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## Notes to the Financial Statements for the year ended 30 June 2004 

## 34. RECONCILIATION OF AUSTRALIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES TO INTERNATIONAL ACCOUNTING STANDARDS 

The fi  nancial statements are prepared in accordance with Australian Generally Accepted Accounting Principles (“GAAP”), which differs in certain respects from International Financial Reporting Standards (“IFRS”). The approximate effect of applying IFRS for the two years ended 30 June 2004 and 30 June 2003, where IFRS are materially different to GAAP, is set out below. 

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## Accounting for impairment of assets 

Under IAS 36 “Impairment of Assets” the consolidated entity is required to record an impairment loss whenever the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is measured as the higher of the net selling price and value in use. Net selling price is the amount obtainable from the sale of an asset in an arm’s length transaction and value in use is the present value of estimated future cash fl  ows expected to arise from continued use and disposal at the end of its useful life. As a result of this treatment the consolidated entity is required to take an after tax write down of $5.6 million for the year ended 30 June 2004 (2003 $8.6 million). Impairment of assets attributable to the outside equity interest in the current year is $2.5 million. Under GAAP, recoverable amount write-downs or impairments are determined using undiscounted cash fl  ows. 

## Accounting for income taxes 

Under IFRS deferred tax balances are calculated based on the difference between the tax base of the asset and the carrying amount of the asset. As a result of this treatment, at 30 June 2004, a deferred tax liability of $5.3 million (2003: $7.7 million) would be recognised in relation to the carrying amount of exploration, evaluation and development expenditure acquired in the NuStar acquisition which has no tax base. This would also result in an increase of $5.3 million (2003: $7.7 million) in exploration, evaluation and development expenditure acquired. This adjustment has no impact on net pro fi  t or net assets of the consolidated entity. Under GAAP deferred tax balances re fl  ect differences arising from the timing of recognition of revenue and expenses for accounting and tax. 

## Accounting for investments in available for sale securities 

Under IAS 39 “Financial Instruments: Recognition and Measurement” the consolidated entity is required to classify investments in securities as, “held for trading” or “available-for-sale”. The investments held by the consolidated entity are classi fi  ed as available-for-sale and carried at fair value with unrealised gains and losses reported in equity and recycled to the Statement of Financial Performance when sold or impaired. Under GAAP investments are carried at cost with a provision recognised for any diminution in value considered to be permanent 

## Accounting for rehabilitation and restoration costs 

Under IFRS rehabilitation and restoration costs incurred during production and after production stops, should be accrued when the liability is incurred. As a result of this treatment no additional provision for rehabilitation would be recognised at 30 June 2004 (2003: $0). 

## Net (loss) attributable to outside equity interests 

During the year NuStar Mining Corporation Limited (“NuStar”) a subsidiary of the Company, raised $19.8 million by the issue of 420 million shares to outside investors to fund the Paulsens project. Simultaneously, the Company converted its loan of $17.6 million to NuStar to equity through the receipt of 352 million shares. As a result of this transaction, the Company diluted its interest in NuStar from 88% to 54%. Under IFRS the transfer of value from the outside equity interest to the parent entity interest is $3.4 million compared to a transfer under GAAP from the parent entity interest to the outside equity interest of $0.4 million. This transfer of value has no impact on the net assets of the consolidated entity. 

