Mine Development Cost — Shaft Sinking and Access
Capitalising the cost of mine shaft construction, access road development, and infrastructure during the development phase.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Mine Development Assets (PPE) | Asset (+) | 18,500,000.00 | - |
| Cash / Contractor Payable | Asset/Liability (-) | - | 18,500,000.00 |
💡 Accountant's Note
Once technical and commercial viability of a mineral deposit is established (JORC-compliant resource estimate, positive feasibility study), all subsequent development expenditures are capitalised as mine development assets. These include shaft sinking, decline development, haul roads, processing plant construction, tailings storage facilities, and mine site infrastructure. Development assets are amortised on the unit-of-production basis once the mine commences production.
Practitioner & Systems Framework
💻 ERP Architecture
Mine development costs are tracked in the capital project management module (SAP PS, Oracle Projects, or mining-specific ERP such as Pronto, Sage X3) by project phase (shaft sinking, development headings, plant construction). The capital project accumulates all directly attributable costs — contractor fees, materials, mining engineering, project management, and directly attributable portion of mine management. IAS 23 borrowing cost capitalisation may apply during the development phase. Development assets are reclassified from CWIP (Capital Work-in-Progress) to the mine development PPE category on commissioning.
⚠️ Audit Flags
Auditors test the decision point that triggered the transition from E&E to development (the feasibility study and resource estimate). Confirm IAS 23 borrowing cost capitalisation is correctly applied — the qualifying period starts when expenditure is incurred, borrowing costs are being incurred, and activities necessary to prepare the asset for use are in progress. Test that development costs exclude general overhead and costs that do not contribute to the mine's development. Review stripping costs incurred during development — initial pre-production stripping costs are capitalised as part of the mine development asset.
📄 Required Documentation
Feasibility study (positive NPV supporting commercial viability), JORC-compliant resource estimate, Board investment decision and capital budget approval, capital project WBS, contractor invoices and completion certificates, IAS 23 borrowing cost calculation, commissioning certification, and CWIP-to-PPE transfer journal on mine commissioning.
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