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2023 ReportAnnual Report
2011
www.energyres.com.au
2011 Review
336
days
worked without a lost
time injury.
99
Indigenous
employees
Surrounding
environment
remains
protected.
Refer to page 22 for further detail
Refer to page 40 for further detail
Refer to page 32 for further detail
$500m
raised to fund ERA strategic
initiatives, including water
management and exploration.
$120m
approved for the Ranger 3
Deeps exploration decline.
Successful
completion of
$52 million 4 metre
lift on the Tailings
Storage Facility
Refer to page 10 for further detail
Refer to page 20 for further detail
Refer to page 20 for further detail
Implementation
commenced for
1.83 gigalitre Brine
Concentrator
facility.
5,167
tonnes
of uranium oxide (U3O8) sold.
2,641
tonnes
of uranium oxide (U3O8)
produced.
Refer to page 21 for further detail
Refer to page 10 for further detail
Refer to page 12 for further detail
$40m
exploration programme
planned on the Ranger
Project Area.
2,427 mm
of rain fell on the Ranger
Project Area during the
2010/11 wet season. 100 mm
short of all time record.
Suspended
process plant
production for
4.5 months.
Refer to page 16 for further detail
Refer to pages 12 & 32 for further detail
Refer to page 12 for further detail
Energy Resources of Australia Ltd | Annual Report 2011
SALES REVENUE ($000)
2007 - 2011
768,297
496,359
357,080
651,381
572,283
DRUMMED PRODUCTION - TONNES (t)
2007 - 2011
5,412
5,339
5,240
3,973
2,641
2007
2008
2009
2010
2011
2007
2008
2009
2010
2011
NET PROFIT AFTER TAX ($m)
2007 - 2011
272.6
221.8
INDIGENOUS EMPLOYEES
2007 – 2011
PER CENT OF
WORKFORCE
NUMBER
98
99
83
81
76.1
47.0
07
08
09
10
-153.6
11
54
14%
17%
19%
15%
17%
07
08
09
10
11
OPERATING CASH FLOW ($000)
2007 - 2011
ALL INJURY FREQUENCY RATE (per 200,000 hrs worked)
2007 - 2011
405,736
248,798
1.00
1.01
0.68
0.73
0.57
66,836
42,123
54,916
07
08
09
10
11
07
08
09
10
11
Front cover: Scott Sullivan, Project Geologist,
part of ERA’s exploration team undertaking a
$40 million exploration programme from 2012-
2014
Energy Resources of Australia Ltd | Annual Report 2011
1
Annual Report
2011 Review
5 Year Comparatives
Company Profile
Vision
2011 in Review
2012 Objectives
Chairman and Chief Executive’s Report
Financial Performance
Operations
Future Supply
Major Projects
Health and Safety
Sustainable Development
Sustainable Development Overview
2011 in review
Environment
Employment
Community
Governance
Markets and Customers
Directors’ Outlook
Financial Report
Detailed Index
Glossary
Corporate Directory
IFC
1
3
3
4
7
8
10
12
16
20
22
27
28
30
32
40
44
47
49
50
53
127
128
129
2
Energy Resources of Australia Ltd | Annual Report 2011
Company Profile
Energy Resources of Australia Ltd (ERA)
is one of the nation’s largest uranium
producers and Australia’s longest
continually operating uranium mine.
ERA has an excellent track record of reliably
supplying customers. Uranium has been
mined at Ranger for three decades. Ranger
mine is one of only three mines in the world
to produce in excess of 100,000 tonnes of
uranium oxide.
ERA’s Ranger mine is located eight kilometres east of Jabiru
and 260 kilometres east of Darwin, located in Australia’s
Northern Territory.
The mine lies within the 79 square kilometre Ranger Project
Area and is adjacent to Magela Creek, a tributary of the
East Alligator River. Ranger mine is an open cut mine which
commenced commercial production of drummed uranium
oxide (U3O8) in 1981.
ERA sells its product to power utilities in Asia, Europe and
North America under strict international and Australian
Government safeguards. It maintains long term relationships
with customers by providing consistent and reliable supply of
uranium oxide in order to meet their energy needs.
ERA also holds title to the Jabiluka deposit, 22 kilometres
north of Ranger. This world class deposit is under long
term care and maintenance and, in accordance with the
Jabiluka Long Term Care and Maintenance Agreement, will
not be developed by ERA without the approval of the Mirarr
Traditional Owners.
The Ranger Project Area and the Jabiluka lease are located
on Aboriginal land, and surrounded by, but separate from, the
World Heritage Listed Kakadu National Park.
The conditions for operating at Ranger and Jabiluka are set
out in agreements entered into by the Northern Land Council
on behalf of the Traditional Owners under the Commonwealth
Aboriginal Land Rights (Northern Territory) Act 1976.
Rio Tinto, a diversified resources group, owns 68.4 per
cent of ERA shares. The balance of the Company’s shares
are publicly held and traded on the Australian Securities
Exchange.
Vision
To be a world class uranium supplier that contributes to
environmental sustainability and is trusted by the Traditional
Owners, the community and our people.
Code of Business Conduct
ERA strives to uphold the guiding principles set out in our
Code of Business Conduct, namely:
► the paramount importance of the safety and wellbeing of
our employees, contractors and the community;
► respecting the culture and aspirations of Indigenous
people in our community, particularly the Mirarr Traditional
Owners of the land on which ERA operates;
► caring for our surrounding environment through
exemplary management systems and commitment to the
principles of sustainable development;
► creation of value for our shareholders;
► building partnerships with our customers and aiming to
exceed their expectations; and
► strengthening the culture of compliance within the
regulatory framework in which ERA operates.
Acknowledgement
ERA acknowledges the Mirarr people, Traditional Owners of
the land on which ERA operates.
Energy Resources of Australia Ltd | Annual Report 2011
3
2011 in Review
SAFEtY AnD HEALtH
EnVIROnMEnt
OPERAtIOnS
Andrew Calcott and Colin Chapman,
HSE team
Amber Hooke, Environmental Scientist
Rodney Moore, Frank Jia and Shane
Reeves, Process Plant Operations
objective
objective
objective
Continue to work towards the
goal of zero harm through strong
safety leadership and employee
engagement.
HigHligHtS
The 2011 All Injury Frequency
Rate (AIFR) per 200,000 hours
was 0.57, a company record.
Reduced risk rating through
implementation of actions from
2010 semi quantitative risk
assessment.
cHallengeS
Changing operating environment
due to extreme weather impacts
and suspension of plant
processing operations.
Employee turnover due to more
competitive job market.
Ensure that ERA’s operations
do not adversely impact on the
surrounding environment, including
significant progress around
process water treatment and
progress of rehabilitation plans,
including closure of Pit 1.
HigHligHtS
No impact to the surrounding
environment as highlighted in the
Supervising Scientist Division
Annual Report 2010/2011.
Successful management of
process water inventory during the
third largest wet season on record.
Detailed studies commenced for
the Ranger Project Area closure
plan.
Rehabilitation trials have been
initiated on the Magela Land
Application Area.
Successfully completed ISO 14001
recertification audit.
cHallengeS
Near record wet season resulted in
2,427 mm of rainfall at Ranger.
Treating and pumping more than
3.5 gigalitres from Pit 3.
Achieve operational excellence
to deliver optimum production
levels. Ensure Pit 3 is completed
by 2012.
HigHligHtS
Following the restart of the
processing plant in June, it has
been operating at an excellent
level.
On target to complete mining in Pit
3 by end of 2012.
Improved mine planning and
execution increased productivity to
near record levels.
Significantly improved grade
control model provided more
accurate grade prediction and
reconciliation.
cHallengeS
Extreme weather events limited
access to high grade ore at the
bottom of Pit 3.
Employee turnover stretched
recruitment and training teams and
increased the challenge around
utilising the mining fleet.
4
Energy Resources of Australia Ltd | Annual Report 2011
COMMUnItIES AnD
GOVERnMEnt
PEOPLE
MAJOR PROJECtS
George Chaloupka Rock Art Fellowship
ERA’s Radiation team
Further exploration of the Ranger
Project Area
objective
objective
objective
Strengthen community and
government engagement and
relationships.
HigHligHtS
Extensive engagement on major
projects.
Progress towards finalising the
mining agreement with the Mirarr
Traditional Owners.
cHallengeS
Slow progress on multi-party
discussions on the future of Jabiru.
Stakeholder concerns following
the impacts of Fukushima accident
and extreme wet season.
Strengthen employee engagement
through strong, positive leadership,
and expand Indigenous
employment and training in all
areas of the business.
Gain approval for the
Environmental Impact Statement
on the Heap Leach Facility and
advance work on the underground
exploration decline.
HigHligHtS
HigHligHtS
Leadership coaching and
development programmes
implemented.
Indigenous employee mentoring
programme introduced.
Enhanced leader communications
across a variety of complementary
media.
Integrated Talent Management
System rolled out for all employees
at ERA.
Indigenous employee rate of
17 per cent, including trainees.
Introduction of seven day rosters.
cHallengeS
Attracting and retaining talented
employees in a highly competitive
recruitment market.
National skills shortages in the
resources industry.
Enhanced leadership development
opportunities.
The study demonstrated that
the Heap Leach Facility was
technically feasible, however
high capital costs and present
economic assumptions limited its
value. Further, ERA did not have
full stakeholder support for this
project.
Completed feasibility study for
Ranger 3 Deeps exploration decline.
Received all approvals for Ranger
3 Deeps exploration decline.
Commenced Ranger 3 Deeps
exploration decline site preparation
works.
Completed feasibility study
on Brine Concentrator,
commenced procurement of long
lead time items.
cHallengeS
Financial constraints resulting
from lower production levels due
to suspension of plant processing
operations.
Energy Resources of Australia Ltd | Annual Report 2011
5
2011 Year in Review
FInAnCIAL
ExPLORAtIOn
ERA’s Commercial team, Naomi Milne,
Stephen Bartlett, Daniel Kulu and Craig Cook
John Mawe, Exploration
objective
objective
Continuation of exploration
programme on Ranger lease.
HigHligHtS
Exploration drilling being
conducted on Georgetown target.
Identified other prospective areas
on Ranger Project Area.
cHallenge
High levels of ground water after
2010/11 wet season resulted in
delayed start to exploration.
Strive to maintain balance sheet
integrity to help underpin future
development and value for
shareholders.
HigHligHtS
Successfully raised approximately
$500 million through an
accelerated renounceable
entitlement offer.
Significant cost savings initiatives
undertaken in 2011 and
another $40 million planned for
2012.
cHallengeS
Lower than forecast production
of uranium due to suspension of
plant processing operations.
Significant increase in financial
statement rehabilitation provision.
Increased expenditure on water
treatment initiatives.
6
Energy Resources of Australia Ltd | Annual Report 2011
2012 OBJECtIVES
Safety and Health
► Continue to work towards the goal of zero harm through strong safety leadership with extensive employee and
contractor engagement.
Environment
► Ensure that ERA’s operations do not adversely impact on the surrounding environment.
► Progress implementation of water management strategy.
► Progress the rehabilitation of Pit 1 and land application areas.
Operations
► Ensure completion of mining in Pit 3 by end of 2012.
► Continue progressing initiatives to improve efficiency in the operation resulting in lower unit costs per tonne
mined and per tonne milled.
Communities and Government
► Finalise and implement the Mining Agreement with Mirarr Traditional Owners and set up the resulting relationship
committee.
► Ensure appropriate consultation with the Traditional Owners and stakeholders in regard to development of ERA’s
major projects.
People
► Utilise innovative recruitment strategies to attract high calibre candidates.
► Better utilise the skills of our existing people.
► Provide competitive workplace benefits for all our people.
► Increase participation in developmental opportunities.
► Build our leadership capabilities through our leadership coaching and mentoring programme.
► Expand upon Indigenous employment, training and development opportunities and enhanced
educational programmes.
Major Projects
► Complete portal access and commence development of Ranger 3 Deeps exploration decline.
► Initiate a prefeasibility study into the development of the potential Ranger 3 Deeps underground mine and initiate
approvals processes.
► Progress Brine Concentrator project to ensure major items delivered to site by the end of the year.
► Progress the integrated process water, tailings and closure prefeasibility study.
Financial
► Achieve Business Review ongoing cost reduction targets of $40 million.
Exploration
► Progress expanded exploration programme on Ranger Project Area.
Energy Resources of Australia Ltd | Annual Report 2011
7
Chairman & Chief Executive’s
Report
This outstanding result was achieved
across major, labour intensive projects
such as the four metre wall lift of
the Tailings Storage Facility and the
comprehensive plant maintenance
programme undertaken during the
suspension of plant processing
operations.
The $52 million Tailings Storage
Facility wall lift was part of a
comprehensive range of water
management initiatives and
investigations undertaken during the
year to significantly improve our ability
to manage water.
These initiatives included studies
into a proposed $220 million Brine
Concentrator facility designed to treat
1.83 gigalitres of process water per
year, and the installation of new pond
water treatment plant.
In February 2012, ERA approved
the design, construction and
commissioning of a Brine Concentrator
facility at Ranger.
The Brine Concentrator facility is
planned to be commissioned and
fully operational in the second half of
2013, and will provide ERA with further
capacity to handle the impacts of future
heavy rainfall events.
During 2011, ERA completed the
feasibility study into the proposed
Ranger Heap Leach Facility.
The study demonstrated that this
facility was technically feasible,
however, high capital costs and
present economic assumptions limited
its value. Further, ERA did not have
full stakeholder support for this project.
Accordingly, ERA decided not to
proceed with the project.
With the operational Pit 3 approaching
the end of its life, ERA increased its
focus on exploration opportunities on
the Ranger Project Area.
In August, ERA approved $120 million
for construction of an exploration
Dr David Klingner,
Chairman
Mr Rob Atkinson,
Chief Executive
ERA experienced very
significant operational
challenges in 2011, which
had a major negative
effect on the company’s
financial performance.
notwithstanding the
difficult circumstances
faced, ERA’s people
responded in a highly
professional manner
which delivered pleasing
results in terms of
safety performance,
environmental protection,
exploration opportunities
and business focus.
The Ranger Project Area received
2,427 mm of rain in the 2010-2011 wet
season, the third highest rainfall on
record, and just 100 mm short of the all
time record.
protected, an achievement confirmed
by the Australian Government’s
Supervising Scientist Division in its
2010/2011 Annual Report.
The temporary suspension of plant
processing operations provided an
opportunity to bring forward scheduled
maintenance in the processing plant.
Processing operations resumed again
in June.
The suspension of plant processing
operations restricted production
for 2011 to 2,641 tonnes. ERA
successfully met all sales commitments
for the year with purchases and
inventory management making up the
shortfall in production.
In terms of financial performance,
ERA’s revenue for 2011 was $668
million, with a net loss of $154 million.
The significant factors that drove
this result were the suspension of
processing operations, the reduction in
the valuation of stockpiled ore following
the reclassification of a significant
quantity of low grade stockpiled ore
and an increase in non cash costs
(predominantly depreciation).
The decision to implement an orderly
suspension of plant processing
operations in January, a decision that
had major production and financial
consequences, ensured that the
surrounding environment remained
Throughout these challenging
conditions ERA maintained its strong
focus on safety, achieving a world
class 2.1 million hours without a lost
time injury during 2011, and an All
Injury Frequency Rate of 0.57.
8
Energy Resources of Australia Ltd | Annual Report 2011
decline to conduct close spaced
underground exploration drilling and to
explore areas adjacent to the Ranger 3
Deeps resource.
The Ranger 3 Deeps mineralised zone
contains an estimated mineral resource
of 34,000 tonnes of uranium oxide, and
represents one of the most significant
recent uranium discoveries worldwide.
An additional $55 million has been
allocated for further studies into the
potential development of a Ranger 3
Deeps underground mine.
ERA has scheduled a three year
drilling programme at an estimated
cost of $40 million starting in 2012
to define and determine potential
additional resources on the Ranger
Project Area.
Investor confidence in ERA’s strategic
plan was confirmed by the successful
accelerated renounceable entitlement
offer conducted in October and
November, which raised approximately
$500 million.
Proceeds from the capital raising will
be used to fund the Ranger 3 Deeps
exploration decline, the studies into
development of a potential Ranger
3 Deeps mine, expanded exploration
of the Ranger Project Area, and
construction of the Brine Concentrator
and other water management initiatives.
In addition, ERA responded to the
challenging operating conditions with
a comprehensive Business Review,
which identified targeted cumulative
savings of $150 million to be achieved
across the business by 2014.
This review identified opportunities to
operate more efficiently and reduce
costs in line with expected future lower
production levels, as well as meeting
the changing business conditions that
ERA is facing.
In parallel with our increased focus on
exploration in coming years ERA is
also devoting more time and resources
towards rehabilitation activities.
First Awards and the Northern Territory
Government’s Smart Schools Awards.
Looking ahead, ERA faces another
challenging year in 2012. Water
management remains key to ERA’s
future success.
The Ranger 3 Deeps resource and the
expanded exploration programme are
both very promising projects.
With the work being currently executed
in regards to water management,
operations and processing
improvements, the company looks
forward to successfully transitioning the
business from an open cut operation to
one which is predominantly underground.
We would like to thank the Gundjeihmi
Aboriginal Corporation and the Mirarr
Traditional Owners as well as other
key stakeholders for their ongoing
engagement.
We would like to sincerely thank all
of our employees and contractors for
their significant efforts and commitment
throughout a very challenging year.
Dr D Klingner
Chairman
Mr R Atkinson
Chief Executive
These activities and investigations
demonstrate our ability to restore
disturbed areas of the mine to a
condition that reflects the natural
habitat of the surrounding area, and
includes the trial landform project,
rehabilitation of land application areas,
and closure of the exhausted Pit 1.
In the first half of 2011, ERA also
undertook a detailed desktop review
of the costs associated with the
rehabilitation of the Ranger Project
Area. This review resulted in the
provision for rehabilitation increasing
from $314 million to $550 million as at
30 June 2011 (net present cost basis).
The provision was revised to $565
million as at 31 December 2011 to
account for disturbance related to
operations in the second half of 2011.
We also continued consultation with
key stakeholders, particularly the Mirarr
Traditional Owners. These discussions
with the Mirarr and other stakeholders
centred on finalisation of the mining
agreement, major projects, water
management, and future arrangements
for the township of Jabiru.
Throughout the suspension of plant
processing operations, ERA was able
to avoid forced redundancies and
in spite of an extremely competitive
employment market, was able to
successfully recruit a substantial
number of new operators to meet the
2012 mining schedule.
The Company’s continued focus on
Indigenous employment, supported by
a new Indigenous employment strategy
and support for mine industry training
programmes has helped maintain
Indigenous employment levels at
17 per cent.
ERA’s Education Partnership with the
West Arnhem College won awards at
the National Australia Bank’s Schools
Energy Resources of Australia Ltd | Annual Report 2011
9
Financial Performance
Earnings
Costs
ERA’s net loss after tax for the year
ended 31 December 2011 was $154
million, down from a net profit of $47
million in 2010. The 2011 earnings
were significantly impacted by the
production shortfall resulting from
the suspension of plant processing
operations, an unfavourable inventory
adjustment of $99 million net after
tax related to the reclassification of
reserves and an increase in non-cash
costs (predominately depreciation).
Revenue
Sales of uranium oxide for the year
were 5,167 tonnes (2010: 5,026
tonnes). Revenue from the sale of
uranium oxide in 2011 was $649
million, (2010: $572 million).
In 2011, ERA achieved an average
realised sale price of uranium oxide
of US$59.32 per pound (2010:
US$48.16).
The average realised sales price
of uranium oxide for the year
demonstrates the importance of ERA’s
long term sales strategy with a focus
on the long term price rather than the
spot price.
The Company’s long term sales
strategy helped offset the very
significant revenue reductions
associated with production shortfalls
and an unfavourable exchange rate.
Sales of uranium oxide are
denominated in US dollars. ERA
does not conduct hedging activities to
mitigate the impact of movements in
the Australian currency relative to the
US dollar.
Total costs were adversely affected
by the significant quantity of uranium
oxide purchased to meet sales
commitments. This was partially
offset by lower consumable costs
resulting from the suspension of plant
processing operations and efficiency
improvements in the operation.
During the year, ERA purchased a total
of 2,126 tonnes of uranium oxide to
meet sales commitments, 1,636 tonnes
of which related to 2011 commitments.
Employee and contractor costs
remained in line with 2010 despite
increased expenditure on ERA’s major
projects which included further studies
on the Brine Concentrator project,
finalisation of studies on the Ranger
Heap Leach Facility project and the
approval of the Ranger 3 Deeps
Exploration Decline project.
Royalties declined due to reduced
sales volume of Ranger produced
materials. ERA does not pay royalties
on purchased material.
In August 2011, ERA adjusted its Ore
Reserves and Mineral Resources
statement for the Ranger Project Area
to reclassify a significant quantity of
low grade stockpiled ore from reserves
to resources which resulted in a
$99 million post tax inventory value
write off. This adjustment also caused
an increase in non-cash costs as the
majority of depreciation is calculated
on total reserves. The increase in the
financial provision for rehabilitation also
adversely impacted non-cash costs.
Capital expenditure increased in 2011
to $97 million (2010: $45 million). The
majority of that expenditure related to
the implementation of ERA’s Water
Management Strategy and included
the successful completion of the four
metre Tailings Storage Facility wall
lift, increased pond water treatment
capacity and progress on the Brine
Concentrator Project.
Successful Capital Raising
ERA successfully raised approximately
$500 million through an underwritten
accelerated renounceable entitlement
offer.
The 12 for 7 share entitlement offer
included an institutional component
and a retail component at an offer price
of $1.53 per new share.
The capital raising was fully supported
by the major shareholder Rio Tinto,
which took up its full 68.4 per cent
entitlement.
Proceeds from the equity raising will be
used to fund:
► construction of Ranger 3 Deeps
exploration decline (see page 20);
► further studies into development
of a potential Ranger 3 Deeps
underground mine (see page 20);
► expanded exploration of the
Ranger Project Area (see page 16);
and
► construction of the Brine
Concentrator and other water
management initiatives (see
page 21).
Dividends
ERA Directors have decided that a
dividend for 2011 will not be paid
(2010: 8 cents per share).
10
Energy Resources of Australia Ltd | Annual Report 2011
Rehabilitation Provision
In 2011, the provision for rehabilitation
in the financial statements was
increased from $314 million (Dec.
2010) to $565 million at the end of
2011 (on a net present cost basis).
Work continues to further define
the scope and cost of rehabilitation
activities with a review of the estimate
scheduled for December 2012.
Business Review
In 2011, ERA conducted a
comprehensive business review of
its operations and strategy to ensure
that it remains focused on the most
value enhancing activities. This
included a review of the cost structure
of the business. The business review
identified a number of opportunities to
operate more efficiently and to reduce
costs in line with the expected future
production levels, as well as meeting
the changing business conditions that
ERA is facing.
The initiative targets cumulative cost
savings of $150 million in operating
cost reductions over the course of the
next 3.5 years and includes:
► introduction of seven day rosters
allowing more efficient use of
accommodation (see page 40);
labour;
► reduction in the use of raw
materials;
► re-tendering major service and
operational contracts upon
expiration;
► consolidation of vendors; and
► reduced stores inventories.
► reduced reliance on contractor
Underlying earnings ($ million)
Reconciliation of pRofit to undeRlying eaRningS
All AfteR tAx figuRes in $ Million
Profit (loss) for the year
Low grade inventory adjustment
2011
(154)
99
One-off charge for the write-off of trial water treatment process
–
Underlying earnings
(54)
2010
47
–
6
53
financial HigHligHtS
YeAR enD 31 DeceMbeR
2011
2010 chAnge %
Revenue from continuing operations ($ million) 667.8
586.0
Earnings before interest and tax ($ million)
(220.6)
Net profit (loss) after tax ($ million)
(153.6)
(54.2)
–
47.7
47.0
52.8
8.0
Total dividends (cents per share)
Uranium oxide production (tonnes drummed) 2,641
3,793
14
(362)
(427)
(203)
(100)
(30)
Total tonnes uranium oxide sold
5,167
5,026
3
The financial statements have been prepared under the International Financial
Reporting Standards. All figures are Australian dollars unless otherwise noted.
Energy Resources of Australia Ltd | Annual Report 2011
11
Above: Members of ERA’s Commercial team,
Naomi Milne, Stephen Bartlett, Daniel Kulu and
Craig Cook
Operations
During 2011, ERA’s
operations were
significantly impacted by
a temporary suspension of
plant processing operations
due to near-record rainfall.
Production
In January 2011, ERA took decisive
action and announced an orderly
suspension of plant processing
operations as a proactive measure to
manage water levels in the Tailings
Storage Facility to manage what was
then expected to be an above average
wet season.
This decision was vindicated with the
Ranger mine experiencing the third
highest rainfall in recorded history,
having received 2,427 mm of rain,
100 mm short of the all time record.
The suspension of plant processing
operations and other water management
actions successfully contained the
process water inventories. A progressive
restart of processing operations began
on 15 June.
The significantly higher than average
rainfall encountered during the
wet season and the consequential
suspension of plant processing
operations restricted total production
for 2011 to 2,641 tonnes, compared
with 3,793 tonnes in 2010. The
processing plant utilisation and
throughput rates were excellent in the
second half of 2011.
The high water levels in Pit 3 restricted
access to high grade ore located at the
bottom of Pit 3, which in turn lowered
the average mill head grade to 0.18
per cent (2010: 0.19).
Additional pond water treatment
capacity was installed in 2011, which
doubled the treatment rate of pond
water. This capacity expedited
the removal and treatment of
approximately 3.5 gigalitres from Pit 3.
Total material mined was 10.7 million
tonnes (2010: 10.6 million) with
operations confined to the upper
benches of Pit 3 for the majority of the
year due to water levels. There were
significant periods of time during the
year when, due to the water levels in
the pit, mining operations were diverted
from Pit 3 to stockpile mining.
TOP SIX HEAVIEST WET SEASONS IN THE NORTHERN TERRITORY DURING
THE LAST 30 YEARS OF OPERATION (1981 – 2011)
2538
2427
2084
2090
1841
1837
1999-00
2000-01
2003-04
2005-06
2006-07
2010-11
RAINFALL (mm)
1999 – 2011
Outlook for Pit 3
Pit 3 is approaching the end of its
operational life. Remaining ore is
located within increasingly narrow,
geologically complex zones in close
association with barren rock at the
margin of the ore body.
Whilst the increased pond water
treatment capacity will improve
dewatering rates in Pit 3, the mining
schedule in 2012 is highly dependent
on the level of rainfall during the
2011/12 wet season.
During 2011, ERA purchased additional
mining equipment to increase the
hauling capacity in order to meet the
scheduled completion of mining in Pit 3
at the end of 2012.
ERA completed an intensive mine haul
truck driver and operator recruitment
programme during 2011, hiring an
additional 70 skilled operators to
keep the fleet running at full capacity
throughout 2012.
Maintenance Programme
Completed Safely
The temporary suspension of plant
processing operations provided an
opportunity to bring forward scheduled
maintenance in the processing plant.
ERA redeployed employees affected
by the suspension of plant processing
operations onto maintenance duties.
Tasks included major overhauls,
maintenance and cleaning, and safety
and environmental improvements.
Maintenance work focused on the
rod mill and ball mill, laterite plant,
primary and fine ore bins, crushing
and grinding circuits, leach tanks
and settling tanks, clarifier, lime mill,
pregnant liquor tank, precipitation tank,
product bins, and high voltage switches
and transformers.
12
Energy Resources of Australia Ltd | Annual Report 2011
Energy Resources of Australia Ltd | Annual Report 2011
13
Karina Archer, a member of ERA’s mining
department, which mined 10.6 million tonnes of
material
“ERA took decisive action and announced an orderly suspension of plant processing operations as a proactive measure to manage water levels in the Tailings Storage Facility to protect the surrounding environment.“ Operations
Frank Harris Chief Advisor, Radiation Governance
and Product Stewardship, helping to ensure all
aspects of ERA’s radiation management and
controls on uranium are global leading practice
14
Energy Resources of Australia Ltd | Annual Report 2011
The maintenance programme was
completed without injury to employees
or contractors.
Peak Plant Performance
Plant performance exceeded
expectations in 2011, following the
completion of the maintenance
programme and the resumption of
processing operations.
Mill throughput for the year was 1.6
million tonnes (2010: 2.4 million
tonnes). Plant utilisation rates
reached 86 per cent, while the rate for
extraction was 92 per cent, and the
recovery rate was 88 per cent.
This was excellent performance in light
of the duration of the suspension of the
plant processing operations.
new Approach to Wet
Weather
When unable to mine in Pit 3 due to
water levels, ERA’s mine haul truck
fleet was redeployed to haul ore from
the stockpiles to ensure the highest
grade ore was closest to the mill.
In addition, the fleet was utilised to
provide crushed rock for the Tailings
Storage Facility wall lift, instead of
engaging additional contractors.
Normally wet weather signals a
restriction to vehicle movement on
site, resulting in reduced productivity
and potential for loss of skilled
personnel to other, more active mine
sites. A strong focus on improvement
and maintenance of haul roads and
adjusting driving schedules to suit
conditions, allowed the mine fleet
to operate for longer periods than
previous wet seasons.
Seven Day Roster
One of the objectives of the business
review was to simplify our operations,
which resulted in the introduction of a
seven day roster. It is expected that the
roster will improve occupancy rates for
company owned accommodation from
50 per cent to more than 80 per cent.
This is expected to deliver annualised
savings of approximately $5 million.
It is also expected to enhance
retention, improve recruitment and
enable leaders to have greater contact
with their teams. It also provides
our people with the improved family
and recreational benefits that are
associated with an even time roster.
Power Station Up, Acid
Plant Down
The three year Ranger mine power
station major overhaul programme was
completed in 2011, delivering more
reliable power supply to the mine and
to the township of Jabiru.
Five diesel-powered generators
have been rebuilt with fuel efficiency
improving by approximately four per
cent, saving 800,000 litres of fuel per
year and avoiding over 2,000 tonnes of
greenhouse gases.
ERA safely completed the demolition
of the decommissioned Ranger acid
plant. The disused plant was carefully
dismantled and placed in land fill
disposal on site. The new Brine
Concentrator facility will be constructed
in this area.
Jabiru Airport Upgrade
The Jabiru Airport is located on the
Ranger Project Area and provides a
critical regional air transport service for
mining operations, tourism, agricultural
business, emergency services and
local communities.
During 2011, ERA completed a
significant work programme at Jabiru
Airport designed to upgrade the
security, access, fencing, parking,
lighting, airstrip markings and buffer
zone.
The Jabiru Airport is utilised for ERA
fly-in, fly-out operations and by third
parties. The airport is of particular
importance to the local region and
Kakadu National Park, especially when
considering emergency evacuation
flights associated with medical issues.
These upgrades have greatly assisted
night time medical evacuations.
Left and bottom right: ERA completed a major
airport upgrade at the Jabiru Airport
Top right: Jody Clark, Manager Water and Tailings
Energy Resources of Australia Ltd | Annual Report 2011
15
Future Supply
Evaluation and
Exploration
ERA has approved $120 million for the
construction of an exploration decline
to conduct close spaced underground
exploration drilling of the Ranger 3
Deeps resource, estimated to contain
34,000 tonnes of uranium oxide (see
page 20).
Results from the 2011 drilling
programme facilitated planning
for ERA’s expanded $40 million
exploration programme to be executed
over the next three years.
ERA’s exploration programme on
the Ranger Project Area during 2011
focused on the Georgetown area south
east of the Ranger 3 Deeps resource.
Drilling of the Georgetown area so
far has intersected mineralisation,
including:
► R3PD7 14 m @ 0.40% eU308 in
hanging wall sequence (HWS) from
404 m
► R3PD20 7 m @ 0.15% eU308 in
HWS from 251 m, 11 m @ 0.62%
eU308 in HWS from 287 m
► R3PD19 1 m @ 0.22% eU308 in
HWS from 370 m
► R3PD20 7 m @ 0.17% eU308 in
upper mine sequence from 770 m
► R3PD25 4 m @ 0.45% eU3O8 in
HWS from 409 m
Mineralised intersections are based on
a 0.08% uranium oxide cut off.
$40 Million Exploration
Programme
ERA has scheduled a three year
drilling programme at an estimated
cost of $40 million, starting in 2012
to define and determine potential
additional resources on the Ranger
Project Area.
New exploration techniques
developed in the last ten years,
such as geochemical, mineralogical,
geophysical and structural techniques,
will be used to shape this expanded
exploration programme for the Ranger
Project Area.
Mineral Resources for the Ranger
Project Area increased by 7,642
tonnes to 117,246 tonnes of contained
uranium oxide. The majority of this
increase was attributable to the
reclassification of Ore Reserves to
Mineral Resources.
Ranger Project Area
Reserves and Resources
During 2011, Ore Reserves for the
Ranger Project Area decreased by
16,364 tonnes of contained uranium
oxide to 13,484 tonnes of contained
uranium oxide as a consequence of
depletion by processing, downward
adjustments following grade
adjustments to stockpiled material and
the insitu ore model, reclassification of
Ore Reserves to Mineral Resources
and reconciliation adjustments.
Jabiluka Reserves and
Resources
The Jabiluka project remains under
long term care and maintenance, and,
in accordance with the Long Term
Care and Maintenance Agreement,
development by ERA will not proceed
without the approval of the Mirarr
Traditional Owners.
The reserves and resources at
Jabiluka remained unchanged during
the year at 67,700 tonnes (reserves)
and 73,940 tonnes (resources) of
contained uranium oxide.
tHe table below SetS out tHe Reconciliation of oRe ReSeRveS:
RAngeR ReconciliAtion
contAineD u3o8 - tonnes
Ore Reserves as at 1 January 2011
Ore Reserves depleted by processing
Other adjustments
See Explanatory Notes
ore Reserves as at 31 December 2011
explanatoRy noteS
grade adjustments for stockpiled and insitu ore
29,848
(2,921)
(13,443)
13,484
(as outlined in announcement dated 4 August 2011)
(6,100)
Reclassification of Ore Reserves to Mineral Resources
(as outlined in announcement dated 4 August 2011)
(7,100)
Reconciliation adjustments
net other Adjustments
(243)
(13,443)
16
Energy Resources of Australia Ltd | Annual Report 2011
Scott Sullivan and John Mawe, members of
the Exploration team who will deliver ERA’s
$40 million exploration programme.
Energy Resources of Australia Ltd | Annual Report 2011
17
“New exploration techniques developed in the last ten years, such as geochemical, mineralogical, geophysical and structural techniques, will be used to shape this expanded exploration programme for the Ranger Project Area.“ Future Supply
18
Energy Resources of Australia Ltd | Annual Report 2011
ERA 2011 Ore Reserves & Mineral ResourcesCUT-OFF GRADE –IN SITU ORE 0.08% U3O8STOCKPILE ORE 0.08% U3O8CUT-OFF GRADE –IN SITU ORE 0.08% U3O8STOCKPILE ORE 0.06% U3O8 AS AT 31 DECEmbER 2011AS AT 31 DECEmbER 2010 ORE (mt)% U3O8t U3O8ORE (mt)% U3O8t U3O8RANGER ORE RESERvESCurrent Stockpiles5.780.126,95520.260.10 20,557Ranger No. 3 Pit In situ Proved2.69 0.225,9733.48 0.21 7,219Probable0.670.08 5571.120.192,072Sub-total Proved and Probable Reserves3.360.196,5304.600.219,291Total Ranger No. 3 Stockpiles, Proved and Probable Reserves9.14 0.15 13,484 24.9 0.12 29,848 CUT-OFF GRADE –OPEN PIT IN SITU RESOURCE 0.02% U3O8UNDERGROUND IN SITU RESOURCE 0.15% U3O8STOCKPILE ORE 0.02% U3O8CUT-OFF GRADE –OPEN PIT IN SITU RESOURCE 0.02% U3O8UNDERGROUND IN SITU RESOURCE 0.15% U3O8STOCKPILE ORE 0.02% U3O8RANGER mINERAL RESOURCESIn Addition To The Above Ore ReserveCurrent Mineralised Stockpiles64.110.0427,71038.110.04 15,092 In situ resource Measured21.020.1019,990 29.760.08 23,605 Indicated52.880.1261,83057.450.11 63,818 Sub-total Measured and Indicated Resources138.01 0.08109,530125.31 0.08 102,515 Inferred Resources6.180.127,7105.95 0.12 7,090 Total Resources144.190.08117,240 131.270.08 109,604 Energy Resources of Australia Ltd | Annual Report 2011
19
As At 31 December 2011As At 31 December 2010cUt-OFF GrADe0.20% U3O8cUt-OFF GrADe0.20% U3O8 Ore (mt)% U3O8t U3O8Ore (mt)% U3O8t U3O8JAbilUkA Ore reserves Proved - - - - - - Probable13.80 0.49 67,700 13.80 0.49 67,700 Total Proved and Probable Reserves13.80 0.49 67,700 13.80 0.49 67,700 JAbilUkA minerAl resOUrces In Addition To The Above Ore ReserveMeasured0.24 0.48 1,140 0.24 0.48 1,140 Indicated4.30 0.36 15,330 4.30 0.36 15,300 Sub-total Measured and Indicated4.540.36 16,440 4.54 0.36 16,440 Inferred Resources10.90 0.53 57,500 10.90 0.53 57,500 total resources15.44 0.48 73,940 15.44 0.48 73,940 Note: Rounding differences may occurAs required by the Australian Securities Exchange, the above tables contain details of other mineralisation that has a reasonable prospect of being economically extracted in the future but which is not yet classified as Proved or Probable Reserves. This material is defined as Mineral Resources under the JORC Code. Estimates of such material are based largely on geological information with only preliminary consideration of mining, economic and other factors. While in the judgment of the Competent Person there are realistic expectations that all or part of the Mineral Resources will eventually become Proved or Probable Reserves, there is no guarantee that this will occur as the result depends on further technical and economic studies and prevailing economic conditions in the future. The information in this report that relates to Ranger and Jabiluka Mineral Resources or Ore Reserves is based on information compiled by Geologists Greg Rogers (a full time employee of Energy Resources of Australia Ltd) and Arnold van der Heyden (a full time employee of Hellman & Schofield Pty Ltd and consultant to Energy Resources of Australia Ltd) and Mining Engineers Reid Miller and John Murphy (full time employees of Energy Resources of Australia Ltd) who are all members of the Australasian Institute of Mining & Metallurgy. Greg Rogers, Arnold van der Heyden, Reid Miller and John Murphy have sufficient experience which is relevant to the style of mineralisation and the type of deposit under consideration, and to the activity which they are undertaking to qualify as Competent Persons as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Greg Rogers, Arnold van der Heyden, Reid Miller and John Murphy consent to the inclusion in this report of the matters based on their information in the form and context in which it appears. Major Projects
Ranger 3 Deeps
Exploration Decline
In August, ERA approved $120 million
for construction of an exploration
decline to conduct close spaced
underground exploration drilling and to
explore areas adjacent to the Ranger 3
Deeps resource.
The Ranger 3 Deeps mineralised zone
contains an estimated 34,000 tonnes
of uranium oxide, and represents one
of the most significant recent uranium
discoveries worldwide.
Site preparation began in October
2011 and construction of the decline
is expected to begin in May 2012 after
the wet season.
The first stage of construction
is excavation of the box cut and
installation of a portal access tunnel,
which is scheduled for completion in
October 2012. Development of the
decline will commence from October
2012 and exploration drilling is targeted
for commencement in June 2013.
An additional $55 million has been
allocated for further studies into the
potential development of a Ranger 3
Deeps underground mine.
ERA will consult with the Traditional
Owners of the Ranger Project Area,
the Mirarr and their representatives,
as well as the regulators and the
Commonwealth and Northern Territory
Governments, on the outcomes of
those studies.
tailings Storage Facility
Wall Lift
Increasing the capacity of the Ranger
Tailings Storage Facility was a
critical component of ERA’s Water
Management Strategy.
During 2011, ERA successfully
completed a $52 million project to
raise the embankment of the Tailings
Storage Facility by four metres.
In November 2011, ERA received
regulatory approval to raise the
wet season operating limit to RL
56.0 metres.
The project was completed ahead of
time, on budget and without injury.
ERA is considering a potential further
wall lift, which may occur in 2012.
Below: Diagram of the Ranger 3 Deeps
exploration decline which will allow ERA to
conduct close spaced underground drilling
and to explore areas adjacent to the Ranger 3
Deeps resource.
20
Energy Resources of Australia Ltd | Annual Report 2011
Heap Leach Facility
During 2011, ERA completed the
feasibility study into the proposed
Ranger Heap Leach Facility.
The study demonstrated that this
facility was technically feasible,
however, high capital costs and
present economic assumptions limited
its value. Further, ERA did not have full
stakeholder support for this project.
Accordingly, ERA decided to not
proceed with the project. The proposed
Heap Leach Facility was designed to
process low grade ore from the Ranger
mine stockpiles. These stockpiles
contain significant quantities of
uranium oxide and ERA will continue to
investigate methods of recovering it.
Brine Concentrator
Facility
During 2011, ERA completed the
feasibility study into a proposed
Brine Concentrator facility.
In February 2012, ERA announced
approval of $220 million to construct
a Brine Concentrator facility to treat
process water, which will allow for
the discharge of up to 1.83 gigalitres
(1.83 billion litres) per year.
Brine concentrators use thermal
energy to evaporate water, which
is subsequently condensed and
discharged as clean distilled water.
This proven technology is scientifically
and environmentally sound and will
provide ERA with effective treatment
means to reduce the process water
inventory and to manage the impacts
of future heavy rainfall events.
The Brine Concentrator will be
provided by HPD LLC, a subsidiary
of Veolia Water Solutions and
Technologies. The Brine Concentrator
facility is planned to be commissioned
in the second half of 2013.
ERA completed a pilot facility trial of
the Brine Concentrator technology
using Ranger process water at Rio
Tinto’s research facilities in Melbourne.
Results indicated that the Brine
Concentrator can successfully treat
Ranger process water to design
specifications.
Below: Design of ERA’s new Brine Concentrator,
which will treat and discharge approximately
1.83 gigalitres of process water per year
Energy Resources of Australia Ltd | Annual Report 2011
21
Health and Safety
In an extremely challenging
year, the team at ERA, kept
safety at the forefront of
all activities to make ERA
one of the safest mining
operations across the Rio
tinto group – a truly world
class safety result.
Safety Performance
Safety is the number one priority
for ERA. ERA has established clear
goals, accountabilities, and support
mechanisms to help achieve its stated
goal of zero harm.
ERA’s approach to improving safety
focuses on three key areas:
► building capability of safety
leadership;
► comprehensive systems, training
and support materials; and
► encouraging a workplace culture of
shared and personal responsibility
and accountability for safe
behaviour.
By constantly engaging with leaders,
employees and contractors on safety
issues, awareness and training, ERA
has achieved significant improvements
to safety performance.
ERA achieved a world class 2.1 million
hours without a lost time injury during
2011, eclipsing the 1.3 million hours
without injury in 2010.
This outstanding result was achieved
across major, labour intensive
projects such as the four metre wall
lift of the Tailings Storage Facility and
the comprehensive plant maintenance
programme undertaken during the
suspension of plant processing
operations.
Strong leadership on safety issues and
demonstration of commitment to the
highest safety standards played a key
role in creating a culture of personal
and team responsibility of safety
awareness.
There was one lost time injury and
five medical treatment injuries in
2011. The lost time injury involved
a finger laceration caused when an
employee attempted to adjust an air-
conditioner vent.
Safety leadership was demonstrated
throughout the comprehensive
maintenance programme
completed during the suspension
of plant processing operations. This
programme involved redeployment
of employees onto maintenance
tasks, specialist contractors, and was
completed without injury.
Injury Rates
ERA measures safety by the All Injury
Frequency Rate (AIFR). This is a
measure of all reportable injuries – lost
time injuries, restricted work injuries
and medical treatment cases – per
200,000 hours worked.
During 2011 ERA bettered the strong
safety performance of 2010, with an
AIFR of 0.57 (2010: 0.71).
ERA’s Lost Time Injury Frequency Rate
(LTIFR) per 200,000 hours for 2011
was 0.10 compared with 0.20 in 2010.
The five medical treatment injuries
involved an injured knuckle, a
laceration to the knee, a crushed
finger, a cut nose and a cut to a
hand. All personnel made a full
complete recovery.
Re-certified to ISO 14001
and AS 4801
ERA completed a major external audit
of its health, safety and environment
systems during February with excellent
results.
ERA achieved international
recertification of its environmental
management systems to ISO 14001,
and recertification of its safety and
health management system to
Australian Standard AS4801.
The independent external HSEQ
auditor found no major requirements
necessary to achieve recertification.
ALL INJURY FREQUENCY RATE (per 200,000 hrs worked)
2007 - 2011
1.00
1.01
0.68
0.73
0.57
07
08
09
10
11
22
Energy Resources of Australia Ltd | Annual Report 2011
ERA’s environmental management
system includes the Company’s water
management system, and ERA’s
safety and health management system
includes the Company’s radiation
management system.
Safety Initiatives
During 2011, there was a higher
number of contractors brought in
for major projects and specialist
maintenance tasks, presenting
challenges for ensuring all contractors
met ERA requirements for safety.
ERA’s FieldGlass contractor
management system helped ensure
contractors brought to site had relevant
skills and safety training for the tasks
they were completing.
The Rio Tinto based Safety
Leadership Development programme
provided support for ERA managers,
supervisors and team leaders to
improve their understanding of safety
responsibilities and use of health and
safety support systems.
ERA completed a Semi-Quantitative
Risk Assessment (SQRA) in 2011.
SQRA reviews are conducted on a
two-year cycle and examine all aspects
of operational activities to identify and
manage high risks.
The 2011 SQRA again identified driving
between the Ranger mine and Darwin
as ERA’s greatest single risk of harm
for employees and contractors. ERA
released a new Road Safety video to
be screened as part of employee and
contractor general induction.
To view the video, go to
http://www.energyres.com.au
In addition, process safety
management has been a major focus
for ERA in 2011. ERA implemented
actions from a third party review
focused on process safety.
Actions have been implemented
to significantly reduce risk around
ammonia and solvent extraction
resulting from HAZOP risk
assessments. This work has resulted
in a lower risk profile contributing
to the safety of our employees and
contractors.
Safety Milestones
The Safety Milestones programme
raises company and community
awareness of workplace safety goals
by donating funds or equipment to the
local community projects when specific
targets for days without injury are met.
In September ERA passed the
previous record of 278 days without
a lost time injury. To highlight the
achievement ERA donated bicycle
safety helmets to school children in
Gunbalanya and Jabiru.
ERA continued with its excellent safety
record, achieving a new record of
336 days worked without a lost time
injury. This equates to more than
2,000,000 working hours. To celebrate
this milestone, ERA donated $10,000
towards the Jabiru community to
install new playground equipment
in the community. In addition to this,
ERA also donated $5,000 to Mission
Australia and $5,000 to the Starlight
Foundation.
The aim of the Ranger mine radiation
monitoring programme is to ensure
that ERA’s employees, members of
the public and the environment are
not exposed to unacceptable levels of
ionising radiation.
Radiation levels are monitored using
a variety of fixed location and mobile
personal systems.
Monitoring results are compared
to limits recommended by the
International Commission on
Radiological Protection (ICRP) for
uranium industry workers.
The ICRP sets two levels of radiation
exposure, other than from natural
and medical sources to distinguish
between two types of people: members
of the public and radiation workers.
Those radiation exposure limits (above
natural background and medical
exposures) are:
► Members of the public: 1 millisievert
(mSv) per year
► Radiation workers: 20 mSv per year
over five years with a maximum of
50 mSv in any one year.
ERA employees and contractors
whose occupational exposure to
radiation may exceed 5 mSv per year
are declared ‘designated’ workers
and their exposure is more stringently
monitored.
ERA continued its recognition and
reward for employee-generated
health and safety solutions through
the Environment Safety and Health
awards, an employee awards night
recognising safety achievements.
It is ERA practice to ensure effective
and appropriate communication
with key stakeholders, including the
regulatory authorities. Radiation
results are subject to review prior to
being finalised.
Radiation Monitoring
ERA’s safety and health management
systems are certified to AS 4801 and
include a comprehensive radiation
management system.
Above: Katrina Sonter; Andrew Calcott and
Colin Chapman undertaking radiation checks
Energy Resources of Australia Ltd | Annual Report 2011
23
ERA Road Safety Video
ERA’s new Road Safety video is getting the safe driving
message across to a wider audience.
ERA’s 2011 Semi-Quantitative Risk Assessment again
identified the 260 kilometre drive between Darwin and
the Ranger mine as the biggest single risk of injury to
employees and contractors.
The video is the latest in a range of safe driving
responses developed by ERA’s Safety Standards
Committee and is designed to make driving safer for all
ERA employees and contractors.
In addition to being made available on DVD, ERA
uploaded the video to YouTube where it is being
accessed by contractors, suppliers, employees and their
family and friends, and other mining operations.
A key element of the video addresses ERA’s
mandatory 110 kph speed limit (below the signed limit
of 130 kph), and provides clear analysis of the potential
risks of overtaking.
The video is screened as part of ERA’s induction
programme for new employees and contractors, and
contractors and visitors who will be travelling between
Ranger and Darwin are required to watch the video.
ERA drivers are required to complete their journey
during daylight hours, and break the journey at the half-
way point Bark Hut rest stop, where they sign an ERA
travel register.
The Arnhem Highway is subject to changing conditions,
extreme weather, wildlife and high levels of tourist traffic.
To view the video, go to
http://www.energyres.com.au
Below: ERA worked closely with Northern Territory Police to film a
video which outlines the risks associated with the drive between Darwin
and Jabiru.
Case Study 1
The drive between Darwin and Jabiru is
ERA’s single biggest risk of injury to employees
and contractors
24
Energy Resources of Australia Ltd | Annual Report 2011
Preliminary analysis of the doses for
2011 has been performed and confirms
that all occupational and public
radiation doses remain well below the
national and international dose limits.
Full year results are contained in
the 2010 Annual Radiation Protection
and Atmospheric Monitoring Report
presented to stakeholders in
March 2011.
in accordance with the Ranger
Authorisation in March 2012.
Accordingly, only preliminary data for
2011 is presented in this report.
The potential exposures of
Jabiru residents and surrounding
communities are also monitored, and
the contribution from the Ranger mine
remains very low in comparison with
both the public dose limit and the
natural background radiation.
The natural background in the area
is 2-3mSv but varies according to
location and other factors such as
dwellings and lifestyle.
The maximum and mean annual
radiation doses received by designated
and non-designated workers in 2010
are summarised in Table 1.
The maximum and mean annual
radiation doses received by designated
and non-designated workers during
2011 will be reported in the 2011
Annual Radiation Protection and
Atmospheric Monitoring Report
to be submitted to stakeholders
table 1: MaxiMuM and Mean Radiation doSeS foR woRkeRS
in 2010
Dose
Limit (mSv)
Maximum Dose (mSv)
Mean dose (mSv)
DesignAteD
non-DesignAteD
20
3.93
0.67
20
0.57
Not Applicable
DESIGNATED WORKER MEAN ANNUAL RADIATION DOSE
60
50
40
30
20
10
0
MAXIMUM RECOMMENDED ANNUAL LIMIT
AVERAGE RECOMMENDED ANNUAL LIMIT
ERA DESIGNATED WORKER MEAN ANNUAL DOSE
95
97
99
01
03
05
07
09
11
ANNUAL RADIATION DOSE (mSv)
1995 – 2011
Average doses are in line with those
measured in previous years and are
similar in magnitude to the natural
variation in background radiation
experienced worldwide.
The maximum individual dose recorded
remains around a quarter of the annual
dose limit.
The doses are in line with the ICRP
principles of Justification, Optimisation
and Limitation. The doses to workers
remain at the lower end of the
spectrum for uranium workers.
Doses are calculated using the
methodology required by the Code
of Practice on Radiation Protection
and Radioactive Waste Management
in Mining and Mineral Processing
and approved in ERA’s Authorisation
to Operate.
The total effective dose is the sum
of the dose from three exposure
pathways: external gamma radiation,
inhalation of radon decay products, and
inhalation of long lived alpha activity.
All radiation doses to workers at
Ranger are available for review by the
regulatory authorities in the Northern
Territory. In 2011 ERA was not legally
able to provide the individual dose
information to the Australian National
Radiation Dose Register (ANRDR)
due to requirements under Northern
Territory privacy legislation. ERA
is currently awaiting alteration of
legislation by the Northern Territory
Government after which ERA will
transfer individual dose information to
the ANRDR.
Results
ERA assures the highest possible
quality control on radiation doses and
does not finalise the doses until they
have been presented and reviewed by
the appropriate regulatory authorities,
As such the 2010 results were not
available for inclusion in the ERA 2010
Annual Report at the time of printing.
Energy Resources of Australia Ltd | Annual Report 2011
25
Dr Ping Lu, Manager, Ecology, working on
the progressive rehabilitation programme at
Ranger mine
26
Energy Resources of Australia Ltd | Sustainable Development
Energy Resources of Australia Ltd | Sustainable Development
27
Sustainable Development Sustainable Development
Overview
ERA takes pride in its focus
on safety, in its commitment
to the highest standards
and performance in
environmental protection,
and in its initiatives to build
a strong community.
ERA operates in a highly sensitive
location, internationally recognised
as one of the most environmentally
and culturally significant places in the
world, with unique ecosystems and
biodiversity, and a long tradition of
human habitation.
ERA’s product, uranium oxide, is
highly valued because of the potential
power that can be generated with low
carbon emissions.
In meeting the future demand for
uranium supply, and the expectations
of electricity consumers the world
over, ERA strives for safety leadership,
environmental protection and strong
and enduring relationships with
all stakeholders.
ERA will continue to engage with the
Mirarr Traditional Owners, with local
communities and with governments
to maintain Jabiru as an important
regional centre, and to create cultural,
social and economic development
opportunities for our neighbours and
future generations.
2011 was an extremely challenging
year for ERA, with significant changes
and disruption to the business, major
projects, and adverse operating
conditions including near-record wet
season rainfall totalling 2,427 mm.
Throughout these challenging
circumstances, ERA’s employees and
contractors kept safety at the forefront
of all activities and achieved excellent
safety results. In addition, our
capability and commitment to protect
the environment was confirmed by the
Australian Government’s Supervising
Scientist Division.
the Mirarr
The Mirarr are the Traditional Owners
of lands in the Kakadu region. Mirarr
country encompasses the Ranger
Project Area and the Jabiluka lease,
the town of Jabiru and parts of Kakadu
National Park, including the wetlands
of the Jabiluka billabong country
and the sandstone escarpment of
Mount Brockman.
In 1995, the Mirarr established the
Gundjeihmi Aboriginal Corporation
(GAC), an incorporated body, to
assist them to manage a balance
between sustainable development
and traditional practice on their land,
and to direct income from mining
royalties towards the establishment
and maintenance of outstation
infrastructure and essential services.
The Mirarr have successfully
claimed traditional country under the
Commonwealth Aboriginal Land Rights
(Northern Territory) Act 1976, and
therefore hold beneficial freehold title
to their country via the Kakadu and
Jabiluka Land Trusts.
In the first half of 2011 the GAC
expressed concern about potential
environmental and cultural impacts
arising from the proposed Ranger
Heap Leach Facility. Traditional Owner
and other stakeholder concerns about
the Heap Leach Facility contributed
to ERA’s decision in August not to
proceed with the facility.
The GAC has for some time also
urged ERA to take additional steps to
reduce process water inventory. ERA
has worked closely with the GAC in
regard to recent water management
initiatives such as the installation of
monitoring bores and raising of the
Tailings Storage Facility wall. ERA
acknowledges water management as
its most significant challenge and is
committed to working with the GAC to
continue to address Traditional Owner
concerns and ensure the surrounding
environment remains protected.
28
Energy Resources of Australia Ltd | Sustainable Development
Power for the World
The role of nuclear energy as a key
part of global energy production
remains strong, with events in
Japan highlighting the importance
of safe operation of nuclear facilities
and transparency and accountability
of nuclear industries.
Concerns about global warming,
projected increases in demand
for electricity – particularly from
developing countries – and the
economic implications of carbon
emissions remain as fundamental
drivers for the search for safe and
reliable base-load power.
The key role of nuclear power
remains an integral part of the
global clean energy mix, particularly
its ability to deliver secure base-load
electricity supply.
Furthermore, nuclear power is a key
component of many nations’ energy
security goals, particularly for
resource-poor countries, because of
the high energy intensity of uranium
compared to other fuel sources.
The reactors currently operating
around the world will continue to
require fuel, while China drives new
demand growth with 27 reactors
under construction, and industry
growth in India, South Korea, United
States and United Arab Emirates.
According to the World Nuclear
Association, there are currently
432 reactors in operation with 63
under construction and a further 152
reactors planned to be in operation
by 2030.
As a key global fuel supplier to the
energy sector, ERA has a strong
reputation for reliability and quality
of supply.
Exports are subject to strict
safeguards and non-proliferation
conditions to ensure that Australian
uranium is only used for peaceful
purposes.
Energy Resources of Australia Ltd | Sustainable Development
29
2011 in Review
2011 tARget
2011 Result note
Continue towards the goal of
zero harm.
YES
Lost Time Injury Frequency Rate (LTIFR) per 200,000 hours for
2011 was 0.10 (2010: 0.20).
Ensure ERA’s operations
do not adversely impact on
surrounding environment.
Further develop the Safety
Leadership Development
Programme (SLDP).
Extend process water treatment
and management by completing
a feasibility study on the Brine
Concentrator and completing
a three metre lift of the Tailings
Storage Facility.
Progress rehabilitation
strategies and field work,
with focus on Pit 1 and Land
Application Areas.
All Injury Frequency Rate (AIFR) was 0.57 (2010: 0.71).
Achieved 2,000,000 hours without a lost time injury.
YES
Supervising Scientist Division 2010/2011 Annual Report:
“confirm that the environment has remained protected through
the period.”
PROGRESS Ongoing delivery of SLDP, undertook leadership workshops.
YES
Successful control of process water with no environmental
impact occurring during the third largest wet season on record.
Brine Concentrator feasibility study completed and procurement
of long lead items commenced.
Tailings Storage Facility three metre lift upgraded to a four
metre lift with practical completion achieved in October 2011.
PROGRESS
Trials in Magela Land Application Area were established using
various remediation methodologies.
Post remediation monitoring of the trial plots started and will
continue over the 2011/12 wet season.
ERA received delivery of Pit 1 wick installation barge and
associated equipment. Installation planned for 2012.
Demonstrate enhanced
monitoring of surrounding
waterways.
YES
During the wet season ERA demonstrated enhanced monitoring
of surrounding waterways through 13 real-time continuous
monitoring stations.
Advance the ERA Climate
Change Management
programme for energy/
greenhouse gas reduction.
Embed improvements of plant
utilisation and metallurgical
performance.
Embed mining improvements
for planning and operations to
ensure mine can be completed
at the end of 2012.
Water quality data for these sites were reported to stakeholders
in weekly water quality reports. There were no statutory non-
compliances.
PROGRESS PricewaterhouseCoopers data integrity audit undertaken.
Monthly reporting of greenhouse gas emissions data to Rio
Tinto completed.
YES
Geomet programme plant improvements (e.g. pH control) and
wash-flow, economic modelling for optimal plant conditions.
PROGRESS
The mine planning process is robust and to a high standard.
The mine operates a life of pit, 3 month, 2 week and daily
schedule.
Mine operations has a focused team of leaders with suitable
experience to complete the Pit 3 mining.
Numerous improvement projects have been completed and a
number are still underway.
30
Energy Resources of Australia Ltd | Sustainable Development
Engage with land owners and
other stakeholders on regional
development and future of
Jabiru.
Work towards achieving
regulatory approval for Heap
Leach Facility.
PROGRESS
ERA, Northern Land Council and Gundjeihmi Aboriginal
Corporation nearing conclusion of mining agreement and
socio economic trust negotiations. Jabiru future discussions
proceeding slowly.
NO
The study demonstrated that this facility was technically
feasible, however high capital costs and present economic
assumptions limit its value. Further, ERA did not have full
stakeholder support for this project. In August, ERA decided not
to proceed with the Heap Leach Facility.
Work towards gaining approval
and starting construction of the
exploration decline.
Consult with land owners and
other stakeholders on major
projects.
Continue to expand upon
Indigenous employment,
training and development
opportunities and enhanced
educational programmes.
YES
Completed feasibility study for Ranger 3 Deeps exploration
decline.
Received all approvals for exploration decline.
Commenced Ranger 3 Deeps exploration decline site
preparation works.
YES
Traditional Owners and Northern Land Council regularly briefed
on all major projects.
Took account of stakeholder concerns in the decision making
process in not to proceed with the Heap Leach Facility project.
YES
17 per cent Indigenous employment rate in 2011. Indigenous
traineeship programme.
As part of the Education Partnership, developed new careers
information and a careers website for students considering
employment at ERA.
Pilot project work with the Minerals Council of Australia on
numeracy and literacy skills and work readiness programmes
for Indigenous employees.
Strengthen employee
engagement through strong
positive and felt leadership.
YES
Continuation of Employee Advisor Groups and introduction
of an ERA specific Leadership Coaching programme for all
Leaders.
Integrated Talent Management System rolled out for all
employees at ERA.
Implement market competitive
attraction and retention
employment strategies.
YES
Continuation of the ERA Bonus scheme.
Roll out of the 2011 Rio Tinto Share Scheme.
Deployment of Employee Profiles for all ERA employees
designed to create an employee career and development plan.
Introduction of a market leading even time roster arrangement.
Build upon educational
initiatives with the West
Arnhem College (WAC) and the
Department of Education and
Training.
YES
Building Our Local Talent (BOLT) partnership strategy has
been developed. This document forms the basis of operational
planning for ERA and WAC to meet educational objectives
together.
Result legend
YES
NO
PROGRESS
Energy Resources of Australia Ltd | Sustainable Development
31
Environment
At Ranger mine, the
2010/11 wet season was
the third largest on record,
with rainfall of 2,427 mm
recorded. this was only
approximately 100 mm less
than the all-time rainfall
record for the area.
Based on the rainfall records in the
Northern Territory, the past decade has
been the wettest on record. Five of the
six highest wet seasons have occurred
since 1999.
Protecting the environment from the
impacts of rainfall during the wet
season became the key focus of
the company’s operational, water
management and environmental
protection activities.
ERA’s management of the impacts
of extreme wet season rainfall
experienced in 2011 delivered
an outstanding result in terms of
environmental protection.
The decision to suspend processing
operations from 28 January until
15 June 2011 (see page 12) helped
contain the volume of process water
in the Tailings Storage Facility and in
the exhausted Pit 1 within authorised
operating limits.
These actions built on a series of water
management improvements put in
place the previous year, and helped
to protect local waterways, minimise
additions to the process water
inventory, and improve water treatment
and monitoring.
During 2011, ERA maintained its
31 year history of protection of the
surrounding environment based on its
statutory monitoring programmes.
The Australian Government’s
Supervising Scientist Division, which
monitors the impact of uranium mining
on the environment and people in
the Alligator Rivers region, stated in
its 2010/2011 Annual Report that its
extensive monitoring and research
programmes “confirm that the
environment has remained protected
through the period.”
Water
Managing water safely and effectively
is the most significant environmental
and operational aspect of ERA’s
activities.
At Ranger mine, all aspects of water
capture, storage, supply, distribution,
sampling, use, treatment and
disposal are governed by ERA’s
Environment, Safety and Health
Management System.
ERA’s Water Management Plan, which
is updated each year and approved
by key stakeholders, directs the
management of water on site.
There are several different
classes of water encountered on
ERA’s operations, including process
water, pond water, release water,
potable water, and water treatment
plant permeate.
Each class of water differs according to
its composition, which dictates the way
it is managed.
Water Management
Strategy
ERA’s Water Management Strategy
involved a number of initiatives in 2011
relating to process water management
and treatment at Ranger.
These water management initiatives
include:
► investment of $80 million to
complete a feasibility study and to
procure long lead items for a Brine
Concentrator facility (see page
21) which will enable treatment of
process water;
► $52 million, four metre raising of
the Tailings Storage Facility wall;
(see page 20)
► additional bore holes installed to
monitor ground water; and
► installation of additional pond water
capacity.
In February 2012, ERA approved the
construction of a Brine Concentrator
with commissioning scheduled for the
second half of 2013.
From 2012, a detailed assessment
of process water inventory at Ranger
mine will be undertaken on 1 May
each year to plan for the coming year
based on rainfall encountered during
the previous wet season. In addition,
the outcomes of the integrated process
water, tailings and closure prefeasibility
study will assist in determining the key
activities, costs and timing of our water
management strategy going forward.
This planning process will make
use of the Ranger OPSIM™ Water
Balance Model. This is a water and
solute balance model, which provides
32
Energy Resources of Australia Ltd | Sustainable Development
Gavin Edwards, Supervisor, Water and Tailings,
monitoring operations in the Water Treatment Plant
Energy Resources of Australia Ltd | Sustainable Development
33
“Supervising Scientist Division 2010/11 Annual Report ‘confirms that the environment has remained protected through the period’.” Environment
Michelle Iles, Manager Water Sciences monitoring
ERA’s 200 ground water monitoring bores
at Ranger mine. Michelle was also awarded
Australian Mining Prospect’s “Mining Woman of
the Year” in 2011.
34
Energy Resources of Australia Ltd | Sustainable Development
Water Monitoring
ERA has an extensive water monitoring
system which tracks changes in
composition and flow rates in surface
water, ground water and waterways.
This system includes 200 ground
water monitoring bores and 13 real-
time monitoring points in waterways
upstream and downstream of the
Ranger mine.
During 2011, ERA began an extensive
field programme to implement the
recommendations of a detailed
independent review of the ground
water systems around the Tailings
Storage Facility.
The review was commissioned by ERA
and the GAC. A stakeholder working
group was established to review the
Tailings Storage Facility and carried out
by technical services consultant URS.
Review recommendations included
strengthening the monitoring and
modelling of ground water movement
and composition around the facility.
As part of the field programme, an
additional 80 ground water monitoring
bores were drilled and developed
in 2011.
Water sampling from these bores is
using the latest micro sampling and
purging techniques developed in the
United States designed to minimise
water disturbance within the bore
water column and improve accuracy
of results.
ERA has recruited a Principal
Hydrogeologist and a dedicated Water
Management Advisor to monitor and
assess the facility bore network and
develop ground water modelling.
Protecting Local
Waterways
Real-time water quality results from
ERA’s in-stream monitoring points in
Magela Creek confirmed improvements
to water quality in 2011 due to
diversion and control of ore stockpile
run-off and catchment improvements
completed in 2010.
The construction of a stockpile
interception trench and catchment
improvements to manage water run-off
from stockpiles combined with high
inflows of high quality water treatment
plant permeate has improved water
quality in Retention Pond 1, which
flows to Magela Creek.
The levels of electrical conductivity
(EC – a measure of dissolved salts),
calcium, magnesium and sulfate
concentrations in Retention Pond 1 all
show a significant reduction compared
with previous years.
The maximum electrical conductivity
measured in Retention Pond 1 during
the 2010-11 reporting period was
615 µS/cm on 6 September 2010.
The electrical conductivity reduced to
below 300 µS/cm, prior to discharge
commencing in late December 2010.
This is compared with the maximum
Retention Pond 1 electrical conductivity
measured in January 2010 of 1,110
µS/cm and January 2009 1,081 µS/cm
respectively. The annual mean for
electrical conductivity for the 2010-11
reporting period (354 µS/cm) is similar
to the annual mean for 2002.
Management of Water
Water treatment is a key aspect of
ERA’s water management activities.
Currently ERA only treats pond water,
producing high quality water permeate
which is released to wetlands or
irrigated in designated land application
areas. ERA stores and passively
evaporates process water. Due to
the significant volumes of pond water
on site following the extreme wet
season in 2010/11 and the need for
subsequent treatment, ERA suspended
the treatment of process water through
the process water treatment plant.
Pond water is water that lands as rain
on disturbed areas of the mining lease,
such as stockpiles or the operational
Pit 3.
Pond water requires active
management and treatment via
wetland filtration or ERA’s ultra/micro
filtration and reverse osmosis pond
water treatment plants.
During 2011, ERA increased its
pond water treatment capacity
to 22 megalitres per day with the
installation of a third pond water
treatment plant, and began planning
for a new 16 hectare retention pond to
be constructed in the 2012 dry season.
CHANGE IN ELECTRICAL CONDUCTIVITY AT RETENTION POND 1
(1981 – PRESENT)
1200
1000
800
600
400
200
0
80
ANNUAL MEANS (JULY – JUNE)
84
88
92
96
00
04
08
12
ELECTRICAL CONDUCTIVITY (µS/cm)
1981 – 2011
Above: The construction of a stockpile runoff interception trench and associated catchment improvements
have improved water quality within Retention Pond 1. This chart shows there has been a dramatic drop
in electrical conductivity within Retention Pond 1 since completion of run-off and catchment initiatives in
mid 2010.
Energy Resources of Australia Ltd | Sustainable Development
35
Environment
Throughout the year ERA treated
a total of 5,510 megalitres of pond
water, compared with 3,210 megalitres
in 2010.
During 2011, these plans moved
to prefeasibility studies in order
to provide greater detail around
work requirements, timing and
estimated costs.
Land
ERA’s land management
responsibilities include operational
works such as controlled burning and
weed management, rehabilitation
and closure research and capability
demonstrations such as the trial
landform, Pit 1 closure and the Land
Application Area rehabilitation trials,
and planning activities.
The extreme rainfall encountered in
the 2010/2011 wet season affected
or delayed a range of ERA land
management activities and projects,
particularly weed control and
controlled burning.
During 2011, ERA developed detailed
rolling five-year management plans for
weed management, fire management,
and revegetation management. These
longer term plans direct the work
required on an annual basis and help
ensure that day-to-day operational
activities are carried in line with long
term goals.
Closure Planning
ERA’s mine closure plan outlines
the strategies and actions needed
to close and rehabilitate the Ranger
Project Area when ERA’s mining and
processing operations come to an end.
The closure model is based on
current scientific and operational
knowledge regarding rehabilitation
techniques and ERA’s current plans for
future operations.
A detailed desktop review of
rehabilitation cost estimates resulted
in ERA increasing provision in financial
statements from $314 million to $565
million as at 31 December 2011 (on
a net present cost basis). A further
review of the closure estimate is
scheduled for December 2012 with the
completion of the prefeasibility studies
in early 2013.
These projects include the trial
landform project, rehabilitation of land
application areas and preparations for
closure of Pit 1.
Magela Land Application
Area Rehabilitation trial
In September, ERA began trials of soil
remediation techniques for the Magela
Land Application Area on the Ranger
Project Area.
The Land Application Area
rehabilitation trial demonstrates ERA’s
soil remediation capability, and will
allow ERA to develop a comprehensive
rehabilitation strategy for land
application areas.
Land application areas were previously
used for disposing of excess pond water
in accordance with ERA’s regulator
approved Water Management Plan.
Regulators now require treatment of
pond water before release via irrigation
or into wetland polishing systems.
The Magela Land Application Area was
identified as the area most impacted
by contaminants as a result of irrigation
between 1985 and 2008.
The trial rehabilitation work on the
Magela Land Application Area tests
the effectiveness of soil remediation
methods, such as surface scraping or
soil mixing or a combination of both.
The trial will also test revegetation
techniques required to restore the
site to a similar condition to nearby
undisturbed sites, and hosts the same
plant species.
Pit 1 Closure
The closure and rehabilitation of Pit 1
tailings repository is a key component
of ERA’s land rehabilitation and
closure strategy.
Pit 1 was the Ranger mine’s first
operational pit. It was exhausted in
1994 and is currently used for storage
of tailings and process water.
Works to dewater Pit 1 through the
installation of vertical wick drains had
been planned for early 2011; however
extreme rainfall in the 2010/2011 wet
season necessitated the deferment of
the dewatering project.
The project is scheduled to resume in
the 2012 dry season, and will involve
installation of more than 8,000 vertical
drainage wicks to a depth of up to
40 metres using a purpose built
amphibious barge.
Water expressed via the wicks will
be transferred to the Tailings Storage
Facility and the tailings surface in Pit 1
allowed to dry out.
A fit for purpose plastic matting will
be placed over the tailings surface,
followed by layers of waste rock until
the final land form is achieved. The
new land form will then be revegetated
using knowledge gained from ERA’s
trial landform project.
36
Energy Resources of Australia Ltd | Sustainable Development
trial Landform
Flourishing plantations on ERA’s trial landform
signal strong early results for the effectiveness of
ERA’s revegetation strategies, as part of progressive
rehabilitation of parts of the Ranger Project Area.
Constructed in 2009, the eight hectare trial landform
comprises waste rock and laterite planted with local
native plants, and provides a large scale opportunity
to assess the performance of revegetation strategies,
erosion characteristics and rainfall run-off patterns.
Results from the trial landform studies will assist in
longer term modelling of the performance of the final
landform created during rehabilitation of the entire
mine site.
Trees that were planted in 2009 and 2010 as tube stocks
began flowering this year, in particular Darwin woollybut
trees (Eucalyptus miniata). The new seedlings indicate
the growing conditions are well suited for the species.
The Darwin woollybut is native to Australia’s Top End,
and is the most important ‘framework species’ for the
reconstruction of the native vegetation on the final
landform.
During the year an additional 3,800 local native plants
were planted on the site.
Below: flowering Darwin wollybut trees (Eucalyptus miniata)
Case Study 2
Energy Resources of Australia Ltd | Sustainable Development
37
ERA’s trial land form on the Ranger Project Area
Environment
Weed Management
ERA has mapped weeds on its
lands annually since 2003, focusing
on 13 priority weed species. At the
Jabiluka Mineral Lease, the area
affected by weeds has decreased
from 4.4 hectares in 2010 to 4.3
hectares in 2011.
On the Ranger Project Area 11
weed management areas were
mapped in 2011, rather than the
whole area, as part of strategic use
of survey resources.
In these 11 areas there were 28.8
hectares of weed affected areas in
2011, compared to 11.8 hectares
in 2010. This increase is partly due
to the long and above average wet
season, which favoured growth of
annual mission grass.
In the 2010/2011 control season,
there were 3,120 hours spent
managing weeds at Ranger and
Jabiluka, up from 2,227 hours in
2009/10. Of this, 20 per cent was
spent at Jabiluka, and 80 per cent
at Ranger.
In 2011, the focus was on weed
spraying, and not on alternative
methods of weed control as in
previous years (i.e. scraping trials or
burning), due to the reduced period
of time to access weeds at the peak
seeding time.
Where possible, staff undertook
additional seed de-heading work to
reduce seed bank build up when
access with spraying units was
not possible.
The Five-Year Weed Management
Plan for 2012-2016 was finalised
in 2011. The plan describes ERA’s
weed management aims and
targets, and is designed to enable
ERA to meet overall objectives for
weed management.
Energy and Greenhouse
Gas Emissions
The principal source of energy
for ERA is diesel fuel. ERA uses
electricity produced by the Ranger
diesel power station for milling
ore, processing operations, water
management, lighting, heating
and cooling.
The power station also provides
electricity for the town of Jabiru and
Parks Australia’s headquarters.
The measured total energy
consumption for the Ranger
operation in 2011 was 1,372,301 GJ
(gigajoules), compared with
1,406,544 GJ in 2010.
Combined greenhouse gas
emissions for 2011 from all diesel,
LPG, petrol use and process
emissions, calculated as CO2
equivalent (CO2-e), was 102,432
tonnes (2010: 109,513 tonnes).
The increase in emission volumes
due to the Tailings Storage
Facility wall lift project and water
pumping and treatment activities
were partially offset by the 4.5
months suspension of plant
processing operations.
The completion of the power station
generator rebuild project in 2011
has helped ERA to improve power
station energy efficiency, delivering
savings of approximately 293,000
litres of diesel, and avoiding
approximately 790 tonnes of
CO2-e emissions.
Other energy efficiency initiatives
include completion of new site
building air conditioning units
at Ranger.
38
Energy Resources of Australia Ltd | Sustainable Development
Biodiversity
Product Stewardship
ERA’s environmental burning
programme continues to improve
biodiversity around the Ranger mine
site and the Jabiluka lease.
Early dry season burns were
conducted again in 2011 at the Djarr
Djarr former exploration camp site on
the Jabiluka lease, which has been
progressively rehabilitated by ERA
since 2006.
The burning created a protective buffer
around a seven hectare revegetation
area. Previous ERA studies show that
young plants require at least three
years of growth before they become
tolerant to regular fire.
Two traditional burnings were
conducted north of Magela Creek with
the help of Aboriginal people employed
through Gundjeihmi Aboriginal
Corporation. The burns provided a
protective buffer protecting vegetation
along the creek from potential,
damaging late dry season fires.
Other biodiversity actions undertaken
in 2011 include developing a
biodiversity management plan, and
surveys of the Ranger Project Area to
identify ‘reference areas’ of undisturbed
habitat. These reference areas help
inform the development of a long term
flora and fauna monitoring programme
to guide mine site rehabilitation and
revegetation.
Product stewardship in the uranium
industry will help the public and other
key stakeholders understand the
benefits and impacts of developing
and using uranium for peaceful
nuclear power.
In 2011, ERA progressed a Life Cycle
Assessment (LCA) of its product,
uranium oxide concentrate.
The LCA document examines the
impacts of one kilogram of our
product in terms of standard reporting
measures, and calculates total
greenhouse gas emission for our
product, including all contributions from
our mining, processing and use
of materials.
The LCA calculates that in 2009, the
greenhouse gas emissions associated
with producing one kilogram of uranium
oxide from Ranger mine was 50.5
kilograms of CO2- equivalent.
This information will form part of an
Environmental Product Declaration
which advises customers and other
stakeholders of the environmental
performance of our operation.
ERA also plays a key role in
developing product stewardship for the
wider industry through its work with the
World Nuclear Association’s Uranium
Mining Sustainability Working Group
(co-chaired by ERA and Rio Tinto).
This included working with scientific
organisations at the cutting edge of
radiation protection, development
of a standard global approach
to evaluating health, safety and
environment performance, and seeking
global adoption of best practice in
sustainability.
ERA also has close ties with the
Australian Uranium Association
(AUA). ERA’s Chief Executive is Chair
of the AUA. The AUA helps to build
better understanding of the uranium
industry’s role in contributing to the
global energy mix.
Waste Management
ERA and the West Arnhem Shire
collaborated in 2011 on a community
project programme to help Jabiru
manage recyclable materials.
Glass from the West Arnhem Shire
which otherwise would have been
disposed of to the Jabiru landfill has
been transported by ERA to recycling
facilities in Darwin.
ERA continues to investigate
options for managing contaminated
hydrocarbon wastes on site.
Contaminated waste hydrocarbons
cannot be moved off site and are
stored in drums and processed in a
secure incineration facility on site.
Environmental team
Changes
As part of ERA’s 2011 business review,
the company’s Environmental Strategy
and Technical Projects were merged
into one department called Technical
and Major Studies.
In addition to existing environmental
and technical research and operation
support activities, the new department
will conduct major studies into the
potential Ranger 3 Deeps mine, life
of mine plan, process water, tailings
and rehabilitation.
This helps to ensure that all of the
work associated with water
management and progressive
rehabilitation is coordinated and
studied by the same workgroup.
Energy Resources of Australia Ltd | Sustainable Development
39
Employment
ERA has a total 2011
workforce of 630 people
comprising 582 staff and
48 contractor positions
across a range of job-
sharing, part-time and
secondment arrangements.
ERA also directly employs
18 apprentices and three
school based apprentices.
ERA has a female participation rate of
employment of 22 per cent, and has 20
females across the business fulfilling
leadership roles from supervisor level
to manager level. In 2011, ERA’s
Water Sciences Manager, Michelle
Iles, was awarded Mining Woman of
the Year from the Australian Mining
Prospect Awards. ERA also provides
flexible work arrangements for both
male and female employees to help
them balance their work and life
commitments.
ERA has an average rolling staff
turnover of 21 per cent, which is
as a result of both standard labour
movement and a transient population
in the Northern Territory. ERA
maintains an absenteeism rate of
under one per cent as a rolling annual
average. In addition to the extremely
low levels of unemployment in the
Northern Territory, the high rental and
property prices as well as significant
competition from other sectors of
the resources industry has created a
very difficult environment in which to
attract and retain suitably skilled labour
to ERA.
ERA will continue to review the
workplace benefits offered to staff in
order to attract and retain the best
people in 2012 and beyond.
Seven Day Roster
ERA introduced a seven day roster in
2011 which allows greater efficiencies
in mine planning, work structures,
flights and accommodation.
The roster also allows greater certainty
for employees and contractors
in managing work-life balance,
particularly fly-in, fly-out employees,
while at the same time ensuring
employee safety is maintained with
provision for adequate rest breaks.
A key benefit of the new roster
is increased occupancy rates for
ERA’s on site accommodation, from
around 50 per cent to over 80 per
cent, resulting in annualised saving
estimated at approximately $5 million
through reduced ad-hoc use of tourist
accommodation in Jabiru.
Cultural Awareness
New employees and contractors
are introduced to the cultural,
environmental and historical values
of the Kakadu region and the Mirarr
Traditional Owners through Cultural
Awareness Programme courses.
During the year, 304 employees and
contractors took part in these courses
(2010: 119), which are part of ERA’s
induction programmes and delivered
in partnership with the Gundjeihmi
Aboriginal Corporation representing
the Mirarr Traditional Owners.
Indigenous Employment
ERA is a major employer in the West
Arnhem region, and is one of the
leading employers of Indigenous
people in the Northern Territory.
At 31 December 2011, ERA’s
workforce of 616 full-time equivalent
employees included 99 Indigenous
employees, and 12 permanent
Indigenous contractors, representing
18 per cent.
This compares with 81 Indigenous
employees and nine permanent
Indigenous contractors (15.5 per cent)
at the same time in 2010.
ERA’s Indigenous employees are
employed in positions at many levels
within the company, from operations
to human resources.
In 2011, ERA started the year with
seven Indigenous trainees and
added a further 12 trainees in April.
Indigenous trainees were matched
with mentors who worked with the
trainees to develop performance
management plans.
During 2011 ERA endorsed a new
Indigenous Employment Strategy,
which builds on previous actions to
develop a strong Indigenous workforce,
including:
► introduction of a new mentoring
system which pairs new Indigenous
employees with experienced
employees;
► refocus on getting local Indigenous
people into the business through
flexible work arrangements;
► support for the Northern Territory
Mine Training Programme, hosted
by Northern Territory Minerals
Council of Australia;
► enrolling and supporting ERA
Indigenous employees in further
training, such as nationally
recognised certification and
language and literacy skills; and
► supporting work experience and
school-based apprenticeships for
students from local communities
through an Education Partnership.
ERA is also working in close
collaboration with its suppliers to
incorporate Indigenous employment
into supplier contracts.
40
Energy Resources of Australia Ltd | Annual Report 2011
Energy Resources of Australia Ltd | Annual Report 2011
41
Steven Nabulwad is one of ERA’s 99 indigenous
employees and is a member of the light vehicle
workshop team.
“New employees and contractors are introduced to the cultural, environmental and historical values of the Kakadu region and the Mirarr Traditional Owners through Cultural Awareness Programmes.” Employment
INDIGENOUS EMPLOYEES
2007 – 2011
PER CENT OF
WORKFORCE
NUMBER
83
17%
08
54
14%
07
98
99
81
15%
10
19%
09
17%
11
northern territory Mine
training Programme
ERA continued its support for the
Northern Territory Mine Training
Programme in partnership with the
Minerals Council of Australia (Northern
Territory Division) and various
government agencies.
This pre-employment programme is
tailored towards the mining industry
and helps people from local Indigenous
communities acquire job ready skills,
such as drivers’ licence and training in
use of power tools or machinery.
Education Partnership
The Education Partnership between
ERA and the Northern Territory
Government established a formal
commitment to providing quality
education and training opportunities
leading to real employment and career
options for students and families in the
West Arnhem region.
ERA is proud to be the first company
to sign such a Memorandum of
Understanding (MOU) which set out
clear goals for the partnership with the
Northern Territory Government in 2009.
The partnership forms the basis
for an integrated programme of
activities to build capacity in the local
economy, support sustainable regional
development, and improve education
and employment outcomes for local
community members.
As part of the partnership in 2011 ERA
provided the following to the students
of the Gunbalanya and Jabiru Schools:
► school visits to the mine site;
► opportunities for school-based
apprentices and traineeships;
► presentations to students;
► support for the Building Our Local
Talent programme; and
► development of career information
and a new careers website which
outlines career opportunities at ERA.
During 2011, ERA had 21 full-time
apprentices and seven school-based
apprentices. By year’s end, five
apprentices completed their training
and transferred to a full-time job
with ERA.
Awards and Recognition
ERA employees and the Education
Partnership were recognised in
national and Territory based awards
in 2011.
In the Australian Mining Prospect
Awards, Michelle Iles, Manager Water
Sciences, won the Mining Woman
of the Year Award, and Process
Metallurgist Daniel Hill was a finalist
for Young Achiever of the Year. Daniel
also featured in a Mining Council of
Australia television advertisement
promoting mining industry
opportunities.
The West Arnhem College and its
Education Partnership with ERA was
recognised by a number of awards,
including the National Australia
Bank’s Schools First Awards and the
Northern Territory Government’s Smart
Schools Awards.
The awards provided a combined
total of $75,000 awards prize funds to
the West Arnhem College to support
partnership initiatives.
Further Education and
training
During 2011, ERA supported
23 employees to enrol in further
education and training and achieve
nationally recognised industry
certification. Training was delivered in
partnership with the registered training
organisation Careers Australia Institute
of Training and Australian Apprentices
Northern Territory.
42
Energy Resources of Australia Ltd | Annual Report 2011
Joe Qualter
In 2011, ERA quietly achieved 30 years of service – the
first drum of uranium oxide was produced on 13 August,
1981. And long time ERA employee Joe Qualter was
there to see it.
Joe, who is today a Processing Plant Technician, was
one of the first to apply for full-time jobs at the Ranger
mine in 1979, and was employed as a crane driver.
Throughout the next three decades Joe has held
a variety of roles, in the mining department, as a
machinery operator, and in processing where he
continues to work today.
Over 30 years at Ranger, Joe has seen the operation
evolve and change. “I think the biggest one is the
attitude towards safety,” Joe said.
“Safety is just such a major focus now, which is great.
Back then we didn’t have the major campaigns we
see now, but I am proud to say that even then we
always made sure we did things safely and didn’t have
accidents.”
In a demonstration of his own personal diligence, Joe
has never had a lost time injury in more than 30 years
at Ranger. “My view is that if you apply yourself fully to
what you’re doing and you think about it properly, you’ll
always survive.”
Below: Joe Qualter
Case Study 3
Daniel Hill, Process Metallurgist featured
in the Minerals Council national advertising
campaign promoting mining industry opportunities.
http://www.thisisourstory.com.au/our-stories_
daniel-hill.aspx
Energy Resources of Australia Ltd | Annual Report 2011
43
Community
Mining Agreement
During the year ERA continued
discussions with the Gundjeihmi
Aboriginal Corporation and the
Northern Land Council to establish a
mining agreement with the Traditional
Owners for the Ranger Project Area.
The Agreement would see increased
benefits delivered to Traditional
Owners, the establishment of a
regional socio-economic trust and
creation of a Relationship Committee
to facilitate regular exchange of
information. All parties are confident
of resolving outstanding issues and
finalising the agreement in early 2012.
territory teams
During 2011 ERA completed its final
year as Principal Partner with Rio
Tinto supporting the Territory Teams
programme.
Over the past three years ERA and
Rio Tinto have contributed $1 million
as founding partners of the Territory
Teams programme.
The Territory Teams programme
provides support for professional
level football and netball opportunities
for Northern Territory athletes,
with a strong focus on providing
support, motivation and development
opportunities for Indigenous athletes.
Over the past three years ERA has
been proud to support the Territory
Thunder Football team and the
Territory Storm netball team from their
debut in 2009 to their great success in
2011, with Territory Thunder claiming
its first National East Australian
Football League premiership.
The partnership achieved its aim of
providing opportunities for Territorians
to compete at higher levels of sporting
competition and also inspiring and
mentoring young community members,
including a strong Indigenous following
which is building in remote Territory
communities. ERA is extremely
proud of Territory Thunder’s values in
encouraging young Indigenous men to
work and contribute to their community,
which closely align with ERA’s values.
ERA is a strong and
dynamic part of the local
community, and makes
significant contribution to
the northern territory and
national economies.
ERA supports a wide range of
community activities, including
over $437,000 in partnerships and
sponsorships providing support to
local schools and students, sport, the
arts, regional festivals, community
health and child care, business and
cultural heritage.
In 2011, ERA continued its support for
the George Chaloupka Fellowship.
The Fellowship supports research and
conservation of Aboriginal rock art in
the Arnhem Land Plateau area of the
Northern Territory, and recognises the
outstanding work of rock art historian
Dr George Chaloupka.
ERA also supported the National
Indigenous Music Awards, the Stone
Festival in Gunbalanya, the Mahbilil
Festival in Jabiru, provided funds to
support community health services
in Jabiru, and contributed to the
Premier’s Flood Relief Appeal proving
donations for flood affected people
in Queensland.
Left to right: Alan Tietzel, ERA General Manager,
External Relations, Mandy Muir, Professor Helen
Garnett, Director, Museum & Art Gallery NT
Foundation, Darryl Wesly at the announcement of
the 2012 George Chaloupka Fellowship. Mandy
is the 2012 recipient and Darryl was the 2011
recipient.
44
Energy Resources of Australia Ltd | Annual Report 2011
thundering triumph
As a Principal Partner in the Territory Teams Programme,
ERA has been immensely proud to watch and cheer as
the Northern Territory Thunder football team went from
newcomers to champions in just three years.
In a year which saw the creation of the AFL’s new
North East Australian Football League (NEAFL), the
Northern Territory Thunder staked their rightful claim as
the top team for 2011 in both the Northern and Eastern
Conference.
The Northern Territory Thunder claimed the 2011
Northern Conference Grand Final in devastating style,
with a record breaking 98 point victory over Morningside.
The team then showed great strength, courage and
discipline to turn around the following week, and win the
overall NEAFL Grand Final against Ainslie.
ERA Chief Executive Rob Atkinson said ERA had been
thrilled to be part of the development of the Northern
Territory Thunder.
“Not only as a team and club in its own right, but as a
source of inspiration and pride for the team’s growing
army of fans of all ages across the Territory,” Rob said.
“That inspiration, that motivation is vitally important,
especially in remote communities, where interest in
sport helps create healthier lifestyles and helps improve
performance in schools.”
“We are immensely proud to have been a founding
partner in the Territory Teams Programme which has
helped shape the future of football in the Northern
Territory, and ERA wishes the team all the best for 2012
and beyond.”
Below: NT Thunder team won the 2011 National East Australian Football
League premiership.
NT Thunder footballer Ross Tungatalu
Energy Resources of Australia Ltd | Annual Report 2011
45
Case Study 4
Community
Community Partnership
Fund
ERA’s community partnership fund
calls for expressions of interest from
community groups for ideas for
funding. The ideas are assessed by an
ERA panel.
In 2011, the community partnership
fund supported 23 projects, including
the Jabiru Children’s Christmas Party,
the Djagana Community Sports, West
Arnhem Sports Carnival, Jabiru Child
Care Centre, Jabiru Auskick, Jabiru
Tennis, Gunbalanya Health Clinic,
Kakadu Health Service, Clontarf
Foundation, Jabiru Uniting Church,
Jabiru Arts and Crafts Group.
Cultural Heritage Policy
and Planning
ERA engages with the Mirarr
Traditional Owners through the
Gundjeihmi Aboriginal Corporation
(GAC) on a range of issues of mutual
interest including environmental
management, cultural heritage and
community development.
In 2011, ERA consulted with the GAC
to develop a Cultural Heritage Policy.
The policy will operate at the same
overarching level as ERA’s principal
safety and environment policies.
To support the policy development and
other community relations and cultural
heritage activities ERA has employed
a Cultural Heritage Advisor, and
developed the 2011-2016 Multi Year
communities plan.
Over the past five years, ERA has
made royalty payments of $127 million:
$98 million distributed to the Territory
based Indigenous organisations
and $29 million to the Northern
Territory Government.
The plan directs and co-ordinates
community relations and cultural
heritage activities, and responds to
a 2010 Rio Tinto Review of ERA’s
community relations activities.
Royalty Payments
ERA makes royalty payments to
the Commonwealth Government
of 4.25 per cent of net sales
revenue. The Commonwealth
Government distributes this money
to Northern Territory based Aboriginal
organisations, including the Gundjeihmi
Aboriginal Corporation (GAC).
A further 1.25 per cent of net sales
revenue is paid to the Commonwealth
and distributed to the Northern Territory
Government.
In 2011, ERA’s royalties totalled
$16 million (2010: $26 million).
Royalties declined due to reduced
uranium oxide production due to
the suspension of plant processing
operations (see page 12). Royalties
on purchased material sold are not
payable by ERA.
Economic Contributions
In addition to royalties, ERA’s activities
make other valuable contributions to
local and Territory economies.
ERA’s economic contribution to the
region commenced over thirty years
ago when it met more than 70 per
cent of the original cost of constructing
Jabiru. Today, Jabiru is a diversified
regional tourism and service centre,
however the infrastructure and services
continue to remain heavily reliant on
ERA and its resident workforce.
These contributions include direct
and indirect employment, payment of
wages and salaries, payroll tax, capital
works and contract engagement,
and purchase of supplies and
consumables.
Below: Justin O’Brien, Executive Officer of the
Gundjeihmi Aboriginal Corporation (GAC) and
Rob Atkinson, ERA’s Chief Executive, inspecting
the Djidbidjidbi Residential College, which is due
to open in 2012. The College is being constructed
by the GAC to improve local Indigenous education
outcomes entirely from Ranger mine royalties
46
Energy Resources of Australia Ltd | Annual Report 2011
The Alligator Rivers Region Technical
Committee (ARRTC) oversees the
nature and extent of research being
undertaken to protect and restore the
environment in the Alligator Rivers
Region from any effects of uranium
mining. The 13 ARRTC members
include seven independent scientists
nominated by the Federation of
Australian Scientists and Technological
Societies and six representatives
of key stakeholder organisations,
including the Supervising Scientist
Division, Northern Territory
Government, ERA, Northern Land
Council, Parks Australia, and a non-
government environment organisation.
Further information on ARRTC can be
contained at:
http://www.environment.gov.au/ssd/
communication/committees/arrtc/index.
html
Governance
► Commonwealth Department of
Resources, Energy and Tourism;
► Alligator Rivers Region Advisory
Committee (including non-
government organisation
representatives); and
► Alligator Rivers Region Technical
Committee (including non-
government organisation
representatives).
The Ranger and Jabiluka Minesite
Technical Committees (MTCs) are
the key forums for consideration of
environmental matters relating to
Ranger and Jabiluka.
The Alligator Rivers Region Advisory
Committee (ARRAC) provides a
formal forum for consultation on
matters relating to the effects of
uranium mining on the environment
in the region. Committee members
include representatives of the
Northern Territory Government, the
Commonwealth Government, the
Northern Land Council, Aboriginal
associations, mining companies
(including ERA), West Arnhem Shire,
the Northern Territory Environment
Centre and other members who may
be appointed by the Commonwealth
Minister for the Environment. Further
information on ARRAC can be
obtained at
http://www.environment.gov.au/ssd/
communication/committees/arrac/
index.html
Regulation
Uranium mining in Australia
is extensively regulated by
Commonwealth and State or Territory
Governments.
The areas of uranium mining that
are regulated include exploration,
development, production, transport,
export, taxes and royalties, labour
standards, occupational health, waste
disposal, protection and rehabilitation
of the environment, mine reclamation,
mine safety, toxic and radioactive
substances and native title.
The mining and export of uranium
is currently permitted under strict
international agreements designed to
prevent nuclear proliferation.
Exports are subject to strict safeguards
and non-proliferation conditions to
ensure that Australian uranium is only
used for peaceful purposes.
Regulators, Stakeholders
and Committees
ERA’s uranium mining activities are
regulated through Commonwealth and
Northern Territory legislation.
ERA’s operations are closely
supervised and monitored by key
statutory bodies including:
► Northern Territory Department of
Resources;
► Australian Government’s
Supervising Scientist Division
(SSD);
► Northern Land Council
(representing the Mirarr Traditional
Owners);
Energy Resources of Australia Ltd | Annual Report 2011
47
Governance
48
Energy Resources of Australia Ltd | Annual Report 2011
Managing Our Risks ERA’s environmental protection measures, health and safety systems, radiation detection procedures and production activities are monitored, audited and reviewed on a regular basis. ERA strives for best practice in all these areas.The Company’s Code of Business Conduct defines expected behaviours for Company decisions and actions. ERA’s environment policy recognises that exemplary environmental management is crucial to long term success, requires compliance with all applicable legislation and other commitments, and aims to continuously improve environmental management performance. The Company maintains international certification (ISO 14001) of its environmental management system, which includes ERA’s water management system.ERA also maintains Australian certification (AS 4801) of its safety and health management system, including ERA’s radiation management system. Markets and Customers
market for uranium. Japanese utilities
are known to hold substantial uranium
inventories and the nuclear safety
review currently being implemented is
likely to result in longer than expected
shutdowns; indeed most, if not all, of
the Japanese reactor fleet could be
offline by May 2012. As a result, Japan
is not expected to be very active in the
market for the next year or two.
However, demand for nuclear fuel is
expected to increase over the longer
term, as concerns about climate
change and energy security encourage
further development of nuclear power.
This is expected to significantly exceed
any market contraction as a result of
the Japan crisis. ERA continues to
envisage a strong long term future for
uranium including continued price and
demand growth with long term demand
exceeding planned supply. This is
driven by Chinese growth and an
increased focus on the need to reduce
carbon emissions.
If there has been one legacy from
the Fukushima crisis, it has been
an increased focus on safety in an
already safety conscious industry.
Comprehensive safety reviews have
been undertaken globally with positive
results from the majority, including
Germany. New and existing reactors
are being stress tested for extreme
events such as multiple natural
disasters, air crashes and terrorist
attacks. Newer reactor designs
have passive safety systems that
should eliminate the possibility of a
core meltdown such as happened
at Fukushima.
ERA sells its product to
electric utilities in Asia,
Europe and north America
through an arrangement
with Rio tinto Uranium,
which provides global reach
and expertise in uranium
sales and marketing
activities.
Exports of uranium oxide are subject
to strict safeguards and non-
proliferation conditions to ensure that
Australian uranium is only used for
peaceful purposes.
Despite the production shortfall
in 2011, ERA met all its sales
commitments by way of alternate
arrangements with some customers,
inventory management and purchases
of spot material.
ERA continues to enjoy a strong
reputation as a leading and reliable
supplier of uranium oxide for electricity
generation.
The Company’s long established
production history and its excellent
supply relationships with diverse
customers across the world create an
excellent base for new growth should
development opportunities proceed
as planned.
The short term price started the year
at US$72.00 and then fell sharply to
US$49.00 following the Fukushima
accident, and climbed back to the high
fifties for the latter half of the year. The
long term price has been more stable
and ranged from the US$62.50 to
US$72.50 during 2011.
ERA’s strategy focuses on long term
price and as such sales are not overly
dependent on the spot price. ERA’s
2011 production was delivered into
long term contracts.
Most of these long term contracts were
signed in the recent period of rising
prices and as a consequence ERA’s
average realised price for 2011 was
significantly higher than the average
spot price.
Weakness in the US dollar continues
to weigh on the global uranium market,
affecting non-US producers in terms of
reduced earnings.
In terms of the global uranium market in
2011, the Fukushima accident in Japan
caused near-term price impacts, and a
slowdown in some regions, as countries
assess safety learnings. However, with
432 reactors operating worldwide in
2011, with 63 under construction and
152 planned for operation by 2030,
nuclear power remains a key element of
global energy.
Emerging economies are expected
to support uranium demand, with
commitment to nuclear energy from
China, India, Russia, South Korea and
the United Arab Emirates.
Although China’s uranium stockpile is
estimated to exceed 20,000 tonnes, the
country’s ambitious build programme -
27 new reactors under construction and
plans to have around 80 gigawatts of
installed generating capacity by 2020 -
is driving new demand.
The major global supplier of uranium,
Kazakhstan, has annual production
exceeding 19,000 tonnes of uranium
in 2011.
Post-Fukushima, the near-term
outlook for uranium will be challenging.
Demand outlook has worsened in
Europe following the announcements
that Germany would exit nuclear
energy generation by 2022,
Switzerland by 2034 and Italy would
abandon its embryonic plans for a
nuclear programme. Understandably
Japan, previously the third largest
annual consumer of uranium, will have
the greatest impact on the near-term
Energy Resources of Australia Ltd | Annual Report 2011
49
Directors’ Outlook
ERA is at a critical stage in
its history. 2012 will be the
last year of operation of its
Ranger Pit 3 open cut mine.
In 2013 mining will cease
and ERA’s production will
consist of the processing
of stockpiled ore which
will progressively reduce
output, unless and until new
production initiatives are
implemented.
The Company’s renewed focus on
business efficiency, exploration
potential, water management and
major projects provide ERA with a
sound footing for maximising growth
opportunities in 2012 and beyond.
ERA is a highly experienced producer,
with over three decades of uranium
mining experience. This experience in
operations, marketing, environmental
management and stakeholder relations
will stand the Company in good stead
as it transitions to a new period in
its development. The Company’s
tenements are located in one of the
world’s great uranium provinces and
previous work has already identified
highly prospective and under explored
regions within the Ranger Project Area.
An expanded $40 million surface drilling
exploration programme is planned for
2012 to 2014 and will target these areas.
In addition, the $120 million
underground exploration decline,
scheduled to begin construction
in 2012, will allow close spaced
exploration drilling of the Ranger 3
Deeps mineral resource.
This resource comprises an estimated
34,000 tonnes of uranium oxide and is
one of the most significant undeveloped
uranium deposits recently discovered.
An additional $55 million has been
allocated for preliminary studies into the
development of an underground mine
targeting the Ranger 3 Deeps resource.
If such a mine proves feasible, and
gains necessary stakeholder support
and regulatory approval, the existing
infrastructure at Ranger mine could
process Ranger 3 Deeps ore, providing
continuity of production once existing
stockpiles are processed.
As 2011 demonstrated, water
management is critical to ERA’s continued
operations. Access to the remaining
high grade ore in Pit 3 remains highly
dependent on the level of rainfall in the
forthcoming wet seasons. Investment in
water management in coming years will
support ERA’s production optimisation
and ensure the process water inventory
is reduced.
In particular, the deployment of proven,
environmentally sound water treatment
technology in the Brine Concentrator
facility will deliver significant capability
to reduce process water volumes
and increase ERA’s ability to manage
extreme wet seasons.
The success of ERA’s capital raising
with approximately $500 million raised,
not only provides funds to support
these development projects, but also
underlines the confidence in ERA’s
strategic initiatives and reputation as a
skilled and capable operator, and the
potential for the Australian uranium
industry.
Should ERA succeed in efforts to
maximise the potential of Ranger’s world
class deposits, production output is likely
to continue to find long term buyers, with
the outlook for the global uranium market
positive in the longer term.
Emerging economies are expected
to support uranium demand, with
commitment to nuclear energy from
China, India, Russia and the United
Arab Emirates.
The near term effects of the accident in
Fukushima caused a temporary drop in
spot prices and an extended reduction
in demand from Japan.
In addition, Germany’s position has
changed from reactor life extension to
possible shutdown, and there has been
some slowing of reactor builds in the short
term as countries assess the important
safety lessons from Fukushima.
In the longer term, any slowing of
demand growth is likely to be offset by
China’s anticipated growth, which may
exceed current estimates.
With 432 reactors operating worldwide
in 2011, 63 under construction and
152 planned for operation by 2030,
nuclear power remains a key element of
global energy supplies.
Nuclear power is a low carbon emitting
generation technology that has the
ability to deliver large volumes of base
load power. ERA believes it will still be
an important part of the global energy
mix for decades to come.
Furthermore, nuclear power is a key
component of many nations’ energy
security goals, particularly for resource-
poor countries, because of the high
energy intensity of uranium compared to
other fuel sources.
ERA’s ability to contribute to a lower
carbon world depends on its ability to
generate benefits for all stakeholders.
ERA aims through strong environmental
management to minimise its footprint
on the region in which it operates,
to achieve best practice in water
management and to progressively
rehabilitate the Ranger Project Area.
ERA also has title to the Jabiluka
deposit, which is a world class deposit
and will only be developed with the
consent of the Mirarr people, the
traditional owners.
Respect for traditional culture, support for
growing communities, and protection of
people and the environment are integral
elements of ERA’s future success.
ERA’s ability to develop resources in
a sustainable manner, and manage
safety, environment and social risks
in the years ahead, will determine the
significant long term value that ERA can
bring to the town of Jabiru, the Northern
Territory and its shareholders.
50
Energy Resources of Australia Ltd | Annual Report 2011
Energy Resources of Australia Ltd | Annual Report 2011
51
“ERA’s ability to develop resources in a sustainable manner, and manage safety, environment and social risks in the years ahead, will determine the significant long term value that ERA can bring to the town of Jabiru, The Northern Territory and its shareholders.” Rodney Moore, Production Superintendent,
Frank Jia, Superintendent Plant Operations
Technical, Shane Reeves, Manager Plant
Operations
52
Energy Resources of Australia Ltd | Annual Report 2011
Financial Report
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
54
76
77-80
81
82
83
84
notes to the Consolidated Financial Statements
85-119
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
2011 Announcements
ten Year Performance
120
121-122
123-124
125
126
Energy Resources of Australia Ltd | Annual Report 2011
53
Financial Report 2011 Directors’ Report
the Directors of Energy Resources of Australia Ltd present their report together with the
financial report of the Company and the consolidated financial report of the consolidated
entity, being the Company and its controlled entity, for the year ended 31 December 2011.
DIRECtORS
The Directors of the Company at any time during or since the end of the financial period are:
dR david klingneR
pRof Helen gaRnett
MR peteR tayloR
BSc(Hons), PhD, FAusIMM
CHAIRMAN
BSc(Hons), PhD, PSM, FTSE, FAICD
DIRECTOR
BA, BSc, LLB, LLM, FAICD
DIRECTOR
Appointed as a Director in February
2007. A lawyer in private practice
before joining Rio Tinto, Mr Taylor
has held a number of executive
and management positions in the
exploration, project development,
commercial and legal operations of the
Rio Tinto Group. Mr Taylor has served
as Managing Director and Chairman of
Bougainville Copper Limited since 21
October 2003, having been a Director
since April 1997. Mr Taylor is also a
director of a number of unlisted Rio
Tinto Group companies.
Appointed as a Director in July 2004
and as Chairman in January 2005.
Member of the Audit Committee and
Remuneration Committee. Dr Klingner
retired from Rio Tinto in 2004 after 38
years of service. During his time with
Rio Tinto he worked in roles involving
exploration, project development and
production including a period as Group
Executive in charge of coal and gold.
He was head of exploration when he
retired and a member of Rio Tinto’s
Executive Committee. Dr Klingner is
also a Director and the Chairman of
Codan Limited.
Appointed as a Director in January
2005. Chair of the Audit Committee
and member of Remuneration
Committee. From October 2003
to 31 December 2008, Professor
Garnett was Vice Chancellor of
Charles Darwin University in the
Northern Territory. Between 1994
and 2003, Professor Garnett served
as the Executive Director of the
Australian Nuclear Science &
Technology Organisation (ANSTO)
and as an Australian representative
to the United Nations International
Atomic Energy Agency. Professor
Garnett is an Emeritus Professor of
the University of Wollongong and of
Charles Darwin University, a Fellow
of the Academy of Technological
Sciences and Engineering and a
Fellow of the Australian Institute
of Company Directors. Professor
Garnett is currently the Chair of Delta
Electricity, a non-executive Director
of Carbon Energy Limited, Director
of the Australian Centre for Plant
Functional Genomics, Director of
the Grape and Wine Research and
Development Corporation and Director
of the Museum and Art Gallery, NT
Foundation. She chairs the Australian
Biosecurity Intelligence Network.
54
Energy Resources of Australia Ltd | Annual Report 2011
MR joHn pegleR
MR MattHew coulteR
MR Rob atkinSon
BE (Mining), MAusIMM
DIRECTOR
BE (Chemical), MBA
DIRECTOR
Appointed as a Director in July 2009.
Member of the Audit Committee and
Chair of Remuneration Committee.
Mr Pegler is presently Chairman
and a Director of the Australian
Coal Association Ltd, a Director and
Chairman of ACALET Ltd, a Director of
WDS Ltd and a Director of Bandanna
Energy Limited. He is Past President
and a Life Member of the Queensland
Resources Council. Mr Pegler was
most recently Chief Executive Officer
of Ensham Resources Pty Limited and
has previously held operational roles
within BP Australia Limited and the
Rio Tinto Group including President
Director of PT Kelian Equatorial
Mining and Managing Director Group
Procurement Eastern Hemisphere.
Appointed as a Director in June
2010. Mr Coulter is presently Chief
Development Officer - Coal, at Rio
Tinto Energy and is accountable for
mergers, acquisitions and divestments
in the global coal sector. Mr Coulter
joined Rio Tinto in 1994, and has held
roles in business evaluation, business
development, operational improvement
and external relations. He was
Chairman of Dalrymple Bay Coal
Terminal Pty Ltd and Half Tide Marine
Pty Ltd, and a director of Port Waratah
Coal Services Ltd, Hunter Valley Coal
Chain Co-Ordinator Limited, and a
number of unlisted Rio Tinto Group
companies.
BE(Hons) Mining & Petroleum Engineering
CHIEF EXECUTIVE
Appointed as a Director in September
2008 and Chief Executive in
September 2008. Mr Atkinson has
served with the Rio Tinto Group
since 1993, holding management,
operational and corporate roles in
Australia, the US and the UK, in the
Energy, Iron Ore and Aluminium
Product Groups. Mr Atkinson is
Chairman of the Australian Uranium
Association. Mr Atkinson has been
appointed as a Vincent Fairfax Fellow
by the Melbourne Business School,
Centre for Ethical Leadership.
Energy Resources of Australia Ltd | Annual Report 2011
55
Directors’ Report
ExECUtIVE COMMIttEE
MR Rob atkinSon
MR Steeve tHibeault
MR dan janney
dR gReg SinclaiR
BE(Hons) Mining & Petroleum
Engineering
CHIEF EXECUTIVE
BA (Acc), CMA
CHIEF FINANCIAL OFFICER
AND COMPANY SECRETARY
Mr Thibeault was appointed
as Chief Financial Officer
in July 2009 and Company
Secretary in 2009.
Mr Thibeault has previously
served in diverse finance
roles with Rio Tinto Alcan
and Alcan Aluminium
Limited.
Appointed as Chief
Executive in September
2008. Mr Atkinson has
served with the Rio Tinto
Group since 1993, holding
management, operational
and corporate roles in
Australia, the US and
the UK, in the Energy,
Iron Ore and Aluminium
Product Groups. Mr
Atkinson is Chairman of
the Australian Uranium
Association. Mr Atkinson
has been appointed as a
Vincent Fairfax Fellow by
the Melbourne Business
School, Centre for
Ethical Leadership.
BS - Metallurgical Engineering,
MBA
GENERAL MANAGER,
OPERATIONS
Mr Janney commenced
with Rio Tinto in 1991 and
over the last 20 years has
held various leadership
positions within operations.
Mr Janney was the General
Manager at Kennecott
Utah Copper’s Smelting
Operations in the US prior
to commencing with ERA.
BAppSc (Chemistry), PhD,
FAusIMM
GENERAL MANAGER,
TECHNICAL AND MAJOR
STUDIES
Dr Sinclair was appointed
as General Manager
Technical and Major Studies
in May 2007. Dr Sinclair has
over 27 years experience
in the resources sector and
has formerly held roles with
the Iron Ore Company of
Canada, Rio Tinto Technical
Services & HSE Groups,
North Limited and the
Australian Nuclear Science
& Technology Organisation.
56
Energy Resources of Australia Ltd | Annual Report 2011
MR cHRiS tZioliS
MR alan tietZel
MR david StaRk
MR RobeRt o’toole
BSc (Chemistry), MA
(International Relations), MBA
CHIEF DEVELOPMENT
OFFICER
Mr Tziolis was appointed as
Chief Development
Officer in October 2010.
Mr Tziolis has over 20 years
of operational and corporate
experience. Mr Tziolis
joined Rio Tinto in 2006
and formerly held roles as
a consultant with McKinsey
& Company and served as
an operations officer in the
Royal Australian Navy.
BA BCom Dip Ed MBA
GENERAL MANAGER,
EXTERNAL RELATIONS
Mr Tietzel was appointed as
General Manager External
Relations in July 2010.
He has a background in
Aboriginal land agreements,
regional development,
government relations,
human resources and
organisation development.
Mr Tietzel joined Rio Tinto
in 1990. He has worked in
the diamonds, salt, bauxite
and alumina sectors, and in
various corporate functions.
BE(Hons) Electrical
Engineering, MIE Aust
GENERAL MANAGER MAJOR
PROJECTS
Mr Stark was appointed as
General Manager Major
Projects in September 2011.
Mr Stark started with Rio
Tinto in 1997 and has held
various leadership roles
in the engineering and
maintenance fields. Prior
to starting with ERA,
Mr Stark was the
Engineering Manager for
the Rio Tinto Energy Major
Projects Group.
LLB, BSc
COMPANY SECRETARY AND
LEGAL COUNSEL
Mr O’Toole was appointed
as Company Secretary
and Legal Counsel in July
2010. Mr O’Toole joined Rio
Tinto in 2005 and previously
served as company
secretary and legal counsel
at Coal & Allied Industries
Limited. Prior to joining the
Rio Tinto Group, Mr O’Toole
was employed in private
legal practice since 2000.
Energy Resources of Australia Ltd | Annual Report 2011
57
Directors’ Report
Meetings of Directors
The number of Directors’ and Audit Committee meetings held and the number of meetings attended by each of the Directors of the Company
during the financial year is shown below:
DiRectoR
D Klingner
H Garnett
P Taylor
J Pegler
M Coulter
R Atkinson
DiRectoRs Meetings
AuDit coMMittee
Meetings
otheR coMMittee
Meetings
helD
AttenDeD
helD
AttenDeD
helD
AttenDeD
11
11
11
11
11
11
11
11
11
10
11
10
3
3
–
3
–
–
3
3
–
3
–
–
4
4
–
1
–
3
4
4
–
1
–
3
Mr Atkinson was invited to Audit Committee meetings and attended all such meetings held during the year.
Interests of Directors
The interests of each Director in the share capital of the Company, other companies within the consolidated entity or in a related body corporate
as at 31 January 2012 are shown below:
DiRectoR
D Klingner
H Garnett
P Taylor
J Pegler
M Coulter
R Atkinson
eneRgY ResouRces
of AustRAliA ltD,
oRDinARY shARes
Rio tinto liMiteD,
oRDinARY shARes
Rio tinto liMiteD,
oPtions in
oRDinARY shARes
Rio tinto liMiteD,
conDitionAl
inteRests in
oRDinARY shARes
–
–
–
–
–
–
29,787
–
21,108
6,331
908
888
–
–
15,407
–
11,268
2,699
–
–
7,273
–
11,687
8,975
58
Energy Resources of Australia Ltd | Annual Report 2011
Remuneration report
The Remuneration Report is set out under
the following main headings:
A Board oversight of remuneration
B Principles used to determine non-
executive Directors’ remuneration
C Principles used to determine executive
remuneration
D Details of remuneration
E Executive service agreements
F Share based compensation
G Additional information
The information provided in the
Remuneration Report has been audited
by the Company’s independent auditor
as required by section 308(3c) of the
Corporations Act 2001.
A Board oversight of
remuneration
Up to and including 2011, the Board had
not established a remuneration committee.
The policies and procedures applied by
the Company during this time in setting
non-executive director and executive
remuneration are set out in sections B and C
of the remuneration report below.
From 2012, the Board has established a
remuneration committee with responsibility
to review:
•
•
•
•
remuneration framework and policies
(including key performance indicators) for
the Company’s senior executives;
remuneration and performance of the
Company’s senior executives;
remuneration of the Company’s non-
executive directors; and
remuneration disclosures made by the
Company.
The Remuneration Committee Charter is
available at the Corporate Governance
section of the website.
B Principles used to
determine
non-executive Directors’
remuneration
Fees and payments to non-executive
Directors reflect the demands which are
made on, and the responsibilities of, the
non-executive Directors. Up to and including
2011, non-executive Directors’ fees and
payments were reviewed annually by the
Board. From 2012, the Remuneration
Committee will review and make
recommendations to the Board regarding
non-executive Directors’ remuneration.
These fees are comprised of a base fee and
any fees payable to non-executive Directors
for their membership on established
committees of the Board. In addition, from
time to time, the Board may approve that
non-executive Directors receive additional
fees for services provided outside the
established committee processes.
The following principles are applied in
determining the remuneration of non-
executive Directors:
•
the responsibilities of and time spent by
the non-executive Directors on the affairs
of ERA, including preparation time;
• acknowledgement of the personal risk
borne as a Director;
• comparison with professional market
rates of remuneration to remain
competitive with the market having
regard to companies of similar size and
complexity; and
the desire to attract Directors of a
high calibre with appropriate levels of
expertise and experience.
•
At the 2008 Annual General Meeting,
shareholders resolved to amend the
Constitution of the Company to provide
that the aggregate remuneration for non-
executive Directors of ERA would be not
more than $800,000 per annum. At the
2011 Annual General Meeting, shareholders
approved the 2010 Remuneration Report.
The aggregate amount of non-executive
Directors’ remuneration paid in 2011
was $602,920 inclusive of statutory
superannuation.
The non-executive Directors’ fees were
reviewed by the Board in January 2012.
The annual fees for non-executive Directors
for 2012 (excluding superannuation) are as
follows:
Chairman
$162,000
$162,000
2012
2011
Non-executive
Director
Audit Committee
Chairman*
Audit Committee
Member*
$90,000
$90,000
$20,000
$20,000
$13,000
$13,000
* Fees are payable in addition to Chairman and non-
executive Director fees.
The Board has resolved that no additional
committee fees are payable for membership
of the Remuneration Committee.
Retirement allowances for non-
executive directors
The entering into of contracts with non-
executive Directors for the provision of
a retirement allowance was approved
by shareholders on 18 October 1990. A
retirement allowance provides benefits to
certain non-executive Directors who have
served for three years or less, an amount
equal to the fees; or for longer than three
years, an amount equal to the statutory
three years emoluments plus, for each
year or part of a year of service exceeding
three years, an additional amount equal to
five per cent of the statutory three years
emoluments.
In April 2004, the Board resolved to remove
this retirement allowance for non-executive
Directors appointed after this date, and
for existing non-executive Directors with
accrued entitlements to freeze those
entitlements until that Director retires, when
it will be paid out. Non-executive Directors
appointed after this date are only entitled to
statutory superannuation contributions.
The Company’s liability for non-executive
Directors’ retirement benefits, which is based
on the number of years service provided
at the balance date, has been included in
employee entitlements.
C Principles used to
determine executive
remuneration
The Company’s Remuneration Policy can be
found in the Remuneration Committee Chart
at the Corporate Governance section of the
Company’s website at
www.energyres.com.au. From 2012, the
Remuneration Committee will be responsible
for the review of, and where appropriate
to make recommendations to the Board in
respect of, executive remuneration.
To determine the remuneration of the Chief
Executive and other key management
personnel of the Company and the
consolidated entity (together, “senior
executives”), the Company generally
implements the remuneration policies and
procedures determined by the Rio Tinto
Remuneration Committee and applied to
senior management personnel across the
wider Rio Tinto Group. For the purposes
of assessing the appropriate level of
remuneration, the Australian resources sector
is considered the most relevant comparator
group. Additional references are also made
to other relevant supplementary comparator
groups comprising companies primarily
Energy Resources of Australia Ltd | Annual Report 2011
59
Directors’ Report
from the ASX 200. Typically, base salaries
will be positioned at the median of these
comparator groups, with total remuneration
positioned across the full market range
according to individual and business
performance.
The Company Secretaries of the Company
are subject to the same executive
remuneration pay and reward framework.
The executive pay and reward framework
has four components:
The related costs of these programmes
are recognised in the Company’s financial
statements. For the purpose of disclosure
under the Corporations Act 2001 and
relevant Accounting Standards, the “key
management personnel” of the Company
and the consolidated entity, apart from the
Chief Executive and the non-executive
Directors, have been determined to be
the General Managers of the Company
reporting directly to the Chief Executive.
The same group includes the “five highest
paid executives” below Board level.
Executive remuneration, including base
salary and short and long term incentive
awards, and other terms of employment
are reviewed annually having regard to
the evaluation of individual and business
performance against goals set at the start
of the year, global economic conditions,
relevant comparative information and
advice from the Rio Tinto Remuneration
Committee. As well as base salary,
remuneration packages may include fringe
benefits such as medical insurance and
car and other allowances, superannuation,
retirement and termination entitlements
and short and long term incentives.
The annual performance evaluation and
management process includes formal
consultation between the Board and the
Chief Executive of the Rio Tinto Energy
Product Group regarding the Chief
Executive of the Company, and between
the Board and the Chief Executive of
the Company regarding the other senior
executives. From 2012, the Remuneration
Committee will assist the Board with
this process.
The executive pay and reward framework
is designed to provide a total remuneration
package which is competitive in the
market; aligns total remuneration with
delivered individual and short and long
term business performance including
long term shareholder value creation and
performance relating to environment,
safety and health; strikes an appropriate
balance between fixed and variable
components; links variable components to
the achievement of challenging individual
and business performance targets,
and ensures the attraction, motivation
and retention of the high calibre senior
executives required to lead the Company.
• Base salary and benefits;
• Short term incentives;
• Long term incentives through
participation in the Rio Tinto Share
Option Plan (SOP), Performance
Share Plan (PSP) and Rio Tinto
Management Share Plan (MSP); and
• Other remuneration such as
superannuation.
Performance and non-
performance related
remuneration
Total remuneration is a combination of the
fixed, performance and service related
elements described in this report. The short
and long term incentive plans (other than
the Rio Tinto Management Share Plan)
are the variable components of the total
remuneration package and are therefore
“at risk”. They are tied to achievement
of specific business measures, individual
performance and service. The other
components are referred to as “fixed” as
they are not at risk.
The long term incentive programme is
designed to provide a target expected value
of between 22.5 and 45 per cent of base
salary for the senior executives and the
Chief Executive, delivered in any one year
through a blend of SOP, PSP and MSP
awards. In 2011, awards were made under
the PSP and the MSP. No awards were
made under the SOP.
Excluding post employment and non-
monetary benefits, the proportion of total
direct remuneration provided by way of
variable at risk components, assuming
maximum levels of performance, as at
31 December 2011 for the Chief Executive
and other senior executives was between
45 and 65 per cent. The actual proportion
of total direct remuneration provided
by way of variable performance related
components (including proportion of options)
will differ from these percentages depending
on measured Company and individual
performance and the current blend of
share plans.
Base salary
Base salary is set at a level consistent
with market expectations within the
wider Rio Tinto remuneration framework
and may be delivered as a mix of cash
and prescribed non-financial benefits.
It is targeted broadly at the median of
companies of similar size, global reach
and complexity, including other large
natural resource companies. Base salary
is reviewed annually and adjusted taking
into account the nature of the role, external
market trends and individual performance.
Short term incentive
plan
The short term incentive plan provides
a bonus opportunity and is designed to
support the overall remuneration policy
by focusing management personnel
on calendar year performance against
challenging individual and business
targets.
Short term incentive
performance conditions
Individual performance is reviewed against
relevant targets and objectives annually.
All senior executives of the Company
have between 40 and 60 per cent of
their performance based bonus based on
business measures with the remainder
based on individual measures.
In 2011, the business measures included:
• Financial performance - net earnings
and cash flow;
• Safety - All Injury Frequency Rate,
Semi Quantitative Risk Assessments
and closure rate of Significant Potential
Incidents; and
• Business performance - drummed
production, quantity of pond water
treated, completion of Tailings Storage
Facility lift and quantity of total material
moved.
Bonus Deferral Plan
In 2009, 10 per cent of the Chief
Executive’s short term incentive plan bonus
paid for service in 2008 was satisfied partly
in cash (50 per cent) and partly through
the deferred award of shares in Rio Tinto
Limited (50 per cent) under the terms of the
Rio Tinto Bonus Deferral Plan (BDP).
60
Energy Resources of Australia Ltd | Annual Report 2011
In 2011, 10 per cent of the Chief
Executive’s short term incentive plan bonus
paid for service in 2010 was satisfied
through the deferred award of shares in Rio
Tinto Limited under the terms of the Rio
Tinto BDP.
In 2012, 25 per cent of the Chief
Executive’s short term incentive plan bonus
paid for service in 2011 will be satisfied
through the deferred award of shares in Rio
Tinto Limited under the terms of the Rio
Tinto BDP.
Long term incentive
plans
Share based remuneration
dependent on performance
Rio Tinto Share Option Plan
(SOP)
An annual grant of options to purchase
shares (in Rio Tinto Limited or Rio Tinto
plc, determined by the employee’s
contractual employing entity) in the future
at current market prices may be made by
Rio Tinto to eligible senior management
personnel.
Each year, the Rio Tinto Remuneration
Committee considers whether a grant of
options should be made under the SOP
and, if so, at what level. In arriving at a
decision, the Rio Tinto Remuneration
Committee takes into consideration
Group remuneration approaches,
individual performance as well as local
remuneration practice.
Under the SOP, options are granted to
purchase shares at an exercise price
based on the share price at time of grant.
No options are granted at a discount
and no amount is paid or payable by the
recipient upon grant of the options.
No options under the SOP become
exercisable unless Rio Tinto has met
stretching performance conditions. In
addition, before approving any vesting
and regardless of performance against
the respective performance conditions,
the Rio Tinto Remuneration Committee
retains discretion to satisfy itself that Rio
Tinto’s Total Shareholder Return (TSR)
performance is a genuine reflection of
value available to shareholders. Under
the SOP, vesting is subject to Rio Tinto’s
TSR equalling or outperforming the HSBC
Global Mining Index over a three year
performance period.
The HSBC Global Mining Index covers
the mining industry globally. If TSR
performance equals the index (threshold
performance) then awards of up to 20,000
or one-third of the award (whichever is
greater) will vest. The full grant may vest if
the TSR performance is equal to or greater
than the HSBC Global Mining Index plus
five per cent per annum. Between these
points, options may vest on a sliding scale,
with no options becoming exercisable
for a three year TSR performance below
the index.
Options will lapse if they do not vest at the
conclusion of the three year performance
period. Prior to any options vesting, the
Rio Tinto Group’s performance against the
criteria relevant to the SOP is calculated
independently by Towers Watson, global
financial services provider. If Rio Tinto
was subject to a change of control or a
company restructuring, options would
vest subject to the satisfaction of the
performance condition measured at the
time of the takeover or restructuring.
Depending on the circumstances, the
Rio Tinto Remuneration Committee has
the discretion to adjust the performance
condition to ensure a fair measure of
performance.
In the case of an acquirer, the Rio Tinto
Remuneration Committee may at its
discretion and with the agreement of
participants determine that options will be
replaced by equivalent new options over
shares in the acquiring company.
If a performance period is deemed to end
during the first 12 months after the options
were granted, the grant will be reduced
pro rata.
Where an option holder dies in service,
subsisting option grants vest immediately,
regardless of whether the performance
conditions have been satisfied.
The estate will have 12 months in which to
exercise the options.
SOP options may be exercised within ten
years of initial grant, and upon exercise
may be satisfied by Rio Tinto through the
transfer of treasury shares, the issue of
new shares or the purchase of shares in
the market.
The 2009 award was tested against
the performance condition at the end of
the performance period, which was 31
December 2011, and will vest to 100 per
cent in March 2012.
Performance Share Plan (PSP)
Rio Tinto’s performance share plan,
the PSP, provides a conditional right
to Rio Tinto shares to eligible senior
management personnel within the Rio Tinto
Group, including the senior executives of
the Company.
The conditional awards only vest if
the performance condition set by the
Rio Tinto Remuneration Committee
is satisfied by Rio Tinto, although the
Rio Tinto Remuneration Committee
retains discretion to satisfy itself that
satisfaction of the performance condition
is a genuine reflection of value available
to shareholders. Prior to the vesting
of conditional awards, Rio Tinto’s TSR
performance against the performance
condition is calculated independently by
Towers Watson.
Subject to Rio Tinto Remuneration
Committee approval, awards vest based
on the Rio Tinto Group’s TSR ranking
against a comparator group of other
mining companies, reviewed as at 31
December of the fourth year of the
grant. The level of vesting depends on
performance against the comparator
group.
From 2010, Rio Tinto has moved away
from the small comparator group of eight
companies used in 2009 with awards
granted from 2010 onwards vesting
subject to Rio Tinto’s TSR performance
against two well recognised market
indices: the Morgan Stanley Capital Index
(50 per cent) and the HSBC Global Mining
Index (50 per cent).
If Rio Tinto was subject to a change of
control or a company restructuring, the
conditional awards would only vest subject
to the satisfaction of the performance
condition measured at the time of the
change of control or restructuring. The
Rio Tinto Remuneration Committee has
discretion to adjust the performance
condition to ensure a fair measure of
performance. Additionally, if a performance
period is deemed to end during the first
12 months after the conditional award is
made, that award will be reduced pro-rata.
Rio Tinto releases awards to participants
as either Rio Tinto plc or Rio Tinto Limited
shares or as an equivalent amount in
cash. Awards may, upon vesting, be
satisfied by Rio Tinto through the transfer
of treasury shares, the issue of new
shares or the purchase of shares in the
market.
Energy Resources of Australia Ltd | Annual Report 2011
61
Directors’ Report
Share based remuneration not
dependent on performance
Rio Tinto Management Share
Plan (MSP)
Under the Management Share Plan,
conditional grants of Rio Tinto shares may
be awarded to eligible senior executives
of the Company which will vest, wholly or
partly, upon expiry of a three year vesting
period. Rio Tinto shares to satisfy the
vesting are purchased by Rio Tinto in the
market. Award levels under the MSP are at
the discretion of Rio Tinto.
In the case of a change of control, awards
vest on the date of the change of control,
but the award may be reduced pro rata to
reflect the acceleration of vesting. Prior to
the change of control, and with the consent
of the acquiring company, the shares can be
converted to shares in the acquirer. After a
change of control, this can only be achieved
with the consent of the employee.
Other Share Plans
The senior executives of the Company,
together with all employees of the Company,
may participate in Rio Tinto share savings
and share option plans applicable at
particular locations. These include the
Rio Tinto Limited share savings plan for
senior executives employed from the
Rio Tinto Limited group of companies
and the Rio Tinto plc share savings plan
for senior executives employed from the
Rio Tinto plc group. Further details are at
Note 32 to the Financial Statements.
Share dealing policy
The participation of senior executives in the
Rio Tinto share plans involving the awarding
of Rio Tinto securities at a future date, and
any grants of shares and options under
these plans, is subject to and conditional
upon compliance with the terms of the
‘Rules for dealing in securities of Rio Tinto,
its subsidiary and associated companies’
(“Rules for dealing”). The Rules for dealing
expressly prohibit the limiting of exposure to
economic risk in relation to such securities,
and are available on the Rio Tinto website at
www.riotinto.com/.
62
Energy Resources of Australia Ltd | Annual Report 2011
D Details of remuneration
Details of the remuneration of each non-executive and executive Director and each of the other senior executives in respect of their services to
the Company and the consolidated entity are set out in the following tables.
non-executive directors of energy Resources of australia ltd
shoRt teRM benefits
DiRectoRs fees
($000)
cAsh
bonus
($000)
non- cAsh
benefits
($000)
Post
eMPloYMent
benefits
suPeR-
AnnuAtion
($000)
175
162
30
110
102
90
82
41
103
96
90
41
568
554
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
16
14
3
10
9
–
–
–
9
8
–
–
35
34
totAl
($000)
191
176
33
120
111
90
82
41
112
104
90
41
603
588
D Klingner
R Carter2
H Garnett
P Taylor1
C Salisbury3
J Pegler
M Coulter1,4
total 2011
Total 2010
2011
2010
2010
2011
2010
2011
2010
2010
2011
2010
2011
2010
Note 1 Amounts paid directly to Rio Tinto Limited.
Note 2 Resigned as a Director on 21 April 2010.
Note 3 Resigned as a Director on 15 June 2010.
Note 4 Appointed as a Director on 15 June 2010.
Energy Resources of Australia Ltd | Annual Report 2011
63
Directors’ Report
executive directors & other key management personnel of the consolidated entity
shoRt teRM benefits
cAsh
sAlARY
($000)
cAsh
bonus
($000)
otheR10
($000)
Post
eMPloYMent
benefits
suPeR-
AnnuAtion
Pension
($000)
shARe
bAseD
PAYMents
cAsh &
eQuitY
settleD
($000)
totAl
($000)
executive directors
R Atkinson1
other senior executives
A Milnes2
D Paterson3
G Sinclair4
D Janney5
S Thibeault6
P Eaglen7
C Tziolis8
A Tietzel9
total 2011
total 2010
2011
2010
2010
2010
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
375
360
287
157
272
253
256
265
239
220
246
134
243
58
321
77
1,952
1,811
208
153
74
65
74
77
91
107
75
77
71
–
78
–
120
–
717
553
82
80
30
50
107
75
71
72
124
116
74
84
108
51
104
21
670
579
89
86
50
39
57
45
39
55
50
40
68
13
24
6
47
13
374
347
232
188
73
38
68
62
114
87
80
62
41
6
45
6
108
25
688
547
986
867
514
349
578
512
571
586
568
515
500
237
498
121
700
136
4,401
3,837
Note 1 Performance related cash bonus: 58% awarded in 2011, 42% forfeited. 62% awarded in 2010, 38% forfeited.
Note 2 Resigned as General Manager Environmental Strategy on 31 December 2010. Performance related cash bonus: 55% awarded in 2010, 45% forfeited.
Note 3 Resigned as General Manager External Relations on 31 August 2010. Performance related cash bonus: 56% awarded in 2010, 44% forfeited.
Note 4 Performance related cash bonus: 58% awarded in 2011, 42% forfeited; 62% awarded in 2010, 38% forfeited.
Note 5 Performance related cash bonus: 60% awarded in 2011, 40% forfeited; 56% awarded in 2010, 44% forfeited. Tax equalisation costs incurred, but not disclosed as remuneration.
Note 6 Performance related cash bonus: 67% awarded in 2011, 33% forfeited; 53% awarded in 2011, 47% forfeited. Tax equalisation costs incurred, but not disclosed as remuneration.
Note 7 Appointed as General Manager Environmental Strategy on 1 June 2010. Performance related cash bonus: 62% awarded in 2011, 38% forfeited. No cash bonus is disclosed for 2010
as payments made were in respect of services rendered to another Rio Tinto entity in 2009.
Note 8 Appointed as Chief Development Officer on 1 October 2010. Performance related cash bonus: 68% awarded in 2011, 32% forfeited. No cash bonus is disclosed for 2010 as
payments made were in respect of services rendered to another Rio Tinto entity in 2009.
Note 9 Appointed as General Manager External Relations on 1 October 2010. Performance related cash bonus: 65% awarded in 2011, 35% forfeited. No cash bonus is disclosed for 2010
as payments made were in respect of services rendered to another Rio Tinto entity in 2009.
Note 10 Other benefits includes relocation, accommodation, travel, vehicle and other allowances and other employment related benefits.
The value of share based payments has been determined in accordance with the recognition and measurement requirements of IFRS2 “Share-
based Payment”. The fair value of awards granted under the SOP, MSP and the BDP have been calculated at their dates of grant using an
independent lattice-based option valuation model provided by external consultants, Lane Clark & Peacock LLP. Some of these awards will be
settled in cash, rather than the transfer of shares, and so the fair value of these cash settled awards has been calculated based on Rio Tinto’s
share price at 31 December 2011. The fair value of awards granted under the PSP has been calculated using a Monte Carlo valuation model
based on the market price of shares and their relative TSR performance at 31 December 2011.
64
Energy Resources of Australia Ltd | Annual Report 2011
E Executive service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements. These agreements provide for
participation in the Rio Tinto short and long term incentive plans including bonus opportunities upon achieving performance and service goals and
performance related share plans. The agreements may also provide for other benefits, including: medical insurance; vehicle and accommodation
allowances; relocation allowances and expenses and travel allowances.
Key management personnel will also be entitled to a range of pre-existing redundancy entitlements, depending on the business and region from
where they were originally employed within the Rio Tinto Group:
• Notice may be worked or fully or partly paid in lieu, at Company discretion.
• Additional capped service related payments may apply.
• Pro rata short term incentive plan payments may be paid based on the proportion of the performance period worked.
• Long term incentive plan benefits may be paid or vest to the extent provided by the relevant plan.
• Share options or conditional share awards held for less than 12 months at date of termination may be reduced pro-rata.
There is no contractual entitlement to payments in the event of a change of control.
Other major provisions of the agreements relating to remuneration are set out below.
R Atkinson – Chief Executive
Term of agreement – Open, commenced 8 September 2008
Base salary (excluding superannuation, allowances and other benefits) as at 31 December 2011 of $376,504 per annum. Maximum short term
incentive bonus upon meeting performance criteria is 100 per cent of base salary. Base salary and short term incentive targets are to be reviewed
annually. Termination by the employee is two months notice in writing or by the employer giving six months notice or equivalent payment in lieu
of notice.
G Sinclair – General Manager Technical Projects
Term of agreement – Open, commenced 1 May 2007.
Base salary (excluding superannuation, allowances and other benefits) as at 31 December 2011 of $273,166 per annum. Maximum short term
incentive bonus upon meeting performance criteria is 50 per cent of base salary. Base salary and short term incentive targets to be reviewed
annually. Termination by the employee is one months notice in writing or by the employer giving three months notice or equivalent payment in lieu
of notice.
D Janney – General Manager Operations
Term of agreement – 1 April 2009 to 30 September 2012
Base salary (excluding superannuation, allowances and other benefits) as at 31 December 2011 of USD $211,242 per annum. Maximum
short term incentive bonus upon meeting performance criteria is 80 per cent of base salary. Base salary and short term incentive targets to be
reviewed annually. Termination by the employee is one months notice in writing or by the employer giving three months notice or equivalent
payment in lieu of notice.
S Thibeault – Chief Financial Officer
Term of agreement – 1 December 2011 - 31 March 2015
Base salary (excluding superannuation, allowances and other benefits) as at 31 December 2011 of $300,000 per annum. Maximum short term
incentive bonus upon meeting performance criteria is 50 per cent of base salary. Base salary and short term incentive targets to be reviewed
annually. Termination by the employee is three months notice in writing or by the employer giving six months notice or equivalent payment in lieu
of notice.
C Tziolis – Chief Development Officer
Term of agreement – Open, commenced 1 October 2010
Base salary (excluding superannuation, allowances and other benefits) as at 31 December 2011 of $245,870 per annum. Maximum short term
incentive bonus upon meeting performance criteria is 50 per cent of base salary. Base salary and short term incentive targets to be reviewed
annually. Termination by the employee is three months notice in writing or by the employer giving six months notice or equivalent payment in lieu
of notice.
Energy Resources of Australia Ltd | Annual Report 2011
65
Directors’ Report
A Tietzel – General Manager External Relations
Term of agreement – Open, commenced 1 October 2010
Base salary (excluding superannuation, allowances and other benefits) as at 31 December 2011 of $324,360 per annum. Maximum short term
incentive bonus upon meeting performance criteria is 60 per cent of base salary. Base salary and short term incentive targets to be reviewed
annually. Termination by the employee is three months notice in writing or by the employer giving six months notice or equivalent payment in lieu
of notice.
P Eaglen – General Manager Environmental Strategy
Commenced 1 June 2010 and resigned 31 January 2012
Base salary (excluding superannuation, allowances and other benefits) as at 31 December 2011 of $247,250 per annum. Maximum short term
incentive bonus upon meeting performance criteria is 50 per cent of base salary. Base salary and short term incentive targets to be reviewed
annually. Termination by the employee is three months notice in writing or by the employer giving six months notice or equivalent payment in lieu of
notice.
66
Energy Resources of Australia Ltd | Annual Report 2011
F Share based compensation
Rio tinto Share option plan
Details of the costs of the share based payment plans applied by the Company are provided at Note 32 of the Financial Statements.
Options under the SOP are granted at the discretion of the Rio Tinto Remuneration Committee in line with Rio Tinto guidelines.
The terms and conditions of each grant of options affecting remuneration in this or future reporting periods are as follows:
gRAnt DAte
Rio tinto liMiteD
13/03/2002
7/03/2003
22/04/2004
9/03/2005
7/03/2006
13/03/2007
10/03/2008
17/03/2009
Rio tinto Plc
13/03/2002
7/03/2003
22/04/2004
9/03/2005
7/03/2006
13/03/2007
10/03/2008
17/03/2009
exPiRY
DAte
exeRcise
PRice (PRe
Rights issue)
exeRcise
PRice (Post
Rights issue)
VAlue PeR
oPtion At
gRAnt DAte
VAlue PeR
oPtion
Post Rights
issue
eARliest
exeRcise DAte
13/03/2012
7/03/2013
22/04/2014
9/03/2015
7/03/2016
13/03/2017
10/03/2018
17/03/2019
13/03/2012
7/03/2013
22/04/2014
9/03/2015
7/03/2016
13/03/2017
10/03/2018
17/03/2019
$
39.87
33.33
34.41
47.04
71.06
74.59
134.18
49.56
£
14.59
12.63
13.29
18.26
27.11
27.01
57.23
20.01
$
23.76
17.23
18.30
30.93
54.95
58.48
118.07
33.45
£
12.05
10.43
10.98
15.09
22.40
22.32
47.28
16.53
$
13.71
6.68
6.17
8.93
17.09
14.23
44.04
13.36
£
4.99
2.97
2.81
4.09
7.40
6.17
20.63
6.62
$
13.71
6.68
6.18
8.93
17.09
14.23
44.04
13.36
£
4.12
2.46
2.33
3.38
6.11
5.10
17.04
8.29
13/03/2005
7/03/2006
22/04/2007
9/03/2008
7/03/2009
13/03/2010
10/03/2011
17/03/2012
13/03/2005
7/03/2006
22/04/2007
9/03/2008
7/03/2009
13/03/2010
10/03/2011
17/03/2012
Energy Resources of Australia Ltd | Annual Report 2011
67
Directors’ Report
Rio tinto performance Share plan (pSp)
Share awards under the PSP are granted at the discretion of the Rio Tinto Remuneration Committee in line with Rio Tinto guidelines. The terms
and conditions of each right to Rio Tinto Limited or Rio Tinto plc shares affecting remuneration in this or future reporting periods are as follows:
AWARD DAte
Rio tinto liMiteD
7 March 2006
13 March 2007
22 March 2010
21 March 2011
Rio tinto Plc
7 March 2006
13 March 2007
22 March 2010
21 March 2011
MARKet PRice
At AWARD
PeRfoRMAnce
PeRioD enDs
MARKet PRice At
31 DeceMbeR 2011
$69.60
$74.50
$75.03
$81.00
£26.30
£26.81
£37.30
£40.58
31 December 2009
31 December 2010
31 December 2013
31 December 2014
31 December 2009
31 December 2010
31 December 2013
31 December 2014
$60.30
$60.30
$60.30
$60.30
£31.25
£31.25
£31.25
£31.25
Note * Vesting dependent upon continued employment with a Rio Tinto Group company.
No conditional awards of either Rio Tinto plc or Rio Tinto Limited shares were made as remuneration for key management personnel
of the consolidated entity under the PSP in 2009, although adjustments were made to PSP balances following the
Rio Tinto rights issue. The Rio Tinto Remuneration Committee reviewed the performance condition applicable to the conditional
award and confirmed that vesting will be dependent on Rio Tinto’s TSR relative to the designated comparator mining companies.
Rio tinto Management Share plan
Share awards under the Management Share Plan are granted at the discretion of the Rio Tinto Remuneration Committee in line with Rio Tinto
guidelines. The terms and conditions of each right to Rio Tinto Limited or Rio Tinto plc shares affecting remuneration in this or future reporting
periods are as follows:
AWARD DAte
Rio tinto liMiteD
10 March 2008
17 March 2009
22 March 2010
21 March 2011
Rio tinto Plc
10 March 2008
17 March 2009
22 March 2010
21 March 2011
MARKet PRice
At AWARD
PeRfoRMAnce
PeRioD enDs
PRice At
31 DeceMbeR 2011
$126.48
$47.60
$75.03
$81.00
£52.58
£19.82
£37.30
£40.58
31 December 2010
31 December 2011
31 December 2012
31 December 2013
31 December 2010
31 December 2011
31 December 2012
31 December 2013
$60.30
$60.30
$60.30
$60.30
£31.25
£31.25
£31.25
£31.25
Note * Vesting dependent upon continued employment with a Rio Tinto Group company.
68
Energy Resources of Australia Ltd | Annual Report 2011
Rio tinto bonus deferral plan and company contributed award
Share awards under the Rio Tinto Bonus Deferral Plan and Rio Tinto Company Contributed Award are granted at the discretion of the Rio Tinto
Remuneration Committee in line with Rio Tinto guidelines. The terms and conditions of each right to Rio Tinto Limited shares affecting
remuneration in this or future reporting periods are as follows:
MARKet PRice
At AWARD
Vesting DAte*
PRice At
31 DeceMbeR 2011
AWARD DAte
Rio tinto liMiteD
bonus DefeRRAl PlAn
17 March 2009
$52.01
50% 31 December 2010
50% 31 December 2011
21 March 2011
$81.00
100% 31 December 2013
Rio tinto liMiteD
coMPAnY contRibuteD AWARD
17 March 2009
21 March 2011
$52.01
50% 31 December 2010
50% 31 December 2011
$81.00
100% 31 December 2013
Note * Vesting dependent upon continued employment with a Rio Tinto Group company.
$60.30
$60.30
$60.30
$60.30
Share based compensation – Rio tinto employee share schemes
The Directors of the Company and key management personnel of the consolidated entity who elected to participate in the Rio Tinto employee
share schemes as at 31 December 2011 are set out below:
R Atkinson
P Taylor
D Janney
C Tziolis
A Tietzel
2011 Rio Tinto Limited scheme commencing 1 January 2012
2009 Rio Tinto Limited scheme commencing 1 January 2010
2011 Rio Tinto plc scheme commencing 1 December 2011
2010 Rio Tinto plc scheme commencing 1 January 2010
2009 Rio Tinto plc scheme commencing 15 December 2009
2008 Rio Tinto Limited scheme commencing 1 January 2009
2008 Rio Tinto Limited scheme commencing 1 January 2009
Energy Resources of Australia Ltd | Annual Report 2011
69
Directors’ Report
equity instrument disclosures relating to directors and key management personnel
Options provided as remuneration (SOP)
Details of options over ordinary shares in Rio Tinto Limited and Rio Tinto plc held during the year and provided as remuneration to the key
management personnel of the consolidated entity in respect of their service to the Company are set out below. When exercisable, each option is
convertible into one ordinary share of Rio Tinto Limited or Rio Tinto plc.
bAlAnce At
stARt of
the YeAR oR
on Joining8
gRAnteD As
ReMuneRAtion
exeRciseD
DuRing the
YeAR
bAlAnce At enD
of the YeAR7
otheR
chAnges7
VesteD &
exeRcisAble
un–VesteD
Rio tinto Plc
Key management personnel
D Janney
2011
S Thibeault
2010
2011
2010
Rio tinto liMiteD
executive directors
R Atkinson
2011
2010
Key management personnel
A Milnes1
2010
D Paterson2
G Sinclair
P Eaglen3
C Tziolis4
A Tietzel5
2010
2011
2010
2011
2010
2011
2010
2011
2010
non-executive directors6
D Klingner
2011
P Taylor
C Salisbury
M Coulter
2010
2011
2010
2010
2011
2010
2,033
3,540
1,186
1,186
3,950
5,278
10,575
10,033
1,998
3,874
–
–
396
396
4,495
4,495
–
4,117
18,209
20,169
9,416
13,792
13,792
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1,782)
–
–
–
(1,238)
(1,511)
–
–
–
–
–
–
–
(4,117)
(2,802)
–
–
(2,524)
–
–
(1,507)
–
–
–
(1,328)
(992)
(866)
–
(365)
–
–
–
–
–
–
–
–
–
(1,960)
(2,749)
–
–
–
–
–
–
–
1,782
8,757
8,460
–
1,238
–
–
–
–
3,275
3,275
–
–
12,978
15,780
3,332
9,473
11,997
2,033
2,033
1,186
1,186
2,168
2,168
826
707
760
760
–
–
396
396
1,220
1,220
–
–
2,429
2,429
3,335
1,795
1,795
Note 1 Upon resignation as General Manager Environmental Strategy on 31 December 2010, balance at 9,583.
Note 2 Upon resignation as General Manager External Relations on 31 August 2010, balance of 9,167.
Note 3 Upon appointment as General Manager Environmental Strategy on 1 June 2010, no balance was held.
Note 4 Upon appointment as Chief Development Officer on 1 October 2010, balance at 396.
Note 5 Upon appointment as General Manager External Relations on 1 October 2010, balance at 4,495.
Note 6 Changes to balances for non-executive Directors do not relate to remuneration for services provided to the Company.
Note 7 Other changes and end of year balance include changes made in relation to awards for service within the wider Rio Tinto Group, including before joining or after ceasing with the
Company, Rio Tinto Rights Issue adjustments to accrued balances of Rio Tinto plc share options and forfeited options where conditions were not met.
Note 8 Where a KMP joined during the year, balance at start of the year reflects holdings at time of commencement with the Company.
70
Energy Resources of Australia Ltd | Annual Report 2011
details of remuneration: Share options
For each grant of options included in the table on page 70, the percentage of the available grant that was paid, or that vested, in 2011, and the
percentage that was forfeited because the service and performance criteria were not met, is set out below. The options vest after three years,
provided the vesting conditions are met (see page 61). No options will vest if the conditions are not satisfied hence the minimum value of the
options yet to vest is nil. The maximum value of the options yet to vest has been determined as the amount of the grant date fair value of the
options that is yet to be expensed.
Rio tinto Plc
D Janney
S Thibeault
Rio tinto liMiteD
R Atkinson
A Milnes
D Paterson
G Sinclair
P Eaglen
C Tziolis
A Tietzel
oPtions
AWARD
DAte
VesteD % foRfeiteD %
futuRe
Vesting title
MAxiMuM
totAl VAlue
of unVesteD
gRAnt $
2011
2010
2011
2010
2011
2010
2010
2010
2011
2010
2011
2010
2011
2010
2011
2010
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
n/A
N/A
n/A
N/A
n/A
N/A
N/A
N/A
n/A
N/A
n/A
N/A
n/A
N/A
n/A
N/A
–
–
–
–
–
–
–
–
–
–
–
Energy Resources of Australia Ltd | Annual Report 2011
71
Directors’ Report
conditional awards provided as remuneration
Performance Share Plan; Management Share Plan; Bonus Deferral Plan;
Companies Contributed Award
No conditional awards of ordinary shares of either the parent entity or of Rio Tinto Limited or Rio Tinto plc were provided during the year as
remuneration to any of the non-executive Directors of the parent entity.
Details of conditional awards of ordinary shares in Rio Tinto Limited and Rio Tinto plc held during the year and provided as remuneration to each
of the key management personnel of the consolidated and parent entity in respect of their duties as officers of the consolidated and parent entity
are set out below. When exercisable, each award converts into one ordinary share of Rio Tinto Limited or Rio Tinto plc.
bAlAnce At
stARt of the
YeAR oR on
Joining7
gRAnteD As
ReMun-
eRAtion
cRYstAllisAtion
of PRioR AWARD
VesteD
lAPseD
AWARDs
cAncelleD
otheR
chAnges8
bAlAnce
At enD
of the
YeAR8
Rio tinto Plc
Key management personnel
D Janney
S Thibeault
Rio tinto liMiteD
executive directors
R Atkinson
2011
2010
2011
2010
7,829
5,837
4,740
2,682
2011
2010
12,016
11,196
Key management personnel
A Milnes1
D Paterson2
G Sinclair
P Eaglen3
C Tziolis4
A Tietzel5
2010
2010
2011
2010
2011
2011
2011
non-executive directors6
P Taylor
C Salisbury
M Coulter
2011
2010
2010
2011
2010
5,174
4,578
3,794
4,616
986
638
1,587
1,587
6,115
6,115
12,268
15,248
16,939
9,250
9,250
2,047
3,035
1,486
2,058
3,493
5,615
1,958
1,275
(1,316)
–
(786)
–
(3,087)
(3,869)
(1,780)
(1,650)
987
(1,040)
1,362
(1,540)
883
–
884
–
–
–
(201)
–
1,565
(1,685)
–
–
–
–
–
–
–
(4,474)
(5,420)
(3,088)
(1,686)
–
(670)
(1,043)
–
–
(714)
(926)
(722)
(625)
(482)
(644)
–
–
–
–
(781)
–
(1,281)
(1,717)
(1,132)
(778)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
348
–
–
–
–
3,289
4,157
6,831
6,449
–
7,890
7,829
5,440
4,740
11,708
12,016
4,630
3,578
3,259
3,794
1,869
986
2,270
1,587
5,214
6,115
9,802
12,268
19,550
13,235
9,250
Note 1 Upon resignation as General Manager Environmental Strategy on 31 December 2010, balance was 4,630.
Note 2 Upon resignation as General Manager External Relations on 31 August 2010, balance was 3,578.
Note 3 Upon appointment as General Manager Environmental Strategy on 1 June 2010, balance at 638.
Note 4 Upon appointment as Chief Development Officer on 1 October 2010, balance at 1,587.
Note 5 Upon appointment as General Manager External Relations on 1 October 2010, balance at 6,115.
Note 6 Changes to balances for non-executive Directors do not relate to remuneration for services provided to the Company.
Note 7 Where a KMP joined during the year, balance at start of the year reflects holdings at time of commencement with the Company.
Note 8 Other changes and end of year balance include changes made in relation to awards for service within the wider Rio Tinto Group, including before joining or after ceasing with the
Company, and Rio Tinto Rights Issue adjustments to accrued balances.
72
Energy Resources of Australia Ltd | Annual Report 2011
Shareholdings
The number of shares held in Energy Resources of Australia Ltd or Rio Tinto Limited during the financial year by each Director of Energy
Resources of Australia Ltd are set out below.
bAlAnce
At enD of
the YeAR1
ReceiVeD DuRing
the YeAR on
exeRcise of
oPtions
otheR
chAnges
DuRing
the YeAR
bAlAnce
At enD of
the YeAR2
eneRgY ResouRces of AustRAliA ltD
R Carter3
Rio tinto liMiteD
R Carter3
D Klingner
C Salisbury4
P Taylor
R Atkinson
J Pegler
M Coulter5
2010
2010
2011
2010
2010
2011
2010
2011
2010
2011
2010
2011
2010
25,000
4,613
36,787
51,787
7,571
11,773
6,353
888
2,041
6,331
6,331
908
908
–
–
–
4,117
–
2,802
–
2,201
888
–
–
2,524
–
–
–
(7,000)
(19,117)
–
3,916
5,420
(2,201)
(2,041)
–
–
(2,524)
–
25,000
4,613
29,787
36,787
7,571
18,491
11,773
888
888
6,331
6,331
908
908
Note 1 Where a Director was appointed during the year, balance reflects holdings at time of commencement with ERA.
Note 2 Where a Director resigned during the year, balance reflects holdings at time of resignation as a Director of ERA.
Note 3 Resigned as a Director on 21 April 2010.
Note 4 Resigned as a Director on 15 June 2010.
Note 5 Appointed as a Director on 15 June 2010.
G Additional information
further details relating to options
VAlue of oPtions exeRciseD DuRing the YeAR
R Atkinson
G Sinclair
VAlue of
oPtions
exeRciseD
DuRing 2011
59,145
40,345
MARKet
PRice At
DAte of
exeRcise
88.14
87.54
loans and other transactions with directors and other key management personnel
There are no loans with Directors and other key management personnel. Other transactions with Director related entities are disclosed in Note
24 – related parties.
Energy Resources of Australia Ltd | Annual Report 2011
73
Directors’ Report
Principal activities
The principal activities of the consolidated
entity during the course of the year consisted
of mining, processing and sale of uranium.
Dividends
No dividends have been paid by ERA
to members in respect of the 2011
financial year.
Review and results of
operations
Details of ERA’s review and results of
operations are included in the “Chairman’s
and Chief Executive’s Report” on page
8 and the “Financial performance” and
“Production” sections at pages 10 and
12, respectively.
Significant changes to the
state of affairs
In the opinion of the Directors, other than
matters reported in the Directors’ Report,
and in the Chairman’s and Chief Executive’s
Report, there were no significant changes in
the state of affairs of the consolidated entity
during the year ended 31 December 2011.
Matters subsequent
to the end of the financial
year
There has not arisen in the interval between
the end of the year and the date of this
report any item, transaction or event of
a material nature, that has significantly
affected or may significantly affect:
(i) the operations of the consolidated entity;
(ii) the results of those operations; or
(iii) the state of affairs of the consolidated
entity subsequent to the financial year
ended 31 December 2011.
Likely developments
In the opinion of the Directors, any other
likely developments in the operations of
the consolidated entity known at the date
of this report have been covered within the
Annual Report and Notes to the financial
statements.
A general review of developments for ERA
is presented in the “Chairman’s and Chief
Executive’s Report”, “Major projects” and
“Directors’ outlook” sections.
Further information as to likely developments
in the operations of the consolidated entity
and the expected results of those operations
in subsequent financial years has not been
included in this report because the Directors
believe, on reasonable grounds, that to
include such information would be likely
to result in unreasonable prejudice to the
consolidated entity.
Annual General Meeting
The 2012 Annual General Meeting will
be held on 11 April 2012 in Darwin, in the
Northern Territory of Australia. Notices of
the 2012 Annual General Meeting are set
out in separate letters to the shareholders of
the Company.
Indemnification and
insurance
indemnification
Clause 11 of the Company’s constitution
provides that every Director, manager,
officer or employee of the Company shall be
indemnified out of the funds of the Company
against all liability incurred by them in
defending any proceedings in which they are
successful.
The Corporations Act 2001 prohibits a
company from indemnifying Directors,
secretaries, executive officers and auditors
from liability except for liability to a party,
other than the Company or a related body
corporate, where the liability does not arise
out of conduct involving a lack of good
faith and except for liability for costs and
expenses incurred in defending proceedings
in which the officer or auditor is successful.
An indemnity for officers or employees who
are not Directors, secretaries or executive
officers, is not expressly prohibited by the
Corporations Act 2001.
The Directors and secretaries of the
Company, and all former Directors and
secretaries, have the benefit of the indemnity
in Clause 11 of the Company’s constitution.
The indemnity also applies to executive
officers of the Company (being the Chief
Financial Officer and General Managers
and other key management personnel and
managers who are concerned with, or take
part in the management of the Company) as
well as other employees.
insurance
Since the end of the previous financial year,
the Company has paid insurance premiums
in respect of a Directors’ and officers’ liability
policy of insurance.
The policy indemnifies all Directors and
officers of ERA and its controlled entities
(including the Directors, secretaries, and
executive officers referred to above) against
certain liabilities.
In accordance with common commercial
practice, the insurance policy prohibits
disclosure of the nature of the liability
insured against and the amount of the
premium.
The Directors have not included details of
the nature of the liabilities covered or the
amount of the premium paid in respect of
Directors’ and officers’ liability insurance as
such disclosure is prohibited under the terms
of the contract.
Environmental regulation
and policy
ERA strives to be at the forefront of
environmental management in the uranium
industry. It operates in accordance with
relevant Commonwealth and Northern
Territory environmental legislation as well
as site specific environmental licences,
permits and statutory authorisations. ERA’s
environmental management system is
ISO14001 compliant.
ERA is required to report any incident that
is a divergence from strict compliance
with statutory requirements, even if the
incident has no detrimental environmental
impact, and reports are made to the
Minister for Resources (Northern Territory),
the Supervising Scientist Division of
the Commonwealth Department of
Sustainability, Environment, Water,
Population and Communities, the Northern
Land Council, the Commonwealth
Department of Resources, Energy &
Tourism and the Gundjeihmi Aboriginal
Corporation (representatives of the Mirarr
Traditional Owners).
The Supervising Scientist confirmed in his
most recent report, relating to the operating
year to 30 June 2011, that there were no
reported incidents that resulted in any
environmental impact off the immediate mine
site, and that the environment remained
protected through the period.
74
Energy Resources of Australia Ltd | Annual Report 2011
Information on Auditor
PricewaterhouseCoopers continues in
office in accordance with Section 327 of the
Corporations Act 2001.
A copy of the auditor’s independence
declaration as required under section 307C
of the Corporations Act 2001 is set out on
page 76.
Signed at Melbourne this 10 February 2012
in accordance with a resolution of
the Directors.
Dr D Klingner
Director
Melbourne
10 february 2012
There were no prosecutions commenced
or fines incurred in respect of ERA’s
environmental performance during 2011.
Further details of ERA’s environmental
performance are included in the
“Environment” section of the Annual Report
on page 32.
Corporate governance
The Board of ERA considers high standards
of corporate governance to be critical to
business integrity and performance. The
corporate governance structures and
practices in place at ERA are substantially in
compliance with the Corporate Governance
Principles and Recommendations – Second
Edition (“Principles”) developed by the
Australian Securities Exchange (“ASX”)
Corporate Governance Council (“Council”).
Areas where the corporate governance
practices of ERA do not follow the Council’s
recommendations arise due to Rio Tinto’s
68.4 per cent ownership of the Company
and the management direction, services and
support this provides. The extent to which
the Company does not comply is detailed
in the Corporate Governance Statement
at page 77.
Rounding of amounts
The Company is of a kind referred to in ASIC
Class Order 98/0100 and in accordance with
that Class Order amounts in the financial
statements and Directors’ Report have been
rounded to the nearest thousand dollars,
unless otherwise indicated.
Auditors
PricewaterhouseCoopers are the auditors of
the consolidated entity.
No person who was an officer of the
consolidated entity during the year was a
former partner or director of the auditors.
Each of the Directors at the time this report
was approved has confirmed that:
• so far as he or she is aware, there is no
relevant audit information (ie information
needed by the auditors in connection
with preparing their report) of which the
auditors are unaware; and
• he or she has taken all steps that they
ought to have taken as a Director in
order to make himself or herself aware
of any relevant audit information and to
establish that the auditors are aware of
that information.
non Audit services
The Company may decide to employ the
auditors on assignments additional to their
statutory audit duties where the auditor’s
expertise and experience with the Company
are important.
Details of the amount paid or payable to the
auditors for audit services are set out below.
During the period PricewaterhouseCoopers
were engaged to perform services in relation
to the accelerated renounceable entitlement
offer conducted by ERA in 2011.
The Board of Directors has considered
the position and, in accordance with the
advice received from the Audit Committee,
is satisfied that the provision of non-audit
services is compatible with the general
standard of independence for auditors
imposed by the Corporations Act 2001. All
non-audit services are reviewed by the Audit
Committee to ensure they do not impact
on the impartiality and objectivity of the
auditors and do not undermine the general
principles relating to auditors’ independence
as set out in Professional Statement F1,
including reviewing or auditing the auditors’
own work, acting in a management or
decision making capacity for the Company,
acting as advocate for the Company or
jointly sharing economic risks and rewards.
Accordingly, the Directors satisfy themselves
that the provision of non-audit services
by the auditors does not compromise the
auditor independence requirements of the
Corporations Act 2001.
During the year the following fees were
paid or payable for services provided by
the auditors of the Company, its related
practices and non-audit related firms.
2011
$000
2010
$000
AuDit
seRVices
PricewaterhouseCoopers
Audit and review of
financial reports
total
Remuneration
for audit
services
Taxation services
Non-audit services
total
Remuneration
350
350
–
285
635
250
250
–
–
250
Energy Resources of Australia Ltd | Annual Report 2011
75
Auditor’s Independence Declaration
76
Energy Resources of Australia Ltd | Annual Report 2011
Corporate Governance Statement
The Board of ERA considers high standards
of corporate governance to be critical to
business integrity and performance and to
maximise the overall long term return to
shareholders. The Board seeks to ensure that
ERA meets the objectives of its shareholders,
while paying proper regard to the interests of
employees and external stakeholders.
The corporate governance structures and
practices in place at ERA are substantially
in compliance with the 2nd Edition of the
Corporate Governance Principles and
Recommendations with 2010 Amendments
(“Principles”) developed by the Australian
Securities Exchange (“ASX”) Corporate
Governance Council (“Council”).
The Board has considered the Council’s
Principles, and ERA does not comply with the
following recommendations:
• Recommendation 2.1 – there is not a
majority of independent Directors; and
• Recommendation 2.4 – there is no
established nominations committee.
Areas where the corporate governance
practices in place at ERA do not follow
the recommendations set out in the
Council’s Principles arise due to Rio Tinto’s
ownership of 68.4 per cent of the shares
of the Company and the management
direction, services and support provided by
Rio Tinto. As explained further below, the
Board considers that in each case this is
appropriate.
The Corporate Governance section of the
Company’s website (www.energyres.com.au)
sets out the further information required by
the Council’s Principles.
the Board
are designed to ensure that ERA meets
or exceeds the regulatory requirements
governing its operations.
In addition to the matters expressly required
by law to be approved by the Board, the
powers specifically reserved for the Board are
as follows:
(a) confirming the appointment of a Chief
Executive proposed by Rio Tinto and
the terms and conditions of the Chief
Executive’s employment;
(b) appointment of the Chair of the Board and
members of Board Committees;
(c) any matters in excess of the discretions
that it may have delegated to the Chief
Executive and set out in the Schedule
of Matters Reserved for Decision of
Consideration by the Board; and
(d) approval, subject to the Constitution, the
Corporations Act and the ASX Listing
Rules, of each of the following:
(i)
(ii)
the issue of new shares or other
securities in the company;
incurring of debt (other than trade
creditors incurred in the normal
course of business)
(iii) capital expenditure in excess of
$5,000,000;
(iv) the acquisition, divestment or
establishment of any significant
business assets;
Qualification for Board membership is driven
by the principle that the Board’s composition
should reflect the right balance of skills,
knowledge and diversity that the Board
considers will best serve the interests of ERA
and all of its shareholders. Decisions relating
to appointment of Directors are made by the
full Board. Directors appointed by the Board
are required by ERA’s Constitution to submit
themselves for election by shareholders at
the Annual General Meeting following their
appointment. There is no share ownership
qualification for appointment as a Director.
The Board has not established a nominations
committee. The Board recognises that this
does not follow Recommendation 2.4 of the
Council’s Principles. The Board considers
that its existing practices in reviewing director
competencies, Board succession planning,
Board performance evaluation and director
selection and nomination, carried out in
accordance with the Board Charter, are
satisfactory and appropriate given the size
of the Board and ERA’s current ownership
structure.
Non-executive Directors are required to retire
at least every three years in accordance with
ERA’s Constitution, but may offer themselves
for re-election.
(v) changes to the discretions delegated
independence
from the Board;
(vi) the annual operating plan;
(vii) changes to the capital and operating
approval limits of senior management;
and
(viii) the annual report and full-year/half-
year results.
Responsibilities and charter
composition
In carrying out its responsibilities and
powers, the Board at all times recognises
its overriding responsibility to act honestly,
fairly, diligently and in accordance with the
law in serving the interests of the ERA’s
shareholders and employees and the
community.
The Board Charter underpins the strategic
guidance and effective management
oversight provided by the Board, and defines
the division of responsibility between Board
and management by formal delegation and a
system of Board reserve powers.
The Board approves strategy and business
plans and monitors the performance of
ERA against these plans. The Board also
monitors compliance with policies prescribed
by the Board in areas such as health and
safety, environment, business ethics, internal
control and risk management. These policies
The Board of ERA currently consists of six
Directors, five of whom are non-executive.
The Chairman is Dr D Klingner who is
an independent non-executive Director.
Professor H Garnett and Mr J Pegler are
independent non-executive Directors.
Two additional non-executive Directors,
Mr P Taylor and Mr M Coulter, are current
executives of Rio Tinto. Mr R Atkinson is an
executive Director and holds the position of
Chief Executive.
The Board strives to achieve a diversity of
skills, experience and perspective among
its directors. Details of the Directors,
their experience, qualifications and other
appointments are set out on pages 54 to 55.
Details of the independent status of Directors
is outlined in the Independence section
below.
For the purposes of determining Director
independence, the Board considers any
material business relationship which could
interfere, or be perceived to interfere, with the
Director’s independence of judgement, ability
to provide a strong, valuable contribution to
the Board’s deliberations and the Director’s
ability to act in the best interest of ERA and
all shareholders. Where contracts in the
ordinary course of business exist between
ERA and a company in which a Director has
declared an interest, these are reviewed for
materiality to both ERA and the other party to
the contract.
The following may be taken into account
in considering such material business
relationships:
• whether within the last three years the
Director or a close family member has
been a member of executive management
of ERA, employed in a senior position with
a member of the Rio Tinto Group or has
received additional remuneration from the
company or a member of the Rio Tinto
Group;
• whether the Director or a close family
member is, or is associated with, a
substantial shareholder (more than 5 per
cent of the voting shares) in the company
or in a member of the Rio Tinto Group;
Energy Resources of Australia Ltd | Annual Report 2011
77
Corporate Governance Statement
•
•
the Director’s cross directorships of or
significant links with or involvement in
other companies;
the Director’s length of service on the
Board; and
• whether, within the last three years,
the Director or a close family member
has had, either directly or indirectly
and whether as principal, employee
or consultant, a material business
relationship with ERA or with a member
of the Rio Tinto Group, whether as an
auditor, professional adviser, supplier, or
customer (“material” being more than five
per cent of ERA’s or the counterparty’s
consolidated gross revenue per annum).
Professor Garnett and Mr Pegler are
independent non-executive Directors. Dr
Klingner was nominated to the Board by Rio
Tinto in 2004. Dr Klingner was previously an
executive of Rio Tinto, however, a significant
period of time (over seven years) has elapsed
since Dr Klingner ceased employment with
Rio Tinto. The Board is satisfied that Dr
Klingner has no continuing relationship
with Rio Tinto that would interfere with his
independent exercise of judgment and that he
is an independent director.
The Board of Directors does not consist of
a majority of independent Directors. This
does not follow Recommendation 2.1 of the
Council’s Principles. The Board considers it
appropriate that the composition of the Board
recognises Rio Tinto’s 68.4 per
cent shareholding.
All Directors are required to, and do, bring
an independent judgment to bear on Board
decisions and act in accordance with their
statutory duties of good faith and for a proper
purpose, and in the interests of
all shareholders.
All related party transactions, including those
with Rio Tinto, have been determined by the
independent Directors to be in the interests
of ERA.
chairman and chief executive
The Chairman, Dr Klingner, is an independent
non-executive director. Dr Klingner’s other
appointments are set out on page 54. The
Board considers that none of his other
commitments interfere with the discharge of
his duties to ERA.
The Chief Executive is Mr R Atkinson,
who is also a Director. This is consistent
with Recommendation 2.3 of the Council’s
Principles that the Chief Executive and
Chairman be different people.
board meetings
The Board held six scheduled meetings
during 2011, and five unscheduled meetings
to deal with urgent and other issues. In
addition, there were four meetings held in
2011 of subcommittees established by the
Board. The Board meeting attendance details
for Directors in 2011 are set out on page 58.
performance self assessment
In 2011 the Board performed an annual
evaluation of itself that:
(a) considered the performance of the
Directors and the Board and the
adequacy of the Board’s structures and
processes, including the Board Charter;
(b) set out goals and objectives of the Board
for the upcoming year; and
(c) considered whether any improvements
or changes to the Board structures and
processes, including the Board Charter
and Audit Committee Charter, were
necessary or desirable.
The process of evaluation and self
assessment took the form of a questionnaire
completed by each of the Directors. Following
collation by an external consultant, the results
and the adequacy and appropriateness of the
self assessment process were compiled. A
report outlining the results was circulated to
all Directors and discussed at the next Board
meeting, where actions arising were agreed.
independent professional advice
The Board has adopted a procedure for
Directors wishing to seek independent
professional advice at the company’s
expense, in the furtherance of their duties.
The Board recognises that there may be
circumstances in which individual Directors
are entitled to independent professional
advice at the company’s expense, in the
furtherance of their duties, and any Director
may do so by arrangement with the
Company Secretary.
Remuneration
ERA’s Constitution provides that the
aggregate remuneration paid to non-
executive Directors of ERA in any one year
will not exceed $800,000 or such other
amount as may be approved by shareholders
from time to time. At the 2011 Annual
General Meeting, shareholders approved the
2010 Remuneration Report.
During 2011, the Board had not established
a remuneration committee. The Board
recognises that this did not follow
Recommendation 8.1 of the Council’s
Principles. The Board considers that its
existing practices in reviewing and approving
remuneration arrangements, carried out in
accordance with the Board Charter, were
satisfactory and appropriate given the size
of the Board, the ownership by the Rio Tinto
Group of 68.4 per cent of the shares of
the Company and the support provided
by Rio Tinto with respect to executive
remuneration policies and procedures.
The policies and procedures applied by the
Company in 2011 when setting non-executive
director and executive remuneration,
and reviewing and evaluating executive
performance, are summarised on pages 59
to 62 of the Remuneration Report. Executive
performance was reviewed in accordance
with these policies and procedures.
In 2012, the Board established a
Remuneration Committee. The Remuneration
Committee currently comprises three non-
executive independent directors, being Mr
Pegler (Chair), Dr Klingner and Professor
Garnett. A majority of members constitutes
a quorum for a meeting. The Chief
Executive may be invited to attend
Remuneration Committee meetings. Other
executives may also be invited to discuss
or report on particular agenda items.
A standing invitation was issued to all non-
executive directors to attend meetings of the
Remuneration Committee.
The Remuneration Committee Charter
sets out the role and objectives of the
Remuneration Committee. A summary of
the objectives of the Remuneration
Committee is set out on page 59 of the
Remuneration Report. The complete
Remuneration Committee Charter is available
at the Corporate Governance section of
ERA’s website.
audit committee
The Audit Committee is appointed by the
Board and currently comprises three non-
executive independent Directors. Two
Directors constitute a quorum. The present
members of the Audit Committee are
Professor Garnett (Chair), Dr Klingner and
Mr Pegler. The Company’s Chief Financial
Officer, Chief Executive, Legal Counsel and
Company Secretary, the external auditor and
the internal auditors are invited to attend all
meetings.
The Audit Committee Charter sets out the
role and terms of reference of the Audit
Committee and is reviewed regularly.
The Audit Committee Charter is available at
the Corporate Governance section of ERA’s
website.
The Committee provides a formal structure
for reviewing ERA’s financial statements,
accounting policies, control systems, risk
management practices and taxation issues,
and for liaison with the external and internal
78
Energy Resources of Australia Ltd | Annual Report 2011
In accordance with the company’s diversity
policy, ERA has set measurable objectives to
achieve diversity. The objectives for 2011 and
the company’s progress in achieving each
objective is set out below:
In addition to the Company’s Code of
Business Conduct, the Company’s employees
are required to comply with Rio Tinto’s
statement of business practice The Way We
Work, available at Rio Tinto’s website at
www.riotinto.com.
outcome
Policy
implemented in
2011.
The Company has a confidential
whistleblower programme known as ‘Speak-
OUT’. Employees are encouraged to report
any suspicion of unethical or illegal practices.
auditors. The Committee also reviews the
adequacy of internal and external audit
arrangements.
The Committee advises the Board of any
matters that might have a significant impact
on the financial condition of ERA and has the
authority to investigate any matters within
its terms of reference, having full access
to the information and resources of ERA to
fulfil its function. Related party transactions
are considered by the Audit Committee. The
Committee reviews compliance with the
Corporations Act 2001, and the requirements
of the ASX and other regulatory requirements.
The Audit Committee held three scheduled
meetings during 2011. Attendance details of
the 2011 meetings of the Audit Committee,
and the qualifications and experience of the
members, are set out in the Directors’ Report
on pages 58 and 54-55 respectively.
Each year the external auditor submits a
schedule of audit services and fee estimate
to the Audit Committee for consideration and
approval. PricewaterhouseCoopers have
been ERA’s external auditor for a number
of years. Each year, the Audit Committee
reviews the effectiveness of the external
audit process and the independence of the
auditor. Based on its 2011 review, the Audit
Committee was satisfied with the external
audit process and that the external auditor
remained independent. Any work to be
conducted by the external auditor other than
the audit is approved by the Audit Committee.
Details of the fees paid to
PricewaterhouseCoopers during 2011 are
outlines on page 75.
diversity
ERA acknowledges the benefits that flow
from advancing Board and employee
diversity, in particular gender and indigenous
diversity. These benefits include identification
and rectification of gaps in the skills and
experience of directors and employees,
enhanced employee retention, greater
innovation and maximisation of available
talent to achieve corporate goals and
increased financial performance.
Diversity in the context of the company
primarily refers to groups which are
under represented in its workforce.
ERA has a particular focus on the
representation of women and Indigenous
people in its workforce.
ERA’s policy on diversity can be found on
the company’s website at
www.energyres.com.au.
objective
Develop and implement
a Flexible Work
Arrangements Policy
to support employees
personal or family
commitments whilst
continuing in the
workplace.
90% of employees to
undertake workplace
harassment training.
20% Indigenous
employees in the
workforce.
99.6% of
employees
completed this
training.
As at 31
December
2011, 17% of
the company’s
workforce were
indigenous
employees.
Create and implement an
Indigenous Employment
Strategy.
Designed and
implemented in
2011.
Introduced
in 2011 and
ongoing.
Develop a Leader
Coaching programme
that includes
information for leaders
on the parental leave
and flexible work
arrangements policies.
As at 31 December 2011, the proportion of
women employed by ERA was as follows.
Board of directors
Executive committee
and managers
Company
17%
18%
22%
code of business conduct
ERA has a Code of Business Conduct to
be met by all employees and Directors.
All employees are required to maintain
high standards of ethical behaviour in the
execution of their duties and comply with all
applicable laws and regulations in Australia
and in every other country in which the
Company engages in business.
The Code of Business Conduct is reviewed
to ensure it adequately addresses the issues
facing the Company and is available for
inspection on the Corporate Overview section
of the Company’s website at
www.energyres.com.au.
purchase and sale of company
securities
ERA has in place a formal policy that
reinforces to all Directors, officers and
employees the prohibitions against insider
trading. The Share Trading Policy is available
for inspection at the Corporate Governance
section of the Company’s website at
www.energyres.com.au.
In addition, the Rules for dealing in securities
of Rio Tinto, its subsidiary and associated
companies (“Rules for dealing”) apply to
the participation of ERA executives in the
Rio Tinto long term incentive programmes
involving the awarding of Rio Tinto securities
at a future date. Any such grants of shares
and options under the Rio Tinto plans are
subject to and conditional upon compliance
with the terms of the Rules for dealing,
including an express prohibition on hedging
or limiting of exposure to economic risk in
relation to such securities.
Under the ERA Share Trading Policy:
• Directors and senior managers must
advise the Chairman in writing, and
receive approval in writing from the
Chairman, if they intend to purchase or
sell securities in the company. In regard to
his own dealings, the Chairman is required
to notify the Chairperson of the Audit
Committee; and
• no dealings in securities of the company
may take place for the period from the
end of any relevant financial period to the
trading day following announcement of
ERA’s annual results or half year results.
Particulars of the interests held by
Directors are outlined on page 58 of the
Remuneration Report.
Energy Resources of Australia Ltd | Annual Report 2011
79
Corporate Governance Statement
Risk identification and
management
ERA has in place a range of policies and
procedures to manage the risks associated
with its operating activities. These policies
and procedures have been adopted by
the Board, with primary oversight by the
Audit Committee, to ensure that potential
business risks are identified and appropriate
action taken.
The management of risk is an integral part
of the responsibility of both the Board and
management and is carried out through
an integrated risk management assurance
process including an internal audit
programme delivered by the company’s
internal auditors and a detailed internal
control questionnaire process covering all of
ERA’s material business risks.
ERA benefits from the Rio Tinto Group’s
knowledge, policies and practices on risk
management and corporate assurance,
developed to manage Rio Tinto’s diverse
business activities covering a variety of
commodities and operational locations.
Together, these make up a comprehensive
framework and approach to risk analysis and
risk management.
Key material business risks and opportunities
inherent to the company’s operations and
the mining industry include (but are not
necessarily limited to): economic conditions
(and consequent fluctuations in commodity
pricing, exchange rates and costs of finance);
delivery of exploration and development
projects; energy cost and supply; international
regulation of greenhouse gas emissions; ore
reserve estimates; community relationships
and government regulation; water
management; land and resource tenure and
rehabilitation including impacts of climatic
conditions, and costs of operations including
changes to input costs.
The Board has in place a number of systems
to identify and manage business risks.
These include:
•
•
the identification and review of all of the
business risks known to be facing the
company;
the provision of reports and information
by management to the Board, on a
periodic basis, confirming the status
and effectiveness of the plans, controls,
policies and procedures implemented to
manage business risks;
• guidelines for ensuring that capital
expenditure and revenue commitments
exceeding certain approved limits are
placed before the Board for approval;
limits and controls for all financial
exposures, including the use of
derivatives;
•
• A regulatory compliance programme; and
• safety, health and environmental policies
which are supported by a set of standards
and management systems which
recognise the company’s commitment to
achieving high standards of performance
in all its activities in these areas.
The Chief Executive and Chief Financial
Officer give statements, in writing, to the
Board regarding the financial reporting and
operational results being founded on a sound
system of internal compliance and control
and the financial statements giving a true
and fair view of the company’s position and
of the results of the company’s operations.
This statement relies on ERA’s sound system
of risk management and internal compliance
and control which implements
the policies adopted by the Board, and
confirms that ERA’s risk management and
internal compliance and control system is
operating efficiently and effectively in all
material respects.
Each year, the leaders of ERA’s operational
and administrative functions complete an
internal control questionnaire that seeks to
confirm that adequate internal controls are
in place, are operating effectively and are
designed to capture and evaluate failings and
weaknesses, if any exist, and take prompt
action if appropriate.
The results of this process are reviewed
by ERA’s senior leadership, and then
presented by the Chief Executive to the
Audit Committee and the Board as a further
review of ERA’s internal controls. The
Chief Executive then certifies that ERA has
maintained an effective system of internal
compliance and control.
public statements and disclosure
matters
ERA makes full and immediate disclosures to
its shareholders and the market as required
by, and in accordance with, its legal and
regulatory obligations. Established systems
are in place to ensure compliance and
matters that may have a material impact on
the price or value of ERA’s securities are
reported to the market in accordance with the
ASX Listing Rules and the Corporations Act,
2001. ERA’s Continuous Disclosure Policy is
available on the Company’s website at
www.energyres.com.au.
Shareholder communication
ERA recognises the importance of effective
communication with shareholders and
the general investment community. Apart
from ERA’s compliance with its mandatory
continuous disclosure obligations, ERA takes
steps to ensure that its shareholders and
other stakeholders are kept informed.
Full advantage is taken of the annual general
meeting to inform shareholders of current
developments and to give shareholders
the opportunity to ask questions. As
recommended by the Council’s Principles,
PricewaterhouseCoopers, ERA’s external
auditor, attends the Annual General Meeting
and is available to answer shareholder
questions about the conduct of the audit
and the preparation and content of the
auditor’s report. ERA shareholders are also
able to submit written questions regarding
the statutory audit report to the auditor via
the company. Any questions received and
answers provided will be made available to
members at ERA Annual General Meetings.
Shareholders who are unable to attend
meetings are encouraged to appoint a proxy
to vote either as they direct or at
their discretion.
ERA believes that investor seminars,
presentation and briefings on financial and
operational issues, including social and
environmental performance, are valuable
ways of communicating with relevant
professionals, employees and other
interested persons. The Chief Executive
and Chief Financial Officer conduct regular
meetings with the company’s major investors
and analysts, and the company organises
investor briefings to coincide with the release
of half year and full year financial results.
ERA gives equal access to information
disclosed in investor seminars, presentations
and briefings. If any such event is used to
disclose new material, it will, in advance or
simultaneously, be disclosed to the ASX and
available on ERA’s website.
80
Energy Resources of Australia Ltd | Annual Report 2011
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2011
Revenue from continuing operations
Changes in inventories
Purchased materials (uranium oxide)
Materials and consumables used
Employee benefits and contractor expense
Government and other royalties
Commission and shipping expenses
Depreciation and amortisation expenses
Financing costs
Statutory and corporate expenses
Other expenses
Profit (loss) before income tax
Income tax (expense)/benefit
Profit (loss) for the year
Other comprehensive income for the year, net of tax
total comprehensive income for the year
Profit is attributable to:
Owners of Energy Resources of Australia Ltd
total comprehensive income for the year is attributable to:
Owners of Energy Resources of Australia Ltd
earnings per share for profit from continuing operations
attributable to the ordinary equity holders of the company:
Basic earnings per share (cents)
Diluted earnings per share (cents)
earnings per share for profit attributable to the
ordinary equity holders of the company:
Basic earnings per share (cents)
Diluted earnings per share (cents)
consoliDAteD
2011
$’000
667,849
(110,430)
(244,064)
(111,192)
(211,353)
(16,153)
(5,611)
(125,925)
(27,132)
(13,675)
(8,654)
(206,340)
52,741
(153,599)
–
(153,599)
2010
$’000
585,957
31,529
(100,408)
(109,786)
(211,148)
(25,873)
(10,778)
(60,748)
(15,709)
(11,972)
(11,637)
59,427
(12,423)
47,004
–
47,004
(153,599)
47,004
(153,599)
47,004
(48.4)
(48.4)
(48.4)
(48.4)
16.8
16.8
16.8
16.8
notes
3
4
4
4
4
4
5
28
28
28
28
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
Energy Resources of Australia Ltd | Annual Report 2011
81
Consolidated Balance Sheet
As at 31 December 2011
Assets
current assets
Cash and cash equivalents
Trade and other receivables
Current tax assets
Inventories
Other
total current assets
non-current assets
Inventories
Undeveloped properties
Property, plant and equipment
Deferred tax assets
Investment in trust fund
total non-current assets
total assets
liAbilities
current liabilities
Payables
Provisions
total current liabilities
non-current liabilities
Deferred tax liabilities
Provisions
total non-current liabilities
total liabilities
net assets
eQuitY
Contributed equity
Reserves
Retained profits
total equity
notes
consoliDAteD
2011
$’000
2010
$’000
7
8
9
10
11
12
13
18
14
15
16
18
17
19
20
20
632,584
67,200
3,698
126,049
381
829,912
112,801
203,632
741,254
2,154
59,219
1,119,060
187,670
72,850
12,704
138,552
579
412,355
212,118
203,632
539,477
–
55,814
1,011,041
1,948,972
1,423,396
80,238
37,019
117,257
–
543,179
543,179
94,072
27,672
121,744
50,926
299,650
350,576
660,436
472,320
1,288,536
951,076
706,485
390,459
191,592
214,585
391,300
345,191
1,288,536
951,076
The above balance sheet should be read in conjunction with the accompanying notes.
82
Energy Resources of Australia Ltd | Annual Report 2011
Consolidated Statement of Changes in Equity
For the year ended 31 December 2011
consoliDAteD
notes
contRibuteD
eQuitY
$’000
ReseRVes
$’000
RetAineD
eARnings
$’000
balance at 1 January 2010
Profit/(loss) for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity
as owners:
Dividends provided for or paid
Employee share options – value of
employee services
balance at 31 December 2010
Profit/(loss) for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity
as owners:
Contributions of equity
Dividends provided for or paid
Employee share options – value of
employee services
balance at 31 December 2011
6
20
19
6
20
214,585
390,859
–
–
–
–
–
–
–
–
–
–
441
441
214,585
391,300
361,130
47,004
–
47,004
(62,943)
–
(15,939)
345,191
totAl
$’000
966,574
47,004
–
47,004
(62,943)
441
(15,498)
951,076
–
–
–
491,900
–
–
491,900
706,485
–
–
–
–
–
(841)
(841)
390,459
(153,599)
(153,599)
–
–
(153,599)
(153,599)
–
–
–
491,900
–
(841)
(153,599)
191,592
337,460
1,288,536
The above statement of changes in equity should be read in conjunction with the accompanying notes.
Energy Resources of Australia Ltd | Annual Report 2011
83
Consolidated Cash Flow Statement
For the year ended 31 December 2011
consoliDAteD
2011
$’000
2010
$’000
notes
687,817
589,890
(645,447)
(476,085)
(9,368)
33,002
12,127
(2,110)
11,897
54,916
(4,449)
109,356
9,386
(1,742)
(74,877)
42,123
(97,426)
(44,951)
22
74
(97,404)
(44,877)
500,290
(11,986)
(902)
–
487,402
444,914
187,670
–
7
632,584
–
–
(286)
(62,943)
(63,229)
(65,983)
253,672
(19)
187,670
27
6
cAsh floWs fRoM oPeRAting ActiVities
Receipts from customers
(inclusive of goods and services tax)
Payments to suppliers and employees
(inclusive of goods and services tax)
Payments for exploration
Interest received
Financing costs paid
Income taxes (paid)/refunded
net cash inflow from operating activities
cAsh floWs fRoM inVesting ActiVities
Payments for deferred stripping and property, plant and equipment
Proceeds from sale of property, plant and equipment
net cash outflow from investing activities
cAsh floWs fRoM finAncing ActiVities
Proceeds from issue of shares
Share issue transaction costs
Employee share option payments
Dividends paid
net cash (outflow)/inflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
cash and cash equivalents at end of year
The above cash flow statement should be read in conjunction with the accompanying notes.
84
Energy Resources of Australia Ltd | Annual Report 2011
notes to the Consolidated Financial Statements
For the year ended 31 December 2011
1
Summary of
significant
accounting policies
The principal accounting policies adopted
in the preparation of these consolidated
financial statements are set out below. These
policies have been consistently applied to
all the years presented, unless otherwise
stated. The financial statements are for the
consolidated entity consisting of Energy
Resources of Australia Ltd (ERA) and
its subsidiaries.
(a) basis of preparation
This general purpose financial report has
been prepared in accordance with Australian
Accounting Standards, other authoritative
pronouncements of the Australian
Accounting Standards Board, Urgent Issues
Group Interpretations and the Corporations
Act 2001.
(i) Compliance with IFRS
The financial statements of Energy
Resources of Australia Ltd also comply with
International Financial Reporting Standards
(IFRS) as issued by the International
Accounting Standards Board (IASB).
(ii) Historical cost convention
These financial statements have been
prepared under the historical cost convention,
as modified by the revaluation of available for
sale financial assets and financial assets and
liabilities (including derivative instruments) at
fair value through profit or loss.
(iii) Critical accounting
estimates
The presentation of financial statements
in conformity with IFRS requires the use
of certain critical accounting estimates. It
also requires management to exercise its
judgement in the process of applying the
accounting policies of ERA. The areas
involving a higher degree of judgement or
complexity, or areas where assumptions
and estimates are significant to the financial
statements are disclosed in Note 2.
(b) principles of
consolidation
(i) Subsidiaries
The consolidated financial statements
incorporate the assets and liabilities of all
subsidiaries of Energy Resources of Australia
Ltd (referred to as Company or parent
entity) as at 31 December 2011 and the
results of all subsidiaries for the year then
ended. Energy Resources of Australia Ltd
and its subsidiaries together are referred to
in this financial report as the Group or the
consolidated entity.
Subsidiaries are all those entities (including
special purpose entities) over which
the Group has the power to govern the
financial and operating policies, generally
accompanying a shareholding of more than
one half of the voting rights. The existence
and effect of potential voting rights that
are currently exercisable or convertible are
considered when assessing whether the
Group controls another entity.
Subsidiaries are fully consolidated from the
date on which control is transferred to the
Group. They are de-consolidated from the
date that control ceases.
Intercompany transactions, balances
and unrealised gains on transactions
between Group companies are eliminated.
Unrealised losses are also eliminated
unless the transaction provides evidence
of the impairment of the asset transferred.
Accounting policies of subsidiaries have
been changed where necessary to ensure
consistency with the policies adopted by the
Group.
Investments in subsidiaries are accounted for
at cost in the individual financial statements
of ERA.
(c) Revenue recognition
Revenue is measured at the fair value of the
consideration received or receivable. Amounts
disclosed as revenue are net of returns, trade
allowances, rebates and amounts collected
on behalf of third parties.
The Group recognises revenue when the
amount of revenue can be reliably measured,
it is probable that future economic benefits
will flow to the entity and specific criteria
have been met for the Group’s activities as
described below. The amount of revenue is
not considered to be reliably measurable until
all contingencies relating to the sale have
been resolved. The Group bases its estimates
on historical results, taking into consideration
the type of customer, the type of transaction
and the specifics of each arrangement.
(i) Sale of goods
Sales are brought to account when the
products pass from the physical control of
the Company pursuant to an enforceable
contract, when selling prices are known or
can be reasonably estimated and when the
products are in a form that requires no further
treatment by the Company.
In the case where a sale occurs and
immediately after which (part of) the goods
are borrowed back by ERA under a separate
agreement, the revenue is deferred until
repayment of the borrowed goods occurs.
(ii) Rendering of services
Revenue from the rendering of services is
recognised when the service is provided.
(iii) Other revenue/income
Other revenue/income recognised by the
Group includes:
•
Interest income, which is recognised on a
time proportion basis using the effective
interest rate method;
• Rental income, which is recognised on a
straight line basis;
• Net gains on disposal of assets, which is
recognised at the date control of the asset
passes to the acquirer;
• Foreign exchange gains, and
•
Insurance recoveries, which is recognised
on confirmation from the insurer that the
claim payment has been approved.
(d) foreign currency
translation
(i) Functional and presentation
currency
Items included in the financial statements
are measured using the currency of the
primary economic environment in which the
entity operates (“the functional currency”).
The consolidated financial statements are
presented in Australian dollars, which is
ERA’s functional and presentation currency.
Energy Resources of Australia Ltd | Annual Report 2011
85
notes to the Consolidated Financial Statements
(ii) Transactions and balances
(i) Rehabilitation
Foreign currency transactions are translated
into the functional currency using the
exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and
losses resulting from the settlement of such
transactions and from the translation at year
end exchange rates of monetary assets and
liabilities denominated in foreign currencies
are recognised in the income statement,
except when they are deferred in equity as
qualifying cash flow hedges and qualifying
net investment hedges or are attributable
to part of the net investment in a foreign
operation.
ERA is required to rehabilitate the Ranger
Project Area upon cessation of mining
operations. The costs are estimated on
the basis of a closure model, taking into
consideration the technical closure options
available to meet ERA’s obligations and
applying a probability weighting to each
option based on the likelihood of executing
each option. When it is deemed only one
option is available it is assigned a 100%
probability. The cost estimates are calculated
annually during the life of the operation to
reflect known developments, and are subject
to regular reviews.
(e) financing costs
Financing costs (including interest) are
included in the statement of comprehensive
income in the period during which they are
incurred, except where they are included
in the cost of non current assets that are
currently being developed and will take a
substantial period of time to complete. The
borrowing costs included in the cost of such
developments are those costs that would
have been avoided if the expenditure on the
development had not been made.
Once the asset is ready for use, the
capitalised borrowing costs are depreciated
as a part of the carrying amount of the
related asset.
The capitalisation rate used to determine the
amount of borrowing costs to be capitalised
is the weighted average interest rate
applicable to the Company’s outstanding
borrowings during the year.
(f) provisions
Provisions are recognised when the Group
has a present legal or constructive obligation
as a result of past events, it is probable that
an outflow of resources will be required to
settle the obligation and the amount has
been reliably estimated. Provisions are not
recognised for future operating losses.
Provisions are measured at the present
value of management’s best estimate of the
expenditure, adjusted for risk, required to
settle the present obligation at the balance
sheet date. The discount rate used to
determine the present value reflects current
market assessments of the time value of
money. The increase in the provision due to
the passage of time is recognised as interest
expense.
The amortisation or unwinding of the
discount applied in establishing the net
present value of provisions is charged
to the profit and loss account in each
accounting period. The amortisation of the
discount is shown as a financing cost. Other
movements in the provision for closure and
restoration costs, including those resulting
from new disturbance, updated cost
estimates, changes to lives of operations
and revisions to discount rates are
capitalised within fixed assets. These costs
are then depreciated on a unit of production
basis over the life of the reserves.
Where rehabilitation is conducted
systematically over the life of the operation,
rather than at the time of closure, provision
is made for the outstanding continuous
rehabilitation work at each balance date. All
costs of continuous rehabilitation work are
charged to the provision as incurred.
Separately, ERA is required to maintain with
the Commonwealth Government the Ranger
Rehabilitation Trust Fund (“trust fund”),
to provide security against the estimated
costs of closing and rehabilitating the mine
immediately (rather than upon the planned
cessation of mining operations). Each year,
ERA is required to prepare and submit to
the Commonwealth Government an annual
plan of rehabilitation. Once accepted by the
Commonwealth Government, the annual
plan is then independently assessed and
costed and the amount to be provided by
ERA, in the trust fund, is then determined.
The trust fund includes both cash and
financial guarantees. The cash portion is
shown as an investment on the balance
sheet (note 14), and interest received by the
trust fund is shown as interest income.
ERA is required to rehabilitate the Jabiluka
Mineral Lease upon cessation of operations
to a standard specified by the Authorisation
to Operate issued by the Northern Territory
Government. The estimated cost of
rehabilitation is currently secured by a bank
guarantee and fully provided for in the
financial statements.
(g) income tax
Income tax expense for the period is the
tax payable on the current period’s taxable
income based on the applicable income
tax rate adjusted by temporary differences
between the tax bases of assets and
liabilities and their carrying amounts in the
financial statements, and to unused tax
losses.
Deferred income tax is provided in full, using
the liability method, on temporary differences
arising between the tax bases of assets and
liabilities and their carrying amounts in the
consolidated financial statements. However,
the deferred income tax is not accounted
for if it arises from initial recognition of an
asset or liability in a transaction other than a
business combination that at the time of the
transaction affects neither accounting nor
taxable profit nor loss. Deferred income tax
is determined using tax rates (and laws) that
have been enacted or substantially enacted
by the reporting date and are expected to
apply when the related deferred income tax
asset is realised or the deferred income tax
liability is settled.
Deferred tax assets are recognised for
deductible temporary differences and
unused tax losses only if it is probable that
future taxable amounts will be available
to utilise those temporary differences and
losses.
Deferred tax liabilities and assets are
not recognised for temporary differences
between the carrying amount and tax bases
of investments in controlled entities where
the parent entity is able to control the timing
of the reversal of the temporary differences
and it is probable that the differences will not
reverse in the foreseeable future.
Deferred tax assets and liabilities are offset
when there is a legally enforceable right to
offset current tax assets and liabilities and
when the deferred tax balances relate to the
same taxation authority. Current tax assets
and tax liabilities are offset where the entity
has a legally enforceable right to offset and
intends either to settle on a net basis, or
to realise the asset and settle the liability
simultaneously.
Current and deferred tax balances
attributable to amounts recognised directly in
equity are also recognised directly in equity.
86
Energy Resources of Australia Ltd | Annual Report 2011
(i) Tax consolidation
legislation
Energy Resources of Australia Ltd and its
wholly owned Australian controlled entities
have implemented the tax consolidation
legislation as at 31 December 2005
and have agreements governing these
relationships for tax purposes in place.
The head entity, Energy Resources of
Australia Ltd, and the controlled entities
in the tax consolidated group account for
their own current and deferred tax amounts.
These tax amounts are measured as if
each entity in the tax consolidated group
continues to be a stand alone taxpayer in its
own right.
In addition to its own current and deferred
tax amounts, Energy Resources of Australia
Ltd also recognises the current tax liabilities
(or assets) and the deferred tax assets
arising from unused tax losses and unused
tax credits assumed from controlled entities
in the tax consolidated group.
Assets or liabilities arising with the tax
consolidated entities are recognised as
amounts receivable from or payable to other
entities in the Group.
Any difference between the amounts
assumed and amounts receivable or
payable under the tax funding agreement
are recognised as a contribution to
(or distribution from) wholly owned tax
consolidated entities.
(h) trade and other
receivables
Trade receivables are normally settled within
45 days and are carried at amounts due.
The collectability of trade receivables is
reviewed on an ongoing basis and specific
provisions are made for any doubtful
amounts. Receivables which are known to
be uncollectible are written off.
Other receivables relate to transactions
outside the usual operating activities of the
Group and are predominately concerned
with rental receipts from employees and
businesses located within the Jabiru
township. These ongoing activities are
expected to be settled during the 12
months subsequent to balance date but are
assessed regularly and impaired accordingly.
(i) inventories
Inventories, other than stores, are carried at
the lower of cost and net realisable value.
Net realisable value is determined based
on estimated future sales prices, exchange
rates and capital and production costs,
including transport.
Inventory is valued using the weighted
average cost method and includes both fixed
and variable production costs as well as
cash and non-cash charges.
Stockpiles represent ore that has been
extracted and is available for further
processing. If there is significant uncertainty
as to when the stockpiled ore will be
processed it is expensed as incurred. Where
the future processing of this ore can be
predicted with confidence, eg because it
exceeds the mine’s cut off grade, it is valued
at the lower of cost and net realisable value.
If the ore will not be processed within 12
months after the balance sheet date it is
included within non-current assets and
net realisable value is calculated on a
discounted cash flow basis.
Work in progress inventory includes ore
stockpiles and other partly processed
material. Quantities are assessed primarily
through surveys and assays.
Stores are valued at cost or net realisable
value where applicable and are impaired
accordingly to take into account
obsolescence.
For inventory management purposes the
Company may enter into uranium loans as
a lending or receiving party. These loans are
entered into for logistical purposes and are
repaid from the Company’s inventory. The
uranium loans do not meet the definition of
a financial liability and are recorded net of
inventory.
(j) impairment of assets
Assets that have an indefinite useful life
and intangible assets that are not yet
available for use are tested annually for
impairment or more frequently if events
or changes in circumstances indicate that
they might be impaired. Other assets are
tested for impairment whenever events or
changes in circumstances indicate that the
carrying amount may not be recoverable.
An impairment loss is recognised for the
amount by which the asset’s carrying
amount exceeds its recoverable amount.
The recoverable amount is the higher of
an asset’s fair value less cost to sell and
value in use. For the purposes of assessing
impairment, assets are grouped at the
lowest levels for which there are separately
identifiable cash flows (cash generating
units).
Fair value is determined as the amount that
would be obtained from the sale of the asset
in an arm’s length transaction. The value
in use is determined using a discount rate,
adjusted for risk, appropriate to the asset’s
inherent risks.
(k) property, plant and
equipment
(i) Acquisition
Items of property, plant and equipment are
recorded at historical cost and, except for
land, are depreciated as outlined below.
Historical cost includes expenditure that is
directly attributable to the acquisition of the
items. Subsequent costs are included in
the asset’s carrying amount or recognised
as a separate asset, as appropriate, only
when it is probable that future economic
benefits associated with the item will flow to
the Group and the cost of the item can be
measured reliably. Repairs and maintenance
are charged to the income statement during
the period in which they are incurred.
(ii) Depreciation and
amortisation
Depreciation of plant and equipment is
provided for as follows:
(a) individual assets that have a life equal to
or longer than the estimated remaining
life of the Ranger mine are depreciated
on a unit of production basis over the life
of the reserves; and
(b) each other asset is depreciated over its
estimated operating life on a straight line
basis.
The following indicates the depreciation
method for buildings and plant and
equipment on which the depreciation
charges are based:
• Buildings – units of production over the
life of reserves
• Plant and equipment* – units of
production over the life of reserves
Energy Resources of Australia Ltd | Annual Report 2011
87
notes to the Consolidated Financial Statements
*Some of these assets are depreciated on a
straight line basis over their useful operating life
which is less than the life of the Ranger mine. See
below for the estimated useful lives.
• Office equipment: computers – three
years
• Office equipment: general – five years
• Plant and equipment – five years
• Furniture & fittings – ten years
• Motor vehicles – five years
Assets are depreciated from the date
of acquisition or, in respect of internally
constructed assets, from the time an asset is
completed and held ready for use.
(iii) Leases
Leases in which a significant portion of
the risks and rewards of ownership are
not transferred to the Group as lessee are
classified as operating leases (Note 22).
Payments made under operating leases (net
of any incentives received from the lessor)
are charged to the income statement on
a straight-line basis over the period of the
lease.
(iv) Mine properties
Mine properties, consisting principally of
Ranger Project rights, are amortised on
a unit of production basis over the life of
the economically recoverable resources of
Ranger.
(v) Deferred stripping costs
Stripping costs incurred in the development
of a mine before production commences are
capitalised as part of the cost of constructing
the mine and subsequently amortised
over the life of the mine on a units of
production basis.
Stripping costs incurred during the
production stage of mining operations
are deferred where they are separately
identifiable and do not form part of normal
mining activities. These costs are deferred
and amortised over the period in which the
associated ore is produced.
(l) exploration
and evaluation
expenditure
Exploration and evaluation expenditure
comprises costs which are directly
attributable to:
•
researching and analysing existing
exploration data;
• conducting geological studies,
exploratory drilling and sampling;
• examining and testing extraction and
treatment methods; and
• compiling pre-feasibility and feasibility
studies.
Exploration and evaluation expenditure
also includes the costs incurred in acquiring
mineral rights, the entry premiums paid
to gain access to areas of interest and
amounts payable to third parties to acquire
interests in existing projects.
Capitalisation of exploration expenditure
commences when there is a high degree
of confidence in the project’s viability and
hence it is probable that future economic
benefits will flow to ERA. Capitalised
exploration expenditure is reviewed for
impairment at each balance sheet date.
Subsequent recovery of the resulting
carrying value depends on successful
development of the area of interest or
sale of the project. If a project does not
prove viable, all unrecoverable costs
associated with the project and the related
impairment provisions are written off. Any
impairment provisions raised in previous
years are reassessed if there is a change
in circumstances which indicates that they
may no longer be required, for example if
it is decided to proceed with development.
If the project proceeds to development,
the amounts included within intangible
assets are transferred to property, plant and
equipment.
(i) Undeveloped properties
Undeveloped properties are mineral
concessions where the intention is to
develop and go into production in due
course. The carrying values of these assets
are reviewed annually by management and
the results of these reviews are reported to
the Board and Audit Committee. Impairment
is assessed based on a status report
regarding ERA’s intentions for development
of the undeveloped property and is reviewed
using the fair value less cost to sell method.
(m) goods and Services
tax (gSt)
Revenues, expenses and assets are
recognised net of the amount of associated
GST, unless the GST incurred is not
recoverable from the taxation authority. In
this case it is recognised as part of the cost
of acquisition of the asset or as part of the
expense.
Receivables and payables are stated
inclusive of the amount of GST receivable
or payable. The net amount of GST
recoverable from, or payable to, the taxation
authority is included with other receivables
or payables in the balance sheet.
Cash flows are presented on a gross
basis. The GST components of cash flows
arising from investing or financing activities
which are recoverable from, or payable
to the taxation authority, are presented as
operating cash flow.
(n) trade and other
payables
Liabilities are recognised for amounts to be
paid in the future for goods and services
received prior to the end of the financial
year, whether or not billed to the Company
or consolidated entity. Trade accounts
payable are normally settled within 60 days.
(o) borrowings
Borrowings are initially recognised at fair
value, net of transaction costs incurred.
Borrowings are subsequently measured
at amortised cost. Any difference between
the proceeds (net of transaction costs) and
the redemption amount is recognised in
the income statement over the period of
the borrowings using the effective interest
method.
Borrowings are classified as current liabilities
unless the Group has an unconditional right
to defer settlement of the liability for at least
12 months after the balance sheet date.
(p) derivatives
Derivatives are initially recognised at fair
value on the date a derivative contract
is entered into and are subsequently
re-measured to their fair value. The method
of recognising the resulting gain or loss
depends on whether the derivative is
designated as a hedging instrument, and if
so, the nature of the item being hedged. The
Company designates derivatives as hedges
against highly probable forecast transactions
(cash flow hedges).
The Company documents at the inception
of the transaction the relationship between
hedging instruments and hedged items,
as well as its risk management objective
88
Energy Resources of Australia Ltd | Annual Report 2011
and strategy for undertaking various hedge
transactions. The Company also documents
its assessment, both at hedge inception
and on an ongoing basis, of whether
the derivatives that are used in hedging
transactions have been and will continue to
be highly effective.
The effective portion of changes in the fair
value is recognised in equity in the hedging
reserve. The gain or loss relating to the
ineffective portion is recognised immediately
in the statement of comprehensive income.
Amounts accumulated in equity are recycled
in the statement of comprehensive income in
the periods when the hedged item will affect
profit or loss (for instance when the forecast
sale that is hedged takes place). When a
forecast transaction is no longer expected to
occur the cumulative gain or loss that was
reported in equity is immediately transferred
to the statement of comprehensive income.
Derivative financial instruments are not held
for speculative purposes.
(q) employee
entitlements
(i) Wages and salaries,
annual leave and sick
leave
The liability for employee entitlements to
wages and salaries represents the amount
which the consolidated entity has a present
obligation to pay resulting from employees’
services provided up to the reporting date.
A provision exists for annual leave and
accumulating sick leave as it is earned by
employees and is measured at the amount
expected to be paid when it is settled and
includes all related on costs. Liabilities for
non-accumulating sick leave are recognised
when the leave is taken and measured at
the rates paid or payable.
(ii) Long service leave
The liability for long service leave expected
to be settled within 12 months of the
reporting date is recognised in the provision
of employee benefits and is measured in
accordance with (i) above. The liability for
long service leave expected to be settled
more than 12 months from the reporting
date is measured as the present value of
expected future payments to be made in
respect of services provided by employees
up to the reporting date. Consideration
is given to the expected future wage and
salary levels, experience of employee
departures and periods of service.
Expected future payments are discounted
using the rates attaching to Commonwealth
Government securities at the reporting
date, which most closely match the terms of
maturity of the related liabilities.
(iii) Superannuation plan
Employees of the Company are entitled to
benefits on retirement, disability or death
from their membership of the Rio Tinto
Staff Superannuation Fund (“The Fund”).
The Fund has both a defined benefit and a
defined contribution section. Contributions
to the defined contribution superannuation
plans are expensed in the income statement
when incurred.
The defined benefits section currently has
only two members from Energy Resources
of Australia Ltd and as such any surplus or
deficit of plan assets are disclosed in the
sponsoring entity, Rio Tinto Services Limited.
(r) Segment reporting
Management has determined the operating
segments based on the reports reviewed by
the Chief Executive, used to make strategic
decisions. The Chief Executive considers the
business from a product perspective.
(s) cash and cash
equivalents
For the purposes of the statement of
cash flows, cash includes cash on hand
and deposits held at call, net of any bank
overdrafts.
(t) contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the
issue of new shares or options are shown
in equity as a deduction, net of tax, from the
proceeds.
Incremental costs directly attributable to
the issue of new shares or options for the
acquisition of a business are not included
in the cost of the acquisition as part of the
purchase consideration.
(u) earnings per share
(i) Basic earnings per share
Basic earnings per share is determined
by dividing net profit after income tax
attributable to members of the Company,
excluding any costs of servicing equity
other than ordinary shares, by the weighted
average number of ordinary shares
outstanding during the financial year,
adjusted for bonus elements in ordinary
shares issued during the year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the
figures used in the determination of basic
earnings per share to take into account the
after income tax effect of interest and other
financing costs associated with dilutive
potential ordinary shares and the weighted
average number of shares assumed to have
been issued for no consideration in relation
to dilutive potential ordinary shares.
(v) Rounding of amounts
The Company is of a kind referred to
in Class Order 98/0100, issued by the
Australian Securities and Investments
Commission, relating to the ‘rounding off’ of
amounts in the financial report. Amounts in
the financial report have been ‘rounded off’
in accordance with that Class Order to the
nearest thousand dollars, or in certain cases,
to the nearest dollar.
(w) Share based
payments
The fair value of cash settled share plans
is recognised as a liability over the vesting
period of the awards. Movements in that
liability between accounting dates are
recognised as an expense. The grant date
fair value of the awards is taken to be the
market value of the shares at the date of
award reduced by a factor for anticipated
relative Total Shareholder Return (‘TSR’)
performance. Fair values are subsequently
re-measured at each accounting date to
reflect the number of awards expected to vest
based on the current and anticipated TSR
performance. If any awards are ultimately
settled in shares, the liability is transferred
direct to equity as the consideration for the
equity instruments issued.
Energy Resources of Australia Ltd | Annual Report 2011
89
notes to the Consolidated Financial Statements
Equity settled share plans are settled either
by the issue of shares by the relevant parent
Company, by the purchase of shares on
market or by the use of shares previously
acquired as part of a share buyback. The fair
value of the share plans is recognised as an
expense over the expected vesting period
with a corresponding entry to other reserves.
If the cost of shares acquired to satisfy
the plans exceeds the expense charged,
the excess is taken to the appropriate
reserve. The fair value of the share plans
is determined at the date of grant, taking
into account any market based vesting
conditions attached to the award (e.g. Total
Shareholder Return). The Group uses fair
values provided by independent actuaries
calculated using a lattice based option
valuation model.
Non-market based vesting conditions (e.g.
earnings per share targets) are taken into
account in estimating the number of awards
likely to vest. The estimate of the number
of awards likely to vest is reviewed at each
balance sheet date up to the vesting date, at
which point the estimate is adjusted to reflect
the actual awards issued. No adjustment
is made after the vesting date even if the
awards are forfeited or not exercised.
Further information about the treatment of
individual share based payment plans is
provided in Note 32.
(x) dividends
Provision is made for the amount of any
dividend declared, determined or publicly
recommended by the Directors on or
before the end of the financial year but not
distributed at balance date.
(y) parent entity financial
information
The financial information for the parent
entity, Energy Resources of Australia
Ltd (ERA), disclosed in Note 30 has
been prepared on the same basis as the
consolidated financial statements, except as
set out below.
(i) Financial guarantees
Where the parent entity has provided
financial guarantees in relation to
loans and payables of subsidiaries for
no compensation, the fair values of
these guarantees are accounted for as
contributions and recognised as part of the
cost of the investment.
(z) new accounting
standards and
interpretations
Certain new accounting standards and
interpretations have been published that
are not mandatory for 31 December 2011
reporting periods. The Group’s assessment
of the impact of these new standards and
interpretations is set out below.
(i) AASB 9 Financial Instruments, AASB
2009-11 Amendments to Australian
Accounting Standards arising from AASB
9 and AASB 2010-7 Amendments to
Australian Accounting Standards arising
from AASB 9 (December 2010) (effective
from 1 January 2013)
AASB9 Financial Instruments addresses
the classification, measurement and
derecognition of financial assets and
financial liabilities. The standard is not
applicable until 1 January 2013 but is
available for early adoption. There will be
no impact on the group’s accounting for
financial assets or liabilities.
(ii) AASB 1053 Application of Tiers of
Australian Accounting Standards and
AASB 2010-2 Amendments to Australian
Accounting Standards arising from Reduces
Disclosure Requirements (effective from
1 July 2013)
On 30 June 2010 the AASB officially
introduced a revised differential reporting
framework in Australia. Under this
framework, a two-tier differential reporting
regime applies to all entities that prepare
general purpose financial statements.
Energy Resources of Australia Ltd is listed
on the ASX and is not eligible to adopt the
new Australian Accounting Standards -
Reduced Disclosure Requirements. The two
standards will therefore have no impact on
the financial statements of the entity.
(iii) AASB 2010-8 Amendments to Australian
Accounting Standards - Deferred Tax:
Recovery of Underlying Assets (effective
from 1 January 2012)
In December 2010, the AASB amended
AASB 112 Income Taxes to provide a
practical approach for measuring deferred
tax liabilities and deferred tax assets when
investment property is measured using the
fair value model. AASB 112 requires the
measurement of deferred tax assets or
liabilities to reflect the tax consequences
that would follow from the way management
expects to recover or settle the carrying
amount of the relevant assets or liabilities,
that is through use or through sale.
The amendment introduces a rebuttable
presumption that investment property which
is measured at fair value is recovered
entirely by sale. This is unlikely to have any
affect on the group.
2
critical accounting
estimates and
judgements
Estimates and judgements are continually
evaluated and are based on historical
experience and other factors, including
expectations of future events that may have
a financial impact on the entity and that
are believed to be reasonable under the
circumstances.
The Group makes estimates and
assumptions concerning the future. The
resulting accounting estimates will, by
definition, seldom equal the related actual
results. The estimates and assumptions that
have a significant risk of causing a material
adjustment to the carrying amounts of
assets and liabilities within the next financial
year are discussed below.
(a) Rehabilitation
provision
The calculation of the rehabilitation provision
relies on estimates of costs and their timing
required to rehabilitate and restore disturbed
land to original condition. The costs are
estimated on the basis of a closure model,
taking into account consideration of the
technical closure options available to meet
ERA’s obligations. The cost estimates are
reviewed annually during the life of the
operation to reflect known developments.
A detailed desktop review was conducted
prior to 30 June 2011 and has resulted in
some modifications to the preferred
closure plan. The provision for rehabilitation
costs represents the net present cost at
31 December 2011 of the preferred
closure plan.
ERA is undertaking detailed studies to
further refine its understanding of the
capital and operating costs involved in full
remediation of the Ranger Project Area. The
ultimate cost of rehabilitation is uncertain
and can vary in response to many factors
such as legal requirements, technological
change and experience at other sites. To
the extent that ERA’s future estimates of
the rehabilitation costs are different to those
currently estimated, ERA will adjust the
provision for rehabilitation costs to reflect
additional knowledge obtained.
90
Energy Resources of Australia Ltd | Annual Report 2011
This includes assumptions around
regulatory or stakeholder approvals for
further development potential. Should
this not occur, it is likely that the Ranger
CGU would face impairment.
If the carrying values of the assets
are assessed to be impaired, the
impairment would be charged against
the income statement.
(b) taxation
The Group has recognised certain deferred
tax assets for deductible temporary
differences and recoverable losses carried
forward. In recognising these deferred
tax assets assumptions have been made
regarding the Group’s ability to generate
future taxable profits.
Judgement is required in regard to the
application of income tax legislation. There
is an inherent risk and uncertainty in
applying these judgements and a possibility
that changes in legislation will impact the
carrying amount of deferred tax assets and
deferred tax liabilities recognised on the
balance sheet.
(c) determination of
ore reserves and
resources
ERA estimates its ore reserves and
resources based on information compiled
by Competent Persons as defined in
accordance with the Australasian Code for
Reporting of Exploration Results, Mineral
Resources and Ore Reserves of December
2004 (the JORC code).
There are numerous uncertainties inherent
in estimating ore reserves and assumptions
that are valid at the time of estimation may
change significantly when new information
becomes available.
Changes in the forecast prices of
commodities, exchange rates, production
costs or recovery rates may change the
economic status of reserves and may,
ultimately, result in the reserves being
restated. Such changes in reserves could
impact on depreciation and amortisation
rates, asset carrying values and provisions
for rehabilitation. A full statement of ERA
Ore Reserves and Mineral Resources as at
31 December 2011 is on page 18 and 19.
(d) impairment
ERA’s balance sheet contains items
that have been subject to impairment
testing during the year, as a result of ERA
identifying specific trigger events. These
trigger events include record rainfall in
December 2011 and continued volatility
in ERA’s share price, resulting in market
capitalisation (Australian Securities
Exchange) being below net assets at year
end. ERA has identified that there are
two cash generating units (CGU), being
the Ranger CGU and Jabiluka CGU. The
carrying amount of the Ranger CGU and
Jabiluka CGU at the end of the year were
$417 million and $180 million respectively.
Further details on the recoverability of the
Jabiluka CGU are provided at note 12.
Following the completion of testing ERA has
concluded that the recoverable amounts
exceed the carrying values and that there is
no impairment.
In assessing impairment, estimates are
required of resource and development
potential, future market prices, discount rate,
exchange rates and capital and production
costs in order to assist in the judgment of
the recoverable amount.
ERA makes estimates and assumptions
in regard to impairment which are subject
to risk and uncertainly. Changes in
circumstances may affect these estimates
and the recoverable amount.
ERA assesses the recoverable amount of
CGUs based on the greater of fair value less
costs to sell or value in use. The fair value
less costs to sell for the Ranger Project Area
has been determined based on discounted
cash flow modelling of a set of probability
weighed strategic outcomes.
The recoverable amount is particularly
sensitive to key assumptions including:
uranium oxide prices (long term and
spot), Australian / US dollar exchange
rate, discount rate and exploration and
development potential.
ERA has conducted a range of sensitivities
on the recoverable amount. These relate
to movements in the long term economic
assumptions that ERA consider reasonably
possible to occur within the next
financial year:
•
A 5% strengthening in the long term
Australian/US dollar exchange rate
(applied from 2016) would decrease
the recoverable amount by around
$80 million and would not likely result
in impairment.
•
A 5% decline in the long term uranium
price (applied from 2016) would
decrease the recoverable amount by
around $88 million and would not likely
result in impairment.
ERA has announced that it will progress
with the Ranger 3 Deeps exploration
decline and has assigned a high probability
that it will progress into production phase
at the successful completion of the
exploration programme. Should this not
occur it is likely that the Ranger CGU
would face impairment.
There are several variables in ERA’s
assessment of the most likely
development programme and its
assessment of recoverable amount.
Energy Resources of Australia Ltd | Annual Report 2011
91
notes to the Consolidated Financial Statements
3 Revenue
ReVenue fRoM continuing oPeRAtions
sales revenue
Sale of goods
Rendering of services
total sales revenue
other revenue
Interest received/receivable, other parties
Rent received
total other revenue
2011
$’000
2010
$’000
649,213
2,168
651,381
15,533
935
16,468
572,036
247
572,283
12,699
975
13,674
total revenue from continuing operations
667,849
585,957
92
Energy Resources of Australia Ltd | Annual Report 2011
4 expenses
PRofit befoRe incoMe tAx incluDes
the folloWing sPecific exPenses:
cost of sales
Produced product (uranium oxide)
Purchased product (uranium oxide)
total cost of sales
Depreciation
Mine land and buildings
Plant and equipment
total depreciation
Amortisation
Mine properties
Rehabilitation asset
total amortisation
total depreciation and amortisation expenses
government and other royalties
Royalty payments
Payments to Aboriginal interests
total government and other royalties
financing costs
Related parties
Other parties
Unwinding of discount (rehabilitation provision)
total financing costs
Doubtful debts expense
Net loss on disposal of property, plant & equipment
Net exchange loss
Rental expense relating to operating leases
Research and development expenditure
Defined contribution superannuation expense
notes
2011
$’000
2010
$’000
268,014
216,659
484,673
3,974
56,219
60,193
14,420
51,312
65,732
125,925
3,671
12,482
16,153
–
2,110
25,022
27,132
(2,736)
713
855
10,027
22
330,590
70,659
401,249
3,328
44,193
47,521
10,398
2,829
13,227
60,748
5,880
19,993
25,873
5
1,737
13,967
15,709
218
8,277
301
3,480
52,364
64,775
6,186
5,754
Energy Resources of Australia Ltd | Annual Report 2011
93
notes to the Consolidated Financial Statements
5
income tax expense (benefit)
incoMe tAx exPense (benefit)
Current tax
Deferred tax
Under/(over) provided in prior years
income tax expense (benefit)
Deferred income tax (revenue)/expense included
in income tax expense comprises:
Decrease/(increase) in deferred tax assets (Note 18b)
(Decrease)/increase in deferred tax liabilities (Note 18a)
Deferred tax
ReconciliAtion of incoMe tAx exPense
to PRiMA fAcie tAx PAYAble
Operating profit before income tax
Tax at the Australian tax rate of 30% (2010 – 30%)
Tax effect of amounts which are not deductible/(taxable)
in calculating taxable income:
R&D tax concession
Amortisation
Other items
Income tax under/(over) provided in prior years
income tax expense (benefit)
AMounts RecogniseD DiRectlY in eQuitY
Aggregate current and deferred tax arising in the
reporting period and not recognised in net profit or loss
but directly debited or (credited) to equity
Net deferred tax asset (Notes 18b)
Tax consolidation legislation
2011
$’000
–
(52,042)
(699)
(52,741)
(30,659)
(21,383)
(52,042)
(206,340)
(61,902)
(3,927)
15,394
(1,607)
(699)
(52,741)
2010
$’000
12,806
(47)
(336)
12,423
(5,017)
4,970
(47)
59,427
17,828
(4,858)
849
(1,060)
(336)
12,423
(3,229)
(128)
Energy Resources of Australia Ltd and its wholly-owned Australian controlled entities implemented the tax consolidation legislation as at 31
December 2005. The accounting policy in relation to this legislation is set out in Note 1(g).
94
Energy Resources of Australia Ltd | Annual Report 2011
6 dividends
oRDinARY shARes
final dividend:
The directors did not declare a final dividend for the year ended 31 December 2010 (2009 - 25 cents per
fully paid share paid on 5 March 2010, fully franked based on tax paid @ 30% – 7.5 cents.)
interim dividend:
The directors have not declared an interim dividend for the year ended 31 December 2011 (2010 – 8 cents
fully franked per fully paid share paid on 13 August 2010)
total dividends provided for or paid
DiViDenDs not RecogniseD At YeAR enD
The directors have not declared a final dividend for the year ended 31 December 2011 (2010 – nil).
The aggregate amount of the final dividend payable out of retained profits
at 31 December 2011 but not recognised as a liability is
DiViDenD fRAnKing Account
Franking credits available for subsequent financial years
based on a tax rate of 30% (2010 – 30%)
2011
$’000
2010
$’000
–
–
–
–
47,684
15,259
62,943
–
2011
$’000
2010
$’000
234,086
236,976
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for franking credits that will arise
from the payment of the amount of the provision for income tax.
The ability to utilise the franking account credits is dependent upon there being sufficient available profits to declare dividends.
Energy Resources of Australia Ltd | Annual Report 2011
95
notes to the Consolidated Financial Statements
7 cash and cash equivalents
cuRRent
Cash at bank and in hand
Deposits at call
cash and cash equivalents
Cash at bank/Deposits at call
Cash assets and deposits bear floating interest rates between 0.00% and 4.7% (2010 – 0.00% and 5.28%).
Interest rate risk exposure
The Group’s and the parent entity’s exposure to interest rate risk is discussed in Note 29.
8 trade and other receivables
cuRRent
Trade debtors
Other debtors
Provision for impairment
net other debtors
trade and other receivables
Impairment of receivables
2011
$’000
2010
$’000
3,627
628,957
632,584
1,095
186,575
187,670
2011
$’000
2010
$’000
60,038
69,164
7,190
(28)
7,162
6,388
(2,702)
3,686
67,200
72,850
No trade receivables are past due. There is no impairment of trade receivables.
The impairment of other receivables relate to transactions outside the usual operating activities of the Group and are predominately concerned
with receipts from employees and businesses operating within the Jabiru township. These ongoing activities are expected to be settled during
the 12 months subsequent to balance date.
Foreign exchange and interest rate risk
ERA operates internationally but is primarily exposed to foreign exchange risk arising from currency exposures with respect to the US dollar.
A summarised analysis of the sensitivity of trade and other receivables to foreign exchange and interest rate risk can be found in Note 29.
Fair value and credit risk
Due to the short-term nature of these receivables, their carrying amount approximates their fair value.
The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables mentioned above.
The Group does not hold any collateral as security. Refer to Note 29 for more information on the financial risk management policy of the Group.
96
Energy Resources of Australia Ltd | Annual Report 2011
9
inventories – current
Stores and spares
Ore stockpiles at cost
Work in progress at cost
Finished product U3O8 at cost
total current inventory
Inventory expense
2011
$’000
23,783
34,993
3,213
64,060
2010
$’000
25,174
24,629
5,383
83,366
126,049
138,552
Obsolescence of inventory provided for and recognised as an expense during the year ended 31 December 2011 amounted to $190,294 (2010:
$1,412,043).
10 other assets
Prepayments
11 inventories – non-current
Ore stockpiles at cost
Inventory expense
2011
$’000
381
2010
$’000
579
2011
$’000
112,801
2010
$’000
212,118
During the year some low grade stockpiled ore was recognised as an expense of $142,060,800 ($99,442,560 post tax). This related to the
reclassification of some low grade stockpiled ore from Reserves to Resources as a result of the decision of the ERA Board to not progress with
the Ranger Heap Leach Facility. This is shown in the change in inventories line of the Statement of Comprehensive Income.
Energy Resources of Australia Ltd | Annual Report 2011
97
notes to the Consolidated Financial Statements
12 undeveloped properties
Jabiluka: long-term care and maintenance development project
Balance brought forward
Amount capitalised during the year
total undeveloped properties
2011
$’000
2010
$’000
203,632
203,632
–
–
203,632
203,632
Undeveloped properties are considered an asset not yet ready for use. The recoverable amount of the undeveloped properties is determined
using the fair value less cost to sell method.
Fair value less cost to sell has been determined using a discounted cash flow model. Key assumptions to which the model is most sensitive
include:
• Uranium prices
• Foreign exchange rates
• Production and capital costs
• Discount rate
• Mineral reserves and resources
In determining the value assigned to each key assumption, management has used external sources of information and has utilised the expertise
of external consultants to validate entity–specific assumptions such as costs, production techniques and mineral reserves.
Further, the Company’s cash flow forecasts are based on estimates of future uranium prices, which assume market prices will revert to the
Company’s assessment of the long term average price, generally over a period of three to five years.
The recoverable amount is dependent on the life of the ore body together with the term of the mining lease. It reflects expected future cashflows
contained in the long term asset plan with an adjustment of cashflows expected to take into account project development risk. The Company
has projected cashflows for the period of the current mining lease, together with a ten year renewal period.
The discount rate applied to the future cash flow forecasts represent an estimate of the rate the market would apply having regard to the time
value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted.
98
Energy Resources of Australia Ltd | Annual Report 2011
13 property, plant and equipment
consoliDAteD
Mine
lAnD AnD
builDings
$’000
PlAnt AnD
eQuiPMent
$’000
Mine
PRoPeRties
$’000
RehAbilitAtion
$’000
totAl
$’000
YeAR enDeD 31 DeceMbeR 2011
Opening net book amount
24,508
Additions
Disposals
Change in estimate
Transfers
Depreciation/amortisation charge
closing net book amount
Cost
Accumulated depreciation/amortisation
–
–
–
50
(3,974)
20,584
111,084
(90,500)
336,782
97,426
(735)
–
(50)
(56,219)
377,204
888,782
(511,578)
69,736
108,451
–
–
–
–
(14,420)
55,316
421,700
(366,384)
–
–
231,011
–
(51,312)
288,150
382,348
(94,198)
539,477
97,426
(735)
231,011
–
(125,925)
741,254
1,803,914
(1,062,660)
net book amount
20,584
377,204
55,316
288,150
741,254
YeAR enDeD 31 DeceMbeR 2010
Opening net book amount
Additions
Disposals
Change in estimate
Transfers
Depreciation/amortisation charge
closing net book amount
Cost
Accumulated depreciation/amortisation
27,415
421
–
–
–
(3,328)
24,508
111,531
(87,023)
355,117
34,209
(8,351)
–
–
(44,193)
336,782
832,154
(495,372)
69,813
10,321
–
–
–
(10,398)
69,736
421,700
(351,964)
18,080
470,425
–
–
93,200
–
(2,829)
108,451
151,337
(42,886)
44,951
(8,351)
93,200
–
(60,748)
539,477
1,516,722
(977,245)
net book amount
24,508
336,782
69,736
108,451
539,477
Assets under construction
The carrying amounts of the assets disclosed above include the following expenditure recognised in relation to property, plant and equipment
which is in the course of construction:
Plant and equipment
2011
$’000
35,460
2010
$’000
19,204
Energy Resources of Australia Ltd | Annual Report 2011
99
notes to the Consolidated Financial Statements
14 investment in trust fund
non-cuRRent
Trust Fund
Trust fund
2011
$’000
2010
$’000
59,219
55,814
The Trust Fund holds a restricted fixed term investment in the form of bank bills which mature and are reinvested periodically.
The applicable weighted average interest rate for the year ended 31 December 2011 was 5.47% (2010: 5.31%).
15 payables
cuRRent
Trade payables
Amounts due to related parties
Other payables
total payables
16 provisions – current
cuRRent
Employee benefits
Rehabilitation
total current provisions
Movements in provisions
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
consoliDAteD – 2011
Carrying amount at the start of the year
Payments
Transfer from non-current provision
carrying amount at the end of the year
consoliDAteD – 2010
Carrying amount at the start of the year
Payments
Transfer from non-current provision
carrying amount at the end of the year
100
Energy Resources of Australia Ltd | Annual Report 2011
2011
$’000
59,480
18,854
1,904
80,238
2011
$’000
11,891
25,128
37,019
2010
$’000
83,744
8,566
1,762
94,072
2010
$’000
8,922
18,750
27,672
RehAbilitAtion
$’000
18,750
(5,382)
11,760
25,128
RehAbilitAtion
$’000
14,949
(3,670)
7,471
18,750
17 provisions – non-current
non-cuRRent
Employee benefits
Rehabilitation
total non-current provisions
Movements in provisions
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
consoliDAteD – 2011
Carrying amount at the start of the year
Change in estimate
Unwinding of discount
Additional provisions recognised
Transfer to current provision
carrying amount at the end of the year
consoliDAteD – 2010
Carrying amount at the start of the year
Change in estimate
Unwinding of discount
Additional provisions recognised
Transfer to current provision
carrying amount at the end of the year
2011
$’000
2010
$’000
3,022
540,157
543,179
3,768
295,882
299,650
RehAbilitAtion
$’000
295,882
220,217
25,022
10,796
(11,760)
540,157
RehAbilitAtion
$’000
196,186
86,363
13,967
6,837
(7,471)
295,882
Energy Resources of Australia Ltd | Annual Report 2011
101
notes to the Consolidated Financial Statements
18 deferred tax liabilities
(A) DefeRReD tAx liAbilitY
the balance comprises temporary differences attributable to:
Amounts recognised in profit and loss
Property, plant and equipment
Investment in trust fund
Undeveloped properties
Inventories
Receivables
total deferred tax liabilities
Off-set of deferred tax asset pursuant to set-off provisions (Note 18b)
net deferred tax liabilities
Movements
Opening balance at 1 January
(Credited)/debited to the income statement (Note 5)
Under provided in prior years credited to the income statement
closing balance at 31 December
(b) DefeRReD tAx Assets
the balance comprises temporary differences attributable to:
Amounts recognised in profit and loss
Tax losses
Rehabilitation
Employee provisions
Other payables
Amount recognised directly in equity
Transaction costs
Share benefits
total deferred tax assets
Set-off of deferred tax liabilities pursuant to set-off provisions (Note 18a)
net deferred tax assets
Movements
Opening balance at 1 January
Credited to the income statement (Note 5)
Over provided in prior years credited to the income statement
Credited to equity
closing balance at 31 December
2011
$’000
2010
$’000
29,811
17,766
23,405
18,728
4,012
93,722
(93,722)
–
112,568
(21,383)
2,537
93,722
23,437
60,924
3,765
4,521
92,647
3,596
(367)
95,876
(93,722)
2,154
61,642
30,659
346
3,229
95,876
34,945
16,744
23,405
33,054
4,420
112,568
(61,642)
50,926
104,078
4,970
3,520
112,568
–
53,417
3,336
4,761
61,514
–
128
61,642
(61,642)
–
55,649
5,017
848
128
61,642
102
Energy Resources of Australia Ltd | Annual Report 2011
19 Share capital
shARe cAPitAl
A Class shares fully paid
Total contributed equity
2011
shARes
2010
shARes
2011
$’000
2010
$’000
517,725,062
190,737,934
706,485
706,485
214,585
214,585
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of
shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each
share is entitled to one vote.
Capital risk management
Details of the Group’s exposure to risks when managing capital are set out in Note 29.
Movement in ordinary share capital
consoliDAteD 2011
Opening balance
25 October 2011
Rights issue - Institutional entitlement offer
21 November 2011
Rights issue - Retail entitlement offer
Transaction costs
Deferred tax on transaction costs
issue
PRice
nuMbeR of
shARes
190,737,934
248,796,293
78,190,835
1.53
1.53
31 December 2011
Balance
517,725,062
$’000
214,585
380,658
119,632
(11,986)
3,596
706,485
Rights issue
On 12 October 2011 the company invited its shareholders to subscribe to a rights issue of 326,987,128 ordinary shares at an issue price of
$1.53 per share on the basis of 12 shares for every 7 fully paid ordinary shares held, with such shares to be issued on, and rank for dividends
after, 25 October 2011 for the institutional entitlement and 21 November 2011 for the retail entitlement. The issue was fully subscribed.
Energy Resources of Australia Ltd | Annual Report 2011
103
notes to the Consolidated Financial Statements
20 Reserves and retained profits
ReseRVes
Share-based payments reserve
Capital reconstruction
total Reserves
Movements
share-based payments reserve
Balance 1 January
Option expense
balance 31 December
capital reconstruction
Balance 1 January
Movements
balance 31 December
RetAineD PRofits
Movements in retained profits were as follows:
Opening retained earnings – 1 January
Net profit for the year
Dividends paid
closing retained earnings – 31 December
nature and purpose of reserves
Share-based payments reserve
2011
$’000
2010
$’000
959
389,500
390,459
1,800
389,500
391,300
1,800
(841)
959
1,359
441
1,800
389,500
389,500
–
–
389,500
389,500
345,191
(153,599)
–
191,592
361,130
47,004
(62,943)
345,191
The share based payments reserve is used to recognise the fair value of equity instruments issued to employees but not exercised.
capital reconstruction reserve
In June 1995, ERA reduced its share capital by cancelling $0.95 of the capital paid up on each issued share and reducing the par value of each
issued share from $1.00 to $0.05. The cancelled capital (comprising $389,500,000 in total) was credited to a Capital Reconstruction Reserve.
The Company has the ability to distribute capital to shareholders from this reserve.
104
Energy Resources of Australia Ltd | Annual Report 2011
21 contingencies
Contingent liabilities
Legal actions against Energy Resources of Australia Ltd.
The remaining argument in the action listed in the Federal Court against the former Commonwealth Minister for Resources and ERA claiming
that due process was not followed in granting approvals for the Jabiluka Mill Alternative is dormant. Should ERA proceed with the Jabiluka Mill
Alternative, notice will be given to the applicant who may or may not wish to pursue the argument further.
No material losses are anticipated in respect of any of the above contingent liabilities or legal disputes.
22 commitments
Capital commitments
Capital expenditure contracted for at the reporting date but not recognised as liabilities is as follows:
Within one year
Lease commitments
operating leases
Future operating lease rentals not provided for in the financial statements and payable:
Commitments in relation to leases contracted for at the
reporting date but not recognised as liabilities, payable
Within one year
Later than one year but not later than five years
total operating leases
2011
$’000
64,664
2010
$’000
35,643
3,899
7,059
10,958
3,017
936
3,953
The consolidated entity leases property, plant and equipment under operating leases expiring from two to four years. Some leases provide the
consolidated entity with a right of renewal at which time all terms are renegotiated. Lease payments comprise a base amount and may include
an incremental contingent rental.
Mineral tenement leases
Future mineral tenement lease payment not provided for in the financial statements and payable:
Within one year
Later than one year but not later than five years
Later than five years
total mineral tenement leases
73
291
558
922
73
291
631
995
In order to maintain current rights of tenure to mining tenements, the consolidated entity will be required to outlay an amount of approximately
$73,000 in the year ending 31 December 2012 in respect of tenement lease rentals.
Energy Resources of Australia Ltd | Annual Report 2011
105
notes to the Consolidated Financial Statements
ERA is liable to make payments to the Commonwealth as listed below:
(i)
An amount equal to the sum payable by the Commonwealth to the Northern Land Council pursuant to the Section 44 Agreement Aboriginal
Land Rights (NT) Act 1976. This amounts to $200,000 per annum during the currency of the Agreement;
(ii) Amounts equal to the sums payable by the Commonwealth to the Aboriginal Benefits Reserve pursuant to a determination under Section
63(5) (b) of the Aboriginal Land Rights (NT) Act 1976. These amounts are calculated at 4.25 per cent of Ranger net sales revenue (amounts
paid during 2011: $12,481,746. 2010: $19,992,479);
(iii) Amounts equal to sums payable by the Commonwealth to the Northern Territory pursuant to an understanding in respect of financial
arrangements between the Commonwealth and the Government of the Northern Territory. These amounts are also calculated as though
they were royalties and the relevant rate is 1.25 per cent of Ranger net sales revenue (amounts paid during 2011: $3,671,102: 2010
$5,880,141);
ERA is liable to make payments to the Northern Land Council (NLC) pursuant to the Section 43 Agreement
(Aboriginal Land Rights (NT) Act 1976) between Pancontinental Mining Limited and Getty Oil Development
Company Limited and the NLC dated 21 July 1982, which was assigned to ERA with the consent of the NLC, as
listed below:
(i) Up front payment of $3,400,000 on the commencement of production at Jabiluka.
(ii) Annual royalty payments calculated at 4.5 per cent of net sales revenue less $500,000 less any amounts paid to the Aboriginal Benefits
Reserve by the Commonwealth under the conditions specified in the mineral lease for the first 10 years and thereafter at 5 per cent of net
sales revenue less any amounts paid to the Aboriginal Benefits Reserve by the Commonwealth under the conditions specified in the mineral
lease (refer commitment below).
ERA is liable to make payments to the Commonwealth in respect of the Jabiluka project pursuant to the conditions
attached to the Mineral Lease. The amount payable was, until 30 June 1990, calculated at the rate of 5.25 per cent
of net sales revenue from the Jabiluka project.
23 auditor’s remuneration
During the year the auditor of the parent entity and its related practices earned the following remuneration:
AuDit seRVices
Pricewaterhousecoopers Australian firm
Audit and review of financial reports
Other services
total remuneration of Pricewaterhousecooper Australia
2011
$’000
2010
$’000
350
285
635
250
–
250
106
Energy Resources of Australia Ltd | Annual Report 2011
24 Related parties
Directors
The names of persons who were Directors of ERA at any time during the financial period are as follows:
H Garnett, D Klingner, R Atkinson, P Taylor, J Pegler and M Coulter.
Information relating to Directors’ compensation, shareholdings and retirement benefits is set out in the Remuneration Report in the Directors’
Report.
Key management personnel
key management personnel compensation
Short-term employee benefits
Post-employment benefits
Share-based payments
2011
$’000
3,907
409
688
5,004
2010
$’000
3,497
381
547
4,425
In compliance with Corporations Regulations 2001 2M.3.03 the Company has provided detailed remuneration disclosures in the Directors report.
The relevant information can be found in the remuneration report on pages 59 to 73.
Loans with Directors and key management personnel
There are no loans with Directors or key management personnel during 2011 (2010: nil).
transactions with Directors and Director-related entities
There were no transactions with Director related entities other than Rio Tinto Limited during 2011 (2010: - ). Details of transactions with Rio Tinto
Limited are outlined below.
Controlled entity
Information relating to the controlled entity is set out in Note 25.
Ultimate parent entity
The ultimate parent entity is Rio Tinto Limited. This interest is held through North Limited (incorporated in Victoria, Australia) which has beneficial
ownership of 68.4 per cent of the issued ordinary shares of the Company. North Ltd owns 34.1 per cent directly and the remaining 34.3 per cent
through its subsidiary, Peko Wallsend Ltd.
Interest income
Interest income is received from Rio Tinto Finance Ltd which holds cash on behalf of the Company.
transactions with related parties
The following transactions occurred with related parties:
Energy Resources of Australia Ltd | Annual Report 2011
107
notes to the Consolidated Financial Statements
other transactions
Management services fees paid to ultimate parent entity:
Rio Tinto Group Companies
consulting fees paid to:
Rio Tinto Group Companies
other re–imbursements for commercial services:
Rio Tinto Group Companies
Amounts received from related parties:
Rio Tinto Group Companies – other
Rio Tinto Group Companies – interest
Dividends paid to:
Related parties – North Ltd
Related parties – Peko Wallsend Ltd
2011
$’000
2010
$’000
1,600
1,600
10,007
9,081
103,571
43,040
41,223
9,721
–
–
11,237
8,338
21,464
21,585
Consulting fees paid to Rio Tinto Group Companies relate to technical services for major projects.
Other reimbursements for commercial services include the purchase of uranium oxide at market price.
Amounts received from related parties include sales of uranium oxide at market price.
Outstanding balances arising from sales/purchases of goods and services
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Aggregate amounts receivable from and payable to each class
of other related parties at balance date were as follows:
current assets – cash assets
Related parties – Rio Tinto Finance Ltd
current assets – receivables
Related parties – Rio Tinto Group Companies
current liabilities – creditors
Related parties – Rio Tinto Group Companies
All related party transactions were conducted on commercial terms and conditions and at market rates.
420,938
186,575
81
508
18,854
8,470
108
Energy Resources of Australia Ltd | Annual Report 2011
25 investment in controlled entity
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the
accounting policy described in Note 1(b):
nAMe of entitY
EWL Sciences Pty Ltd
countRY of
incoRPoRAtion
Australia
clAss of
shARes
Ordinary
eQuitY holDing
2011
%
100
2010
%
100
The above controlled entity is wholly-owned and no dividends were paid to the parent entity (2010: $Nil).
26 Segment information
Description of segments
Management has determined the operating segment based on the reports reviewed by the Chief Executive that are used to make strategic
decisions.
The Chief Executive considers the business from a product prospective and has identified only one reportable segment in the year ended 31
December 2011, being the mining, processing and selling of uranium. There are no other unallocated operations.
Primary reporting – business segments
The segment information provided to the Chief Executive for the reportable segment is as follows:
uRAniuM
Total segment revenue
Revenue from external customers
Other revenue
total segment revenue
segment result
Income tax expense
Profit for the year
Segment assets
total assets
Segment liabilities
total liabilities
Acquisitions of non-current assets
Depreciation and amortisation expense
Loss on disposal of trial plant and equipment
Net loss on sale of property, plant and equipment
2011
$’000
667,849
651,381
16,468
667,849
(206,340)
52,741
(153,599)
1,948,972
1,948,972
660,436
660,436
97,426
125,925
–
713
2010
$’000
585,957
572,283
13,674
585,957
59,427
(12,423)
47,004
1,423,396
1,423,396
472,320
472,320
44,951
60,748
8,277
–
Energy Resources of Australia Ltd | Annual Report 2011
109
notes to the Consolidated Financial Statements
Other segment information
Segment revenue
The revenue from external parties reported to the Chief Executive is measured in a manner consistent with that in the income statement.
Revenues from external customers are derived from the sale of uranium. A breakdown of revenue and results is provided in the tables above.
Segment revenue reconciles to total revenue from continuing operations as disclosed in note 3.
The consolidated entity is domiciled in Australia. The result of its revenue from external customers in other countries is outlined in the table below:
Asia
United States
Europe
segMent ReVenues
fRoM sAles to
exteRnAl custoMeRs
2011
$’000
165,714
396,860
86,639
649,213
2010
$’000
198,234
287,316
86,486
572,036
Segment revenues are allocated based on the country in which the customer is located.
Segment assets
The amounts provided to the Chief Executive with respect to total assets are measured in a manner consistent with that of the financial
statements. These assets are allocated based on the operations of the segment and the physical location of the asset. Segment assets include
all assets used by a segment and consist primarily of operating cash, receivables, inventories, property, plant and equipment and other assets,
net of provisions.
All assets of the consolidated entity as at 31 December 2011 are in Australia with the exception of inventories in transit or at converters of
$28,334,413 (2010 – $59,486,699). All acquisitions of property, plant and equipment and other non-current assets occurred in Australia.
Segment liabilities
The amounts provided to the Chief Executive with respect to total liabilities are measured in a manner consistent with that of the financial
statements. These liabilities are allocated based on the operations of the segment. Segment liabilities consist primarily of trade and other
creditors, employee entitlements and provisions. The consolidated entity does not have any borrowings or derivative financial instruments as at
31 December 2011.
110
Energy Resources of Australia Ltd | Annual Report 2011
27 Reconciliation of profit after income tax to net cash inflow from
operating activities
Profit for the year
Add/(less) items classified as investing/financing activities:
Net (gain) loss on sale of non-current assets
Add/(less) non-cash items:
Depreciation and amortisation
Rehabilitation provision: unwinding of discount
Employee benefits: share based payments
Net exchange differences
Deferred tax on share issue costs
Change in operating assets and liabilities
(Increase)/decrease in trade and other receivables
(Increase)/decrease in inventories
(Increase)/decrease in other assets
(Increase)/decrease in investment in trust fund
(Decrease)/increase in payables
(Decrease)/increase in current tax liabilities
(Decrease)/increase in net provision for deferred tax liabilities
(Decrease)/increase in provisions
net cash inflow provided from operating activities
2011
$’000
(153,599)
2010
$’000
47,004
713
8,277
125,925
25,022
61
–
3,596
5,650
111,820
198
(3,406)
(13,834)
9,006
(53,080)
(3,156)
54,916
60,748
13,967
727
19
–
(12,801)
(33,508)
342
(2,544)
25,184
(64,951)
2,497
(2,838)
42,123
Energy Resources of Australia Ltd | Annual Report 2011
111
notes to the Consolidated Financial Statements
28 earnings per share
Basic earnings per share
Diluted earnings per share
2011
cents
(48.4)
(48.4)
2010
cents
16.8
16.8
Earnings used in the calculation of basic and diluted earnings per share: 2011: $(153,598,511) (2010: $47,004,351)
Weighted average number of ordinary shares on issue used in calculation of basic earnings per share: 2011: 317,534,781 shares (2010:
279,609,962) ERA has retrospectively adjusted the prior year earnings per share to reflect the rights issue.
options
Options granted to employees are granted under the share-based payment plans are for options in Rio Tinto plc and Rio Tinto Ltd. Therefore,
the options have not been included in the determination of diluted earnings per share. Details relating to the options are set out in Note 32.
29 financial risk management
ERA carries out risk management under policies approved by the board of directors. The board provides principles for overall risk management,
as well as written policies covering specific areas, such as mitigating interest rate and other risks, use of derivative and non-derivative financial
instruments. The subsidiary does not utilise any financial instruments, and as such, sensitivities are identical for both parent and group.
The Group’s business is mining and not trading. Accordingly, the Group only contracts to sell uranium that it plans to produce, however
purchasing uranium for resale may be required in circumstances where actual production falls short of contractual sales volumes. The Group
operates entirely in Australia and is exposed primarily to Australian dollar denominated costs. Sales are denominated in US dollars.
Market risk
foreign exchange risk
ERA markets its products internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect
to the US dollar. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities that are denominated
in a currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis and cash flow forecasting. It is no longer
group policy to hedge against foreign exchange risk, all legacy financial instruments held in the form of foreign exchange contracts expired
during 2009.
The Group’s exposure to foreign currency risk at the reporting date was as follows:
Trade receivables
2011
usD
$’000
60,842
2010
usD
$’000
63,613
Group sensitivity
At 31 December 2011, had the Australian Dollar weakened/strengthened by 10% against the US Dollar with all other variables held constant,
the change in trade receivables would have effected post-tax profit for the year by $5,458,042 higher/$6,003,846 lower (2010: $5,503,613
higher/$3,221,964 lower).
commodity price risk
In the absence of uranium being traded on global futures exchanges, the Group uses a combination of both fixed and market price related
contracts for future sales to manage this exposure. No financial instruments are used by the group to manage commodity price risk.
interest rate risk
The Group’s main interest rate risk arises from cash on deposit. When cash is surplus to operational and investing requirements it is invested in
lump sum deposits to maximise interest received. In addition, the Group is exposed to interest rate risk on cash in the investment trust fund.
112
Energy Resources of Australia Ltd | Annual Report 2011
Credit risk
The Group has no significant concentrations of credit risk. The Group has policies in place to ensure that sales of products are made to
customers with an appropriate credit history. Where customers are rated by an independent credit rating agency, these ratings are used to set
credit limits. If no independent rating exists, the credit quality of the customer is subject to extensive assessment. Letters of credit and other
forms of credit insurance are also used as required. Derivative counterparties, cash transactions and cash invested through the investment/trust
fund are limited to high credit quality financial institutions. The Group has policies that limit the amount of credit exposure to any one financial
institution.
tRADe ReceiVAbles
AA
A
BBB
Other
2011
$’000
2010
$’000
32,507
10,836
16,695
–
24,752
9,108
–
35,304
Liquidity and capital risk
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
The Group does not have a target debt to equity ratio, but has a policy of maintaining a flexible financing structure to be able to fund capital
expenditure programmes, pay dividends and fund expansion opportunities as they arise. This policy is balanced against the desire to ensure
efficiency in the debt/equity structure of the Group’s balance sheet in the longer term through pro-active capital management programmes.
Fair value estimation
The carrying value less impairment provision of trade receivables and payables is a reasonable approximation of their fair values due to the
short-term nature of these amounts.
Energy Resources of Australia Ltd | Annual Report 2011
113
notes to the Consolidated Financial Statements
30 parent entity financial information
(i) Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
balance sheet
current assets
total assets
current liabilities
total liabilities
shareholders’ equity
issued capital
Reserves
Capital reconstruction
Share-based payments
Retained earnings
Profit or loss for the year
total comprehensive income
2011
$’000
2010
$’000
830,580
1,949,740
117,257
660,436
400,167
1,411,100
108,664
459,255
706,485
214,585
389,500
959
192,360
(153,599)
(153,599)
389,500
1,800
345,959
46,990
46,990
(ii) No guarantees have been provided by the parent entity.
(iii) The commitments for the parent entity are consistent with those reported in Note 22 for the consolidated entity.
31 events subsequent to balance date
No matters or circumstances have arisen since the end of the financial year that have significantly affected, or may significantly affect the
operations or state of affairs of the consolidated entity in subsequent financial years.
114
Energy Resources of Australia Ltd | Annual Report 2011
32 Share-based payments
ERA participates in a number of share-based payment plans administered by Rio Tinto plc and Rio Tinto Limited, which are described in detail
in the Remuneration Report. These plans have been accounted for in accordance with the fair value recognition provisions of AASB2, ‘Share-
based Payments’, which means that AASB2 has been applied to all grants of employee share-based payments that had not vested as at 1
January 2004.
Performance Share Plan (“PSP”)
With effect from 2010, the policy for settling awards granted under the Performance Share Plan (PSP) formerly known as the Mining Companies
Comparative Plan (the MCCP) changed. For settlement of all future awards under this plan, participants will be assigned shares and offered a
third party facility to realise these shares for cash and/or to meet any tax liabilities.
The grant date fair value of the awards is taken to be the market value of the shares at the date of award reduced by 50 per cent for
anticipated relative TSR performance. In addition for the valuations after 2005 the market value is reduced for non-receipt of dividends between
measurement date and date of vesting. Forfeitures are assumed prior to vesting at 3 per cent per annum of outstanding awards. In accordance
with the method of accounting for cash-settled awards, fair values are subsequently remeasured each year to reflect the number of awards
expected to vest based on the current and anticipated TSR performance.
A summary of the status of shares granted under the share plan at 31 December 2011, and changes during the year, is presented below:
bAlAnce
At stARt
of the
YeAR
gRAnteD
DuRing
the YeAR
tRAnsfeRs
in/(out)
exeRciseD
DuRing
the YeAR
foRfeiteD
DuRing the
YeAR
bAlAnce
At enD
of the
YeAR
VesteD AnD
exeRcisAble
At enD of
the YeAR
consoliDAteD – 2011
Rio tinto limited
12,011
3,607
Weighted average
exercise price
Rio tinto plc
Weighted average
exercise price
74.92
3,242
$81.00
1,164
£32.77
£40.58
consoliDAteD – 2010
–
–
–
–
(3,177)
(2,469)
9,972
$74.79
$74.79
$77.19
(837)
(670)
2,899
£26.81
£26.81
£22.32
Rio tinto limited
11,726
5,673
1,400
(3,871)
(2,917)
12,011
Weighted average
exercise price
$71.44
$75.03
$74.91
$69.00
$69.00
$74.92
Rio tinto plc
1,507
1,735
Weighted average
exercise price
£27.55
£37.30
–
–
–
–
–
–
3,242
£32.77
–
–
–
–
5,646
$74.79
1,507
£27.55
The weighted average share price at the date of exercise of rights to shares exercised regularly during the year ended 31 December 2011 was
$76.21 (2010: $71.85).
The weighted average remaining contractual life of rights to shares outstanding at the end of the period was 3 years (2010: 3 years).
Where options are issued to employees of subsidiaries within the Rio Tinto Group, the subsidiaries compensate the parent for the amount
recognised as expense in relation to these options.
Energy Resources of Australia Ltd | Annual Report 2011
115
notes to the Consolidated Financial Statements
Share Option Plan (“SOP”)
It is policy to settle these awards in equity, although the participants at their discretion can be offered a cash alternative. The awards are
accounted for in accordance with the requirements applying to equity-settled share-based payment transactions. The performance conditions
in relation to Total Shareholder Return have been incorporated in the measurement of fair value for these awards by modelling the correlation
between Rio Tinto‘s TSR and that of the index. The relationship between Rio Tinto‘s TSR and the index was simulated many thousands of times
to derive a distribution which, in conjunction with the lattice-based option valuation model, was used to determine the fair value of the options.
A summary of the status of options granted under the plan at 31 December 2011, and changes during the year, is presented below:
bAlAnce
At stARt
of the
YeAR
gRAnteD
DuRing
the YeAR
tRAnsfeRs
in/(out)
exeRciseD
DuRing
the YeAR
foRfeiteD
DuRing the
YeAR
bAlAnce
At enD
of the
YeAR
VesteD AnD
exeRcisAble
At enD of
the YeAR
consoliDAteD – 2011
Rio tinto limited
20,422
Weighted average
exercise price
$35.75
Rio tinto plc
3,219
Weighted average
exercise price
£16.53
consoliDAteD – 2010
Rio tinto limited
30,682
Weighted average
exercise price
Rio tinto plc
Weighted average
exercise price
$34.66
4,726
£18.37
–
–
–
–
–
–
–
–
–
–
–
–
(3,020)
$54.95
–
–
–
–
–
–
17,402
$32.42
3,219
£16.53
(3,217)
(1,511)
(5,532)
20,422
$30.15
$26.50
$58.48
$35.75
–
–
–
–
(1,507)
3,219
£22.32
£16.53
12,032
$31.96
–
–
15,052
$36.57
–
–
The weighted average share price at the date of exercise of options exercised regularly during the year ended 31 December 2011 was $87.89
(2010: $73.00).
The weighted average remaining contractual life of share options outstanding at the end of the period was 1 years (2010: 3 years).
Where options are issued to employees of subsidiaries within the Rio Tinto Group, the subsidiaries compensate the parent for the amount
recognised as expense in relation to these options.
116
Energy Resources of Australia Ltd | Annual Report 2011
Share Savings Plan (“SSP”)
Awards under these plans are settled in equity and accounted for accordingly. The fair value of each award on the day of grant was estimated
using a lattice-based option valuation model, including allowance for the exercise price being at a discount to market price.
A summary of the status of options granted under the plan at 31 December 2011, and changes during the year, is presented below:
bAlAnce
At stARt
of the
YeAR
gRAnteD
DuRing
the YeAR
tRAnsfeRs
in/(out)
exeRciseD
DuRing
the YeAR
foRfeiteD
DuRing the
YeAR
bAlAnce
At enD of
the YeAR
VesteD AnD
exeRcisAble
At enD of
the YeAR
consoliDAteD – 2011
Rio tinto limited
Weighted average
exercise price
47,124
$54.69
16,927
$59.26
(2,425)
$56.00
(6,654)
$60.07
(3,717)
$58.59
51,255
$55.08
consoliDAteD – 2010
Rio tinto limited
Weighted average
exercise price
50,158
$54.31
8,493
$59.26
(2,889)
$51.67
(7,130)
$48.85
(1,508)
$56.80
47,124
$54.69
2,476
$62.26
6,871
$55.24
The weighted average share price at the date of exercise of options exercised regularly during the year ended 31 December 2011 was $85.15
(2010: $72.23).
The weighted average remaining contractual life of share options outstanding at the end of the period was 3 years (2010: 3 years).
Where options are issued to employees of subsidiaries within the Rio Tinto Group, the subsidiaries compensate the parent for the amount
recognised as expense in relation to these options.
Energy Resources of Australia Ltd | Annual Report 2011
117
notes to the Consolidated Financial Statements
Management Share Plan (“MSP”)
The Management Share Plan was introduced in 2007 and is described in the Remuneration Report. The awards will be settled in equity
including the dividends accumulated from date of award to vesting. The awards are accounted for in accordance with the requirements applying
to equity-settled share-based payment transactions. The fair value of each award on the day of grant is set equal to share price on the day of
grant. Forfeitures are assumed prior to vesting at 3 per cent per annum of outstanding awards.
A summary of the status of shares granted under the share plan at 31 December 2011, and changes during the year, is presented below:
bAlAnce
At stARt
of the
YeAR
gRAnteD
DuRing
the YeAR
tRAnsfeRs
in/(out)
exeRciseD
DuRing
the YeAR
foRfeiteD
DuRing the
YeAR
bAlAnce
At enD of
the YeAR
VesteD AnD
exeRcisAble
At enD of
the YeAR
consoliDAteD – 2011
Rio tinto limited
15,633
3,864
Weighted average
fair value at grant
date
$73.04
$81.62
Rio tinto plc
9,327
2,369
Weighted average
fair value at grant
date
£30.36
£40.75
consoliDAteD – 2010
–
–
–
–
(2,478)
$126.48
(1,265)
£52.58
Rio tinto limited
11,500
5,507
2,231
(3,605)
Weighted average
fair value at grant
date
$72.17
$75.03
$74.53
$74.50
Rio tinto plc
7,012
3,358
Weighted average
fair value at grant
date
£26.11
£37.16
–
–
(1,043)
£26.81
–
–
–
–
–
–
–
–
17,019
$67.21
10,431
£30.02
15,633
$73.04
9,327
£30.36
–
–
–
–
–
–
–
–
The weighted average share price at the date of exercise of conditional grants of shares exercised regularly during the year ended
31 December 2011 was $84.75 (2010: $78.08).
The weighted average remaining contractual life of conditional grants of shares outstanding at the end of the period was 3 years
(2010: 2 years).
The model inputs for conditional rights granted during the year ended 31 December 2011 included:
(a) rights are granted for no consideration and have a three year life
(b) exercise price: – (2010: – )
(c) grant date: 21 March 2011 (2010: 22 March 2010)
(d) expiry date: 21 March 2014 (2010: 22 March 2013)
(e) share price at grant date: $81.00 (2010: $75.03)
Where options are issued to employees of subsidiaries within the Rio Tinto Group, the subsidiaries compensate the parent for the amount
recognised as expense in relation to these options.
118
Energy Resources of Australia Ltd | Annual Report 2011
Bonus Deferral Plan (“BDP”)
The Bonus Deferral Plan was introduced during 2009 and is made up of two parts: the Bonus Deferral Award and the Company Contributed
Award. The Bonus Deferral Award was established for the mandatory deferral of 100% of the 2008 Bonus for “Most Senior Executives” and 50%
of the 2008 Bonus for “Band C and Above Executives”. In addition, in order to enhance retention of key employees the Company Contributed
Award was made in respect of 25% of the gross annual basic salary for each Band C and Above Executive. The vesting of these awards is
dependent only on service conditions being met. The awards will be settled in equity including the dividends accumulated from date of award
to vesting. The awards are accounted for in accordance with the requirements applying to equity-settled share based payment transactions.
The fair value of each award on the day of grant is equal to share price on the day of grant less a small adjustment for the timing of dividends
vesting. Forfeitures are assumed prior to vesting at three per cent per annum of outstanding awards.
bAlAnce
At stARt
of the
YeAR
gRAnteD
DuRing
the YeAR
tRAnsfeRs
in/(out)
exeRciseD
DuRing
the YeAR
foRfeiteD
DuRing the
YeAR
bAlAnce
At enD of
the YeAR
VesteD AnD
exeRcisAble
At enD of
the YeAR
consoliDAteD – 2011
Rio tinto limited
1,484
341
Weighted average
fair value at grant
date
$51.24
76.73
consoliDAteD – 2010
Rio tinto limited
Weighted average
fair value at grant
date
798
2,185
$41.77
$51.24
–
–
–
(1,533)
$51.24
(1,499)
$51.25
–
–
–
–
292
$81.00
1,484
$51.24
–
–
–
–
The weighted average share price at the date of exercise of options exercised regularly during the year ended 31 December 2011 was $86.36
(2010: 70.58).
The weighted average remaining contractual life of share options outstanding at the end of the period was 1 years (2010: 1 years).
Where options are issued to employees of subsidiaries within the Rio Tinto Group, the subsidiaries compensate the parent for the amount
recognised as expense in relation to these options.
expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit expense were as
follows:
Share based payment expense
2011
$’000
61
2010
$’000
727
Energy Resources of Australia Ltd | Annual Report 2011
119
Directors’ Declaration
In the Directors’ opinion:
(a) the financial statements and notes set out on page 81 to 119 are in accordance with the Corporations Act 2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
(ii) giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2011 and of its performance for the financial
year ended on that date; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International
Accounting Standards Board.
The Directors have been given the declarations by the Chief Executive and Chief Financial Officer required by section 295A of the Corporations
Act 2001.
This declaration is made in accordance with a resolution of the directors.
Dr D Klingner
Director
Melbourne
10 february 2012
120
Energy Resources of Australia Ltd | Annual Report 2011
Independent Auditor’s Report
Energy Resources of Australia Ltd | Annual Report 2011
121
Independent Auditor’s Report
122
Energy Resources of Australia Ltd | Annual Report 2011
Shareholder Information
The shareholder information set out below was applicable as at 31 January 2012
distribution of equity securities
Analysis of numbers of registered equity security holders by size of holding:
1 – 1000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
A clAss
oRDinARY shARes
nuMbeR
of shARe-
holDeRs
% of
shARe-
holDeRs
9,022
5,208
1,680
1,622
90
51.20
29.55
9.54
9.20
0.51
nuMbeR
of shARes
3,352,864
13,123,728
12,039,122
39,151,865
450,057,483
17,622
100.00
517,725,062
There were 1,366 holders of less than a marketable parcel of ordinary shares.
equity security holders
The names of the twenty largest registered holders of quoted equity securities are listed below:
Peko Wallsend Ltd
North Limited
National Nominees Limited
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
JP Morgan Nominees Australia Limited
JP Morgan Nominees Australia Limited
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