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Author: Admin | 2025-04-28
Of the LOM plan during the planning process. The version of the LOM plan that should be considered in assessing the materiality of a major project at an existing operation when making the determination of sustaining vs. non-sustaining classification would typically be the plan that is approved by the company’s Board of Directors and/or used as the basis for external guidance disclosures or making the investment decision.9. How should companies categorize initial development of a mine with respect to sustaining vs non-sustaining?The initial development of a new open pit or underground mine, including related infrastructure should be considered non-sustaining. If a second pit or a second underground mine is developed at the same operation, the initial stripping or surface underground development should also be characterised as non-sustaining if it meets the materiality thresholds for a ‘major project at an existing operation’. This would generally align with the capitalization rules under US GAAP. In certain cases, the initial plan to develop a new open pit or underground mine may include phases of mine development that a company plans to treat as non-sustaining that will occur after the declaration of commercial production. Companies should make this decision at the time of project funding and execution approval and clearly disclose those phases of project development that will be considered non-sustaining in nature after the declaration of commercial production.10. How should companies categorize production phase open pit capitalised stripping and underground mine development costs with respect to sustaining vs non-sustaining?Production phase open pit capitalised stripping and underground mine development would generally be sustaining capital (even if it may meet the definition of “a major project at an existing operation”). Extensions to existing underground footprints and further pushbacks of existing open pits should be considered sustaining, unless: The stripping or underground mine development is expected to take at least 12 months; and The ore production phase is expected to be more than 5 years.It is expected that laybacks at existing open pit mines will be considered sustaining in nature unless they meet the criteria outlined above. Companies that report under US GAAP are not permitted to capitalise open pit stripping costs during the production phase of the mine under EITF 04-6. As a result, differences in reported AISC may arise for this type of expenditure when compared to companies that are permitted to capitalise stripping costs under IFRS.11. How should corporate donations be classified with respect to sustaining vs. non- sustaining?Because corporate donations are generally made to support a company’s social license to operate, these costs should generally be categorised as sustaining costs. The WGC Guidance Note recognises that certain community donations may be considered non-sustaining when incurred in connection with the development of a
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