Financial Assurance, Closure Cost Estimates and ARO for Mining Projects - Different Numbers for Different Reasons

Author(s): 
Terry Braun
Date: 
Tuesday, February 21, 2017
First presented: 
SME 2017
Type: 
Presentation
Category: 
Mining
Environmental/Social

Within the last 20 years, mine closure liabilities represent an increasing proportion of the balance sheet of a mining company. This presentation examines regulatory trends related to closure obligations in the Americas as well as financial disclosures by public mining companies with regard to asset retirement obligations and environmental liabilities. Regulatory trends include national and, where applicable, regional (e.g., provincial, state) governmental regulations that monitor and revisit mine permitting requirements. In North and South America, the sharing of experiences related to mining legacy issues triggers regulatory revisions at a national and/or international basis. In addition to permitting trends, international accounting standards recognize reclamation and closure obligations of public mining companies by estimating Asset Retirement Obligations through use of financial models. Whether a mining company is audited under U.S. Generally Accepted Accounting Principles or International Financial Reporting Standards, accounting firms demand a fair-value estimate of the legal closure obligation for each mining property.
 
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Feature Author

Terry Braun
Terry Braun has 25 years of professional experience in mining and environmental projects. His practice incorporates various elements of environmental compliance activities as well as engineered solutions to potential environmental liabilities at mining and other industrial operations. Terry has conducted process reviews of financial disclosure for asset retirement obligations and has prepared various US GAAP and IFRS compliant financial models on behalf of clients. His calculations of asset retirement obligations typically include capital cost estimations and discounted cash flow analyses.
Closure Cost Specialist
MSc, PE
SRK Denver
SRK Worldwide