Precious Metals Forum

Go Back   Precious Metals Forum > Precious Metals and Economic News > PM Bug > Mining

LinkBack Thread Tools
Old 08-17-2013, 07:54 AM   #1
Golden Cockroach
PMBug's Avatar
Join Date: Oct 2011
Location: In Scrooge McDuck's vault
Posts: 7,064
Liked: 2454 times
Impairment charges for mining companies explained

I thought this was interesting:
Quote :
Impairment charges, as they are called, dominated subsequent headlines. To tally a few of largest: Newcrest - $5.6 billion; Barrick Gold - $8.7 billion; Kinross - $2.3 billion; Goldcorp - $1.9 million; and Newmont - $2 billion. The explanation for the losses was a variation on the same theme. They were losses “largely due to short-term and long-term gold price assumptions,” as Kinross put it. The wording was much the same across the gold herd.

But how does an impairment charge come to be? What are the basic mechanics gold miners use to assess it? What happens if the price of gold goes back up? These are questions worth considering as the force of such losses, driven by a much diminished gold price, blows through the balance sheets of so many gold miners. They were the overarching questions the PwC's Dean Braunsteiner, an accountant specializing in the mining sector, addressed in an interview with Mineweb Thursday.

... Under old, pre-2011, accounting rules in Canada, where many gold miners are headquartered, impairment charges were a one way street. Now, following the adoption of new international accounting standards a couple years back, known as IFRS, the accounting goes both ways.

“Under IFRS not only do you have impairment charges, but you can have those impairments reversed in the future, which is quite unusual compared to what I would call old Canadian GAAP (generally accepted accounting practices) where once you took an impairment charge, that was it. You took the charge and went with that revised amount going forward.”

With the new IFRS standard if the gold price rises again, buoying longer term forecasts along with it, then non-cash net gains will make a mark. “So we're seeing a bunch of impairment charges now,” Braunsteiner says. “But in the future as the longterm price of gold recovers, you may in fact start to see companies writing up their assets, or reversing those impairment charges, which will be a bit unusual.”
The journey of a thousand miles begins with a single step. - Lao Tzu

Important stuff: PMBug 101 * Forum Guidelines * Support PMBug
PMBug is offline   Reply With Quote
Old 09-15-2013, 05:17 AM   #2
Join Date: Sep 2013
Posts: 1
Liked: 0 times
This is a test message i new to this app. Just testing the reply feature.

Sent from my iPhone using Tapatalk - now Free
CoalTrader is offline   Reply With Quote

Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are On

Similar Threads
Thread Thread Starter Forum Replies Last Post
World Economic Collapse Explained jprich16 Fiat Ponzi 0 07-07-2013 02:57 PM
PM streaming companies (SLW business model) swissaustrian Mining 18 04-09-2013 05:29 PM
CFTC files charges for gold and silver fraud PMBug PM Bug 0 12-08-2012 08:30 AM
Guatemala seeks 40% stake of all mining companies PMBug Mining 3 06-29-2012 11:13 AM
Government Explained video Island_Dweller STS 2 04-08-2012 03:08 PM

All times are GMT -5. The time now is 06:06 AM.

Powered by vBulletin® from Jelsoft Enterprises Ltd.
Content Relevant URLs by vBSEO 3.6.0 PL2 ©2011, Crawlability, Inc.
Content of copyright © 2011 - 2019 Measuring Up. All Rights Reserved.