NKWEF~~1. Carrying value of prospects, rights and exploration assets
The carrying value of prospects, rights and exploration assets at 31 December 2016 comprises the Group’s Garatouw Project. This is considered to be a key audit matter as the recoverability of the carrying value of prospects, rights and exploration assets is subjective, being based on the Group’s ability, and intention, to continue to explore the asset and maintain tenure. The carrying value may also be impacted by the results of exploration work indicating that the mineral reserves may not be commercially viable for extraction. The Group engaged an independent valuation expert to determine the recoverable amount of the Garatouw Project at 31 December 2016. Based on the independent expert’s valuation report, the recoverable amount was determined to be the same as the carrying value and accordingly the Group did not recognise any impairment charge or impairment reversals for the year ended 31 December 2016 as detailed in Note 8 to the financial report. (ii) The Group holds a mining right over the Garatouw Project for a 29 year period expiring 21 January 2044. On 11 October 2016, the South African Department of Mineral Resources (“DMR”) issued the Group with a notice indicating its intention to cancel the mining right due to failure by the Group to comply certain provisions of the Mineral and Petroleum Resources Development Act and the terms of the mining right. The notice required the Group to make a presentation to the DMR as to why the mining right should not be cancelled. This presentation was made to the DMR on 24 November 2016 with the submission of the required documentation under the notice being made on 30 November 2016. This matter is disclosed in Note 8 to the financial report. (i) We involved our valuation specialists to assess the valuation report provided by the Group’s independent valuation expert including assessing: ? The independence, objectivity and capability of the expert used by the Group ? The methodology and valuation method adopted ? The assumptions applied by the Group’s independent valuer providing the report as detailed in Note 8. We also considered the adequacy of the Group’s disclosures with respect to the degree of estimation involved in the determination of the recoverable amount. (ii) We assessed the documentation submitted to the DMR addressing the concerns raised by the DMR in their notice. As a formal decision is yet to be made by the DMR on the withdrawal of the notice, an Emphasis of Matter paragraph has been included in our auditor’s report to highlight the significant uncertainty over the withdrawal of the notice and its impact on the Group’s ownership of the Garatouw Project. We have assessed the disclosures made in the financial report in relation to this matter. http://www.nkweplatinum.com/ReportPDF/2016%20Annual%20Report%20to%20Shareholders%20(pdf).pdf
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