ANNUAL
REPORT
2016
CELEBRATING
IN PRODUCTION
ERA has a diverse
workforce consisting
of a number of families
who are long term
residents of Jabiru. Here
are some of the faces
behind the Ranger mine
operations.
Daughter and Father
Chloe: Contractor Coordinator,
Maintenance
Time with ERA: 9 years
Robert: Long-Term Planner, Mine
Planning
Time with ERA: 18 years
Father and Son
Dean: Warehouse Officer
Time with ERA: 12 years
Anthony: Emergency Services
Officer
Time with ERA: 5 years
Daniel: Chemical Engineer
Superintendent Plant Operations,
Production
Time with ERA: 9 years
Lendel: Warehouse Officer
Time with ERA: 1 year
Mother and Son
Lesley: Personal Assistant
Time with ERA: 8 years
Ryan: Technical Officer, Water
Monitoring
Time with ERA: 8 years
Marie: Electrical Trade Apprentice,
Maintenance
Time with ERA: 1 year
Husband and Wife
Peter: Planner Asset Management
Time with ERA: 13 years
Sue: Administration Officer
Time with ERA: 4 years
CONTENTS
1
25
2016 ANNUAL REPORT
Company Overview
Chairman’s Report
Chief Executive’s Report
2017 Objectives
Operating and Financial Review
Financial Performance
Operations
Business Strategy
Future Supply
Sales and Marketing
Health and Safety
Radiation Monitoring
Regulatory Framework
4
6
7
8
9
9
11
14
17
21
22
23
24
SUSTAINABILITY REPORT
Overview
27
28
29
31
32
34
Environment
Water
Land
Employment
Community
37
FINANCIAL REPORT
1
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT YEAR IN REVIEW
2016
PG 7
PG 9
Excellent safety
performance –
AIFR 0.19
PG 11
$30 million in
positive cash flow,
$396 million cash
at bank
PG 13
Tailings Storage
Facility dredge
completes first full
year of operations
PG 13
Strategic business
review completed
PG 12
Three million cubic
metres of tailings
deposited in Pit 3
PG 13
Produced 2,351
tonnes and sold
2,139 tonnes of
uranium oxide
PG 13
PG 11
Mill tailings
transferred directly
to Pit 3
Process Safety
Improvement
Action Plan
implemented
PG 9
PG 32
Female
employment
participation rate
16 per cent
Net loss after tax
$271 million
PG 14
PG 32
Ranger 3 Deeps
continued in care
and maintenance
Indigenous
participation rate
13 per cent
PG 13
PG 32
Brine injection
system
commissioned
Laterite capping of
Pit 1 completed
382 Full Time
Equivalent
employees at
31 December
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ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
2016 YEAR IN REVIEW
SALES REVENUE ($M)
DRUMMED PRODUCTION TONNES (T)
2012
2013
2014
2015
2016
369.6
356.1
379.2
332.8
267.8
3,710
2,960
2012
2013
2014
2015
2016
1,165
2,005
2,351
NET PROFIT AFTER TAX ($M)
INDIGENOUS EMPLOYEES (FTE’S)
2012
2013
2014
2015
2016
-218.8
-135.8
-187.8
-275.5
-271.1
2012
2013
2014
2015
2016
47
49
46
103
79
OPERATING CASHFLOW ($M)
ALL INJURY FREQUENCY RATE (PER 200,000 HRS
WORKED)
-3.3
-17.9
-54.0
2012
2013
2014
2015
2016
2012
2013
2014
2015
84.6
0.52
0.67
0.91
1.27
34.0
2016
0.19
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ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
2016 ANNUAL REPORT
SUSTAINABILITY REPORT
FINANCIAL REPORT
COMPANY OVERVIEW
Energy Resources of Australia Ltd (ERA) acknowledges the
Mirarr people, Traditional Owners of the land on which
ERA operates.
ERA operates the Ranger uranium mine, Australia’s longest
continually operating uranium mine.
ERA has provided international customers with reliable
supply of uranium oxide (U3O8) in the 35 years since
production at Ranger began. During that time, Ranger has
produced in excess of 120,000 tonnes of uranium.
The Ranger mine’s operational infrastructure lies within the
79 square kilometre Ranger Project Area, which is located
eight kilometres east of Jabiru and 260 kilometres east
of Darwin, in the Northern Territory of Australia. ERA’s
operations on the Ranger Project Area are undertaken
pursuant to an authorisation granted under section 41 of
the Atomic Energy Act 1953 (Cth) (the Ranger Authority).
ERA is currently processing stockpiled ore following the
completion of open cut mining in 2012.
The Ranger 3 Deeps ore body contains a Mineral Resource
of 43,858 tonnes of contained uranium oxide, comprised of
19.58 million tonnes at an overall grade of 0.244% U3O8.
Following a decision in 2015 not to progress the Ranger
3 Deeps project to full feasibility study, the exploration
decline and associated infrastructure remain under care and
maintenance. In order to fully develop the Ranger 3 Deeps
resource, ERA would require an extension to the Ranger
Authority which expires in January 2021.
ERA also holds title to the world-class Jabiluka Mineral
Lease. In accordance with the Jabiluka Long Term Care
and Maintenance Agreement, the Jabiluka deposit will not
be developed by ERA without the consent of the Mirarr
Traditional Owners.
The Ranger Project Area and the Jabiluka Mineral Lease
are located on Aboriginal land and are surrounded by,
but are separate from the World Heritage-listed Kakadu
National Park.
In addition to the Ranger Authority, ERA’s uranium mining
activities are regulated through Commonwealth and
Northern Territory legislation. ERA has also entered into
a suite of agreements which govern its operations on
the Ranger Project Area with the Gundjeihmi Aboriginal
Corporation, on behalf of the Mirarr Traditional Owners,
the Northern Land Council and the Commonwealth
Government.
ERA has a sales and marketing agreement with Rio Tinto
Uranium pursuant to which ERA’s product is sold to
international power utilities under strict international and
Australian Government safeguards which ensure that
Australian uranium is only used for peaceful purposes.
ERA is committed to strong environmental management
practices. The Ranger Project Area is being progressively
rehabilitated in line with regulatory requirements.
The Company’s shares are publicly held and traded
on the Australian Securities Exchange, with Rio Tinto,
a diversified resources group, currently holding
68.4 per cent of ERA shares.
ERA IS COMMITTED TO STRONG
ENVIRONMENTAL MANAGEMENT
PRACTICES. THE RANGER
PROJECT AREA IS BEING
PROGRESSIVELY REHABILITATED
IN LINE WITH REGULATORY
REQUIREMENTS.
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ENERGY RESOURCES OF AUSTRALIA LTD
2016 ANNUAL REPORT
SUSTAINABILITY REPORT
FINANCIAL REPORT
JOESPH QUALTER, CELEBRATING 35 YEARS WITH ERA
In 2016 Joe Qualter celebrated
35 years with ERA. Joe is ERA’s
longest serving employee, having
started working at Ranger mine
just prior to the commencement
of production on 13 August 1981.
ENERGY RESOURCES OF AUSTRALIA LTD 5
CHAIRMAN’S REPORT
The Company reached a very important milestone in
2016 – 35 years of supply of uranium oxide at Ranger.
ERA continues to supply uranium to fuel some of the
biggest cities in the world, which rely on nuclear power
as a clean and reliable source of base load energy.
In 2016, energy security continues to be a global issue, not
only in developing countries, but, as we have experienced
recently domestically, also in the developed world. While
renewable energy sources such as wind and solar power
have a place in the energy mix, they are capital intensive and,
therefore, costly per unit of output, and lack the reliability
and capacity to support large base load supply, as is the
case with nuclear, gas and fossil fuels. Nuclear is one of the
few energy sources which can provide a continuous, reliable
base load supply without environmental damage. We are
seeing China and India increasingly turning to nuclear as
part of their energy mix to support their growing economies
and population, as well as their need to be environmentally
supportive and internationally competitive. Currently, nuclear
generates only about 11 per cent of the world’s electricity
and 21 per cent of electricity in the OECD countries.
According to the World Nuclear Association, in late 2016,
worldwide, there were 58 reactors under construction
and 167 on order or planned, with a further 345 reactors
proposed. This is in addition to the 448 nuclear power
plants which are currently operating.
India and China have ambitious nuclear development plans,
with China having 37 nuclear power reactors in operation
and 20 more under construction. Meanwhile India, which
aims to supply 25 per cent of its electricity from nuclear
power by 2050, has 22 reactors operating, 5 under
construction, and further 20 in planning stages.
ERA has traditionally sold its uranium to the established
nuclear power generating countries such as Japan, the US
and Europe. However, new markets such as China and the
UAE are now buying Australian uranium to fuel their reactors.
With the number of reactors to come on line in the next
decade in a bid to cut greenhouse emissions and to address
climate change, Australia is in the box seat to capitalise on
this market growth in Asia.
Australia’s known uranium resources are the largest in
the world – almost a third of the world total. Australia’s
3 operating mines export all of their production under
very strict safeguards. None is used domestically.
Just as the Commonwealth’s approach to uranium mining
has shifted over the decades from the three uranium mines
approach to less restrictive limits, so should the approach to
energy supply.
PETER MANSELL
CHAIRMAN
The challenges we are confronting globally are easily
identified: cost, security, reliability and international
competitiveness. They are all critical issues. We talk a great
deal about renewables – and, as I say above, they do have
a place in the mix – but, on current technologies, they are
both expensive and too unreliable and insecure for base
load requirements. Gas also has a place in the mix, but it
is not greenhouse emission free. Clearly, in today’s ‘clean
energy’ environment, the world cannot rely to the extent
that it does on energy generated by fossil fuels, certainly not
with the current technologies. It is unsustainable in the long
term. It is against that backdrop that we, in Australia, need
to debate, in a rational way, the role that uranium can play
in our international competitiveness and as a responsible,
cheap, reliable and carbon dioxide emission free source of
global and domestic energy. Australia is rich in uranium and
the cost and competitive advantages are self-evident. There
are unquestionably community concerns about uranium and
nuclear energy, but they must be understood and addressed
in a considered discussion based on fact – not ideology.
Against a backdrop of a low uranium price with expectations
of recovery by many market observers being some time away,
the ERA Board took the step earlier in the year to conduct a
review of the near-term strategic priorities for the business.
We will maintain the progressive rehabilitation of the Ranger
Project Area as we process stockpiled ore until 2020, while
the Board keeps its options open with regards to Ranger
3 Deeps, which continues to be on care and maintenance.
This cautious approach is necessary during times of high
economic volatility, low uranium spot prices and ongoing
variability of the Australian dollar. We will do whatever is
necessary to preserve the value of all of our ore deposits, but
only in very close collaboration with all affected stakeholders.
The Board’s responsibility is to navigate a path forward with
all stakeholders that maximises value for all shareholders.
Lastly, on behalf of the Board, I would like to thank the
management team and staff for a year that they can be
truly proud of.
It is time to have a mature debate about energy sourcing
both on a global and domestic level. There is a need to shift
from ideology to a rational scientific and political debate.
Peter Mansell
Chairman
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ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
CHIEF EXECUTIVE’S REPORT
In 2016 ERA delivered strong safety and operational
performance, generated positive cash flow from remaining
ore stockpiles, and made significant progress on rehabilitation.
Our focus on safety for our people, our communities and
the environment remains a core value and in 2016 ERA
delivered excellent performance in workplace health
and safety.
We achieved an all injury frequency rate of 0.19 per 200,000
hours worked, compared with 0.67 for 2015, and 1.27
for 2014.
This improved performance reflects sustained focus from
frontline teams supported by safety leadership from team
leaders, supervisors and managers.
In addition ERA successfully completed implementation of a
comprehensive Process Safety Improvement Action Plan.
The plan’s implementation has been conducted with
regulatory oversight from external safety consultants Noetic
Risk Solutions (Noetic), on behalf of the Australian and
Northern Territory Governments.
Noetic’s final report determined that ERA has effectively
implemented process safety concepts and is now in a
leading position as compared to industry peers.
A strategic review of the business was completed in April
which determined three near-term strategic priorities for ERA.
We will maximise generation of cash flow from the
processing of stockpiled ore, which can potentially be
sustained until late 2020.
We will continue the progressive rehabilitation of the
Ranger Project Area and provide assurance to stakeholders
that rehabilitation can be fully delivered and funded in a
range of business scenarios.
We will also continue to preserve the option for the future
development of Ranger 3 Deeps via ongoing care and
maintenance of the Ranger 3 Deeps exploration decline and
related infrastructure.
Our focus on maximising generation of cash flow from the
processing of stockpiled ore delivered strong results in 2016.
ERA produced 2,351 tonnes of uranium oxide, which was
slightly above the guidance of 1,900 to 2,300 tonnes and
with engineered efficiency initiatives achieved above plan
performance in milling rates, throughput and production.
Financially ERA continued to generate strong positive cash
flow, increasing its cash balance by $30 million.
ERA’s contracted long term sales agreements continue to
shield the business from the impact of the low spot price
for uranium.
ANDREA SUTTON
CHIEF EXECUTIVE
ERA realised an average sale price of US$41.87 per pound
compared with an average spot price of US$25.64 per
pound in 2016.
At 31 December 2016, ERA had $466 million in total cash
resources and a rehabilitation provision of $511 million.
As a prudent risk management initiative, ERA has entered
into a $100 million credit facility with Rio Tinto, should
additional rehabilitation funding be required.
In 2016 we achieved further progressive rehabilitation
milestones on the Ranger Project Area.
ERA is seeking regulatory approval to proceed with the final
land-forming layer of waste rock for Pit 1, after successfully
completing the laterite capping layer in 2016.
In Pit 3 the brine injection infrastructure was commissioned,
marking a significant turning point in ERA’s integrated brine
and tailings management system.
The stainless steel dredge achieved its first full year of
operations, transferring an estimated 3.0 million cubic
metres of tailings from the Tailings Storage Facility to Pit 3.
All new tailings are now sent from the processing plant
directly to Pit 3.
This has the net effect of progressively lowering the volume
of the tailings mass and process water stored in the Tailings
Storage Facility.
Finally, as we look to the future it is important for ERA to
make appropriate plans and to take all necessary measures
to meet our obligations under the current legal framework.
We recognise, however, that as the end of mining
approaches, plans need to be made about the future of
the township and community of Jabiru.
Our Jabiru Social Impact Assessment began seeking
feedback from local people and businesses at the end of
2016 and this information will help develop a transition and
rehabilitation strategy for the town.
In closing I would like to thank our key stakeholders for
their support throughout 2016 and to also recognise the
skills, commitment and safety focus displayed by ERA’s
dedicated workforce.
Andrea Sutton
Chief Executive
7
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT 2017 OBJECTIVES
The Company’s objective is to continue to safely produce uranium oxide,
while advancing the progressive rehabilitation of the Ranger Project Area,
protecting the environment and contributing to the global energy market
and local economy and enhancing shareholder value.
Area
Objective
Health,
Safety and
Environment
Committed to the goal of zero harm:
• focus on strong safety leadership development;
• complete the implementation of the Critical Risk Management programme at Ranger;
• demonstrate a sound understanding of processing critical risk profiles within the organisation
and monitor using the Critical Control Management Plan; and
• continue to protect the World Heritage-listed Kakadu National Park through effective risk
assessment and environmental management plans.
Strategic
business review
Implement the near-term strategic priorities identified by the strategic business review:
• continue the progressive rehabilitation of the Ranger Project Area and provide assurance
to stakeholders that rehabilitation can be fully delivered and funded in a range of business
scenarios;
Financial
Operations
• maximise generation of cash flow from the processing of stockpiled ore, which can potentially be
sustained until late 2020 (the current Ranger Authority expires in January 2021); and
• preserve the option for the future development of Ranger 3 Deeps via ongoing care and
maintenance of the Ranger 3 Deeps exploration decline and related infrastructure.
Maximise cash generation and shareholder value:
• continue to identify savings and cash generation opportunities;
• maximise operational efficiencies and cost savings; and
• continue to maintain optionality of Ranger 3 Deeps and Jabiluka ore deposits.
Economically produce uranium from stockpiled ore while integrating rehabilitation activities:
• optimise production of uranium oxide;
• optimise availability and throughput of the Brine Concentrator, including injection of brine into
Pit 3 backfill; and
• monitor and manage the integrity of the processing plant and operating assets.
Rehabilitation
and closure
Continue progressive rehabilitation of the Ranger Project Area:
• dredging of the Tailings Storage Facility;
• finalise closure criteria by working with the respective stakeholders and regulators; and
• continue revegetation work on disturbed land.
Communities
and government
Enhance relationships with key stakeholders:
• consult residents and stakeholders as part of the Jabiru Town Social Impact Assessment;
• actively engage with the representatives of the Mirarr Traditional Owners, the Gundjeihmi
Aboriginal Corporation, to achieve mutually beneficial outcomes for the Company, the Traditional
Owners and shareholders;
• engage with governments and their agencies to ensure timely outcomes on the Company’s
objectives; and
• work with Governments, Traditional Owners and stakeholders to plan for the future of Jabiru.
People
Foster a safe, capable, committed and diverse workforce:
• continue to support inclusion and diversity within ERA;
• continue to grow regional training and development programme; and
• provide leadership and development opportunities for the workforce.
8
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT OPERATING AND FINANCIAL REVIEW
Financial Performance
In 2016 ERA continued to generate positive cash flow from
its operations. ERA generated cash flow from operating
activities of $34 million for the period (2015: $85 million). In
2016 cash flow was impacted by a weaker average realised
sales price and lower sales volume. This has partially been
offset by lower expenditure on exploration and evaluation
and an increase in other revenue.
ERA increased its cash balance by $30 million during 2016,
ending the year with $396 million in cash at bank and no
debt. In addition to cash at bank, ERA had $70 million of
cash held by the Commonwealth Government as part of
the Ranger Rehabilitation Trust Fund, bringing total cash
resources to $466 million at 31 December 2016.
ERA recorded a net loss after tax of $271 million compared
to a net loss after tax of $275 million in 2015. The net
loss after tax was impacted by a $231 million non-cash
impairment of ERA’s property, plant and equipment.
In 2015, the net loss after tax was impacted by a non-
cash charge for the write down of deferred tax assets of
$196 million.
At 30 June 2016, ERA identified that the continued decline
in the uranium oxide spot price was an indication of
impairment. A non-cash impairment charge of $161 million
was recorded in the Statement of Comprehensive Income at
30 June 2016.
At 31 December 2016 a further impairment of $69 million
was recorded due to continued weakening of the uranium
oxide price. The total non-cash impairment charge for 2016
was $231 million.
In April, ERA entered into a $100 million credit facility
agreement with Rio Tinto. The agreement provides
additional assurance to stakeholders that rehabilitation of
the Ranger Project Area can be fully funded in a range of
business scenarios.
REVENUE
Revenue from the sale of uranium oxide was $268 million
(2015: $333 million). Sales volume for 2016 was 2,139
tonnes (2015: 2,183 tonnes). The average realised sales
price that the Company received for uranium oxide in 2016
was US$41.87 per pound (2015: US$51.99 per pound).
This compares favourably against the average spot price for
2016 of US$25.64 per pound.
With uranium oxide sales denominated in US dollars, the
weakening of the Australian dollar was beneficial to ERA.
The average USD/AUD exchange rate during the year was
0.74 US cents, compared with 0.75 US cents in 2015.
Stockpiled ore is loaded onto a haul truck at Ranger mine,
with the processing plant in the background.
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ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT OPERATING AND FINANCIAL REVIEW
OPERATING COSTS
Cash costs for 2016 were significantly lower than 2015,
due to an ongoing focus on cash preservation, reduced
exploration and evaluation expenditure and favourable
movements in consumable input prices.
The Company’s cash generation programme continued to
identify further opportunities for savings and efficiency
improvements across the business in 2016. Work on
additional opportunities will continue in 2017. Favourable
input costs were achieved through ongoing negotiation of
procurement contracts and productivity improvements.
Total exploration and evaluation spend for 2016 was nil
(2015: $9 million).
CAPITAL EXPENDITURE
Capital expenditure for the year was $3 million (2015: $12
million). All capital expenditure in 2016 related to sustaining
capital expenditure projects.
REHABILITATION
Progressive rehabilitation continued with expenditure of
$20 million incurred during 2016. Expenditure was primarily
associated with the completion of a layer of laterite capping
to Pit 1 and commissioning and operation of dredging
infrastructure to transfer tailings from the Tailings Storage
Facility to Pit 3.
CREDIT FACILITY
In April ERA entered into a $100 million credit facility
agreement with Rio Tinto. The credit facility agreement
provides additional assurance to stakeholders that
rehabilitation of the Ranger Project Area can be fully funded
in a range of business scenarios.
In the event that ERA is unable to fully fund the Ranger
rehabilitation programme from its cash reserves, and in
the absence of any other successful developments or asset
sales, the Company may draw on the facility. The credit
facility can be terminated at any time by ERA. Further
details of the credit facility are the subject of an ASX release
dated 29 April 2016.
A beach is forming in Pit 3 as tailings are deposited via
pipelines from the Tailings Storage Facility and the mill.
10
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT OPERATING AND FINANCIAL REVIEW
Engineers look over the processing area of Ranger mine.
Operations
In 2016 ERA built on the solid operational delivery of the
previous year with another strong performance in terms of
optimised production of uranium oxide and process safety
implementation.
ERA has continued to successfully implement the Process
Safety Improvement Action Plan to the satisfaction of
Commonwealth and Northern Territory regulators.
Total production for the 12 months to 31 December 2016
was 2,351 tonnes of uranium oxide (guidance 1,900
to 2,300 tonnes) with throughput, milling rates and
production all ahead of plan.
All ore milled was taken from existing stockpiles.
Comprehensive maintenance strategies, including scheduled
mill maintenance in the June quarter, contributed to
improved production rates in the latter half of the year.
Progressive rehabilitation of the Ranger Project Area
continued with the dredge operating at capacity to transfer
tailings from the Tailings Storage Facility to Pit 3, the
commissioning of the brine injection infrastructure and the
completion of laterite capping of Pit 1.
In addition, in line with the outcomes of the strategic
business review, ERA has preserved the option for the
future development of Ranger 3 Deeps, which is now in
care and maintenance.
STRATEGIC BUSINESS REVIEW
ERA initiated a strategic business review in late 2015 with
the aim of identifying executable options to maximise
shareholder value.
ERA announced the outcomes of the strategic business
review in May 2016. The review determined three near-term
strategic priorities for the Company, which were to:
• continue the progressive rehabilitation of the Ranger
Project Area and provide assurance to stakeholders that
rehabilitation can be fully delivered and funded in a
range of business scenarios;
• maximise generation of cash flow from the processing
of stockpiled ore, which can potentially be sustained
until late 2020 (the current Ranger Authority expires in
January 2021); and
• preserve the option for the future development of
Ranger 3 Deeps via ongoing care and maintenance of
the Ranger 3 Deeps exploration decline and related
infrastructure.
PROCESS SAFETY
Over the past 24 months ERA has been implementing the
Process Safety Improvement Action Plan to improve the
management of process safety risks at Ranger.
Implementation has been overseen on a quarterly basis by
the Northern Territory and Commonwealth Governments
and their independent consultant Noetic Risk Solutions.
In November, the eighth and final quarterly visit to Ranger
to observe progress and implementation of the Process
Safety Improvement Action Plan was completed.
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ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT OPERATING AND FINANCIAL REVIEW
The final report concludes that ERA has effectively
implemented process safety concepts, and “has put itself in
a leading position as compared to industry peers. This is a
major achievement.”
ERA will continue to embed process safety management
at Ranger in 2017. Following successful completion of
the scheduled programme of regulatory oversight ERA
will engage external consultants to support ongoing
governance of process safety management.
PRODUCTION
Record throughput of 2.7 million tonnes of uranium ore
and peak primary milling rates of 318 tonnes per hour were
achieved through a consistent and sustained approach to
optimised plant performance.
In 2016 ERA produced 2,351 tonnes of uranium oxide,
which marginally exceeded market guidance (1,900 to
2,300 tonnes). Average ore head grade for 2016 was
0.10 per cent uranium oxide (2015: 0.10 per cent).
ERA‘s Primary Maintenance Optimisation Programme and
Production Improvement Plans simplified and streamlined
preventative maintenance to ensure maximum plant
availability and contribute to improved safety.
Strong performance was achieved in both the laterite and
the primary crushing plants, with combined availability of
91 per cent against a plan of 86 per cent, and utilisation of
90 per cent against a plan of 86 per cent.
PROGRESSIVE REHABILITATION
ERA’s rehabilitation activities continue to take place in
parallel with ongoing operations.
The progressive nature of ERA’s rehabilitation activities
ensures that work to rehabilitate the environment is
completed at the earliest opportunity. It also requires
current operational activities be planned and conducted
with rehabilitation in mind.
ERA’s proposals, activities, costings and outcomes for
its progressive rehabilitation plan are derived from the
Integrated Tailings, Water and Closure Study and are
the result of extensive studies and consultation with
stakeholders.
A key element of the Integrated Tailings, Water and Closure
Study is the Tailings and Brine Management Project, which
coordinates the rehabilitation of Pit 1, Pit 3 and the Tailings
Storage Facility and includes provision for managing tailings
waste from ongoing milling activities until the end of
production in 2020.
The Brine Concentrator is a key facility in the water
management and rehabilitation activities at Ranger.
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ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT OPERATING AND FINANCIAL REVIEW
This significant project provides an integrated operational
pathway for:
• converting the Pit 1 catchment area from process water
The rock pre-load activated the drainage wicks, forcing the
water beneath the pit to travel to the surface where it was
collected and pumped to the Tailings Storage Facility.
to pond water;
• redirecting tailings from the processing mill away from
the Tailings Storage Facility and directly into Pit 3;
• returning water from Pit 3 to the Tailings Storage Facility;
• directing the brine waste stream from the Brine
Concentrator to Pit 3; and
• rehabilitation of the exhausted Pits 1 and 3.
The Tailings and Brine Management Project continued to
achieve significant progress in 2016 building on the gains
of 2015.
The dredge was commissioned in the first half of the
year with performance testing commencing in May. Since
performance testing, the dredge has performed well
which has resulted in a forecast compression of the overall
dredging schedule.
In the 12 months to 31 December 2016 the dredge
transferred 3.0 million cubic metres of tailings from the
Tailing Storage Facility to Pit 3.
The slurry which is pumped from the Tailings Storage Facility
and the mill via primary and secondary pipelines has formed
a beach in the base of Pit 3. This is designed to enhance
consolidation of the tailings in the Pit and express process
water. Pumping infrastructure then transfers process water
from Pit 3 back to the Tailings Storage Facility. This process
water is then directed to the Brine Concentrator for treatment.
The associated brine transfer pumping and injection
infrastructure was commissioned in March 2016 enabling
the concentrated brine waste stream from the Brine
Concentrator to be injected into the base of Pit 3.
Total brine injected during the year was 95 megalitres.
REHABILITATION OF PIT 3
Mining of Pit 3 was completed in late 2012 and in 2013
more than 33 million tonnes of waste rock were placed
into the base of the pit along with five brine injection wells
designed to enable injection of waste brine from the Brine
Concentrator into the base of the pit.
In 2016 tailings from both the Tailings Storage Facility and
from milling operations was transferred into the pit, while a
water recovery drain and extraction pump system transfers
excess water back to the Tailings Storage Facility.
The transfer of tailings to Pit 3 will continue until 2020 after
which final rehabilitation of Pit 3 will continue.
REHABILITATION OF PIT 1
ERA’s progressive rehabilitation programme includes
significant work on ERA’s original Pit 1 mining operation.
ERA has stored mill tailings in Pit 1 as required by the Ranger
Authority. In 2012, Pit 1 closure works saw the installation of
over 7,700 dewatering wicks, a geotextile fabric layer and a
pre-load rock layer to compress the tailings mass.
In 2016 work to cap the pre-load rock layer with an
impervious layer of laterite was completed. ERA has sought
permission from regulators to place the final bulk rock fill
on top of the laterite layer in preparation for land forming
and revegetation of the 39.3 hectare site.
BRINE CONCENTRATOR
The Brine Concentrator treats process water which is stored
in the Tailings Storage Facility and Pit 3.
Process water is heated to high temperatures and
evaporated before being cooled, condensed and discharged
to the environment as high quality, clean distilled water.
The Brine Concentrator produces high quality water suitable
for release to ERA’s constructed wetlands and then offsite,
as well as concentrated brine.
During 2016 works to improve the reliability of the diesel
power generators delivered an increased security of power
supply to the Brine Concentrator resulting in more stable
operations.
ERA continues to work with the Brine Concentrator
equipment manufacturer HPD, a subsidiary of Veolia, to
increase plant availability and address various technical
issues. Significant improvement was made during the year
to achieve improved availability and increase production
rates of the Brine Concentrator.
During the year, the Brine Concentrator produced
1,306 megalitres of distillate and 95 megalitres of brine
concentrate which was transferred to Pit 3 via the brine
injection system.
CLOSURE PLAN
ERA reviewed and updated the Ranger Closure Plan and
submitted a draft for review by relevant stakeholders at the
end of 2016.
This Closure Plan includes a works programme that
meets with the closure objectives as stated in the Ranger
Authority and associated Environmental Requirements.
The plan also includes proposed closure criteria for the
Ranger mine which have been developed in consultation
with the Supervising Scientist Branch, the Northern
Territory Department of Primary Industry and Resources,
the Northern Land Council, the Gundjeihmi Aboriginal
Corporation and the Commonwealth Department of
Industry, Innovation and Science over several years.
The closure criteria address the key themes of closure
which are landform, radiation, water, flora and fauna,
soils and cultural.
13
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT OPERATING AND FINANCIAL REVIEW
Business Strategy
ERA’s vision is to be a world-class uranium supplier that
contributes to environmental sustainability and is trusted by
Traditional Owners and the community.
ERA holds two undeveloped uranium resources of
international significance at Ranger 3 Deeps and Jabiluka.
In addition, ERA has stockpile Ore Reserves at Ranger that,
in the absence of development of other resources, are
expected to sustain operations until late 2020 under current
economic assumptions.
ERA’s near term strategic priorities are:
• continue the progressive rehabilitation of the Ranger
Project Area and provide assurance to stakeholders that
rehabilitation can be fully delivered and funded in a
range of business scenarios;
• maximise the generation of cash flow from the
processing of stockpiled ore, which can potentially be
sustained until late 2020 (the current Ranger Authority
expires in January 2021); and
• preserve the option for the future development of
Ranger 3 Deeps via ongoing care and maintenance of
the Ranger 3 Deeps exploration decline and related
infrastructure.
ERA considers that the implementation of these
objectives will maximise shareholder value and benefit its
stakeholders.
CURRENT OPERATIONS
Current operations rely on the processing of uranium ore
stockpiles following the cessation of open pit mining in Pit 3.
In January 2016, ERA announced that it had reclassified
6,003 tonnes of uranium oxide contained within surface
stockpiles from Mineral Resources to Ore Reserves. The
increase in Ore Reserves resulted from lowering the cut-off
grade from 0.08% U3O8 to 0.06% U3O8.
The Company’s estimate of Ore Reserves for the Ranger
stockpiles at 31 December 2016 was 8,081 tonnes of
contained uranium oxide.
The Company has generated positive cash flow from
the processing of stockpiled ore in each year since the
cessation of open pit mining operations in 2012.
The Company has initiatives in place to reduce costs
and improve productivity to offset the adverse impact
of declining ore grades over time.
Subject to market conditions, and in the absence of further
mine development, the mine plan which supports the
Ore Reserves Statement assumes that stockpiled ore can
continue to be economically processed at Ranger until late
2020.
RANGER 3 DEEPS
The Ranger 3 Deeps project involved the construction
of a 2,710 metre exploration decline and an associated
underground exploration drilling programme designed to
pave the way to a potential underground mine.
A haul truck stops under the ore discriminator at Ranger. The tray of the truck was
painted pink to raise awareness of breast cancer research.
14
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT OPERATING AND FINANCIAL REVIEW
The exploration decline and associated infrastructure remain
under care and maintenance.
The Ranger 3 Deeps Mineral Resource remains unchanged
for 2016 at 19.58 million tonnes at an overall grade of
0.224% U3O8, representing 43,858 tonnes of contained
uranium oxide.
JABILUKA
In addition to Ranger 3 Deeps, the Jabiluka Mineral Lease
remains one of ERA’s key assets. Jabiluka is a large, high-
quality uranium ore body of international significance.
ERA has entered into a Long Term Care and Maintenance
Agreement with the Mirarr Traditional Owners in relation to
the Jabiluka resource.
Future mining developments at Jabiluka will not occur
without the consent of the Mirarr Traditional Owners.
BUSINESS RISKS
The business risks that could adversely affect the
achievement of the financial performance or financial
outcomes of the Company are described below.
Undeveloped resources
The Company has significant undeveloped uranium
resources at Ranger 3 Deeps and Jabiluka.
In 2015 the ERA Board determined that development of
the Ranger 3 Deeps project would not proceed to final
feasibility study in the current operating environment.
This was, in part, due to the Board’s assessment that the
economics of the project required operations beyond
the current Ranger Authority, which permits processing
operations until January 2021. An extension of the Ranger
Authority would enable the Company to revisit the project’s
economics over time.
Support from the Mirarr Traditional Owners is a key
factor in the Company’s ability to secure an extension
to the Ranger Authority. In the second half of 2015,
representatives of the Mirarr Traditional Owners withdrew
from negotiations with the Company on the possibility of
an Authority extension.
In relation to Jabiluka, ERA has agreed that future mining
development will not occur without the consent of the
Mirarr Traditional Owners. It is uncertain that this consent
will be forthcoming and, by extension, that the Jabiluka
deposit will be developed. Should this consent not
eventuate in the future, the Jabiluka Undeveloped Property
would face full impairment.
Rehabilitation
ERA currently has authority to produce uranium oxide at
the Ranger Project Area until January 2021 and must fully
rehabilitate the site by January 2026.
The ultimate cost of rehabilitation is uncertain and while
ERA has used its best estimate, costs may vary in response
to factors such as legal requirements, technological change
and market conditions. In the event that ERA is unable to
fully fund the Ranger rehabilitation programme from its
cash reserves, and in the absence of any other successful
developments or asset sales, the Company may require an
additional source of funding to fully fund the rehabilitation
of the Ranger Project Area. The Company has entered into
a $100 million credit facility agreement with Rio Tinto for
this purpose.
Water management
Management of water on the Ranger Project Area is
critical to the ongoing operation of ERA’s processing and
rehabilitation activities. ERA has a number of procedures
and initiatives underway in respect to water management,
including the Brine Concentrator. To the extent that these
initiatives cost more than expected or ERA is required to
implement further initiatives, ERA’s financial and operational
performance and position may be impacted.
Uranium market demand, price and foreign
exchange risks
ERA’s business relates primarily to the production and
subsequent sale of uranium oxide to a variety of customers.
Demand for, and pricing of, uranium oxide remains sensitive
to external economic and political factors, many of which
are beyond ERA’s control. Global uranium and foreign
exchange market fluctuations may materially affect ERA’s
financial performance.
General regulatory risks
Uranium mining in Australia is extensively regulated by
Commonwealth, State and Territory Governments.
In particular, the approval processes for uranium mining
are more onerous, and therefore more costly, than for the
mining of other minerals. Government actions in Australia
and other jurisdictions in which ERA has interests, including
new or amended legislation, guidelines and regulations
in relation to the environment, uranium or nuclear power
sectors, competition policy, native title and cultural heritage
could impact ERA’s operations.
Operational aspects that may be affected include, among
other things, land access rights, the granting or renewal of
licences and other tenements, the extension of mine life
and the approval of developments.
15
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT OPERATING AND FINANCIAL REVIEW
Capital and liquidity risks
The future liquidity and capital requirements of the
Company will depend on many factors. Should current
forecasts for foreign exchange rate, prices, costs, resource
and mining techniques not be realised, and in the absence
of any other successful developments, the Company may
require an additional source of funding to fully fund the
rehabilitation of the Ranger Project Area.
The Company has entered into a $100 million credit facility
agreement with Rio Tinto for this purpose.
Each year, the Company 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 the
Company into the Ranger Rehabilitation Trust Fund (Trust
Fund) is then determined. The Trust Fund includes both cash
and financial guarantees.
The Company’s ability to continue to access financial
guarantees can be influenced by many factors including
future cash balance, cash flows and shareholder support.
Should one or more of the financial guarantees be
withdrawn at any time and the Company is unable to
access replacement guarantees, substantial additional cash
would be required to be deposited into the Trust Fund. In
a scenario where this occurs the Company’s cash resources
available to fund operations would reduce. The Company
has plans in place to address these risks, including the credit
facility agreement with Rio Tinto.
Regulators and stakeholders
Regulatory approvals would be required to commence any
production from the proposed Ranger 3 Deeps mine or on
any other parts of the Ranger Project Area and the Jabiluka
Mineral Lease. If regulatory approvals are not obtained or
are obtained on unsatisfactory conditions, ERA will not be
able to proceed with those developments.
The capping of Pit 1 was completed in January 2016, the next stage
Caption
of the rehabilitation process will be to commence bulk backfilling.
16
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT FUTURE SUPPLY
EVALUATION AND EXPLORATION
There was no evaluation or exploration expenditure
for 2016. ERA suspended the final stage of the surface
exploration programme on the Ranger Project Area in 2015
to preserve cash following the deferral of the Ranger 3
Deeps project.
GOVERNANCE
ERA’s Competent Person is a full time employee of ERA.
The ERA Board oversees the governance of Resources and
Reserves. This includes the annual review and approval of
the publicly reported Ore Reserves and Mineral Resources
Statement.
The Ranger 3 Deeps exploration decline and associated
infrastructure remains under care and maintenance.
RANGER 3 DEEPS RESERVES AND RESOURCES
The economic assumptions for the Ranger 3 Deeps Mineral
Resource use a cut-off grade of 0.11% U3O8. The Ranger 3
Deeps estimated Mineral Resource is 19.58 million tonnes
with an overall grade of 0.224% U3O8, equating to 43,858
tonnes of contained uranium oxide.
RANGER RESERVES AND RESOURCES
During 2016 ERA processed 2,696 tonnes of uranium oxide.
Probable Ore Reserves of uranium oxide for Ranger
decreased by 2,302 tonnes in 2016 to 8,081 tonnes at 31
December 2016 (31 December 2015: 10,383 tonnes). This
included the impact of depletion by processing in 2016 of
2,696 tonnes.
During the reporting period, all processed ore was sourced
from either run of mine stocks or low grade stockpiles.
For the same period, Ranger Mineral Resources decreased
by 178 tonnes of uranium oxide, from 56,149 tonnes to
55,971 tonnes.
The decrease was mainly due to the mining depletion of
low grade stocks below the reserve cut-off.
JABILUKA RESERVES AND RESOURCES
The Jabiluka Mineral Lease remains under long term care
and maintenance. 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 Jabiluka estimated Mineral Resource is 137,107 tonnes
of uranium oxide at a cut-off grade of 0.2% U3O8.
Internal approval of Ore Reserves and Mineral Resources
for ERA is the responsibility of the Chief Executive and
estimates are carried out by a Competent Person as defined
by the JORC Code 2012.
As part of its internal controls, ERA applies the standards
of the Rio Tinto Ore Reserves Steering Committee (ORSC)
in the generation and publication of Mineral Resources and
Ore Reserves.
The ORSC comprises senior representatives from technical,
financial and business fields within the Rio Tinto Group and
meets on a quarterly basis.
The ORSC’s role includes setting the standards and
qualifications for Competent Persons in accordance with the
JORC Code 2012 which form the basis of Competent Person
appointment by ERA.
Rio Tinto’s Resource and Reserve internal audit programme
is conducted by independent external consulting personnel
in a programme managed by Rio Tinto Group Audit and
Assurance with the assistance of the ORSC.
Rio Tinto has continued the development of internal systems
and controls to ensure compliance with the JORC Code
2012 in all external reporting including the preparation of
reported data by ERA’s Competent Person.
Other improvements introduced by the ORSC include
a web-based reporting and sign-off database, annual
internal Competent Person reports and Competent Person
development and training.
17
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT FUTURE SUPPLY
ERA 2016 Ore Reserves & Mineral Resources
RANGER ORE RESERVES
Current Stockpiles
In situ
Proved
Probable
CUT-OFF GRADE –
STOCKPILE ORE 0.06% U3O8
As at 31 December 2016
CUT-OFF GRADE –
STOCKPILE ORE 0.06% U3O8
As at 31 December 2015
Ore (MT) % U3O8
t U3O8
Ore (MT) % U3O8
t U3O8
10.00
0.081
8,081
12.08
0.086
10,383
–
–
–
–
–
–
–
–
–
–
–
–
Sub-total Proved and Probable Reserves
10.00
0.081
8,081
12.08
0.086
10,383
Total Ranger No. 3 Stockpiles,
Proved and Probable Reserves
10.00
0.081
8,081
12.08
0.086
10,383
RANGER MINERAL RESOURCES
IN ADDITION TO THE ABOVE RESERVE
CUT-OFF GRADE – STOCKPILE
RESOURCE 0.02% U3O8
UNDERGROUND INSITU RESOURCE
0.11% U3O8
As at 31 December 2016
CUT-OFF GRADE – STOCKPILE
RESOURCE 0.02% U3O8
UNDERGROUND INSITU RESOURCE
0.11% U3O8
As at 31 December 2015
Current Mineralised Stockpiles
30.61
0.04
Ore (MT) % U3O8
t U3O8
12,113
Ore (MT) % U3O8
31.17
0.04
t U3O8
12,291
In situ resource (R3 Deeps)
Measured
Indicated
Sub-total Measured and Indicated Resources
Inferred Resources
Total Resources
JABILUKA ORE RESERVES
(all written back to Mineral Resources)
Proved
Probable
Total Proved and Probable Reserves
JABILUKA MINERAL RESOURCES
Measured
Indicated
Sub-total Measured and Indicated
Inferred Resources
Total Resources
* Rounding differences may occur.
3.72
10.41
44.74
5.44
50.18
0.27
0.22
0.10
0.20
0.11
10,134
22,636
44,883
11,087
55,971
3.72
10.41
45.31
5.44
50.75
0.27
0.22
0.10
0.20
0.11
10,134
22,636
45,062
11,087
56,149
CUT-OFF GRADE 0.20% U3O8
As at 31 December 2016
CUT-OFF GRADE 0.20% U3O8
As at 31 December 2015
Ore (MT) % U3O8
t U3O8
Ore (MT) % U3O8
t U3O8
–
–
–
1.21
13.88
15.09
10.03
25.12
–
–
–
0.89
0.52
0.55
0.54
0.55
–
–
–
10,769
72,176
82,945
54,162
137,107
–
–
–
1.21
13.88
15.09
10.03
25.12
–
–
–
0.89
0.52
0.55
0.54
0.55
–
–
–
10,769
72,176
82,945
54,162
137,107
18
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT FUTURE SUPPLY
Ranger Ore Reserves Reconciliation
ORE RESERVES
Ranger Ore Reserves as at 31 December 2015
Stage design and block model improvements
Presentation of subgrade material for processing
Depletion by processing (primary and laterite ores)
Ranger Ore Reserves as at 31 December 2016
*Rounding differences may occur
Competent person
URANIUM OXIDE
(U3O8 TONNES)*
10,383
216
178
(2,696)
8,081
Ranger and Jabiluka Ore Reserves and Mineral Resources are reported in accordance with the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves, 2012 Edition (JORC Code 2012).
The JORC Code 2012 envisages the use of reasonable investment assumptions, including the use of projected long term commodity prices, in
calculating reserve estimates.
As required by the Australian Securities Exchange (ASX), the above tables also contain details of other mineralisation that has a reasonable prospect
of being economically extracted in the future but which is not yet classified as Proven or Probable Reserves.
This material is defined as Mineral Resources under the JORC Code 2012. 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
Proven 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 the above tables is sourced from the ERA 2016 Annual Statement of Reserves and Resources which was released to ASX on
31 January 2017 and can be found at: http://www.asx.com.au/asxpdf/20170131/pdf/43fncy6lg71253.pdf
Neither the information that relates to Ranger and Jabiluka Mineral Resources or Ore Reserves, nor the underlying resource models, have changed
since the ERA 2016 Annual Statement of Reserves and Resources was disclosed to ASX.
ERA is not aware of any new information or data beyond the updates already provided to the market that materially affects the Ore Reserves and
Mineral Resources estimate.
All assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed. The information in this
report that relates to Ranger and Jabiluka Ore Reserves and Mineral Resources is based on information compiled by geologist Stephen Pevely (a full
time employee of ERA).
Stephen Pevely is a member of the Australasian Institute of Mining and Metallurgy and has sufficient experience which is relevant to the style of
mineralisation and the type of deposit under consideration, and to the activity being undertaken, to qualify as a Competent Person as defined in the
JORC Code 2012. Stephen Pevely consents to the inclusion in this report of the matters based on his information in the form and context in which it
appears.
Summary data for year end 2015 are shown for comparison. Metric units are used throughout. The figures used to calculate reserves and resources
are often more precise than the rounded numbers shown in the tables, hence small differences may result if the calculations are repeated using the
tabulated figures.
19
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT Supervisor Scott Revie leads a processing crew tool box
session before the start of night shift at Ranger.
20
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT SALES AND MARKETING
ERA’s uranium is delivered to a variety of end customers in
the United States of America, Europe, China, Japan, South
Korea and Taiwan.
Meanwhile, demand has been significantly lower due to the
slower than expected restart of Japanese reactors following
the failure at Fukushima.
These customers seek reliable supply of high quality product
sourced from Australia, a stable, democratic country and
member of the Organisation for Economic Co-operation
and Development (OECD).
The mechanism for the sale of ERA’s uranium is a sales and
marketing agreement with Rio Tinto Uranium.
Under this agreement all production from ERA and the
Rössing uranium mine in Namibia (also majority-owned by
Rio Tinto) is purchased by Rio Tinto Uranium and sold to
nuclear utility customers around the world.
ERA’s success in securing long term contracts with
key customers has helped shield ERA from the current
prolonged decline in the spot market for uranium.
The average realised price achieved in 2016 was US$41.87
per pound (2015: US$51.99 per pound) compared with the
average spot price of US$25.64 per pound.
In addition, ERA’s uranium sales are contracted in US dollars
and a favourable movement in the exchange rate has
helped to offset weak market conditions.
The global uranium market continued to present significant
challenges for producers in 2016, with spot prices below
the cost of production for all but the lowest cost mines.
Continued global oversupply is occurring at a time when
near-term demand remains subdued. A recent decision from
Kazakhstan to cut its production by 10 per cent has had a
positive effect on the spot price.
Some older reactors in Europe and the USA have been shut
prematurely due to lower power prices in those markets. In
the USA, the emergence of shale gas is having a negative
impact on the reactor fleet. Heavy subsidies offered to
renewable energy sources in the USA and Europe are also
impacting the nuclear energy industry.
The longer-term outlook for uranium is more positive.
The signing of the Paris agreement on climate change
increases pressure on signatory countries to find low-carbon
solutions to electricity generation; many countries searching
for low emissions energy security are including nuclear
power as part of the electricity generation mix.
India and China have ambitious nuclear development plans,
with China having 37 nuclear power reactors in operation
and 20 more under construction. Meanwhile India, which
aims to supply 25 per cent of its electricity from nuclear
power by 2050, has 22 reactors operating, five under
construction, and further 20 in planning stages.
Australia has secured a long-term bilateral civil nuclear
agreement with India to export uranium for nuclear power
generation. This means Australia can export uranium to
India for use in that country’s safeguarded nuclear units.
New nuclear builds are also underway in the USA, France,
South Korea, Russia, Finland and the United Arab Emirates.
It is expected that the supply-demand imbalance will correct
itself over time and drive a uranium price recovery.
Drums of uranium oxide ready for transportation
from Ranger.
21
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT HEALTH AND SAFETY
Safety is a core value for ERA. The team at ERA is committed
to zero harm.
ERA continued to build on its strong safety performance in
2015 with one recordable injury in 2016.
The ERA Board introduced a Health, Safety and
Environment Committee to further support governance
and initiatives for improvement in health, safety and the
environmental management of ERA’s operations.
One of the key safety performance measures used by ERA
is the All Injury Frequency Rate (AIFR) which measures
the frequency of recordable injuries – lost time injuries,
restricted work injuries and medical treatment cases –
per 200,000 hours worked.
In 2016 ERA achieved an AIFR of 0.19 (2015: 0.67;
2014: 1.27).
CRITICAL RISK MANAGEMENT
In 2016 ERA progressed the implementation of Critical Risk
Management (CRM). CRM is designed to ensure that each
work area has a clear understanding of what potentially
fatal risks are associated with work activities, and prior to
commencing a task to ensure there are effective controls in
place and that these have been verified as being in place.
All levels of the business now participate in CRM through
the completion of critical control checklists, critical control
field verifications or critical control verification standards.
MANAGING HEAT AND HUMIDITY
During the hotter months of the year, hydration and
thermal stress are critical issues for ERA’s workforce,
especially for employees and contractors required to work
outdoors while wearing protective clothing and equipment.
Each year ERA implements programmes designed to
encourage behaviours which can help to manage thermal
stress and maintain hydration.
AUDITS
ERA’s integrated Health, Safety and Environment
Management System provides certification to both ISO
14001 (the international standard for environmental
management systems) and AS4801 (the Australian standard
for occupational health and safety management systems).
During February, independent surveillance audits of the
integrated Health, Safety and Environment Management
System were completed. The surveillance audits ensure the
system remains on track for successful re-certification in
2017 by identifying opportunities for improvement.
The 2016 surveillance review had no major findings for
ERA, which confirms the health, safety and environment
governance and procedures are meeting objectives.
The 2017 re-certification audit took place in November
2016, to allow for any non-conformances to be addressed by
ERA’s re-certification date in the first quarter of 2017.
In addition ERA participated in a Rio Tinto audit of its
Health, Safety, Environment and Communities standards
against the Rio Tinto Performance Standards in July 2016.
This audit occurs bi-annually and involves personnel from
Rio Tinto travelling to ERA to complete the audit. There
were no major non-conformances and 19 minor non-
conformances. A number of improvement opportunities
were identified through the audit, particularly in the health
area, which will enable continued compliance with the
standards to be achieved more efficiently.
Members of ERA’s health and safety team carrying out a
safety inspection in the Ranger Warehouse.
22
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT RADIATION MONITORING
ERA maintains a comprehensive radiation monitoring
programme at Ranger, in accordance with the Company’s
Radiation Policy and Radiation Management Plan.
This enables the Company to achieve the performance
outcomes described in ERA’s Health, Safety and
Environment Management System, which is certified to
Australian (AS4801) and international (ISO14001) standards.
These performance outcomes require that radiation
exposure to workers, the public and the environment are as
low as reasonably achievable.
A variety of mobile and fixed monitoring stations are used to
monitor radiation. There are also personal monitoring systems
that are used to capture individual worker radiation doses.
Monitoring results are subject to review prior to being
finalised. Preliminary results from the first three quarters of
2016 for workers, the public and the environment were well
below regulatory dose limits. Results for the fourth quarter
will be finalised and released in early 2017.
Monitoring results are compared to limits recommended
by the International Commission on Radiological Protection
(ICRP) for uranium industry workers as adopted by
Australian legislation.
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.
These radiation exposure limits (above natural background
and medical exposures) are:
• Members of the public: 1 millisievert (mSv) per annum;
and
• Radiation workers: 20 mSv per annum over a five year
period 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.
Examples of activities at Ranger that require a designated
worker status include mine production, process production,
process maintenance and electrical maintenance.
Doses are calculated using the methodology required by the
Code of Practice on Radiation Protection and Radioactive
Waste Management in Mining and Mineral Processing.
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.
ERA provides occupational radiation dose data for workers
at Ranger mine to the Australian Government’s Australian
National Radiation Dose Register (ANRDR).
The ANRDR is managed by the Australian Government to
collect, store, manage and distribute the radiation dose
records received by individuals working at uranium mining
and milling sites.
Designated workers are able to access the ANRDR, and
ERA also provides a copy of personal dose records to all
designated workers.
RADIATION MONITORING RESULTS
To ensure the highest possible quality control on radiation
doses, the results are reviewed internally by ERA and
externally by the Company’s regulators.
The maximum and mean annual radiation doses received
by designated workers and the maximum radiation doses
received by non-designated workers during 2016 will be
reported in the 2016 Annual Radiation Protection and
Atmospheric Monitoring Report.
The 2016 report will be submitted to stakeholders in
March 2017.
Preliminary analysis of the available dose results for 2016
indicates that all occupational and public radiation doses
remain well below the national and international dose
limits.
The table on this page provides a summary of the maximum
and mean annual radiation doses received by designated
and non-designated workers for the first three quarters of
the year.
The doses are in line with the ICRP principles of Justification,
Optimisation and Limitation and remain at the lower end of
the spectrum for uranium workers.
The potential exposures to Jabiru residents from the Ranger
mine activities are also monitored throughout the year and
are calculated annually.
The resulting contribution from Ranger mine remains very
low in comparison to both the public dose limit and the
natural background radiation level.
Historically the contribution from Ranger mine has been,
on average, approximately 0.02 mSv (or two per cent of the
1mSv member of public dose limit) and less than one per
cent of the natural background radiation level in Australia of
between 2 and 3 mSv (which varies according to location).
RADIATION DOSE
DESIGNATED
WORKERS
NON-
DESIGNATED
WORKERS
Q1 – Maximum (mSv)
Q1 – Mean (mSv)
Q2 – Maximum (mSv)
Q2 – Mean (mSv)
Q3 – Maximum (mSv)
Q3 – Mean (mSv)
0.96
0.35
1.18
0.37
1.22
0.43
0.21
0.12
0.27
0.13
0.28
0.17
23
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT Committee members include representatives of the
Northern Territory Government, the Commonwealth
Government, the Northern Land Council, Aboriginal
associations, mining companies (including ERA), West
Arnhem Regional Council, 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/science/supervising-
scientist/communication/committees/arrac
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 14 ARRTC members include seven independent
scientists nominated by the Federation of Australian
Scientists Branch and Technological Societies with the
remaining representatives being from the Commonwealth
Supervising Scientist Branch, Northern Territory
Government, ERA, Uranium Equities Ltd, Northern Land
Council, Parks Australia and a non-government environment
organisation.
Further information on ARRTC can be contained at:
http://www.environment.gov.au/science/supervising-
scientist/communication/committees/arrtc
INTERNATIONAL AND AUSTRALIAN CERTIFICATION
ERA maintains international certification (ISO 14001) of its
Health, Safety and Environment Management System which
includes the Company’s Water Management System.
ERA also maintains Australian certification (AS4801) of
its Health, Safety and Environment Management System
including the Ranger Radiation Management System.
REGULATORY FRAMEWORK
Uranium mining activities in Australia are strictly regulated
by the Commonwealth and State or Territory Governments.
The purpose of these regulations is to ensure uranium
mining performance and compliance in a range of critical
areas, including health and safety, mine safety, safe
management of toxic and radioactive substances, waste
disposal, transport safety, export controls, protection and
rehabilitation of the environment, native title, exploration,
development, taxes and royalties, labour standards and
mine reclamation.
International agreements designed to prevent nuclear
proliferation also govern the mining and export of uranium.
Exports are subject to strict safeguards and conditions to
ensure that Australian uranium is only used for peaceful
purposes.
REGULATION OF ERA’S OPERATIONS
Commonwealth and Northern Territory legislation provides
the regulatory framework for ERA’s uranium mining
activities.
ERA’s operations are closely supervised and monitored by
statutory bodies including:
• Commonwealth Department of Industry, Innovation and
Science;
• Northern Territory Department of Primary Industry and
Resources;
• Commonwealth Government’s Supervising Scientist
Branch;
• Northern Land Council;
• 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 are
the key forums for consideration of environmental matters
relating to Ranger and Jabiluka.
Committee members include representatives of the
Gundjeihmi Aboriginal Corporation, the Northern Land
Council, the Northern Territory Department of Primary
Industry and Resources, the Commonwealth Department of
Industry, Innovation and Science and the Commonwealth
Supervising Scientist Branch.
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.
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ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT Sustainability
Report
ENERGY RESOURCES OF AUSTRALIA LTD 25
CONTENTS
Overview
Environment
Water
Land
Employment
Community
27
28
29
31
32
34
DUE TO THE SENSITIVE NATURE OF
THE SURROUNDING ENVIRONMENT,
ERA STRIVES FOR SAFETY
LEADERSHIP, ENVIRONMENTAL
PROTECTION AND STRONG AND
ENDURING RELATIONSHIPS WITH
ALL STAKEHOLDERS.
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ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT OVERVIEW
The area surrounding ERA’s operations is internationally
recognised for unique ecosystems and biodiversity,
significant environmental and cultural heritage value and a
long tradition of human habitation.
Due to the sensitive nature of the surrounding environment,
ERA strives for safety leadership, environmental protection
and strong and enduring relationships with all stakeholders.
ERA’s commitment to protect the environment in 2016 was
overseen by the Commonwealth Government’s Supervising
Scientist Branch, which conducts extensive monitoring
and research programmes on the Ranger Project Area and
Jabiluka Mineral Lease.
ERA will continue to engage with the Mirarr Traditional
Owners, local communities and all levels of government to
protect the natural environment in which it operates.
THE MIRARR
The Mirarr are Traditional Owners of the lands on which
ERA operates.
Mirarr country encompasses the Ranger Project Area and
the Jabiluka Mineral 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.
The Mirarr hold beneficial freehold title to traditional
country via the Kakadu and Jabiluka Land Trusts and in
accordance with the Aboriginal Land Rights (Northern
Territory) Act 1976.
In 1995, the Mirarr established the Gundjeihmi Aboriginal
Corporation, 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 across a wide range of fields and
activities that cover heritage, economic and community
development, education, training and employment.
ERA recognises that the support of Traditional Owners is
critically important to its current operations, future projects
and successful rehabilitation.
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ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT ENVIRONMENT
ERA is committed to protecting the environment in which
it operates. Measures to protect the environment include a
wide range of preventative monitoring activities. ERA has a
particular focus on water management and monitoring which
reflects the potential for extreme rainfall associated with the
top end climate. ERA has a strong history of engagement and
co-operation with its regulators and other stakeholders to
ensure that the environment remains protected.
The Commonwealth’s Supervising Scientist Branch monitors
the impact of uranium mining on the environment and
people in the Alligator Rivers Region, including water quality
and aquatic biology indicators in Magela Creek and other
waterways adjacent to the Ranger mine.
The Supervising Scientist Branch uses a structured
programme of audits and inspections, in conjunction with
the Northern Territory Department of Primary Industry and
Resources to supervise regional uranium mining operations.
ERA’s monitoring results and the results from the
Supervising Scientist Branch are made available to the
public.
During 2016, results from statutory monitoring programmes
showed that ERA continued to maintain environmental
values and objectives in regards to water management. A
variety of improvements occurred onsite to increase surface
and groundwater knowledge, whilst continuing to protect
the surrounding environment.
The Trial Landform and Tailings Storage Facility at
Ranger mine.
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ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT WATER
MANAGING WATER BY QUALITY
There are a number of different classes of water within
the Ranger mine site: process water, pond water, release
water, potable water and water including treatment plant
permeate or Brine Concentrator distillate.
ERA’s operational and planning activities are built on a
comprehensive water management strategy that is based
on industry-leading monitoring systems and significant
investment in infrastructure for the storage, transfer and
treatment of water.
Each class of water requires a different management
approach:
• process water has been in contact with uranium ore
during processing operations and must be managed
within a closed system, and stored in the Tailings
Storage Facility or Pit 3 prior to treatment via the Brine
Concentrator;
• pond water has been in contact with stockpiled
mineralised material and operational areas of the site,
other than those contained within the process water
system. Pond water is held in the pond water system
comprising a series of sumps and retention ponds prior
to being put through reverse osmosis treatment plants;
• release water comprises clean site run-off water
collected in purpose built storages, and water that
has been treated by the Brine Concentrator or water
treatment plants to a quality suitable for release;
• potable water is high quality bore water used for
drinking and ablution. Water used in ablutions is treated
via septic tanks and disposed of via conventional
transpiration trenches;
• water treatment plant permeate is pond water that
has been treated via ERA’s micro filtration and reverse
osmosis treatment plants. Permeate is release quality
water and is either irrigated on designated land
application areas during the dry season, or released
during the wet season; and
• Brine Concentrator distillate is process water which has
been treated by the Brine Concentrator. This distillate is
of extremely high quality and like water treatment plant
permeate is considered release quality water.
Effective water management is a fundamental element of
ERA’s business and environmental protection activities.
The Kakadu region’s extended dry periods, potential for
extreme storms, and highly variable annual rainfall requires
flexibility and innovation in ERA’s approach to water
management.
The 2015-16 wet season was one of the lowest on record in
terms of rainfall. A total of 984.2 millimetres was recorded
at Jabiru Airport to 31 August 2016 (annual average:
1,566 millimetres).
Drier conditions resulted in a further reduction from the
2014-15 wet season in the volume of pond water treated
through ERA’s microfiltration and reverse osmosis treatment
facilities during the 2015-16 wet season.
WATER MANAGEMENT PLAN
ERA’s Health, Safety and Environment Management
System provides the governance framework for all water
management operations and planning activities at Ranger.
Water management performance objectives and outcomes
set out in the Health, Safety and Environment Management
System are delivered through ERA’s Water Management Plan.
The Water Management Plan is updated every year and
submitted to regulatory authorities for approval, with advice
and input from the Minesite Technical Committee.
The 2015-2016 Water Management Plan was approved in
March 2016 and the updated 2016-17 Water Management
Plan was submitted to the Minesite Technical Committee in
October 2016.
The Water Management Plan covers water capture, storage,
supply, distribution, sampling, use, treatment and disposal
across the Ranger mine site, and describes the systems for
routine and contingency management of process, pond and
release water.
WATER MANAGEMENT INFRASTRUCTURE
A key aspect of ERA’s approach to water management is
having the flexibility and operational capability to store and
treat large volumes of differing types of water based on the
quality of that water.
ERA achieves that operational flexibility through a range of
water management facilities, systems and infrastructure,
including:
• a process water transfer pumping system connecting the
Tailings Storage Facility with Pit 3;
• tailings dredging to Pit 3;
• brine injection into Pit 3 backfill;
• plant tailings to Pit 3;
• surface water and seepage interception trench around
stockpiles;
• GCT2 interception system;
• use of continuous real-time water quality monitoring
stations;
• an expanded network of ground water monitoring bores
(approximately 240 actively monitored);
• successful diversion of approximately 90 per cent of Pit
1 catchment away from the process water system to the
pond water system;
• water treatment plants; and
• Brine Concentrator.
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ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT WATER
The dredge was commissioned during the year to transfer
tailings from the Tailings Storage Facility to Pit 3. Tailings
generated by production operations also continued to be
transferred directly to Pit 3.
Process water from the Tailings Storage Facility is treated by
the Brine Concentrator, which has the capacity to treat up
to 1.83 gigalitres of process water per year.
The pure distillate from the Brine Concentrator is released
via irrigation or to local waterways. This year ERA began
injecting the concentrated brine waste stream from the
Brine Concentrator into the base of Pit 3 via a series of
injection wells.
Placement of the waste rock capping layer and an
impermeable laterite seal over the tailings mass in Pit
1 has enabled the conversion of the majority of the Pit
1 catchment area from process water to pond water,
significantly reducing the volume of process water being
sent to the Tailings Storage Facility.
These actions will continue in future years with the aim of
achieving a continual reduction in both the tailings mass
and the volume of process water being stored in Tailings
Storage Facility.
GULUNGUL CREEK
Gulungul Creek is an ephemeral waterway that flows during
the wet season along the western side of the Ranger mine
site, and joins Magela Creek downstream of the mine.
In response to elevated levels of electrical conductivity in
Gulungul Creek in the 2014-15 wet season, ERA further
improved the existing interception trench network. A clay
interception barrier and a series of dewatering bores were
installed to limit groundwater expression into Gulungul
Creek. This complements the installation of approximately
1,000 metres of interception trenches during the 2014
dry season.
NEW MONITORING POINTS
ERA’s water monitoring system comprises of approximately
240 groundwater bores across the Ranger operational area.
During 2016 ERA extended its comprehensive groundwater
monitoring network with the installation of 13 new wells
based on recommendations from the 2014-15 Ranger
Annual Groundwater Report prepared by consultants ERM.
In addition, ERA operates 14 continuous real-time water
quality sensing stations located within the Magela and
Gulungul creek systems, upstream and downstream of the
Ranger mine. Monitoring stations are equipped with auto
samplers that collect water samples triggered by in-stream
events.
The water monitoring system helps ensure that water is
managed in accordance with ERA’s Water Management
Plan, meets regulatory requirements and provides assurance
to stakeholders through the provision of accurate and
timely data.
This data is shared with members of the Minesite Technical
Committee, including the Supervising Scientist Branch. The
Supervising Scientist Branch also conducts independent
monitoring of waters upstream and downstream of the
Ranger mine site.
INDEPENDENT SURFACE WATER WORKING GROUP
The Independent Surface Water Working Group (ISWWG)
undertakes an independent expert review of the surface
water management, monitoring, and compliance systems
associated with release of water from the Ranger mine site.
It consists of representatives from ERA, the Gundjeihmi
Aboriginal Corporation, the Supervising Scientist Branch
and the Northern Land Council.
During 2016 sediment monitoring of on and off-site
Billabongs took place, addressing one of the two
outstanding recommendations from the ISWWG’s 2013
review report. The results of the sediment monitoring
will be reported to the MTC members in 2017. Increased
monitoring of aquatic bushfoods, the last outstanding
recommendation, from the 2013 ISWWG review report,
will be addressed in 2017.
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ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT JABILUKA
More than 16,000 tube stocks belonging to 22 native
species have been planted at Jabiluka over the past
decade to revegetate the site. This work was carried out
in consultation with the Mirarr Traditional Owners. A total
of 19 monitoring plots and two transects were established
for assessing the development of the revegetation into a
sustainable ecosystem.
Ongoing weed, fire and water quality management is in
place at Jabiluka.
WEED MANAGEMENT
ERA carries out regular weed control activities on the
Ranger Project Area and Jabiluka Mineral Lease.
Activities are guided by ERA’s land management strategy
which targets priority species including Annual Pennisetum,
Mission Grass and Rattlepod.
The weed season runs from October to May. In-field weed
monitoring shows that ERA’s programme has resulted in a
progressive reduction of weed infestation over the Ranger
Project Area.
LAND
REVEGETATION
Revegetation is a key component of the progressive
rehabilitation activities which have been taking place at
Ranger and Jabiluka.
Significant progress was made during the year in
rehabilitation management at both sites, including the
trials carried out to determine the best path forward for
revegetation of the Ranger site.
RANGER
Closure studies and revegetation trials at Ranger progressed
during the year. A key part of the revegetation programme
at Ranger is the eight-hectare trial landform. The landform
is divided into four sections for the purpose of comparing
different revegetation methods.
The optimum method for revegetation at Ranger involves
the use of tube stock seedlings grown on waste rock.
Annual monitoring results found that the height, trunk
diameter and density of the tube stocks which were planted
on the waste rock far exceeded those planted on a mix of
laterite and waste rock and direct seeding methods. Weeds
were also less prevalent on the waste rock section of the
landform and there was no problem with waterlogging.
During the year, a four-hectare section of the landform
was burnt to test the native plant species resistance to fire.
Studies three months later found that a majority of species
survived the burn and that some species (mainly acacias and
non-eucalypts) are more vulnerable to fire than eucalypts.
Six months after the burn, the vegetation had recovered.
Preliminary results from the vegetation survey showed that
more than 95 per cent of individual trees survived the trial
burn and most local native species showed fire resilience.
POPULATION OF FLORA AND FAUNA
The Ecology team continued to monitor flora and fauna
on the trial landform during the year. Seven years after
revegetation the flora is flourishing with many native
flowers and fruits attracting a large variety of birds and
other animals. At any given time, hundreds of birds of
many species have been observed on the site, including the
threatened Eastern Partridge Pigeon, Yellow Orioles and
White Winged Trillers.
The Ranger exploration yard was being converted into
a new nursery during the year, to prepare for mass
revegetation of the site. Work on the nursery will build its
capacity to 200,000 tube stocks. Currently ERA has the
permission, through its exclusive local indigenous contractor
Kakadu Native Plants, to collect seeds from within Kakadu
National Park to raise tube stocks for revegetation.
More than 16,000 native trees have been planted at
Jabiluka over 10 years.
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ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT EMPLOYMENT
During 2016 ERA’s workforce declined slightly in line with
cost control initiatives and the outcomes of the strategic
business review completed in May.
At 31 December 2016, ERA’s total workforce was 382
people (full time equivalent, including 38 contractors). At
the same time in 2015 ERA’s full time equivalent workforce
was 409, and in 2014 it was 415.
ERA also directly employed three graduates, six apprentices
(including four first-year apprentices), four school-based
apprentices and three Indigenous trainees, two of whom
have been promoted to full time roles.
At year end Indigenous employment remained steady at
approximately 13 per cent of employees (2015: 13 per cent).
ERA’s female employment participation declined slightly,
finishing the year with 16 per cent of the 2016 workforce
(2015: 17 per cent).
The downturn in the mining industry generally has had
a flow-on effect on average rolling turnover, which has
reduced to nine per cent, compared with 21 per cent in
2015 and 39 per cent in 2014.
The workforce stability that accompanies a low turnover
rate has had a positive influence on safety as the number of
new people entering the ERA workforce reduces.
INDIGENOUS EMPLOYMENT
Although ERA’s workforce has reduced in recent years
as major projects have been completed ERA remains an
important source of Indigenous employment in Jabiru and
the West Arnhem region.
ERA retains a strong focus on encouraging and supporting
Indigenous employment opportunities and provides
a variety of roles across the business ranging from
superintendent and senior-supervisor leadership roles
through to operational roles.
At 31 December 2016, ERA had a total of 46 Indigenous
employees, representing 13 per cent of the workforce
(2015: 13 per cent) and a stable Indigenous employment
rate.
ERA engaged three Indigenous trainees in 2016, working in
community relations, warehousing and operations. Two of
the Indigenous trainees were promoted to full time roles in
warehousing and operations.
Indigenous trainees are engaged through ERA’s Indigenous
Employment Strategy and supported by a mentoring
programme which pairs trainees with workplace mentors.
ERA’s Indigenous Employment Strategy provides workplace
literacy and numeracy training and support for students
from local communities in work experience and school-
based apprenticeships.
The communities office in Jabiru was revamped in 2016, to
showcase the history of ERA and the Ranger operations.
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ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT EMPLOYMENT
PRE-EMPLOYMENT PROGRAMME
In 2016 ERA and other local organisations and businesses
worked together to provide opportunities for school leavers
and other local people through the Pre-Employment
Programme.
GRADUATES AND APPRENTICESHIPS
In 2016, ERA resumed a graduate intake programme with
three graduate employees. The graduates will be working
in the Closure team, in electrical services and in mechanical
engineering.
The programme is supported by a range of stakeholders
including ERA, Warnbi Aboriginal Organisation, Carey
Training, Westpac, Jabiru Medical Centre and the Northern
Territory Department of Business.
This programme helps local people learn skills and gain
accreditation to enable them to enter the workforce or
find new local employment. Participants who complete
the programme achieve accreditation in Certificate II –
Resource Infrastructure Work Preparation, which includes a
Certificate in First Aid.
In 2016 seven participants completed the five week course.
One participant gained employment with ERA, while the
other six gained work with other local employers including
Parks Australia.
INDIGENOUS EMPLOYMENT DEVELOPMENT
The Indigenous Enterprise Development scheme involves
ERA working with the Gundjeihmi Aboriginal Corporation
and local businesses to develop employment and training
opportunities.
The Indigenous Enterprise Development scheme provides
accredited training for people from local Indigenous
communities to work on regional revegetation activities,
such as progressive rehabilitation activities at ERA, weed
management and fire monitoring.
In addition local Indigenous people can gain recognised
skills accreditation through a Certificate III in Land
Management by participating in ERA’s Indigenous
Revegetation Workforce.
In 2016 ERA continued its apprenticeship programme with
a new intake of four first year apprentices bringing the
total number of ERA apprentices to six. The apprentices are
engaged for four years and achieve Certificate III in various
mining and industry related fields.
In 2016 ERA engaged five school-based apprentices.
School-based apprentices continue their year 11 and
year 12 schooling while maintaining part-time work at
ERA. A school-based apprenticeship can lead to further
employment or a full-time apprenticeship, either with ERA
or with another employer.
INCLUSION AND DIVERSITY
In 2016 ERA established an Inclusion and Diversity work
group to review policy and participation across ERA, and to
provide guidance for inclusive leadership training.
The Inclusion and Diversity work group reflects the broader
Australian Rio Tinto Energy and Minerals Policy and is
supported by the Diversity Council of Australia (DCA).
The DCA provides guest speakers and analysis of policy and
practice to inform workshops for ERA’s frontline leadership
teams.
CULTURAL AWARENESS
ERA’s Cultural Awareness Programme is delivered in
partnership with the Gundjeihmi Aboriginal Corporation
representing the Mirarr Traditional Owners.
During the year 49 new employees and long-term
contractors participated in cultural awareness training.
The programme provides new employees and contractors
with an introduction to the unique cultural, environmental
and historical values of the Kakadu region and the Mirarr
Traditional Owners.
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RELATIONSHIP WITH MIRARR TRADITIONAL
OWNERS
The Mirarr Traditional Owners of the land on which ERA
operates are key stakeholders, and their input and support
for our activities are integral to our business.
The Gundjeihmi Aboriginal Corporation represents the
Mirarr Traditional Owners in discussions and negotiations
with ERA on a range of matters of interest to both parties.
In 2016 ERA and the Gundjeihmi Aboriginal Corporation
continued discussion on a range of important issues
including employment and training, cultural heritage and
environmental protection, rehabilitation planning, water
management, housing, royalties, community activities, the
Kakadu West Arnhem Social Trust and discussions about
the future of the Jabiru township.
ENGAGEMENT WITH MIRARR TRADITIONAL
OWNERS
The Gundjeihmi Aboriginal Corporation and ERA have
established formal structures to meet regularly, share
information and create opportunities for ongoing
engagement and collaboration.
The Relationship Committee, established under the 2013
Ranger Mining Agreement, shares information, assists
with collaboration and provides a forum for discussion of
Ranger operational matters and opportunities for local
Aboriginal participation in business development, training
and employment.
Each year ERA makes a sustainability payment to the
Northern Land Council which is passed through to the
Kakadu West Arnhem Social Trust. The Kakadu West
Arnhem Social Trust is a charitable trust founded by senior
Mirarr Traditional Owner Yvonne Margarula in 2013.
The township of Jabiru.
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The trust funds programmes which aim to address
Aboriginal disadvantage in the Kakadu West Arnhem
region. Along with the Gundjeihmi Aboriginal Corporation,
ERA is represented on the Kakadu West Arnhem Social
Trust board.
COMMUNITY ENGAGEMENT AND INVESTMENT
During the year, the Communities office in Jabiru was
remodelled to better showcase the history and future of
ERA’s operations and rehabilitation. This has resulted in a
tripling of the number of visitors to the centre by tourists
and local residents. During the year, ERA also hosted a
series of site visits to the Ranger mine.
ERA continued to be a major supporter of community
events such as the annual Mahbilil Festival, Kakadu Triathlon
and the CareFlight 30th Anniversary Gala Ball. ERA has
a long relationship with CareFlight and has supported its
work in the West Arnhem region by giving the emergency
service priority free access to the Jabiru Airport for its
rescue missions. The Kakadu Triathlon raised $11,223 for
CareFlight.
In addition to sponsorship of events, ERA, through its
Community Partnership Fund, contributed approximately
$42,220 in funds and in-kind donations to local West
Arnhem sporting, community, education and cultural groups.
JABIRU OUTLOOK
ERA is a significant contributor to the economy, population,
infrastructure and provision of services in Jabiru. ERA
operates subject to the current legal framework which
requires the cessation of mining and processing activities by
January 2021. Separate to the Ranger Authority, the current
Jabiru town lease is due to expire in July 2021. This has
created uncertainty about the outlook for Jabiru and the
local economy.
ERA is working with the Gundjeihmi Aboriginal
Corporation, the Commonwealth Government, the
Northern Territory Government and the Northern Land
Council to consider options for the future of Jabiru and the
local region.
This involves discussion around future socio-economic
opportunities for the region as well as the potential terms of
a Jabiru lease and township post 2021.
ERA continues to advocate for early resolution on the future
governance arrangements, to take effect in 2021, in order
to provide certainty for the town.
SOCIAL IMPACT ASSESSMENT
ERA has a range of rehabilitation obligations in the town of
Jabiru which it must prepare for ahead of the lease expiring
in July 2021.
In November, ERA commenced a Social Impact Assessment
(SIA) for Jabiru. The SIA process is designed to explain the
current rehabilitation obligations and to gather information
about their potential impacts on the town, local businesses,
residents, the broader West Arnhem region and visitors.
The SIA does not develop a plan for the future of Jabiru
beyond 2021. The Commonwealth Government, Northern
Territory Government and Traditional Owner representatives
are undertaking discussions regarding the future of Jabiru.
The outcome of those discussions will also have a significant
influence on ERA’s rehabilitation plans and the future of
the town.
Jabiru community members were involved in the SIA
process through approximately 30 information sessions
which were held in the town in November and December.
Further consultations will also take place in early 2017.
ROYALTIES
ERA generates revenue from the processing of stockpiled
ore at Ranger. This production continues to deliver royalty
payments to the Indigenous community and the Northern
Territory Government.
These royalty payments are calculated on 5.5 per cent of
net sales revenue from Ranger mine production.
The equivalent of 4.25 per cent of Ranger sales revenue is
paid to Northern Territory-based Aboriginal organisations,
including the Gundjeihmi Aboriginal Corporation.
The remaining 1.25 per cent of royalties derived from
Ranger sales revenue is paid to the Commonwealth and
distributed to the Northern Territory Government.
In 2016, ERA’s royalties totalled $14.3 million. This compares
with $17.9 million paid in 2015 and $15.4 million paid
in 2014.
ERA has paid more than $500 million in royalties to
governments and aboriginal interests since production
began at Ranger 35 years ago.
Royalties will continue to be paid for as long as ERA
processes stockpiled ore at Ranger, but in the absence of
a change in the current legal framework and support for
development projects from key stakeholders royalties are
expected to progressively decline and ultimately cease in
2021 at the end of the Ranger Authority.
In addition to the payment of royalties, ERA also makes an
annual rental payment and a sustainability payment which
are passed through to local Aboriginal interests.
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ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT 2016 ANNUAL REPORT
SUSTAINABILITY REPORT
FINANCIAL REPORT
36
ENERGY RESOURCES OF AUSTRALIA LTD
Financial
Report
CONTENTS
Director’s Report ..................................................................................... 38
Auditor’s Independence Declaration ........................................................ 61
Corporate Governance Statement ............................................................ 62
Statement of Comprehensive Income ...................................................... 69
Balance Sheet ......................................................................................... 70
Statement of Changes in Equity ............................................................... 71
Cash Flow Statement .............................................................................. 72
Notes to the Financial Statements ............................................................ 73
Directors’ Declaration ............................................................................ 107
Independent Auditor’s Report ............................................................... 108
Shareholder Information .........................................................................114
2016 ASX Announcements .....................................................................116
Ten Year Performance ............................................................................117
Index .....................................................................................................118
ENERGY RESOURCES OF AUSTRALIA LTD
37
DIRECTOR'S REPORT
Directors
Peter Mansell
CHAIRMAN
BCom, LLB, H. Dip. Tax, FAICD
Andrea Sutton
CHIEF EXECUTIVE AND
MANAGING DIRECTOR
BE (Hons) Chemical, GradDipEcon,
GAICD
Shane Charles
NON-EXECUTIVE
DIRECTOR
LLB
Paul Dowd
NON-EXECUTIVE
DIRECTOR
BSc (Eng), FAusIMM, MAICD
Appointed in October 2015.
Appointed in September 2013.
Prior to joining ERA,
Ms Sutton had a 21 year
career with Rio Tinto in
which she had extensive
operational, technical and
corporate experience,
including as Managing
Director with the Rio Tinto
Support Strategy Review
team, General Manager
Operations at the Bengalla
mine and General Manager
Infrastructure with Rio Tinto
Iron Ore.
External appointments: Chair
of the Northern Territory
Minerals Council of Australia
Management Committee;
member of the Northern
Territory Mining Advisory
Council.
Chairman of Remuneration
Committee and member of
Audit and Risk Committee.
Mr Mansell has extensive
experience in the mining,
corporate and energy sectors,
both as an advisor and as an
independent non-executive
Chairman and Director of
listed and unlisted companies.
Mr Mansell practised law
for a number of years as a
partner in corporate and
resources law firms in each
of South Africa and Australia.
He retired from legal practice
in 2004 and has since held
directorships in a number of
companies including BWP
Management Ltd, Foodland
Associated Ltd, OZ Minerals
Ltd, W.A. Newspaper
Holdings Ltd (Chairman),
Electricity Networks
Corporation (trading as
Western Power) (Chairman)
and Zinifex Ltd (Chairman).
Mr Mansell also chaired the
Advisory Board of Pacific
Aluminium Ltd in anticipation
of its intended float in 2014.
External appointments:
Non-executive Director of
Aurecon Group Pty Ltd,
Foodbank of Australia Ltd
and Tap Oil Limited.
38
Appointed in October
2015. Chair of the Audit
and Risk Committee (from
January 2016); member
of Health, Safety and
Environment Committee and
Remuneration Committee.
Mr Charles is currently the
Executive Chairman of the
Toowoomba and Surat
Basin Enterprise (TSBE), an
independent, business driven
economic development
organisation with a vision to
pursue sustainable growth
and diversity. He is at the
forefront of developing an
Asia strategy (principally in
relation to China) to allow
producers and exporters the
opportunity to access new
markets and capital.
He has just finished his
tenure as Deputy Chairman
of the GasFields Commission
Queensland and was
previously the Chairman
of Stanwell Corporation
Limited and the Endeavour
Foundation Limited.
External appointments:
Executive Chairman of
Toowooba and Surat Basin
Enterprise; Chairman of
Sunrise Way Rehabilitation
Limited; President of the
Royal Agricultural Society of
Queensland.
Appointed in October
2015. Chair of Health,
Safety and Environment
Committee; member of Audit
and Risk Committee and
Remuneration Committee.
Mr Dowd is a mining
engineer with more than
50 years’ experience in the
mining industry, primarily in
the private sector, but also
serving in the public sector as
head of the Victorian Mines
and Petroleum Departments.
Mr Dowd has previously held
senior executive positions
as Managing Director of
Newmont Australia Ltd and
Vice President Australia and
New Zealand Operations
for Newmont Mining
Corporation and prior to that
as Chief Operating Officer of
Normandy Mining Ltd.
Mr Dowd was previously
Chairman of Adelaide
Resources Ltd and a non-
executive Director of
Macarthur Coal Ltd.
External appointments:
Non-executive Director of
OZ Minerals Limited and PNX
Metals Limited; Chairman of
CSIRO Minerals Resources
Sector Advisory Council;
Advisory Board Member of
South Australian Minerals
and Petroleum Expert Group
(SAMPEG) and University of
Queensland – Sustainable
Minerals Institute.
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT DIRECTOR'S REPORT
Directors
Simon Trott
NON-EXECUTIVE
DIRECTOR
BSc (Hon), GradDipFin, GAICD
Zara Fisher
NON-EXECUTIVE
DIRECTOR
B Com, MASc, MAICD
Bruce Cox
NON-EXECUTIVE
DIRECTOR
BCom, CPA, MBA, GAICD
Joanne Farrell
NON-EXECUTIVE
DIRECTOR
BSc, Grad Dip Business Management
Appointed in December 2015.
Mr Trott is the Managing
Director of Rio Tinto Salt,
Uranium and Borates. After
joining Rio Tinto in 2000,
Mr Trott has held a range of
commercial, operating and
business development roles
across a number of product
groups. He has oversight of
all marketing, operational
and commercial aspects of
Rio Tinto’s salt, uranium
and borates businesses
with operations in Australia
(Northern Territory and
Western Australia), Namibia
and the United States,
together with projects in
Canada (uranium and potash)
and Serbia (lithium and
borates).
External appointments:
Director of Dampier Salt
Limited, Rössing Uranium
Limited and US Borax Inc.
Appointed in August 2016.
Member of Health, Safety
and Environment Committee
(from January 2017).
Ms Fisher has worked in the
mining industry for over 20
years and is currently Vice
President HSE for Rio Tinto
Iron Ore. In this role she is
accountable for the health,
safety and environmental
performance of Rio Tinto’s
Iron Ore operations and
is a member of the Iron
Ore Executive Committee.
Previously Ms Fisher has
worked with Rio Tinto in a
range of roles in Australia
and internationally in the Iron
Ore, Aluminium, Copper,
Energy and Minerals groups.
Ms Fisher has extensive
experience in operations,
maintenance, strategy,
corporate services and
finance.
Ms Fisher holds a Bachelor
of Commerce and a
Masters of Applied Science
(Environmental Management
and Restoration) and is a
member of the Australian
Institute of Company
Directors. Prior to joining Rio
Tinto Ms Fisher worked in
chartered accounting.
Appointed in November 2014
and resigned in May 2016.
Chair of the Audit and Risk
Committee between June
2015 and January 2016.
Appointed in June 2014 and
resigned in August 2016.
Member of the Health, Safety
and Environment Committee
until August 2016.
Mr Cox is currently the
President and Chief Executive
Officer of Pacific Aluminium
and is a member of Rio Tinto
Alcan’s Executive Committee.
Mr Cox has more than 35
years’ experience with Rio
Tinto and BHP, and prior
to his current role was
Managing Director of Rio
Tinto Diamonds.
Mr Cox’s career has spanned
the steel, platinum, copper,
iron ore and diamond
commodity sectors and
he has lived in Australia,
Zimbabwe, Chile, the United
Kingdom and the United
States. Mr Cox is a CPA,
Graduate of the Australian
Institute of Company
Directors and has a Bachelor
of Commerce and a Masters
of Business Administration.
Ms Farrell is currently the
Group Executive – Health,
Safety and Environment for
Rio Tinto. Ms Farrell is also
responsible for leading Rio
Tinto’s interaction with key
stakeholders in Australia as
Managing Director Australia.
Ms Farrell has been with
Rio Tinto for 29 years
and brings a wealth of
experience from various
roles across Organisational
Resources, Government
Affairs and Communities
in Australia, the US and
Europe. Prior to working
in the mining industry,
she was an economist in
regional development with
the Government of Western
Australia.
External appointments:
Director of Perth Institute of
Contemporary Arts, member
of the Governing Council of
North Metropolitan TAFE and
member of Chief Executive
Women.
39
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT DIRECTOR'S REPORT
Executive Committee
Andrea Sutton
James May
CHIEF EXECUTIVE AND
MANAGING DIRECTOR
BE (Hons) Chemical, GradDipEcon,
GAICD
See biography shown on
page 38.
CHIEF FINANCIAL OFFICER
BA (Hons), FCA, GAICD
Mr May was appointed as
Chief Financial Officer in June
2014 and brings financial,
accounting and business
development experience to
ERA. Mr May has over 16
years’ experience in finance
roles in the energy and
extractive resources sector.
Prior to joining ERA, Mr May
held various finance and
corporate roles within Rio
Tinto. Mr May is a Chartered
Accountant through the
Institute of Chartered
Accountants in England and
Wales.
Tim Eckersley
GENERAL MANAGER
OPERATIONS
B.Sc. Agric (Hons)
Mr Eckersley was appointed
as General Manager
Operations in September
2012.
Over the last 23 years Mr
Eckersley has held various
leadership roles in the mining
industry including in bauxite,
alumina, gold, mineral
sands and iron ore. Prior to
joining ERA, Mr Eckersley
was General Manager within
Rio Tinto Iron Ore Expansion
Projects business unit.
40
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT DIRECTOR'S REPORT
Thomas Wilcox
LEGAL COUNSEL AND
COMPANY SECRETARY
LLB, LLM, BCom
Alan Tietzel
CHIEF ADVISOR
AGREEMENTS
BA, BCom, Dip Ed MBA
Mr Wilcox was appointed as
Company Secretary and Legal
Counsel in November 2013.
Mr Wilcox joined Rio Tinto in
2009 and has previously held
legal and commercial roles
in London and Melbourne,
working predominantly with
the Exploration and Energy
Groups.
Prior to joining Rio Tinto,
Mr Wilcox was employed in
private legal practice since
2003. He has a Bachelor of
Laws, Bachelor of Commerce
and Master of Laws from The
University of Melbourne.
External appointments:
Director of Australian Football
League Northern Territory.
Mr Tietzel was appointed as
General Manager External
Relations in July 2010 and
subsequently Chief Advisor
Agreements in September
2012. He has a background in
Aboriginal land agreements,
regional development,
government relations, human
resources and organisation
development.
Mr Tietzel joined Rio Tinto
in 1990 and has worked in
the diamonds, salt, bauxite
and alumina sectors, and
in a variety of corporate
functions.
41
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT DIRECTOR’S REPORT
DIRECTOR'S REPORT
Meetings of Directors
The number of Directors and 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
P Mansell
A Sutton
B Cox1
J Farrell2
Z Fisher3
S Charles
P Dowd
S Trott
DIRECTORS
MEETINGS4
AUDIT AND RISK
COMMITTEE4
REMUNERATION
COMMITTEE4
HSE COMMITTEE4
OTHER4
9/9
9/9
3/3
7/7
2/2
9/9
9/9
9/9
6/6
-
1/1
-
-
6/6
5/5
-
3/3
-
-
2/2
-
-
3/3
-
-
-
-
2/2
-
2/2
2/2
-
7/7
2/2
-
-
-
7/7
5/5
-
Note 1
Note 2
Note 3
Note 4
Resigned as a Director 3 May 2016.
Resigned as a Director 29 August 2016.
Appointed as a Director 29 August 2016.
Number of meetings attended/maximum the Director could have attended.
Ms Sutton was invited to each meeting of the Audit and Risk Committee and the Health, Safety and Environment Committee and
attended all such meetings held during the year.
Interests of Directors
The interests of each Director in the share capital of the Company and its related body corporates as at 31 January 2017 are shown
below:
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
-
-
-
-
-
-
-
-
2,000
3,885
5,417
-
1,744
27,580
2,899
5,431
-
1,158
4,385
-
-
-
-
-
-
12,870
62,464
-
-
47,543
6,653
35,854
DIRECTORS
P Mansell
A Sutton
B Cox1
S Charles
P Dowd
J Farrell2
Z Fisher3
S Trott
Note 1
Note 2
Note 3
Resigned as a Director 3 May 2016.
Resigned as a Director 29 August 2016.
Appointed as a Director 29 August 2016.
42
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT DIRECTOR'S REPORT
Remuneration report
The Remuneration Report is set out under the following main
headings:
A.
B.
C.
D.
E.
F.
G.
Board oversight of remuneration
Principles used to determine non-executive Directors’
remuneration
Principles used to determine executive remuneration
Details of remuneration
Executive service agreements
Share based compensation
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.
Board oversight of remuneration
A
The Remuneration Committee has responsibility to review:
•
remuneration framework and policies (including key
performance indicators) for the Company’s Chief Executive
and senior executives;
remuneration and performance of the Company’s Chief
Executive and 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 ERA’s 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. The Remuneration Committee reviews and
makes 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. ERA does
not pay retirement or post-employment benefits to non-executive
Directors, however, statutory superannuation contributions are
paid to non-executive Directors. 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 ag-
gregate remuneration for non-executive Directors of ERA would
be not more than $800,000 per annum. At the 2016 Annual
General Meeting, the 2015 Remuneration Report was approved
with 95.68 per cent of shares voted in favour (voting comprised
356,856,147 votes ‘for’ the resolution and 16,104,679 votes
‘against’ the resolution). North Limited and Peko-Wallsend Pty
Ltd, which are both Rio Tinto entities, voted a combined total of
354,078,854 votes ‘for’ the resolution. The aggregate amount of
non-executive Directors’ remuneration paid in 2016 was approxi-
mately $691,000 inclusive of statutory superannuation.
The non-executive Directors’ fees were reviewed by the Board
in January 2016. The Board resolved that there would be no
increase in non-executive Directors’ fees in 2016. There was no
increase in committee fees, although a fee was introduced for the
newly established Health, Safety and Environment Committee.
The annual fees for non-executive Directors for 2016 (excluding
superannuation) are as follows:
Chairman
Non-executive Director
Audit and Risk Committee
Chair1
Audit and Risk Committee
Member1
Health, Safety and
Environment Chair1
Health, Safety and
Environment Committee
Member1
Remuneration Committee
Chair1,2
2016
$165,000
$92,000
2015
$165,000
$92,000
$20,000
$20,000
$13,000
$13,000
$20,000
$13,000
-
-
$5,000
$5,000
Note 1 Fees are payable in addition to Chairman and non-executive Director fees.
Note 2 Mr Mansell waived the fee for chairing the Remuneration Committee. The
Board has resolved that no additional committee fees are payable to members
of the Remuneration Committee.
C
Principles used to determine executive
remuneration
The Remuneration Committee is responsible for the review of,
and where appropriate will make recommendations to the Board
in respect of, executive remuneration.
The Corporations Act 2001 and relevant Accounting Standards
require disclosures in respect of “key management personnel”,
being those persons having authority and responsibility for
planning, directing and controlling the activities of the Company.
The key management personnel are, in addition to the Directors,
the permanent General Managers of the Company (including
the Chief Advisor Agreements) reporting directly to the Chief
Executive. Throughout this Remuneration Report the key
management personnel who are not Directors are collectively
referred to as “senior executives”.
43
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
DIRECTOR'S REPORT
As the Company is a member company of the Rio Tinto Group, it
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 to determine the remuneration of the Chief Executive
and senior executives.
As a member of the Rio Tinto Group, ERA’s Chief Executive and
senior executives are seconded from Rio Tinto and are hence
drawn from the talented pool of executives in the wider Rio Tinto
Group. It is the view of the Remuneration Committee (which has
been endorsed by the Board) that a company of ERA’s size,
scope and remote location would have significant difficulty in
attracting executives of the calibre necessary to ensure superior
performance or in retaining them for significant periods if this
arrangement was not in place. Under these circumstances,
the Board believes that the general application of the Rio
Tinto remuneration framework to ERA’s Chief Executive and
senior executives, with appropriate review by the Company’s
Remuneration Committee, is of benefit to ERA.
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.
Typically, base salaries are positioned at the median of these
comparator groups, while incentive plans are designed with the
potential to deliver total remuneration outcomes across the full
market range according to business and individual performance.
The related costs of these programs are recognised in the
Company’s financial statements.
Executive remuneration, including base salary and short and long
term incentive plan 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 and relevant comparative
information. As well as base salary, remuneration packages may
include fringe benefits such as medical insurance, car, rent and
other allowances, superannuation, retirement entitlements and
short and long term incentives.
The annual performance evaluation and management process
includes formal consultation between the Chairman (based on
the Remuneration Committee’s review and recommendations)
and the Managing Director, Rio Tinto Borates, Salt and Uranium
regarding the Chief Executive of the Company, and between
the Remuneration Committee and the Chief Executive of the
Company regarding the senior executives.
An annual performance evaluation of the Chief Executive and
senior executives was undertaken in 2016.
44
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, 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.
The Company Secretary of the Company is subject to the same
executive remuneration pay and reward framework.
The executive pay and reward framework has four components:
•
•
•
base salary and benefits;
short term incentive plans;
long term incentive plans through participation in the
Rio Tinto Performance Share Plan (PSP), the Rio Tinto
Management Share Plan (MSP) and, in the case of the Chief
Executive, the ERA Long Term Incentive Plan (ERA LTIP);
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 MSP) 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 plans are 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 PSP and MSP. In 2016, awards
were made under the PSP and MSP.
In 2016 the Remuneration Committee determined that the Chief
Executive’s remuneration should be simplified and the ERA LTIP
was discontinued. As such, no awards were made under the ERA
LTIP in 2016.
Excluding post employment and non-monetary benefits, the
proportion of total direct remuneration, assuming maximum
award levels and maximum levels of performance, provided by
way of variable at risk components as at 31 December 2016 for
the Chief Executive and senior executives was between 48 and
68 per cent. The actual proportion of total direct remuneration
provided by way of variable performance related components will
differ from these percentages depending on measured Company,
Rio Tinto and individual performance and the current blend of
share plans.
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
DIRECTOR'S REPORT
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 individual and Company performance, global
economic conditions, role responsibilities, an assessment against
comparator groups, internal relativities and base salary budgets
applying to the broader employee population.
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. The Chief Executive and senior executives
of the Company have between 40 and 70 per cent of their
performance-based bonus based on business measures, with the
remainder based on individual measures.
The short term incentive plan bonus payments disclosed in this
report are amounts paid in 2016 relating to performance in 2015,
as 2016 performance calculations are not finalised at the date
of this report. The Company’s business performance measures
for 2015 used in the determination of short term incentive plan
payments were:
•
•
•
Safety - All Injury Frequency Rate and Lost Time Injuries;
Financial - net earnings and free cash flow; and
Business - drummed production, cost of material milled,
volume and cost of material moved and Brine Concentrator
performance.
Bonus Deferral Plan
In 2016, 25 per cent of the Chief Executive’s short term incentive
plan bonus pay was satisfied through the deferred award of
shares in Rio Tinto Limited under the terms of the Rio Tinto
Bonus Deferral Plan (BDP).
The same percentage will be satisfied in 2017 through the
deferred award of shares in Rio Tinto Limited under the terms of
the Rio Tinto BDP.
Long term incentive plans
In 2016, the Remuneration Committee considered the application
of the Rio Tinto long term incentive plan to the Company’s Chief
Executive and senior executives. As previously outlined, the
Remuneration Committee believes that the general application
of the Rio Tinto remuneration framework (including the Rio
Tinto long term incentive plans) to ERA’s Chief Executive and
senior executives, with appropriate review by the Remuneration
Committee, is of benefit to the Company.
As such the Remuneration Committee recommended that
the Company’s long term incentive plans remain unchanged
for 2016, with the exception of the ERA LTIP which was
discontinued. During 2017, the Remuneration Committee will
review the position for future years.
Share based remuneration dependent on performance
Performance Share Plan
The Rio Tinto PSP provides a conditional right to Rio Tinto shares
to eligible senior management personnel within the Rio Tinto
Group, including the Chief Executive and senior executives of ERA.
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 the underlying
performance of the business. Prior to the vesting of conditional
awards, Rio Tinto’s Total Shareholder Return (TSR) performance
against the performance condition is calculated independently by
Willis Towers Watson.
Subject to Rio Tinto Remuneration Committee approval,
awards vest based on the Rio Tinto Group’s TSR performance
against the Morgan Stanley Capital World Index (one third)
and the Euromoney Global Mining Index (one third), along with
improvement in Rio Tinto EBIT margin (one third) relative to
global mining comparators. This is reviewed at 31 December
of the fifth year of the grant. The level of vesting depends on
performance against the indices.
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. Should this occur
within the first 36 months from date of grant of the award, the
number of shares that can vest will be reduced pro-rata over the
36 month period. The Rio Tinto Remuneration Committee has
discretion to adjust the performance condition to ensure a fair
measure of performance.
Rio Tinto releases awards to participants as either Rio Tinto
plc or Rio Tinto Limited shares. 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.
Chief Executive’s long term incentive plan
In 2016 the Remuneration Committee determined that the ERA
LTIP would be discontinued. Awards were made in 2014 and
2015 to the Chief Executive who was the only executive to
participate in this plan.
The ERA LTIP is an award of rights that have a value calculated
by reference to the Company’s share price (ie phantom shares).
Whether or not the rights vest depends on the extent to which
the relevant performance conditions have been satisfied over
the performance period. Awards have a three year performance
period commencing on 1 January of the year of grant.
45
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT Share based remuneration not dependent on
performance
Management Share Plan
Under the Rio Tinto MSP, conditional grants of Rio Tinto shares
may be awarded to eligible employees 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 Rio Tinto 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
All employees of the Company may participate in Rio Tinto
share savings and share option plans applicable at particular
locations. Up to and including 2011, 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 of companies. In 2012, the Rio Tinto
Remuneration Committee approved and implemented a new
global employee share purchase plan, myShare. The new plan
is offered to eligible employees. Under the plan, employees may
acquire shares up to the value of US$5,000 per year capped
at 10 per cent of their base salary. Each share purchased will
be matched by the Company providing the participant holds
the shares and remains employed at the end of the three year
vesting period. Further details are at Note 30 to the Financial
Statements.
Share dealing policy
The participation of the Chief Executive and 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’ (“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.
DIRECTOR'S REPORT
The two performance conditions are a relative TSR condition and
the achievement of ERA strategic measures. Each condition will
be assessed independently. Strategic performance conditions
have been chosen to ensure that the long term incentive award
is assessed against both the Company’s relative performance
against other uranium producers and the achievement of ERA
strategic measures.
For the TSR performance condition, rights vest based on ERA’s
TSR performance against Areva SA, Cameco Corp, Denison
Mines Corp, Energy Fuels Inc, Fission Uranium Corp, Paladin
Energy Limited, Summit Resources Limited, Uranium Energy Corp
and Ur-Energy Inc over the performance period. Vesting will be
subject to ERA’s ranked position using the following schedule:
Equal or greater to 2nd
ranked company
Between the 5th and 2nd
ranked companies
Above the 6th ranked
company
100 per cent of the rights
subject to the TSR condition
vest
Between 22.5 per cent and 100
per cent of the rights subject to
the TSR condition vest, on a pro
rata basis
22.5 per cent of the rights
subject to the TSR condition
vest
Equal to the 6th ranked
company or below
Nil vesting
For the ERA strategic measures, an assessment of the level of
vesting applicable to this portion of the award is to be assessed
by the Remuneration Committee, with the final outcome to be
recommended to the Board by the Chairman at the end of the
three year performance period. The elements to be considered in
respect of ERA strategic measures include financial performance,
organisational and personnel related performance, relations with
stakeholders and progress in respect of the Ranger 3 Deeps
underground mine project. For outstanding performance, the Board
may determine to permit a number of rights to vest that is equal
to 150 per cent of the initial number of rights awarded that were
subject to ERA strategic measures condition.
The Remuneration Committee has discretion to give consideration
to significant circumstances which may have changed the strategic
measures over the performance period. Upon vesting, the value
of the ERA LTIP award will be converted into Rio Tinto MSP
shares. The number of Rio Tinto MSP shares to be awarded will be
calculated based on the five day average Rio Tinto Limited share
price prior to the Rio Tinto MSP grant date in March of the year of
vesting. Any Rio Tinto MSP shares provided will vest after a further
two year period. There are no further performance conditions,
however, the Rio Tinto MSP shares can be forfeited in certain
circumstances related to cessation of employment.
46
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
DIRECTOR'S REPORT
Details of remuneration
D
Details of the remuneration of each non-executive and executive Director and each of the senior executives in respect of their services
to the Company are set out in the following tables.
Non-executive Directors of Energy Resources of Australia Ltd
SHORT TERM BENEFITS
POST EMPLOYMENT BENEFITS
DIRECTORS
FEES
($000)
CASH
BONUS
($000)
NON- CASH
BENEFITS
($000)
SUPER-
ANNUATION
($000)
TOTAL
($000)
P Mansell1
B Cox2,3
S Charles1
P Dowd1
J Farrell2,4
Z Fisher2,5
S Trott2,6
H Garnett7
P McMahon7
J Pegler8
D Smith9
P Taylor2,8
Total 2016
Total 2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2016
2015
2015
2015
2015
2015
2015
178
31
32
92
123
17
124
17
69
92
32
92
6
56
89
31
46
26
650
503
Note 1
Note 2
Note 3
Note 4
Note 5
Note 6
Note 7
Note 8
Note 9
Appointed as a Director 26 October 2015.
Amounts paid directly to Rio Tinto Limited.
Resigned as a Director 3 May 2016.
Resigned as a Director 29 August 2016.
Appointed as a Director 29 August 2016.
Appointed as a Director 6 December 2015.
Resigned as a Director 20 June 2015.
Resigned as a Director 13 April 2015.
Appointed as a Director 27 January 2015. Resigned as a Director 20 June 2015.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17
6
-
-
12
3
12
3
-
-
-
-
-
5
8
3
4
-
41
32
195
37
32
92
135
20
136
20
69
92
32
92
6
61
97
34
50
26
691
535
47
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT STIP outcomes
Ms Sutton’s achievement against her 2015 individual objectives
was assessed as ‘good’. Detailed outcomes are below:
•
strong safety perfomance in 2015 with a decrease in the All
Injury Frequency Rate to 0.67 (2014: 1.27);
implementation of the Process Safety Improvement Action
Plan;
production of 2,005 tonnes of uranium oxide was within
market guidance; sales volume of 2,183 tonnes of uranium
oxide;
Ranger rehabilitation programme progressed to schedule,
including Pit 1 capping and commissioning of dredge and
related infrastructure;
strong cash management focus and continued growth of
cash reserves;
Ranger 3 Deeps project evaluation completed on schedule
and budget; project optionality maintained through
business strategy review;
optimised availability and throughput of the Brine
Concentrator, including injection of brine into Pit 3 backfill;
and
continued progress with key stakeholders on closure
criteria for Ranger Project Area and associated
infrastructure.
•
•
•
•
•
•
•
LTIP awards granted
Award levels are set so as to incentivise executives to provide
sufficient retention for the executive team and to contribute
to the competitiveness of the overall remuneration package.
The value of the MSP and PSP awards granted to Ms Sutton
in 2016, based on the fair value calculations performed by
individual advisors, was 45 per cent of base salary. The
eventual value of the PSP award will depend on performance
during the period 2016 to 2020.
DIRECTOR'S REPORT
Executive Director and senior executives
Set out below is an overview of the remuneration paid to the
Executive Director and senior executives in 2016. This includes
details of the key elements of remuneration and a summary of
total remuneration for 2016.
Andrea Sutton
(Chief Executive and Managing Director from
23 September 2013)
Base salary
Ms Sutton was appointed as Chief Executive and Managing
Director on 23 September 2013. Ms Sutton’s base salary is
reviewed annually with reference to the underlying performance
of ERA and the Rio Tinto Group, global economic conditions,
role responsibility, individual performance, an assessment
against relevant comparator groups, internal relativities
and base salary budgets applying to the broader employee
population.
Ms Sutton did not receive an increase in her base salary in
2016.
On 1 March 2016, Ms Sutton’s base salary was $400,402.
STIP objectives
The STIP cash payment made to Ms Sutton in 2016 was
determined by assessing individual and business performance
in 2015 against objectives set for that year.
The following individual objectives were set for Ms Sutton for
2015:
•
safe and predictable operations with particular emphasis
on process safety, asset integrity, productivity, output,
quality, costs and cash flow;
implementation of progressive rehabilitation to schedule,
including:
- Pit 1 laterite capping complete; and
- dredge and infrastructure commissioned to schedule;
effective implementation of strategies for water
management and other environmental controls, including
stable and consistent operation of Brine Concentrator;
Ranger 3 Deeps project activities completed to Board
expectations regarding progress, studies and shareholder
value;
stakeholder support for lease extension and Ranger 3
Deeps project; and
effective leadership behaviours in interaction with
employees, the Board and stakeholders including
Traditional Owners, regulators, investors and the
community.
•
•
•
•
•
48
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
DIRECTOR'S REPORT
Total remuneration
The table below provides a summary of Ms Sutton’s total remuneration disclosed for 2015 and 2016. The purpose of this table is to
enable shareholders to better understand the actual remuneration received and to provide an overview of the actual outcomes of the
Company’s remuneration arrangements. The remuneration details set out on page 52 include theoretical accounting values relating to
various parts of the remuneration packages, most notably long term incentive plan arrangements. Accordingly, the numbers below are
not compatible with those in the table on page 52.
(STATED IN $’000)
Base salary paid1
STIP cash bonus2
STIP deferred shares3
LTIP share based payments
Superannuation
Other benefits4
Total remuneration
% change from previous year
% of maximum STIP cash bonus awarded
% of maximum STIP cash bonus forfeited
2016
2015
400
204
68
254
30
140
399
136
45
223
104
123
1,096
1,030
6
68
32
9
46
54
Note 1
Note 2
Note 3
Note 4
Salaries are reviewed with effect from 1 March.
Bonus payment relates to prior year performance.
Value of deferred share awards granted under Bonus Deferral Plan.
Other benefits include accommodation, vehicle and other allowances and Company paid superannuation above statutory requirements that is taken as cash.
Senior executives
Base salary
Base salaries are reviewed annually, with reference to the underlying performance of ERA, the Rio Tinto Group and the individual,
global economic conditions, role responsibility, an assessment against relevant comparator groups and base salary budgets applying
to the broader employee population. No salary increases were awarded in 2016.
At the end of 2015 and 2016, the base salaries of the Company’s senior executives were:
BASE SALARY A’$000 (UNLESS OTHERWISE SPECIFIED)
2016
2015
CHANGE
Tim Eckersley
James May
Greg Sinclair1
Alan Tietzel
Note 1
Employment with ERA ceased on 1 March 2015. Salary is reflected at time of resignation.
322
240
-
355
322
240
297
355
0%
0%
-
0%
49
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
DIRECTOR'S REPORT
STIP objectives and outcomes
The individual objectives set out below relate to the 2015 financial year (with the corresponding STIP Award paid in 2016).
SUMMARY OF INDIVIDUAL OBJECTIVES
•
•
•
•
•
•
•
•
•
•
•
•
Prevention of high consequence safety and environmental events
Demonstrate Health, Safety and Environment leadership
Achieve target metrics for production and cost, plant utilisation, availability and recovery
Implement asset management plan and establish robust governance system
Delivery of pond and process water treatment (including brine concentrator operation) to plan
Establish and achieve syndicated cost reduction targets while maintaining ERA core values
Diversity and inclusion plan targets met by year end
Rehabilitation projects implemented on schedule and budget in accordance with closure plan
Demonstrate behaviours that align with values of accountability, teamwork, integrity and respect
Prevention of high consequence safety and environmental events
Demonstrate Health, Safety and Environment leadership
Deliver focussed, high quality business evaluation capabilities to Ranger 3 Deeps project to sup-
port investment assessment
Deliver excellence in accounting, performance reporting and financial forecasting
Drive and deliver cash generation and cost improvement for ERA
•
•
• Manage treasury processes and financing risks for the business
•
•
Continuous improvement of key business processes, including IT and procurement
Demonstrate behaviours that align with values of accountability, teamwork, integrity and respect
Prevention of high consequence safety and environmental events
Demonstrate Health, Safety and Environment leadership
•
•
• Obtain support of Gundjeimi Aboriginal Corporation for Ranger Authority extension
•
• Mining Agreement plan fully implemented. Relationship Committee discussions and outcomes
Jabiru Vision agreed with the Northern Territory Government
support ERA strategic objectives
2015/16 stakeholder engagement strategy on schedule and budget
Identify and deliver business transformation improvements, particularly in regard to township
Demonstrate behaviours that align with values of accountability, teamwork, integrity and respect
•
•
•
Tim Eckersley
James May
Alan Tietzel
50
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT DIRECTOR'S REPORT
A summary of the individual targets and performance for each of the Company’s senior executives (other than the Chief Executive) for
the 2015 financial year (with the corresponding STIP Award paid in 2016) is set out in the table below.
MEASURES
Tim Eckersley
Financial performance
Business performance
Health and Safety
Individual
Total
James May
Financial performance
Business performance
Health and Safety
Individual
Total
Alan Tietzel
Financial performance
Business performance
Health and Safety
Individual
Total
WEIGHT (%)
RESULT
(OUT OF
200%)
WEIGHTED
RESULT (%)
10.0
15.0
15.0
60.0
100.0
10.0
15.0
15.0
60.0
100.0
10.0
15.0
15.0
60.0
100.0
181.1
118.0
200.0
125.0
-
181.1
118.0
200.0
119.0
-
181.1
118.0
200.0
105.0
-
18.1
17.7
30.0
75.0
140.8
18.1
17.7
30.0
71.4
137.2
18.1
17.7
30.0
63.0
128.8
LTIP awards
Award levels are set so as to incentivise executives to provide sufficient retention for the executive team and to contribute to the
competitiveness of the overall remuneration package. The value of the awards granted to the Company’s senior executives (other
than the Chief Executive) in 2016, based on the fair value calculations performed by independent advisors, was between 28.1 per cent
and 30 per cent of base salary.
51
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT DIRECTOR'S REPORT
Executive Director and senior executives total remuneration
SHORT TERM BENEFITS
CASH
SALARY
($000)
CASH
BONUS7
($000)
OTHER6
($000)
TERMINATION
PAYMENTS
($000)
POST
EMPLOY-
MENT
BENEFITS
SUPER-
ANNUA-
TION
PENSION
($000)
SHARE
BASED
PAY-
MENTS
CASH &
EQUITY
SETTLED
($000)
Executive Director
A Sutton1
Senior executives
T Eckersley2
J May3
A Tietzel4
G Sinclair5
Total 2016
Total 2015
2016
2015
2016
2015
2016
2015
2016
2015
2015
400
399
365
364
240
239
355
354
49
1,360
1,405
204
136
136
85
82
53
137
89
-
559
363
140
123
34
32
75
75
93
88
6
342
324
-
-
-
-
-
-
-
-
-
-
-
30
104
75
70
65
51
35
35
10
205
270
254
223
104
100
47
39
115
112
11
520
485
TOTAL
($000)
1,028
985
714
651
509
457
735
678
76
2,986
2,847
Note 1
Note 2
Note 3
Note 4
Note 5
Note 6
Note 7
Performance related cash bonus: 68 per cent awarded in 2016, 32 per cent forfeited, 46 per cent awarded in 2015, 54 per cent forfeited.
Performance related cash bonus: 70 per cent awarded in 2016, 30 per cent forfeited. 45 per cent awarded in 2015, 55 per cent forfeited.
Performance related cash bonus: 69 per cent awarded in 2016, 31 per cent forfeited. 45 per cent awarded in 2015, 55 per cent forfeited.
Performance related cash bonus: 64 per cent awarded in 2016, 36 per cent forfeited, 42 per cent awarded in 2015, 58 per cent forfeited.
Salary paid in financial year from 1 January 2015 to 1 March 2015. No cash bonus was paid in respect to services rendered to ERA during the year.
Other benefits includes relocation, accommodation, travel, vehicle, other allowances, Company paid superannuation above statutory requirement that is taken as
cash excluding cash paid site allowances which are treated as cash salary.
Performance and related bonuses paid in 2016 relate to services in 2015 (equally bonuses paid in 2015 relate to services in 2014).
The value of share based awards has been determined in accordance with the recognition and measurement requirements of AASB2
“Share-based Payment”. The fair value of awards granted under the Rio Tinto Management Share Plan (MSP), Bonus Deferral Plan
(BDP), Performance Share Plan (PSP) and myShare has been calculated at their dates of grant using valuation models provided by
external consultants Lane Clark and Peacock LLP, including an independent lattice-based option valuation model and a Monte Carlo
valuation model which takes into account the constraints on vesting and exercise attached to these awards.
The fair value of awards granted under the ERA Long Term Incentive Plan (ERA LTIP) to the Chief Executive have been calculated at
their date of grant using a valuation model provided by external consultant EY.
52
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT DIRECTOR'S REPORT
Executive service agreements
E
Remuneration and other terms of employment for the Chief Executive and senior executives are formalised in service agreements.
These agreements provide for participation in the Rio Tinto short and long term incentive plans upon achieving performance and
service goals. The agreements may also provide for other benefits, including: medical insurance, vehicle and accommodation
allowances, relocation allowances and expenses and travel allowances.
The Chief Executive and senior executives are also 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. These include:
•
•
•
•
•
•
•
notice may be worked or fully or partly paid in lieu, at ERA’s 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;
conditional share awards granted and held for less than three years at the date of termination are reduced pro-rata;
conditional share awards held for less than three years at date of termination are reduced pro-rata;
there is no contractual entitlement to payments in the event of a change of control; and
other major provisions of the agreements relating to remuneration as set out below.
A Sutton - Chief Executive
Term of agreement - Open, commenced 23 September 2013
Base salary (excluding superannuation, allowances and other benefits) as at 31 December 2016 of $400,402 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 three months’ notice in writing or by the employer giving six
months’ notice or equivalent payment in lieu of notice.
In addition to Ms Sutton’s service agreement, ERA has entered into a secondment agreement with Rio Tinto in relation to Ms Sutton’s
services to ERA. The secondment agreement provides that ERA can end Ms Sutton’s secondment by giving Rio Tinto six months’
notice at any time. Rio Tinto can end Ms Sutton’s secondment by giving six months’ notice to ERA.
T Eckersley - General Manager Operations
Term of agreement - Open, commenced 10 September 2012
Base salary (excluding superannuation, allowances and other benefits) as at 31 December 2016 of $321,946 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.
J May - Chief Financial Officer
Term of agreement - Open, commenced 5 May 2014
Base salary (excluding superannuation, allowances and other benefits) as at 31 December 2016 of $240,311 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.
A Tietzel - Chief Advisor Agreements
Term of agreement - Open, commenced 1 October 2010
Base salary (excluding superannuation, allowances and other benefits) as at 31 December 2016 of $354,860 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.
53
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT DIRECTOR'S REPORT
F
Share based compensation
Rio Tinto Share Option Plan
In 2013 the Rio Tinto Share Option Plan was discontinued. Details of the costs of the share based payment plans applied by the
Company are provided at Note 30 of the Financial Statements.
The terms and conditions of each grant of options affecting remuneration in this or future reporting periods are as follows:
EXERCISE
PRICE
(PRE RIGHTS
ISSUE)
EXERCISE
PRICE
(POST RIGHTS
ISSUE)
VALUE PER
OPTION AT
GRANT DATE
VALUE PER
OPTION
POST RIGHTS
ISSUE
EXPIRY
DATE
EARLIEST
EXERCISE
DATE
GRANT DATE
Rio Tinto Limited
17/03/2009
17/03/2019
49.56
33.45
13.36
13.36
17/03/2012
Rio Tinto Performance Share Plan
Share awards under the Rio Tinto Performance Share Plan (PSP) are granted at the discretion of the Rio Tinto Remuneration
Committee in line with Rio Tinto guidelines. In 2013 the PSP was revised, and as a transitional provision, 50 per cent potentially vest
after four years and 50 per cent potentially vest after five years. PSP awards were granted in 2016. 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
27 May 2013
27 May 2013
11 March 2016
MARKET PRICE AT AWARD
PERFORMANCE PERIOD
ENDS1
MARKET PRICE AT
31 DECEMBER 2016
$53.11
$53.11
$44.57
31 December 2016
31 December 2017
31 December 2020
$59.90
$59.90
$59.90
Note 1
Vesting dependent upon continued employment with a Rio Tinto Group company.
54
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT DIRECTOR'S REPORT
Rio Tinto Management Share Plan
Share awards under the Rio Tinto Management Share Plan (MSP) 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
17 March 2014
23 March 2015
11 March 2016
MARKET PRICE
AT AWARD
PERFORMANCE PERIOD
ENDS1
PRICE AT
31 DECEMBER 2016
$60.28
$54.02
$44.57
20 February 2017
19 February 2018
18 February 2019
$59.90
$59.90
$59.90
Note 1
Vesting dependent upon continued employment with a Rio Tinto Group company.
Rio Tinto Bonus Deferral Plan
Share awards under the Rio Tinto Bonus Deferral 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 shares affecting remuneration in this or future
reporting periods are as follows:
AWARD DATE
Rio Tinto Limited
17 March 2014
23 March 2015
11 March 2016
MARKET PRICE AT AWARD
VESTING DATE1
PRICE AT
31 DECEMBER 2016
$60.28
$54.02
$44.57
1 December 2016
1 December 2017
1 December 2018
$59.90
$59.90
$59.90
Note 1
Vesting dependent upon continued employment with a Rio Tinto Group company.
Share based compensation – Rio Tinto employee share schemes
The key management personnel and Directors of the Company who elected to participate in Rio Tinto employee share schemes as at
31 December 2016 are set out below:
T Eckersley
Z Fisher
A Tietzel
S Trott
Rio Tinto myShare Savings Plan
Rio Tinto myShare Savings Plan
Rio Tinto myShare Savings Plan
Rio Tinto myShare Savings Plan
55
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT DIRECTOR'S REPORT
Equity instrument disclosures relating to key management personnel
Options provided as remuneration
Details of options over ordinary shares in Rio Tinto Limited and Rio Tinto plc held during the year and provided as remuneration to key
management personnel in respect of their service to ERA (or, in the case of non-executive Directors, to Rio Tinto) 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 JOINING1
BALANCE AT END
OF THE YEAR3
GRANTED
AS REMUN-
ERATION
EXERCISED
DURING THE
YEAR
OTHER
CHANGES2
VESTED &
EXER-
CISABLE
UNVESTED
Rio Tinto Limited
Executive Director
A Sutton
Senior executives
A Tietzel
2016
2015
2016
2015
Non-executive Directors4
B Cox
J Farrell
P Taylor
2016
2015
2016
2015
2015
2,888
2,888
2,008
2,008
8,111
8,111
3,666
8,090
7,343
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(4,424)
(2,031)
(1,730)
-
(2,008)
-
(3,726)
-
(3,666)
-
-
1,158
2,888
-
2,008
4,385
8,111
-
3,666
5,312
-
-
-
-
-
-
-
-
-
Note 1
Note 2
Note 3
Note 4
Where a key management personnel joined during the year, balance at start of the year reflects holdings at time of commencement with ERA.
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 ERA, and forfeited options where conditions were not met.
Where a key management personnel left prior to the end of the year, the balance reflects the holding at the time of resignation.
Changes to balances for non-executive Directors do not relate to remuneration for services provided to the Company.
56
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT DIRECTOR'S REPORT
Conditional awards provided as remuneration
Performance Share Plan; Management Share Plan; Bonus Deferral Plan
No conditional awards of ordinary shares of either ERA or of Rio Tinto Limited or Rio Tinto plc were provided during the year as
remuneration for services provided to ERA to any of the non-executive Directors. Details of conditional awards of ordinary shares in
Rio Tinto Limited and Rio Tinto plc held during the year and provided as remuneration to the Chief Executive and senior executives of
ERA in respect of their duties as officers of ERA 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 JOINING1
GRANTED
AS REMU-
NERATION VESTED LAPSED
AWARDS
CAN-
CELLED
OTHER
CHANGES2
BALANCE
AT END
OF YEAR3
Rio Tinto Limited
Executive Director
A Sutton
Senior executives
T Eckersley
J May
G Sinclair
A Tietzel
Non-executive Directors4
B Cox
J Farrell
Z Fisher
P Taylor
S Trott
2016
2015
2016
2015
2016
2015
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
9,350
9,630
5,825
5,371
2,367
1,799
3,542
6,548
6,417
45,624
41,484
37,291
31,017
6,626
14,000
24,473
24,473
6,786
(3,032)
2,427
(2,561)
2,007
(2,033)
1,619
(1,078)
1,573
1,224
-
(717)
(656)
(267)
2,216
(2,323)
1,798
(1,514)
-
-
-
-
-
-
-
-
(8,001)
(10,848)
(5,746)
(7,541)
-
(3,038)
(3,023)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(234)
(146)
(149)
(87)
(59)
-
(97)
(194)
(153)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,870
9,350
5,650
5,825
3,164
2,367
3,178
6,247
6,548
24,841
62,464
14,988
45,624
15,998
47,543
13,815
37,291
5
6,631
5,464
16,426
14,382
35,832
-
24,473
Note 1
Note 2
Note 3
Note 4
Where a key management personnel joined during the year, balance at start of the year reflects holdings at time of commencement with ERA.
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 ERA, and Rio Tinto Rights Issue adjustments to accrued balances.
When a key management personnel left prior to the end of the year, the balance reflects holdings at the date of resignation.
Changes to balances for non-executive Directors do not relate to remuneration for services provided to ERA.
ERA Long Term Incentive Plan
In addition to the conditional awards set out above, as at 31 December 2016, Ms Sutton had been awarded a cumulative total of
223,528 rights (31 December 2015 balance: 223,528 rights) that have a value calculated by reference to the Company’s share price
(i.e. phantom shares). These awards have a three year performance period and, upon vesting, will be converted into Rio Tinto MSP
shares based on the five day average Rio Tinto Limited share price prior to the Rio Tinto MSP grant date in March of the year of
vesting. Any Rio Tinto MSP shares provided will vest after a further two year period. Further details of the ERA LTIP are available on
pages 45 and 46.
57
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT DIRECTOR'S REPORT
Shareholdings
The number of shares held in ERA or Rio Tinto Limited during the financial year by each Director of ERA are set out below.
Energy Resources of Australia Ltd
P McMahon
Rio Tinto Limited
P Mansell
A Sutton
B Cox
P Dowd
J Farrell
Z Fisher
S Trott
P McMahon
J Pegler
D Smith
P Taylor
BALANCE
AT START OF
THE YEAR1
INCREASED
DURING
THE YEAR
OTHER CHANGES
DURING THE
THE YEAR
BALANCE
AT END OF
THE YEAR2
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2016
2015
2015
2015
2015
2015
42,500
3,500
3,137
11,537
9,211
5,399
5,395
1,744
1,744
26,741
19,404
2,799
2,318
2,318
18,405
6,331
33,078
33,804
-
-
363
3,580
3,170
6,709
9,571
-
-
5,580
12,077
3,071
3,091
-
-
-
65
4,601
-
42,500
(1,500)
-
(11,232)
(844)
(6,691)
(9,567)
-
-
(4,741)
(4,740)
(2,993)
-
-
(10,582)
-
(10,104)
(2,457)
2,000
3,500
3,885
11,537
5,417
5,399
1,744
1,744
27,580
26,741
2,877
5,409
2,318
7,823
6,331
23,039
35,948
Note 1
Note 2
Where a Director was appointed during the year, balance reflects holdings at the time of commencement with the Company.
Where a Director resigned during the year, balance reflects holdings at time of resignation as a Director of the Company.
G
Additional information
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.
58
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT DIRECTOR'S REPORT
Principal activities
The principal activities of the Company during the course of the
year consisted of the mining, processing and sale of uranium
oxide.
Dividends
No dividends have been paid by ERA to members in respect of
the 2016 financial year (2015: nil).
Operating and financial review
Details of ERA’s review and results of operations are included in
the Chairman’s Report on page 6, the Chief Executive’s Report
on page 7 and the Operating and Financial Review section on
page 9.
Significant changes to the state of affairs
In the opinion of the Directors, other than matters reported in
the Directors’ Report, the Chairman’s Report and the Chief
Executive’s Report, there were no significant changes in the state
of affairs of the Company during the year ended 31 December
2016.
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)
(ii)
(iii)
the operations of the Company;
the results of those operations; or
the state of affairs of the Company subsequent
to the financial year ended 31 December 2016.
Likely developments
In the opinion of the Directors, any likely developments in the
operations of the Company 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
Operating and Financial Review section on page 9.
Annual General Meeting
The 2017 Annual General Meeting will be held on 12 April 2017 in
Darwin, in the Northern Territory of Australia. Notices of the 2017
Annual General Meeting will be set out in separate letters to the
shareholders of the Company.
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 Company Secretary of the Company, and all
former Directors and Company 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 senior executives 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 (including
the Directors, Company 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.
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 Department of Primary Industry and Resources (Northern
Territory); the Supervising Scientist Branch of the Commonwealth
Department of Environment; the Northern Land Council; the
Commonwealth Department of Industry, Innovation and Science
and the Gundjeihmi Aboriginal Corporation (representatives of
the Mirarr Traditional Owners).
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.
ERA’s commitment to protect the environment in 2016 was
overseen by the Supervising Scientist Branch, which conducts
extensive monitoring and research programs on the Ranger
Project Area and Jabiluka Mineral Lease.
There were no prosecutions commenced or fines incurred in
respect of ERA’s environmental performance during 2016.
59
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
DIRECTOR'S REPORT
The environment remained protected throughout the period.
Further details of ERA’s environmental performance are included
in the Environment section of the Annual Report on page 28.
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 3rd Edition of
the Corporate Governance Principles and Recommendations
developed by the 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 on pages 62 to 68.
Rounding of amounts
The Company is of a kind referred to in ASIC Class Order
2016/191 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.
Auditor
PricewaterhouseCoopers is the auditor of the Company. No
person who was an officer of the Company during the year was a
former partner or director of the auditor. 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 auditor in
connection with preparing its report) of which the auditor is
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
auditor is aware of that information.
Non audit services
The Company may decide to employ the auditor on assignments
additional to its statutory audit duties where the auditor’s
expertise and experience with the Company are important.
Details of the amounts paid or payable to the auditor for audit
services are set out below.
The Board of Directors has considered the position and, in
accordance with the advice received from the Audit and Risk
Committee, is satisfied that the provision of non-audit services
is compatible with the general standard of independence for the
auditor imposed by the Corporations Act 2001.
60
All non-audit services are reviewed by the Audit and Risk
Committee to ensure they do not impact on the impartiality
and objectivity of the auditor and do not undermine the general
principles relating to auditor’s independence as set out in
Professional Statement F1, including reviewing or auditing the
auditor’s 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 have satisfied themselves that the provision of non-
audit services by the auditor 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 auditor of the Company, its related
practices and non-audit related firms.
AUDIT SERVICES
PricewaterhouseCoopers Australia
Audit and review of financial reports
Audit and review of financial reports
(additional prior year fees)
Total remuneration for audit
services
Taxation services
Audit related services
Total Remuneration
2016
$000
2015
$000
407
28
435
-
53
488
345
108
453
-
100
553
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 61.
Signed at Perth this 10 February 2017 in accordance with a
resolution of the Directors.
P Mansell
Director
Perth
10 February 2017
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT AUDITOR’S INDEPENDENCE DECLARATION
Auditor’s Independence Declaration
As lead auditor for the audit of Energy Resources of Australia Ltd for the year ended 31 December
2016, I declare that to the best of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
John O'Donoghue
Partner
PricewaterhouseCoopers
Melbourne
10 February 2017
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
61
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
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 3rd Edition of
the Corporate Governance Principles and Recommendations
(“Principles”) developed by the ASX Corporate Governance
Council (“Council”).
The Board has considered the Council’s Principles, and ERA
did not comply with the following recommendations for the
whole of the reporting period:
•
Recommendation 2.4 – there was not a majority of
independent Directors.
Recommendations 4.1 and 7.1 – for part of the reporting
period the Audit and Risk Committee was not chaired by an
independent Director.
•
As explained further below, the Board considers that in each
case this is appropriate.
This Corporate Governance Statement is current as at 10
February 2017 and has been approved by the Board of ERA.
Board responsibilities and charter
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.
Other than as specifically reserved to the Board in the Board
Charter, responsibility for the management of ERA’s business
is delegated to the Chief Executive who is accountable to the
Board.
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 are
designed to ensure that ERA meets or exceeds the regulatory
requirements governing its operations.
62
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 and removal of a Chief
Executive proposed by Rio Tinto and the terms and
conditions of the Chief Executive’s employment;
appointment and removal of a Company Secretary;
appointment of the Chairman of the Board and
members of Board Committees;
any matters set out in the Schedule of Matters
Reserved for Decision or Consideration by the Board;
and
approval, subject to the Constitution, the Corporations
Act 2001 and the ASX Listing Rules, of each of the
following:
(i)
(b)
(c)
(d)
(e)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
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);
capital expenditure in excess of $5,000,000;
the acquisition, divestment or establishment of
any significant business assets;
changes to the discretions delegated from the
Board;
the annual operating budget plan;
changes to the capital and operating approval
limits of senior management; and
the annual report and interim and preliminary
final reports.
The Board Charter is available at the Corporate Governance
section of ERA’s website.
Composition
From 1 January 2016 to 3 May 2016, the Board of ERA consisted
of seven Directors, six of whom were non-executive. On 3 May
2016, the number of Directors decreased to six, following the
resignation of Mr Cox as a non-executive Director.
Ms Sutton was the Board’s only executive Director and held the
position of Chief Executive and Managing Director throughout
2016.
Mr Mansell, Mr Charles and Mr Dowd all served as independent
non-executive Directors in 2016. Mr Cox, Ms Farrell, Ms Fisher
and Mr Trott, who are all executives of Rio Tinto, also served as
non-executive Directors during the period.
Skills, experience and diversity
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 38 to 39. Details of the independent status of each
Director is outlined in the Independence section below.
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
CORPORATE GOVERNANCE STATEMENT
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.
Governance
The Board reviews its structure, size and composition regularly.
The Board has not established a Nominations Committee. 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.
The process to identify and nominate new independent Directors
from time to time is led by the incumbent independent Directors.
Decisions relating to the appointment of Directors are made by
the full Board. Directors appointed by the Board are required
by ERA’s Constitution to submit themselves for re-election by
shareholders at the Annual General Meeting following their
appointment. There is no share ownership qualification for
appointment as a Director.
The ERA Board undertakes appropriate background checks and
screening prior to appointing a Director or putting a candidate
to security holders for election as a Director. ERA provides
security holders with all material information in its possession
concerning each Director standing for election or re-election in
the explanatory notes accompanying the notice of meeting.
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. The key attributes that the Board
seeks to achieve in its membership are set out below.
Mining
Health, Safety
and Environment
Financial
Technical
Strategy
Senior executive experience in the
resources industry, including mining,
development, marketing and exploration
Familiarity with issues associated with
workplace health and safety, environment
and social responsibility
Proficiency in financial accounting and
reporting, corporate finance, internal
financial controls, corporate funding and
associated risks
A strong understanding in technical
areas of the resource industry, including
engineering, mining and processing
Proven ability in developing and imple-
menting successful business strategies,
including the capacity to probe and
challenge management on the delivery of
strategic objectives
Commitment to the highest standards of
governance, including Board experience
with other ASX listed companies that
demonstrate rigorous governance
standards
Sustainable success in business at a very
senior executive level
Interaction with government and
regulators and involvement in public
policy initiatives and decisions
Executive
leadership
Government
relations
Community
and indigenous
engagement
Experience in engaging with a cross-
section of community and Indigenous
stakeholders
Risk
management
Experience in developing and establishing
risk management frameworks, setting risk
appetite and overseeing organisational
risk culture
Appointment, induction training and professional
development
All new non-executive Directors sign a letter of appointment
which sets out the key terms and conditions of their appointment
including duties, rights and responsibilities, the time commitment
envisaged and the Board’s expectations regarding their
involvement with committee work. The Chief Executive and
senior executives enter into service agreements which govern the
terms of their employment (see page 53).
Induction training is provided to all new Directors. It includes
comprehensive induction materials, discussions with the Chief
Executive and senior executives and the option to visit the
Company’s operations at Ranger mine, either by appointment or
with the Board during its next site tour. The induction materials
and discussions include information on the Company’s strategy,
culture and values, key corporate and Board policies, the
Company’s financial, operational and risk management position,
the rights and responsibilities of Directors, the role of the Board
and its committees and meeting arrangements.
All Directors are expected to maintain the skills required to
discharge their obligations to the Company. ERA provides
the opportunity for Directors to participate in professional
development activities to develop and maintain the skills and
knowledge needed to perform their role as Directors effectively.
63
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
Chairman and Chief Executive
The Chairman, Mr Mansell, is an independent non-executive
Director. Mr Mansell’s other appointments are set out on page
38. The Board considers that none of his other commitments
interfere with the discharge of his duties to ERA.
The Chief Executive is Ms Sutton, who is also a Director.
Company Secretary
The Company Secretary is responsible for ensuring that Board
procedures are complied with and that governance matters are
addressed. All Directors have direct access to the Company
Secretary who is accountable directly to the Board, through the
Chairman, on all matters to do with the proper functioning of
the Board. Details of the Company Secretary’s experience and
qualifications are set out on page 41.
Board meetings
The Board held six scheduled meetings and three extraordinary
meetings during 2016. In addition, there were 17 meetings held
in 2016 of Committees established by the Board. The Board and
Committee meeting attendance details for Directors in 2016 are
set out on page 42.
Performance self assessment
The Board has a process for periodically evaluating its
performance, as well as the performance of its committees
and individual Directors. The evaluation and self-assessment
generally takes the form of an internal process facilitated by
the Chairman. After consulting each Director and the Company
Secretary, the Chairman reports a summary of the findings to
all Directors for discussion at the next Board meeting where
relevant actions are agreed. Every third year, the Board
utilises the services of an external consultant to facilitate the
process. The external process takes the form of a questionnaire
completed by each of the Directors and the Company Secretary.
Following collation by the consultant, the results, adequacy and
appropriateness of the self-assessment process are compiled.
A report outlining the results is circulated to all Directors and
discussed at the following Board meeting where actions arising
are agreed.
The last formal performance evaluation was carried out in
2014 and facilitated by an external consultant. Due to the
number of changes to the Board’s composition in 2015 and
2016, a formal evaluation was not carried out in the period. The
Chairman obtained informal feedback from the Directors on the
performance of the Board and its committees in 2016, with a view
to undertaking a formal evaluation in 2017.
CORPORATE GOVERNANCE STATEMENT
Independence
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 interests 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.
In addition to the examples set out in the Principles, 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
five per cent of the voting shares) in the Company or in a
member of the Rio Tinto Group;
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
this may have compromised independence; 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).
Mr Mansell, Mr Charles and Mr Dowd are considered by the
Board to be independent Directors.
For the reporting period, the Board of Directors did not consist
of a majority of independent Directors. This does not follow
Recommendation 2.4 of the Council’s Principles. The Board
considered it was appropriate that the composition of the Board
recognised Rio Tinto’s 68.4 per cent shareholding.
All Directors are required to, and do, bring an independent
judgement 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 on arm’s
length terms and in the interests of ERA.
64
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
CORPORATE GOVERNANCE STATEMENT
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 2016 Annual General
Meeting, the 2015 Remuneration Report was approved with
95.68 per cent of shares voted in favour (voting comprised
356,856,147 votes ‘for’ the resolution and 16,104,679 votes
‘against’ the resolution). North Limited and Peko-Wallsend Pty
Ltd, which are both Rio Tinto entities, voted a combined total of
354,078,854 votes ‘for’ the resolution.
In 2012, the Board established a Remuneration Committee. At 31
December 2016, the Remuneration Committee comprised three
non-executive Directors, being Mr Mansell (Chair), Mr Dowd and
Mr Charles, all of whom are independent. 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.
The Remuneration Committee Charter sets out the role and
objectives of the Remuneration Committee. A summary of the
objectives of the Remuneration Committee and the policies and
practices of the Company regarding the remuneration of non-
executive Directors, the Chief Executive and senior executives
is set out on pages 43 to 46 of the Remuneration Report. The
complete Remuneration Committee Charter is available at the
Corporate Governance section of ERA’s website.
Details of how the performance evaluation process is undertaken
by the Board in respect of the Chief Executive and senior
executives are set out on pages 43 to 46 of the Remuneration
Report.
Audit and Risk Committee
The Audit and Risk Committee is appointed by the Board and at
31 December 2016 comprised three non-executive Directors, all
of whom are independent. A majority of members constitutes a
quorum. The present members of the Audit and Risk Committee
are Mr Charles (Chair), Mr Mansell and Mr Dowd. The
Company’s Chief Financial Officer, Chief Executive and Legal
Counsel & Company Secretary, the external auditor and the
internal auditor are invited to attend all meetings.
During the period from 1 January 2016 to 28 January 2016, the
Audit and Risk Committee was chaired by Mr Cox, who was not
considered by the Board to be independent (other members of
the Committee were Mr Charles and Mr Mansell). This does not
follow Recommendations 4.1 or 7.1 of the Council’s Principles.
The Board considered the composition of the Audit and Risk
Committee in light of the skills and experience of the current
Directors and determined that it was appropriate for Mr Cox to
chair the Committee during this period.
From 28 January 2016 the Audit and Risk Committee was
comprised of Mr Charles (Chair), Mr Mansell and Mr Dowd, all of
whom are independent Directors.
The Audit and Risk Committee Charter sets out the role and
terms of reference of the Audit and Risk Committee and is
reviewed regularly. The Audit and Risk 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 auditors. The Committee also reviews
the adequacy of internal and external audit arrangements.
The Audit and Risk 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 and Risk Committee. The Audit and
Risk Committee reviews compliance with the Corporations Act
2001, and the requirements of the ASX and other regulatory
requirements.
The Audit and Risk Committee held three scheduled meetings
during 2016 and three extraordinary meetings. Attendance
details of the 2016 meetings of the Audit and Risk Committee,
and the qualifications and experience of the members, are set out
in the Directors’ Report on pages 42 and 38 respectively.
Each year the external auditor submits a schedule of audit
services and fee estimate to the Audit and Risk Committee
for consideration and approval. PricewaterhouseCoopers has
been ERA’s external auditor for a number of years. Each year,
the Audit and Risk Committee reviews the effectiveness of the
external audit process and the independence of the auditor.
Based on its 2016 review, the Audit and Risk 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 and
Risk Committee.
Details of the fees paid to PricewaterhouseCoopers during 2016
are outlined on page 60.
65
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT CORPORATE GOVERNANCE STATEMENT
Health, Safety and Environment Committee
In 2016 the ERA Board introduced a Health, Safety and
Environment Committee.
The Health, Safety and Environment Committee is appointed by
the Board and ordinarily comprises three non-executive Directors.
A majority of members constitutes a quorum. At 31 December
2016 the members of the Health, Safety and Environment
Committee were Mr Dowd (Chair) and Mr Charles. Ms Farrell
served as a member of the committee in 2016, but resigned as
a Director during the period. In January 2017 Ms Fisher was
appointed to the Health, Safety and Environment Committee. The
Company’s Chief Executive, General Manager Operations and
Company Secretary are invited to attend all meetings.
The Health, Safety and Environment Committee Charter sets out
the role and objectives of the Health, Safety and Environment
Committee and is reviewed regularly. It is available at the
Corporate Governance section of ERA’s website.
The Committee provides a formal structure to further support
governance and initiatives for improvement in health, safety and
the environmental management of ERA operations.
The Health, Safety and Environment Committee held two
scheduled meetings during 2016, which will be increased to three
in 2017. Attendance details of the 2016 meetings of the Health,
Safety and Environment Committee, and the qualifications and
experience of the members, are set out in the Directors’ Report
on pages 42 and 38 respectively.
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 underrepresented 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. In accordance
with the Company’s diversity policy, ERA has set measurable
objectives to achieve diversity.
The objectives and the Company’s progress in achieving each
objectives are set out below:
OBJECTIVE
OUTCOME
Women to represent 20 per
cent of the management
(being manager level and
above) and the Board by end
of 2016.
Target of 33 per cent
Indigenous people and 25 per
cent female participation in
new apprenticeships by end
of 2016.
As at 31 December 2016
female participation at manager,
Executive Committee and
Board level is 26 per cent.
Women comprise 33 per cent
of Directors. Total female
participation is 16 per cent.
Throughout 2016, ERA had six
full time apprentices, three of
whom are Indigenous (50 per
cent) and three of whom are
female (50 per cent).
In addition, ERA had four school
based apprentices and three
Indigenous trainees.
Target Indigenous
employment of 20 per cent by
the end of 2016.
ERA ended 2016 with an
Indigenous employment rate of
13 per cent.
As at 31 December 2016, the proportion of women employed by
ERA was as follows:
Board of Directors
Executive Committee and
managers
Company
33%
24%
16%
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 Governance section of
the Company’s website at www.energyres.com.au.
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.
The Company has a confidential whistleblower programme
known as ‘Speak-OUT’. Employees are encouraged to report any
suspicion of unethical or illegal practices.
66
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT CORPORATE GOVERNANCE STATEMENT
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”
(“Rules for dealing”) apply to the participation of ERA executives
in the Rio Tinto long term incentive plans 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, senior executives and senior managers must
advise the Chairman in writing, and receive approval in
writing from the Chairman, if they intend to purchase or
sell ERA securities. In regard to his own dealings, the
Chairman is required to notify the Chair of the Audit and Risk
Committee.
No dealings in ERA securities 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
42 of the Remuneration Report.
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 and Risk Committee, to ensure that
potential business risks are identified and appropriate action
taken.
The Company has an annual internal audit programme that
is determined by the Audit and Risk Committee. The annual
internal audit programme is executed by an outsourced
provider which reports back to the Audit and Risk Committee
on its assessment of the Company’s control environment. In
addition, the Company’s compliance officer provides support for
internal audit planning activities and the monitoring of actions
implemented by the Company in response to findings raised by
the internal auditor.
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. 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 Audit and Risk Committee reviews ERA’s risk management
framework at least annually, and did so in 2016, to satisfy itself
that it continues to be sound.
In 2016, both the Audit and Risk Committee and the Board
undertook an assessment of the strategic risks to the Company’s
business and the mitigation strategies to be implemented
by management. The strategic risks identified through this
assessment were process water, cashflow over the period of
2016 to 2018, Ranger 3 Deeps mine, stakeholder support of
the Company’s strategic initiatives, rehabilitation of the Ranger
Project Area, internal constraints relating to the Company’s
licence to operate, external events relating to the Company’s
licence to operate, long term resource access and human
resources.
These strategic risks are in addition to risks inherent to the
mining industry generally which include economic conditions
(fluctuations in commodity pricing and exchange rates),
international regulation of greenhouse gas emissions and impact
of climatic conditions. More information on ERA’s business risks,
including any material exposure to economic, environmental and
social sustainability risks, is set out on pages 15 and 16 of the
Annual Report.
67
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
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. 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 the Annual General Meeting. 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, presentations 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.
ERA provides shareholders with the option to receive
communications from, and send communications to, the
Company and the share registrar electronically. The contact
details are available on the Company’s website.
CORPORATE GOVERNANCE STATEMENT
Each reporting period, the Chief Executive and the Chief
Financial Officer give statements to the Board that, in their
opinion, the financial records of the Company have been properly
maintained and that the financial statements comply with the
Australian Accounting Standards and give a true and fair view
of the Company’s financial position and performance. The
statements also provide that the opinion has been formed on the
basis of a sound system of risk management and internal control
which is operating effectively in all material respects. In 2016,
the Chief Executive and senior executives of the Company also
made a declaration that they:
•
understood the key requirements of each business integrity
element of the Rio Tinto’s The Way We Work; and
had actively engaged with their direct reports to:
•
- promote awareness of the business integrity values; and
- ensure compliance with the Company’s expectations
around each value.
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 at the Corporation Governance section of ERA’s
website at www.energyres.com.au.
68
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2016
Revenue from continuing operations
Changes in inventories
Materials and consumables used
Employee benefits and contractor expenses
Government and other royalties
Commission and shipping expenses
Depreciation and amortisation expenses
Non-cash impairment charge
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/(loss) 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/(loss) attributable to the
ordinary equity holders of the Company:
Basic earnings per share (cents)
Diluted earnings per share (cents)
NOTES
3
4
4
13
4
2016
$’000
294,839
(44,763)
(75,150)
2015
$’000
348,260
(46,800)
(74,449)
(122,852)
(135,768)
(14,286)
(17,908)
(5,526)
(5,130)
(37,853)
(111,933)
(230,724)
(19,654)
(12,736)
(2,372)
-
(22,031)
(12,787)
(1,252)
(271,077)
(79,798)
5
-
(195,695)
(271,077)
(275,493)
-
-
(271,077)
(275,493)
(271,077)
(275,493)
(271,077)
(275,493)
27
27
(52.4)
(52.4)
(53.2)
(53.2)
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
69
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT NOTES
2016
$’000
2015
$’000
7
8
9
10
11
12
13
14
15
16
17
18
19
20
20
395,598
365,326
12,348
20,440
127,274
132,950
-
480
535,220
519,196
9,791
203,632
-
70,789
49,673
203,632
259,990
68,324
284,212
581,619
819,432
1,100,815
34,357
40,416
58,572
50,139
38,930
39,958
133,345
129,027
466,460
480,750
21,068
487,528
620,873
198,559
21,091
501,841
630,868
469,947
706,485
389,440
706,485
389,751
(897,366)
(626,289)
198,559
469,947
BALANCE SHEET
AS AT 31 DECEMBER 2016
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other
Total current assets
Non-current assets
Inventories
Undeveloped properties
Property, plant and equipment
Investment in trust fund
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Payables
Income received in advance
Provisions
Total current liabilities
Non-current liabilities
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Total equity
The above balance sheet should be read in conjunction with the accompanying notes.
70
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2016
Balance at 1 January 2015
Profit/(loss) for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Employee share options – value of employee services
20
Balance at 31 December 2015
Profit/(loss) for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Employee share options – value of employee services
20
CONTRIBUTED
EQUITY
$’000
RESERVES
$’000
RETAINED
EARNINGS
$’000
NOTES
TOTAL
$’000
706,485
389,918
(350,796)
745,607
-
-
-
-
-
-
(275,493)
(275,493)
-
-
(275,493)
(275,493)
(167)
(167)
-
-
(167)
(167)
706,485
389,751
(626,289)
469,947
-
-
-
-
-
-
-
-
(311)
-
(271,077)
(271,077)
-
-
-
-
-
-
(311)
-
Balance at 31 December 2016
706,485
389,440
(897,366)
198,559
The above statement of changes in equity should be read in conjunction with the accompanying notes.
71
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2016
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 and evaluation
Payments for rehabilitation
Interest received
Financing costs paid
NOTES
2016
$’000
2015
$’000
317,514
375,701
(267,373)
(261,400)
50,141
-
(20,454)
6,240
(1,905)
34,022
114,301
(8,749)
(26,538)
6,920
(1,340)
84,594
(2,988)
(11,906)
93
247
(2,895)
(11,659)
(853)
(853)
30,274
365,326
(2)
(904)
(904)
72,031
293,318
(23)
Net cash (outflow)/inflow from operating activities
26
CASH FLOW FROM INVESTING ACTIVITIES
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Net cash (outflow)/inflow from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
Employee share option payments
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
7
395,598
365,326
The above cash flow statement should be read in conjunction with the accompanying notes.
72
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
1
Summary of significant
accounting policies
The principal accounting policies adopted in the preparation
of these 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 Energy
Resources of Australia Ltd (ERA).
(a) Basis of preparation
This general purpose financial report has been prepared
in accordance with Australian Accounting Standards and
interpretations issued by the Australian Accounting Standards
Board, and the Corporations Act 2001.
(i) Compliance with IFRS
The financial statements of the Company 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.
(iii) Critical accounting estimates
The presentation of financial statements requires the use of cer-
tain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the accounting
policies of the Company. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and esti-
mates are significant to the financial statements, are disclosed in
Note 2.
(b) Principles of consolidation
(i) Subsidiaries
ERA has no subsidiaries and is referred to in the financial report
as the Company.
Subsidiaries are all those entities (including special purpose
entities) over which the Company 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 Company controls another entity.
(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 Company 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 Company’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 Company 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 the Company under a
separate agreement, the revenue is deferred until repayment of
the borrowed goods occurs.
Under the marketing agreement with Rio Tinto Uranium,
payment for uranium oxide is connected to the date the material
is shipped. Once cash is received, it is treated as unearned
revenue until the sale occurs and ownership transfers.
(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 Company 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;
contract compensation, which is recognised upon
cancellation of a sales contract;
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 financial
statements are presented in Australian dollars, which is the
Company’s functional and presentation currency.
(ii) Transactions and balances
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
statement of comprehensive income, 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.
73
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
(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 Company 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.
(i) Rehabilitation
The Company 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 the Company’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 per cent
probability. The cost estimates are calculated annually during
the life of the operation to reflect known developments, and are
subject to regular reviews.
The amortisation or unwinding of the discount applied in
establishing the net present value of provisions is charged to the
statement of comprehensive income 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.
74
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, the Company 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, the Company 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 the Company 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.
The Company 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.
The current income tax charge is calculated on the basis of
the tax laws enacted or substantively enacted at the end of the
reporting period in the country where the Company generates
taxable income (Australia).
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 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
or 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.
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
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.
(h) Trade and other receivables
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method less provision for impairment.
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 Company and are predominantly
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, for example because it exceeds the
mine’s cut off grade, it is valued at the lower of cost and net
realisable value.
Stockpiled ore’s net realisable value is calculated on a discounted
cash flow basis. If the ore will not be processed within 12 months
after the balance sheet date it is included within non-current
assets.
Work in progress inventory includes ore stockpiles and other
partly processed material. Quantities are assessed primarily
through surveys and assays.
Stores are valued at the lower of cost or net realisable value 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 loans received 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 the present value of the
future cashflow expected to be derived from an asset or cash
generating unit.
(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 Company and
the cost of the item can be measured reliably. Repairs and
maintenance are charged to the statement of comprehensive
income 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.
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ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
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.
•
•
* 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
•
•
Tailings Storage Facility - three years
Brine Concentrator - seven 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 Company 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 statement of comprehensive income on a
straight-line basis over the period of the lease.
(iv) Mine properties
Mine properties, consisting principally of Ranger Project Area
mining rights, are amortised on a unit of production basis over the
life of the economically recoverable reserves 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;
construction of underground tunnels, where necessary
for exploration drilling;
examining and testing extraction and treatment
methods; and
compiling prefeasibility and feasibility studies.
76
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 the
Company. Capitalised exploration expenditure is reviewed for
impairment indicators 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 and Risk Committee. Impairment is assessed
using the fair value less cost of disposal 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 flows.
(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. Trade accounts payable
are normally settled within 60 days. These are recognised initially
at their fair value and subsequently measured at amortised cost
using the effective interest rate method.
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
(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 statement of comprehensive income over the period of the
borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the
Company 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 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 Company 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 Company has no staff who are members of the defined
benefits section.
(iv) Termination benefits
Termination benefits are payable when employment is terminated
before the normal retirement date, or when an employee
accepts voluntary redundancy in exchange for these benefits.
The Company recognises termination benefits when it is
demonstrably committed to either terminating the employment
of current employees according to a detailed formal plan without
possibility of withdrawal or to providing termination benefits as
a result of an offer made to encourage voluntary redundancy.
Benefits falling due more than 12 months after the end of the
reporting period are discounted to present value.
(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.
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ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
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 2016/191,
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.
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. TSR). The Company uses fair values
provided by independent actuaries calculated using a lattice
based option valuation model.
78
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 30.
(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) New accounting standards and interpretations
Certain new accounting standards and interpretations have
been published that are not mandatory for 31 December 2016
reporting periods. The Company’s assessment of the impact of
these new standards and interpretations is set out below.
(i) AASB 9 Financial Instruments
AASB 9 Financial Instruments addresses the classification,
measurement and derecognition of financial assets and financial
liabilities. The standard is not applicable until 1 January 2018 but
is available for early adoption. The derecognition rules have been
transferred from AASB 139 Financial Instruments: Recognition
and Measurement and have not been changed. There will be
no impact on the Company’s accounting for financial liabilities,
as the new requirements only affect the accounting for financial
liabilities that are designated at fair value through profit or loss
and the Company does not have any such liabilities.
(ii) AASB 16 Leases
AASB 16 was issued in February 2016. It will result in almost all
leases being recognised on the balance sheet as the distinction
between operating and financing leases is removed. Under the
new standard, an asset (the right to use the leased item) and a
financial liability to pay rentals are recognised. The only exception
are short-term and low-value leases. The company has not yet
determined to what extent these commitments will result in the
recognition of an asset and a liability for future payments and
how it will affect the Company’s profit or loss and classification
of cashflows. The standard is mandatory for financial years
commencing on or after 1 January 2019.
(iii) AASB 15 Revenue from Contracts with Customers
AASB 15 ‘Revenue from contracts with customers’ establishes
principles for reporting the nature, amount, timing and uncertainty
of revenue and cash flows arising from an entity’s contracts with
customers. The standard is not applicable until 1 January 2018
but is available for early adoption. ERA is presently determining
the extent of the impact, if any.
There are no other standards that are not yet effective and that
are expected to have an impact on the entity in the current or
future reporting periods and in forecast transactions.
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
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 Company and that are believed to be reasonable under the
circumstances.
The Company 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 to rehabilitate and restore disturbed land.
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 provision for
rehabilitation represents the net present cost at 31 December,
based on current disturbance, of the preferred plan within the
requirements of the Ranger Authority. The Ranger Authority
requires ERA to cease mining and processing activities by
January 2021 and complete rehabilitation of the Ranger Project
Area by January 2026.
The closure model is based on a prefeasibility study that was
conducted in 2011 and has been reviewed and updated annually
since. Material packages of work have had studies progressed
and work subsequently executed as required. Key packages of
work completed since 2012 include preliminary Pit 3 backfill, Pit
1 capping and design, construction and commissioning of tailings
dredging system. Completion of these activities was conducted
in line with the prefeasibility study cost estimate.
ERA intends to commence a feasibility study in 2017. The
feasibility study will increase the level of certainty regarding
forecast rehabilitation expenditure.
Major activities to complete the rehabilitation plan include:
material movements, water treatment, tailings transfer, demolition
and revegetation. Major cost sensitivities include: material
movements and water treatment costs. Material movement costs
are sensitive to the forecast volume of material to be moved and
the estimated cost that it can be moved for. Water treatment
costs are sensitive to the volume of process water to be treated
which is impacted by rainfall, water in flows, and the performance
of water treatment infrastructure. The current cost estimate may
require material adjustment should the assumptions used change
or not be realised.
The ultimate cost of rehabilitation is uncertain and can vary in
response to many factors including legal requirements, technological
change and market conditions as well as the sensitivities referred
to above. It is reasonably possible that outcomes within the next
financial year that are different from the current cost estimate
could require material adjustment (increase or decrease) to the
rehabilitation provision for the Ranger Project Area.
In estimating the rehabilitation provision a risk-free discount rate
is applied to the underlying cash flows. At 31 December 2016,
ERA reduced the real discount rate from 2.25 per cent to 2.00
per cent due to the enduring period at low interest rates being
experienced. This resulted in an increase to the provision of $6.6
million.
The overall change in estimate (including the change in discount
rate) to the rehabilitation provision is an increase of $5.6 million
at 31 December 2016. The change in estimate considered
updated technology and learnings from work conducted to date,
both on the Ranger Project Area and other operations. The
overall rehabilitation strategy remains unchanged.
(b) Taxation
ERA recognises certain deferred tax assets for temporary
differences. ERA has approximately $178 million tax losses (at
30 per cent) that are not recognised as deferred tax assets due
to uncertainty regarding ERA’s ability to generate adequate levels
of future taxable profits, this treatment is reviewed periodically.
Should future taxable profits eventuate, this treatment will not
impact ERA’s ability to utilise available tax losses in the future.
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. Further details on
deferred tax assets are included in Note 18.
(c) Determination of ore reserves and resources
ERA estimates the Ore Reserves and Mineral Resources based
on information compiled by a Competent Person as defined
in the 2012 Edition of the Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves
(the JORC code). There are numerous uncertainties inherent
in estimating Ore Reserves and Mineral Resources 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 Ore Reserves and may, ultimately, result in the Ore
Reserves being restated. Such changes in Ore Reserves could
impact on depreciation and amortisation rates, asset carrying
values and provisions for rehabilitation. ERA’s Ore Reserves
and Mineral Resources Statement as at 31 December 2016 is on
pages 18 and 19.
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ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
(d) Asset carrying value
At the end of each reporting period, ERA assesses whether there
are any indications that ERA’s Cash Generating Units (CGU)
may be impaired. This requires judgment in analysing possible
impacts caused by factors such as the price of uranium oxide,
foreign exchange movements, operating and capital estimates,
project progression, Traditional Owner relationships and weather
impacts on process water inventories.
At 30 June 2016, ERA identified that continued decline in the
uranium oxide spot price was an indication of impairment.
Impairment testing was performed on the Ranger CGU and
concluded the asset carrying value exceeded the CGU fair value.
ERA also determined that external and business-specific factors
that had occurred in the six months to 30 June 2016 warranted a
revision to the valuation technique that is used to determine the
fair value of the Ranger CGU.
A non-cash impairment charge of $161.4 million was recorded in
the Statement of Comprehensive Income at 30 June 2016.
Uranium prices continued to weaken in the second half of 2016
resulting in a further non-cash impairment charge of $69.3 million
being recognised at 31 December 2016. The total non-cash
impairment charge for the year is $231 million.
ERA has assessed the recoverable amount using a fair value
less costs of disposal (FVLCD) method. ERA conducts
impairment testing using a probability-weighted discounted cash
flow model. The Ranger CGU comprises all assets and liabilities
of ERA excluding the asset and deferred tax liability related to the
Jabiluka Undeveloped Property as well as revenue received in
advance. The Ranger CGU carrying value at 31 December 2016
is $(408) million, post impairment charge.
The FVLCD method under Australian Accounting Standard 136
- Impairment of Assets requires a determination of the fair value
of ERA’s CGUs, being the price that would be received to sell
a CGU in an orderly transaction between market participants
at measurement date. In this context, ERA considers that the
fair value that a willing buyer would place on the Ranger CGU
includes some option value for the Ranger 3 Deeps project on
the basis that it is possible that the Ranger 3 Deeps mine is able
to be developed in the future, subject to achieving an extension
to the Ranger Authority.
In determining the fair value of the Ranger CGU, ERA assumes
that a market participant would characterise the Ranger CGU as
an inseparable bundle of assets and liabilities. This incorporates
processing of ore from existing stockpiles (until late 2020),
the option to develop the Ranger 3 Deeps underground mine
(subject to achieving an Authority extension) and the obligation
to complete rehabilitation of the Ranger Project Area (by January
2026 in the absence of an Authority extension).
Multiple approaches are available to determine fair value and
a high degree of judgment is required in determining the most
appropriate method.
In determining the fair value of the Ranger CGU at 31 December
2015, ERA applied a conventional discounted cash flow valuation
technique incorporating the use of a single discount rate.
The single discount rate was based on an estimate of ERA’s
weighted average cost of capital. In conducting the impairment
assessment at 31 December 2016, ERA has assessed that the
likelihood that a market participant would use a conventional
discounted cash flow technique to determine the fair value less
costs of disposal of the Ranger CGU is decreasing. This is
principally due to the sustained weakness in the uranium market
and the impact of the passage of time on the expected remaining
life of current operations which is now less than five years (in the
absence of an Authority extension). In light of these factors, the
probability that a market participant would seek to utilise a more
sophisticated valuation method than the conventional single rate
discounted cash flow technique is increasing.
As a result of the review, ERA has continued to use a probability-
weighted discounted cash flow valuation technique but
determined separate discount rates for the constituent parts of
the Ranger CGU. The constituent parts of the Ranger CGU are
current operations (stockpiled ore processing), rehabilitation
cash flows and the Ranger 3 Deeps development option. This
is a more complex valuation approach than using a single
discount rate approach and reflects an assumption that a market
participant is more likely to perform a more detailed evaluation
of the risk characteristics of the Ranger CGU’s cash flows in
response to the factors outlined above. The discount rates
adopted have been determined in consultation with a third party
valuation expert. The impairment calculation is sensitive to
the discount rates adopted, and changes to the discount rate
assumptions may materially impact the FVLCD of the Ranger
CGU and the resulting impairment charge.
The valuation methodology used to determine the fair value
of the Ranger CGU may be subject to continued revision in
future reporting periods if there is a material change to ERA’s
circumstances.
When assessing recoverable amounts, ERA makes estimates
and assumptions which are subject to risk and uncertainty.
Changes in circumstances may affect these estimates and the
recoverable amount. The recoverable amount is sensitive to
key assumptions including: uranium oxide price, Australian/US
dollar exchange rate, ERA’s ability to secure an extension to the
Ranger Authority and other approvals. Uranium oxide price and
exchange rate assumptions used in determining the recoverable
amount are based on market consensus forecasts.
At 31 December 2016 the property, plant and equipment in the
Ranger CGU has been fully impaired.
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ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
(e) Undeveloped properties
Undeveloped properties are considered assets not yet ready for
use. In reporting periods where impairment testing is required,
the recoverable amount of the undeveloped properties is
determined using the fair value less costs of disposal method.
Undeveloped properties consist of the Jabiluka Mineral Lease.
The carrying value of the Jabiluka Undeveloped Property, net of
deferred tax liability is $181 million.
(f) Inventory net realisable value
The calculation of net realisable value is sensitive to key
assumptions including: uranium price, Australia/US dollar
exchange rate and, where applicable, costs to complete.
The sales price of uranium oxide is denominated in US dollars,
so fluctuations in the Australian/US dollar exchange rate will
affect the proceeds received from sales and consequently the
recoverable amount.
Inventories are carried at the lower of cost or net realisable value
in accordance with AASB 102.
Total net realisable value adjustments recorded periodically
through the year was $24.8 million (pre-tax) (2015: $31.2
million). The net realisable value adjustment has been included
in ‘Changes in inventories’ in the statement of comprehensive
income.
At 31 December 2016, following reduced depreciation in the
second half of 2016 finished goods inventory was below its net
realisable value and so remains recorded at cost (2015 year end
NRV adjustment: $11.3 million).
The Jabiluka Mineral Lease is currently subject to a Long Term
Care and Maintenance Agreement with Traditional Owners. This
agreement ensures the Jabiluka deposit will not be developed
without the consent of the Mirarr Traditional Owners. It is uncer-
tain that this consent will be forthcoming and, by extension, that
the Jabiluka deposit will be developed. Should this consent not
eventuate in the future, the Jabiluka Undeveloped Property would
face full impairment.
The valuation of the Jabiluka Mineral Lease requires a high de-
gree of judgment. To determine the fair value ERA uses a prob-
ability weighted discounted cash flow model. Results are cross
checked against market valuation of other undeveloped mining
projects in the uranium industry and the broader mining sector,
including market valuations of mining assets subject to long-term
approval constraints. The approach has been reviewed in the
current reporting period with support from an external valuation
expert.
Key assumptions to which the Jabiluka model is sensitive
include: the probability of future development, uranium oxide
prices, foreign exchange rates, production and capital costs, dis-
count rate, ore reserves and mineral resources and lease tenure
renewal.
81
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
3
Revenue
REVENUE FROM CONTINUING OPERATIONS
Sale of goods
Rendering of services
Total sales revenue
Other revenue
Interest received/receivable, other parties
Rent received
Contract compensation
Net gain on sale of property, plant and equipment
Total other revenue
Total revenue from continuing operations
2016
$’000
2015
$’000
267,757
332,669
8
108
267,765
332,777
8,704
789
17,504
77
8,493
829
6,161
-
27,074
15,483
294,839
348,260
82
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
4
Expenses
LOSS BEFORE INCOME TAX INCLUDES
THE FOLLOWING SPECIFIC EXPENSES:
Cost of sales
Produced product (uranium oxide)
Total cost of sales
Depreciation
Mine land and buildings
Plant and equipment
Total depreciation
Amortisation
Mine properties
Rehabilitation asset
Total amortisation
NOTES
2016
$’000
2015
$’000
236,413
236,413
294,101
294,101
810
32,070
32,880
1,431
3,542
4,973
3,298
81,592
84,890
8,199
18,844
27,043
Total depreciation and amortisation expenses
37,853
111,933
Government and other royalties
Royalty payments
Payments to Indigenous interests
Total Government and other royalties
Financing costs
Other parties
Unwinding of discount (rehabilitation provision)
Total Financing Costs
Doubtful debts expense
Net loss on disposal of property, plant & equipment
Net foreign exchange loss/(gain)
Rental expense relating to operating leases
Research and development expenditure
Total exploration and evaluation expenditure
(including Ranger 3 Deeps exploration decline)
Defined contribution superannuation expense
22
22
3,247
11,039
14,286
1,904
17,750
19,654
-
-
429
4,948
-
-
4,471
4,070
13,838
17,908
1,341
20,690
22,031
(6)
538
292
5,417
1,705
8,749
5,024
83
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT NOTES TO THE 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 loss before income tax
Tax at the Australian tax rate of 30% (2015: 30%)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Derecognition of deferred tax assets
R&D tax concession
Amortisation
Rehabilitation expenditure
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 (Note 18B)
2016
$’000
2015
$’000
-
-
-
-
-
195,331
364
195,695
104
(104)
197,573
(2,242)
-
195,331
(271,077)
(81,323)
(79,798)
(23,940)
76,436
219,667
-
8,080
(3,228)
35
-
-
(1,705)
5,653
(4,348)
4
364
195,695
(23)
23
84
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
6
Dividends
Dividends paid or declared
No dividends have been paid or declared for the year ended 31 December 2016 (2015: nil).
Dividends franking account
Franking credits available for subsequent financial years
based on a tax rate of 30% (2015: 30%)
2016
$’000
2015
$’000
234,095
234,095
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 as applicable.
The ability to utilise the franking account credits is dependent upon there being sufficient available profits to declare dividends.
7
Cash and cash equivalents
CURRENT
Cash at bank and in hand
Deposits at call
Cash and cash equivalents
2016
$’000
2015
$’000
3,572
392,026
395,598
3,640
361,686
365,326
Cash at bank/Deposits at call
Cash assets and deposits bear floating interest rates between 0.0 per cent and 2.6 per cent (2015: 0.0 per cent and 3.3 per cent).
Interest rate risk exposure
The Company’s exposure to interest rate risk is discussed in Note 28.
8
Trade and other receivables
CURRENT
Trade debtors
Other debtors
Trade and other receivables
2016
$’000
2015
$’000
9,941
2,407
12,348
17,427
3,013
20,440
Impairment of receivables
No trade receivables are past due. There is no impairment of trade receivables.
Other debtors relate to transactions outside the usual operating activities of the Company 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.
85
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Foreign exchange and interest rate risk
The Company 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 28.
Fair value and credit risk
Due to the short-term nature of trade and other 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 Company does not hold any collateral as security. Refer to Note 28 for more information on the financial risk management policy
of the Company.
9
Inventories – current
Stores and spares
Ore stockpiles at cost
Work in progress at cost
Finished product U3O8 at cost
Finished product U3O8 at net realisable value
Total current Inventory
2016
$’000
16,128
37,340
2,424
71,382
2015
$’000
16,923
36,337
6,879
-
-
72,811
127,274
132,950
Inventory expense
Obsolescence of inventory provided for and recognised as an expense during the year ended 31 December 2016 amounted to
$840,635 (2015: $1,351,475).
Write-downs of inventories to net realisable value recognised as an expense during the year ended 31 December 2016 amounted
to $24,780,087 (2015: $31,220,392). The expense has been included in ‘Changes in inventories’ in the statement of comprehensive
income.
10 Other assets
Prepayments
11
Inventories – non-current
Ore stockpiles at cost
86
2016
$’000
-
2015
$’000
480
2016
$’000
9,791
2015
$’000
49,673
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
12 Undeveloped properties
Jabiluka: Long-term care and maintenance development project
Balance brought forward
Amount capitalised during the year
Total undeveloped properties
2016
$’000
2015
$’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 of disposal method.
Fair value less cost of disposal has been determined using a discounted cash flow model. Key assumptions to which the model is
most sensitive include:
•
•
•
•
• Ore Reserves and Mineral Resources; and
•
uranium prices;
foreign exchange rates;
production and capital costs;
discount rate;
probability of future development.
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 Resources.
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 development and life of the ore body together with the term and continuity 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 Jabiluka Mineral Lease is currently under long-term care and maintenance. The Company has agreed that future mining
development will not occur without the consent of the Mirarr Traditional Owners. It is uncertain that this consent will be forthcoming
and, by extension, that the Jabiluka deposit will be developed. Should this consent not eventuate in the future, the Jabiluka
Undeveloped Property would face full impairment.
The discount rate applied to the future cash flow forecasts represents 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.
87
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
13 Property, plant and equipment
MINE LAND AND
BUILDINGS
$’000
PLANT AND
EQUIPMENT
$’000
MINE
PROPERTIES
$’000
REHABILITATION
$’000
TOTAL
$’000
YEAR ENDED 31 DECEMBER 2016
Opening net book amount
4,196
226,203
8,269
21,322
259,990
Additions
Disposals
Change in estimate
Depreciation/amortisation charge
Impairment Loss
Closing net book amount
Cost
Accumulated depreciation/amortisa-
tion/impairment
-
-
-
(810)
(3,386)
-
2,988
(15)
-
(32,070)
(197,106)
-
-
-
-
(1,431)
(6,838)
-
-
-
5,614
(3,542)
2,988
(15)
5,614
(37,853)
(23,394)
(230,724)
-
-
110,845
1,164,095
421,700
342,327
2,038,967
(110,845)
(1,164,095)
(421,700)
(342,327)
(2,038,967)
Net book amount
-
-
-
-
-
YEAR ENDED 31 DECEMBER 2015
Opening net book amount
7,494
Additions
Disposals
Change in estimate
Depreciation/amortisation charge
Closing net book amount
Cost
Accumulated depreciation/amortisa-
tion/impairment
Net book amount
-
-
-
(3,298)
4,196
110,845
(106,649)
4,196
296,674
11,906
(785)
-
(81,592)
226,203
1,161,122
(934,919)
226,203
16,468
37,849
-
-
-
(8,199)
8,269
421,700
-
-
2,317
(18,844)
21,322
358,485
11,906
(785)
2,317
(111,933)
259,990
336,713
2,030,380
(413,431)
(315,391)
(1,770,390)
8,269
21,322
259,990
Assets under construction
The cost 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
2016
$’000
1,333
2015
$’000
4,956
88
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
14
Investment in trust fund
NON-CURRENT
Trust Fund
2016
$’000
2015
$’000
70,789
68,324
Trust Fund
The Ranger Rehabilitation Trust Fund holds a restricted fixed term investment in the form of bank bills which mature and are
reinvested periodically. The Trust Fund is held at cost and classified as a non-current receivable. The applicable weighted average
interest rate for the year ended 31 December 2016 was 2.75 per cent (2015: 2.93 per cent).
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 the rehabilitation provision during the financial year are set out below:
2016
Carrying amount at the start of the year
Payments
Transfer from non-current provision
Carrying amount at the end of the year
2016
$’000
2015
$’000
32,990
645
722
47,832
1,497
810
34,357
50,139
2016
$’000
2015
$’000
9,861
48,711
58,572
9,012
30,946
39,958
REHABILITATION
$’000
30,946
(20,454)
38,219
48,711
89
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
2015
Carrying amount at the start of the year
Payments
Transfer from non-current provision
Carrying amount at the end of the year
17 Provisions – non-current
NON-CURRENT
Employee benefits
Rehabilitation
Carrying amount at the end of the year
Movements in provisions
Movements in the rehabilitation provision during the financial year are set out below:
2016
Carrying amount at the start of the year
Change in estimate
Unwinding of discount
Transfer to current provision
Carrying amount at the end of the year
2015
Carrying amount at the start of the year
Change in estimate
Unwinding of discount
Transfer to current provision
Carrying amount at the end of the year
90
REHABILITATION
$’000
31,207
(26,538)
26,277
30,946
2016
$’000
2015
$’000
3,740
462,720
466,460
3,175
477,575
480,750
REHABILITATION
$’000
477,575
5,614
17,750
(38,219)
462,720
REHABILITATION
$’000
480,845
2,317
20,690
(26,277)
477,575
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
18 Deferred tax liability
(A) DEFERRED TAX LIABILITY
The balance comprises temporary differences attributable to:
Amounts recognised in profit and loss
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
Property, plant and equipment
Rehabilitation
Employee provisions
Other
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)
(Under)/over provided in prior years credited to the income statement
Credited to equity (Note 5)
Closing balance at 31 December
2016
$’000
2015
$’000
21,236
23,405
14,799
1,332
60,772
20,497
23,405
16,203
771
60,876
(39,704)
(39,785)
21,068
21,091
60,876
(104)
-
60,772
34,791
-
4,080
833
66,619
(2,242)
(3,501)
60,876
14,697
20,523
3,656
909
39,704
39,785
(39,704)
(39,785)
-
-
39,785
241,246
(104)
(197,573)
-
23
(3,865)
(23)
39,704
39,785
91
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
19 Share capital
SHARE CAPITAL
A Class shares fully paid
Total contributed equity
2016
SHARES
2015
SHARES
517,725,062
517,725,062
2016
$’000
706,485
706,485
2015
$’000
706,485
706,485
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 shareholders’ 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 Company’s exposure to risks when managing capital are set out in Note 28.
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
ACCUMULATED LOSSES
Movements in retained profits were as follows:
Opening retained earnings – 1 January
Net loss for the year
Dividends paid
Closing retained earnings/(accumulated losses) – 31 December
2016
$’000
2015
$’000
(60)
389,500
389,440
251
389,500
389,751
251
(311)
(60)
418
(167)
251
389,500
389,500
-
-
389,500
389,500
(626,289)
(350,796)
(271,077)
(275,493)
-
-
(897,366)
(626,289)
Nature and purpose of reserves
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, the Company 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.
92
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
21 Contingencies
Contingent liabilities
Legal actions against the Company:
The remaining argument in the action listed in the Federal Court against the former Commonwealth Minister for Resources and the
Company claiming that due process was not followed in granting approvals for the Jabiluka Mill Alternative is dormant. Should the
Company 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 the contingent liability disclosed above.
22 Commitments
Capital commitments
Capital expenditure contracted for at the reporting date is as follows:
Within one year
Lease commitments
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
2016
$’000
3,861
2015
$’000
7,160
2016
$’000
2015
$’000
2,120
5,463
7,583
1,365
4,073
5,438
The Company leases property, plant and equipment under operating leases expiring between one and four years. Some leases
provide the Company with a right of renewal at which time all terms are renegotiated.
Mineral tenement leases
Future mineral tenement lease payments 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
2016
$’000
146
583
389
2015
$’000
146
583
534
1,118
1,263
In order to maintain current rights of tenure to mining tenements, the Company will be required to outlay an amount of $145,730 in the
year ending 31 December 2017 in respect of tenement lease rentals.
93
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
The Company is liable to make payments to the Commonwealth as listed below:
(i)
(ii)
(iii)
An annual amount equal to the sum payable by the Commonwealth to the Northern Land Council pursuant to the Section
44 Agreement for rent for the duration of the agreement. This amounted to $982,233 for 2016 and is indexed for future years.
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 (Northern Territory) Act 1976. The Company is required to pay 2.5
per cent of Ranger net sales revenue to the Commonwealth and 1.75 per cent of Ranger net sales revenue to the Northern
Land Council or an entity representing the Mirarr Traditional Owners as directed by the Northern Land Council (amounts
paid during 2016: $11,039,080; 2015: $13,837,954).
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 2016: $3,246,788; 2015: $4,069,987).
The Company is liable to make payments to the Northern Land Council pursuant to the Section 43 Agreement between
Pancontinental Mining Limited and Getty Oil Development Company Limited and the Northern Land Council dated 21 July 1982,
which was assigned to the Company with the consent of the Northern Land Council, as listed below:
Up front payment of $3,400,000 on the commencement of production at Jabiluka.
(i)
Annual royalty payments calculated at 4.5 per cent of net sales revenue less $500,000 less any amounts paid to the
(ii)
Aboriginal Benefits Reserve by the Commonwealth under the conditions specified in the Jabiluka 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).
The Company 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. The Jabiluka project is now under long term care and maintenance and will not be developed without the consent
of the Mirarr Traditional Owners.
23 Auditor’s remuneration
During the year the auditor of the Company earned the following remuneration:
AUDIT SERVICES
PricewaterhouseCoopers Australian firm
Audit and review of financial reports
Audit and review of financial reports (additional prior year fees)
Audit related services
Total remuneration of PricewaterhouseCoopers Australia
2016
$’000
2015
$’000
407
28
53
488
345
108
100
553
94
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
24 Related parties
Directors
The names of persons who were Directors of the Company at any time during the financial year are as follows:
Peter Mansell, Shane Charles, Paul Dowd, Andrea Sutton, Joanne Farrell (resigned 29 August 2016), Bruce Cox (resigned 3 May
2016), Simon Trott and Zara Fisher (appointed 29 August 2016).
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 and Directors’ compensation
Short-term employee benefits
Post-employment benefits
Share-based payments
2016
$’000
2,911
246
520
2015
$’000
2,556
341
485
3,677
3,382
In compliance with Corporations Regulations 2001 2M.3.03 the Company has provided detailed remuneration disclosures in the
Director’s report. The relevant information can be found in the Remuneration Report on pages 43 to 58.
Loans with Directors and key management personnel
There were no loans with Directors or key management personnel during 2016 (2015: Nil).
Transactions with Directors and Director-related entities
There were no transactions with Directors or Director-related entities other than Rio Tinto Limited during 2016 (2015: nil). Details of
transactions with Rio Tinto Group Companies are outlined below.
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 Pty Ltd.
Interest income
Interest income is received from Rio Tinto Finance Ltd which holds cash on behalf of the Company.
95
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
Transactions with related parties
The following transactions occurred with related parties:
Management services fees paid to ultimate parent entity:
Rio Tinto Group Companies
Consulting fees paid to:
Rio Tinto Group Companies
Other reimbursements paid for commercial services received:
Rio Tinto Group Companies
Amounts received from related parties:
Rio Tinto Group Companies – sales
Rio Tinto Group Companies – interest
Dividends paid to:
Related parties – North Ltd
Related parties – Peko-Wallsend Pty Ltd
2016
$’000
2015
$’000
(90)
(1,600)
(2,164)
(3,186)
(16,712)
(18,676)
269,368
327,594
2,674
1,894
-
-
-
-
Amounts received from related parties include sales of uranium oxide at market price. In April 2014, the Company entered into a
marketing agreement with Rio Tinto Uranium on the basis that it represented superior value to the Company’s then existing marketing
agreements and the alternative marketing agreements considered. Under the marketing agreement, uranium oxide produced by the
Company is sold to Rio Tinto Uranium and pooled with uranium oxide produced from the Namibian operation of Rössing Uranium
Limited, a related party of Rio Tinto plc.
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 received from and payable to each class of other related parties at balance
date were as follows:
2016
$’000
2015
$’000
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
Current liabilities - income received in advance
Related parties - Rio Tinto Group Companies
213,887
172,621
8,284
16,248
645
1,497
40,416
38,930
All related party transactions were conducted on arm’s length terms and conditions and at market rates.
96
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
25 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 2016, 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:
Revenue from external customers
Other revenue
Total segment revenue
Segment result
Income tax benefit/(expense)
Profit/(loss) for the year
Segment assets
Total assets
Segment liabilities
Total liabilities
Acquisitions of non-current assets
Depreciation and amortisation expense
Non-cash Impairment charge
Net (gain)/loss on sale of property, plant and equipment
URANIUM
2016
$’000
2015
$’000
267,765
332,777
27,074
15,483
294,839
348,260
(271,077)
(79,798)
-
(195,695)
(271,077)
(275,493)
819,432
1,100,815
819,432
1,100,815
620,873
620,873
2,988
37,853
230,724
(77)
630,868
630,868
11,906
111,933
-
538
97
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
NOTES TO THE 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
below. Segment revenue reconciles to total revenue from continuing operations as disclosed in Note 3.
The Company is domiciled in Australia. The result of its revenue from external customers in other countries is outlined in the table
below:
Asia
North America
Europe
Africa
Total revenue
SEGMENT REVENUES
FROM SALES TO
EXTERNAL CUSTOMERS
2016
$’000
2015
$’000
267,757
332,669
-
-
-
-
-
-
267,757
332,669
Segment revenues are allocated based on the country in which the customer is located. During 2014 the Company entered into a
marketing agreement with Rio Tinto Uranium based in Asia. Details are disclosed in Note 24.
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 Company as at 31 December 2016 are in Australia with the exception of inventories in transit or at converters of
$42,373,356 (2015: $66,245,519). 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 Company does not have any borrowings or derivative financial
instruments as at 31 December 2016.
98
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
26 Reconciliation of loss after income tax to net cash inflow/(outflow) from
operating activities
Loss 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
Non cash impairment charge
Rehabilitation provision: unwinding of discount
Employee benefits: share based payments
Net exchange differences
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
(Increase)/decrease in net deferred tax assets
(Decrease)/increase in provisions
Net cash inflow/(outflow) provided from operating activities
27 Earnings per share
Basic earnings per share
Diluted earnings per share
2016
$’000
2015
$’000
(271,077)
(275,493)
(77)
538
37,853
230,724
17,750
542
2
9,578
45,558
480
(2,465)
(15,782)
(23)
(19,041)
34,022
111,933
-
20,690
737
23
(9,208)
49,664
912
(1,573)
18,537
195,718
(27,884)
84,594
2016
CENTS
(52.4)
(52.4)
2015
CENTS
(53.2)
(53.2)
Earnings used in the calculation of basic and diluted earnings per share: 2016: ($271,076,984) (2015: ($275,493,203)).
Weighted average number of ordinary shares on issue used in calculation of basic earnings per share: 2016: 517,725,062 shares
(2015: 517,725,062).
Options
Options granted to employees under the share-based payment plans are for options in Rio Tinto plc and Rio Tinto Limited. 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 30.
99
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
28 Financial risk management
The Company 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 Company’s business is mining and not trading. Accordingly, the Company 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 Company operates entirely in Australia and is exposed primarily to Australian dollar denominated costs. Sales are
primarily denominated in US dollars.
Market risk
Foreign exchange risk
The Company 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 not Company policy to hedge against foreign exchange risk.
The Company’s exposure to foreign currency risk at the reporting date was as follows:
Trade receivables
Trade payables
2016
USD
$’000
5,777
(266)
2015
USD
$’000
11,416
(2,371)
Group sensitivity
At 31 December 2016, had the Australian Dollar weakened/strengthened by 10 per cent against the US Dollar with all other variables
held constant, the change in trade receivables would have affected pre-tax profit for the year by $800,281 higher/lower (2015:
$1,567,403 higher/lower).
At 31 December 2016, had the Australian Dollar weakened/strengthened by 10 per cent against the US Dollar with all other variables
held constant, the change in trade payables would have effected pre-tax profit for the year by $36,808 higher/lower (2015: $325,481
higher/lower).
Commodity price risk
In the absence of uranium being traded on global futures exchanges, the Company 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 Company to manage commodity
price risk.
Interest rate risk
The Company’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 Company is exposed to interest rate risk on cash in
the Ranger Rehabilitation Trust Fund.
Credit risk
The Company 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 Ranger Rehabilitation Trust Fund
are limited to high credit quality financial institutions. The Company has policies that limit the amount of credit exposure to any one
financial institution.
100
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
TRADE RECEIVABLES
AA
A
BBB
Other
2016
$’000
2015
$’000
-
-
9,941
17,427
-
-
-
-
Liquidity and capital risk
ERA’s objectives when managing capital are to safeguard ERA’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.
ERA 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 ERA’s balance sheet in the longer term through pro-active capital management
programmes.
The future liquidity and capital requirements of ERA will depend on many factors. Should current forecasts for foreign exchange rate,
prices, costs, resource and mining techniques not be realised, and in the absence of any other successful developments or asset
sales, ERA may require an additional source of funding to fully fund the rehabilitation of the Ranger Project Area. Any inability to
obtain sufficient capital would have a material impact on ERA’s business and financial performance.
In April 2016 the Company entered into a $100 million credit facility agreement with Rio Tinto. The credit facility agreement provides
additional assurance to stakeholders that rehabilitation of the Ranger Project Area can be fully funded in a range of business
scenarios.
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 into the Ranger Rehabilitation Trust Fund (Trust Fund) is then determined. The Trust Fund includes both cash and
financial guarantees.
ERA’s ability to continue to access these financial guarantees can be influenced by many factors including future cash balance, cash
flows and shareholder support. Guarantees are subject to periodic review by the banks. Should ERA at any point be unable to access
financial guarantees, substantial additional cash would be required to be deposited into the Trust Fund.
ERA has plans in place to address these risks, including the credit facility agreement with Rio Tinto.
ERA currently has no debt and $466 million in total cash resources (comprising $396 million of cash on hand or at call (Note 7) and
$70 million invested as part of the Trust Fund). No debt covenants exist.
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.
101
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
29 Events occurring after the reporting period
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 Company in subsequent financial years.
30 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 Payment’.
Performance Share Plan
The Performance Share Plan (PSP) was revised in 2013 with details listed in the Remuneration Report.
The fair value awards granted under the PSP have been calculated at their dates of grant using a Monte Carlo valuation model
which takes into account the Total Shareholder Returns (TSR) performance conditions. No forfeitures are assumed. The awards are
accounted for in accordance with the requirements applying to equity-settled sharebased payments transactions.
A summary of the status of shares granted under the share plan at 31 December 2016, 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
EXER-
CISABLE AT
END OF
THE YEAR
2016
Rio Tinto Limited
6,420
3,823
Weighted average fair
value at grant date
2015
Rio Tinto Limited
Weighted average fair
value at grant date
$37.45
$44.57
8,592
$43.00
-
-
-
-
(1,195)
(636)
8,412
2,293
$44.79
$44.79
$39.09
$34.52
(356)
(1,333)
(483)
6,420
1,831
$44.79
$62.26
$62.26
$37.45
$44.79
The weighted average share price at the date of exercise of conditional grants of shares exercised during the year ended 31
December 2016 was $47.80 (2015: $59.09).
The weighted average remaining contractual life of rights to shares outstanding at the end of the period was 3 years (2015: 2 years).
Where shares 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 shares.
102
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
Share Option Plan
The Share Option Plan was discontinued in 2013 and as such no awards were made. 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 (TSR) 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. Expected volatilities are based on the historical volatility of Rio Tinto’s share return.
A summary of the status of options granted under the plan at 31 December 2016, 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
4,896
$49.87
4,896
$49.87
-
-
-
-
-
-
-
-
-
-
-
-
(3,738)
1,158
1,158
$54.95
$33.45
$33.45
-
-
4,896
4,896
$49.87
$49.87
2016
Rio Tinto Limited
Weighted average
exercise price
2015
Rio Tinto Limited
Weighted average
exercise price
The weighted average share price at the date of exercise of options exercised during the year ended 31 December 2016 was nil (no
options were exercised) (2015: nil).
The weighted average remaining contractual life of share options outstanding at the end of the period was 0 years (2015: 0 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.
103
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
Share Savings Plan
The Share Savings Plan was replaced with the myShare Savings Plan in 2013, and as such no awards were made in 2016. 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 2016, and changes during the year, is presented below:
BALANCE
AT START
OF THE
YEAR
2,124
$55.62
13,777
$53.36
2016
Rio Tinto Limited
Weighted average
exercise price
2015
Rio Tinto Limited
Weighted average
exercise price
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
-
-
-
-
723
$55.62
-
-
(531)
2,316
$55.62
$55.62
(3,545)
(5,444)
(2,664)
2,124
$54.21
$52.69
$51.80
$55.62
-
-
-
-
The weighted average share price at the date of exercise of conditional grants of shares exercised during the year ended 31
December 2016 was nil (2015: $52.12).
The weighted average remaining contractual life of share options outstanding at the end of the period was one year (2015: two years).
Where shares 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 shares.
myShare Savings Plan
The myShare plan was introduced to all eligible staff members in 2013 and is described in the Remuneration Report. Awards under
this plan are settled in equity and accounted for accordingly. The fair value of each award on the day of grant is set equal to the share
price on the day of grant.
A summary of the status of conditional shares granted under the plan at 31 December 2016, 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
16,933
8,772
(821)
(4,568)
(1,830)
18,486
$55.38
$46.15
$55.38
$56.37
$55.38
$50.76
14,381
8,483
(768)
$58.25
$51.87
$56.53
-
-
(5,163)
16,933
$57.45
$55.38
-
-
-
-
2016
Rio Tinto Limited
Weighted average
exercise price
2015
Rio Tinto Limited
Weighted average
exercise price
The weighted average share price at the date of exercise of conditional grants of shares exercised regularly during the year ended
31 December 2016 was $46.84 (2015: nil).
The weighted average remaining contractual life of share options outstanding at the end of the period was two years (2015: two
years).
Where shares 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 shares.
104
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Management Share Plan
The Management Share Plan (MSP) 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. No forfeitures were assumed. A summary of the status of shares granted under the MSP plan
at 31 December 2016, 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 EXER-
CISABLE
AT END OF
THE YEAR
2016
Rio Tinto Limited
15,950
7,160
Weighted average fair
value at grant date
2015
$55.88
$45.47
-
-
(5,872)
$53.11
Rio Tinto Limited
16,478
6,193
(2,822)
(3,899)
Weighted average fair
value at grant date
$57.35
$54.49
$57.30
$58.83
-
-
-
-
17,238
$52.50
15,950
$55.88
-
-
-
-
The weighted average share price at the date of exercise of conditional grants of shares exercised regularly during the year ended
31 December 2016 was $47.80 (2015: $52.78).
The weighted average remaining contractual life of conditional grants of shares outstanding at the end of the period was two years
(2015: two years).
The model inputs for conditional rights granted during the year ended 31 December 2016 included:
(a)
(b)
(c)
(d)
(e)
rights are granted for no consideration and have a three year life;
exercise price: nil (2015: nil);
grant date: 11 March 2016 (2015: 23 March 2015);
expiry date: 18 February 2019 (2015: 20 February 2018); and
share price at grant date: $44.57 (2015: $55.88).
Where shares 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 shares.
105
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS
Bonus Deferral Plan
The Bonus Deferral Award was established for the mandatory deferral of a specific percentage of the Chief Executive’s Short Term
Incentive Plan bonus payment into Rio Tinto shares. 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. No forfeitures are
assumed.
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 EXER-
CISABLE
AT END OF
THE YEAR
1,720
1,599
$58.39
$45.51
1,689
875
$57.15
$55.68
-
-
-
-
(1,038)
$60.35
(844)
$53.11
-
-
-
-
2,281
$48.19
1,720
$58.39
-
-
-
-
2016
Rio Tinto Limited
Weighted average fair
value at grant date
2015
Rio Tinto Limited
Weighted average fair
value at grant date
The weighted average share price at the date of exercise of conditional grants of shares exercised during the year ended 31
December 2016 was $47.80 (2015: $44.01).
The weighted average remaining contractual life of share options outstanding at the end of the period was two years (2015: two
years).
Where shares 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 shares.
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
2016
$’000
542
2015
$’000
737
106
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT DIRECTORS’ DECLARATION
In the Directors’ opinion:
(a)
the financial statements and notes set out on pages 69 to 106 are in accordance with the Corporations Act 2001 (Cth),
including:
(i)
(ii)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
giving a true and fair view of the Company’s financial position as at 31 December 2016 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 the Chief Financial Officer required by section 295A of the
Corporations Act 2001 (Cth). This declaration is made in accordance with a resolution of the directors.
P Mansell
Perth
10 February 2017
107
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
INDEPENDENT AUDITOR’S REPORT
Independent auditor’s report
To the shareholders of Energy Resources of Australia Ltd
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Energy Resources of Australia Ltd (the Company or ERA) is in
accordance with the Corporations Act 2001, including:
a) giving a true and fair view of the Company’s financial position as at 31 December 2016 and of its
financial performance for the year then ended; and
b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Company’s financial report comprises:
the balance sheet as at 31 December 2016;
the statement of comprehensive income for the year then ended;
the statement of changes in equity for the year then ended;
the statement of cash flows for the year then ended;
the notes to the financial statements, which include a summary of significant accounting
policies; and
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Company in accordance with the auditor independence requirements of
the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
in accordance with the Code.
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
108
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
INDEPENDENT AUDITOR’S REPORT
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Company, its accounting processes and controls and the industry in which it operates.
Materiality
Audit scope
Key audit matters
Our audit focused on areas
where the directors made
subjective judgements, for
example significant
accounting estimates
involving assumptions and
inherently uncertain future
events.
The audit procedures were
predominantly performed at
the Company’s Darwin office
and the Rio Tinto shared
service centre in Brisbane.
The audit engagement team
also conducted a site visit to
the Ranger mine.
Amongst other relevant topics,
we communicated the following
key audit matters to the Audit
and Risk Committee:
– Accounting for the cost of
rehabilitation of the Ranger
Project Area;
– Impairment assessment for
the Ranger Cash Generating
Unit (CGU);
– Carrying value assessment
for the Jabiluka Undeveloped
Property; and
– Liquidity and capital
management.
The above matters are further
described in the Key audit
matters section of our report.
For the purpose of our audit
we used a materiality of $6.6
million, which represents
approximately 5% of the
Company’s adjusted profit/loss
before tax and averaged for the
current and two previous
years.
We applied this threshold,
together with qualitative
considerations, to determine
the scope of our audit and the
nature, timing and extent of
our audit procedures and to
evaluate the effect of
misstatements on the financial
report as a whole.
This benchmark was
considered appropriate,
because, in our view,
profit/loss before tax is the
metric against which the
performance of the Company
is most commonly measured.
An average was used due to the
fluctuations in profit/loss from
year to year. We adjusted for
impairment as it was an
infrequently occurring item
impacting profit.
We selected 5% based on our
professional judgement noting
that it is within the range of
commonly accepted profit
related benchmarks.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context.
109
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
INDEPENDENT AUDITOR’S REPORT
Key audit matter
Accounting for the cost of rehabilitation
of the Ranger Project Area
(Refer to notes 16 and 17) $511.4m provision
How our audit addressed the key audit matter
The Company is required under the Ranger
section 41 Authority (Ranger Authority) to fully
rehabilitate the Ranger Project Area (RPA) site
by 8 January 2026.
We obtained the Company’s calculation of the
rehabilitation obligation (the model). We checked the
timing of the cash flows in the model were consistent
with the requirements of the Ranger Authority.
Calculating the final rehabilitation obligation
requires significant estimation and judgement
by the Company. Assumptions are required to be
made in respect of methods of rehabilitation,
costs and timing, as well as the potential for
changes in regulatory requirements, technology
and market conditions. The most significant
components of the provision relate to the
movement of waste rock, the transfer of tailings
from the Tailings Storage Facility and the
treatment of process water.
The work required may also change as a result of
the outcomes of current progressive
rehabilitation activity and ongoing and planned
technical studies. The calculation of the
provision requires significant input from
specialists and experts, both within and external
to the Company.
Given the significance of this balance and the
factors outlined above, the provision for
rehabilitation was a key audit matter.
Impairment assessment for the Ranger
CGU
(Refer to note 2 (d)) $230.7m impairment
charge
The Company’s investment in the Ranger Project
Area was a key audit matter given the
significance of the Ranger CGU to the
Company’s operations and the judgement
involved in the assessment of impairment.
The impairment of $230m for the year ended 31
December 2016 ($69m in the current half year)
reflects the continuing decline in the short term
price of uranium oxide, which particularly
impacted the Ranger CGU given the significant
forecast cash inflows from producing uranium
oxide from existing stockpiles within a limited
timeframe. Property, plant and equipment has
been written down to nil value as a result of the
latest impairment.
110
Where significant assumptions made within the
model, such as costs of moving waste rock and
treating water, could be checked against external
benchmarks or similar historical expenditure we did
so for a sample. Alternatively, where no such
information was available, we tested a sample of the
internal or external experts’ estimate of costs.
We checked that the discount rate used was
consistent with that generally used in the industry to
discount liabilities of this type.
We also compared actual cash flows in FY16 to those
forecast by management as part of the provision in
FY15, to assess the historical accuracy of estimates
and assumptions.
We evaluated the cash flow forecasts in the Ranger
model that assesses impairment and understood the
process by which they were developed. We also
compared them to the latest Board approved budgets.
We compared current year (2016) actual results with
the figures included in the prior year (2015) forecast,
to assess the historical accuracy of estimates and
assumptions.
We also assessed:
●
The probability of Ranger 3 Deeps proceeding to
development by discussion with management
and review of publicly available information;
● Key assumptions, including the uranium oxide
price and AUD/USD exchange rate used in the
forecasts, by comparing them to economic and
industry forecasts;
The discount rates used in the Ranger
●
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
INDEPENDENT AUDITOR’S REPORT
Key audit matter
Carrying value assessment for the
Jabiluka Undeveloped Property
(Refer to note 12) $181m carrying value
Assessing the carrying amount of the Company’s
investment in the Jabiluka Undeveloped
Property was a key audit matter. Factors giving
rise to this conclusion included the size of the
balance and the judgement required in the
assessment as a result of the long-term nature of
the asset, particularly in relation to:
● whether development of the Jabiluka
resource will ultimately proceed given it requires
the consent of the Mirrar Traditional Owners
under the Long Term Care and Maintenance
Agreement;
●
the long-term uranium oxide price, the
AUD/USD exchange rate and estimated capital
and operating costs used in the probability
weighted discounted cash flow model to estimate
the fair value of the asset.
●
How our audit addressed the key audit matter
impairment model by involving internal
valuations experts, and comparing them to
market data and industry research.
We checked the calculations within the model and the
resultant impairment for the current period and the
full year.
We performed procedures over the assessment of the
carrying value of the Jabiluka Undeveloped Property,
including with respect to whether the development
will proceed, by updating our understanding of:
the resource including size and grade;
the consent process required;
●
●
● The latest long term uranium oxide price and
AUD/USD exchange rate used in the
valuation model utilised by the Company (the
Jabiluka model); and
● historical engineering assessments of the
capital and operating costs of the project.
Having updated our understanding of the above
points, we considered whether there had been any
changes in these assumptions which would give rise
to an impairment indicator. We did not identify any
triggers that had not been considered by the
Company.
For valuation cross checks, we compared the carrying
value of the Jabiluka Undeveloped Property to a
number of relevant market transactions, including
specific assets transacted with approval constraints.
We also compared the market capitalisation of the
Company to its net assets and noted that the market
capitalisation was higher at 31 December 2016.
Liquidity and capital management
(Refer to note 28 )
ERA had a cash balance of $396m and a further
amount of $70m held in the Ranger
Rehabilitation Trust Fund by the
Commonwealth Government for the purposes of
rehabilitation at 31 December 2016. In the event
that ERA is unable to fully fund the Ranger
rehabilitation programme from its cash reserves,
and in the absence of any other successful
developments or assets sales, the Company may
require an additional source of finance to fully
fund the rehabilitation of the Ranger Project
Area.
We evaluated the process by which management
projects cash flows over the medium to long term.
We reviewed the Rio Tinto credit facility agreement
to assess the Company’s continued compliance with
the key terms and conditions.
Our procedures included confirming the current
status of the financial guarantees provided by a
number of banks. In addition we corresponded
directly with the banks to confirm the position of the
guarantees at 31 December 2016.
We evaluated whether the disclosures were consistent
111
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
INDEPENDENT AUDITOR’S REPORT
Key audit matter
The risks to funding around the future uranium
market, the maintenance of financial guarantees
and the terms of the Rio Tinto credit facility,
along with the related financial statement
disclosures are important to understand the
financial position of the Company and were
therefore considered to be a key audit matter.
Other information
How our audit addressed the key audit matter
with the requirements of Australian Accounting
Standards.
The directors are responsible for the other information. The other information comprises the
Company’s annual report and sustainability report for the year ended 31 December 2016, but does not
include the financial report and the auditor’s report thereon. Our opinion on the financial report does
not cover the other information and accordingly we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Company
to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to liquidate the Company or to
cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_files/ar1.pdf. This description forms part of our auditor’s report.
112
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
INDEPENDENT AUDITOR’S REPORT
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 43 to 58 of the directors’ report for the
year ended 31 December 2016.
In our opinion, the remuneration report of Energy Resources Ltd of Australia for the year ended 31
December 2016 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the remuneration report, based on our audit conducted in
accordance with Australian Auditing Standards.
PricewaterhouseCoopers
John O’Donoghue
Partner
Melbourne
10 February 2017
113
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
SHAREHOLDER INFORMATION
Energy Resources of Australia Ltd is a for-profit company limited by shares, incorporated and domiciled in Australia.
The financial statements were authorised by Directors on 10 February 2017. The Directors have the power to amend and reissue the
financial statements.
The shareholder information set out below was applicable as at 31 January 2017.
Distribution of equity securities
Analysis of numbers of registered equity security holders by size of holding:
1 - 1,000
1,001 - 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
ORDINARY SHARES
NUMBER
OF SHARE-
HOLDERS
% OF
SHARE-
HOLDERS
6,675
3,278
1,043
1,075
79
54.94
26.98
8.58
8.85
0.65
NUMBER
OF SHARES
2,253,177
8,525,283
7,859,110
27,813,502
471,273,990
121,150
There were 5,641 holders of less than a marketable parcel of ordinary shares.
100.00
517,725,062
Equity security holders
The names of the twenty largest registered holders of quoted equity securities are listed below:
Peko Wallsend Ltd
North Limited
Hsbc Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia Limited
Hsbc Custody Nominees (Australia) Limited
Warbont Nominees Pty Ltd
Ganra Pty Ltd
Mr Wan Cheung Danny Cheng
Sked Pty Ltd
Hsbc Custody Nominees (Australia) Limited
John E Gill Trading Pty Ltd
National Nominees Limited
Mrs Qiuyu Ping
Dr Larry Jordan
Mr Stephen James Fulton
Mr William Ewart Granter
Mr Leon Arharidis and Mrs Kiveli Arharidis
Bradleys Polaris Pty Ltd
Miengrove Pty Ltd
114
NUMBER
OF SHARES
177,535,718
176,543,136
87,117,842
5,395,870
5,225,694
1,523,826
716,013
651,429
600,000
600,000
556,820
531,000
512,470
488,837
460,000
400,000
400,000
366,000
360,000
349,887
% OF
ISSUED
SHARES
0.44
1.65
1.52
5.36
91.03
100.00
% OF
ISSUED
SHARES
34.29
34.10
16.83
1.04
1.01
0.29
0.14
0.13
0.12
0.12
0.11
0.10
0.10
0.09
0.09
0.08
0.08
0.07
0.07
0.07
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
SHAREHOLDER INFORMATION
Entitlements to vote
Subject to any rights or restrictions for the time being attached to any shares on a show of hands, every member present in person or
by proxy or by attorney or by representative and entitled to vote at a shareholders’ meeting shall have one vote.
On a poll, every member present in person or by proxy or by attorney or by representative shall have one vote for each share held by
him/her.
Annual General Meeting
The next Annual General Meeting will be held at 9:30am on Wednesday 12 April 2017 in Darwin, Northern Territory, Australia.
Tax file numbers
Tax file numbers or exemption details are recorded from shareholders who wish to provide the information. Dividend advice
statements, when issued to shareholders, indicate whether or not a shareholder’s tax file number has been recorded. ERA normally
pays fully franked dividends. In the event of an unfranked dividend being paid, ERA will be required to deduct tax at the top marginal
rate from the dividend paid to shareholders resident in Australia who have not supplied a tax file number or exemption form.
Information on shareholding
Shareholders who require information about their shareholding or dividend payment should contact ERA’s principal registry.
Shareholders who have changed their address should advise the change in writing to:
ERA Share Registry
Computershare Investor Services Pty Ltd
117 Victoria Street
West End QLD 4101
Telephone: +61 (0) 3 9473 2500
Facsimile: +61 (0) 3 9415 4000
Sponsored shareholders should note, however, that they should contact their sponsored broker to initiate a change of address.
115
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
2016 ASX ANNOUNCEMENTS
22 Dec 2016
Response to ASX Price and Volume Query
11 Oct 2016
29 Aug 2016
24 Aug 2016
September 2016 - Quarter Operations Review
Resignation and appointment of directors
ERA Additional Information for the Financial
Community
24 Aug /2016
ASX Interim Report 30 June 2016
24 Aug 2016
June 2016 Half Year Results
28 Jul 2016
12 Jul 2016
07 Jul 2016
31 May 2016
04 May 2016
04 May 2016
04 May 2016
04 May 2016
03 May 2016
29 Apr 2016
11 Apr 2016
31 Mar 2016
29 Mar 2016
29 Mar 2016
15 Feb 2016
29 Jan 2016
29 Jan 2016
28 Jan 2016
28 Jan 2016
28 Jan 2016
12 Jan 2016
Deferral of half-year financial report
June 2016 Quarter Operations Review
Change in substantial holding
Change in substantial holding
2016 Annual General Meeting - Results of
Voting
2016 AGM Chief Executive's Address
2016 AGM Chairman's Address
Strategic review outcomes
Resignation of director
Credit facility agreement
March 2016 Quarter Operations Review
Strategic review - update
Annual General Meeting Proxy Form
Notice of Annual General Meeting
2015 Annual Report
Share Trading Policy
ERA Financial Community Presentation
January 2016
Annual Statement of Reserves and Resources
ERA 2015 Full Year Results
Preliminary Final Report
December 2015 Quarter Operations Review
Details of these announcements are available at www.energyres.com.au.
116
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
TEN YEAR PERFORMANCE
YEAR ENDED 31
DECEMBER
Sales Revenue ($000)
Earnings Before Interest
and Tax ($000)
Profit/(Loss) Before Tax
($000)
Income Tax Expense/
(Benefit) ($000)
Profit/(Loss) After Tax
($000)
Total Assets ($000)
Shareholders’ Equity ($000)
Long Term Debt ($000)
Current Ratio
Liquid Ratio
Gearing Ratio (%)
Interest Cover (times)
Return on Shareholders’
Equity (%)
Earnings Per Share (cents)
Dividends Per Share (cents)
Payout Ratio (%)
Share Price ($) closing
Price-Earning Ratio
Dividend Yield (%)
Net Tangible Assets per
Share ($)
No. of Employees
Profit After Tax per
Employee ($000)
Ore Mined (million tonnes)
Ore Milled (million tonnes)
Mill Head Grade (% U3O8)
Mill Recovery (%)
Production (tonnes U3O8) –
Drummed
Sales – Ranger Concen-
trates (tonnes U3O8)
Sales – Other Concentrates
(tonnes U3O8)
Sales – Total (tonnes U3O8)
Note 1
Post rights issue
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
267,765 332,777 379,166 356,139 396,629 651,381 572,283 768,297 496,359 357,080
(279,781)
(88,292) (284,274) (199,431) (278,266) (220,633)
47,726 374,737 317,957 108,012
(271,077)
(79,798) (273,602) (186,541) (254,785) (206,340)
59,427 382,053 312,569
98,366
- 195,695 (85,802)
(50,712)
(36,026)
(52,741)
12,423 109,479
90,784
22,277
(271,077) (275,493) (187,800) (135,829) (218,759) (153,599)
76,089
819,432 1,100,815 1,341,724 1,627,561 1,826,275 1,948,972 1,423,396 1,359,131 1,170,409 985,353
198,559 469,947 745,607 934,022 1,069,619 1,288,536 951,076 966,574 758,926 606,021
47,004 272,574 221,785
-
4.0
3.1
-
-
(136.5)
(52.4)
-
-
0.44
(0.83)
-
0.38
356
-
4.0
3.0
-
-
-
4.1
2.7
-
-
-
3.8
2.3
-
-
-
4.0
2.9
-
7.1
6.0
-
(156.7)
-
(177.9)
(58.6)
(53.2)
(25.2)
(36.3)
(14.5)
(26.2)
(20.5)
(42.3)
(11.9)
(29.7)1
-
-
0.36
(0.68)
-
0.91
374
-
-
1.30
(3.58)
-
-
-
1.26
(4.81)
-
1.44
389
1.80
519
-
-
1.27
(3.00)
-
2.07
594
-
-
1.23
(2.54)
-
2.49
567
-
3.4
2.1
-
47.8
4.9
24.6
8.0
32
11.13
45.24
2.96
4.99
523
-
3.1
2.2
-
33.5
31.6
142.9
39.0
27
23.89
16.72
1.42
5.07
521
-
1.5
0.8
-
5.6
29.2
116.3
28.0
24
19.00
16.34
1.47
3.98
519
-
1.8
1.0
-
7.79
13.1
39.9
20.0
28
19.50
48.88
1.03
3.20
419
(761.5)
(736.6)
(482.8)
(264.8)
(374.5)
(270.9)
89.87
523.17
427.33
181.6
2.7
0.10
84.9
-
2.5
0.10
82.0
-
1.3
0.11
81.5
-
2.3
0.15
84.8
3.8
2.6
0.17
86.2
1.2
1.6
0.18
87.9
1.4
2.4
0.19
87.2
2.2
2.3
0.26
88.3
3.5
2.0
0.30
88.2
2.9
1.9
0.31
88.2
2,351
2,005
1,165
2,960
3,710
2,641
3,793
5,240
5,339
5,412
2,130
2,183
2,164
2,767
2,665
3,258
4,373
5,497
5,272
5,324
9
-
984
48
558
2,139
2,183
3,148
2,815
3,223
1,908
5,167
653
–
–
–
5,026
5,497
5,272
5,324
Definition of statistical ratios
Current Ratio
Liquid Ratio
foreign exchange
Gearing Ratio
Interest Cover
Return on Shareholders’ Equity
Earnings per Share
=
=
=
=
=
=
current assets/current liabilities
(current assets-inventory-prepayments-foreign exchange hedge asset on borrowings)/(current liabilities-bank overdraft –
hedge liability)
(long term debt + term creditors)/(shareholders’ equity + long term debt + term creditors)
earnings before interest and tax/interest expense
profit after tax/average shareholders’ equity
profit after tax/weighted average number of shares issued
117
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT
INDEX
2016 Announcements
2016 ERA Ore Reserves and Mineral Resources
2017 Objectives
Auditor’s Independence Declaration
Balance Sheet
Business Strategy
Cash Flow Statement
Chairman’s Report
Chief Executive’s Report
Community
Company Overview
Corporate Governance Statement
Director’s Declaration
Director’s Report
Employment
Environment
Financial Performance
Future Supply
Health and Safety
Independent Auditor’s Report
Land
Notes to the Financial Statements
Operating and Financial Review
Operations
Radiation monitoring
Regulatory Framework
Sales and Marketing
Shareholder Information
Statement of Changes in Equity
Statement of Comprehensive Income
Sustainable Development
Ten Year Sustainability Report Performance
116
18
8
61
70
14
72
6
7
35
4
62
107
38
32
28
9
17
22
108
31
73
9
11
23
24
21
114
71
69
25
117
118
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT NORTHERN
TERRITORY
KAKADU
NATIONAL PARK
(19,803 sq km)
Oenpelli Road
MUDGINBERRI
DARWIN
GUNBALANYA
Arnhem Highway
JABILUKA
RANGER
JABIRU
Arnhem Highway
PARK
HEADQUARTERS
JABIRU
JABILUKA
MINERAL
LEASE
(73 sq km)
RANGER
PROJECT
AREA
(79 sq km)
Ranger
Uranium Mine
(500 ha)
PINE CREEK
KATHERINE
NORTHERN
TERRITORY
KAKADU
NATIONAL PARK
(19,803 sq km)
Oenpelli Road
MUDGINBERRI
DARWIN
GUNBALANYA
Arnhem Highway
JABILUKA
RANGER
JABIRU
Arnhem Highway
PINE CREEK
KATHERINE
PARK
HEADQUARTERS
JABIRU
JABILUKA
MINERAL
LEASE
(73 sq km)
RANGER
PROJECT
AREA
(79 sq km)
Ranger
Uranium Mine
(500 ha)
Ranger Mine
Locked Bag 1
Jabiru NT 0886
Head Office
Level 3, Energy House
18-20 Cavenagh Street
GPO Box 2394
Darwin NT 0801
Tel: +61 (0) 8 8924 3500
Fax: +61 (0) 8 8924 3555
www.energyres.com.au
Registered Office
Energy Resources of Australia Ltd
c/ Mallesons Stephen Jacques
Level 5, NICTA Building B
7 London Circuit
Canberra City ACT 2601
119
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT This page has been left blank intentionally
120
ENERGY RESOURCES OF AUSTRALIA LTD 2016 ANNUAL REPORTSUSTAINABILITY REPORTFINANCIAL REPORT Chris: Supervisor Mining,
Mine Operations
Time with ERA: 9 years
Husband and Wife
Josh: Senior Supervisor – Production
Time with ERA: 6 years
Wendy: Personal Assistant
Time with ERA: 5 years
Tse Wei: Chemical Engineer
Production Metallurgist
Time with ERA: 1 year
Daughter and Father
Veronica: Travel and
Accommodation Support Officer
Time with ERA: 4 years
Matthew: Maintenance Technician
Electrical
Time with ERA: 12 years
Zeb: Accountant
Specialist Finance
Time with ERA: 9 years
Jenny: Geologist
Mine Geologist, Mining Production
Brothers
Travis: Maintenance Technician
Powerstation
Time with ERA: 2 years
Deakin: Maintenance Technician
Plant Operations
Time with ERA: 8 years
Time with ERA: 8 years