7.5.2.5 Credit risk related to other financial assets

in PLN millions, unless otherwise stated

As at 31 December 2022, the most significant item in other financial assets was cash accumulated on the bank accounts of the Mine Closure Fund in the amount of PLN 407 million (as at 31 December 2021: PLN 429 million).

All special purpose deposits of the Group, which are dedicated to collection of cash for future decommissioning costs of mines and other technological facilities and restoration of tailing storage facilities, are carried out by banks with the highest or medium-high ratings confirming the security of the deposited cash.

The following tables present the level of cash concentration within special purpose funds dedicated to the collection of cash by the Group for future decommissioning costs of mines and other technological facilities, according to the credit ratings of financial institutions in which cash is held on special purpose accounts.

Impairment losses on cash accumulated on the bank accounts of special purpose funds: the Mine Closure Fund, were determined individually for each balance of a given financial institution. External bank ratings were used to measure credit risk. The analysis determined that these assets have a low credit risk at the reporting date. The Group used a simplification permitted by the standard and the impairment loss was determined on the basis of 12-month credit losses. The calculation of impairment determined that the amount of impairment loss is insignificant. These assets are classified to Degree 1 of the impairment model.

Moreover, as of 15 July 2022, the Company changed the form of the Tailings Storage Facility Restoration Fund from a bank account to a bank guarantee.