RE:Decommissioning liabilityThis was posted a year and a half ago and things are still no clearer after reading the 2021 Q3 disclosure
mdjbrown wrote: Between 2011 and 2017 the decommissioning liability remained exactly the same at $212,000, however in Q4 of 2018 this liability significantly increased to $2,553,000.
In that same fourth quarter a Rights Offering was completed whereby GSFC was responsible for paying to Karnalyte the majority of the $2.4 million proceeds raised through that rights offering.
After 7 years of absolutely no change to the $212K decommissioning liability, the substantial increased liability in 2018 is now fluctuating like a term loan, with a $311K reduction reported in 2019.
Could someone kindly explain a specific liability increase by more than ten fold in 2018, followed by a >10% decrease in 2019.
“The fourth quarter of 2019 was positively impacted by a reduction in salaries, a reduction in legal expenses, a reduction in travel expenses, a reduction in restructuring expenses, the receipt of land rental income and the recovery recorded as a result of a change in estimate to the Company’s decommissioning liability”
“Total shareholders’ equity in the fourth quarter of 2018 was positively impacted by the completion of a rights offering by the Company on December 21st, 2018, despite the fourth quarter loss of $2,719,000.
6. Capital assets and 7. Exploration and evaluation assets and other assets
Additions to decommissioning liability Assets under construction 2018 $1,175,000
Therefore, in addition to the impairment losses recognized in prior years, the Company recorded an impairment loss of $747,000 during 2019 (2018 - $1,176,000) to impair additions to exploration and evaluation assets to their estimated recoverable amount
8. Decommissioning liability
The undiscounted amount of estimated costs required to settle the obligations at December 31, 2019 is $2,242,000 (2018 - $2,553,000) which are expected to be incurred in 2038.
“The increase in the fourth quarter of 2018 and all the quarters in 2019 is due to a significant increase in the decommissioning liability recorded due to a change in the estimate of this liability made during the fourth quarter of 2018.”
The undiscounted amount of estimated costs required to settle the obligations at December 31, 2018 is $2,553,000 (2017 - $212,000) which are expected to be incurred in 2038.
The undiscounted amount of estimated costs required to settle the obligations at December 31, 2017 is $212,000 (2016 - $212,000) which are expected to be incurred between 2028 and 2029.
The undiscounted amount of estimated costs required to settle the obligations at December 31, 2016 is $212,000 (2015 - $212,000) which are expected to be incurred between 2028 and 2029
The undiscounted amount of estimated costs required to settle the obligations at December 31, 2015 is $212,000 (2014 - $212,000) which are expected to be incurred between 2028 and 2029
The undiscounted amount of estimated costs required to settle the obligations at December 31, 2014 is $212,000 (2013 - $212,000) which are expected to be incurred between 2028 and 2029.
The undiscounted amount of estimated costs required to settle the obligations at December 31, 2013 is $212,000 (2012 - $212,000).
The undiscounted amount of estimated costs required to settle the obligations at December 31, 2012 is $212,000 (2011 - $270,000).
"ii. Decommissioning Provisions Amounts are recorded for decommissioning provisions that will be incurred by the Company at the end of the operating life of the facilities and properties, and upon retirement of its mining assets. Estimates of these costs are subject to uncertainty associated with the method, timing and extend of future decommissioning activities. The provision and related asset and expense are impacted by estimates with respect to the costs and timing of decommissioning."
“Decommissioning obligations: The Company’s decommissioning obligations are based on the Company’s net ownership in wells and facilities. Management estimates the costs to abandon and reclaim the wells and the facilities and the estimated time period during which these costs will be incurred in the future. These provisions relate only to the wells that can be used in production at a future date. The majority of these costs are expected to be incurred over the next 30 years.”
“i) Decommissioning obligations: The Company’s activities give rise to dismantling, decommissioning and site disturbance remediation activities. Provision is made for the estimated cost of site restoration and capitalized in the relevant asset category.”
“Decommissioning obligations are measured at the present value of management’s best estimate of expenditure required to settle the present obligation at the reporting date.”
" Subsequent to the initial measurement, the obligations are adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation. The increase in the provision due to the passage of time is recognized as finance costs whereas increases/decreases due to changes in the estimated future cash flows are capitalized. Actual costs incurred upon settlement of the decommissioning obligations are charged against the provision to the extent the provision were established.”