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Annual Report and Accounts 2011

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Notes to the Annual Financial Statements
For the year ended 30 June 2011

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24. Provisions

US$ million Post-retirement
medical fund
and income tax
Rehabilitation Total
Balance at 1 July 2009 4.2 26.0 30.2
Arising on business combination 2.3 15.8 18.1
Increase in provisions 0.9 0.9
Unwinding of present value adjustment of rehabilitation provision 2.6 2.6
Exchange differences 0.1 0.3 0.4
Balance at 30 June 2010 7.5 44.7 52.2
Current 2.2 2.2
Non-current 5.3 44.7 50.0
Balance at 30 June 2010 7.5 44.7 52.2
Balance at 1 July 2010 7.5 44.7 52.2
Increase in provisions 1.4 3.9 5.3
Unwinding of present value adjustment of rehabilitation provision 3.8 3.8
Exchange differences 0.6 3.4 4.0
Balance at 30 June 2011 9.5 55.8 65.3
Current 2.2 2.2
Non-current 7.3 55.8 63.1
Balance at 30 June 2011 9.5 55.8 65.3

Employee entitlements and other provisions

The provisions relate to provision for an unfunded post retirement medical fund and income tax. The provision for the post-retirement medical fund is further disclosed in note 34. The provision for taxation is based on estimates made, where appropriate, from historical information and professional advice

Rehabilitation

The provision is the estimated cost of the environmental rehabilitation at each site, which is based on current legal requirements and existing technology. The Group estimates the present value of the rehabilitation expenditure at each mine as follows:

  • Koffiefontein mine of US$7.8 million (30 June 2010: US$6.4 million), provided over the current life of mine plan of 14 years;
  • Cullinan mine of US$18.9 million (30 June 2010: US$15.5 million) provided over the estimated total life of mine of 53 years;
  • Kimberley Underground mines of US$14.1 million (30 June 2010: US$8.3 million) provided over the current life of mine plan of 11 years;
  • Williamson mine of US$12.9 million (30 June 2010: US$12.1 million) provided over the current life of mine plan of 17 years; and
  • Helam, Star and Sedibeng of US$2.1 million (30 June 2010: US$2.4 million) (the Fissure mines) provided over their current life of mine plan of approximately 17 years.

The majority of the rehabilitation expenditure is expected to be incurred at the end of the life of the respective mine. This is represented by the current life of mine plans for the mines, with the exception of Cullinan which is expected to be rehabilitated after 53 years, of which 16 years are included in the current life of mine plan. The 53 year period assumes mining of the C-Cut.

The significant assumptions and uncertainties are disclosed in note 1.24. Cash and cash equivalents have been secured in respect of rehabilitation provisions, as disclosed in notes 19 and 20.