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Asset retirement obligations | 12 Months Ended
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Dec. 31, 2017
Text block1 [abstract] |
Asset retirement obligations |
15. | Asset retirement obligations
|  | Greece |  |  | Brazil |  |  | Turkey |  |  | Romania |  |  | Canada |  |  | Total |
|  | $ |  |  | $ |  |  | $ |  |  | $ |  |  | $ |  |  | $ |
At January 1, 2017 |  |  | 48,131 |  |  |  | 4,092 |  |  |  | 36,196 |  |  |  | 1,359 |  |  |  | - |  |  |  | 89,778 |
Acquired during the year |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 9,453 |  |  |  | 9,453 |
Accretion during the year |  |  | 1,025 |  |  |  | 32 |  |  |  | 913 |  |  |  | 36 |  |  |  | - |  |  |  | 2,006 |
Revisions to estimate of obligation |  |  | 1,112 |  |  |  | (80 | ) |  |  | 502 |  |  |  | 10 |  |  |  | - |  |  |  | 1,544 |
Settlements |  |  | (2,807 | ) |  |  | - |  |  |  | (290 | ) |  |  | - |  |  |  | - |  |  |  | (3,097 | )
At December 31, 2017 |  |  | 47,461 |  |  |  | 4,044 |  |  |  | 37,321 |  |  |  | 1,405 |  |  |  | 9,453 |  |  |  | 99,684 |
Less: Current portion |  |  | (3,489 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (3,489 | )
Long term portion |  |  | 43,972 |  |  |  | 4,044 |  |  |  | 37,321 |  |  |  | 1,405 |  |  |  | 9,453 |  |  |  | 96,195 |
Estimated undiscounted amount |  |  | 71,591 |  |  |  | 4,117 |  |  |  | 49,257 |  |  |  | 2,340 |  |  |  | 12,286 |  |  |  | 139,591 |
The Company’s asset retirement obligations relate to the restoration and rehabilitation of the Company’s mining operations and projects under development. The expected timing of the cash flows in respect of the provision is based on the estimated life of the various mining operations. The increase in the estimate of the obligation in 2017 was mainly due to the acquisition of Integra. The provision is calculated as the present value of estimated future net cash outflows based on the following key assumptions:
|  | Greece |  |  | Brazil |  |  | Turkey |  |  | Romania |  |  | Canada |
|  | % |  |  | % |  |  | % |  |  | % |  |  | % |
At December 31, 2016 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Inflation rate |  |  | 2.0 to 2.4 |  |  |  | 2.0 to 2.4 |  |  |  | 2.0 to 2.4 |  |  |  | 2.0 to 2.4 |  |  |  | - |
Discount rate |  |  | 1.5 to 3.0 |  |  |  | 0.8 |  |  |  | 2.3 to 2.5 |  |  |  | 2.7 |  |  |  | - |
At December 31, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Inflation rate |  |  | 2.0 to 2.2 |  |  |  | 2.0 to 2.2 |  |  |  | 2.0 to 2.2 |  |  |  | 2.0 to 2.2 |  |  |  | 2.0 to 2.2 |
Discount rate |  |  | 1.5 to 3.0 |  |  |  | 1.8 |  |  |  | 2.3 to 2.5 |  |  |  | 2.7 |  |  |  | 2.3 to 2.5 |
The discount rate is a risk-free rate determined based on U.S. Treasury bond rates. U.S. Treasury bond rates have been used for all of the mine sites as the liabilities are denominated in U.S. dollars and the majority of the expenditures are expected to be incurred in U.S. dollars. Similarly, the inflation rates used in determining the present value of the future net cash outflows are based on U.S inflation rates. Environmental guarantee deposits exist with respect to the environmental rehabilitation of the Lamaque project (note 10). Additionally, the Company has the following: a) a €50.0 million Letter of Guarantee to the Greek Ministry of Environment, Energy and Climate Change as security for the due and proper performance of rehabilitation works committed in relation to the mining and metallurgical facilities of the Kassandra Mines (Stratoni, Olympias and Skouries) and the removal, cleaning and rehabilitation of the old Olympias tailings. This Letter of Guarantee is renewed annually, expires on July 26, 2026 and has an annual fee of 57 basis points. b) a €7.5 million Letter of Guarantee to the Greek Ministry of Environment and Energy for the due and proper performance of the Kokinolakas Tailings Management Facility, committed in connection with the Environmental Impact Assessment approved for the Kassandra Mines (Stratoni, Olympias and Skouries). The Letter of Guarantee is renewed annually and expires on July 26, 2026. The Letter of Guarantee has an annual fee of 45 basis points.

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