NEOMETALS LTD — Interim / Quarterly Report 2005

Mar 10, 2005

ABN 89 099 116 631 Financial Report for the Half-Year Ended 31 December 2004

Financial Report
for the Half-Year Ended 31 December 2004

	Page Number
Directors' Report	$\mathcal{Z}_{\mathcal{C}}$
Auditor's Independence Declaration	7
Independent Review Report	8
Directors' Declaration	9
Statement of Financial Performance	10
Statement of Financial Position	II
Statement of Cash Flows	12
Notes to the Financial Statements	$13 - 15$

Directors' Report

DIRECTORS' REPORT

The Directors of Reed Resources Ltd submit herewith the Half-Year Report for the half-year ended 31 December 2004. In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows:

DIRECTORS

The names of the Directors of the Company during or since the end of the half-year are:

Mr David John Reed. Mr Christopher John Reed, Mr Peter Lionel Fleury Collins, Mr Ian Courtney Junk,

Executive Chairman Executive Director Non-Executive Director Non-Executive Director

REVIEW OF OPERATIONS

A summary of consolidated revenues and results for the half year are set out below.

	Half year Ended 31 December 2004 \$	Half Year Ended 31 December 2003 \$
Revenue
Interest revenue	60,688	23,675
	60,688	23,675
Details of relevant expenses
Employment benefits	209,005	151,671
Occupancy & service fees	11,927	42,565
Communications, advertising $&$ presentations	11,678	40,586
Accounting & audit	56,430	32,197
Depreciation and amortisation	23,821	25,972
Insurance	21,198	24,200
Travel	14,015	22,793
Legal & professional	2,941	7,439
Borrowing expenses	1,261	1,058
Other	127,028	56,686
	479,304	405,167
Loss from operating activities before tax	418,616	381,492

The consolidated loss after income tax for the half-year attributable to members of Reed Resources Ltd was \$418,616

Reed Resources Ltd raised no money by the issue of shares during the half-year to 31 December 2004.

The company has invested \$382,470 in capitalised exploration expenditure and development costs in the half-year to 31 December 2004.

COMET VALE PROJECT (Reed Resources Ltd 100%)

During the period, the Company focused on development of the Sand George prospect and re-evaluation and infill drilling of the Sand Prince West lode.

Sand George mining start-up

In November 2004, the Board committed to mining the deposit based on the results of a mining study conducted by Australian Contract Mining Pty Ltd, which indicated recovery of more than 65,000 ounces of gold from an existing indicated resource of 249,000 tonnes at 8.6 g/t Au. The Company entered into discussions with mining contractors to negotiate a mining contract, including Kingrose Pty Ltd (Kingrose) with whom a Memorandum of Understanding (MOU) was signed at the beginning of January 2005.

The MOU provides for Kingrose to earn a 50% interest in Mining Leases M29/52 (Sand George) and M29/321 (Sand Queen) and Miscellaneous Licence L29/67 by incurring all mining and development costs to earn 50% of the gold recovered to a depth of 243 m below the collar of the Sand Oueen Main Shaft and 60% of gold recovered below that level, excluding royalties. Mining operations, initially using the Sand Queen Main Shaft, are planned to commence on 1 March 2005 and the first gold production is planned for the December Quarter, 2005.

An application for land clearing for mining purposes has been lodged with the Department of Environment and an NOI is ready to be lodged with the Department of Industry and Resources once the Project Management Plan is finalised.

Sand Prince West

A number of RC pre-collars for diamond drill holes that were drilled to test the deeper sections of the Sand George deposit also intersected a shallowly northwest dipping lode structure, referred to as the Sand Prince West lode. Previous resource evaluation of this lode structure identified an Inferred Resource of some 77,600 tonnes at 3.9 g/t Au to a depth of 35m below surface.

Re-evaluation of this resource indicated its suitability for a small open pit mine, subject to further closespaced drilling. An in-fill drilling program targeted on a zone between 13000 and 13100 mN and from surface to a maximum depth of 25 metres has been completed with 46 RC drill holes drilled to a maximum depth of 36 m (down-hole). Most of the holes returned intersections with at least 1 g/t Au over at least 1 metre drilled depth and up the 10.5 metres thick, as listed in Table 1. The best intersection is 7 metres at 31.42 g/t Au (drill hole SPWGC048). The thicker and high grade portion of this lode is open to the north.

Results of the latest drilling will be combined with previous drilling data for a re-evaluation and upgrading of the Sand Prince West resource and an assessment of the viability for a shallow open pit mine.

The Company will also undertake a re-assessment of previous drilling and resource estimate at the nearby Coonega prospect (M29/35) to determine its potential for a small open pit mine.

MOUNT FINNERTY PROJECT

(Reed Resources Ltd 100%)

During the period, exploration continued on advancing the iron ore, nickel and gold potential of the Mt Finnerty tenements. A report on a biological assessment of the Mt Finnerty project has been completed and will facilitate early approvals for ground clearance applications for drilling and other exploration activities.

Iron Ore

Geological mapping and surface sampling of banded iron formations (BIF) south of Mt Finnerty has located another zone of iron-enriched BIF with assays of 58.5 to 65 % Fe in surface samples. The latest discovery has been sampled over a strike length of at least 4 km and is approximately 10 km along strike from the initial discovery alongside the Trans-Australia Railway. Repeat sampling of iron-enriched BIF adjacent to the railway has confirmed the high assays at this location with 60-61 $\%$ Fe.

The latest sampling indicates that the iron-enriched BIF between Mt Finnerty and the railway line has low levels of aluminium, silicon and manganese and very low phosphorous levels (most samples less than 0.08 % $P$ ).

Following advice from Consolidated Minerals Limited that it does not wish to participate in a joint venture for iron ore at Mt Finnerty, the Board has initiated discussions with another company to enter into a joint venture agreement to assess the iron ore potential of the Mt Finnerty project. Drilling that had been planned for the end of the quarter was postponed until negotiations are finalised.

Nickel

Geological mapping (1:10,000) has been completed along the western flank of the Watt Hills Greenstone Belt. This work has confirmed the presence of a thick sequence of ultramafic rocks, which had previously been interpreted from an aeromagnetic survey flown in 2003.

Results of this mapping are being integrated with other data sets, including an ortho-rectified image acquired during the quarter, and previous landform-regolith mapping and soil and rock-chip geochemical data to define targets for further ground-based exploration, including RAB and RC drilling and EM surveys.

BARRAMBIE PROJECT (Reed Resources Ltd 100%)

The Company has retained Mineral Engineering Technical Services (METS) to conduct a Pre-feasibility Study for the development of a treatment plant to produce Vanadium Pentoxide $(V₂O₅)$ and Ilmenite from its Barrambie Deposit.

Since its discovery in the late 1960's, evaluation of the Barrambie Fe-Ti-V resource has focussed on the production of feedstock for a smelting operation producing Vanadium Slag, Titanium Slag and Pig Iron. In 2004 Reed conducted extensive metallurgical test work on one tonne of drill core from the ilmeniterich Eastern Band, producing an ilmenite feedstock after acid leach containing 45-55 % TiO₂ and 40-50 $% Fe₂O₃$ . Financial modelling of a stand-alone bulk ilmenite operation did not meet alliance partner Consolidated Minerals Limited's (CSM) investment criteria and CSM elected not to form a joint venture with Reed.

Since Reed's acquisition of the deposit in April 2003, growing demand from steel producers has pushed the Vanadium Pentoxide price from US\$2.50/lb to US\$10.50/lb (Metals Bulletin, 28 January 2005), accordingly the evaluation of the deposit has been broadened to include recovery of vanadium.

The Barrambie deposit contains in excess of 470,000 tonnes of $V_2O_5$ in Indicated and Inferred Resources of 124,000,000 tonnes at an average grade of 0.38% $V_2O_5$ . Beneficiation test work indicates that conventional gravity technology will liberate a high-grade concentrate of 1.1% $V_2O_5$ and 36% TiO₂. Laboratory scale test work on this concentrate using an atmospheric hydrochloric acid leach, indicates effective liberation of vanadium, achieving vanadium dissolution levels of up to 75%, leaving an ilmenite concentrate as a residual solid.

Metallurgical test work to be undertaken by AMMTEC as part of the Pre-Feasibility Study will test the recovery of vanadium from the leach liquor via solvent extraction and recycling of hydrochloric acid by pyrohydrolosis. This test work will enable an optimised flowsheet for the production of Vanadium Pentoxide and Ilmenite to be finalised for the design, engineering and costing work packages. Ore reserves, mining method and mine design work packages will be prepared by independent mining consultants.

It is anticipated that the Pre-Feasibility Study will be finished by the end of June 2005.

FURTHER INFORMATION

Further, more detailed information on the Company's activities during the half-year is available in the Company's September 2004 and December 2004 quarterly reports to the Australian Stock Exchange.

EVENTS SUBSEQUENT TO BALANCE DATE

Mount Finnerty Iron Ore Joint Venture

On 18 February 2005, the Company executed a Heads of Agreement with Portman Mining Limited (ASX:PMM) ("Portman") to enter into a joint venture to explore and develop iron ore at the Mt. Finnerty,

The key terms of the Heads of Agreement are:

• Portman will be operator of the joint venture, and can earn 80% of the iron ore rights by solely incurring expenditure totalling \$300,000 within three years.
• Minimum expenditure of \$100,000 must be incurred by Portman on the Project Area within 12 $\bullet$ months prior to withdrawal.
• If Portman withdraws from the Agreement prior to expending \$300,000 Portman will retain no interest in the Project (i.e. iron rights).
• Following notification from Portman of achieving minimum expenditure (\$300,000) Reed Resources ("RDR") shall either:
• $\circ$ Elect to contribute to its share of expenditure thereby maintaining its twenty percent (20%) participating interest in the Project or,
• $\circ$ Elect to retain a ten percent (10%) participating interest and be free carried until completion of a feasibility study and a decision has been made in favour of project development and commencement of mining (Decision to Mine ("DTM")).
• At the DTM, Reed shall elect to either contribute to Joint Venture Expenditure according to its equity, or convert all of its Participating Interest to a Production Royalty.
• Reed retains ownership of all non Iron Ore minerals.

AUDITOR'S INDEPENDENCE DECLARATION

A copy of the auditors' independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 7.

This report is made in accordance with a resolution of the directors

D.J.Reed Director

Cheed

C.J.Reed Director

Perth, (O March 2005)

Deloitte

Deloilte Touche Tohmatsu A.B.N. 74 490 121 060

Level 14 Woodside Plaza 240 St Georges Terrace Perth WA 6000 PO Box A46 Perth WA 6837 Australia

DX 206 Tel: +61 (0) 8 9365 7000 Fax: +61 (0) 8 9365 7001 www.deloilte.com.au

Board of Directors Reed Resources Limited 89 Outram Street WEST PERTH WA 6005

10 March 2005

$\mathcal{L}_1$ , $\mathcal{L}_2$ , and the space field $\mathcal{L}_2$ , $\mathcal{L}_3$

in 1992
Notae

Dear Directors

Reed Resources Limited

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Reed Resources Limited.

As lead audit partner for the review of the financial statements of Reed Resources Limited for the half-year ended 31 December 2004, I declare that to the best of my knowledge and belief, there have been no contraventions of:

• (i) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
• (ii) any applicable code of professional conduct in relation to the review.

Yours sincerely

DELOITTE TOUCHE TOHMATSU

EEANNE KARAMFILES

Partner Chartered Accountants

Deloitte

Deloitte Touche Tohmatsu A.B.N. 74 490 121 060

Woodside Plaza Level 14 240 St. Georges Terrace Perth WA 6000 GPO Box A46 Perth WA 6837 Australia

$DX 206$ Tel: +61 (0) 8 9365 7000 Fax: +61 (0) 8 9365 7001 www.deloitte.com.au

Independent review report to the members of Reed Resources Limited

Scope

We have reviewed the financial report of Reed Resources Limited for the half-year ended 31 December 2004 as set out on pages 9 to 15. The financial report includes the consolidated financial statements of the consolidated entity comprising the disclosing entity and the entities it controlled at the end of the half-year or from time to time during the half-year. The disclosing entity's directors are responsible for the financial report. We have performed an independent review of the financial report in order to state whether, on the basis of the procedures described, anything has come to our attention that would indicate that the financial report is not presented fairly in accordance with Accounting Standard AASB 1029 "Interim Financial Reporting" and other mandatory professional reporting requirements in Australia and statutory requirements, so as to present a view which is consistent with our understanding of the consolidated entity's financial position, and performance as represented by the results of its operations and its cash flows, and in order for the disclosing entity to lodge the financial report with the Australian Securities and Investments Commission.

Our review has been conducted in accordance with Australian Auditing Standards applicable to review engagements. A review is limited primarily to inquiries of the entity's personnel and analytical procedures applied to the financial data. These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

Statement

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Reed Resources Limited is not in accordance with:

• the Corporations Act 2001, including: $(a)$
• giving a true and fair view of the consolidated entity's financial position as at 31 $(i)$ December 2004 and of its performance for the half-year ended on that date; and
• complying with Accounting Standard AASB 1029 "Interim Financial Reporting" and the $(ii)$ Corporations Regulations 2001; and
• $(b)$ other mandatory professional reporting requirements in Australia.

Deloite Teuhe Tohmatsy DELOITTE TOUCHE TOHMATSU

Leanne Karamfiles Partner Chartered Accountants Perth, 10 March 2005

The liability of Deloitte Touche Tohmatsu, is limited by, and to the extent of, the Accountants' Scheme under the Professional Standards Act 1994 (NSW).

Member of Deloitte Touche Tohmatsu 8

The directors declare that:

• the attached financial statements and notes thereto comply with Accounting Standards; $(a)$
• $(b)$ the attached financial statements and notes thereto give a true and fair view of the financial position and performance of the consolidated entity;
• in the directors' opinion, the attached financial statements and notes thereto are in accordance with $(c)$ the Corporations Act 2001; and
• $(d)$ in the directors' opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of the directors made pursuant to s. 303(5) of the Corporations Act $2001.$

On behalf of the Directors

Cheed

C.J.Reed Director

Perth, $\hat{U}$ March 2005

Consolidated Statement of Financial Performance for the Half-Year Ended 31 December 2004

	Half-Year Ended 31 December 2004 S	Half-Year Ended 31 December 2003 \$
Revenue from ordinary activities Expenses from ordinary activities Borrowing costs	60,688 (478, 043) (1,261)	23,675 (404, 109) (1,058)
Loss From Ordinary Activities Before Income Tax Expense	(418,616)	(381, 492)
Income tax expense relating to ordinary activities
Loss From Ordinary Activities After Related Income Tax Expense	(418,616)	(381, 492)
Net Loss	(418, 616)	(381, 492)
Total Changes In Equity Other Than Those Resulting From Transactions With Owners As Owners	(418, 616)	(381, 492)
Loss per Share: Basic (cents per share) Diluted (cents per share)	(0.72) (0.72)	(0.74) (0.74)

Consolidated Statement of Financial Position as at 31 December 2004

	31 December 2004 \$	30 June 2004 \$
Current Assets
Cash assets	1,254,420	2,003,686
Receivables	30,022	77,833
Total Current Assets	1,284,442	2,081,519
Non-Current Assets
Mining tenements	8,453,420	8,070,950
Other property, plant and equipment	299,788	301,778
Total Non-Current Assets	8,753,208	8,372,728
Total Assets	10,037,650	10,454,247
Current Liabilities
Payables	12,244
Interest-bearing liabilities		13,713
Total Current Liabilities	12,244	13,713
Non-Current Liabilities
Interest-bearing liabilities	3,488
Total Non-Current Liabilities	3,488
Total Liabilities	15,732	13,713
Net Assets	10,021,918	10,440,534
Equity
Contributed equity	12,005,179	12,005,179
Accumulated losses	(1,983,261)	(1, 564, 645)
Total Equity	10,021,918	10,440,534

Consolidated Statement of Cash Flows for the Half-Year Ended 31 December 2004

		Inflows/(Outflows)
	Half-Year Ended 31 December 2004 \$	Half-Year Ended 31 December 2003 \$
Cash Flows from Operating Activities Payments to suppliers and employees Interest and Bill discounts received Interest and other costs of finance paid	(429, 712) 64,103	(347, 127) 23,675 (680)
Net cash used in operating activities	(365, 609)	(324, 132)
Cash Flows From Investing Activities Payments on development & exploration leases Payment for property, plant and equipment	(351,601) (21, 831)	(708,908) (437)
Net cash used in investing activities	(373, 432)	(709, 345)
Cash Flows From Financing Activities Proceeds from issues of equity securities Repayment of borrowings	(10, 225)	500,000 (9, 531)
Net cash (used in)/provided by financing activities	(10, 225)	490,469
Net Decrease In Cash Held	(749, 266)	(543,008)
Cash At The Beginning Of The Half-Year	2,003,686	1,294,971
Cash At The End Of The Half-Year	1,254,420	751,963

Notes to the Financial Statements for the Half-Year Ended 31 December 2004

$\mathbf{1}$ . Basis of Preparation

The half-year financial report is a general purpose financial report prepared in accordance with the Corporations Act 2001 and AASB 1029 "Interim Financial Reporting". The half-year financial report does not include notes of the type normally included in an annual financial report and should be read in conjunction with the 2004 annual financial report.

Significant Accounting Policies

The accounting policies adopted in the preparation of the half-year financial report are consistent with those adopted and disclosed in the 2004 annual financial report.

$2.$ Subsequent Events

Mount Finnerty Iron Ore Joint Venture

On 18 February 2005, the Company executed a Heads of Agreement with Portman Mining Limited (ASX:PMM) ("Portman") to enter into a joint venture to explore and develop iron ore at the Mt.Finnerty,

The key terms of the Heads of Agreement are:

Portman will be operator of the joint venture, and can earn 80% of the iron ore rights by solely incurring expenditure totalling \$300,000 within three years.

Minimum expenditure of \$100,000 must be incurred by Portman on the Project Area within 12 months prior to withdrawal.

If Portman withdraws from the Agreement prior to expending \$300,000 Portman will retain no interest in the Project (i.e. iron rights).

Following notification from Portman of achieving minimum expenditure (\$300,000) Reed Resources ("RDR") shall either:

Elect to contribute to its share of expenditure thereby maintaining its twenty percent $(20\%)$ participating interest in the Project or,

Elect to retain a ten percent (10%) participating interest and be free carried until completion of a feasibility study and a decision has been made in favour of project development and commencement of mining (Decision to Mine ("DTM")).

At the DTM, Reed shall elect to either contribute to Joint Venture Expenditure according to its equity, or convert all of its Participating Interest to a Production Royalty,

Reed retains ownership of all non Iron Ore minerals.

3. Segment Information

The consolidated entity is engaged in mineral resource exploration and development, carried out in the Kalgoorlie region of Western Australia.

WEIGHT ON THE WAY TO A THE WAY TO

网络

Notes to the Financial Statements for the Half-Year Ended 31 December 2004

Impact of adoption of Australian equivalents to International Financial Reporting $\overline{4}$ . Standards

Management of the transition to A-IFRS

In accordance with the Financial Reporting Council's strategic directive, Reed Resources Ltd ("Reed") will be required to prepare financial statements that comply with Australian equivalents to International Financial Reporting Standards ("A-IFRS") for annual reporting periods beginning on or after 1 January 2005. Accordingly, Reed's first half-year report prepared under A-IFRS will be for the half-year reporting period ended 31 December 2005, and its first annual financial report prepared under A-IFRS will be for the year ended 30 June 2006.

The company has commenced reviewing the transition from its current policies to the AASB equivalents to IFRS. The company has allocated internal resources and engaged expert consultants to review, identify and conduct business impact assessments to isolate key areas that will be affected by this transition. The Company's board of directors is being regularly kept up to date with the results of both the internal review and the external consultants reports and assessments.

Under AASB 1 the consolidated entity, in complying with Australian equivalents to IFRS for the first time is required to restate its comparative financial statements to amounts reflecting the application of Australian equivalents to IFRS to that comparative period. Most adjustments required on transition to Australian equivalents to IFRS will be made, retrospectively, against opening retained earnings as at 1 July 2004.

At this stage Reed has not been able to reliably quantify the impacts on the financial statements.

Key areas where accounting policies are likely to change and may impact on the financial statements of the consolidated entity include the following:

First-time adoption of A-IFRS

On first-time adoption of A-IFRS, the consolidated entity will be required to restate its comparative balance sheet such that the comparative balances presented comply with the requirements specified in the A-IFRS. That is, the balances that will be presented in the financial report for the year ended 30 June 2005 may not be the balances that will be presented as comparative numbers in the financial report for the following year, as a result of the requirement to retrospectively apply the A-IFRS. In addition, certain assets and liabilities may not qualify for recognition under A-IFRS, and will need to be derecognised. As any adjustments on first-time adoption are to be made against opening retained earnings, the amount of retained earnings at 30 June 2004 presented in the 2005 financial report and the 2006 financial report available to be paid out as dividends may differ significantly.

Various voluntary and mandatory exemptions are available to the consolidated entity on first-time adoption, which will not be available on an ongoing basis. The exemptions provide relief from retrospectively accounting for certain balances, instruments and transactions in accordance with A-IFRS, and includes relief from having to restate past business combinations, expense share-based payments granted before 7 November 2002, and the identification of a 'deemed cost' for property, plant and equipment.

The impact on Reed Resources Ltd of the changes in accounting policies on first-time adoption of A-IFRS will be affected by the choices made. The consolidated entity is evaluating the effect of the options available on first-time adoption in order to determine the best possible outcome for the consolidated entity.

Notes to the Financial Statements for the Half-Year Ended 31 December 2004

Share-based payment

Share-based compensation forms part of the remuneration of employees of the consolidated entity (including executives) as disclosed in the notes to the financial statements. The consolidated entity does not recognise an expense for any share-based compensation granted. Under A-IFRS, the consolidated entity will be required to recognise an expense for such share-based compensation. Share-based compensation is measured at the fair value of the share options determined at grant date and recognised over the expected vesting period of the options. A reversal of the expense will be permitted to the extent non-market based vesting conditions (e.g. service conditions) are not met. The entity will not retrospectively recognise share-based payments vested before 1 January 2005 as permitted under A-IFRS first time adoption.

The recognition of the expense will decrease the consolidated entity's opening retained earnings on initial adoption of A-IFRS and increase share capital by the same amount for share-based payments issued after 7 November 2002 but not vested before 1 January 2005. Similar impacts will also occur in future periods, however, quantification of the impact on equity and in the income statement of the existing share options granted as remuneration has not been completed at the reporting date.

Income tax

The consolidated entity currently recognises deferred taxes by accounting for the differences between accounting profits and taxable income, which give rise to 'permanent' and 'timing' differences. Under A-IFRS, deferred taxes are measured by reference to the 'temporary differences' determined as the difference between the carrying amount and the tax base of assets and liabilities recognised in the balance sheet.

Because A-IFRS has a wider scope than the entity's current accounting policies, it is likely that the amount of deferred taxes recognised in the balance sheet will increase. In particular, significant increases in deferred tax liabilities are anticipated in relation to deferred taxes associated with fair value adjustments and intangibles arising in relation to pre-transition business combinations, revaluations of land and buildings and investments in associates.

The consolidated entity also has carried forward tax losses which have not been recognised as deferred tax assets as they do not satisfy the 'virtually certain' criteria under current Australian GAAP (refer note 5(b)). Under A-IFRS, it may be easier to recognise these tax losses as deferred tax assets as they are recognised based on a 'probable' recognition criteria. The impact of this difference may be to increase deferred tax assets and opening retained earnings, and result in a higher level of recognised deferred tax assets on a go-forward basis.

Adjustments to the recognised amounts of deferred taxes will also result as a consequence of adjustments to the carrying amounts of assets and liabilities resulting from the adoption of other A-IFRS. The likely impact of these changes on deferred tax balances has not currently been determined.

Capitalisation of Exploration and Evaluation Costs

The Consolidated Entity currently uses the "area of interest" principles which are used commonly in Australia and in accordance with the Australian Accounting Standard AASB 1022 "Accounting for the Extractive Industries". The AASB has recently released AASB 6 Exploration for and Evaluation of Mineral Resources which is not expected to cause significant changes to the Consolidated Entity's accounting for capitalised exploration and evaluation expenditure. AASB 6 continues to allow an area of interest approach to impairment and the the standard effectively permits the grandfathering of existing accounting treatments of exploration and evaluation expenditure. Impairment tests of exploration and evaluation assets will be required once technical feasibility and commercial viability is determinable.

RESPONSE SECTION