ASIC has welcomed the decision by ASX-listed Resolute Mining Limited (Resolute) to impair the Syama Mine by $310 million in its financial report for the half-year ended 31 December 2014.

Resolute has conducted its impairment testing to take into account events that occurred in the six months ended 31 December 2014 and has made a number of adjustments to assumptions and a valuation technique which gives rise to an outcome consistent with other information available to Resolute based on its announced ore reserves.

ASIC had previously made enquiries to Resolute regarding the value of the Syama mine in Resolute’s 30 June 2014 financial report as part of its financial reporting surveillance program. ASIC raised a number of concerns with Resolute including the need for valuation cross-checks and the use of announced ore reserves in impairment testing models.

As outlined in ASIC media release 14-294MR Focuses for 31 December 2014 financial reports, impairment testing and asset values remain a focus area of our financial reporting surveillances. ASIC reminds companies and those involved in preparing and approving financial reports that assumptions and estimates used in estimating the fair value of assets should be realistic and supportable.