of default is an estimate of the likelihood of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of future conditions. For credit-impaired receivables, management takes into account the probability-weighted amount that is determined by evaluating a range of possible outcomes, the time value for money and reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions. Future economic conditions may differ to the scenarios outlined, the impact of which will be accounted for in the future reporting periods. In measuring ECL on the refundable deposit to PT Golden Prima Energy (“GPE”) of US$30 million (2024 : US$30 million) (Note 9), management had considered, amongst others, (i) US$25 million guarantee on the deposit provided by PT Sinar Unggul Internasional (“SUI”), the holding company of GPE, and (ii) the financial position and performance of SUI and GPE. Based on assessment performed, management is satisfied with the recoverability of the amount due from GPE and is confident that the US$30 million is recoverable within the next financial year by the due date of 31 December 2026. The carrying amounts of trade and other receivables and key assumptions including the probability of occurrence under different economic scenarios, expected net future cash flow, expected recovery year and discount rate used, are disclosed in Note 8 to the financial statements. (f) Trade and other receivables measured at fair value through profit and loss As disclosed in Note 8(b), the fair value of trade and other receivables under Cooperation Agreement is determined using discounted cash flow approach. Under the approach, future cash flows are estimated based on present value of expected payments, discounted using the entity’s discount rate. The expected payments are determined based on the coal sold from the underlying coal mines under the Cooperation Agreement. The calculation of value in use is most sensitive to the following assumptions: • Discount rate • Forecasted coal prices • Forecasted production volume The future cash flows are discounted using a discount rate of 13.1% (2024 : 12.6%). The fair value measurement of trade and other receivables under Cooperation Agreement is disclosed in Note 4(c)(vi) to the financial statements. (g) Deferred stripping costs Certain mining costs, principally those that relate to the stripping of waste and which relate to future economically recoverable coal to be mined, are included in deferred stripping costs. These costs are deferred and subsequently either taken to the cost of producing inventory by way of amortisation of deferred stripping costs for the SDJ and TBR mines, or recognised into the profit or loss using the weighted average cost method upon sales of coal inventories for the TRA mine. The estimated waste incurred to improve access to remaining ore reserves, estimates of coal reserves and the remaining life of the mine are regularly assessed by the management to ensure the carrying value and rate of deferral is appropriate taking into consideration the available facts and circumstances from time to time. 75 GEO ENERGY | ANNUAL REPORT 2025
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