IGO Interactive Annual Report 2019

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 JUNE 2019 Notes to the consolidated financial statements 30 June 2019 (continued) 8 Trade and other receivables (continued) (b) Key estimates and judgements (continued) The allowance for expected credit losses assessment requires a estimation based on a degree of judgement. It is based on the lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit loss rate for each group. These assumptions include recent sales experience and historical collection rates. 9 Inventories 2019 $'000 2018 $'000 Current Mine spares and stores 19,023 13,831 ROM inventory 32,866 39,943 Concentrate inventory 12,006 23,258 Gold in circuit 1,454 1,585 Gold dore 4,925 3,870 70,274 82,487 Non-current ROM inventory 52,594 33,012 52,594 33,012 (a) Classification of inventory Inventory classified as non-current relates to low grade (0.6g/t to 1.2g/t) gold ore stockpiles which are not intended to be utilised within the next 12 months but are anticipated to be utilised beyond that period. (b) Recognition and measurement (i) Ore, concentrate and gold inventories Inventories, comprising nickel, copper and cobalt in concentrate, gold dore, gold in circuit and ore stockpiles, are valued at the lower of weighted average cost and net realisable value. Costs include fixed direct costs, variable direct costs and an appropriate portion of fixed overhead costs. A portion of the related depreciation, depletion and amortisation charge is included in the cost of inventory. (ii) Mine spares and stores Inventories of consumable supplies and spare parts are valued at the lower of cost and net realisable value. Cost is assigned on a weighted average basis. Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion, and the estimated costs necessary to make the sale. The recoverable amount of surplus items is assessed regularly on an ongoing basis and written down to its net realisable value when an impairment indicator is present. (c) Key estimates and judgements The Group reviews the carrying value of inventories regularly to ensure that their cost does not exceed net realisable value. In determining net realisable value various factors are taken into account, including estimated future sales price of the product based on prevailing spot metals prices at the reporting date, less estimated costs to complete production and bring the product to sale. Stockpiles are measured by estimating the number of tonnes added and removed from the stockpile, the amount of contained metal based on assay data, and the estimated recovery percentage based on the expected processing method. Independence Group NL 22 IGO ANNUAL REPORT 2019 — 85