in PLN millions, unless otherwise stated
Accounting policies
The item involvement in joint ventures comprises investments in joint ventures accounted for using the equity method and loans granted to a  joint venture.
The Group classifies as investments accounted for using the equity method the interest in joint ventures which are joint contractual arrangements, in which the parties sharing control have the right to the net assets of a given entity. Joint control occurs when decisions on relevant activities of joint ventures require unanimous consent of the parties sharing control.

Investments are initially recognised at cost.  The Group’s share in profit or loss of entities accounted for using the equity method (assessed while taking into account the impact of measurements to fair value at the investment’s acquisition date)  from the acquisition date is recognised in profit or loss, and its share in changes of accumulated other comprehensive income from the acquisition date – in the relevant item of accumulated comprehensive income.
Unrealised gains and losses  on transactions between the investor and the joint venture are eliminated in the amount proportional to the investor’s share in these profits/losses.
If there are any indications of impairment, an investment is tested for impairment by calculating the recoverable amount in accordance with the policy presented in Part 3.

Loans granted to a joint venture do not meet the criteria of recognition as  net investments in a joint  venture. Loans are initially recognised at fair value and measured at the reporting date at amortised cost, including impairment losses.
Significant estimates and assumptions
Joint control
The Group classifies the agreement  “JV Sierra Gorda” as a joint venture under IFRS 11, in which KGHM INTERNATIONAL LTD’s share equals 55%, and which was entered into in order to mine copper and molybdenum in the Sierra Gorda area (Chile).
Classification of Sierra Gorda S.C.M. as a joint venture, despite the 55% share of the Group, was made based on analysis of the terms of the agreements between the parties and contractual stipulations which indicated joint control. Pursuant to the terms of the agreements, all relevant activities of Sierra Gorda S.C.M. require the unanimous consent of both owners. The Group and other owners have three members each in the appointed Owners Council. The Owners Council makes strategic decisions and is responsible for overseeing their execution. Moreover, it approves the appointment of senior management. In the reporting period, there were no changes to provisions that were the basis of classifying the investment as a joint venture.

Valuation of involvement in joint venture Sierra Gorda S.C.M.
At the end of the reporting period, the Group performed a valuation of its involvement in Sierra Gorda, firstly by performing a valuation of the interest in Sierra Gorda S.C.M. using the equity method. The Group’s share (55%) of losses of Sierra Gorda amounted to PLN (6 015) million and was higher than the carrying amount of the joint venture by PLN 4 816 million.  After recognising the share of losses in the amount of PLN (1 199) million, the carrying amount of the interest in Sierra Gorda amounts to 0. In accordance with the accounting policies, the Group ceases to recognise its share of further losses of Sierra Gorda S.C.M.
However, due to operating results of Sierra Gorda and a significant change in parameters of international mining assets, such as mine lives, metals production volumes, assumed operating costs and the level of capital expenditures during a mine’s life the Group performed an impairment testing of involvement in joint venture Sierra Gorda, the carrying amount of which amounted to USD  2 083 million (PLN 8 707 million at the average exchange rate as at 30 December 2016 announced by the NBP) and was the value of loan granted to the joint venture.
To determine the recoverable amount in the performed test, the fair value measurement of the tested asset was made (less costs to sell) making use of the DCF method, i.e. the method of discounted cash flows.

As a result of the performed test, the loan’s fair value was determined to be at the level of USD 1 032 million (PLN 4 313 million at the average exchange rate as at 30 December 2016 announced by the NBP). The carrying amount was higher than the fair value of a loan granted, and therefore an impairment allowance was recognised  in the amount of USD 1 051 million (PLN 4 394 million at the average exchange rate as at 30 December 2016). Assumptions concerning the price curves were adopted while taking into account the professional judgment of the Parent Entity’s Management Board with respect to the future fluctuations of these amounts which was reflected in the calculation of the recoverable amount. Assumptions adopted for testing were described in Part 3.

The loan granted to Sierra Gorda is not a net investment  in the joint venture Sierra Gorda S.C.M. (as defined in IAS 21.15) because settling the loan is expected by the Group and planned to take place in the foreseeable future.