NOTES TO FINANCIAL STATEMENTS 31 December 2025 3 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (cont’d) The carrying amounts of the Group’s deferred stripping costs are disclosed in Note 13 to the financial statements. (h) Impairment review of deferred stripping costs and mining properties The Group assesses annually whether its deferred stripping costs and mining properties exhibit any indication of impairment. Should there be any indicator of impairment, the Group then estimates the recoverable amounts based on value in use calculations. These calculations require the use of judgement and estimates. The carrying value of deferred stripping costs and mining properties are reviewed regularly during the financial year, taking into consideration the available facts and circumstances, and to the extent to which the capitalised value exceeds its recoverable value, the excess is provided for or written-off in the financial year in which this is determined. The Group has engaged independent qualified persons to estimate the proved and probable coal reserves which are used to form the basis of the impairment review, and may adjust such valuation with other estimates including discount rates, forecasted coal prices and production volumes not covered by the independent qualified persons. As coal prices may be volatile, there is a risk that the recoverable amounts may be lower than the carrying amounts. The carrying amounts of the Group’s deferred stripping costs and mining properties are disclosed in Notes 13 and 15 to the financial statements respectively. Sensitivity to demand for coal and consideration of Paris Convention Management has taken the assumption during the impairment assessment that throughout the remaining life of mines where licenses are extended, there will continue to be a ready market for thermal coal with no significant demand decline in the immediate future due to the policies arising from the Paris convention with thermal coal still remaining as a transition fuel for several decades before a viable comparable alternative and transition thereof will be realised. When coal is displaced as a fuel for power generation at a pace more rapid than presently augured, it may result in lower prices for coal which may have bearing on the impairment assessment, as forecasted coal prices is a key assumption in the assessment. On the basis that assumes no mitigating factors are taken to counter price fluctuations, any resulting impairments would likely be higher than would otherwise occur. In reality, if coal prices were to reduce significantly, management would adopt alternative strategies and plans to manage the operating costs and alter mining plans to reduce the overall impact to the recoverable amounts of the mines, so as to preserve the underlying economic value of the mines. The Government of Indonesia wherein the coal mines are geographically located has committed to reduce carbon emission by 2030 and net zero emissions by 2060. As at date of this report, no announcement or legislations have been passed in relation to the Paris convention aside from a proposed carbon tax to power plants which has been delayed, a Climate Risk Management & Scenario Analysis (CRMS) on 5 March 2024 along with a new financial goal to help countries to protect against climate disasters on 22 November 2025 and hence do not translate to direct financial implications for the Group for the financial year ended 31 December 2025. Management has also taken into consideration the Just Energy Transition Partnership’s (“JETP”) plan announcement in the Group of 20 (“G20”) leaders’ summit in November 2022 along with the subsequent Comprehensive Investment and Policy Plan in November 2023. Accordingly, no revisions were made to the assumptions undertaken for impairment analysis for the current financial year ended 31 December 2025 as there are yet known policies which directly translates into operational or financial measures for the Group. Further, the impairment assessment factors in operating cash flows from SDJ Mine until 2027, TBR mine until 2031 and TRA mine until 2040. The aforementioned reduces the exposure of the Group to declining coal prices due to the Paris Convention and the JETP as management assumes that the policies by governments to achieve the 2060 target would have yet gained full traction by 2030 and with more prominent policies and effects towards the later part of the targeted 2060. 76
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