Impact Minerals Ltd Annual Report 2022 57 Notes to the Consolidated Financial Statements continued NOTE 11: EXPLORATION AND EVALUATION Consolidated 2022 $ 2021 $ Opening balance 11,993,262 10,946,163 Exploration expenditure incurred during the year 3,939,357 4,975,014 Sale of Lachlan Fold Belt tenements (refer Note 9) – (115,141) Sale of Clermont Project – (100,000) Sale of the Blackridge Project (refer Note 9) (475,420) – Sale of 75% interest in the Commonwealth Project (refer Note 9) (3,140,000) – Impairment expense (1,121,911) (3,712,774) Closing balance 11,195,288 11,993,262 The Group recognised an impairment charge of $110,525 in relation to the disposal of its Blackridge project and $949,045 in relation to the disposal of a 75% interest in its Commonwealth project. Further impairment losses of $62,341 were booked following a review of the Group’s remaining tenements. Exploration and evaluation expenditure, including the costs of acquiring licences and permits, are capitalised as exploration and evaluation assets on an area of interest basis. Costs incurred before the Group has obtained the legal rights to explore an area are recognised in the Statement of Profit or Loss and Other Comprehensive Income. Exploration and evaluation assets are only recognised if the rights of the area of interest are current and either: i) t he expenditures are expected to be recouped through successful development and exploitation or from sale of the area of interest; or ii) a ctivities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing. Exploration and evaluation assets are assessed for impairment if sufficient data exists to determine technical feasibility and commercial viability, and facts and circumstances suggest that the carrying amount exceeds the recoverable amount. For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-generating units to which the exploration activity relates. The cash generating unit shall not be larger than the area of interest. Once the technical feasibility and commercial viability of the extraction of minerals in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified to mineral property and development assets within property, plant and equipment. When an area of interest is abandoned or the directors decide that it is not commercial, any accumulated costs in respect of that area are written off in the financial period the decision is made.
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