Where in an annual report of a company I can identify an example demonstrating knowledge of :
Question:
Where in an annual report of a company I can identify an example demonstrating knowledge of :
Business Combination - 100% ? Who is a financial user that would be interested in this?
Here is the financial report:
CONSOLIDATED STATEMENTS OF (LOSS) EARNINGS
YEARS ENDED DECEMBER 31
(In millions of United States dollars, except for per share amounts)
Note 2018 2017
Revenues 9 $ 3,032 $ 3,423
Mine operating costs
Production costs 9, 10 (1,794) (1,889)
Depreciation and depletion 9, 18(d) (983) (990)
(2,777) (2,879)
Earnings from mine operations 9 255 544
Exploration, evaluation and project costs 18(a) (86) (62)
Share of net earnings related to associates and joint venture 19 83 189
Impairment of mining interests, net 20 (4,727) (244)
Corporate administration 10(a), 27 (131) (158)
Restructuring costs (4)
(Loss) earnings from operations, associates and joint venture (4,606) 265
Gain on disposition of mining interest, net of transaction costs 8(b), (c) 42
Finance costs 11 (145) (133)
Other (expense) income, net 12 (10) 19
(Loss) earnings before taxes (4,761) 193
Income tax recovery 13 612 465
Net (loss) earnings $ (4,149) $ 658
Net (loss) earnings per share
Basic 14(a) $ (4.77) $ 0.76
Diluted 14(a) (4.77) 0.76
The accompanying notes form an integral part of these consolidated financial statements.
GOLDCORP | 2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
YEARS ENDED DECEMBER 31
(In millions of United States dollars)
Note 2018 2017
Net (loss) earnings $ (4,149) $ 658
Other comprehensive (loss) income, net of tax
Items that may be reclassified subsequently to net (loss) earnings:
Unrealized gains (losses)
Equity securities 3 (17)
Derivatives designated as cash flow hedges 25(b) 7 19
Reclassification of realized gains (losses)
Equity securities 3 (15)
Derivatives designated as cash flow hedges recognized in net (loss)
earnings 25(b) (4) (3)
Derivatives designated as cash flow hedges recorded as property,
plant and equipment 25(b) (2) (1)
1 (17)
Items that will not be reclassified subsequently to net (loss) earnings:
Remeasurement of defined benefit pension plans 2 (1)
Decrease in equity securities 3 (108)
(106) (1)
Total other comprehensive loss, net of tax (105) (18)
Total comprehensive (loss) income $ (4,254) $ 640
The accompanying notes form an integral part of these consolidated financial statements.
GOLDCORP | 3
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31
(In millions of United States dollars)
Note 2018 2017
Operating activities
Net (loss) earnings $ (4,149) $ 658
Adjustments for:
Reclamation expenditures 24 (27) (24)
Items not affecting cash:
Depreciation and depletion 9, 18(d) 983 990
Share of net earnings related to associates and joint venture 19 (83) (189)
Impairment of mining interests, net 20 4,727 244
Share-based compensation 27(a) 25 30
Gain on disposition of mining interest, net of transaction costs 8(b), (c) (42)
Revision of estimates and accretion of closure cost obligations 10, 24 46 20
Deferred income tax recovery 13 (768) (661)
Other 27 40
Change in working capital 15 10 145
Net cash provided by operating activities 791 1,211
Investing activities
Acquisitions of mining interests 7 (266)
Expenditures on mining interests 9, 18(b) (1,155) (1,075)
Return of capital investment in associate 19 141 65
Proceeds from dispositions of mining interests, net of transaction costs 8(a), (b), (c) 320
Interest paid 18(b) (60) (35)
Purchases of short-term investments and equity securities, net 15 (30) (48)
Settlement of deferred payment obligation 7 (27) (5)
Other 9(e) (4) (61)
Net cash used in investing activities (1,135) (1,105)
Financing activities
Proceeds from issuance of term loans, net of borrowing costs 25(d)(ii) 400
Debt repayments 25(d)(ii) (500)
Draw down (repayment) of credit facility, net 25(d)(ii) 480 (30)
Finance lease payments (8) (6)
Dividends paid to shareholders 14(b) (59) (62)
Common shares issued 1
Purchase of shares pursuant to Normal Course Issuer Bid 26 (21)
Net cash provided by (used in) financing activities 292 (97)
Effect of exchange rate changes on cash and cash equivalents
(Decrease) increase in cash and cash equivalents (52) 9
Cash and cash equivalents, beginning of the year 186 157
Cash and cash equivalents reclassified as held for sale at the beginning of
the year 8(a) 20
Cash and cash equivalents, end of the year 15 $ 134 $ 186
Supplemental cash flow information (note 15)
The accompanying notes form an integral part of these consolidated financial statements.
GOLDCORP | 4
CONSOLIDATED BALANCE SHEETS
(In millions of United States dollars)
Note
At December 31
2018
At December 31
2017
Assets
Current assets
Cash and cash equivalents 15 $ 134 $ 186
Short-term investments 38 48
Accounts receivable 91 146
Inventories 16 491 441
Sales and indirect taxes recoverable 228 250
Income taxes receivable 36 24
Other 17 39 48
1,057 1,143
Mining interests
Owned by subsidiaries and joint operation 18, 20 12,910 17,311
Investments in associates and joint venture 19, 20 2,632 2,736
15,542 20,047
Equity securities 190 178
Deferred income taxes 13 22 112
Inventories 16 16
Other 21 156 189
Total assets $ 16,967 $ 21,685
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 596 $ 574
Debt 22 400 499
Income taxes payable 113 98
Provisions and other 100 84
1,209 1,255
Deferred income taxes 13 2,289 3,063
Debt 22 2,467 1,984
Deferred payment obligation 7 163 182
Finance lease obligations 23 230 242
Provisions 24 619 610
Income taxes payable 60 122
Other 55 43
Total liabilities 7,092 7,501
Shareholders' equity
Common shares, stock options and restricted share units 18,248 18,261
Accumulated other comprehensive (loss) income (128) 23
Deficit (8,245) (4,100)
9,875 14,184
Total liabilities and shareholders' equity $ 16,967 $ 21,685
Commitments and contingencies (notes 7, 25(d)(ii) and 29)
The accompanying notes form an integral part of these consolidated financial statements.
GOLDCORP | 5
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In millions of United States dollars, shares in thousands)
Common shares
Shares issued,
fully paid with
no par value Amount
Stock options
and restricted
share units
Accumulated other
comprehensive loss Deficit Total
At January 1, 2018 867,346 $ 17,930 $ 331 $ 23 $ (4,100) $ 14,184
Impact of adopting IFRS 9 on January 1, 2018 (note 3) (46) 46
At January 1, 2018 (restated) 867,346 17,930 331 (23) (4,054) 14,184
Total comprehensive loss
Net loss (4,149) (4,149)
Other comprehensive loss (105) (105)
(105) (4,149) (4,254)
Shares repurchased under Normal Course Issuer Bid
(note 26) (2,290) (48) 27 (21)
Restricted share units vested (note 27(a)) 1,579 26 (26)
Share-based compensation (note 27(a)) 25 25
Dividends (note 14(b)) 895 10 (69) (59)
At December 31, 2018 867,530 $ 17,918 $ 330 $ (128) $ (8,245) $ 9,875
Common shares
Shares issued,
fully paid with
no par value Amount
Stock options
and restricted
share units
Accumulated other
comprehensive income Deficit Total
At January 1, 2017 853,812 $ 17,733 $ 331 $ 41 $ (4,690) $ 13,415
Total comprehensive income
Net earnings 658 658
Other comprehensive loss (18) (18)
(18) 658 640
Acquisition of Exeter Resource Corporation (note 7) 11,261 156 2 2 160
Stock options exercised and restricted share units
vested (note 27a)) 1,647 33 (32) 1
Share-based compensation (note 27(a)) 30 30
Dividends (note 14(b)) 626 8 (70) (62)
At December 31, 2017 867,346 $ 17,930 $ 331 $ 23 $ (4,100) $ 14,184
The accompanying notes form an integral part of these consolidated financial statements.
(In millions of United States dollars, except where noted)
GOLDCORP | 6
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
1. DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS
Goldcorp Inc. is the ultimate parent company of its consolidated group ("Goldcorp" or "the Company"). The Company is incorporated and
domiciled in Canada, and its head office is at Suite 3400 - 666 Burrard Street, Vancouver, British Columbia, V6C 2X8.
The Company is a senior gold producer engaged in the acquisition, exploration, development, operation, and reclamation of precious
metal properties in Canada, the United States, Mexico, and Central and South America. The Company's current sources of operating
cash flows are primarily from the sale of gold, zinc, silver, lead and copper.
The Company's principal producing mining properties are comprised of the lonore, Musselwhite, Porcupine and Red Lake mines in
Canada; the Peasquito mine in Mexico; the Cerro Negro mine in Argentina; and the Pueblo Viejo mine (40% interest) in the Dominican
Republic. At December 31, 2018, the Company's significant projects include the Borden, Century Gold, and Coffee projects in Canada,
and the NuevaUnin (50% interest) and Norte Abierto (50% interest) projects in Chile.
2. BASIS OF PREPARATION
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as
issued by the International Accounting Standards Board ("IASB"), effective as of December 31, 2018. IFRS comprises IFRSs, International
Accounting Standards ("IASs"), and interpretations issued by the IFRS Interpretations Committee ("IFRICs") and the former Standing
Interpretations Committee ("SICs").
3. CHANGES IN ACCOUNTING STANDARDS
New and amended IFRS standards that are effective for the current year
Financial Instruments
On January, 1 2018, the Company adopted IFRS 9 - Financial Instruments ("IFRS 9") which replaced IAS 39 - Financial Instruments:
Recognition and Measurement ("IAS 39"). IFRS 9 provides a revised model for recognition and measurement of financial instruments and
a single, forward-looking 'expected loss' impairment model. IFRS 9 also includes significant changes to hedge accounting. The standard
is effective for annual periods beginning on or after January 1, 2018. The Company adopted the standard using the retrospective approach
outlined in the standard, except for hedge accounting, which was applied prospectively. IFRS 9 did not impact the Company's classification
and measurement of financial assets and liabilities except for equity securities as described below. The standard also had negligible
impact on the carrying amounts of the Company's financial instruments at the transition date.
The following summarizes the significant changes in IFRS 9 compared to IAS 39:
IFRS 9 uses a single approach to determine whether a financial asset is classified and measured at amortized cost or fair value. The
classification and measurement of financial assets is based on the Company's business models for managing its financial assets and
whether the contractual cash flows represent solely payments for principal and interest. Most of the requirements in IAS 39 for
classification and measurement of financial liabilities were carried forward in IFRS 9. The change did not impact the carrying amounts
of any of the Company's financial assets on the transition date. The Company designated its equity securities as financial assets at
fair value through other comprehensive income ("FVTOCI"), where they will be recorded initially at fair value. Subsequent changes in
fair value will be recognized in other comprehensive income only and will not be transferred into earnings (loss) upon disposition. As
a result of this change, the Company reclassified $46 million of impairment losses recognized in prior years on certain equity securities
which the Company continued to own as at January 1, 2018 from opening deficit to accumulated other comprehensive income on
January 1, 2018. As a result of adopting IFRS 9, the net change in fair value of the equity securities, including realized and unrealized
gains and losses, if any, is now presented as an item that will not be reclassified subsequently to net (loss) earnings in the Consolidated
Statements of Comprehensive (Loss) Income. Realized gains and losses on securities derecognized prior to January 1, 2018 have not
been restated in prior year comparatives.
The adoption of the new "expected credit loss" impairment model under IFRS 9, as opposed to an incurred credit loss model under
IAS 39, had a negligible impact on the carrying amounts of the Company's financial assets on the transition date given the Company
transacts exclusively with large international financial institutions and other organizations with strong credit ratings and the negligible
historical level of customer default.
(In millions of United States dollars, except where noted)
GOLDCORP | 7
The new general hedge accounting requirements retain the three types of hedge accounting mechanisms previously available under
IAS 39. Under IFRS 9 however, greater flexibility has been introduced to the types of transactions eligible for hedge accounting,
specifically broadening the types of instruments that qualify for hedging instruments and the types of risk components of non-financial
items that are eligible for hedge accounting. As a result, certain of the Company's hedging strategies and hedging instruments that
did not qualify for hedge accounting previously, primarily the hedging of forecasted concentrate sales, are now eligible for hedge
accounting. In addition, the effectiveness test has been replaced with the principle of an "economic relationship". Retrospective
assessment of hedge effectiveness is also no longer required. Enhanced disclosure requirements about an entity's risk management
activities have also been introduced. As a result, subsequent to the adoption of IFRS 9, the Company hedged a certain percentage of
its forecasted zinc and lead concentrate sales and designated these contracts as hedges for accounting purposes. These contracts
were entered into during the year ended December 31, 2018. The Company did not designate its economic hedges that existed as at
January 1, 2018 as hedges for accounting purposes.
The Company has also adopted the associated narrow scope amendment to IFRS 7 - Financial Instruments - Disclosures. As a result of
applying the amendment, the Company has added disclosure relating to its risk management strategies for which hedge accounting is
applied in its consolidated financial statements for the year ended December 31, 2018 (note 25(b)).
Revenue Recognition
On January 1, 2018, the Company adopted IFRS 15 - Revenue from Contracts with Customers ("IFRS 15") which supersedes IAS 18 -
Revenue ("IAS 18"). IFRS 15 establishes a single five-step model framework for determining the nature, amount, timing and uncertainty
of revenue and cash flows arising from a contract with a customer. IFRS 15 is effective for annual periods beginning on or after January
1, 2018. The Company adopted the standard on January 1, 2018 using the full retrospective approach without applying any practical
expedients.
IFRS 15 requires entities to recognize revenue when 'control' of goods or services transfers to the customer whereas the previous standard,
IAS 18, required entities to recognize revenue when the 'risks and rewards' of the goods or services transfer to the customer. The Company
concluded that there was no change in the timing of revenue recognition of its bullion, dor and concentrate sales under IFRS 15 as
compared to IAS 18 as the point of transfer of risks and rewards of goods and services and transfer of control occur at the same time.
As such, no adjustment was required to the Company's financial statements.
Additionally, IFRS 15 requires entities to apportion the transaction price attributable to contracts from customers to distinct performance
obligations on a relative standalone selling price basis. In accordance with the terms of certain of the Company's concentrate sale
agreements, the Company must contract for and pay the shipping and insurance costs necessary to bring the goods to the named
destination. Therefore, a portion of the revenue earned under these contracts, representing the obligation to fulfill the shipping and
insurance services that occur after the transfer of control, is deferred and recognized over time as the obligations are fulfilled. The impact
of this change was insignificant to the Company's financial statements.
IFRS 15 requires that variable consideration should only be recognized to the extent that it is highly probable that a significant reversal
in the amount of cumulative revenue recognized will not occur. The Company concluded that the adjustments relating to the final assay
results for the quantity and quality of concentrate sold and the retroactive pricing adjustment for the new annual pricing terms relating
to the Company's concentrate sales are not significant and does not constrain the recognition of revenue.
Additional disclosures have been presented in notes 5 and 25(b) as a result of adopting IFRS 9 and 15.
Other Narrow Scope Amendments/Interpretations
The Company has also adopted narrow scope amendments to IFRS 2 - Share Based Payments and IAS 1 - Presentation of Financial
Statements, and new interpretation IFRIC 22 - Foreign Currency Transactions and Advance Consideration, which did not have an impact
on the Company's Consolidated Financial Statements.
New and amended IFRS standards not yet effective
Leases
In January 2016, the IASB issued IFRS 16 - Leases ("IFRS 16") which replaces IAS 17 - Leases ("IAS 17") and its associated interpretative
guidance. IFRS 16 applies a control model to the identification of leases, distinguishing between a lease and a service contract on the
basis of whether the customer controls the asset. Control is considered to exist if the customer has the right to obtain substantially all
of the economic benefits from the use of an identified asset and the right to direct the use of that asset. For those assets determined to
meet the definition of a lease, IFRS 16 introduces significant changes to the accounting by lessees, introducing a single, on-balance
(In millions of United States dollars, except where noted)
GOLDCORP | 8
sheet accounting model that is similar to the current finance lease accounting, with limited exceptions for short-term leases or leases
of low value assets. The Company will apply IFRS 16 on its effective date of January 1, 2019 retrospectively, with the cumulative effect
of initially applying the standard as an adjustment to retained earnings and no restatement of comparative information. The Company
has elected to measure its right of use assets at amounts equal to the associated lease liabilities; as such, the adjustment to retained
earnings will be nil.
Upon adoption, the Company has elected to apply the available exemptions as permitted by IFRS 16 to recognize a lease expense on a
straight line basis for short term leases (lease term of 12 months or less) and low value assets. The Company has also elected to apply
the practical expedient whereby leases whose term ends within 12 months of the date of initial application would be accounted for in
the same way as short term leases.
Upon the adoption of IFRS 16, the Company expects to recognize additional right of use assets and lease liabilities related to the Company's
equipment and building rentals, land leases and service contracts, including certain of the Company's drilling and blasting contracts that
contain embedded leases for property, plant and equipment. Based on the Company's assessment of the expected impact of IFRS 16,
the Company expects that the adoption of the new standard will result in the recognition of additional right of use assets and lease
liabilities of approximately $55 million to $65 million. The Company does not expect there will be a material impact to the Consolidated
Statements of Net (Loss) Earnings or the Consolidated Statements of Cash Flows.
Definition of a Business
In October 2018, the IASB issued amendments in Definition of a Business (Amendments to IFRS 3) which:
clarify that to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive
process that together significantly contribute to the ability to create outputs;
narrow the definitions of a business and of outputs by focusing on goods and services provided to customers and by removing the
reference to an ability to reduce costs;
add guidance and illustrative examples to help entities assess whether a substantive process has been acquired;
remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to
produce outputs; and
add an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a
business.
The amendments are effective for business combinations for which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period. Earlier
application is permitted.
Uncertainty Over Income Tax Treatments
IFRIC 23 - Uncertainty over Income Tax Treatments (the "Interpretation") sets out how to determine the accounting tax position when
there is uncertainty over income tax treatments. The Interpretation requires an entity to determine whether uncertain tax positions are
assessed separately or as a group; and assess whether it is probable that a tax authority will accept an uncertain tax treatment used,
or proposed to be used, by an entity in its income tax filings. If yes, the entity should determine its accounting tax position consistently
with the tax treatment used or planned to be used in its income tax filings. If no, the entity should reflect the effect of uncertainty in
determining its accounting tax position. The Interpretation is effective for annual periods beginning on or after January 1, 2019. Entities can
apply the Interpretation with either full retrospective application or modified retrospective application without restatement of
comparatives retrospectively or prospectively. The Company does not expect the application of the Interpretation will have a significant
impact on the Company's consolidated financial statements.
Annual Improvements 2015-2017 Cycle
In December 2017, the IASB issued the Annual Improvements 2015-2017 cycle, containing amendments to IFRS 3 - Business Combinations
("IFRS 3"), IFRS 11 - Joint Arrangements, IAS 12 - Income Taxes and IAS 23 - Borrowing Costs. These amendments are effective for annual
periods beginning on or after January 1, 2019 and are not expected to have a significant impact on the Company's consolidated statements.
(In millions of United States dollars, except where noted)
GOLDCORP | 9
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies used in the preparation of these consolidated financial statements are as follows:
(a) Basis of Measurement
These consolidated financial statements have been prepared on a historical cost basis, except for those assets and liabilities that
are measured at revalued amounts or fair values at the end of each reporting period.
(b) Currency of Presentation
The Company's presentation currency is the United States ("US") dollar. All amounts, with the exception of per share amounts,
are expressed in millions of US dollars, unless otherwise stated. References to C$ are to Canadian dollars.
(c) Basis of Consolidation
These consolidated financial statements include the accounts of the Company and its subsidiaries. Subsidiaries are entities
controlled by the Company. Control exists when the Company has power over an investee, when the Company is exposed, or has
rights, to variable returns from the investee and when the Company has the ability to affect those returns through its power over
the investee. Subsidiaries are included in the consolidated financial results of the Company from the effective date of acquisition
up to the effective date of disposition or loss of control. The principal subsidiaries of Goldcorp and their geographic locations at
December 31, 2018 were as follows:
Direct parent company Location
Ownership
interest
Mining properties and
development projects owned
(note 18)
Les Mines Opinaca Lte ("lonore") Canada 100% lonore mine
Goldcorp Canada Ltd./Goldcorp Inc. ("Musselwhite") Canada 100% Musselwhite mine
Goldcorp Canada Ltd./Goldcorp Inc. ("Porcupine") Canada 100% Porcupine mine and Century Gold
projects
Goldcorp Borden Limited ("Borden") Canada 100% Borden project
Red Lake Gold Mines Ontario Partnership ("Red Lake") Canada 100% Red Lake and Campbell mines
Minera Peasquito S.A. de C.V. ("Peasquito") Mexico 100% Peasquito mine
Oroplata S.A. ("Cerro Negro") Argentina 100% Cerro Negro mine
Kaminak Gold Corporation ("Kaminak") Canada 100% Coffee project
Intercompany assets and liabilities, equity, income, expenses, and cash flows between the Company and its subsidiaries are
eliminated.
(d) Investments in Associates and Joint Arrangements
These consolidated financial statements also include the following joint arrangements and investments in associates:
Associates and joint
arrangements Location
Ownership
interest
Classification and
accounting method
Mining properties (note
19)
Compaia Minera Casale SpA
("Norte Abierto")
Chile 50.0% Joint Operation; consolidate
Goldcorp's share
Norte Abierto project
NuevaUnin SpA
("NuevaUnin")
Chile 50.0% Joint Venture; equity method NuevaUnin project
Pueblo Viejo Dominicana
Corporation ("Pueblo Viejo")
Dominican
Republic
40.0% Associate; equity method Pueblo Viejo mine
Minera Alumbrera Limited
("Alumbrera")
Argentina 37.5% Associate; equity method Alumbrera mine
The Company conducts a portion of its business through joint arrangements where the parties are bound by contractual
arrangements establishing joint control, and decisions about the activities that significantly affect the returns of the investee
require unanimous consent. A joint arrangement is classified as either a joint operation or a joint venture, subject to the terms
that govern each investor's rights and obligations in the arrangement.
(In millions of United States dollars, except where noted)
GOLDCORP | 10
In a joint operation, the investor has rights and obligations to the separate assets and liabilities of the investee and in a joint
venture, the investors have rights to the net assets of the joint arrangement. For a joint operation, the Company recognizes its
share of the assets, liabilities, revenue, and expenses of the joint arrangement, while for a joint venture, the Company accounts
for its investment in the joint arrangement using the equity method.
An associate is an entity over which the Company has significant influence, and is neither a subsidiary nor a joint arrangement.
The Company has significant influence when it has the power to participate in the financial and operating policy decisions of the
associate but does not have control or joint control over those policies. The Company accounts for its investments in associates
using the equity method.
Under the equity method, the Company's investment in a joint venture or an associate is initially recognized at cost and subsequently
increased or decreased to recognize the Company's share of net earnings and losses of the joint venture or associate, after any
adjustments necessary to give effect to uniform accounting policies, any other movement in the joint venture or associate's
reserves, and for impairment losses after the initial recognition date. The total carrying amount of the Company's investments in
joint venture and associates also include any long-term debt interests which in substance form part of the Company's net
investment. The Company's share of a joint venture or an associate's losses that are in excess of its investment are recognized
only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate
or joint venture. The Company's share of earnings and losses of joint venture and associates are recognized in net earnings during
the period. Dividends and repayment of capital received from a joint venture or an associate are accounted for as a reduction in
the carrying amount of the Company's investment. Unrealized gains and losses between the Company and its joint venture and
associates are recognized only to the extent of unrelated investors' interests in the associates and joint venture. Intercompany
balances and interest expense and income arising on loans and borrowings between the Company and its joint venture and
associates are not eliminated.
The Company's investments in joint venture and associates are included in mining interests on the Consolidated Balance Sheets.
Impairment and reversal of impairment of investments in associates and joint arrangements
At the end of each reporting period, the Company assesses whether there is any objective evidence that an investment in an
associate or joint venture is impaired. Objective evidence includes observable data indicating there is a measurable decrease in
the estimated future cash flows of the investee's operations. When there is objective evidence that an investment is impaired,
the carrying amount of such investment is compared to its recoverable amount, being the higher of its fair value less costs of
disposal ("FVLCD") and value-in-use ("VIU"). If the recoverable amount of an investment is less than its carrying amount, the
carrying amount is reduced to its recoverable amount and an impairment loss, being the excess of carrying amount over the
recoverable amount, is recognized in the period in which the relevant circumstances are identified. When an impairment loss
reverses in a subsequent period, the carrying amount of the investment is increased to the revised estimate of recoverable amount
to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had an
impairment loss not been previously recognized. A reversal of an impairment loss is recognized in net earnings in the period in
which the reversal occurs.
Similar to the assessment of impairment for subsidiaries, the Company reviews the mining properties and plant and equipment
for a joint operation at the cash-generating unit ("CGU") level to determine whether there is any indication that these assets are
impaired (note 4(m)).
(e) Business Combinations
A business combination is defined as an acquisition of assets and liabilities that constitute a business. A business is an integrated
set of activities and assets that is capable of being conducted and managed for the purpose of providing a return to the Company
and its shareholders in the form of dividends, lower costs or other economic benefits. A business consists of inputs, including
non-current assets, and processes, including operational processes, that when applied to those inputs have the ability to create
outputs that provide a return to the Company and its shareholders. A business also includes those assets and liabilities that do
not necessarily have all the inputs and processes required to produce outputs, but can be integrated with the inputs and processes
of the Company to create outputs. When acquiring a set of activities or assets in the exploration and development stage, which
may not have outputs, the Company considers other factors to determine whether the set of activities or assets is a business.
Those factors include, but are not limited to, whether the set of activities or assets:
(i) Has begun planned principal activities;
(ii) Has employees, intellectual property and other inputs and processes that could be applied to those inputs;
(iii) Is pursuing a plan to produce outputs; and
(In millions of United States dollars, except where noted)
GOLDCORP | 11
(iv) Will be able to obtain access to customers that will purchase the outputs.
Not all of the above factors need to be present for a particular integrated set of activities or assets in the exploration and
development stage to qualify as a business.
Business combinations are accounted for using the acquisition method whereby identifiable assets acquired and liabilities
assumed, including contingent liabilities, are recorded at 100% of their fair values at acquisition date. The acquisition date is the
date at which the Company obtains control over the acquiree, which is generally the date that consideration is transferred and
the Company acquires the assets and assumes the liabilities of the acquiree. The Company considers all relevant facts and
circumstances in determining the acquisition date.
The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the fair
values of the assets at the acquisition date transferred by the Company, the liabilities, including contingent consideration, incurred
and payable by the Company to former owners of the acquiree and the equity interests issued by the Company. The measurement
date for equity interests issued by the Company is the acquisition date. Acquisition-related costs, other than costs to issue debt
or equity securities of the acquirer, are expensed as incurred. The costs to issue equity securities of the Company as consideration
for the acquisition are reduced from share capital as share issue costs.
It generally requires time to obtain the information necessary to identify and measure the following as of the acquisition date:
(i) The identifiable assets acquired, liabilities assumed and any non-controlling interest in the acquiree;
(ii) The consideration transferred in exchange for an interest in the acquiree;
(iii) In a business combination achieved in stages, the equity interest in the acquiree previously held by the acquirer; and
(iv) The resulting goodwill or gain on a bargain purchase.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination
occurs, the Company reports in its consolidated financial statements provisional amounts for the items for which the accounting
is incomplete. During the measurement period, the Company will retrospectively adjust the provisional amounts recognized at
the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date
and, if known, would have affected the measurement of the amounts recognized as of that date. During the measurement period,
the Company will also recognize additional assets or liabilities if new information is obtained about facts and circumstances that
existed as of the acquisition date and, if known, would have resulted in the recognition of those assets and liabilities as of that
date. The measurement period ends as soon as the Company receives the information it was seeking about facts and circumstances
that existed as of the acquisition date or learns that more information is not obtainable and shall not exceed one year from the
acquisition date.
Non-controlling interests are recorded at their proportionate share of the fair value of identifiable net assets acquired on initial
recognition. The excess of: (i) total consideration transferred by the Company, measured at fair value, including contingent
consideration, and (ii) the non-controlling interests in the acquiree, over the fair value of net assets acquired, is recorded as
goodwill.
(f) Foreign Currency Translation
The functional and presentation currency of the Company and each of its subsidiaries, associates and joint arrangements is the
US dollar. Accordingly, foreign currency transactions and balances of the Company's subsidiaries, associates and joint
arrangements are translated as follows: (i) monetary assets and liabilities denominated in currencies other than the US dollar
("foreign currencies") are translated into US dollars at the exchange rates prevailing at the balance sheet date; (ii) non-monetary
assets denominated in foreign currencies and measured at other than fair value are translated using the rates of exchange at the
transaction dates; (iii) non-monetary assets denominated in foreign currencies that are measured at fair value are translated using
the rates of exchange at the dates those fair values are determined; and (iv) income statement items denominated in foreign
currencies are principally translated using daily exchange rates, except for depreciation and depletion which is translated at
historical exchange rates.
Foreign exchange gains and losses are recognized in net (loss) earnings and presented in the Consolidated Statements of (Loss)
Earnings in accordance with the nature of the transactions to which the foreign currency gains and losses relate. Unrealized
foreign exchange gains and losses on cash and cash equivalent balances denominated in foreign currencies are disclosed
separately in the Consolidated Statements of Cash Flows.
(In millions of United States dollars, except where noted)
GOLDCORP | 12
(g) Revenue Recognition
The Company's primary product is gold; other metals produced as part of the extraction process are considered to be by-products
arising from the production of gold. Revenue relating to the sale of metals is recognized when control of the metal or related
services are transferred to the customer in an amount that reflects the consideration the Company expects to receive in exchange
for those products or services. In determining whether the Company has satisfied a performance obligation, it considers the
indicators of the transfer of control, which include, but are not limited to, whether: the Company has a present right to payment;
the customer has legal title to the asset; the Company has transferred physical possession of the asset to the customer; and the
customer has the significant risks and rewards of ownership of the asset.
Revenue also includes consideration relating to shipping and insurance services that the Company arranges and pays for on behalf
of customers as required by the terms of certain of the Company's concentrate agreements to bring the goods to the named
destination. The Company considers the portion of shipping and insurances services provided after the transfer of control of the
concentrate as distinct performance obligations. Accordingly, the Company apportions consideration attributable to these services
based on a relative stand-alone pricing basis. The consideration is deferred and recognized over time as the obligations are
fulfilled.
The initial sales price of the Company's concentrate metal sales is determined on a provisional basis at the date of sale as the
final selling price is subject to movements in the monthly average London Metal Exchange or London Bullion Market Association
prices up to the date of final pricing. The period between provisional invoicing and final pricing, or settlement period, is typically
between 30 and 120 days. Upon transfer of control of the concentrate, the Company recognizes revenue on a provisional basis
based on the forward prices for the estimated month of settlement. Revenues are subsequently re-estimated by reference to
forward market prices at each period end, with the impact of changes in the forward market prices recognized as revenue
adjustments as they occur until final settlement. Refining and treatment charges are netted against revenues from metal
concentrate sales.
(h) Earnings per Share
Earnings per share calculations are based on the weighted average number of common shares outstanding during the period. For
calculations of diluted earnings per share, the weighted average number of common shares outstanding are adjusted to include
the effects of restricted share units and dilutive stock options, whereby proceeds from the potential exercise of dilutive stock
options with exercise prices that are below the average market price of the underlying shares are assumed to be used in purchasing
the Company's common shares at their average market price for the period.
(i) Cash and Cash Equivalents
Cash and cash equivalents include cash and short-term money market investments that are readily convertible to cash with original
terms of three months or less.
(j) Inventories and Stockpiled Ore
Finished goods, work-in-process, heap leach ore and stockpiled ore are measured at the lower of weighted average cost and net
realizable value. Net realizable value is calculated as the estimated price at the time of sale based on prevailing and long-term
metal prices less estimated future costs to convert the inventories into saleable form and estimated costs to sell. At operations
where the ore extracted contains significant amounts of metals other than gold, primarily zinc, silver, lead and copper, cost is
allocated between the joint products on a pro-rata basis. Incremental processing costs directly related to a joint product are
allocated to that metal. Stockpiled ore that is expected to take longer than 12 months to recover is presented as a non-current
asset.
Ore extracted from the mines is generally stockpiled and subsequently processed into finished goods (gold and by-products in
dor or concentrate form). Costs are included in work-in-process inventory based on current costs incurred up to the point prior
to the refining process, including applicable depreciation and depletion of mining interests, and removed at the weighted average
cost per recoverable ounce of gold. The average costs of finished goods represent the average costs of work-in-process inventories
incurred prior to the refining process, plus applicable refining costs.
The recovery of gold and by-products from certain oxide ore is achieved through a heap leaching process at Peasquito. Under
this method, ore is stacked on leach pads and treated with a cyanide solution that dissolves the gold contained within the ore.
The resulting pregnant solution is further processed in a plant where the gold is recovered. Costs are included in heap leach ore
inventory based on current mining and leaching costs, including applicable depreciation and depletion of mining interests, and
(In millions of United States dollars, except where noted)
GOLDCORP | 13
removed from heap leach ore inventory as ounces of gold are recovered at the weighted average cost per recoverable ounce of
gold on the leach pads. Estimates of recoverable gold on the leach pads are calculated based on the quantities of ore placed on
the leach pads (measured tonnes added to the leach pads), the grade of ore placed on the leach pads (based on assay data), and
a recovery percentage (based on ore type).
Supplies are measured at weighted average cost. In the event that the net realizable value of the finished product, the production
of which the supplies are held for use in, is lower than the expected cost of the finished product, the supplies are written down
to net realizable value.
The costs of inventories sold during the period are presented as mine operating costs in the Consolidated Statements of (Loss)
Earnings.
(k) Mining Interests
Mining interests include mining properties, related plant and equipment, and the Company's investments in associates and joint
venture.
Mining properties:
Mining properties are comprised of reserves, resources and exploration potential. The value associated with resources and
exploration potential is the value beyond proven and probable reserves.
Resources represent the property interests that are believed to potentially contain economic mineralized material such as inferred
material within pits; measured, indicated and inferred resources with insufficient drill spacing to qualify as proven and probable
reserves; and inferred resources in close proximity to proven and probable reserves. Exploration potential represents the estimated
mineralized material contained within: (i) areas adjacent to existing reserves and mineralization located within the immediate
mine area; (ii) areas outside of immediate mine areas that are not part of measured, indicated, or inferred resources; and
(iii) greenfields exploration potential that is not associated with any other production, development, or exploration stage property.
Recognition:
Capitalized costs of mining properties include the following:
(i) Costs of acquiring production, development and exploration stage properties in asset acquisitions;
(ii) Costs attributed to mining properties acquired in business combinations;
(iii) Expenditures incurred to develop mining properties;
(iv) Economically recoverable exploration and evaluation expenditures;
(v) Borrowing costs incurred that are attributable to qualifying mining properties;
(vi) Certain costs incurred during production, net of proceeds from sales, prior to reaching operating levels intended by
management; and
(vii) Estimates of reclamation and closure costs (note 4(n)).
Acquisitions:
The cost of acquiring a mining property as part of a business combination is capitalized and represents the property's fair value
at the date of acquisition. The purchase consideration of the acquisition of a mining property determined to be an asset acquisition
is allocated to the individual assets acquired and liabilities assumed based on their relative fair values. Fair value is determined
by estimating the value of the property's reserves, resources and exploration potential.
Development expenditures:
Drilling and related costs incurred to define and delineate a mineral deposit that has not been classified as proven and probable
reserves are capitalized and included in the carrying amount of the related property in the period incurred, when management
determines that it is probable that the expenditures will result in a future economic benefit to the Company.
(In millions of United States dollars, except where noted)
GOLDCORP | 14
Stripping costs:
In open pit mining operations, it is necessary to incur costs to remove overburden and other mine waste materials in order to
access the ore body (stripping costs). Stripping costs incurred prior to the production stage of a mining property (pre-stripping
costs) are capitalized as part of the carrying amount of the related mining property.
Exploration and evaluation expenditures:
The costs of acquiring rights to explore, exploratory drilling and related costs incurred on sites without an existing mine and on
areas outside the boundary of a known mineral deposit which contain proven and probable reserves are exploration and evaluation
expenditures and are expensed as incurred prior to the date of establishing that costs incurred are economically recoverable.
Exploration and evaluation expenditures incurred subsequent to the establishment of economic recoverability are capitalized and
included in the carrying amount of the related mining property.
Management uses the following criteria in its assessments of economic recoverability and probability of future economic benefit:
(i) Geology: there is sufficient geologic certainty of converting a mineral deposit into a proven and probable reserve. There is
a history of conversion to reserves at operating mines;
(ii) Scoping, prefeasibility or feasibility: there is a scoping study, prefeasibility or preliminary feasibility study that demonstrates
the additional reserves and resources will generate a positive commercial outcome. Known metallurgy provides a basis for
concluding there is a significant likelihood of being able to recover the incremental costs of extraction and production;
(iii) Accessible facilities: the mineral deposit can be processed economically at accessible mining and processing facilities where
applicable;
(iv) Life of mine plans: an overall life of mine plan and economic model to support the economic extraction of reserves and
resources exists. A long-term life of mine plan and supporting geological model identifies the drilling and related development
work required to expand or further define the existing ore body; and
(v) Authorizations: operating permits and feasible environmental programs exist or are obtainable.
Prior to capitalizing exploratory drilling, evaluation, development and related costs, management determines that the following
conditions have been met:
(i) It is probable that a future economic benefit will flow to the Company;
(ii) The Company can obtain the benefit and controls access to it;
(iii) The transaction or event giving rise to the future economic benefit has already occurred; and
(iv) Costs incurred can be measured reliably.
Borrowing costs:
Borrowing costs incurred that are attributable to acquiring and developing exploration and development stage mining properties
and constructing new facilities ("qualifying assets") are capitalized and included in the carrying amounts of qualifying assets until
those qualifying assets are ready for their intended use, which in the case of mining properties, is when the mining property
reaches commercial production. Capitalization commences on the date that expenditures for the qualifying asset are incurred,
borrowing costs are being incurred by the Company and activities that are necessary to prepare the qualifying asset for its intended
use are being undertaken. All other borrowing costs are expensed in the period in which they are incurred. For funds obtained
from general borrowing, the amount capitalized is calculated using a weighted average of rates applicable to the borrowings
during the period. For funds borrowed that are directly attributable to a qualifying asset, the amount capitalized represents the
actual borrowing costs incurred on the specific borrowings.
Costs incurred during production:
Capitalization of costs incurred ceases when the mining property is capable of operating at levels intended by management. Costs
incurred prior to this point, including depreciation of related plant and equipment, are capitalized and proceeds from sales during
this period are offset against costs capitalized.
(In millions of United States dollars, except where noted)
GOLDCORP | 15
Development costs incurred to maintain current production are included in mine operating costs. These costs include the
development and access (tunnelling) costs of production drifts to develop the ore body in the current production cycle.
During the production phase of a mine, stripping costs incurred that provide access to a component of reserves and resources
that will be produced in future periods and that would not have otherwise been accessible are capitalized ("stripping activity
asset"). The costs qualifying for capitalization are those costs directly incurred to perform the stripping activity that improves
access to the identified component of ore, plus an allocation of directly attributable overhead costs, and which are determined
using a strip ratio methodology. The strip ratio represents the ratio of the estimated total volume of waste material to the estimated
total quantity of economically recoverable ore of the component of the reserves and resources for which access has been improved.
The stripping activity asset is included as part of the carrying amount of the mining property. Capitalized stripping costs are
amortized based on the estimated recoverable ounces contained in reserves and resources that directly benefit from the stripping
activities. Costs for waste removal that do not give rise to future economic benefits are included in mine operating costs in the
period in which they are incurred.
Measurement:
Mining properties are recorded at cost less accumulated depletion and impairment losses.
Depletion:
The carrying amounts of mining properties are depleted using the unit-of-production method over the estimated recoverable
ounces, when the mine is capable of operating at levels intended by management. Under this method, depletable costs are
multiplied by the number of ounces produced, and divided by the estimated recoverable ounces contained in proven and probable
reserves and a portion of resources where it is considered highly probable that those resources will be economically extracted.
During the year ended December 31, 2018, depletion expense would have increased by $126 million if resources were excluded
from recoverable ounces.
A mine is capable of operating at levels intended by management when:
(i) Operational commissioning of major mine and plant components is complete;
(ii) Operating results are being achieved consistently for a period of time;
(iii) There are indicators that these operating results will be continued; and
(iv) Other factors are present, including one or more of the following: A significant portion of plant/mill capacity has been
achieved; a significant portion of available funding is directed towards operating activities; a pre-determined, reasonable
period of time has passed; or significant milestones for the development of the mining property have been achieved.
Management reviews the estimated total recoverable ounces contained in depletable reserves and resources annually, and when
events and circumstances indicate that such a review should be made. Changes to estimated total recoverable ounces contained
in depletable reserves and resources are accounted for prospectively.
Impairment and reversal of impairment:
At the end of each reporting period, the Company reviews its mining properties and plant and equipment at the CGU level to
determine whether there is any indication that these assets are impaired. If any such indication exists, the recoverable amount
of the relevant CGU is estimated in order to determine the extent of impairment. A CGU is the smallest identifiable group of assets
that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The Company's
CGUs are its mine sites, represented by its principal producing mining properties and significant development projects.
The recoverable amount of a mine site is the greater of its FVLCD and VIU. In determining the recoverable amounts of each of
the Company's mine sites, the Company uses the FVLCD as this will generally be greater than or equal to the VIU. When there is
no binding sales agreement, FVLCD is primarily estimated as the discounted future after-tax cash flows expected to be derived
from a mine site, less an amount for costs to sell estimated based on similar past transactions. When discounting estimated
future after-tax cash flows, the Company uses its after-tax weighted average cost of capital. Estimated cash flows are based on
expected future production, metal selling prices, operating costs and capital expenditures. Continued access to the estimated
recoverable reserves, resources and exploration potential of the Company's mining interests is a key assumption in determining
their recoverable amounts. The ability to maintain existing or obtain necessary mining concessions, surface rights title, and water
(In millions of United States dollars, except where noted)
GOLDCORP | 16
concessions is integral to the access of the reserves, resources and exploration potential. A mining concession gives its holder
the right to carry out mining activities in the area covered by that concession and take ownership of any minerals found, but it
does not always grant surface access rights. In some jurisdictions surface access rights must be separately negotiated with the
owner of the surface lands and in the event of a dispute or failed negotiations, administrative legal process may be available. In
other jurisdictions, surface access rights may be granted along with mining rights. Water concessions provide its holder the right
to specified levels of water usage and are granted based on water availability in the source area.
If the recoverable amount of a mine site is estimated to be less than its carrying amount, the carrying amount is reduced to its
recoverable amount. The carrying amount of each mine site includes the carrying amounts of mining properties, plant and
equipment, goodwill and related deferred income tax balances, net of the mine site reclamation and closure cost provision. In
addition, the carrying amounts of the Company's corporate assets are allocated to the relevant mine sites for impairment purposes.
Impairment losses are recognized in net earnings in the period in which they are incurred. The allocation of an impairment loss,
if any, for a particular mine site to its mining properties and plant and equipment is based on the relative carrying amounts of
those assets at the date of impairment. Those mine sites which have been impaired are tested for possible reversal of the
impairment whenever events or changes in circumstances indicate that the impairment may have reversed. When an impairment
loss reverses in a subsequent period, the revised carrying amount shall not exceed the carrying amount that would have been
determined had no impairment loss been recognized for the asset previously, less subsequent depreciation and depletion. Reversals
of impairment losses are recognized in net earnings in the period in which the reversals occur.
Plant and equipment:
Plant and equipment are recorded at cost less accumulated depreciation and impairment losses. Costs capitalized for plant and
equipment include borrowing costs incurred that are attributable to qualifying plant and equipment. The carrying amounts of plant
and equipment are depreciated using either the straight-line or unit-of-production method over the shorter of the estimated useful
life of the asset or the life of mine. The significant classes of depreciable plant and equipment and their estimated useful lives
are as follows:
Mill and mill components life of mine
Underground infrastructure life of mine
Mobile equipment components 3 to 15 years
Assets under construction are depreciated when they are substantially complete and available for their intended use, over their
estimated useful lives.
Management reviews the estimated useful lives, residual values and depreciation methods of the Company's plant and equipment
at the end of each financial year, and when events and circumstances indicate that such a review should be made. Changes to
estimated useful lives, residual values or depreciation methods resulting from such review are accounted for prospectively.
Derecognition:
Upon disposal or abandonment, the carrying amounts of mining properties and plant and equipment are derecognized and any
associated gains or losses are recognized in net earnings. The cost and accumulated depreciation and depletion and impairment
of fully depleted mineral properties and fully depreciated plant and equipment are derecognized.
(l) Leases
Contracts which contain the legal form of a lease are classified as either finance or operating leases. Finance leases represent
leases that transfer substantially all of the risks and rewards of ownership of the leased asset. They are capitalized at the
commencement of the lease at the lower of the fair value of the leased asset and the present value of the minimum lease payments
and these capitalized costs are depreciated over the shorter of the period of expected use and the lease term. Leases in which
a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Operating
lease payments are included in production and corporate administration costs in the Company's Consolidated Statements of (Loss)
Earnings on a straight-line basis over the period of the lease. In addition to contracts which take the legal form of a lease, other
significant contracts are assessed to determine whether, in substance, they are or contain a lease, if the contractual arrangement
contains the use of a specific asset and the right to use that asset. The Company will apply the new lease accounting standard,
IFRS 16, on its effective date of January 1, 2019 (note 3).
(In millions of United States dollars, except where noted)
GOLDCORP | 17
(m) Income Taxes
The Company uses the liability method of accounting for income taxes. Under the liability method, deferred income tax assets
and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases, unused tax losses and other income tax deductions.
Deferred income tax assets are recogniz
Accounting What the Numbers Mean
ISBN: 978-1260565492
12th edition
Authors: David Marshall, Wayne McManus, Daniel Viele