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Ero CopperAnnual Report 2015
OZ Minerals Limited ABN 40 005 482 824
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A modern mining company
—
OZ Minerals is an Australian based modern
mining company with a focus on copper.
It owns the Prominent Hill copper-gold
mine and Carrapateena copper-gold project,
both located in South Australia. OZ Minerals
strives to be a global market leader and
partner of choice in the resources sector.
In 2015, OZ Minerals met or exceeded
all production targets and market
guidance for copper and gold production,
while reducing overall costs.
/ 2015 Snapshot
/ A message from the Chairman and CEO
/ Our Company Strategy
/ Prominent Hill
/ Carrapateena
/ Sustainability
/ Resources and Reserves 2015
/ Results for Announcement to the Market
/ Directors’ Report
/ Operating and Financial Review
/ Remuneration Overview and Report
/ Consolidated Financial Statements
/ Shareholder Information
/ Contact Details/Annual General Meeting
2
3
4
6
8
10
11
18
19
26
41
57
95
IBC
A modern mining company
—
OZ Minerals is an Australian based modern
mining company with a focus on copper.
It owns the Prominent Hill copper-gold
mine and Carrapateena copper-gold project,
both located in South Australia. OZ Minerals
strives to be a global market leader and
partner of choice in the resources sector.
In 2015, OZ Minerals met or exceeded
all production targets and market
guidance for copper and gold production,
while reducing overall costs.
/ 2015 Snapshot
/ A message from the Chairman and CEO
/ Our Company Strategy
/ Prominent Hill
/ Carrapateena
/ Sustainability
/ Resources and Reserves 2015
/ Results for Announcement to the Market
/ Directors’ Report
/ Operating and Financial Review
/ Remuneration Overview and Report
/ Consolidated Financial Statements
/ Shareholder Information
/ Contact Details/Annual General Meeting
2
3
4
6
8
10
11
18
19
26
41
57
95
IBC
1
OZ Minerals / Annual Report 2015 2015 Snapshot
—
/ Record safety performance – 35% reduction in TRIFR to 5.30.
/ Key commitments achieved or exceeded with Prominent Hill producing 130,305 tonnes of copper
and 113,028 ounces of gold.
/ Robust production from combined underground operations.
/ Analysis of Carrapateena options complete and stand-out option taken to pre-feasibility stage.
/ Encouraging final results from Hydromet plant trial.
/ Strong financial results with revenue of $879.4 million, underlying EBITDA (1) of $484.9 million,
underlying NPAT (1) of $139.6 million and statutory NPAT of $130.2 million.
/ Balance sheet remains robust with $552.5 million in cash and no debt.
/ New business strategy implemented by Managing Director & CEO.
/ Corporate relocation to Adelaide complete.
/ Exploration joint ventures with Minotaur and Toro Energy Ltd.
Full Year financial results summary
Group revenue
Underlying EBITDA (1)
2015
$m
879.4
484.9
2014
$m
831.0
341.1
Depreciation and amortisation
(285.1)
(296.1)
Underlying EBIT (1)
Net financing income
Income tax (expense)/benefit
Underlying NPAT (1)
Non-underlying items net of tax
NPAT
Dividends per share – unfranked (cents)
199.8
2.9
(63.1)
139.6
(9.4)
130.2
6.0
45.0
3.6
(18.3)
30.3
18.2
48.5
20.0
2013
$m
644.0
115.8
(218.5)
(102.7)
7.0
33.2
(62.5)
(231.9)
(294.4)
30.0
(1) OZ Minerals financial results are reported under
International Financial Reporting Standards (‘IFRS’).
This Annual Report and Results for Announcement
to the Market include certain non-IFRS measures,
including Underlying EBITDA, Underlying EBIT
and Underlying NPAT. These measures are
presented to enable understanding of the
underlying performance of the Consolidated
Entity without the impact of non-trading items
such as write-down of assets and results from
discontinued operations. Non-IFRS measures
have not been subject to audit or review.
Underlying EBITDA, Underlying EBIT and
Underlying NPAT are included in Note 1 Operating
Segments, which form part of the Consolidated
Financial Statements. Refer Note 1 Operating
Segments to the Consolidated Financial Statements
for further details.
/ Copper Price
US$/lb
A$/lb
$/oz
4.0
3.5
3.0
2.5
2.0
1.5
Ja n 1 5
F e b 1 5
M ar 1 5
p r 1 5
A
M a y 1 5
Ju n 1 5
Jul 1 5
u g 1 5
A
S e p 1 5
O ct 1 5
o v 1 5
N
D e c 1 5
Ja n 1 6
F e b 1 6
/ Gold Price
US$/oz
A$/oz
$/oz
2,000
1,800
1,600
1,400
1,200
1,000
Ja n 1 5
F e b 1 5
M ar 1 5
p r 1 5
A
M a y 1 5
Ju n 1 5
Jul 1 5
u g 1 5
A
S e p 1 5
O ct 1 5
o v 1 5
N
D e c 1 5
Ja n 1 6
F e b 1 6
2
130,305
—
tonnes of copper
produced
in 2015
$879.4m
—
in revenue
OZ Minerals / Annual Report 2015 A message from the Chairman and CEO
—
Neil Hamilton
Andrew Cole
Dear Shareholder,
We are pleased to report that OZ Minerals
achieved solid operational and financial
outcomes across four consecutive quarters
in 2015. The Prominent Hill open pit and
underground mines performed well
throughout the year, with significant
safety improvements also achieved.
Overall costs were reduced while
production rates increased. Investments
made over the past seven years have seen
Prominent Hill generate significant cash
flow off a comparatively low cost base.
Production rates at Prominent Hill were
well within guidance for 2015, with
130,305 tonnes of copper and 113,028
ounces of gold against expectations
of 126,000 to 131,000 tonnes of copper
and 100,000 to 110,000 ounces of gold.
We have delivered consistent safety and
cost improvements, while our investment
in open pit wall stability has enabled
us to build a second decline in the
underground to increase annual
production capacity and drive down
costs. This second decline was approved
and announced in February 2016 and
construction has already begun.
We also embarked on phase one of
a drilling program aimed at converting
Mineral Resource to Ore Reserves, which
began in late 2015. Initial work on the
eastern end of the Prominent Hill ore
bodies returned some encouraging early
results, with the program set to continue
in 2016 and 2017, complementing efforts
to extend the mine life at Prominent Hill.
Our sound operational performance
resulted in a marked increase in
profit, with revenue of $879.4 million
and statutory NPAT of $130.2 million.
The Company’s balance sheet remained
solid, with a cash balance of
$552.5 million at 31 December 2015
and no debt. The strong performance
was reflected in record cash flows
and enabled OZ Minerals to reward
shareholders with a final dividend
of 14 cents per share, bringing the
full year dividend to 20 cents per share,
equating to a yield of 4.7 percent.
Development of the Carrapateena project
took a significant step forward this year,
following a re-analysis of existing data
which returned a high-grade resource
of 61 million tonnes at 2.9 percent copper
equivalent, contained within the
previously announced resource. Following
extensive studies throughout 2015, a
stand-out 2.8 million tonnes per annum
option was identified and announced on
26 February 2016. This project option will
now shift to a pre-feasibility phase, with
a decision on the decline’s construction
expected in the coming months.
In 2015, the Hydromet trial in conjunction
with the University of Adelaide, South
Australian Government and Orway
Mineral Consultants proved successful.
The five-month demonstration plant
trial produced encouraging results
for OZ Minerals and South Australia.
The process, using new chemistry with
existing technology, significantly upgraded
copper-in-concentrate levels while
reducing impurities to very low levels.
The first parcel of copper concentrate
achieved an upgrade to 53–55 percent
copper while the second delivered
an upgrade to 58–60 percent copper.
These results will have positive
implications for OZ Minerals with its
copper resources and exploration land
holding in the Gawler Craton. The copper
industry as a whole will also stand to
benefit, when the technology is applied
commercially. At a time when the market
is seeing copper grades decline and
impurity levels rise, the ability to produce
a more pure copper-in-concentrate will
provide a strong competitive advantage
in the market place. This technology will
be incorporated into the new
Carrapateena flow sheet.
In 2015, we entered into three exploration
ventures with Minotaur Exploration and
Toro Energy. These encompass searching
for copper deposits in South Australia
and Queensland as well as nickel deposits
in Western Australia respectively. We will
see preliminary results emerge in 2016.
These progressive business decisions are
specifically aligned to the OZ Minerals
growth strategy developed and
implemented in early 2015. The relocation
of the head office to Adelaide was
marked with an official opening by the
South Australian Premier in December
2015. The move has allowed us to achieve
significant savings in our overhead costs,
get closer to our operating assets and
form a number of innovative local
partnerships to progress opportunities.
We would like to thank our suppliers,
customers, communities and shareholders.
We would also like to acknowledge
the employees and contractors whose
contribution is pivotal in enabling
OZ Minerals to exceed expectations.
Their unwavering commitment instils
great confidence as we embark on
another productive year.
We encourage you to read the Operating
and Financial Review on page 26 of
this report, which includes detailed
information on our operational
and financial results for 2015.
Neil Hamilton
31 March 2016
OZ Minerals recognises the importance
of maintaining a focus on exploration.
Andrew Cole
31 March 2016
3
OZ Minerals / Annual Report 2015 Our Company Strategy
—
D
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VALUE
CREATION
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A
G V
—
2015 – A year
of transformation
for OZ Minerals
S
A
F
E
MULTIP L E
ASSET S
S T R O N
CAPITAL DISC I P L I N E
4
OZ Minerals / Annual Report 2015 These elements would be complemented
by strong values, capital discipline
and a dedication to safety across the
entire business, with the utmost integrity
exhibited at all times.
Value creation is the centrepiece of
the strategy. It applies to the Company,
OZ Minerals staff, wider community,
shareholders, stakeholders, traditional
owners and the industry as a whole,
each with its own criteria of how value
is defined.
The activation of the strategy also
provided the impetus to leverage
off the current phase of the mining
cycle and seize the chance to grow
and prosper. At the same time,
the Company pledged to reliably
and predictably deliver results with
disciplined capital deployment.
The latter half of 2015 was devoted
to ensuring people took ownership of
the strategy. By ensuring processes and
systems within the business reflected the
eight strategic elements, people became
more focused and frequently considered
the strategy when making decisions.
OZ Minerals consistently and diligently
explored opportunities to acquire assets
that would generate value for
shareholders. Much has been achieved
in-line with the Company strategy
to-date. OZ Minerals entered into
exploration partnerships with Minotaur
and Toro Energy Ltd. demonstrating
its allegiance to value creation, copper
core and multiple assets.
OZ Minerals’ pursuit of a safe workplace
with zero harm for all employees
continued this year. There was a renewed
focus, in line with the strategy, with
a Site Safety Acceleration Process
being progressed on-site. OZ Minerals’
total recordable injury frequency rate
decreased by 35 percent compared
to the previous year. Critical risk
management, hazard awareness and
leadership intent were all targeted
in the campaign.
Development options for Carrapateena
were also fast-tracked, while a
re-analysis of data identified a more
focused resource of 61 million tonnes
at 2.9 percent copper equivalent.
Significant time and effort was invested
in advancing this option, with a view
to creating robust and lower risk
returns for shareholders. The Company
is also in a position to independently
finance the entire project. This again
reflects the strategic elements,
including value creation, capital
discipline, multiples assets, a copper
core and commitment to customers.
The Hydromet plant trial also produced
resounding results this year. The process,
which essentially increases copper-in-
concentrate levels while removing
impurities, could revolutionise the
industry when applied commercially.
Results of the trial using Prominent Hill
copper concentrate returned upgrades
of 53–55 percent copper in the first parcel
while the second delivered upgrades of
58–60 percent copper. This aligns directly
with several components of the strategy
encompassing a copper core, value
creation and a strong customer focus
by producing customised concentrate
parcels that would prove favourable
to market conditions.
OZ Minerals is confident this focus on
exceptional operational performance,
unrivalled asset quality, investment in
the right projects and diversification
will create long-term value throughout
the cycle and deliver superior returns
to shareholders.
Whilst 2015 was noted as a ‘year of
transformation,’ the new OZ Minerals
strategy is only just starting to take
shape. The changes made and the
opportunities being progressed are just
the start of a long-term Company-wide
transformation that will see OZ Minerals
grow and prosper well into the future.
The first priority of the new Managing
Director & CEO, Andrew Cole, was to
launch a Company-wide strategic review.
The motivation for developing a new
business strategy was to ensure that
OZ Minerals explicitly leveraged the
assets held, recognised the market
conditions of the day and discerned itself
from other companies around the world.
As a modern mining company, it was
imperative that OZ Minerals’ employees
developed a connection to core
components of a strategy and felt
passionate and confident about where
it would take the Company in the future.
It was also necessary to cultivate
a culture that was able to endure
the cyclical pressures and volatility
of the mining industry.
The strategy was implemented across
the Company in mid-2015 following
staff planning workshops and
comprehensive analysis. The decision
was made to operate as a leaner
business with a foundation built
on copper, with base metals and
gold opportunistically pursued.
Decisive action had to be taken to
ensure OZ Minerals not only survived,
but thrived. The Company sought
to identify key operational aspects
of the business and formulate a strategy
that could be enacted immediately
but remain relevant in the future.
One of the first decisions was to relocate
the corporate office to Adelaide, which
is now complete. To increase efficiencies
and make savings, it was deemed
necessary to reconfigure and reduce
the size of the workforce.
Shortly after this, the new OZ Minerals
business strategy was launched.
It encompassed operating a lean business;
ensuring it remained fit for purpose
and demonstrated an agile and flexible
approach to opportunities. OZ Minerals
would also build and maintain a valuable
portfolio of multiple assets, on the
condition they generated value accretive
cash flow and risks were assessed and
deemed manageable. The Company
would continue to maintain a copper
core with a strong customer focus to
ensure OZ Minerals remained the
preferred supplier of mineral products
around the world.
5
OZ Minerals / Annual Report 2015 Prominent Hill
—
Operational Summary
—
In 2015, the Prominent
Hill operation produced
130,305 tonnes of
copper and 113,028
ounces of gold.
40.7%
—
increase in
copper production
in 2015 from
2014
South
Australia
Prominent Hill
Adelaide
/ Location
650km north-west of Adelaide, 130km
south-east of the town of Coober Pedy.
/ Product
Copper concentrate (containing gold
and silver).
/ Mining method
Open pit and underground mine.
/ Processing method
Conventional crushing, grinding
and flotation.
/ 2015 Production
130,305 tonnes contained copper;
113,028 ounces contained gold.
/ Resources
179Mt @ 1.0% copper, 0.7g/t gold
(1.8Mt copper, 3.9Moz gold).(1)
/ Reserves
73Mt @ 1.0% copper, 0.6g/t gold
(720kt copper, 1.4Moz gold).(1)
/ Sales
Concentrates produced at Prominent
Hill are transported by road to a rail
siding. Concentrate is then transported
to customers in Australia by road
or railed to Port Adelaide where
it is then shipped to customers in
Asia and Europe.
(1) See pages 11–16 for full disclosure.
6
OZ Minerals / Annual Report 2015 A range of efficiency measures were
implemented in the open pit and
underground mine at Prominent Hill,
increasing production levels and
reducing operational costs.
—
Strong mining rates in the open pit
throughout 2015 were complemented
by robust contributions from the
underground. Mill availability drove
higher levels of production leading to
guidance being revised upwards during
the year. The underground performed
consistently, exceeding the planned
annual mining rate of 1.2 million tonnes
of ore at 2.0 percent copper for the year.
As the open pit nears its final depth,
the amount of waste rock relative
to the amount of ore is decreasing
and the space in which equipment
can move is reducing. This means less
equipment and people are required.
In order to optimise the fleet, relative
to the mining schedule, the open pit
is moving to its final stages whilst the
underground mine is expanding.
Prominent Hill Mine Infrastructure
10200 L
WEST
Cover sequence
9800 L
9400 L
9000 L
8600 L
As a result, approximately 100 people
working at the Prominent Hill open pit
mine were demobilised in early 2016.
Development to expand Prominent
Hill’s underground operation via
a second decline that will lift the
capacity of the mine by approximately
3.5– 4.0Mtpa has begun.
Once the second decline is complete,
truck queuing in the underground will
be eliminated and other benefits realised
in terms of ventilation, rehandling and
contingency planning. It will bolster
the capacity of the underground, extend
its reserve and increase the efficiency
of the entire operation while driving
down unit costs. The mine plan has also
been accelerated to drive value and
generate cash earlier than expected.
Cu produced (t)
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
2 0 1 1
2 0 1 2
2 0 1 3
2 0 1 4
2 0 1 5
Au produced (oz)
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
2 0 1 1
2 0 1 2
2 0 1 3
2 0 1 4
2 0 1 5
EAST
Legend
Mined open pit (1)
Measured Resource
Indicated Resource
Inferred Resource
Final open pit design
Basement Contact
Surface
UG Development
(1) Total mined as of
end December 2015.
Papa Zone
Malu open pit
Malu Underground
Ankata Underground
54000 E
54400 E
54800 E
55200 E
55600 E
56000 E
56400 E
56800 E
7
OZ Minerals / Annual Report 2015
Carrapateena
—
—
The scoping study
for Carrapateena was
completed in February
2016, demonstrating
technical and financial
viability with the
potential for a multi-
decade operation
at low operating costs.
South
Australia
Prominent Hill
Carrapateena
Adelaide
/ Location
250km south-east of Prominent Hill,
130km north of the regional centre
of Port Augusta, in South Australia.
/ Deposit
Iron oxide copper-gold deposit.
/ Status
Advanced exploration project,
pre-feasibility study due to
be completed in the last quarter
of 2016.
/ Resources
Total Indicated and Inferred Resources
(at a 0.3% copper cut-off) of
800Mt at 0.8% copper, 0.3g/t gold
(6.3Mt copper and 8.4Moz of gold).(2)
/ Reserves
270Mt at 0.9% copper, 0.4g/t gold
(2,500kt copper and 3.5Moz of gold).(2)
(1) Please see footnote on page 9.
(2) Please see the Resources and Reserves
section on pages 11–16 of this report.
61Mt
—
@ 2.9% CuEq (1)
8
OZ Minerals / Annual Report 2015 Exploration
Carrapateena
An exploration program comprising
three drill holes was completed
at the Fremantle Doctor prospect
in early 2015. The program returned
broad intersections of copper-gold
mineralisation in haematite breccia,
confirming the high prospectivity
of the Carrapateena tenements.
Exploration activities were suspended
for the majority of 2015. In March
2016, a four-hole drilling program
commenced to upgrade some
of OZ Minerals’ current Indicated
Resource to Measured Status and
provide samples for metallurgical
test work.
Australian Exploration
OZ Minerals entered into three new
joint ventures in 2015.
1. The Mt Woods JV with Minotaur
Exploration will search for copper
resources in the tenements
surrounding Prominent Hill.
The JV will focus on identification
and drilling of IOCG targets.
2. The Yandal One JV with Toro Energy
will focus on exploration for nickel
sulphide mineralisation in Western
Australia, where shallow drilling
by previous explorers intersected
significant nickel mineralisation
within 60 kilometres of the
Mount Keith mine.
3. The Eloise JV with Minotaur
Exploration will look for Cannington
style lead/zinc/silver mineralisation
in the highly prospective Eastern
Succession of the Mt Isa block.
OZ Minerals expects to drill test targets
at all three projects in 2016.
Jamaica: Bellas Gate Project
(potential earn-in to 80 percent)
Initial results from the maiden drill
program at the Connors prospect
within the Bellas Gate Project area
have been encouraging.
A drilling program of 28 drill holes for
7,064 metres was completed at Bellas
Gate during 2015, in the search for
porphyry copper-gold deposits similar
to Northparkes and Cadia-Ridgeway
in Australia. Further copper-gold
mineralisation was intersected at the
Connors Prospect and broad intervals
of chalcopyrite mineralisation were
also intersected at the Hendley and
Geo Hill Prospects. Field mapping
and geochemical surface sampling
identified new targets at Lucky Valley
and Provost Prospects, where further
work is planned for 2016.
By the end of 2015, OZ Minerals
was near to satisfying exploration
expenditures on Bellas Gate required
to fulfil Phase 4 of the Farm-In joint
venture and earn a 70 percent interest
in the project.
Jamaica: Above Rocks Project
(potential earn-in to 80 percent)
In December, OZ Minerals initiated
a second joint venture with Carube
Resources Corp. on the Above Rocks
tenements, covering an area totalling
104 square kilometres in central-east
Jamaica. Field work commenced in late
2015 and focused on several targets
which show outcropping copper
mineralisation. Further work, including
geochemical sampling, geophysics,
and drilling is planned for 2016.
Canada: Col Later Project
A drilling program targeting porphyry
copper-gold mineralisation at the
Col Later Project intersected gold
mineralisation without significant
copper. OZ Minerals has withdrawn
from the joint venture.
A significant focus for 2015 was to
add further value to the Carrapateena
project. As part of the 2015 strategic
review, OZ Minerals committed to
undertake a number of initiatives
designed to build on previous studies.
—
Value optimisation of the previously
developed block cave project was carried
out. Site layouts were reviewed and
rationalised and low-cost engineering
options considered. A number of
opportunities were identified for
improving the capital cost of the project.
An investigation was completed into the
development of a rail option, transporting
ore from Carrapateena to Prominent Hill
for processing. This work was undertaken
in collaboration with the South Australian
Government as a part of an infrastructure
partnership. An evaluation of third party
build/own/operate financing of the rail
was undertaken, as it had the potential
to significantly lower upfront capital
required to develop Carrapateena.
In October 2015, a High-Grade Resource (1)
of 61 million tonnes at 2.9 percent copper
equivalent was announced. A scoping
study assessing the mining of this
resource using sub-level open stoping
or sub-level caving was completed in
February 2016. From this study, sub-level
caving, at a rate of 2.8 million tonnes
per annum, was found to have favourable
financials and was chosen for further
study in 2016. This pre-feasibility study
will be completed in the last quarter
of 2016. There is potential for the rate
to grow to 4.8 million tonnes per annum,
adding further value.
The hydrometallurgical process,
‘Hydromet’, was successfully progressed
to demonstration plant scale. The plant
ran for a total of 19 weeks at a run
time of 91 percent, upgrading a total
of 150 tonnes of test concentrate to
an average grade of 55–60 percent
copper and reducing impurities to very
low levels. This work was undertaken
in collaboration with a number of
local and international research and
technology providers, as well as the
South Australian Government.
This technology will be incorporated
into the new Carrapateena flow sheet.
(1) The information in this report that relates to the high grade resource announcement in October 2015 for Carrapateena is extracted from the report entitled ‘Carrapateena
Project Mineral Resource explanatory notes as at 25 September 2015’ released on 6 October 2015 and is available to view at www.ozminerals.com/operations/resources--
reserves.html. The calculation of CuEq is detailed in this ASX release. The Company confirms it is not aware of any new information or data that materially affects
the information included in the original market announcement and, in the case of estimates of Ore Reserves, that all material assumptions and technical parameters
underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The Company confirms that the form and
context in which the Competent Persons’ findings are presented have not been materially modified from the original market announcement.
9
OZ Minerals / Annual Report 2015 Sustainability
—
—
As a modern mining company, OZ Minerals strives to create a safe workplace
for its people, mitigate its environmental impact while making a valuable
contribution to communities and stakeholders.
A new growth strategy was launched
in 2015, with safety declared one
of the fundamental elements.
Being injured at work is unacceptable
and OZ Minerals is committed to
continuous improvement in this area
with dedicated ongoing programs.
This year, OZ Minerals had no fatalities
or serious disabling injuries recorded.
At the end of 2015, the total recordable
injury frequency rate per million working
hours stood at 5.30, a 35 percent decrease
on the previous year (2014: 8.18). The lost
time injury frequency rate fell to 0.99
(2014: 2.46).
OZ Minerals seeks to build its reputation
as a valued member of the communities
in which it operates. The Company is also
committed to fostering sustainable
relationships that respect local cultures
and generate shared benefits.
OZ Minerals had no adverse community
or environmental incidents in 2015.
OZ Minerals continues to have
significant sponsorship arrangements
with community organisations that are
locally driven and close to assets. Major
sponsorships include the Royal Flying
Doctor Service, Remote and Isolated
Children’s Exercise, regional gymkhanas
and local community activities.
OZ Minerals received a number of awards
in 2015, including a commendation for
excellence in supporting communities
as part of the South Australian Premier’s
awards in mining and energy. The awards
acknowledge outstanding efforts in
supporting communities, social inclusion,
workforce diversity and environmental
excellence. The Company also received
an award for excellence in leadership
in recognition of its continued focus
on developing female leaders.
OZ Minerals works hard to build
sustainable relationships that respect
local cultures and operate with a
partnership mentality. We strongly
believe mining can co-exist with
traditional owners and pastoralists
and that relationships built on trust
and respect can benefit all parties.
A concerted and consistent effort is
made to ensure OZ Minerals is a valued
member of the communities in which it
operates. The Company identified and
implemented numerous cost efficiencies
in 2015. A cost reduction program has
already realised annual savings in excess
of $5 million. This has enabled lean, yet
profitable, operations which open up
significant growth pathways that can
be explored in a sustainable manner.
Case Study
—
AM-Y Environmental
Services – waste
management contract
C
S
To assist the Antakirinja Matu-Yankunytjatjara Aboriginal Corporation (AMYAC) in
developing a sustainable business that would provide employment for the corporation
and region, AM-Y Environmental Services Pty Ltd (AM-Y ES) was established to undertake
opportunities for commercial enterprises on behalf of AMYAC, as a subsidiary business
of the Aboriginal Corporation.
In 2015, OZ Minerals conducted a review of its waste management contract to establish
a more cost efficient and effective program. AM-Y ES was awarded the contract following
rigorous pre-qualification and compliance requirements. The stringent procurement process
also solidified the Company’s capability to win contracts in the future. AMYAC Native Title
Holders consists of 830 Traditional Owners in the area including many from the Far North
of SA, including Coober Pedy and Prominent Hill. OZ Minerals was keen to establish a more
effective waste management strategy for Prominent Hill operations. Source separation
of waste and recycling materials at the point of generation was identified as a focal point
for AM-Y ES. After many months of work, the waste management services on site commenced
in September 2015.
Tonnages going to the landfill in 2015 reduced compared to 2014. An Indigenous trainee
was employed with AM-Y ES in early 2016 to learn skills associated with waste management.
This is a very important step in continuing our engagement with the traditional landowners
and acknowledging their relationship with the land.
The procurement process was extremely worthwhile for members, who amassed additional
skills. Profits are also used to help members of the community in need of food, shelter,
medical treatment and other important welfare requirements.
10
OZ Minerals / Annual Report 2015 Reserves and Resources 2015
—
OZ Minerals’ Ore Reserves and Mineral Resources
The 2015 Ore Reserves and Mineral Resources of OZ Minerals are summarised in the table below along with the 2014 Ore Reserves
and Mineral Resources for comparison.
2015
2014
Tonnes
Mt
Cu%
Au
g/t
Ag
g/t
Cu
kt
Au
Moz
Ag
Moz
Tonnes
Mt
Cu%
179
800
202
1,180
73
270
343
1.0
0.8
0.6
0.8
1.0
0.9
0.9
0.7
0.3
0.1
0.3
0.6
0.4
0.4
2.6
3.3
1.7
2.9
2.9
4.5
4.2
1,799
6,300
1,100
3.9
8.4
0.9
15
84
11
178
800
202
9,200
13.2
110
1,180
720
2,500
3,220
1.4
3.5
4.9
7
39
46
79
270
349
1.1
0.8
0.6
0.8
1.0
0.9
0.9
Au
g/t
0.7
0.3
0.1
0.3
0.6
0.4
0.4
Ag
g/t
2.7
3.3
1.7
3.0
2.8
4.5
4.1
Cu
kt
Au
Moz
Ag
Moz
1,930
6,300
1,100
9,330
800
2,500
3,300
4.0
8.4
0.9
15
84
11
13.3
110
1.4
3.5
4.9
7
39
46
Resources
Prominent Hill
Carrapateena
Khamsin
Total
Reserves
Prominent Hill
Carrapateena
Total
Table subject to rounding errors.
Information in the table above was drawn from the following:
Deposit
Prominent Hill
Prominent Hill
Carrapateena
Khamsin
Prominent Hill
Prominent Hill
Carrapateena
Mineral Resources 2014
Mineral Resources 2015
Mineral Resources
Mineral Resources
Ore Reserves 2014
Ore Reserves 2015
Ore Reserves
Estimate date
30 June 2014
30 June 2015
30 June 2013
23 March 2014
30 June 2014
30 June 2015
15 August 2014
Release date
20 November 2014
4 November 2015
28 November 2013
26 May 2014
20 November 2014
4 November 2015
18 August 2014
All Mineral Resources and Ore Reserves are estimates. The Resource and Reserve statements and their accompanying explanatory
notes can be viewed in full at: www.ozminerals.com/operations/resources--reserves.html.
Prominent Hill 2015 Mineral Resources and Ore Reserves
The Prominent Hill Ore Reserves and Mineral Resources remain robust with the majority of changes due to mining depletion.
The Underground Ore Reserves have increased through successful resource conversion drilling at Malu Underground.
Prominent Hill Mineral Resource
The total Prominent Hill Mineral Resource as at 30 June 2015 was estimated to be 178 million tonnes at 1.0 percent copper and
0.7 grams per tonne gold for 1.8 million tonnes of contained copper and 3.9 million ounces of contained gold. Within this were
estimated to be Ore Reserves of 73 million tonnes at 1.0 percent copper and 0.6 grams per tonne gold for 720 thousand tonnes
of contained copper and 1.4 million ounces of contained gold.
The Prominent Hill Mineral Resource is comprised of copper-gold mineralisation and gold-only mineralisation. The June 2015
Mineral Resource estimate contains 7.0 percent fewer copper tonnes and 3.0 percent fewer gold ounces than the previous Mineral
Resource estimate.
Open Pit Mineral Resource
− The Open Pit Mineral Resource decreased mainly due to mining depletion.
Ankata Mineral Resource
− The Ankata Mineral Resource decreased mainly due to mining depletion.
Malu Underground Mineral Resource
− The Malu Underground Mineral Resource is largely unchanged with depletion offset by success in drilling.
Kalaya Mineral Resource
− There is no current exploration or mining at Kalaya. There was a small but immaterial change in the Mineral Resource due
to a change of cut-off grade and the introduction of an estimated bulk density.
Stockpiles
− Copper-gold ore stockpiles to 30 June 2015 increased by 1.3 million tonnes to 3.0 million tonnes and gold-only ore stockpiles
increased by 2.5 million tonnes to 11 million tonnes.
11
OZ Minerals / Annual Report 2015 Copper-gold Mineral Resources at Prominent Hill – June 2015
Tonnes
(Mt)
Cu
(%)
Au
(g/t)
Ag
(g/t)
Category
Open Pit (1) – 0.25% Cu cut-off
Measured
Indicated
Inferred
Total
Malu (2) – $57 NSR cut-off
Measured
Indicated
Inferred
Total
Kalaya (3) – $57 NSR cut-off
Measured
Indicated
Inferred
Total
Ankata (4) – $57 NSR cut-off
Measured
Indicated
Inferred
Total
Surface Stocks
Measured
Total
Measured
Indicated
Inferred
Total
1.3
1.0
0.6
1.1
1.4
1.0
1.1
1.2
0.0
0.0
1.0
1.0
2.2
0.9
1.2
2.1
0.5
0.5
0.2
0.5
0.5
0.7
0.6
0.6
0.0
0.0
0.6
0.6
0.4
0.6
0.1
0.4
3.5
2.7
2.2
3.0
3.6
2.7
2.8
3.0
0.0
0.0
1.8
1.8
4.3
1.0
3.0
4.2
Cu
(kt)
162
159
8
330
317
215
371
903
0
0
336
336
188
1
5
195
Au
(Moz)
Ag
(Moz)
0.2
0.3
0.0
0.5
0.3
0.5
0.7
1.5
0.0
0.0
0.6
0.6
0.1
0.0
0.0
0.1
1.4
1.3
0.1
2.9
2.6
1.8
3.2
7.5
0.0
0.0
1.9
1.9
1.2
0.0
0.0
1.2
0.6
0.3
2.9
17
0.0
0.2
1.5
1.0
1.0
1.2
0.5
0.6
0.6
0.6
3.7
2.7
2.3
2.8
683
376
721
1,780
0.7
0.7
1.4
2.8
5.5
3.1
5.2
13.8
13
15
1
30
22
21
35
78
0
0
33
33
9
0
0
9
3
46
36
69
152
Table subject to rounding errors.
(1) Within the final pit design.
(2) Outside the final pit design and east of 55300mE.
(3) Outside the final pit design and west of 55300mE (excluding Ankata Mineral Resource).
(4) Ankata Mineral Resource.
12
— Reserves and Resources 2015 continuedOZ Minerals / Annual Report 2015 Gold-only Mineral Resources at Prominent Hill – June 2015
Category
Tonnes
(Mt)
Cu
(%)
Au
(g/t)
Ag
(g/t)
Cu
(kt)
Au
(Moz)
Ag
(Moz)
Open Pit (5) – 0.5 g/t Au cut-off Below 0.25% Cu
Measured
Indicated
Inferred
Total
Malu (6) – $57 NSR cut-off
Measured
Indicated
Inferred
Total
Kalaya (7) – $57 NSR cut-off
Measured
Indicated
Inferred
Total
Ankata (8) – $57 NSR cut-off
Measured
Indicated
Inferred
Total
Surface Stocks
Measured
Total
Measured
Indicated
Inferred
Total
0
5
0
6
0
1
3
4
0
0
6
6
0
0
0
0
11
11
7
9
27
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.1
0.1
0.0
0.0
0.0
0.0
1.6
1.0
0.9
1.0
0.0
2.2
2.5
2.4
0.0
0.0
2.1
2.1
0.0
0.0
0.0
0.0
1.8
1.2
0.8
1.2
0.0
1.0
0.8
0.9
0.0
0.0
0.6
0.6
0.0
0.0
0.0
0.0
0.1
0.7
2.4
0.1
0.0
0.1
0.1
0.7
1.2
2.2
1.3
2.4
1.1
0.7
1.5
0
3
0
3
0
0
1
1
0
0
4
4
0
0
0
0
11
11
3
5
19
0.0
0.2
0.0
0.2
0.0
0.1
0.2
0.3
0.0
0.0
0.4
0.4
0.0
0.0
0.0
0.0
0.0
0.2
0.0
0.2
0.0
0.0
0.1
0.1
0.0
0.0
0.1
0.1
0.0
0.0
0.0
0.0
0.2
0.8
0.3
0.3
0.6
1.1
0.9
0.2
0.2
1.3
Table subject rounding errors.
(5) Within Ore Reserves final pit design.
(6) Outside of Ore Reserves final pit design and east of 55300mE.
(7) Outside of Ore Reserves final pit design and west of 55300mE (excluding Ankata Resource estimate).
(8) Ankata Resource estimate.
Prominent Hill Ore Reserves
The Ore Reserves at 30 June 2015 were estimated to be 73 million tonnes at 1.0 percent copper and 0.6 grams per tonne gold
for 720 thousand tonnes of contained copper and 1.4 million ounces of contained gold.
Open Pit Ore Reserves
− The Ore Reserves decreased due to mining. Stockpiles which were previously included in the Open Pit Ore Reserve were counted
separately in the 2015 Ore Reserve estimate.
Ankata Ore Reserves
− The Ore Reserves decreased due to mining.
Malu Underground Ore Reserves
− The Ore Reserves increased due to drilling success despite mining depletion.
13
OZ Minerals / Annual Report 2015 Summary of the Ore Reserves at Prominent Hill – June 2015
Classification
Tonnes
(Mt)
Open Pit
Proved
Probable
Total
Ankata
Proved
Probable
Total
Malu
Proved
Probable
Total
Stockpiles
Proved
Prominent Hill all mining areas
Proved
Probable
Total
Table subject to rounding errors.
14
22
36
7
0
7
10
6
16
14
45
28
73
Cu
(%)
1.1
0.7
0.9
2.0
0.0
2.0
1.7
1.1
1.5
Au
(g/t)
Ag
(g/t)
0.5
0.7
0.6
0.3
0.0
0.3
0.5
1.0
0.7
3.3
2.3
2.6
3.7
0.0
3.7
4.2
2.7
3.7
Cu
(kt)
150
150
300
150
0
150
180
60
240
Au
(Moz)
Ag
(Moz)
0.2
0.5
0.7
0.1
0.0
0.1
0.2
0.2
0.4
1.4
1.6
3.0
0.9
0.0
0.9
1.4
0.5
2.0
0.2
0.6
2.5
30
0.2
1.1
1.1
0.8
1.0
0.5
0.8
0.6
3.0
2.6
2.9
510
210
720
0.7
0.7
1.4
4.7
2.3
7.0
Material changes in the Prominent Hill Mineral Resources and Ore Reserves Statement
OZ Minerals is not aware of anything that materially affects the information contained in the Prominent Hill Mineral Resource
and Ore Reserve Statement, 30 June 2015 other than changes due to depletion since 30 June 2015. Depletion for the six months
to 31 December 2015 amounts to approximately 6.5 million tonnes at 1.2% Cu, 0.5 g/t Au and 2.7 g/t Ag.
Competent Persons’ Statements
Prominent Hill Mineral Resources and Ore Reserves
The information set out in these tables is a summary of information relating to Prominent Hill Mineral Resources and Ore Reserves set out in the document, Prominent Hill
Mineral Resources and Ore Reserves Statements and Explanatory Notes as at 30 June 2015, which was released to the market on 4 November 2015 and is available at
www.ozminerals.com/operations/resources--reserves.html.
The information in this report that relates to Mineral Resources is based on and fairly represents information and supporting documentation compiled by Colin Lollo,
a Competent Person who is a Member of The Australasian Institute of Mining and Metallurgy (AusIMM Membership No. 225331). Colin Lollo is a full time employee
of OZ Minerals Limited. He is a shareholder in OZ Minerals Limited and is entitled to participate in the OZ Minerals Performance Rights Plan.
Colin Lollo has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify
as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (JORC 2012).
Colin Lollo consents to the inclusion in the report of the matters based on his information in the form and context in which they appear.
Colin Lollo BSc (Geology) has over 19 years of relevant experience as a geologist, including eight years in Iron-Oxide-Copper-Gold style deposits.
This Mineral Resource estimate has been reported in accordance with the guidelines defined in the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves’ (The JORC Code, 2012 Edition).
The information in this report that relates to Ore Reserves is based on and fairly represents information and supporting documentation compiled by Justin Taylor BEng (Min),
a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy (AUSIMM Membership No. 307796).
Justin Taylor is a full time employee of OZ Minerals Limited. Justin Taylor is a shareholder in OZ Minerals Limited and is entitled to participate in the OZ Minerals
Performance Rights plan.
Justin Taylor BEng (Min) has over 30 years of experience as a mining engineer, including eight years in Iron-Oxide-Copper-Gold style deposits. He has sufficient experience
that is relevant to the style of mineralisation and type of deposit under consideration and to the activities being undertaken to qualify as a Competent Person as defined
in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (JORC 2012). Justin Taylor consents to the inclusion
in the report of the matters based on his information in the form and context in which they appear.
The Ore Reserve estimates have been reported in accordance with the guidelines defined in the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves’ (The JORC Code, 2012 Edition).
Carrapateena Mineral Resources and Ore Reserve Estimates
and Khamsin Mineral Resource Estimate
For a full copy of the Carrapateena Mineral Resource and Ore Reserve statements and the Khamsin Mineral Resource statement,
please visit www.ozminerals.com/operations/resources--reserves.html.
14
— Reserves and Resources 2015 continuedOZ Minerals / Annual Report 2015 Carrapateena Mineral Resource Estimates
There are two current Mineral Resource estimates for Carrapateena. These are tabled below. The Mineral Resource estimate
declared in September 2015 is essentially a subset of that declared in June 2013 based on a higher cut-off grade.
Carrapateena Mineral Resources – June 2013 (1)
Classification
Indicated
Inferred
Total
Tonnes
(Mt)
356
444
800
Table subject to rounding errors.
(1) Based on 0.3 percent copper cut-off grade.
Carrapateena Mineral Resources – September 2015 (1)
Tonnes
(Mt)
55
6
61
Classification
Indicated
Inferred
Total
Table subject to rounding errors.
(1) Based on $120 NSR cut-off grade.
Khamsin Mineral Resource Estimate
Cu
(%)
1.0
0.6
0.8
Cu
(%)
2.4
2.5
2.4
Au
(g/t)
0.4
0.2
0.3
Au
(g/t)
0.9
0.7
0.9
Ag
(g/t)
4.3
2.4
3.3
Ag
(g/t)
11.7
11.6
11.7
Cu
(Mt)
3.7
2.6
6.3
Cu
(Mt)
1.3
0.1
1.5
Au
(Moz)
Ag
(Moz)
4.9
3.5
8.4
50
35
84
Au
(Moz)
Ag
(Moz)
1.6
0.1
1.7
21
2
23
The Khamsin Iron Oxide Copper Gold (IOCG) deposit is located 10 kilometres north-west of Carrapateena. The Khamsin deposit
was discovered in late 2012.
The initial Mineral Resource for Khamsin is based on 30 holes (including eight wedged holes) drilled since the discovery and
is summarised in the table below. Holes were diamond drill holes spaced approximately 100 metres apart.
Mineral Resource Estimate for the Khamsin Deposit (1) as at 23 March 2014
Classification
Inferred
Table subject to rounding errors.
Tonnes
(Mt)
202
Cu
(%)
0.6
Au
(g/t)
0.1
Ag
(g/t)
1.7
Cu
(Mt)
1.1
Au
(Moz)
0.9
Ag
(Moz)
11
(1) Cut-off – The estimated Mineral Resource has been reported based on the assumption that block caving is the most likely mining method. Within the Mineral Resource
outline no selectivity has been assumed and consequently no cut-off grade has been applied, however the outline of the Mineral Resource has been constructed in order
to maximise the amount of material above 0.4 percent copper within a potentially caveable shape.
Carrapateena Ore Reserve Estimate
A pre-feasibility study for Carrapateena was completed in 2014 and demonstrated a positive economic outcome at which time
an Ore Reserve was declared. The Ore Reserve estimate was based on the Mineral Resource estimate as at 31 October 2012 (released
on 21 January 2013). This Resource estimate was subsequently updated as at 30 June 2013 (released on 28 November 2013). The
changes in the Mineral Resource estimate had no material impact on the Ore Reserve estimate.
Carrapateena is a mineralised zone of haematite breccia and haematised granite within the granitic basement. It is overlain by
470 metres of cover. The Carrapateena orebody is a copper mineralised zone in the south-west of the haematite breccia. It is about
300 metres in diameter and extends more than 1,000 metres vertically. Economic gold and silver are also present in the orebody.
Carrapateena Ore Reserve Estimate as at 15 August 2014
Location
Classification
Lift One
Lift Two
Total
Probable
Probable
Probable
Table subject to rounding errors.
Ore
Mt
110
160
270
Cu
%
0.9
1.0
0.9
Au
g/t
0.5
0.4
0.4
Ag
g/t
5.3
4.3
4.5
Cu
(kt)
1,000
1,500
2,500
Au
(Moz)
1.7
1.8
3.5
Ag
(Moz)
18
21
39
15
OZ Minerals / Annual Report 2015 Material changes in Carrapateena Mineral Resources and Ore Reserve estimates and Khamsin Mineral Resource estimate.
OZ Minerals confirms that it is not aware of any new information or data that would materially affect the Carrapateena
Ore Reserve estimate as at 15 August 2014 or the Khamsin Mineral resource estimate as at 23 March 2014.
OZ Minerals is, however, considering a high grade mining option based on the Carrapateena Mineral Resource declared
in September 2015. If viable, it is unlikely that the mining method will be block caving. In that case the Ore Reserve will
be re-estimated. In addition the potential for the eventual extraction of the Khamsin Resource as it stands will be diminished
because it was assumed that the mining method for Khamsin would be block caving.
Competent Persons’ Statements
Carrapateena Mineral Resources and Ore Reserve and Khamsin Mineral Resource
The information set out in this report relating to the Carrapateena Mineral Resource estimate of June 2013 is a summary of information set out in the Annual Carrapateena
Resource Update and Mineral Resource Explanatory Notes as at 30 June 2013, released to the market on 28 November 2013 and available at www.ozminerals.com/operations/
resources--reserves.html.
The information set out in this report relating to the Carrapateena Mineral Resource estimate of September 2015 is a summary of information set out in Carrapateena Project
Mineral Resource Explanatory Notes as at 25 September 2015, released to the market on 5 October 2015 and available at www.ozminerals.com/operations/resources--reserves.html.
The information set out in this report relating to the Khamsin Mineral Resource as at 23 March 2014 was extracted from the report entitled ‘Khamsin Mineral Resources
Statement as at 23 March 2014’ and available at www.ozminerals.com/operations/resources--reserves.html.
The information in this report that relates to Mineral Resources is based on information compiled by Stuart Masters, a Competent Person who is a Member of The Australasian
Institute of Mining and Metallurgy (108534) and a Member of the Australian Institute of Geoscientists (5683). Stuart Masters is a full time employee of CS 2 Pty Ltd and has
no interest in, and is entirely independent of, OZ Minerals. Stuart Masters has sufficient experience that is relevant to the style of mineralisation and type of deposit under
consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves’ (JORC 2012). Stuart Masters consents to the inclusion in the report of the matters based on his information in the form and context
in which they appear.
Stuart Masters BSc (Geology), CFSG, has over 29 years of relevant experience as a geologist, including 11 years in Iron-Oxide-Copper-Gold style deposits. Stuart Masters has
visited site on eight occasions since OZ Minerals acquired the project, including three times since the June 2013 Mineral Resource was reported.
The information set out in this report relating to Carrapateena Ore Reserves is a summary of information set out in the Carrapateena Ore Reserves Explanatory Notes
as at 15 August 2014 and is available to view at www.ozminerals.com/operations/resources--reserves.html.
The information in this report that relates to Carrapateena Ore Reserves is based on and fairly represents information and supporting documentation compiled by Justin Taylor
BEng (Min), a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy (AUSIMM Membership No. 307796).
Justin Taylor is a full time employee of OZ Minerals Limited. Justin Taylor is a shareholder in OZ Minerals Limited and is entitled to participate in the OZ Minerals
Performance Rights plan.
Justin Taylor BEng (Min) has over 30 years of experience as a mining engineer, including eight years in Iron-Oxide-Copper-Gold style deposits. He has sufficient experience
that is relevant to the style of mineralisation and type of deposit under consideration and to the activities being undertaken to qualify as a Competent Person as defined
in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (JORC 2012). Justin Taylor consents to the inclusion
in the report of the matters based on his information in the form and context in which they appear.
The Ore Reserve estimate has been reported in accordance with the guidelines defined in the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves’ (The JORC Code, 2012 Edition).
Governance arrangements
OZ Minerals has a longstanding Mineral Resource and Ore Reserve Policy, which establishes Company-wide consistency, rigour
and discipline in the preparation and reporting of Mineral Resources and Ore Reserves in accordance with industry best practice.
The policy sets out:
− Reporting requirements.
− Review and approval requirements.
− Company standards.
− Accountabilities in relation to the assumptions and estimates used for Mineral Resource and Ore Reserve calculations;
review, implementation and compliance with the policy; and delivery of Mineral Resource and Ore Reserve estimates
and findings to the Board.
Updates to Mineral Resource and Ore Reserve estimates compiled during 2013 were completed in accordance with the
guiding principles contained within the policy, suitably modified to meet current Company structures, delegated authorities
and estimate requirements.
This included:
− Reporting in compliance with the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves’ (JORC Code 2012 Edition).
− Suitably qualified and experienced Competent Persons.
− All Mineral Resource and Ore Reserve estimates being subject to internal and external review and independent review
by suitably qualified practitioners, inclusive of the Competent Persons.
− Approval by the Board of the Mineral Resources and Ore Reserves estimates prior to release to the market.
16
— Reserves and Resources 2015 continuedOZ Minerals / Annual Report 2015 Consolidated Financial Statements
—
/ Results for Announcement to the Market
/ Directors’ Report
Operational and Financial Review
Remuneration Overview
/ Letter from the Chair of the Remuneration Committee
/ Remuneration Report
/ Auditor’s Independence Declaration
/ Consolidated Statement of Comprehensive Income
/ Consolidated Statement of Changes in Equity
/ Consolidated Balance Sheet
/ Consolidated Statement of Cash Flows
/ Notes to the Consolidated Financial Statements
Group Performance
1 Operating Segments
2 Earnings per share
3 Dividends
4
Income tax
Net Cash and Capital Employed
5
Inventories
6 Operating cash flows
7 Property, plant and equipment
8 Lease receivable
9
Intangible assets
10 Provisions
Contributed Equity
11 Capital expenditure commitments
12 Issued capital
13 Share-based payments
Risk Management
14 Financial assets and liabilities
15 Financial risk management
16 Contingencies
Group Structure and Other Information
17 Parent entity disclosures
18 Deed of cross guarantee
19 Key management personnel
20 Remuneration of auditors
21 New accounting standards
/ Directors’ Declaration
/ Independent Auditor’s Report
/ Shareholder Information
18
19
26
41
42
43
56
57
58
59
60
61
62
63
66
66
67
68
69
70
71
74
74
75
76
76
77
77
78
79
81
84
86
86
88
90
91
91
92
93
95
17
OZ Minerals / Annual Report 2015
—
Results for Announcement to the Market
Provided below are the results for announcement to the market in accordance with Australian Securities Exchange (‘ASX’) Listing
Rule 4.2A and Appendix 4E for the Consolidated Entity (‘OZ Minerals’ or the ‘Consolidated Entity’) comprising OZ Minerals Limited
(‘OZ Minerals Limited’ or the ‘Company’) and its controlled entities for the year ended 31 December 2015 (the ‘financial year’)
compared with the year ended 31 December 2014 (‘comparative year’).
Consolidated results, commentary on results and outlook
Revenue
Net profit/(loss) after tax from continuing operations
Profit after tax from discontinued operation
Profit/(loss) after tax attributable to equity holders of OZ Minerals Limited
31 December
2015
$m
31 December
2014
$m
Movement
$m
Movement
%
879.4
130.2
–
130.2
831.0
41.6
6.9
48.5
48.4
88.6
(6.9)
81.7
5.8
213.0
(100.0)
168.5
The commentary on the consolidated results and outlook, including changes in state of affairs and likely developments of the
Consolidated Entity, are set out in the Operating and Financial Review section of the Directors’ Report.
Net tangible assets per share
Net tangible assets per share
31 December
2015
$ per share
31 December
2014
$ per share
6.89
6.58
In accordance with Chapter 19 of the ASX listing rules, net tangible assets per share represent total assets less intangible assets less
liabilities ranking ahead of, or equally with, ordinary share capital, divided by the number of ordinary shares on issue at the end
of the financial year.
Dividends
Since the end of the financial year, the Board of Directors has resolved to pay an unfranked dividend of 14.0 cents per share, to be
paid on 10 March 2016. The record date for entitlement to this dividend is 24 February 2016. The financial impact of the dividend
amounting to $42.5 million has not been recognised in the Consolidated Financial Statements for the year ended 31 December
2015, and will be recognised in subsequent Consolidated Financial Statements.
The details in relation to dividends announced or paid since 1 January 2014 are set out below:
Record date
24 February 2016
10 September 2015
11 September 2014
26 February 2014
Date of payment
10 March 2016
24 September 2015
25 September 2014
13 March 2014
Cents per
share
Total
dividends
$m
14
6
10
10
42.5
18.2
30.3
30.3
For Australian income tax purposes, all dividends were unfranked and declared to be conduit foreign income.
Independent auditor’s report
The Consolidated Financial Statements upon which this Appendix 4E is based have been audited and the Independent Auditor’s
Report to the members of OZ Minerals Limited is included in the attached Annual Report.
18
OZ Minerals / Annual Report 2015
—
Directors’ Report
Your directors present their report for OZ Minerals for the year ended 31 December 2015 together with the Consolidated Financial
Statements. OZ Minerals Limited is a company limited by shares that is incorporated and domiciled in Australia.
Directors
The directors of the Company during the year ended 31 December 2015 and up to the date of this report are set out below.
Directors were in office for the entire period unless otherwise stated.
Neil Hamilton (Non-executive Director and Chairman)
Andrew Cole (Managing Director & Chief Executive Officer)
Paul Dowd
Brian Jamieson (retired as a Non-executive Director on 25 May 2015)
Charles Lenegan
Rebecca McGrath
Dean Pritchard
Principal activities
The principal activities of the Consolidated Entity during the financial year were the mining of copper, gold and silver, undertaking
exploration activities and development of mining projects. For additional information on the activities of the Consolidated Entity
refer to the Operating and Financial Review section in the Director’s Report.
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the Consolidated Entity during the financial year ended 31 December
2015. Refer to the Operating and Financial Review section for discussion of the state of affairs of the Consolidated Entity.
Dividends
Since the end of the financial year, the Board of Directors has resolved to pay an unfranked dividend of 14.0 cents per share, to be
paid on 10 March 2016. The record date for entitlement to this dividend is 24 February 2016. The financial impact of the dividend
amounting to $42.5 million has not been recognised in the Consolidated Financial Statements for the year ended 31 December
2015, and will be recognised in subsequent Consolidated Financial Statements.
The details in relation to dividends announced or paid since 1 January 2014 are set out below:
Record date
24 February 2016
10 September 2015
11 September 2014
26 February 2014
Date of
payment
Cents per
share
Total
dividends
$m
10 March 2016
24 September 2015
25 September 2014
13 March 2014
14
6
10
10
42.5
18.2
30.3
30.3
For Australian income tax purposes, all dividends were unfranked and were declared to be conduit foreign income.
19
OZ Minerals / Annual Report 2015 Information on directors and officers
Particulars of the qualifications, experience and special responsibilities of each person who was a Director during the year ended
31 December 2015 and up to the date of this report are set out below:
Director
Experience and expertise
Other current listed
entity directorships
Former listed
entity directorships
in last three years
OZ Minerals special
responsibilities
during the year
Non-executive
Director of Metcash
Limited since
February 2008
Chairman of Miclyn
Express Offshore
Limited from
February 2010
to June 2013
Chairman of
OZ Minerals
Limited Board
Member of
Human Resources
& Remuneration
Committee
None
None
Managing Director
& Chief Executive
Officer
Current directors
Neil Hamilton
Independent
Non-executive
Chairman
Appointed as a
Non-executive
Director on
9 February 2010
and Chairman
on 13 April 2010
LLB
Andrew Cole
Managing Director
& Chief Executive
Officer
Appointed on
3 December 2014
BAppSc (Hons) in
Geophysics MAICD
Mr Hamilton is an experienced
professional Company Director
and Chairman. He has over 35 years’
experience in the legal profession and
in business with substantial experience
in senior management positions and
on boards of public companies across
law, funds management, investment,
insurance and resources.
Mr Hamilton has broad directorship
experience across a range of ASX
listed companies. He is the former
Chairman of Challenge Bank Ltd,
Western Power Corporation,
Mount Gibson Iron Ltd, Iress
Market Technology Ltd and Miclyn
Express Offshore Ltd. Mr Hamilton
is also a Senior Adviser to UBS.
Mr Cole has over 20 years’ experience
in exploration and operations in
the resources industry. Following
exploration geoscientist roles in
Australia, Canada, USA and Mexico
with Rio Tinto Exploration (CRA and
Kennecott), Mr Cole spent 10 years
in mine development and mine
operations with Rio Tinto in
Australia, China, Canada and
the United Kingdom.
During his career at Rio Tinto,
Mr Cole held various senior and
leadership positions, including
General Manager Operations
of the Clermont Region Operations,
including the Blair Athol Mine
and Clermont Mine, Chief Executive
Officer of Chinalco Rio Tinto
Exploration and Chief Operating
Officer of Rio Tinto Iron and Titanium.
Mr Cole is a Councilor of SACOME
(South Australian Chamber of Mines
and Energy).
20
— Directors’ Report continued OZ Minerals / Annual Report 2015 Director
Experience and expertise
Other current listed
entity directorships
Former listed
entity directorships
in last three years
OZ Minerals special
responsibilities
during the year
Current directors
Paul Dowd
Independent
Non-executive
Director
Appointed on
23 July 2009
BSc (Eng)
Charles Lenegan
Independent
Non-executive
Director
Appointed on
9 February 2010
BSc (Econ)
Rebecca McGrath
Independent
Non-executive
Director
Appointed on
9 November 2010
BTP (Hons),
MA (Ap.Sc), FAICD
Mr Dowd is a mining engineer and has
been in mining for 50 years, primarily
in the private sector, but also serving
in the Public Sector as head of the
Victorian Mines and Petroleum
Departments. He has held senior
executive positions with Newmont
and prior to that Normandy, including
as Managing Director of Newmont
Australia Limited and Vice President
of Australia and New Zealand
Operations for Newmont Mining
Corporation. Mr Dowd currently
has various advisory positions
with councils and groups, including
the SA Minerals and Petroleum
Expert Group (SAMPEG), and the
University of Queensland –
Sustainable Minerals Institute Board.
Mr Dowd is Chairman of the CSIRO
Minerals Resources Sector Advisory
Council, and was the Inaugural
Chairman of RESA from September
2006 to May 2015 and Non-executive
Director of RESA from May 2015
to present.
Mr Lenegan was a former Managing
Director of Rio Tinto Australia.
Mr Lenegan had a distinguished
27-year career with Rio Tinto
where he held various senior
management positions across
a range of commodities and
geographies. Mr Lenegan was
formerly the Chairman of the
Minerals Council of Australia
and a former board member
of the Business Council of Australia.
Mr Lenegan is currently Chairman
of Bis Industries Limited (non-ASX
listed company).
Ms McGrath was the former
Chief Financial Officer and
a member of BP’s Executive
Management Board for Australia
and New Zealand. Ms McGrath
was also the former Vice President
Operations BP Australia and Pacific
and General Manager, Group
Marketing Performance BP Plc
(London). She is a former Director
of Big Sky Credit Union and in
addition to her Bachelor and Master
Degrees, she is a graduate of the
Cambridge University Business and
Environment program. Ms McGrath
is also a member of the JP Morgan
Advisory Council.
Chairman of the
Sustainability
Committee
Member of
Audit Committee
None
Non-executive
Director of PNX
Metals Limited since
April 2012
(previously
Managing Director
from September
2008 to April 2012)
Non-executive
Director of Energy
Resources of
Australia Ltd
from October
2015 to present
None
Chairman of the
Audit Committee
Member of
Sustainability
Committee
Chairman of
Rey Resources Limited
from November 2010
to November 2012
Non-executive
Director of Turquoise
Hill Resources from
August 2012
to May 2014
Chairman of
Human Resources
& Remuneration
Committee
Member of the
Audit Committee
None
Non-executive
Director of Incitec
Pivot Limited since
September 2011
Non-executive
Director of CSR
Limited since
February 2012
Non-executive
Director of
Goodman Group
since April 2012
21
OZ Minerals / Annual Report 2015 Director
Experience and expertise
Current directors
Dean Pritchard
Independent
Non-executive
Director
Appointed on
20 June 2008
BE, FIE Aust, CP Eng,
FAICD
Mr Pritchard has over 30 years’
experience in the engineering
and construction industry. He was
previously Chairman of ICS Global
Limited, a Director of RailCorp,
Zinifex Limited and Eraring
Energy and Chief Executive Officer
of Baulderstone Hornibrook.
Other current listed
entity directorships
Former listed
entity directorships
in last three years
OZ Minerals special
responsibilities
during the year
Member of the
Sustainability
Committee
Member of the
Human Resources
& Remuneration
Committee
Non-executive
Director of Steel
& Tube Holdings
Limited (a New
Zealand listed
company) since
May 2005
Non-executive
Director of
Broadspectrum
Limited (previously
Transfield Services
Limited) since
October 2013
Non-executive
Director of Spotless
Group Limited from
May 2007 to
August 2012
Chairman of Steel
Tube & Holdings
Limited from
May 2005 to
October 2012
Non-executive
Director of Arrium
Limited (previously
One Steel Limited)
from October 2000
to November 2014
Former director
Brian Jamieson
Independent
Non-executive
Director
Appointed on
27 August 2004
FCA
Brian Jamieson
retired as a
Non-executive
Director on
25 May 2015.
Mr Jamieson was Chief Executive
of Minter Ellison Lawyers Melbourne
from 2002 until he retired at the
end of 2005. Prior to joining Minter
Ellison, he was with KPMG for over
30 years holding the positions of
Chief Executive, Managing Partner
and Chairman of KPMG Melbourne
from 2001 to 2002. He was also a
KPMG Board Member in Australia
and Asia Pacific and a member of the
KPMG USA Management Committee.
Mr Jamieson is a fellow of the Institute
of Chartered Accountants in Australia.
Further, Mr Jamieson is a Director and
Treasurer of the Bionics Institute.
Chairman of
Mesoblast Limited
since November 2007
Chairman of Sigma
Pharmaceuticals
Limited since
June 2010 and
Non-executive
Director since
December 2005
Non-executive
Director of Tatts
Group Limited
since May 2005
Non-executive
Director of
Tigers Realm Coal
Limited from
February 2011
to May 2014
Member of the
Audit Committee
Member of the
Sustainability
Committee
22
— Directors’ Report continued OZ Minerals / Annual Report 2015 Head of Legal and Company Secretary
Mr Robert Mancini Head of Legal and Company Secretary (appointed 17 August 2015)
LLB, BCOM
Robert Mancini B.Com, LLB was appointed Head of Legal and Company Secretary of OZ Minerals Ltd effective on 17 August 2015.
Mr Mancini holds a Bachelor of Commerce majoring in Economics and Finance and Bachelor of Laws. Mr Mancini is originally
from Perth, Western Australia, and relocated to Adelaide, South Australia, to join OZ Minerals at its new South Australian head
corporate office.
Prior to joining OZ Minerals, Mr Mancini was Senior Legal Counsel at Clough Ltd, General Manager of Legal at UGL Ltd and Group
General Counsel at Forge Group Ltd. Together with corporate and continuous disclosure compliance, Mr Mancini is experienced
in negotiating large scale EPC and EPCM infrastructure contracts in the oil and gas and mining sectors, both domestically and
internationally, as well as dispute resolution management.
Attendance at meetings
The number of meetings of OZ Minerals Limited’s Board of Directors and of each Board Committee held from the beginning
of the financial year until 31 December 2015, and the number of meetings attended by each director is set out below.
Board meetings
Board Committee meetings
Audit
Human Resources
and Remuneration
Sustainability
Neil Hamilton
Andrew Cole
Paul Dowd
Dean Pritchard
Charles Lenegan
Rebecca McGrath
Brian Jamieson (c)
A
9
9
9
9
8
9
4
B
9
9
9
9
9
9
4
A
3
6
5
3
6
6
3
B
–
6
3
–
6
6
3
A
5
5
1
5
3
5
–
B
5
5
–
5
–
5
–
A
–
4
4
4
2
–
1
B
–
4
4
4
2
–
1
A
Number of meetings attended. Note that directors may attend Committee meetings without being a member of that Committee.
B
Number of meetings held during the time the director held office (in the case of Board meetings) or was a member of the relevant committee during the year.
(c) Brian Jamieson retired as a Non-executive Director on 25 May 2015.
Directors’ interests
The relevant interests of each director in the ordinary shares of OZ Minerals Limited at the date of this report are set out below:
Director
Neil Hamilton
Andrew Cole
Paul Dowd
Charles Lenegan
Rebecca McGrath
Dean Pritchard
Total
Shares
number
39,500
10,000
10,800
20,750
12,750
22,720
116,520
23
OZ Minerals / Annual Report 2015 Environmental regulation
OZ Minerals is subject to environmental regulation with respect to its activities in both Australia and overseas. In addition to
the licensing and permit arrangements which apply to its overseas activities, the Consolidated Entity’s Prominent Hill operations,
Australian exploration activities and its concentrate shipping activities operate under various licences and permits under the laws
of the Commonwealth, States and Territories.
Compliance with the Consolidated Entity’s licences and permits is monitored on a regular basis and in various forms, including
environmental audits conducted by the Consolidated Entity, regulatory authorities and other third parties. A documented process
is used by the Consolidated Entity to classify and report any exceedance of a licence condition or permit condition, as well as any
incident reportable to the relevant authorities. As part of this process, all reportable environmental non-compliances and significant
incidents are reviewed by the Executive Committee and the Sustainability Committee of the OZ Minerals Board of Directors.
These incidents require a formal report to be prepared identifying the factors that contributed to the incident or non-compliance
and the actions taken to prevent any reoccurrence.
During the year, OZ Minerals completed its seventh report under the National Greenhouse and Energy Report Act 2009 (‘NGERS’).
Prior to the submission of the report, a comprehensive independent audit was conducted on the processes that OZ Minerals
developed to meet the requirements of the NGERS Act. The audit provided assurance that the reported emissions, energy
production and energy consumption were prepared in accordance with the NGERS Act.
Insurance and indemnity
During the financial year, the Company paid premiums in respect of a contract insuring directors and officers of the Company
and its related bodies corporate against certain liabilities incurred while acting in that capacity. The contract of insurance prohibits
the disclosure of the nature of the liability and the amount of the insurance premium.
The Company’s Constitution also allows OZ Minerals to provide an indemnity, to the extent permitted by law, to officers of
the Company, or its related bodies corporate in relation to liability incurred by an officer when acting in that capacity on behalf
of the Company or a related body corporate.
The Consolidated Entity has granted indemnities under Deeds of Indemnity with current and former Executive and Non-executive
Directors, former officers, the General Counsel – Special Projects, the former Group Treasurer and each employee who was a
director or officer of a controlled entity of the Consolidated Entity, or an associate of the Consolidated Entity, in conformity with
Rule 10.2 of the OZ Minerals Limited Constitution.
Each Deed of Indemnity indemnifies the relevant director, officer or employee to the fullest extent permitted by law for liabilities
incurred while acting as an officer of OZ Minerals, its related bodies corporate and any associated entity, where such an office
is or was held at the request of the Company. The Consolidated Entity has a policy that it will, as a general rule, support and hold
harmless an employee who, while acting in good faith, incurs personal liability to others as a result of working for the
Consolidated Entity.
Claims for payment of legal expenses have been received from certain current and former directors and officers of the Company
and its related bodies corporate who are cross respondents in the class action proceedings that the Company is currently involved
in. The Consolidated Entity is providing monies in relation to these claims under the relevant Deeds of Indemnity and, depending
on the outcome of the proceedings, may be able to recover some of those monies. However, there is no certainty regarding the
outcome of the class action proceedings.
No indemnity has been granted to an auditor of the Consolidated Entity in their capacity as auditors of the Consolidated Entity.
Proceedings on behalf of the Consolidated Entity
At the date of this report there are no leave applications or proceedings brought on behalf of the Consolidated Entity under
section 237 of the Corporations Act 2001.
24
— Directors’ Report continued OZ Minerals / Annual Report 2015 Audit and non-audit services
KPMG continues in office in accordance with the Corporations Act 2001. A copy of the external Auditor’s Independence Declaration
as required under section 307C of the Corporations Act 2001 is set out on page 41 and forms part of the Directors’ Report.
The Company, with the approval of the Audit Committee, may decide to employ the external auditor on assignments additional
to their statutory audit duties where the auditor’s expertise and experience with the Consolidated Entity are important, and where
these services do not impair the external auditor’s independence.
Details of the amounts paid or payable to the external auditor (KPMG) and its network firms for audit and non-audit services
provided during the year are set out below.
Audit services provided by KPMG
Audit and review of Financial Reports and other audit work under the Corporations Act 2001
including audit of subsidiary Financial Statements
KPMG Australia
Overseas KPMG firms
Total fees for audit services provided by KPMG
Other non-audit services provided by KPMG Australia
Taxation compliance and other taxation advisory services
Other services
Total fees for other services provided by KPMG Australia
Total fees
2015
$
532,000
33,343
565,343
165,882
120,000
285,882
851,225
The Audit Committee has, following the passing of a resolution by the Committee, provided the Board with advice in relation
to the provision of non-audit services by KPMG.
In accordance with the advice received from the Audit Committee, the Board is satisfied that the provision of the non-audit services
is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are
satisfied that the provision of non-audit services by the auditor, as set out in the table on the previous page, did not compromise
the auditor independence requirements of the Corporations Act 2001 for the following reasons:
− All non-audit services have been reviewed by the Audit Committee to ensure they did not impact the integrity and objectivity
of the external auditor; and
− None of the services undermined the general principles relating to auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants, including reviewing or auditing the auditor’s own work, acting in a management or a decision-making
capacity for OZ Minerals Limited or its controlled entities, acting as advocate for the Company or jointly sharing economic risk
and rewards.
Matters subsequent to the end of the financial year
Since the end of the financial year, the Board of Directors resolved to pay an unfranked dividend of 14.0 cents per share, to be
paid on 10 March 2016. The record date for entitlement to this dividend is 24 February 2016. The financial impact of the dividend
amounting to $42.5 million has not been recognised in the Consolidated Financial Statements for the year ended 31 December
2015, and will be recognised in subsequent Consolidated Financial Statements.
Since the end of the financial year, the Company has received particulars of the loss alleged to have been suffered by the Applicant
and Group Members in the class action proceedings. Having considered this information and all the circumstances, the Company
believes that it is not in a position to calculate with sufficient reliability an estimate of the possible obligation in respect of the class
action even if it were found to exist. OZ Minerals is vigorously defending these proceedings.
Since the end of the financial year, the Company has been advised by the Australian Federal Police (AFP) that the scope of the AFP’s
investigation is being extended to OZ Minerals’ former Cambodian operations generally in relation to foreign bribery allegations.
OZ Minerals is continuing to cooperate with the AFP in its investigation.
There have been no other events that have occurred subsequent to the reporting date which have significantly affected or may
significantly affect the Consolidated Entity’s operations or results in future years.
25
OZ Minerals / Annual Report 2015 Directors’ Report
—
Operational and Financial Review
Rounding of amounts
The Company is of a kind referred to in Class Order 98/100 issued by the Australian Securities and Investments Commission,
(‘ASIC’) relating to the ‘rounding off’ of amounts in the Directors’ Report. Amounts in the Directors’ Report have been rounded
off in accordance with the Class Order to the nearest million dollars to one decimal place, or in certain cases, to the nearest dollar.
All amounts are in Australian dollars only, unless otherwise stated.
Operating and Financial Review
The Operating and Financial Review is set out on pages 27 to 40, and forms part of the Directors’ Report.
Remuneration Report
The Remuneration Report which has been audited by KPMG is set out on pages 43 to 55, and forms part of the Directors’ Report.
Corporate Governance Statement
The Board is committed to achieving and demonstrating the highest standards of corporate governance. The Board continues
to refine and improve the governance framework and has practices in place to ensure they meet the interests of shareholders.
The Company complies with the Australian Securities Exchange Corporate Governance Council’s Corporate Governance Principles
and Recommendations 3rd Edition (‘the ASX Principles’). OZ Minerals’ Corporate Governance Statement, which summarises
the Company’s corporate governance practices and incorporates the disclosures required by the ASX Principles, can be viewed
at http://www.ozminerals.com/about/corporate-governance/corporate-governance-statement/.
Signed in accordance with a resolution of the directors.
Neil Hamilton
Chairman
Perth
10 February 2016
Andrew Cole
Managing Director & Chief Executive Officer
Adelaide
10 February 2016
26
OZ Minerals / Annual Report 2015 Overview
OZ Minerals Limited is an Australian modern mining company listed on the Australian Securities Exchange which specialises in
exploring for, developing and operating copper, gold and base metal projects. OZ Minerals continually strives to be a global market
leader in the resources sector, with a clear strategy and effective governance that support value creation for all our stakeholders.
OZ Minerals owns and operates the Prominent Hill mine, a high-quality copper-gold mine, and the Carrapateena exploration
project, which is one of Australia’s largest undeveloped copper deposits, and is located relatively close to key infrastructure in our
home state of South Australia. As Australia’s third largest copper producer with quality assets, a substantial cash balance and no
debt, OZ Minerals strives to be a global market leader and partner of choice in the resources sector.
Since commencing operations in 2009, Prominent Hill mine has grown from a single open pit mining operation into an integrated
open pit and underground operation. Copper and gold ore mined is processed through the plant (currently operating at 10.6Mtpa,
nameplate capacity 8.0Mtpa) to produce some of the highest grade copper concentrate in the world with C1 costs within the first
quartile of the cost curve.
Copper (tonnes)
Gold (ounces)
130.3
d
e
c
u
d
o
r
p
s
e
c
n
u
o
d
n
a
s
u
o
h
T
250
200
150
100
50
0
113.0
2 0 0 9
2 0 1 0
2 0 1 1
2 0 1 2
2 0 1 3
2 0 1 4
2 0 1 5
2 0 0 9
2 0 1 0
2 0 1 1
2 0 1 2
2 0 1 3
2 0 1 4
2 0 1 5
d
e
c
u
d
o
r
p
s
e
n
n
o
t
d
n
a
s
u
o
h
T
140
120
100
80
60
40
20
0
Ore milled
Nameplate
capacity
8Mtpa
10.6
d
e
l
l
i
m
s
e
n
n
o
t
n
o
i
l
l
i
M
12
10
8
6
4
2
0
C1 costs
d
e
c
u
d
o
r
p
r
e
p
p
o
c
f
o
b
l
/
c
S
U
200
150
100
50
0
70.1
2 0 0 9
2 0 1 0
2 0 1 1
2 0 1 2
2 0 1 3
2 0 1 4
2 0 1 5
2 0 0 9
2 0 1 0
2 0 1 1
2 0 1 2
2 0 1 3
2 0 1 4
2 0 1 5
Since acquiring the Carrapateena exploration project in 2011, OZ Minerals has undertaken a significant amount of work to identify
the best approach to develop the project. During 2015, the Company undertook a number of initiatives, including:
− Construction and operation of the Hydromet demonstration plant;
− A study to optimise a stand-alone block cave option;
− A study to assess linking Carrapateena to Prominent Hill mine via a 250-kilometre rail line; and
− Identification of a high-grade option.
These projects have progressed well and a decision following the assessment of the multiple options for Carrapateena will be made
by the end of February 2016.
OZ Minerals operates across the mining cycle from exploration through to development, construction and operation of copper
and gold operations. As a modern mining company, OZ Minerals is committed to creating and sustaining a positive culture where
diversity is valued, encouraged and promoted and has a strong sustainability focus with significant contributions to people,
communities and the environment.
27
OZ Minerals / Annual Report 2015
New strategy and execution during 2015
OZ Minerals adopted a new growth strategy in 2015, designed to leverage the value locked in its assets while enduring the cyclical
pressures of the mining industry and differentiating itself from other companies around the world. The foundation elements of the
strategy are safety, capital discipline and strong values, which apply to all elements of a lean business, copper core, customer focus
and multiple assets. Embedding the strategy into every facet of the business has been a priority during the year and continues to
be a focus for all employees.
During 2015, OZ Minerals achieved a number of successes in line with the new strategy. Achievements during the year include:
Safety:
− Lowest TRIFR of 5.30 since commencing operations at Prominent Hill;
− TRIFR reduction of 35 percent since 2014; and
− Emphasis on leadership, pro-active reporting and root cause identification to target reduction in injuries.
Lean business:
− Fit for purpose organisational structure in place;
− Melbourne office closed down and smooth transition to Adelaide;
− Significant reduction in C1 costs from US90.7 cents to US70.1 cents per pound of copper; and
− Record equipment utilisation achieved resulting in lower costs and faster mining.
Capital discipline:
− Cost conscious culture being developed resulting in significant reduction in ongoing costs;
− Supplier review commenced in November 2015, with early gains of annualised savings of $5.0 million realised; and
− Capital allocation decisions based on return on investment.
Copper core:
− Record production of 130,305 tonnes of copper from Prominent Hill;
− Carrapateena High Grade Resource estimated at 61Mt @ 2.4% Cu, 0.9 g/t Au, and 11.7 g/t Ag identified (1); and
− Successful delivery of the hydromet trial, with interim results returning upgrades of copper in line with expectations
and reduction of impurities to negligible levels that reduces marketing costs and increase marketing flexibility.
Multiple assets:
Organic options:
− Imminent decision on Carrapateena;
− Exploration at Bellas Gate and Joint Venture at Rodinia underway in Jamaica; and
− Exploration Joint Venture with Minotaur Exploration leveraging wealth of exploration data at Prominent Hill.
Inorganic options:
− Exploration Joint Venture with Minotaur Exploration in Queensland at the Eloise Project;
− Exploration Joint Venture with Toro Energy; and
− A full pipeline of projects is under active consideration for delivering value accretive growth to OZ Minerals.
Value creation:
− Efficient operations and customer focused delivery helping to accelerate cash flows; and
− Acquisition strategy seeks to leverage the distressed commodities market.
(1) Details of this Mineral Resource estimate were previously reported in the announcement entitled ‘Carrapateena Update’ released to the ASX on 6 October 2015 and
available at http://www.ozminerals.com/uploads/media/151006-Carrapateena-High-Grade--Explanatory-notes-1503c513-d142-485c-8a51-52b3c24ad7bc-0.pdf. OZ Minerals
confirms that it is not aware of any new information included in the original market announcement and, in the case of estimates of Mineral Resources, that all material
assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. OZ Minerals
confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement.
28
Directors’ Report — Operational and Financial Review continuedOZ Minerals / Annual Report 2015 Review of operations
Safety performance
Ensuring a safe work environment is fundamental to OZ Minerals’ operations, and the safety, health and wellbeing of OZ Minerals’
employees and contractors is a core foundation of the Company’s culture. OZ Minerals’ safety strategy is based on the Company’s
commitment to ensure that no employee is injured in the course of working at its operations.
Active engagement on every operational level and from senior leadership teams combined with activities focused on identifying
and eliminating causes of incidents has delivered significant success. It has resulted in a sustained reduction in the number of
recordable workplace injuries. The total recordable injury frequency rate (‘TRIFR’) per million hours worked decreased by 35 percent
to 5.30 at the end of 2015 (full year 2014: 8.18). The lost time injury frequency rate (‘LTIFR’) per million hours worked also decreased
to 0.99 from 2.46 in 2014. There were no permanent or serious disabling injuries in 2015.
The renewed focus on identifying and analysing incidents with potential for more serious consequences to determine why incidents
occur and to put in place measures to reduce the likelihood of incidents reoccurring has increased the number of such incidents
being self-reported and development of a strong safety culture across the Group.
OZ Minerals operates in partnership with its contractors and is actively building a shared safety culture between employees
and contractors working on our sites. Prominent Hill completed the Site Safety Acceleration Programme during the year, which
outlined three pillars for enhancement: leadership engagement; critical risk management, with a focus on increasing awareness
and understanding of critical risk and raising awareness, and a focus on general hazard awareness. This process is continuing
throughout 2016. With a focused plan to develop the safety culture and leadership at Prominent Hill, a weekly safety leadership
forum has been established, which is designed to communicate leadership intent and expectations among the leadership group
at Prominent Hill, as well as coach and support leaders in their responsibility to communicate the safety intent and expectations
to their operators. Other areas of concentration include Mental Health Awareness and Health and Well Being programs and
increasing emergency response capabilities.
Prominent Hill
Strong operating performance combined with efforts to match customer requirements and concentrate production resulted
in a record year of production and matching sales. During the year, Prominent Hill achieved record contained copper production
of 130,305 tonnes (which was within guidance) and strong contained gold production of 113,028 ounces (which exceeded guidance).
The increase over 2014 was achieved through record mill throughput rates of 1,292 tonnes per hour, resulting in ore milled of
10.6 million tonnes in 2015, which was 33 percent above nameplate capacity.
The Prominent Hill mine achieved a number of milestones during the year, which included the commissioning of the Malu
Underground mine three months ahead of schedule in July, execution of the open pit stability program, which has yielded
a stable open pit,which augurs well for production from the open pit, as well as the underground mine.
Prominent Hill C1 cost of US70.1 cents per pound of copper was within the first quartile for all copper producers worldwide
(Wood Mackenzie data from Q4 2015). The resounding cost performance was the result of the enhanced focus on cost control,
increased efficiencies and the relatively weaker Australian dollar.
2016 Copper mine, composite, C1 cash cost grouped by mine and ranked by cash cost (C1)
)
b
l
/
c
(
t
s
o
c
h
s
a
C
1
C
350
300
250
200
150
100
50
0.0
0
C1 costs for
Prominent Hill 2015
US70.1 cents
2 0
4 0
6 0
8 0
1 0 0
Cumulative percentile paid metal (Mlbs)
Source: Wood Macquarie Ltd. Dataset Q4.
29
OZ Minerals / Annual Report 2015
The open pit continued its efficient operation, with a number of improvements driving accelerated demobilisation of equipment
in 2015, and again in early 2016, as the waste removal activity reduces significantly. Ore produced from the open pit of 12.3 million
tonnes was lower than production in 2014 by 14 percent as mining activity reduces. However, production of copper ore, which has
a higher value than gold ore, was higher than in the prior year by 14 percent.
The open pit waste-to-ore strip ratio for the year was 3.1:1 compared to 4.7:1 in 2014; a significant reduction and a trend that will
continue through to the end of open pit mining in 2018.
The Malu Underground mine was commissioned in July 2015, following which the two underground mines of Ankata and Malu were
integrated into a single Prominent Hill underground mine. This integration has begun to deliver efficiencies through the improved
scheduling of stopes and coordination of development and production activities.
The underground mine produced 1.9 million tonnes of high-grade copper ore during the year, an increase of 37 percent compared
to 2014, as the second area of mining (Malu) was commissioned during the year. The mine plan for the underground has been
optimised to deliver higher grades of ore earlier.
A number of changes were made to processing during 2015, with the development of a processing plant toolkit that has enabled
the production of customised copper concentrates and consequent expansion of the customer base. The processing plant performed
at its highest efficiency since commencing operations, milling 10.6 million tonnes of ore, which was 33 percent higher than the
nameplate capacity, with sustained high recoveries of 89 percent for copper and 72 percent for gold.
Carrapateena
There were a number of successes at the Carrapateena project during 2015, which included the identification of a contained
resource estimated at 61Mt @ 2.4% Cu, 0.9 g/t Au, and 11.7 g/t Ag (1), a Hydromet demonstration trial that confirmed copper
upgrade to 60 percent, and a reduction in impurities and an acceleration of concurrent studies, resulting in the bringing forward
of a decision on Carrapateena to February 2016.
Following the cessation of exploration drilling at the Khamsin and Fremantle Doctor prospects in early 2015, OZ Minerals embarked
on four projects: Hydromet demonstration plant; the value optimised stand-alone block cave option; the Gawler Craton strategy
linking Carrapateena to Prominent Hill mine via a 250-kilometre rail line; and a high-grade option to explore multiple options
of unlocking the value in the Carrapateena project.
Exploration
Recognising the need to invest in exploration to generate high-value assets for OZ Minerals’ shareholders over the long term,
OZ Minerals entered into a number of innovative exploration joint ventures (‘JV’), collaborating with companies which have either
the experience or have had exploration successes.
The Mt Woods JV with Minotaur Exploration (‘Minotaur’) seeks to leverage skills of Minotaur in identifying ore bodies at Prominent
Hill through analysis and interpretation of the large geological and drill core data base that has been accumulated through years
of exploration drilling.
The Eloise JV with Minotaur seeks to build on the exploration success that Minotaur has had at the Eloise prospect in Queensland.
OZ Minerals also entered into the Yandal One JV with Toro Energy during the year to earn into ground where Toro has previously
intersected up to 0.45 percent nickel with holes terminating in mineralisation.
In Jamaica, at the Bellas Gate project, exploration was significantly advanced during the year, with the completion of 41 diamond drill
holes for ~7,100m. Exploration was focused on identifying porphyry hosted copper-gold mineralisation. Several prospects were tested
and 12 holes were drilled at the Connors project, with the best result being 260m @ 0.44% copper and 0.19g/t gold (2). Reconnaissance
mapping identified several new prospects with outcropping porphyry style mineralisation, which require further testing.
(1) Details of this Mineral Resource estimate were previously reported in the announcement entitled ‘Carrapateena Update’ released to the ASX on 6 October 2015 and
available at http://www.ozminerals.com/uploads/media/151006-Carrapateena-High-Grade--Explanatory-notes-1503c513-d142-485c-8a51-52b3c24ad7bc-0.pdf. OZ Minerals
confirms that it is not aware of any new information included in the original market announcement and, in the case of estimates of Mineral Resources, that all material
assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. OZ Minerals
confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement.
(2) This information is extracted from the report entitled ‘Quarterly Report for the three months ended 30 September 2014’ released to the ASX on 14 October 2014 and
available at http://www.ozminerals.com/uploads/media/ASX-2014-Sep-Quarterly-Report-b7eed6fb-ed79-4514-9aec-13dc2c3af87b-0.pdf Minerals confirms that it is not aware
of any new information or data that materially affects the information included in the original market announcement. OZ Minerals confirms that the form and context in
which the Competent Person’s findings are presented have not been materially modified from the original market announcement.
30
Directors’ Report — Operational and Financial Review continuedOZ Minerals / Annual Report 2015 Review of financial results
− Net profit after tax of $130.2 million – an increase of 168 percent;
− Underlying EBITDA of $484.9 million and EBITDA margin of 55 percent;
− Total revenue of $938.8 million less revenue from sale attributable to pre commissioning
production at Malu underground, for group revenue of $879.4 million;
− Cost of goods sold of $379.1 million – a reduction of 17 percent; and
− Net assets of $2,343.9 million, with cash of $552.5 million and no debt.
Review of consolidated financial results and operations (3)
OZ Minerals recorded a strong financial performance in 2015, underpinned by volume growth from the Prominent Hill operations,
as well as cost reduction benefits from continued cost control strategies and sustained efficiency improvements. Net profit for
the year of $130.2 million compared to the net profit of $48.5 million in the prior year and reflects a period of peak production
performance of the Prominent Hill mine.
Revenue from sale of metal in concentrate
Copper
Gold and Silver
TCRCs
Total revenue
Mining
Processing
Transport
General and administration
Royalties
Deferred waste
Inventory adjustment
Inter-segment (expense)/income
Total cost of goods sold
Exploration and other expense
Restructuring costs
FX gain
Underlying EBITDA
Depreciation
Underlying EBIT
Net finance income
Income tax (expense)/benefit on underlying
profit/(loss) before tax
Underlying NPAT
Non underlying items net of tax
NPAT
Earnings per share (cents per share)
Prominent
Hill
2015
$m
Carrapateena
2015
$m
Exploration &
Development
2015
$m
Corporate
2015
$m
794.5
182.0
(97.1)
879.4
(351.7)
(87.0)
(54.1)
(23.3)
(47.9)
148.1
79.8
(14.2)
(350.3)
(1.5)
(3.0)
12.5
537.1
(281.5)
255.6
–
–
–
–
–
–
–
–
–
–
–
–
–
(29.9)
–
–
(29.9)
(0.8)
(30.7)
–
–
–
–
–
–
–
–
–
–
–
(1.3)
(1.3)
(9.6)
–
–
(10.9)
–
(10.9)
–
–
–
–
–
–
–
(43.0)
–
–
–
15.5
(27.5)
–
(4.6)
20.7
(11.4)
(2.8)
(14.2)
Total
2015
$m
794.5
182.0
(97.1)
879.4
(351.7)
(87.0)
(54.1)
(66.3)
(47.9)
148.1
79.8
–
(379.1)
(41.0)
(7.6)
33.2
484.9
(285.1)
199.8
2.9
(63.1)
139.6
(9.4)
130.2
42.9
Total
2014
$m
660.6
217.4
(47.0)
831.0
(494.3)
(91.3)
(45.6)
(76.2)
(23.5)
196.0
78.7
–
(456.2)
(53.0)
–
19.3
341.1
(296.1)
45.0
3.6
(18.3)
30.3
18.2
48.5
16.0
(3) OZ Minerals financial results are reported under International Financial Reporting Standards (‘IFRS’). This Annual Report and Results for Announcement to the Market
include certain non-IFRS measures including Underlying EBITDA, Underlying EBIT and Underlying NPAT. These measures are presented to enable understanding of the
underlying performance of the Consolidated Entity without the impact of non-trading items such as adjustments to discontinued operations. Non-IFRS measures have
not been subject to audit. Underlying EBITDA, Underlying EBIT and Underlying NPAT are included in Note 1 Operating Segments, which form part of the Consolidated
Financial Statements. Refer Note 1 Operating Segments to the Consolidated Financial Statements for further details.
31
OZ Minerals / Annual Report 2015
Variance analysis – underlying net profit after tax 31 December 2014 vs 31 December 2015
Underlying net profit after tax for the year ended 31 December 2014
$m
$m
30.3
Changes in revenues:
Volume – sales
Copper
Gold
Silver
A$ price
Copper
Gold
Silver
Adjustment for Malu Underground pre-production ore
Treatment and refining charges
Royalties
Changes in mine costs:
Production costs
Deferred waste and inventory adjustment
Depreciation
Other costs:
Corporate
Exploration
Foreign exchange gain on cash and debtor balances
Restructuring expense
Other
Tax, net interest and dividends
Underlying net profit for the year ended 31 December 2015
Revenue
230.8
(62.1)
(2.4)
(36.0)
29.1
2.1
(63.0)
(50.1)
(24.4)
144.0
(46.8)
11.0
4.2
15.6
13.9
(7.6)
(3.6)
166.3
(4.8)
(137.5)
108.3
22.5
(45.5)
139.6
Net revenue from sale of concentrates to customers of $938.8 million was adjusted by $59.4 million for revenue attributable
to pre-production phase of the Malu underground project and was capitalised against the cost of development of the mine.
The reported revenue of $879.4 million was an increase of six percent compared to 2014.
Payable copper sales of 126,763 tonnes was the highest since operations commenced at Prominent Hill and reflects the success
in prioritising contained copper production throughout the year. Contained copper sold of 130,316 tonnes was 37 percent higher,
while contained gold sold of 116,471 ounces was 24 percent lower than in 2014.
The average A$ copper price was four percent lower than 2014, while the average A$ gold price was 10 percent higher than 2014.
The sharp reduction in the US$ copper price by 20 percent was largely offset by the weaker A$, which was 17 percent lower than
2014. The US$ gold price reduced by eight percent compared to 2014, but with the benefit of the weaker A$ was 10 percent higher
than 2014. Mark to market adjustments of $5.6 million were recognised at the end of the year to reflect the revaluation of trade
receivables to changes in the underlying copper and gold price on provisionally priced concentrate sales.
32
Directors’ Report — Operational and Financial Review continuedOZ Minerals / Annual Report 2015
Realisation costs
Treatment charges and refining costs (‘TCRC’) increased by $50.1 million as a result of sales of 254,119 tonnes of concentrate,
which was 37 percent higher than 2014. The benchmark TCRCs in 2015 were higher by 16 percent compared to 2014 as a result
of surplus concentrate volumes transacted globally in 2015.
Transportation and freight costs during the year increased by 19 percent as a direct result of increased tonnages of concentrate sold.
The royalty rate of 1.5 percent of revenue for the initial five years of a new mine in South Australia increased to five percent from
August 2014. This resulted in the increase in royalty expense from $23.5 million in 2014 to $47.9 million in 2015, not commensurate
with the increase in revenue.
Prominent Hill mine costs
Mining costs were lower by $142.6 million in 2015 as a result of lower activity and streamlined operations delivering high equipment
utilisation. During the year, there was less mining equipment and personnel following the demobilisation from three fleets to two
fleets in early 2015.
The cash cost to mine a tonne of ore from the open pit in 2015 of $23.30 was lower than $30.70 in 2014 due to the significantly
lower waste-to-ore strip ratio, which was 3.1:1 in 2015 compared to 4.7:1 in 2014. Open pit mining unit costs of $5.70 per tonne
in 2015 were higher than $5.17 in 2014, which reflects the impact of the deeper open pit and longer haulage distances. As a result
of the declining strip ratio, the deferral of mining costs to the balance sheet was lower by $47.9 million.
Underground mining costs of $38.0 million relating to the development of the Malu Underground mine were capitalised in 2015.
The two underground mines commenced operations as an integrated mining operation in the second half of the year. The level
of underground development remained high throughout the year. The combined output from the mine was 1.9 million tonnes
compared to 1.4 million tonnes in 2014, and will increase as development activity decreases and less waste is produced with
maturity of the underground mine. Underground operating costs during the second half of the year averaged $46.0 per tonne
of ore mined following the commissioning of the Malu underground mine. Fuel costs were lower as a result of lower prices,
improved efficiencies and less equipment.
While ore milled in 2015 of 10.6 million tonnes was higher than in the prior year of 9.9 million tonnes, processing costs were
lower by five percent as a result of cost benefits realised from process improvements and fewer maintenance shutdowns.
Focus remains on accelerated mining of the open pit, as it is the most value accretive option to optimise the mining contract.
Ore continues to be stockpiled for processing in later periods after the open pit ceases operations in 2018. Concentrate and
ore inventory movement of $79.8 million for the year ended 31 December 2015 was primarily a result of an increase in ore
stocks by 3.6 million tonnes during 2015.
Depreciation expense decreased by $11.0 million compared to 2014 due to lower depreciation of plant and equipment as a result
of underground mine life extension since 2014.
Other costs
Exploration and evaluation costs related to the Carrapateena project of $29.9 million were lower than in 2014 as the decision
to cease exploration drilling was made in early 2015. Focus during the year was on evaluating options for Carrapateena, which
included the Hydromet demonstration plant, value optimised stand-alone block cave option, the Gawler Craton strategy linking
Carrapateena to Prominent Hill and the high-grade option. Direct Exploration costs of $9.6 million were incurred on global
exploration related to the Company’s pursuit of early stage projects in Australia, Jamaica and the Americas.
During the year, the A$ depreciated by 17 percent compared to 2014 and resulted in a larger gain on revaluation of $13.9 million
on US$ denominated trade receivables and cash holdings. In early 2016, the Company determined to maintain its cash holdings
in A$ with US$ maintained only to meet US$ commitments.
As a result of the decision to relocate the Consolidated Entity’s corporate office from Melbourne to Adelaide, restructuring and
redundancy expenses of $7.6 million were recognised. Sustained reduction in costs is expected to be realised over the coming years
with only one office and lower headcount.
Corporate costs of $43.0 million comprise those incurred in direct support of operating activities and those related to largely
corporate activities. An allocation of $15.5 million related to support activities that cover a range of services and costs provided
at the Corporate office. These costs relate to the Prominent Hill, Carrapateena, and Exploration and Development operating
segments, and include sales and marketing, strategic sourcing, business services, information technology and insurance.
The income tax expense for the year ended 31 December 2015 was $59.5 million, and is higher than the Australian corporate tax
rate of 30 percent due to non-deductible overseas exploration expenditure. The Company utilised its available group tax losses
and tax offsets, and consequently did not have a current tax liability.
33
OZ Minerals / Annual Report 2015 Non-underlying items, net of tax
During 2015, non-underlying items included legal costs relating to the class action of $9.4 million net of tax (refer to Note 16
to the Consolidated Financial Statements).
During the prior year, the following non-underlying items were recognised and included in the net profit after tax attributable
to the shareholders of OZ Minerals:
− Revaluation adjustment of $8.7 million relating to investment in Toro;
− Gain on de-recognition of foreign currency translation reserve of $2.6 million; and
− Profit from discontinued operation net of tax of $6.9 million.
Cash flow
m
$
700
600
500
400
300
200
100
0
218.5
p e nin g 2 0 1 5
c as h b ala n c e
O
Operating cash flows
429.8
(77.5)
(21.3)
3.0
552.5
p eratin g
a ctivities
O
In v estin g
a ctivities
Fin a n cin g
a ctivities
Effe ct o f e xc h a n g e
rate c h a n g es
Clo sin g 2 0 1 5
c as h b ala n c e
Operating cash flows for the year ended 31 December 2015 of $429.8 million was an increase of $208.3 million compared to the
prior year as a result of increased sales, reduced activity levels in the open pit and cessation of exploration drilling at Carrapateena.
Payments to suppliers and employees were lower by $90.5 million, the receipts from customers increased by $102.1 million and
exploration expenditure decreased by $15.6 million.
Investment cash flows
Net investment cash flows of $77.5 million were a combination of net payments for property plant and equipment and receipts
from the sale of equity investments.
The payments incurred related to the following:
− Deferred waste stripping costs of $148.1 million;
− Mine development costs of the underground operation of $97.5 million, of which $38.0 million related to pre-commissioning
development costs of the Malu Underground;
− Net receipts from sale of pre-commissioning ore from Malu underground of $46.4 million, offset the capitalised
development costs; and
− Other sustaining capital expenditure of $5.5 million.
During the year, OZ Minerals sold its investments in Sandfire and other minor investments and received $126.5 million.
34
Directors’ Report — Operational and Financial Review continuedOZ Minerals / Annual Report 2015 Financing activities
Cash flows relating to financing activities were an outflow of $21.3 million, compared to an outflow of $60.9 million
in the comparative year. The decrease in the outflow is due to the lower dividend payments during the year. For more details,
refer to dividend section below.
Dividend
Dividends of $18.2 million were paid during the year. Since the end of the financial year, the Board of Directors has resolved
to pay a final dividend in respect of the 2015 financial year amounting to $42.5 million.
Balance Sheet
Net assets and total equity increased by $94.8 million during the year to $2,343.9 million, mainly due to current year profit
of $130.2 million partially offset by dividends of $18.2 million and the reduction in the value of investments in equity securities
of $18.5 million.
The Company ended the year with a cash balance of $552.5 million and undrawn debt facilities of US$200 million. In January 2016,
the Company commenced negotiations to amend the debt facility, which will reduce the costs incurred to maintain the commitment
while retaining the flexibility to support the Company’s growth strategy.
Inventories at 31 December 2015 were $329.8 million, of which non-current ore stockpiles increased by $80.9 million in line with
the accelerated open pit mining strategy. The addition to ore inventories during the year of $88.8 million was offset by net realisable
value write-down of $4.4 million of low-grade gold ore stockpiles. The net realisable value is estimated based on the revenue to
be derived from metal contained in the ore stockpiles based on the mine plan for processing and adjusted for incremental costs.
During the year, OZ Minerals sold its investments in Sandfire and other minor investments and realised $126.5 million.
At 31 December 2015, the equity investment represents the Company’s 21 percent investment in Toro. Refer to Note 14
to the Consolidated Financial Statements.
The lease receivable of $34.8 million at 31 December 2015 reduced by $7.4 million following the amortisation of the lease receivable
during the year. The consideration paid in 2012 to acquire mining equipment recognised as a lease receivable will be recovered by
OZ Minerals progressively over the mining services contract with Thiess through a reduced mining services charge.
Outlook
With a record year of production in 2015, OZ Minerals expects 2016 to be another strong year, and has consequently set guidance
for contained copper production at 115,000 to 125,000 tonnes (4). Copper ore will continue to be prioritised until 2018, when contained
gold production will significantly increase.
C1 unit cost guidance for the 2016 calendar year has been set at US70 cents to US80 cents per payable pound of copper,
and is expected to remain in the lowest cost quartile.
Total open pit movement will significantly reduce in 2016 to between 30Mt to 35Mt as the strip ratio declines. As a consequence,
in March 2016, Thiess will demobilise another excavator fleet. With less material movement, open pit unit mining costs will increase
slightly to $6.40 to $6.60 per tonne; however, the reduction in open pit strip ratio to around 1:1 times results in overall lower costs
per tonne of ore.
Underground ore movement will increase in 2016 to between 2.0Mt and 2.2Mt as the underground continues to expand.
As previously announced, work commenced earlier in the year on a second decline into the underground to further increase
the capacity of the mine and make it more efficient. Across OZ Minerals, a continued focus on cost reductions will see further
efficiencies driven through the business.
A decision on development options for Carrapateena will be made in February 2016, which will determine the pathway forward
to unlock the value in this undeveloped project.
Corporate costs are expected to be around $25.0 million, with the lean and devolved business model being implemented
across the Company.
(4) This information is extracted from the report entitled ‘Record production sets scene for dividends and growth’ released to the ASX on 10 February 2016 and is available at
http://www.ozminerals.com/media/asx/. OZ Minerals confirms that all material assumptions underpinning the production target in that report continue to apply and have
not materially changed
35
OZ Minerals / Annual Report 2015 Risks
OZ Minerals’ operating and financial results and performance is subject to a wide range of risks and uncertainties, including
financial, political, operational or environmental. The Consolidated Entity manages and mitigates these risks where appropriate
to minimise adverse impact on its performance. A flat corporate governance structure and direct channels of communication
ensure timely responses to emerging risks.
The Board has oversight responsibility and determines overall risk appetite for the Consolidated Entity. OZ Minerals operates a
risk management system with multiple lines of defence with line managers and operational staff; corporate functions that establish
standards for managing risk; and the Committees of the Board, which review risk management as part of their role of oversight
and inspection. Provided in the table below are the risks and mitigants that were identified by the Company which have the
potential to affect future operating and financial performance.
While development of mitigating controls minimises adverse impact on the performance of the Company, should any of these
elements be subject to failure or disruption, the Company’s expected financial result may be significantly impacted.
Context
Strategic Risks
One operating asset
Operating only one producing asset
exposes the Consolidated Entity to
concentration risks.
Risk
Mitigation/Actions
The Prominent Hill mine generates most
of the income and cash flows of the
Company and has historically been solely
dependent on the one source of ore from
the open pit.
Prominent Hill now operates an integrated
underground mine with multiple areas
that mitigate the sole dependence on
the open pit.
The Company has an active program
focused on the utilisation of trigger
action response plans to maintain the
ongoing stability of the open pit walls.
The OZ Minerals maintenance and
engineering team have developed
robust procedures and practices to
ensure they are operating the processing
plant with minimal disruption and
at high throughput levels.
Concentrate is transported to Australian
destinations using road and rail and shipped
to overseas destinations from the Port of
Adelaide. The use of customised containers
with lids and rotainers to load concentrate
onto ships mitigates the risk of spillage
and impact on the environment.
Growth strategy
Pathways to growth through acquisition
or development of value accretive copper
assets continue to be a key element
of the Company’s growth strategy.
Extension of mine life at Prominent Hill
since operations began in 2009 and
acquisition of Carrapateena and definition
of a 202Mt resource, as well as a high-grade
61Mt resource have added value to the
Company’s shareholders.
With the downtrend in commodity prices
and expected long-term shortages in copper
supplies, OZ Minerals competes with other
entities in acquiring projects that generate
excellent shareholder value.
The primary focus is that any potential
transaction will be value accretive to the
Company’s shareholders.
OZ Minerals evaluates each opportunity
with due care and relies on expert opinion,
both internal and external, where necessary.
OZ Minerals’ Finance department supports
the activities of the whole Group, is
involved at the earliest stage of transactions
and projects, and is responsible for the
assessment of financial risk and returns.
36
Directors’ Report — Operational and Financial Review continuedOZ Minerals / Annual Report 2015 Risk
Mitigation/Actions
Context
Operational Risks
Class action litigation risks
The Company is and has been a defendant
in class action litigation in connection with
the merger of Oxiana and Zinifex in July 2008
and the refinancing of the Company’s debt
facilities in 2008 and 2009. In all these
matters, the Company has denied liability.
On 1 July 2011, the Federal Court of Australia
formally approved a settlement deed
for class actions brought by shareholders
of OZ Minerals/Oxiana. That settlement
was reached without admission of liability
by OZ Minerals.
OZ Minerals is the respondent in
representative proceedings commenced
on 25 February 2014 in the Federal Court
of Australia by former Zinifex shareholders
who were Zinifex shareholders on
1 July 2008 and acquired shares in
OZ Minerals on 1 July 2008 as a result
of the merger between Oxiana and
Zinifex and who have not settled the
claims the subject of the class action
with OZ Minerals previously.
The applicant’s statement of claim alleges
that OZ Minerals breached its continuous
disclosure obligations and engaged in
misleading or deceptive conduct and/or
made false and misleading statements
as a result of which the applicant
and other Zinifex shareholders who
obtained OZ Minerals shares at the
time of the merger with Oxiana
suffered loss and damage.
Contract management
Many aspects of the Prominent Hill
operations and the Company’s exploration
and development activities are conducted
by contractors.
The production and capital costs incurred
by OZ Minerals are subject to a variety
of factors, including and not limited to:
fluctuations in input costs determined
by global markets; for example, fuel
and other key consumables; changes
in economic conditions, which impact
on margins required by contracting
partners; and changes in mining
assumptions, such as ore grades
and pit designs.
37
OZ Minerals is vigorously defending these
proceedings. Even if liability is found to
exist, it is possible that OZ Minerals may
be able to reduce its liability and/or
transfer some of its liability to third
parties via claims for contribution and
apportionment defences.
Cross claims have been filed against third
parties, including certain current and former
directors and officers of Oxiana and Zinifex
and advisers to these entities. Claims for
payment of legal expenses have been
received from current and former directors
and officers of the Consolidated Entity
and an adviser who are cross respondents
in the current proceedings. The Consolidated
Entity is providing moneys in relation
to these claims under Deeds of Indemnity
and other indemnities. Depending on
the outcome of the proceedings, the
Consolidated Entity may be able to recover
some of these monies. However, the
outcome of the proceedings is uncertain.
Mediation in the class action proceedings
is expected to occur in early March 2016
and the trial is scheduled to commence
on 1 June 2016. There are a number
of variables associated with class action
litigation and significant uncertainty
regarding the outcome. It is not possible
to make an assessment of the outcome
(including uncertainty as to the
Consolidated Entity’s ability to recover
costs) of these proceedings or to provide
a reliable estimate of its financial effect
on the Consolidated Entity.
OZ Minerals engages with reputable
contractors who have the technical ability,
proven track record and financial capability
to execute its projects.
Competitive procurement processes and
embedded performance structures in
contracts ensure that the consolidated
entity mitigates its risks of non-performance
by its contractors while deriving the highest
value to its shareholders.
OZ Minerals initiated a project in the fourth
quarter of 2015 to review its contracts to
identify efficiencies and unlock cost savings.
The Company’s operational and financial
results are impacted by the performance
of these contractors, the input costs
charged and the associated risks relating
to these contractors, many of which are
outside the control of the Company.
OZ Minerals / Annual Report 2015 Context
Risk
Mitigation/Actions
Operational Risks (continued)
Geotechnical failure
The open pit and underground mining
operations remain subject to geotechnical
uncertainty and adverse weather conditions,
which may manifest in a pit wall failure
or rock falls, mine collapse, cave-ins or
other failures to mine infrastructure and
reduced productivity.
The depth of the open pit will increase
until mining ceases in 2018 and concurrent
mining of multiple underground
areas result in increased underground
mining activities.
Estimates of reserves and resources
The assessment of reserves and resources
involves areas of estimation and judgement.
The preparation of these estimates
involves application of significant
judgement and no assurance of level
of recovery of minerals or commercial
viability of deposits can be provided.
The Company reviews and publishes
its reserves and resources annually.
Customer management
OZ Minerals markets a high-grade copper
concentrate to overseas and local customers
and any disruption to the logistics chain
from production through to delivery
to the customer can result in significant
financial impacts.
Concentrates marketability is dependent
on global mine supply, smelter demand,
concentrate grades and impurities in
the product. Prominent Hill concentrate
has a high copper grade containing
gold and silver along with fluorine
and uranium impurities.
Regulators in various jurisdictions may
change limits or approach to assessment
guidelines for impurities in concentrate,
which can impede the importation
of the concentrate into those jurisdictions.
These changes may result in additional
requirements related to the ore, tailings
or concentrates or result in challenges
with selling, transporting or importing
Prominent Hill concentrates in
various jurisdictions.
38
OZ Minerals operates programs that
monitor and respond to changes in
geotechnical structures in the open pit,
underground and tailings storage facility
to ensure the safety of personnel working
in the affected areas and where possible
activities are undertaken to reduce the
risk of geotechnical failure.
Open pit stability de-risking activities
progressed during the quarter with the
completion of de-pressurisation wells.
Separately, the successful drilling and
installation of horizontal depressurisation
holes in the south wall of the open pit
continues to further mitigate the risk
factors associated with wall instability.
The movement in the open pit
walls has been at its lowest since
monitoring commenced.
The Reserve and Resource estimates and
mine plans have been carefully prepared
by the Company in compliance with
JORC guidelines and in some instances
verified by independent mining experts
or experienced mining operators.
The estimation of the Company’s
reserves and resources involves analysis
of drilling results, associated geological
and geotechnical interpretations,
operating cost and business assumptions,
and a reliance on commodity price and
exchange rate assumptions.
The Company’s production plan is based
on the published Reserves and Resources.
OZ Minerals has developed customised
solutions in partnership with customers
to match smelter demand and production
from the Prominent Hill mine for
concentrate grades and timing along
with a range of controls to manage
the fluorine and uranium impurities.
During 2015, the customer base for
Prominent Hill concentrate was expanded
and diversified with the inclusion
of a number of customers with diverse
requirements that match the profile
of expected concentrate production.
OZ Minerals has multiple marketing
options, including but not limited
to ore blending, concentrates blending
and additional flotation treatment
in the existing plant.
OZ Minerals maintains a diverse
customer portfolio to mitigate against
the risk of regulatory changes to
importation requirements.
Directors’ Report — Operational and Financial Review continuedOZ Minerals / Annual Report 2015 Context
Market Risks
Commodity prices and exchange rates
Risk
Mitigation/Actions
OZ Minerals has no influence over the
determination of copper, gold and silver
prices in the global commodities market
or the Australian/US dollar exchange rates.
SHEC
Process safety failures resulting in injuries or fatalities
OZ Minerals undertakes operations
in areas which may pose a safety risk,
including but not limited to areas such
as handling explosives, underground
operations subject to rock fall, confined
spaces, areas where heavy and light
vehicles interact, manual handling
and operating at height.
Operating a fly in fly out operation also
introduces the risk that is inherent in air
travel, as contractors and employees are
required to regularly commute by aircraft.
Environmental spills from marketing or processing activities
The Company operates under a range of
environmental regulations and guidelines.
Environmental regulations and occupational
health and safety guidelines for certain
products and by-products produced or
to be produced are generally becoming
more onerous.
The Company aims to realise average copper
prices which are materially consistent with
the prevailing average prices.
Any uneven exposure to price in a
particular month is managed through
shipment schedules or undertaking
LME futures transactions.
The Company’s functional currency is
the Australian dollar, which reflects the
majority of its cost base. In January 2016,
the Company determined to maintain
Australian dollars with US$ holding
maintained only to meet US$ commitments.
The Company does not take a position
on the level of the Australian dollar or
take active steps to hedge the currency risk.
OZ Minerals is committed to the safety
of its people and all work processes have
a high safety focus.
OZ Minerals operates in partnership with
its contractors and is actively building a
shared safety culture between employees
and contractors working on our sites.
Active engagement at all levels of
operations and senior leadership teams
combined with activities focused on
identifying and eliminating drivers of safety
incidents has delivered significant successes
that has resulted in a sustained reduction
in the number of recordable injuries.
The Company is required to close
its operations and rehabilitate the land
affected by the operation at the conclusion
of mining and processing activities.
Estimates of these costs are reflected
in accordance with AASB 137 Provisions,
Contingent Liabilities and Contingent
Assets, as provisions in the financial
statements. In estimating these costs,
management seek external assistance
and review where appropriate.
However, actual closure costs may be higher
than estimated as these are costs to be
incurred following the closure of mining
operations over a long time period.
39
OZ Minerals / Annual Report 2015 Context
SHEC (continued)
Risk
Mitigation/Actions
Maintenance of community relations and good title
The Company works closely with local
communities, particularly the Indigenous
communities in South Australia.
Located within the ‘green zone’ of the
Woomera Prohibited Area, agreements
with the Commonwealth of Australia
govern the terms of access.
Access and compensation agreements,
which are reviewed and updated from
time to time, are in place with communities
affected by mining activities.
The Company has controls in place to
ensure compliance with the Deed, and
relies on good relations with the Australian
Defence Department regarding defence
operations in the Woomera region and
any potential impact that these operations
may have on mining operations.
The Company also relies on the maintenance
of good title over the authorisations,
permits and licences which allow it to
operate. Loss of good title or access due
to challenges instituted by issuers of
authorisations, permits or licences, such
as government authorities or land owners,
may result in disruptions to operations.
Business strategies, prospect and likely developments
This report sets out the information on the business strategies and prospects for future financial years and refers to likely
developments in OZ Minerals’ operations and the expected results of the operations in future financial years. Information in this
report is provided to enable shareholders to make an informed assessment about the business strategies and prospects for future
financial years of the Consolidated Entity. Detail that could give rise to likely material detriment to OZ Minerals; for example,
information that is commercially sensitive, confidential or could give a third party a commercial advantage, has not been included.
40
Directors’ Report — Operational and Financial Review continuedOZ Minerals / Annual Report 2015 Directors’ Report
—
Remuneration Overview
Remuneration consideration to Executive KMP during 2015
For full details of the audited cost to the Company of the remuneration of the Executive KMP, calculated in accordance with the
accounting standards and the Corporations Act 2001, refer to Table 6 of the Remuneration Report.
The unaudited table below includes details of remuneration actually delivered to the Executive KMP for the financial year 2015
and has been prepared to provide greater transparency to shareholders regarding remuneration outcomes.
KMP
Current
Andrew Cole
2015
2014
Luke Anderson
2015
2014
Former
Andrew Coles
2015
2014
Cash
salary (a)
$
Short term
incentive
$
Retention
payment
$
716,860
52,114
675,000
107,150
79,225
–
–
–
–
–
647,792
543,031
273,611
421,740
100,000
–
Long-term
incentive (b)
Other
benefits (c)
$
–
–
–
–
–
$
5,448
180,715
–
–
1,773
1,745
Superannuation (d)
$
Termination
benefits (e)
$
Total
$
33,140
4,951
10,179
–
–
1,430,448
237,780
–
–
196,554
–
19,308
18,783
562,320
1,604,804
–
985,299
(a) The cash salary reflects the total amount of fixed pay received by the Executive KMP, as set out in Table 6 in the Remuneration Report. Annual leave and long service leave
entitlements for Mr Coles of $80,719 and $117,780 respectively were paid upon cessation of employment and are included in cash salary above.
(b) For the value of share-based long-term incentives calculated in accordance with the accounting standards, refer to Table 6 in the Remuneration Report. This Long-Term
Incentive column is unaudited and records the actual value realised by the Executive KMP during the period they were KMP rather than the value calculated according
to the accounting standards. Subsequent to ceasing as a member of KMP, Andrew Coles became entitled to receive 52,375 shares as a result of successful achievement
of the TSR hurdle in relation to performance rights granted to him in 2012.
(c) Other benefits include the value (where applicable) of benefits such as compulsory annual health checks, car parking or other benefits that are available to all employees
of OZ Minerals. These amounts have been determined in accordance with the accounting standards, are inclusive of Fringe Benefits Tax, where applicable, and are
consistent with the amounts disclosed in the total remuneration in Table 6 of the Remuneration Report. Other benefits paid to Mr Cole in 2014 included payment
of relocation costs for Mr Cole and his family from Canada to Australia. Other benefits do not include net accruals for long service leave or accrued annual leave.
(d) Represents direct contributions by the Company to superannuation funds. Amounts greater than the maximum superannuation level have been paid and included
in cash salary.
(e) Mr Coles ceased employment on 23 October 2015 due to a redundancy event. Termination payments made to Mr Coles, in accordance with the terms of his employment
contract include 12 months’ fixed remuneration capped as per the requirement of the Corporations Act 2001.
41
OZ Minerals / Annual Report 2015 —
Letter from the Chair of the Remuneration Committee
Dear Shareholders,
2015 has been a year of transformation at OZ Minerals.
During this significant period of change, the Human Resources and Remuneration Committee (Committee) has focused on ensuring
remuneration at OZ Minerals is designed to maintain alignment with shareholder interests (both short term and long term); that
remuneration remains market competitive and that it is clearly communicated to shareholders. This enables OZ Minerals to retain
and attract a diverse range of skilled people vital to delivering a sustainable future, and thereby achieve strategic objectives and
maximise shareholder value.
Your Company’s remuneration policy and structure for senior executives who are members of the key management personnel
of the Company (Executive KMP) is largely unchanged from the previous year. Executive KMP remuneration is delivered as a mix
between fixed remuneration (including base salary and superannuation) and variable at-risk remuneration, including performance
based awards, including a Short-Term Incentive (STI) and a Long-Term Incentive (LTI).
During 2015, the Company conducted a business strategic review, involving an analysis of the organisational structure and its
appropriateness for the OZ Minerals business. As a result of this review, the Board decided to relocate the Company’s corporate
office to Adelaide, and to adjust the structure and composition of the senior management team. Following this, a number of
new senior executives joined the OZ Minerals leadership team during 2015 with a broad mix of skills and experience that are
highly complementary to our new strategy.
Details of the new Executive team, their experience and qualifications can be found on the OZ Minerals website.
Key highlights for remuneration in 2015
− 2015 has been a significant year of transformation, innovation and operational excellence. We have built a new growth oriented
strategy from the ground up, moved head offices from Melbourne to Adelaide and recruited a new leadership team.
− OZ Minerals has delivered strong and consistent results throughout the year in the key areas of safety performance, cost
management and increased production.
− The Committee appointed PwC as its independent remuneration adviser to provide expert advice on alternative designs for the LTI.
− To further enhance the alignment of the executive team’s interests with those of the shareholders, the comparator group for
LTI awards made in 2015 has been refined to ensure more relevant comparator companies are included, with a specific focus
on copper and gold companies.
− As result of strong performance in 2015, the Board (with the support of the Committee) has determined to make available the
full STI opportunity to eligible employees, subject to the consideration of individual performance, as defined in the STI plan rules.
− When considering the context of the wider mining sector and the comparative position of salaries in OZ Minerals, the Committee
determined not to award salary increases across the business in 2016.
Key Developments for remuneration in 2016 and beyond
− As a result of the Company’s strategic review, the Board will be reassessing those positions which make up Key Management
Personnel (KMP). This will be done in accordance with the updated roles and responsibilities of the new executive team.
The outcome of this process will be reflected in the 2016 Remuneration Report.
− Following on from a review of LTI design in 2015, an additional performance hurdle will be introduced to the 2016 LTI plan.
In order to further align interests of shareholders and management, a gain sharing component will be included. This component
will target a 20 percent increase in absolute share price over the LTI performance period on a cliff-vesting basis (i.e. recipient
will receive the entire component if a 20 percent increase or greater is achieved and none of the component if the absolute
share price increase is less than 20 percent). The remaining proportion of the LTI opportunity for senior executives will retain
the current vesting criteria, being relative TSR, which will account for approximately 70 percent of the LTI award, and the new
component of absolute share price increase being approximately 30 percent of the total LTI award. This will result in the overall
LTI opportunity for KMP being slightly increased.
The Board is determined to continue its focus on the longer-term strategy of the business and delivering well aligned
and transparent remuneration outcomes.
Thank you for your ongoing support of OZ Minerals.
Yours Sincerely
Rebecca McGrath
42
OZ Minerals / Annual Report 2015 —
Remuneration Report
The Directors of OZ Minerals Limited present the Remuneration Report for the Company and the Consolidated Entity for the year
ended 31 December 2015. This Remuneration Report forms part of the Directors’ Report and has been audited in accordance with
the Corporations Act 2001.
1 Details of Key Management Personnel
The Consolidated Entity’s Key Management Personnel (‘KMP’) during 2015 are listed in Table 1 below, and consist of the Non-executive
Directors (‘NEDs’), and the Executive KMP who are accountable for planning, directing and controlling the affairs of the Company
and its controlled entities.
Table 1 – KMP during 2015
Name
Executive KMP
Current
Andrew Cole
Luke Anderson
Former
Andrew Coles
Non-executive Directors
Current
Neil Hamilton
Paul Dowd
Charles Lenegan
Rebecca McGrath
Dean Pritchard
Former
Brian Jamieson
Position
Period as KMP during the year
Managing Director & CEO
All of 2015
Chief Financial Officer
From 12 October 2015
Chief Financial Officer
Ceased employment 23 October 2015
Independent Chairman
Independent NED
Independent NED
Independent NED
Independent NED
All of 2015
All of 2015
All of 2015
All of 2015
All of 2015
Independent NED
Retired 25 May 2015
43
OZ Minerals / Annual Report 2015 2
Remuneration policy
2.1 Overview of remuneration policy and practices
The remuneration policy outlined below demonstrates the linkage between remuneration and business strategies and the impact
that those imperatives have on the actual remuneration arrangements of the Company. The overriding business objective is to achieve
superior returns compared to the Company’s peers in the resources sector.
The Company’s remuneration policy is underpinned by the following guidelines on remuneration:
Box 1 – Remuneration principles
Business needs and
market alignment
OZ Minerals’ remuneration policy is focused on the achievement of our corporate objectives.
Remuneration is set having regard to market practices and aligned with the achievement of returns
to our shareholders.
Simplicity and equity
OZ Minerals’ remuneration philosophy, policy, principles and structures are simple to understand,
communicate and implement, and are equitable across the Company and its diverse workforce.
Performance and
reward linkages
Market positioning
and remuneration mix
Well-designed remuneration policy supports and drives Company and team performance and
encourages the demonstration of desired behaviours. Performance measures and targets are few
in number, outcome-focused and customised at an individual level to maximise performance,
accountability and reward linkages.
The mix of remuneration is an important aspect of OZ Minerals’ remuneration policy. Fixed remuneration
is set at a competitive level, positioned to have regard to the challenges of attracting and retaining
high performers in business critical roles, particularly in the mining industry. The ‘at-risk’ components
of remuneration are dependent on challenging goals and focused on incentivising Executive KMP in
achieving business critical objectives and returns to shareholders.
Talent management
Remuneration policy is tightly linked with the performance and talent management frameworks
in order to reward and recognise the achievement of role accountabilities and to support the
engagement of future leaders.
Governance, transparency
and communication with
shareholders
OZ Minerals is committed to developing and maintaining remuneration policy and practices that are
targeted at the achievement of corporate objectives and the maximisation of shareholder value. It will
openly communicate this to shareholders and other relevant stakeholders, and will always be within
the boundaries of legal, regulatory and industrial requirements. The Board has absolute discretion
in the development, implementation and review of the key aspects of remuneration.
2.2 Use of remuneration consultants
The Board and Human Resources and Remuneration Committee seek and consider advice from independent remuneration
consultants to ensure that they have at their disposal information relevant to the determination of all aspects of remuneration
relating to the Executive KMP. The engagement of remuneration consultants is governed by internal protocols, which set the
parameters around the interaction between management and the consultants (‘Protocols’) with a view to minimising the risk
of any undue influence occurring and ensuring compliance with the requirements of the Corporations Act 2001.
Under the Protocols adopted by the Board and Human Resources and Remuneration Committee:
− remuneration consultants are engaged by and report directly to the Board or the Human Resources and
Remuneration Committee;
− the Committee must, in deciding whether to approve the engagement, have regard to any potential conflicts of interest,
including factors that may influence independence, such as previous and future work performed for the Committee and any
relationships that exist between any KMP and the consultant;
− communication between the remuneration consultants and KMP is restricted to minimise the risk of undue influence on the
remuneration consultant; and
− where the consultant is also engaged to perform work that does not involve the provision of a remuneration recommendation,
prior approval of the Board or Human Resources and Remuneration Committee must be obtained in certain circumstances where
the consultant continues to be engaged to provide remuneration recommendations.
The advice and recommendations of remuneration consultants are used as a guide by the Board and the Human Resources and
Remuneration Committee. Decisions are made by the Board after its own consideration of the issues but having regard to the
advice of the Human Resources and Remuneration Committee and the consultants. No remuneration recommendations within
the meaning established by the Corporations Act 2001 were received during 2015.
44
— Remuneration Report continuedOZ Minerals / Annual Report 2015 2.3 Review of Executive KMP remuneration
To ensure that executive remuneration remains consistent with the Company’s remuneration policy and guiding principles,
remuneration is reviewed annually by the Board with the assistance of the Human Resources and Remuneration Committee
and, where needed, external remuneration consultants. In conducting the remuneration review the Board considers:
− the remuneration policy and practices;
− the core skills and experience required of each role in order to grade positions accurately;
− market benchmarks, using salary survey data from the Australian Industrials and Resources sectors;
− individual performance against key job objectives, as specified in the person’s annual performance contract, and with comparison
against their peers; and
− business plans and budgets.
2.4 Components of Executive KMP remuneration
Box 2 – Remuneration mix
Fixed remuneration
Short-Term Incentive (‘STI’)
Long-Term Incentive (‘LTI’)
‘At-risk’ remuneration
Regular base reward that reflects the job
size, role, responsibilities and professional
competence of each executive, according
to their knowledge, experience and
accountabilities and considering external
market relativities.
Variable, performance based, annual cash
incentive plan designed to reward high
performance against challenging, clearly
defined and measurable objectives that are
based on a mixture of targets and are set
to incentivise superior performance, with
specific targets or metrics in each category.
The equity component of the at-risk
reward opportunity, linked to the
Company’s medium to long-term
TSR performance.
The mix of fixed and at-risk remuneration varies depending on the role and grading of executives (being the Managing Director
& CEO and his direct reports), and also depends on the performance of the Company and individual executives. More senior
positions have a greater proportion of at-risk remuneration.
If maximum at-risk remuneration is earned, the percentage of fixed to at-risk remuneration would be as follows:
Remuneration mix
Managing Director & CEO
35.7%
35.7%
28.6%
Fixed
STI
LTI
CFO
38.5%
30.8%
30.7%
45
OZ Minerals / Annual Report 2015 Box 3 – Questions and answers about Executive KMP remuneration
Fixed remuneration
What is included in fixed
remuneration?
When and how is fixed
remuneration reviewed?
STI
Why does the Board
consider an STI Plan
is appropriate?
What are the
performance conditions?
Is there an overriding
financial performance
condition or other
condition?
How is the STI structured
to reward exceptional
performance?
An Executive KMP’s fixed remuneration comprises salary and certain other benefits (including statutory
superannuation contributions) that may be taken in an agreed form, including cash, leased motor vehicles
and additional superannuation, provided that no extra cost is incurred by the Company for these benefits.
Fixed remuneration is reviewed annually. Any adjustments to the fixed remuneration for the Managing
Director & CEO and Executive KMP must be approved by the Board after recommendation by the Human
Resources and Remuneration Committee. The Company seeks to position the fixed remuneration at between
the 50th and 75th percentile or higher for business critical roles of salaries for comparable companies within
the mining market and, where appropriate, the broader general industry market.
Variable performance based remuneration strengthens the link between pay and performance. The purpose
of these programs is to make a large proportion of the total market reward package subject to meeting
various targets linked to OZ Minerals’ business objectives. The use of variable performance based remuneration
avoids much higher levels of fixed remuneration and is designed to focus and motivate employees to achieve
outcomes beyond the standard expected in the normal course of ongoing employment. A reward structure
that provides variable performance based remuneration is also necessary as a competitive remuneration
package in the Australian and global marketplace for executives.
The performance conditions, or KPIs, are set and weighted at the beginning of each year and are designed
to drive successful and sustainable financial and business outcomes, with reference to the Board approved
corporate objectives, plans and budget for the year. The Board assesses and sets the KPIs applicable to the
Managing Director & CEO’s STI award, and the Managing Director & CEO assesses and sets the KPIs for each
of his direct reports in consultation with the Board.
For 2015, the key areas of focus included improving the Company’s operational and financial performance,
sustainability performance and progressing the Company’s growth objectives. Personal KPIs were also set
to take into account individual performance of each Executive KMP and their ability to influence the outcome
of the Company’s performance.
The KPIs for Mr Andrew Cole as the Managing Director & CEO for 2015 comprised:
− Operational and Financial performance with a weighting of 40 percent, which was assessed against
EBITDA performance, free cash generation, overhead costs, working capital and cost to concentrate
optimisation initiatives;
− Sustainability performance with a weighting of 20 percent, which was assessed against the achievement
of safety targets (such as a significant reduction in total recordable injury frequency and severity rates),
improving significant potential safety risks, improving stakeholder relationships, diversity performance
and compliance; and
− Strategy and Growth performance with a weighting of 40 percent, which was assessed against increasing
mineable reserves and growth pipelines, delivering value enhancing strategies and plans for existing
resources and improving concentrate quality and sales terms and conditions.
The functional KPIs for the role of Chief Financial Officer included the KPIs listed above and personal
KPIs related to the achievement of targets and objectives in the functional areas over which the role
has responsibility being finance, tax, treasury, commercial services, information technology and sales
and marketing. The relevant KPIs for individual performance also related to contribution as a member
of the Executive Committee, including the successful transition of duties from Mr Coles to Mr Anderson,
and implementation and development of the Company’s strategy.
Yes. The availability of the STI Pool is subject to the discretion of the Board, having regard to the interests
of the Company and shareholders. The Board can choose not to pay, or reduce the amount of the STI
otherwise payable.
The STI Plan is designed to reward Executive KMP at three pre-determined performance levels – threshold,
target and stretch.
Threshold performance
represents the minimum level of performance required for an STI award to vest;
Target performance
represents the achievement of planned or budgeted performance,
set at a challenging level; and
Stretch performance
represents outstanding performance.
What is the value of the
STI opportunity?
For 2015, the STI reward opportunity (represented as a percentage of total fixed remuneration) was:
− Managing Director & CEO – Target 70 percent, Maximum 100 percent; and
− Chief Financial Officer – Target 56 percent, Maximum 80 percent.
The amount of STI reward awarded was dependent upon achievement of all KPI targets.
46
— Remuneration Report continuedOZ Minerals / Annual Report 2015 STI
How is STI assessed?
The Managing Director & CEO assesses the business performance of the executive team throughout the
year for progress and improvement, to arrive at a summary assessment at year end for discussion with
the Human Resources and Remuneration Committee and the Board.
As a higher-level review, the Board also reviews the performance assessment of all executives who report
directly to the Managing Director & CEO, with a view to understanding, endorsing and/or discussing
individual circumstances and potential.
The Human Resources and Remuneration Committee and the Board assess the performance of the Managing
Director & CEO against the performance targets and objectives set for that year.
The Board considers the method of assessing STI as described above appropriate as the Managing Director
& CEO has oversight of his direct reports and the day-to-day function of the Company, while the Board
and Human Resources and Remuneration Committee have overall responsibility for determining whether
executives have met the performance targets and objectives set for that year.
What happens to
STI awards when
an executive ceases
employment?
If an executive leaves OZ Minerals, then the Good Leaver Policy may apply (subject to the executive’s contract)
and, if the requirements are met, the STI may be granted on a pro rata basis in relation to the period of
service completed, subject to the discretion of the Board and conditional upon the individual performance
of the relevant executive.
LTI
Why does the Board
consider a LTI Plan
is appropriate?
How is the award
delivered?
Was a grant made
in 2015?
The Company believes that a LTI Plan can:
− focus and motivate employees to achieve outcomes beyond the standard expected in the normal course
of ongoing employment;
− ensure that business decisions and strategic planning have regard to the Company’s long-term performance;
− be consistent with contemporary remuneration governance standards and guidelines;
− be consistent and competitive with current practices of comparable companies; and
− create an immediate ownership mindset among the executive participants, linking a substantial portion
of their potential total reward to OZ Minerals’ ongoing share price and returns to shareholders.
Performance Rights are granted under the OZ Minerals LTI Plan, as further detailed in the table below.
A grant was made on 21 July 2015 to all continuing participants in the LTI Plan. The number of performance
rights granted to each executive was calculated as their LTI opportunity divided by the volume weighted
average share price on the five trading days up to and including the grant date (being $3.89 per share).
The grant of rights to Mr Luke Anderson in 2015 is pro-rated to take into account the period of service
and was granted on 4 December 2015.
What are the
performance conditions?
The performance conditions are: (a) the executive meeting the Service Condition; and (b) OZ Minerals meeting
the LTI Performance Condition. The two conditions are referred to as the Vesting Conditions.
Service Condition
The service condition is met if employment with OZ Minerals is continuous for three years commencing
on or around the grant date (‘Performance Period’).
LTI Plan Performance Condition
The LTI Plan performance condition is the Company’s TSR as measured against a Comparator Group. The Board
considers that TSR is an appropriate performance hurdle because it ensures that a proportion of each participant’s
remuneration is linked to shareholder value and ensures that participants only receive a benefit where there
is a corresponding direct benefit to shareholders. TSR reflects benefits received by shareholders through share
price growth and dividend yield and is the most widely used long-term incentive hurdle in Australia.
To ensure an objective assessment of the relative TSR comparison, the Company employs an independent
organisation to calculate the TSR ranking.
The performance rights will only vest where the TSR performance of the Company relative to the selected
Comparator Group measured over the Performance Period is at the 50th percentile or above.
TSR ranking versus Comparator Group
Percentage of maximum award
Below the 50th percentile
At the 50th percentile
Between the 50th and 75th percentile
0 percent vest
50 percent vest
Between 50 percent and 100 percent vest progressively
by using a straight-line interpolation
At or above the 75th percentile
100 percent vest
47
OZ Minerals / Annual Report 2015 LTI
Why were the
performance
conditions chosen?
The approach to linking individual executive performance (including mandatory service periods)
and Company performance to the vesting of performance rights is standard market practice.
The conditions are aimed at linking the retention and performance of the executives directly to rewards,
but only where shareholder returns are realised. The focus on employee-held equity is also part of a
deliberate policy to strengthen engagement and direct personal interest to the achievement of returns
for shareholders.
What is the
comparator group?
The comparator companies selected for 2015 are considered to be alternative investment opportunities to
OZ Minerals for local and global investors and are impacted by commodity prices and cyclical factors in a
similar way to OZ Minerals. The list of comparator group companies for 2015 appears in the following table.
2015 Comparator Companies:
Comparator Company
Capstone Mining Corp.
HudBay Minerals Inc.
Ivanhoe Mines Ltd
Katanga Mining Limited
KAZ Minerals Plc
Lundin Mining Corporation
Sandfire Resources NL
Taseko Mines Limited
Nevsun Resources Ltd
MMG Limited
Exchange
ASX/ticker Code
TSX
TSX
TSX
TSX
LSE
TSX
ASX
TSX
TSX
HKEX
CS
HBM
IVN
KAT
KAZ
LUN
SFR
TKO
NSU
1208
Comparator group companies relating to the 2012–2014 LTI grants are as follows:
Anglo American Plc, Antofagasta Plc, Barrick Gold Corporation, BHP Billiton Limited, Boliden AB, Capstone
Mining Co, First Quantum Minerals Limited, Freeport McMoran Copper & Gold Inc, HudBay Minerals Inc,
Ivanhoe Mines Limited, Katanga Mining Limited, Kaz Minerals Plc, KGHM International Limited, Lundin
Mining Corporation, Newcrest Mining Limited, Newmont Mining Corporation, Rex Minerals Limited, Rio Tinto
Limited, Sandfire Resources NL, Southern Copper Corporation, Taseko Mines Limited, Vedanta Resources Plc.
Mercator Minerals Limited was removed due to the appointment of administrators, and PanAust Limited was
removed due to its delisting.
What happens to
performance rights
granted under the LTI
Plan when an executive
ceases employment?
If the executive’s employment is terminated for cause, or due to resignation, all unvested performance rights
will lapse, unless the Board determines otherwise. In all other circumstances, unless the Board determines
otherwise, a pro rata portion of the executive’s performance rights, calculated by reference to the portion
of the performance period that has elapsed, will remain on foot, subject to the performance condition
as set by the Board. If and when these performance rights vest, shares will be allocated in accordance
with the OZ Minerals’ Equity Incentive Plan Rules and any other conditions of grant.
What happens in the
event of a change
of control?
In the event of a takeover or change of control of OZ Minerals, the Board has discretion to determine that
vesting of all or some of the performance rights should be accelerated. If a change of control occurs before
the Board has exercised its discretion, a pro rata portion of the performance rights will vest, calculated
based on the portion of the relevant performance period that has elapsed up to the change of control,
and the Board retains a discretion to determine if the remaining performance rights will vest or lapse.
Is there any ability
for the Company to
‘clawback’ LTI awards?
In the event of fraud, dishonesty, gross misconduct or material misstatement of the financial statements,
the Board may make a determination, including the lapsing of unvested performance rights, the forfeiture
of shares allocated on vesting of performance rights and/or repayment of any cash payment or dividends,
to ensure that no unfair benefit is obtained.
Do shares granted upon
vesting of performance
rights granted under the
LTI Plan dilute existing
shareholders’ equity?
Does the Company
have a policy in relation
to margin loans and
hedging at-risk
remuneration?
Generally, there is no dilution of shareholders’ pre-existing equity as shares allocated to the participants
in the LTI Plan upon vesting of performance rights are usually satisfied by purchases by the plan trustee
on market.
Under the Company’s Securities Trading Policy, all executives, directors and officers are prohibited from
entering into financing arrangements where the monies owed to the lender are secured against a mortgage
over OZ Minerals’ shares. Transactions entered into prior to 19 November 2009, when the prohibition was
introduced, are exempted from the policy. The Company’s Securities Trading Policy also prohibits executives
and employees from entering into any hedging arrangement over unvested securities issued pursuant to any
share scheme, performance rights plan or option plan.
48
— Remuneration Report continuedOZ Minerals / Annual Report 2015 3
Company performance and remuneration outcomes
3.1 Company performance
A summary of OZ Minerals’ business performance as measured by a range of financial and other indicators is outlined
in the table below.
Table 2 – Company performance (a)
Measure
Earnings/(losses) before interest, income tax,
depreciation from continuing operations – $m
Net profit/(loss) after income tax – $m
Net cash inflow from operating activities – $m
Basic earnings/(loss) per share – cents (b)
Share price at end of year – $ (b)
Dividends paid per share – cents (b)
Capital return per share – $ (b)
Shares bought back on market and cancelled – $m
2015
471.9
130.2
429.8
42.9
4.05
6
–
–
2014
352.4
48.5
221.5
16.0
3.48
20
–
–
2013
(215.5)
(294.4)
179.1
(97.1)
3.15
30
–
–
2012
353.9
152.0
344.8
49.5
6.70
40
–
100.1
2011
510.1
274.5
647.1
85.6
10.01 (c)
70
1.20
99.9
(a) Refer to the Operating and Financial Review section in the Directors Report for a commentary on the consolidated results, including underlying performance
of the Company.
(b) Where applicable, amounts in the table above have been adjusted for the 1:10 share consolidation completed in 2011.
(c) The share price at the beginning of 2011 was $17.20.
3.2 STI performance and outcomes for 2015
The Chairman and the Board, with the assistance of the Chair of the Human Resources and Remuneration Committee, undertook
a review of the Managing Director & CEO’s performance against each of his 2015 KPIs. The Managing Director & CEO reviews
the performance of each of the Executive KMP against their 2015 KPIs, and seeks the approval of the Human Resources and
Remuneration Committee in determining STI award outcomes.
The STI targets and weightings are set out in the following table.
Table 3A – STI award percentage for Executive KMP
In accordance with the procedure set out in Section 2, an assessment was undertaken of the performance of each of the
Executive KMP against their 2015 KPIs.
KPI category
Operational and financial
Sustainability
Growth
Overall awarded percentage
Weighting Managing
Director & CEO
(maximum) (a)
%
40
20
40
100
STI Outcome for 2015
(weighted performance
outcome)
%
36
16
38
90
Weighting Chief
Financial Officer
(maximum) (b)
%
40
20
40
100
STI Outcome for 2015
(weighted performance
outcome)
%
34
15
36
85
(a) The Managing Director & CEO’s maximum STI award was 100 percent of his fixed remuneration.
(b) The Chief Financial Officer’s maximum STI award was 80 percent of his fixed remuneration.
49
OZ Minerals / Annual Report 2015 Details of the amounts payable to the Executive KMP appear in Table 3B below.
Table 3B – STI payments to Executive KMP in 2015
Details of STI payments awarded to Executive KMP as a result of 2015 performance are included in the table below:
Name
Current
Andrew Cole
Luke Anderson (b)
Former
Andrew Coles (b)
STI Payment
$
675,000
79,225
273,611
Maximum potential
value of STI payment (a)
$
Percentage of maximum
potential STI
payment awarded
%
Percentage
of maximum STI
payment forfeited
%
750,000
93,205
364,815
90
85
75
10
15
25
(a) The minimum potential value of the payments was nil. The maximum potential value of payment represents the achievement of stretch performance. This amount was
pro-rated to take into account the period of service for Mr Anderson, whose full year potential entitlement would have been $420,000, and for Mr Coles $449,856 for
a full year of service. The Managing Director & CEO’s maximum STI award was 100 percent of his fixed remuneration. The Chief Financial Officer’s maximum STI award
was 80 percent of his fixed remuneration.
(b) The CFO STI also contemplates personal KPI performance relative to role as part of the overall STI outcome and is pro-rated for period of service during 2015. Mr Andrew
Coles pro-rated STI payment was determined at the time of cessation, considering relative company and personal performance against targets at that time. This was due
to the CFO role transition resulting from the relocation of Melbourne Corporate office to Adelaide.
3.3 LTI performance and outcomes for 2015
The LTI awards on foot during the year (including those granted as part of the 2015 LTI awards) are detailed in the table below.
Table 4 – LTI awards on foot
Executive KMP
Grant Date
Number of
Performance
Rights
Maximum
value of
Fair Value per
Performance
grant (a)
$
Right (b)
$
Performance
and Service
Period (d)
Expiry Date
Andrew Cole
21 Jul 2015
154,344
754,742
Andrew Coles
21 Dec 2012
64,043
736,495
20 Dec 2013
78,395
599,722
28 Jul 2014
94,153
455,701
21 Jul 2015
115,721
565,875
Luke Anderson
4 Dec 2015
23,680
115,795
2.82
4.05
1.97
3.12
2.82
3.41
1 Jul 2015 –
30 Jun 2018
21 Dec 2012 –
20 Dec 2015
20 Dec 2013 –
19 Dec 2016
1 Jul 2014 –
30 Jun 2017
1 Jul 2015 –
30 Jun 2018
1 Jul 2015 –
30 Jun 2018
Vesting
outcomes
To be
determined
15 Aug 2018
28 Feb 2016
Vested (c)
28 Feb 2017
15 Aug 2017
To be
determined (c)
To be
determined (c)
15 Aug 2018
Lapsed (c)
15 Aug 2018
To be
determined
(a) The maximum value of the grants has been estimated based on a 52-week high closing share price in the calendar year of the grant. For the 2015 grant this was
$4.89 per instrument. The minimum total value of each grant, if the applicable performance conditions are not met, is nil.
(b) The fair values were calculated as at the grant dates. In accordance with the requirements of applicable Accounting Standards, remuneration includes a proportion
of the notional value of performance rights as compensation granted or outstanding during the year. The notional value of performance rights granted as compensation
is determined as at the grant date and progressively allocated over the vesting period. The amount included as remuneration is not related to or indicative of the benefit
(if any) that individual executives may in fact receive. The values were calculated by an external third party based on a Monte-Carlo simulation model.
(c) Upon cessation of employment the number of performance rights available to vest was amended for each annual grant in accordance with the principles described in
Box 3. These amendments resulted in less performance rights which could potentially vest as follows: 2012: 60,648, 2013: 48,243, 2014: 39,296. As a result, 88,405 performance
rights lapsed in addition to the full amount of the 2015 grant. In accordance with the plan rules, TSR was tested for the 21 December 2012 grant, which resulted in
52,375 shares accruing to Mr Coles as a result of successful achievement of the TSR hurdle. The remaining performance rights held by Mr Coles following his termination
will remain on foot and subject to TSR testing in accordance with the original terms of the grant.
(d) The service period for Luke Anderson was from the date performance rights were granted to 30 June 2018.
Performance rights granted under the OZ Minerals LTI Plan are granted for no consideration. Performance rights carry no dividend
or voting rights. On vesting of a performance right, one ordinary share in the Company will be allocated. The vesting condition for
each grant is the relative TSR performance of the Company over the relevant performance period. In general, the executive must
also remain employed with OZ Minerals for a continuous period of three years from the grant date.
Although the terms of each of the above LTI awards are predominantly the same as those awarded in 2015, full details of the prior
awards are set out in the Remuneration Report for the year in which they were granted.
Details of the performance rights held by Executive KMP that lapsed during the year are set out in Table 10.
50
— Remuneration Report continuedOZ Minerals / Annual Report 2015 4
Executive KMP employment arrangements
The remuneration arrangements for Executive KMP are formalised in employment contracts. Each of these agreements provide
for the payment of fixed remuneration, performance-related cash bonuses under the STI Plan (as discussed above), other benefits,
and participation, where eligible, in the Company’s LTI Plan (as discussed above).
Table 5 – Termination provision of Executive KMP – during 2015
Name
Current
Term of contract
Notice period by either party
Termination benefit
Andrew Cole
Permanent – ongoing until notice
has been given by either party.
Twelve months’ notice
by the Company.
Six months’ notice by
Andrew Cole.
Company may elect to make
payment in lieu of notice.
No notice period requirements
for termination by Company
for cause.
Luke
Anderson
Permanent – ongoing until notice
has been given by either party.
Three months’ notice by
either party.
Company may elect to make
payment in lieu of notice.
No notice requirements
for termination by Company
for cause.
Former
Andrew Coles
Permanent – ongoing until notice
has been given by either party.
Three months’ notice by
either party.
Company may elect to make
payment in lieu of notice.
No notice requirements
for termination by Company
for cause.
Twelve months fixed remuneration in the case
of termination by the Company. No termination
benefits (other than accrued entitlements) in the
case of termination by the Company for cause.
Nine months fixed remuneration in the case
of termination by the Company. No termination
benefits (other than accrued entitlements) in the
case of termination by the Company for cause.
Nine months fixed remuneration in the case
of termination by the Company. No termination
benefits (other than accrued entitlements) in the
case of termination by the Company for cause.
Upon the occurrence of a fundamental change
in the role, the executive may terminate his or
her employment within thirty days of the event,
giving rise to the fundamental change and
receive the same payments from the Company
as if it was a termination by the Company
for no cause.
51
OZ Minerals / Annual Report 2015 48
–
39
37
54
5
Total remuneration for Executive KMP
Table 6 – Total rewards to Executive KMP
Short-term benefits
Cash
salary
$
STI
payment
$
Accrued
annual
Retention
payment (b)
Other
benefits (c)
leave (a)
$
$
Long-term
benefits
Long-term
benefits
other (d)
$
Current
Andrew Cole
2015
2014
716,860 675,000
36,346
52,114
–
4,609
–
5,448
– 180,715
4,848
130
33,140
4,951
Luke Anderson
2015
107,750
79,225
9,476
–
–
556
10,179
Former
Andrew Coles
Post
employment
benefits
Super-
annuation (e)
Termination
benefits (f)
$
Share-based
payments
Value of
performance
rights (g)
$
Total
remun-
eration
$
Percent of
remuneration
‘at-risk’
%
$
–
–
–
65,996
1,537,638
–
242,519
2,339
209,525
2015
2014
647,792
273,611 (121,627) 100,000
543,031 421,740
24,200
–
1,773
1,745
(116,260)
5,799
19,308
18,783
562,320
217,800
1,584,717
–
268,529
1,283,827
(a) Annual leave has been separately categorised and is measured on an accrual basis and reflects the movement in the accrual over the 12-month period. The annual leave
entitlement for Mr Coles of $80,719 was paid on cessation of employment, and is included in Cash salary above. The credit of $(121,627) reflects the reversal of the annual
leave accrual.
(b) Retention payment made to Mr Coles in October 2015 in respect of his continued service from January to October 2015 following the decision to relocate the corporate
office from Melbourne to Adelaide.
(c) Other benefits include the value (where applicable) of benefits such as compulsory annual health checks, car parking or other benefits that are available to all employees
of OZ Minerals, and are inclusive of Fringe Benefits Tax where applicable. Other benefits paid to Mr Cole in 2014 included payment of relocation costs for Mr Cole and his
family from Canada to Australia.
(d) Represents the net accrual movement for Long Service Leave (LSL) over the 12-month period, which will only be paid if Executive KMP meets legislative service conditions.
LSL has been separately categorised and is measured on an accrual basis and reflects the movement in the accrual over the 12-month period. The long service leave
entitlement for Mr Coles of $117,780 was paid on cessation of employment, and is included in Cash salary above. The credit of $(116,260) reflects the reversal of the long
service leave accrual.
(e) Represents direct contributions to superannuation funds. Amounts greater than the maximum superannuation level have been paid and included in cash salary.
(f) Termination payments made to Mr Coles, in accordance with the terms of his employment contract include 12 months’ fixed remuneration capped as per the requirement
of the Corporations Act 2001.
(g) The fair values were calculated as at the grant dates. In accordance with the requirements of applicable Accounting Standards, remuneration includes a proportion of
the notional value of equity rights compensation granted or outstanding during the year. The notional value of equity rights granted as compensation which do not vest
during the reporting period is determined as at the grant date and progressively allocated over the vesting period. The amount included as remuneration is not related
to or indicative of the benefit (if any) that individual executives may in fact receive. The values were calculated by an external third party based on a Monte-Carlo
simulation model.
52
— Remuneration Report continuedOZ Minerals / Annual Report 2015 6 Non-executive Director remuneration
6.1 Non-executive Director remuneration policy
Non-executive Director (‘NED’) remuneration is reviewed annually by the Board. NEDs receive a fixed fee remuneration consisting
of a base fee rate and additional fees for committee roles.
Consistent with best practice, NEDs do not receive any form of equity incentive entitlement, bonuses, options, other incentive
payments or retirement benefits. In the past, the Company paid retirement benefits to NEDs. These benefits were frozen
at 31 December 2005, and the value at that date is adjusted each year at a bank interest rate. Details are set out in Table 8.
As approved at the OZ Minerals General Meeting on 18 July 2008, the maximum fees payable per annum is $2,700,000 in total.
The Board decided, based on a recommendation from the Human Resources and Remuneration Committee, not to increase
the fees paid to Non-executive Directors in 2016.
Table 7 – Details of NED remuneration
Fees
Board
Audit
Sustainability
Human Resources and Remuneration
Nomination and Board Governance (a)
Chairman
$ per annum
Member
$ per annum
313,285
43,056
21,528
21,528
–
120,314
21,528
10,764
10,764
5,382
(a) The Nomination and Board Governance committee was disbanded in 2015 and responsibility for activities have been merged into the Board.
All Directors (including the Chairman) are entitled to superannuation contributions (or cash in lieu thereof) equal to 9.5 percent
calculated on base Board and Committee fees, and are entitled to be reimbursed for travelling and other expenses properly
incurred by them in attending any meeting or otherwise in connection with the business or affairs of the Company, in accordance
with the Company’s constitution. The Chairman of the Board does not receive additional fees for being a member of any
Board Committee.
53
OZ Minerals / Annual Report 2015 6.2
Total fees paid to NEDs
Total fees received by NEDs in 2015 were $1,101,018 (2014: $1,189,618) compared with the maximum approved fees payable
of $2,700,000. Payments and non-monetary benefits received by NEDs individually are set out in the following table:
Table 8 – Total remuneration paid to NEDs
Directors’ fees
Post-employment benefits
Board fees and
cash benefits
$
Committee
fees
$
Non-monetary
benefits
$
324,267
326,802
120,314
120,314
120,314
126,625
120,314
120,314
120,314
120,314
–
–
33,189
26,910
49,335
48,438
43,056
43,056
21,528
21,528
50,131
120,314
13,455
32,292
–
–
–
–
–
–
–
–
–
–
–
–
Current
Neil Hamilton
2015
2014
Paul Dowd
2015
2014
Charles Lenegan
2015
2014
Rebecca McGrath
2015
2014
Dean Pritchard
2015
2014
Former
Brian Jamieson
2015
2014
Retirement
benefit
adjustment (a)
Company
contributions to
superannuation (b)
$
–
–
–
–
–
–
–
–
–
–
$
18,780
15,857
14,583
13,803
16,117
9,510
15,520
15,317
13,475
13,299
Total fixed
remuneration
$
343,047
342,659
168,086
161,027
185,766
184,573
178,890
178,687
155,317
155,141
285
617
6,041
14,308
69,912
167,531
(a) In the past OZ Minerals paid retirement benefits to NEDs; however, these benefits were frozen at 31 December 2005. As advised in previous years, the value at that date
is adjusted each year at a bank interest rate and the increase in value from the previous year is accrued in the retirement benefit adjustment. Retirement benefits were
adjusted for 2015 at an average bank interest rate of 2.10 percent per annum (2.10 percent in 2014). A total retirement benefit, including the retirement benefit adjustment
for 2015 of $30,291, had accrued prior to departure. The terms of the retirement benefit scheme were disclosed in the Company’s 2005 Annual Report.
(b) Represents direct contributions to superannuation funds. Any amounts greater than the superannuation maximum contribution base have been paid and included
in board fees and cash benefits.
54
— Remuneration Report continuedOZ Minerals / Annual Report 2015
7
Equity instrument disclosure relating to KMP
Table 9 – KMP shareholdings
The movement in the number of shares held directly or indirectly by each KMP during the year is set out below:
Balance at
1 January 2015 (a)
Shares granted
as remuneration
Share acquired
on exercise of rights
Net other
movements
Balance at
31 December 2015 (b)
NEDs
Neil Hamilton
Paul Dowd
Brian Jamieson
Charles Lenegan
Rebecca McGrath
Dean Pritchard
Executive KMP
Andrew Cole
Andrew Coles
Luke Anderson
Total
39,500
10,800
108,527
20,750
5,750
22,720
10,000
21,750
–
239,797
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,000
–
–
–
7,000
39,500
10,800
108,527
20,750
12,750
22,720
10,000
21,750
–
246,797
(a) The balance shown for Luke Anderson represents the number of shares held on the date he became a member of the KMP.
(b) The balance shown for Andrew Coles and Brian Jamieson represents the number of shares held on the dates they ceased to be members of the KMP.
Table 10 – KMP performance rights holdings
The movement in the number of performance rights for KMP during the year is set out below:
Balance at
1 January
2015 (d)
Granted as
remuneration
Value of
rights
granted
($) (a)
Vested (b) Exercised
Value of
rights vested/
exercised
($)
Balance at
31 December
Forfeiture (c)
2015 (e)
Andrew Cole
Luke Anderson
Andrew Coles
Total
–
–
236,591
236,591
154,344
435,250
23,680
80,749
115,721
326,333
293,745
842,332
–
–
–
–
–
–
–
–
–
–
–
–
–
–
204,125
204,125
154,344
23,680
148,187
326,211
(a) The fair value of the performance rights granted to Executive KMP on 21 July 2015 calculated on the grant date was $2.82 for Mr Cole and Mr Coles and for Mr Anderson
$3.41 (the fair value has been calculated by an independent adviser based on a Monte-Carlo simulation model). No price is payable on acquisition of these rights, and there
is no exercise price. Subject to the achievement of relevant performance conditions, these rights would be expected to vest on 30 June 2018.
(b) The number of vested performance rights at 31 December 2015 that were unexercisable was nil (2014: nil). In accordance with the principles set out in Box 3, Mr Coles
was permitted to retain a number of his performance rights following his termination. As at the date Mr Coles ceased to be KMP the TSR condition for the 2012 LTI grant
had not reached the end of the performance period. Subsequent to his Termination 52,375 performance rights vested following testing of the TSR condition applicable
to this grant. The remaining performance rights held by Mr Coles following his termination will remain on foot and subject to TSR testing in accordance with the original
terms of the grant.
(c) Upon cessation of employment for Mr Coles the number of performance rights available to vest was amended for each annual grant in accordance with the principles
described in Box 3. For the 2012 grant, 3,395 rights lapsed, 2013 grant, 30,152 rights lapsed, 2014 grant, 54,857 rights lapsed and 2015 grant, 115,721. The value of performance
rights which were forfeited, based on the share price on the date of forfeiture, was $851,204.
(d) The balance shown for Luke Anderson represents the number of performance rights held on the date he became a member of the KMP.
(e) The balance shown for Andrew Coles represents the number of performance rights held on the date he ceased to be a member of the KMP.
8 Other transactions with Executive KMP or NEDs
There were no loans made to Executive KMP, NEDs or their related parties during the year. There were no other transactions
between the Company and any Executive KMP, NED or their related parties other than those within the normal employee,
customer or supplier relationship on terms no more favourable than arm’s length.
55
OZ Minerals / Annual Report 2015
—
Auditor’s Independence Declaration
Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
To: the Directors of OZ Minerals Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 31 December 2015
there have been:
(a) no contraventions of the auditor independence requirements as set out in 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.
KPMG
Michael Bray
Partner
Melbourne
10 February 2016
KPMG, an Australian partnership
and a member firm of the KPMG network
of independent member firms affiliated
with KPMG International Cooperative
(‘KPMG International’), a Swiss entity.
Liability limited by a scheme
approved under Professional
Standards Legislation.
56
OZ Minerals / Annual Report 2015 —
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2015
Revenue from sale of concentrates
Net foreign exchange gains
Other income
Changes in inventories of ore and concentrate
Consumables, concentrate purchases and other direct costs
Employee benefit expenses
Restructuring expenses – employee benefits
Exploration and evaluation expenses
Freight expenses
Royalties expense
Depreciation expense
Other expenses
Profit before net financing income and income tax from continuing operations
Financing income
Financing expenses
Net financing income
Profit before income tax from continuing operations
Income tax expense from continuing operations
Profit from continuing operations
Profit from discontinued operation after income tax
Profit for the year attributable to equity holders of OZ Minerals
Other comprehensive loss
Items that will not be reclassified subsequently to Income Statement
Notes
1
1
1
7
4
2015
$m
879.4
33.2
5.9
79.8
(259.0)
(63.9)
(7.6)
(39.5)
(54.1)
(47.9)
(285.1)
(54.4)
186.8
7.6
(4.7)
2.9
189.7
(59.5)
130.2
–
130.2
2014
$m
831.0
19.3
18.4
78.7
(353.4)
(69.2)
–
(55.1)
(45.6)
(23.5)
(296.1)
(48.2)
56.3
7.3
(3.7)
3.6
59.9
(18.3)
41.6
6.9
48.5
Change in fair value of investments in equity securities, net of tax
14
(18.5)
(67.5)
Items that may be reclassified to Income Statement
Foreign currency translation differences
Items reclassified to Income Statement
De-recognition of foreign currency translation reserve
Other comprehensive loss for the year, net of tax
Total comprehensive income/(loss) for the year attributable to equity holders of OZ Minerals
Basic and diluted earnings per share
Continuing operations
Discontinued operation
Total earnings per share
–
–
(18.5)
111.7
Cents
42.9
–
42.9
0.1
(2.6)
(70.0)
(21.5)
Cents
13.7
2.3
16.0
2
2
2
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying Notes.
57
OZ Minerals / Annual Report 2015 —
Consolidated Statement of Changes in Equity
Issued
capital
$m
Retained
earnings
$m
Treasury
shares
$m
Notes
Foreign
currency
translation
reserve
$m
For the year ended 31 December 2015
Balance as at 1 January 2015
Total comprehensive income for the year
Profit for the year
Other comprehensive loss
Total comprehensive income for the year
Transactions with owners, recorded directly in equity
Dividends
Share-based payment transactions, net of income tax
Purchase of treasury shares
Exercise of performance rights
Total transactions with owners
Balance as at 31 December 2015
For the year ended 31 December 2014
Balance as at 1 January 2014
Total comprehensive loss for the year
Profit for the year
Other comprehensive loss
Total comprehensive loss for the year
Transactions with owners, recorded directly in equity
Dividends
Share-based payment transactions, net of income tax
Purchase of treasury shares
Exercise of performance rights
Total transactions with owners
Balance as at 31 December 2014
3
13
3
13
2,058.9
190.2
–
–
–
–
–
–
–
–
2,058.9
130.2
(18.5)
111.7
(18.2)
4.4
–
(2.5)
(16.3)
285.6
–
–
–
–
–
–
(3.1)
2.5
(0.6)
(0.6)
–
–
–
–
–
–
–
–
–
–
Total
equity
$m
2,249.1
130.2
(18.5)
111.7
(18.2)
4.4
(3.1)
–
(16.9)
2,343.9
2,058.9
266.6
(0.1)
2.5
2,327.9
–
–
–
–
–
–
–
–
2,058.9
48.5
(67.5)
(19.0)
(60.6)
3.6
–
(0.4)
(57.4)
190.2
–
–
–
–
–
(0.3)
0.4
0.1
–
–
(2.5)
(2.5)
–
–
–
–
–
–
48.5
(70.0)
(21.5)
(60.6)
3.6
(0.3)
–
(57.3)
2,249.1
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying Notes.
58
OZ Minerals / Annual Report 2015 —
Consolidated Balance Sheet
As at 31 December 2015
Current assets
Cash and cash equivalents
Trade receivables
Other receivables
Inventories
Prepayments
Total current assets
Non-current assets
Inventories
Investments in equity securities
Intangible assets – Carrapateena
Lease receivable
Property, plant and equipment
Total non-current assets
Total assets
Current liabilities
Trade payables and accruals
Other payables
Employee benefits
Provisions
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Employee benefits
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Retained earnings
Treasury shares
Notes
5
5
14
9
8
7
10
4
10
2015
$m
552.5
91.4
7.2
143.2
4.9
799.2
186.6
31.8
252.2
34.8
2014
$m
218.5
120.1
7.7
147.7
6.0
500.0
105.7
176.8
252.2
42.2
1,261.8
1,767.2
2,566.4
1,331.8
1,908.7
2,408.7
63.4
1.7
9.2
8.6
82.9
102.6
3.6
33.4
139.6
222.5
2,343.9
73.5
3.2
10.9
4.2
91.8
43.1
3.3
21.4
67.8
159.6
2,249.1
2,058.9
190.2
–
12
2,058.9
285.6
(0.6)
Total equity attributable to equity holders of OZ Minerals Limited
2,343.9
2,249.1
The above Consolidated Balance Sheet should be read in conjunction with the accompanying Notes.
59
OZ Minerals / Annual Report 2015
—
Consolidated Statement of Cash Flows
For the year ended 31 December 2015
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Payments for exploration and evaluation
Income tax refund
Financing costs and interest paid
Interest received
Net cash inflows from operating activities
Cash flows from investing activities
Payment for property, plant and equipment
Net proceeds from sale of pre-commissioning Malu UG ore concentrates
Proceeds from disposal of investments
Dividends received
Net cash outflows from investing activities
Cash flows from financing activities
Dividends paid to shareholders
Payments for acquisition of treasury shares
Proceeds from concentrate blending arrangement
Payments for concentrate blending arrangement
Net cash outflows from financing activities
Net increase/(decrease) in cash held
Cash and cash equivalents at beginning of the year
Effects of exchange rate changes on foreign currency denominated cash balances
Cash and cash equivalents at the end of the year
Notes
2015
$m
929.6
(463.0)
(39.5)
–
(2.8)
5.5
2014
$m
827.5
(553.5)
(55.1)
0.8
(2.5)
4.3
6
429.8
221.5
7
14
3
(251.4)
(325.9)
46.4
126.5
1.0
7.9
4.5
3.0
(77.5)
(310.5)
(18.2)
(3.1)
–
–
(21.3)
331.0
218.5
3.0
552.5
(60.6)
(0.3)
26.1
(26.1)
(60.9)
(149.9)
364.0
4.4
218.5
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying Notes.
60
OZ Minerals / Annual Report 2015 —
Notes to the Consolidated Financial Statements
What’s new in this report?
Over the past year, we have reviewed the content and structure of the Consolidated Financial Statements looking for opportunities
to make them less complex and more relevant to users. This included:
− a thorough review of content to eliminate immaterial disclosures that may undermine the usefulness of the Consolidated
Financial Statements by obscuring important information;
− reorganisation of the notes to the financial statements into five distinct sections to assist users in understanding the Consolidated
Entity’s performance; and
− using diagrams and graphs to improve the communication of certain important financial information.
The purpose of these changes is to provide users with a clear understanding of what drives financial performance and financial
position of the Consolidated Entity and linkage to our strategy, while still complying with the provisions of the Corporations Act 2001.
An introduction at the start of each section to explain its purpose and content has been added where relevant. Accounting policies
and critical accounting judgements applied to the preparation of the financial statements have been grouped with the related
accounting balance or financial statement matter. Accounting policies have been documented in simple terms to assist the users
of the Consolidated Financial Statements to better understand OZ Minerals’ financial position and performance.
Estimates and judgements used in developing and applying the Consolidated Entity’s accounting policies are continually evaluated
and are based on experience and other factors and are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised and future periods if the revision affects future periods. The critical estimates
and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are
discussed in the respective sections of the Consolidated Financial Statements.
To assist in identifying critical accounting judgements, we have highlighted them with the following formatting:
A
J
61
OZ Minerals / Annual Report 2015 Notes to the Consolidated Financial Statements
—
Group Performance
Introduction
The principal business activities of OZ Minerals Limited (OZ Minerals or the Parent) and its controlled entities (collectively
the ‘Consolidated Entity’) were the mining of copper, gold and silver, undertaking exploration activities and development
of mining projects.
The Company is incorporated and domiciled in Australia and limited by shares which are publicly traded on the Australian Securities
Exchange. OZ Minerals registered office is Level 2, 162 Greenhill Road, Parkside 5063, South Australia, Australia.
The Consolidated Financial Statements of OZ Minerals Limited and its controlled entities for the year ended 31 December 2015:
− include general purpose Financial Statements prepared by a for profit entity in accordance with Australian Accounting Standards
(‘AASBs’) and the Corporations Act 2001, and comply with International Financial Reporting Standards (‘IFRS’);
− are presented in Australian dollars, which is also the functional currency of the Company and all its controlled entities;
− has amounts rounded off to within the nearest million dollars unless otherwise stated in accordance with Class Order 98/100
dated 10 July 1998, issued by the Australian Securities and Investments Commission.
The Consolidated Financial Statements have been prepared on a going concern basis and under the historical cost convention,
except for the following items, which are measured at fair value, or otherwise, in accordance with the provisions of applicable
accounting standards:
− financial instruments, including trade receivables;
− investments in equity securities;
− derivative financial instruments;
− items of inventory and property, plant and equipment, which have been written down in accordance with applicable
accounting standards.
Other than the final dividend for the year ended 31 December 2015, discussed in Note 3, the following events have occurred
subsequent to reporting date which have significantly affected or may significantly affect the Consolidated Entity’s operations
or results in future years:
− Since the end of the financial year, the Company has received particulars of the loss alleged to have been suffered by the
Applicant and Group Members in the class action proceedings. Having considered this information and all the circumstances,
the Company believes that it is not in a position to calculate with sufficient reliability an estimate of the possible obligation
in respect of the class action even if it were found to exist. OZ Minerals is vigorously defending these proceedings.
− Since the end of the financial year, the Company has been advised by the Australian Federal Police (AFP) that the scope of the
AFP’s investigation is being extended to OZ Minerals’ former Cambodian operations generally in relation to foreign bribery
allegations. OZ Minerals is continuing to cooperate with the AFP in its investigation.
There have been no other events that have occurred subsequent to the reporting date which have significantly affected or may
significantly affect the Consolidated Entity’s operations or results in future years.
62
OZ Minerals / Annual Report 2015 This section analyses the financial performance of the Consolidated Entity for the year ended 31 December 2015. The focus is on
segment performance, revenue streams, earnings per share, dividends and taxation.
1 Operating segments
Segment
Prominent Hill
Principal activities
Mining copper, gold and silver from the Prominent Hill Mine, a combined open pit and underground mine
located in the Gawler Craton of South Australia. The Prominent Hill Mine generates revenue from the sale
of concentrate products containing copper, gold and silver to customers in Asia, Europe and Australia.
Carrapateena
Exploration and evaluation associated with the Carrapateena project located in South Australia.
Exploration and
Development
Exploration and evaluation activities associated with other projects and include interests in Jamaica, Chile,
and joint ventures with Minotaur and Toro Energy, and Corporate Development activities.
Corporate
(corporate activities)
Other corporate activities include the Consolidated Entity’s Group Office (which includes all corporate
expenses that cannot be directly attributed to the operation of the Consolidated Entity’s operating
segments), other investments in equity securities and cash balances.
The Group’s expanded operating segments in 2015 are representative of management’s focus on developing a value accretive
portfolio of multiple assets. Operating segments are components of the Consolidated Entity about which separate financial
information is available that is evaluated regularly by the Consolidated Entity’s key management personnel in deciding how
to allocate resources and in assessing performance. Operating segments have been identified based on information provided
to the chief operating decision maker, being the executive management team.
With a change in the Executive Committee and restructure of the business in 2015, re-evaluation of segment disclosure was
undertaken to align with the revised reporting included in internal management reports. As a result, revised operating segments
have been disclosed. In accordance with accounting standards comparative information has been re-stated in a consistent format.
Segment Result: Underlying EBITDA, Underlying EBIT and Underlying NPAT are used internally by management to assess
performance of the business, make decisions on allocating resources and assess operational management.
31 December 2015
Revenue – copper
Revenue – gold and silver
Treatment and refining charges
Net Revenue
Mining
Processing
Transport
General and administration
Royalties
Deferred waste adjustment
Inventory adjustment
Inter-segment (expense)/income
Cost of goods sold
Exploration and other expenses
Restructuring costs
FX gain
Underlying EBITDA
Depreciation
Underlying EBIT
Net finance income
Income tax expense
Underlying Net Profit after tax
Class action defence costs, net of tax
Net Profit for the year attributable to equity
holders of OZ Minerals Ltd
Prominent Hill
$m
Carrapateena
$m
Exploration &
Development
$m
Corporate
$m
Consolidated
$m
–
–
–
–
–
–
–
–
–
–
–
–
–
(29.9)
–
–
(29.9)
(0.8)
(30.7)
–
–
–
–
–
–
–
–
–
–
–
(1.3)
(1.3)
(9.6)
–
–
(10.9)
–
(10.9)
–
–
–
–
–
–
–
(43.0)
–
–
–
15.5
(27.5)
–
(4.6)
20.7
(11.4)
(2.8)
(14.2)
794.5
182.0
(97.1)
879.4
(351.7)
(87.0)
(54.1)
(66.3)
(47.9)
148.1
79.8
–
(379.1)
(41.0)
(7.6)
33.2
484.9
(285.1)
199.8
2.9
(63.1)
139.6
(9.4)
130.2
794.5
182.0
(97.1)
879.4
(351.7)
(87.0)
(54.1)
(23.3)
(47.9)
148.1
79.8
(14.2)
(350.3)
(1.5)
(3.0)
12.5
537.1
(281.5)
255.6
63
OZ Minerals / Annual Report 2015
660.6
217.4
(47.0)
831.0
(494.3)
(91.3)
(45.6)
(76.2)
(23.5)
196.0
78.7
–
(456.2)
(53.0)
19.3
341.1
(296.1)
45.0
3.6
(18.3)
30.3
2.6
8.7
41.6
6.9
48.5
Prominent Hill
$m
Carrapateena
$m
Exploration &
Development
$m
Corporate
$m
Consolidated
$m
660.6
217.4
(47.0)
831.0
(494.3)
(91.3)
(45.6)
(29.0)
(23.5)
196.0
78.7
(12.8)
(421.8)
3.1
9.1
421.4
(292.7)
128.7
–
–
–
–
–
–
–
–
–
–
–
–
–
(43.5)
–
(43.5)
(0.8)
(44.3)
–
–
–
–
–
–
–
–
–
–
–
(1.3)
(1.3)
(11.6)
–
(12.9)
(0.1)
(13.0)
–
–
–
–
–
–
–
(47.2)
–
–
–
14.1
(33.1)
(1.0)
10.2
(23.9)
(2.5)
(26.4)
31 December 2014
Revenue – copper
Revenue – gold and silver
Treatment and refining charges
Net Revenue
Mining
Processing
Transport
General and administration
Royalties
Deferred waste adjustment
Inventory adjustment
Inter-segment (expense)/income
Cost of goods sold
Exploration and other income/(expenses)
FX gain
Underlying EBITDA
Depreciation
Underlying EBIT
Net finance income
Income tax expense
Underlying Net Profit after tax
Exchange gain on de-recognition of foreign currency translation reserve, net of tax
Gain on revaluation of investment to fair value upon discontinuation of equity method, net of tax
Net Profit after tax from continuing operations
Profit from discontinued operation
Net Profit for the year attributable to equity holders of OZ Minerals Ltd
Expenses
Employee benefit expenses include contributions to defined contribution plans of $5.0 million (2014: $5.0 million).
The royalty rate of 1.5 percent of revenue for the initial five years of a new mine in South Australia increased to five percent from
August 2014. This resulted in the increase in royalty expense from $23.5 million in 2014 to $47.9 million in 2015 not commensurate
with the increase in revenue.
64
Notes to the Consolidated Financial Statements — Group Performance continuedOZ Minerals / Annual Report 2015
Recognition and measurement of revenue
Revenue from sale of concentrates is recognised upon transfer of risks and rewards to the customer, when, the price is fixed
or determinable, no further processing is required, the quantity and quality of the goods has been determined with reasonable
accuracy, and collectability is probable. This is generally when the concentrates are loaded on to the vessel at the port of shipment
or in the case of domestic sales when the concentrates are delivered to the customer’s premises.
Measurement of sales revenue is based on the most recently determined estimate of product specifications with a subsequent
adjustment made to revenue upon final determination of metal content in concentrates by customer. These adjustments are
typically insignificant relative to the total sales value.
The terms of concentrate sales contracts contain provisional pricing arrangements. The commodity price for metal in concentrate
is based on prevailing prices at the time of shipment to the customer. Adjustments to the commodity price occur based on movements
in quoted market prices up to the date of final settlement. Receivables arising from sales contracts are initially recognised at fair
value, with subsequent changes in fair value recognised in the Income Statement in each period until final settlement, as an
adjustment to revenue. Changes in fair value over the quotation period and up until final settlement are estimated by reference
to forward market prices.
Revenue is reported net of treatment and refining charges and pricing adjustments.
Revenue information presented below is based on the location of the customer’s operations. Major customers who individually
accounted for more than 10 percent of total revenue contributed approximately 56 percent of total revenue (2014: 67 percent).
Net revenue by geographical region
8.5
122.1
349.0
5.5
82.6
326.5
)
m
$
(
s
e
t
a
r
t
n
e
c
n
o
c
f
o
s
e
l
a
s
m
o
r
f
e
u
n
e
v
e
R
600
500
400
300
200
100
0
3.6
71.3
228.8
2.0
41.3
171.1
2 0 1 5 A sia
2 0 1 4 A sia
2 0 1 5 E u r o p e
2 0 1 4 E u r o p e
Copper
Gold
Silver
3.8
45.9
200.7
0.7
10.3
36.7
u stralia
2 0 1 4 A
2 0 1 5 A
u stralia
65
OZ Minerals / Annual Report 2015
2
Earnings per share
Basic and diluted earnings per share – cents
Continuing operations
Discontinued operation
Overall earnings per share
Reconciliation of earnings used in calculating basic and diluted earnings per share – $ millions
For basic and diluted earnings per share from continuing operations
Profit after tax from continuing operations
For basic and diluted earnings per share from discontinued operation
Profit after tax from discontinued operation
Weighted average number of ordinary shares – number
2015
42.9
–
42.9
130.2
–
2014
13.7
2.3
16.0
41.6
6.9
Weighted average number of ordinary shares on issue used in the calculation
of basic and diluted earnings per share
303,433,159
303,451,160
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the parent, by the weighted average
number of ordinary shares outstanding during the financial year. The weighted average is determined by the total number of shares
on issue less treasury shares held by the Company throughout the period.
Diluted earnings per share adjusts the amounts used in the determination of basic earnings per share to take into account 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.
The performance rights as set out in Note 13 that existed at 31 December 2015 and 31 December 2014 were not included in the
calculation of diluted earnings per share because they were not assessed as having a dilutive impact.
3 Dividends
Since the end of the financial year, the Board of Directors has resolved to pay an unfranked dividend of 14.0 cents per share,
to be paid on 10 March 2016. The record date for entitlement to this dividend is 24 February 2016. The financial impact of the
dividend amounting to $42.5 million has not been recognised in the Consolidated Financial Statements for the year ended
31 December 2015, and will be recognised in subsequent Consolidated Financial Statements.
Record date
24 February 2016
10 September 2015
11 September 2014
26 February 2014
Date of payment
Cents per share
Total dividends $m
10 March 2016
24 September 2015
25 September 2014
13 March 2014
14
6
10
10
42.5
18.2
30.3
30.3
For Australian income tax purposes, all dividends were unfranked and were declared to be conduit foreign income.
66
Notes to the Consolidated Financial Statements — Group Performance continuedOZ Minerals / Annual Report 2015 4
Income tax
Income tax expense comprises current and deferred tax. Current and deferred tax expense attributable to amounts recognised
in other comprehensive income or directly in equity is recognised in other comprehensive income or directly in equity, respectively.
Significant accounting
judgements
—
A
J
Recoverability of deferred tax assets
The Consolidated Entity is subject to income taxes of Australia and jurisdictions where
it has foreign operations. Significant judgement is required in the application of income
tax legislation to determine the provision for income taxes. There are many transactions and
calculations undertaken during the ordinary course of business for which the ultimate tax
determination is uncertain, and for which provisions are based on estimated amounts.
Where the final tax outcome of these matters is different from the amounts that were
initially recorded, such differences will impact the current and deferred tax provision
in the period in which the determination is made.
Assumptions about the generation of future taxable profits influence the ability of the
Consolidated Entity to recognise (or continue to recognise) deferred tax assets. Taxable profit
estimates are based on estimated future production and sales volumes, commodity prices,
foreign exchange rates, operating costs, restoration costs and capital expenditure. A change
in these assumptions may impact the amount of deferred tax assets recognised in the balance
sheet in future periods.
Income tax expense in the Income Statement
Current income tax benefit
Deferred income tax expense
Income tax expense
Reconciliation of income tax expense to pre-tax profit
Profit from continuing operations before income tax
Income tax expense at the Australian tax rate of 30 percent
Adjustments
Non-deductible expenditure
Non-assessable income
Revision for prior periods
Income tax expense
Income tax is attributable to:
Continuing operations
Discontinued operation
Income tax expense
2015
$m
–
(59.5)
(59.5)
189.7
(56.9)
(2.1)
–
(0.5)
(59.5)
(59.5)
–
(59.5)
2014
$m
0.8
(12.2)
(11.4)
59.9
(18.0)
(2.2)
4.0
4.8
(11.4)
(18.3)
6.9
(11.4)
67
OZ Minerals / Annual Report 2015 Notes to the Consolidated Financial Statements
—
Net Cash and Capital Employed
Deferred tax assets and liabilities
2015
Unrestricted tax losses and offsets
Restricted tax losses
Property plant and equipment
Inventories
Provisions and accruals
Other
Net deferred tax liabilities
2014
Unrestricted tax losses and offsets
Restricted tax losses
Property plant and equipment
Inventories
Provisions and accruals
Other
Net deferred tax liabilities
Opening
balance
$m
Recognised
in Income
Statement
$m
Closing
balance
$m
74.7
54.4
(179.5)
(5.3)
10.1
2.5
(43.1)
109.7
53.4
(211.4)
7.2
7.4
2.8
(30.9)
(66.4)
(5.4)
8.9
0.5
0.4
2.5
8.3
49.0
(170.6)
(4.8)
10.5
5.0
(59.5)
(102.6)
(35.0)
1.0
31.9
(12.5)
2.7
(0.3)
(12.2)
74.7
54.4
(179.5)
(5.3)
10.1
2.5
(43.1)
Recognised restricted tax losses are subject to an available fraction which limits the amount of these losses that can be utilised
each year and may only be utilised after unrestricted tax losses are utilised. Recognised unrestricted tax losses and tax offsets have
no restrictions, and under current legislation, do not have an expiry date.
Unrecognised tax losses
Restricted tax losses of $191.4 million tax effected (2014: $191.4 million tax effected) remain unrecognised in the Balance Sheet
at 31 December 2015. Capital tax losses of $592.5 million tax effected (2014: $589.5 million tax effected) remain unrecognised
in the Balance Sheet at 31 December 2015.
Recognition and measurement of income taxes
Current tax
The tax currently payable is based on taxable profit for the year, using rates enacted or substantively enacted at reporting date,
and any adjustments to tax payable in respect of previous years.
Deferred tax
Deferred tax assets and liabilities are determined using the balance sheet method, which calculates temporary differences based
on the difference between the carrying amount of the Consolidated Entity’s assets and liabilities in the balance sheet and their
associated tax bases.
Deferred tax assets and liabilities are not recognised for temporary differences arising from investments in subsidiaries where
the consolidated entity is able to control the reversal of the temporary differences, and it is probable they will not reverse in the
foreseeable future. Deferred tax assets are recognised, to the extent that it is probable that future taxable income will be available
to utilise them.
The carrying amount of deferred tax assets is reviewed at the end of each reporting date and adjusted based on estimates of future
taxable income and or capital gains against which the deferred tax asset could be utilised.
Deferred tax assets and liabilities are measured at the tax rates applicable to each jurisdiction, which are expected to apply in the
period when the assets are realised or liabilities discharged and are offset where they relate to the same tax authority and there
is a legally enforceable right to offset.
Tax consolidation
OZ Minerals Limited and its wholly owned Australian controlled entities are part of a tax consolidated group. OZ Minerals Limited
is the head of the tax consolidated group.
68
OZ Minerals / Annual Report 2015
5
Inventories
Significant accounting
judgements
—
A
J
120
100
80
60
40
20
0
)
m
$
(
e
u
l
a
v
y
r
o
t
n
e
v
n
I
Net realisable value of inventories
Inventories are recognised at the lower of cost and net realisable value (‘NRV’).
NRV of ore is based on the estimated amount expected to be received when the ore is
processed and sold, less incremental costs to convert the ore to concentrate and selling
costs. The computation of NRV for stockpiles involves significant judgements and estimates
in relation to future ore blend rates, timing of processing, processing costs, commodity
prices, foreign exchange rates, discount rates and the ultimate timing of sale of concentrates
produced. A change in any of these critical assumptions will alter the estimated NRV
and may therefore impact the carrying value of inventories.
109.8
92.6
89.1
76.8
73.2
2015
2014
33.5
28.9
32.5
O re st o c k pile
(n o n-c u rre n t)
at N
R V
C o n c e n trates
at c o st
O re st o c k pile
(c u rre n t) at c o st
O re st o c k pile
(n o n-c u rre n t)
at c o st
Concentrates – at cost
Ore Stockpile – at cost
Stores and consumables – at cost
Inventories – current
Ore Stockpile – non-current at cost
Ore Stockpile – non-current at net realisable value
Inventories – non-current
Total Inventories
21.7
25.1
St o res a n d
m a bles
at c o st
c o n s u
2015
$m
28.9
92.6
21.7
143.2
76.8
109.8
186.6
329.8
2014
$m
33.5
89.1
25.1
147.7
32.5
73.2
105.7
253.4
A net realisable value inventory adjustment to reduce the value of inventory of $4.4 million in respect of low grade gold ore
stockpiles was recognised in 2015 (2014: $57.1 million).
69
OZ Minerals / Annual Report 2015
Recognition and measurement of inventories
Inventory is valued at the lower of cost incurred in bringing product to its present location and condition and net realisable value.
Costs are assigned to individual items of inventory on the basis of weighted average costs. Cost comprises direct materials and
labour, and a proportion of overhead expenditure directly related to the production of inventories. Expenditure directly related
to the production of inventories includes processing costs, transportation costs to the point of sale, and depreciation of plant and
equipment and mining property and development assets, the latter of which includes deferred stripping assets and mine rehabilitation
costs incurred in the mining process.
Net realisable value is calculated by estimating the value that is expected to be realised upon sale of concentrate after deducting
estimated costs of processing and selling costs. This estimation is based on assumptions of future prices and costs, as well as expected
future ore blend rates and timing of processing.
Inventories expected to be processed or sold within 12 months after balance date are classified as current assets, all other inventories
are classified as non-current.
6 Operating cash flows
The Consolidated Entity’s operating cash flow reconciled to profit after tax is as follows:
Profit after tax for the year
Adjustments for:
Depreciation
Lease amortisation
Gain on revaluation of investment to fair value upon discontinuation of equity method
Dividends classified as investing activities
Other items
Change in assets and liabilities:
Trade and other receivables
Prepayments
Inventories
Trade and other payables
Provision for employee benefits
Provision for demobilisation and other provisions
Net current and deferred tax liability
Net cash inflow from operating activities
2015
$m
130.2
2014
$m
48.5
285.1
296.1
7.4
–
(1.0)
3.9
29.2
1.1
(76.4)
(11.6)
(1.4)
3.8
59.5
429.8
8.0
(8.7)
(3.0)
(0.7)
(0.2)
(2.0)
(80.6)
(57.0)
1.6
7.3
12.2
221.5
Recognition and measurement of cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash equivalents comprise short-term and highly liquid cash deposits that are
readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. For the purposes
of the Consolidated Statement of Cash Flows, cash includes cash on hand, demand deposits and cash equivalents.
70
Notes to the Consolidated Financial Statements — Net Cash and Capital Employed continuedOZ Minerals / Annual Report 2015 7
Property, plant and equipment
2015
At cost
Accumulated depreciation and impairment losses
Closing carrying amount
Reconciliation of carrying amounts
Opening carrying amount
Additions and transfers including deferred mining
Disposals – at cost
Accumulated depreciation on disposals
Malu underground pre commissioning revenue adjustment
Increase in mine rehabilitation asset – Note 10
Depreciation expense
Closing carrying amount
2014
At cost
Accumulated depreciation and impairment losses
Closing carrying amount
Reconciliation of carrying amounts
Opening carrying amount
Additions and transfers including deferred mining
Malu underground pre commissioning revenue adjustment
Increase in mine rehabilitation asset – Note 10
Depreciation expense
Closing carrying amount
Plant and
equipment
$m
Mine
property and
development
$m
Freehold
land and
buildings
$m
Capital
work in
progress
$m
1,130.2
(740.6)
389.6
440.5
17.5
(9.8)
9.8
–
–
(68.4)
389.6
1,539.1
(764.6)
774.5
685.8
335.8
–
–
(54.3)
10.7
(203.5)
774.5
187.5
(112.0)
75.5
87.5
1.2
–
–
–
–
(13.2)
75.5
22.2
–
22.2
118.0
(103.7)
–
–
7.9
–
–
22.2
Plant and
equipment
$m
Mine
property and
development
$m
Freehold
land and
buildings
$m
Capital
work in
progress
$m
1,122.5
(682.0)
440.5
497.4
20.1
–
–
(77.0)
440.5
1,246.9
(561.1)
685.8
644.0
240.2
–
5.1
(203.5)
685.8
186.3
(98.8)
87.5
102.9
0.2
–
–
(15.6)
87.5
118.0
–
118.0
60.5
65.4
(7.9)
–
–
118.0
Total
$m
2,879.0
(1,617.2)
1,261.8
1,331.8
250.8
(9.8)
9.8
(46.4)
10.7
(285.1)
1,261.8
Total
$m
2,673.7
(1,341.9)
1,331.8
1,304.8
325.9
(7.9)
5.1
(296.1)
1,331.8
Recognition and measurement of property, plant and equipment
Items of property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the items and costs incurred in bringing assets into use.
Mine property and development assets include costs transferred from exploration and evaluation assets once technical feasibility
and commercial viability of an area of interest are demonstrable. After transfer, all subsequent expenditures to develop the mine
to the production phase, which are considered to benefit mining operations in future periods, are capitalised.
The proceeds from sale of any concentrate produced from ore extracted and processed as part of development of the asset prior
to being deemed ready for use, less any further processing and selling costs incurred, is deducted from the cost of the asset.
The present value of the expected cost of decommissioning an asset after its use is included in the cost of the respective asset
if the recognition criteria for a provision are met.
Property, plant and equipment is tested for impairment when there is an indication of impairment. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows. An impairment loss
is recognised for the amount by which the asset or cash-generating unit (‘CGU’) carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to dispose and value in use. Assets that have been impaired
are reviewed for possible reversal of impairment at each reporting date.
71
OZ Minerals / Annual Report 2015
Value in use is the net amount expected to be recovered through cash flows arising from continued use and subsequent disposal
of an asset (or group of assets). In assessing value in use, estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset.
The asset’s fair value less costs to dispose is the amount obtainable from the sale of an asset or cash-generating unit in an arm’s
length transaction between knowledgeable, willing parties, less the estimated costs of disposal.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits
by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest
and best use.
Significant accounting
judgements
—
A
J
Significant accounting
judgements
—
A
J
Recoverability of assets
The Consolidated Entity undertook a review of the carrying value of the Prominent Hill CGU
and determined that no adjustment to the carrying value was necessary. The recoverable
amount was estimated on the basis of Fair Value Less Cost to Dispose, and based upon an
internal discounted cash flow for presently approved mine plans and an estimate of the value
of resources known to exist but not yet included in mine plans. The latter was estimated from
independent publicly available information for recent transactions involving comparable
resources. No value was ascribed to exploration potential associated with the CGU despite
the prospectivity of the region.
Significant estimates and judgements are made in estimating the recoverable amount,
including future cash flows, commodity prices, foreign exchange rates, costs and mine
plans. Key areas of judgement and assumptions include the following:
− Future cash flows are based on latest Board approved internal budgets and forecasts,
which reflect expectations of the volume and grade of ore to be mined and processed,
mine plans, sales, short-term and long-term commodity prices and exchange rates,
operating and capital costs and operational assumptions. These estimates are based
on past experience, current market conditions and expectation of future changes to
the market in which the CGU operates. Commodity price and exchange rate assumptions
were based on consensus of independent industry analysts and commentators.
− Mineral resources not modelled in Board approved budgets are included in the assessment
of fair value less cost to dispose, based on the application of an appropriate resource
valuation multiple to the contained copper equivalent within these resources.
− Discount rate applied to the cash flows, which would be applied by a market participant
in considering the value of the CGU and is reflective of current market conditions. A real
post-tax discount rate of 9.5 percent (2014: 9.2 percent) was used in 2015.
The valuation is sensitive to such assumptions, which are subject to change as a result of
changing economic and operational conditions. As a result, any change in key assumptions
will alter the estimate of recoverable amount, and consequently it could in the absence
of other factors require a change to the carrying value of assets associated with the
Prominent Hill CGU in the future.
Commissioning of assets
Judgement is required as to when a mine moves into the production phase, this being
when the mine is substantially complete and ready for its intended use.
During 2015, having regard to a reasonable period of testing, the ability to produce metal
in saleable form (within specifications), and the ability to sustain ongoing production
of metal, the Consolidated Entity determined that assets related to the Malu underground
mine were ready for use. As a result, from 1 July 2015, expenditure to date was transferred
from capital work in progress to mine property and development and depreciation commenced.
Prior to commissioning all costs were capitalised and net revenue generated from sale
of concentrate produced was deducted from the amount capitalised.
72
Notes to the Consolidated Financial Statements — Net Cash and Capital Employed continuedOZ Minerals / Annual Report 2015 The depreciation methods adopted by the Consolidated Entity are provided in the table below:
Category
Freehold land
Depreciation method
Not depreciated
Buildings and other infrastructure
Straight-line over life of mine
Short-term plant and equipment
Straight-line over life of asset
Processing plant
Units of ore milled over total mine reserves
Mine property and development
Units of ore extracted over applicable reserves to which the asset relates
Depreciation of assets commences when the assets are ready for their intended use. The depreciation of mine property and
development commences when the mine is commissioned or deemed ready for use.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each reporting
period and adjusted prospectively, if appropriate. Where depreciation rates are changed, the net written down value of the
asset is depreciated from the date of the change in accordance with the new depreciation rate, with the change accounted for
as a change in accounting estimate.
Significant accounting
judgements
—
A
J
Ore reserves and resources estimates
The estimated quantities of economically recoverable reserves and resources are based
upon interpretations of geological and geophysical models, and require assumptions
to be made regarding exchange rates, commodity prices, future capital requirements
and future operating performance.
Changes in reported reserves and resources estimates can impact the carrying value of
property, plant and equipment, including deferred mining expenditure, intangible assets,
provisions for mine rehabilitation, restoration and dismantling obligations, recognition of
deferred tax assets, as well as the amount of depreciation charged to the Income Statement.
Changes in the carrying value of the assets may arise principally through changes in the
income that can be economically generated from each project. Changes in depreciation
expense may arise through a change in the useful life over which property, plant and
equipment is depreciated.
Open pit stripping (waste removal) costs – deferred mining
Stripping (waste removal) activity is removal of waste material to access ore reserves. Stripping costs incurred in the development
phase (those to initially access the ore body) are capitalised as part of the cost of constructing the mine and depreciated as outlined
above. Stripping costs incurred during the production phase (production stripping costs) generate two benefits:
− Production of inventory (‘ore’) – accounted for as a part of producing those ore inventories; or
− Improved access to a component of the ore body to be mined in future – recognised as ‘deferred mining asset’ and classified
as part of mine property and development, if the following criteria are met:
− Future economic benefits are probable;
− The component of the ore body for which access will be improved can be accurately identified; and
− The costs associated with improved access can be reliably measured.
A component is a specific part of the ore body that is made more accessible as a result of the stripping activity and is determined
based on mine plans. Any changes are applied prospectively.
Production stripping costs are allocated between ore produced and the deferred mining asset on the basis of the relative volume
of waste mined in a period which exceeds the remaining waste-to-ore stripping ratio at the beginning of the period applicable
to the component. Deferred mining costs are subsequently depreciated using the units of production method over the life of the
identified component of the ore body that became more accessible as a result of the stripping activity. Deferred mining costs are
carried at cost less depreciation and any impairment losses.
73
OZ Minerals / Annual Report 2015 Significant accounting
judgements
—
A
J
Stripping (waste removal) costs – deferred mining
Judgement is required in determining the estimated future ore and waste to be mined from
a component of the open pit. The estimate of ore and waste remaining to be mined influences
the amount of mining costs, which are capitalised as mine property and development or
included in the cost of inventory. The estimates that determine the amounts capitalised
or expensed are based on Board approved mine plans. A change in ore or waste expected
to be mined will influence both the future rate at which mining costs may be capitalised
as a deferred mining asset, as well as altering the useful life for depreciation purposes
of any existing deferred mining asset.
8
Lease receivable
Finance lease receivable
2015
$m
34.8
2014
$m
42.2
Recognition and measurement of finance lease receivable
Leases which transfer substantially all the risk and rewards of ownership of an asset are classified as finance leases. Where a finance
lease is provided, the item of equipment is derecognised and the present value of the minimum lease payments receivable are
recognised as a lease receivable. Contingent rents are recognised as revenue in the period in which they are earned.
The finance lease receivable represents the consideration paid by OZ Minerals to acquire mining equipment which was leased back
to Thiess on an interest free basis. OZ Minerals benefits progressively over the mining services contract from reduced mining services
charges by Thiess. Upon termination of the mining services contract, any carrying value of lease receivable will be recovered by
OZ Minerals from resale of the equipment to Thiess.
The finance lease receivable of $34.8 million as at 31 December 2015 comprises $42.2 million from the comparative year,
less $7.4 million (2014: $8.0 million) amortisation of the finance lease receivable during the year.
9
Intangible assets
Significant accounting
judgements
—
A
J
Exploration assets
Carrying value of capitalised exploration expenditure
The accounting policy for exploration and evaluation expenditure requires judgement to
determine whether future economic benefits are likely from either future exploitation or
sale, or whether activities have not reached a stage that permits a reasonable assessment
of the existence of reserves.
In the event future economic benefits are unlikely or a reasonable assessment of the
existence or otherwise of economic reserves is possible, an impairment test may be
required, which may result in an adjustment to the carrying value of capitalised
exploration expenditure.
The ultimate recoupment of costs capitalised for exploration and evaluation phases is
dependent on successful development and commercial exploitation or sale of the respective
areas of interest.
2015
$m
252.2
2014
$m
252.2
Exploration assets represent acquisition costs of the Carrapateena copper-gold project in South Australia. The terms of this asset
acquisition provide for two further payments by OZ Minerals to vendors upon commercial production being reached:
− US$50.0 million is payable on first commercial production of copper, uranium, gold or silver.
− US$25.0 million is payable on first commercial production of rare earths, iron or any other commodity.
The further payments amounting to US$75.0 million do not constitute a liability in accordance with accounting standards
as OZ Minerals can control whether the amounts will ever be paid and therefore no liability is recognised for the year ended
31 December 2015.
74
Notes to the Consolidated Financial Statements — Net Cash and Capital Employed continuedOZ Minerals / Annual Report 2015 Recognition and measurement of exploration expenditure
Exploration and evaluation expenditure is recognised in the Income Statement as incurred, unless the expenditure is expected
to be recouped through successful development and exploitation of the area of interest, or alternatively by its sale, in which case
it is recognised as an asset on an area of interest basis.
Exploration and evaluation assets are classified as tangible (as part of property, plant and equipment) or intangible according
to the nature of the assets. Exploration and evaluation assets are not depreciated and are assessed for impairment if:
− sufficient information exists to determine technical feasibility and commercial viability; or
− other facts and circumstances suggest that the carrying amount exceeds the recoverable amount.
For the purposes of impairment testing, exploration and evaluation assets are allocated to CGUs to which the exploration activity
relates. A CGU is not larger than the area of interest.
Once the technical feasibility and commercial viability of the extraction of mineral reserves in an area of interest are demonstrable,
exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified to mine
property and development assets within property, plant and equipment.
From time to time, the Consolidated Entity enters into arrangements which enable it to secure the opportunity to explore and
potentially earn the right to mineralisation if discovered on underlying exploration tenements held by other entities (earn in
arrangements). Expenditure incurred under earn in arrangements is expensed as incurred. Under the agreements, OZ Minerals
does not assume any liabilities or hold any rights to other assets that the holder of the tenement may possess.
10 Provisions
Significant accounting
judgements
—
A
J
Mine rehabilitation, restoration and dismantling obligations
The provision for mine rehabilitation includes future cost estimates associated with
reclamation, plant closures, waste site closures, monitoring, demobilisation of equipment,
decontamination, water purification and permanent storage of historical residues.
Uncertainty exists as to the amount of rehabilitation obligations which will be incurred
due to the impact of changes in environmental legislation, and many other factors, including
future changes in technology, price increases and changes in interest rates. The calculation
of these provision estimates requires assumptions such as application of environmental
legislation, plant closure dates, available technologies, engineering cost estimates and
discount rates. A change in any of the assumptions used may have a material impact
on the carrying value of mine rehabilitation, restoration and dismantling provisions.
Recognition and measurement of provisions
Provisions are measured at the present value of the best estimate of the expenditure required to settle the present obligation
at balance sheet date. The discount rate used to determine the present value reflects current market assessments of the time
value of money and the risks specific to the liability. The increase in provisions due to the passage of time is recognised in the
Income Statement as financing expenses.
Provisions are made for the estimated cost of rehabilitation, decommissioning and restoration relating to areas disturbed during
mining and exploration operations up to the reporting date but not yet rehabilitated. Provisions for mine rehabilitation are based
on current estimates of costs to rehabilitate such areas, discounted to their present value based on expected future cash flows.
The estimated costs include the current cost of rehabilitation necessary to meet legislative requirements. Changes in estimates
are dealt with on a prospective basis as they arise. The provision is recognised as a liability, separated into current (estimated costs
arising within 12 months) and non-current components based on the expected timing of these cash flows.
Provision for demobilisation relates to the Consolidated Entity’s obligation to reimburse contractors for the cost of removing
equipment from the mine site. Additions to the provision are made over the life of the equipment while in use at OZ Minerals
to match the expected demobilisation costs with the related benefit.
75
OZ Minerals / Annual Report 2015 Notes to the Consolidated Financial Statements
—
Contributed Equity
Current
Equipment demobilisation
Other provisions
Total current provisions
Non-current
Equipment demobilisation
Mine rehabilitation
Total non-current provisions
Aggregate
Other provisions
Equipment demobilisation
Mine rehabilitation
Total provisions
Reconciliation of provisions
Opening carrying amount
Unwind of discount
Provisions recognised
Closing carrying amount
2015
$m
6.8
1.8
8.6
2.5
30.9
33.4
1.8
9.3
30.9
42.0
2014
$m
4.2
–
4.2
3.1
18.3
21.4
–
7.3
18.3
25.6
Mine
rehabilitation
provision
Equipment
demobilisation
provision
18.3
1.9
10.7
30.9
7.3
–
2.0
9.3
The addition of $10.7 million to the mine rehabilitation provision was due to revisions in mine rehabilitation cost estimates and
changes in the estimated timing of rehabilitation activities at Prominent Hill and initial recognition of a provision for Carrapateena.
The rehabilitation will be carried out at the end of mining operations.
11 Capital expenditure commitments
In accordance with OZ Minerals’ accounting policy, commitments for capital expenditure represent the minimum expected
payments where the contracts are not cancellable. Otherwise the commitment represents the cancellation fee.
OZ Minerals has entered into contracts for ongoing capital projects. While these contracts are cancellable, termination payments
are not reliably measurable as they are dependent on various factors, including application of termination clauses, which can only
be estimated in the event of termination.
The minimum expected payments in relation to contracts for development of capital projects and equipment, which were not
required to be recognised as liabilities at 31 December 2015, amount to nil (2014: nil).
76
OZ Minerals / Annual Report 2015 This section analyses the various forms of equity within the Consolidated Entity, how capital is managed by the Consolidated
Entity and share-based payments, which are paid from the equity of the parent.
The capital management strategy of the Consolidated Entity is to maintain sufficient liquidity in order to support its business
and to achieve superior returns for its shareholders. The Consolidated Entity manages its capital structure and makes adjustments
in light of changes in economic conditions. To maintain or adjust the capital structure, the Consolidated Entity may adjust the
dividend payment to shareholders and undertake other suitable capital management initiatives.
The Consolidated Entity’s policy is to maintain a gearing ratio of up to a maximum of 20 percent. The gearing ratio as at
31 December 2015 is nil (2014: nil).
12
Issued capital
303,470,022 shares (2014: 303,470,022 shares)
2015
$m
2014
$m
2,058.9
2,058.9
The Company does not have authorised capital or par value in respect of its issued shares. Ordinary shares entitle the holder to
participate in dividends and the proceeds on winding up of the Company in proportion to the number of shares held. On a show
of hands, every holder of ordinary shares present at a meeting in person or by proxy is entitled to one vote, and upon a poll each
holder is entitled to one vote per share.
Recognition and measurement of issued capital
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.
Shares bought and held by Employee Share Plan Trust to meet the Consolidated Entity’s obligation to provide shares to employees
in accordance with the terms of their employment contracts and employee share plans as and when they may vest are classified
as treasury shares and are presented as a deduction from total equity, until the shares are cancelled or reissued.
13 Share-based payments
Total expenses arising from share-based payment transactions recognised during the year as part of employee benefit expenses was
$4.4 million (2014: $3.6 million). A description of OZ Minerals’ significant Performance Rights Plans (‘PRP’) and Long-Term Incentive
Plans (‘LTIP’) are provided below:
Element
Performance rights granted under PRP
Performance rights granted under LTIP
Performance
period
2015: 22 July 2015 to 1 July 2016
2014: 2 May 2014 to 1 July 2015
2013: 1 May 2013 to 1 May 2014
Service
period
2015: 22 July 2015 to 1 July 2016
2014: 2 May 2014 to 1 July 2015
2013: 1 May 2013 to 1 May 2014
2015: 1 July 2015 to 30 June 2018
2014: 1 July 2014 to 30 June 2017
2013: 20 December 2013 to 19 December 2016
2012: 21 December 2012 to 20 December 2015
2011: 22 December 2011 to 21 December 2014
2015: 1 July 2015 to 30 June 2018
2014: 28 July 2014 to 15 July 2017
2013: 20 December 2013 to 19 December 2016
2012: 21 December 2012 to 20 December 2015
2011: 22 December 2011 to 21 December 2014
Vesting
conditions
Percentage vesting based on individual
performance against Key Performance
Indicators
TSR performance measured against
Comparator Group
Percentage of vesting
75th percentile or greater
100
Between the 50th and
75th percentile
Between 50 percent and 100 percent
vest progressively by using a
straight-line interpolation
50th percentile
Less than 50th percentile
50
Nil
Exercise price Not applicable – provided at no cost
Not applicable – provided at no cost
77
OZ Minerals / Annual Report 2015 Notes to the Consolidated Financial Statements
—
Risk Management
Performance rights granted under the PRPs or LTIPs are not entitled to dividends nor have voting rights. All performance rights
under current performance rights plans are automatically exercised upon vesting, which is dependent upon the meeting of both
the service condition and the performance condition. The shares when issued on vesting of performance rights rank equally in all
respects with previously issued fully paid ordinary shares.
The fair value of services received in return for share-based payments granted during the year is based on the fair value of the
performance rights granted, measured using a Binomial Approximation Option Valuation Model and Monte-Carlo Simulation
Valuation Model for Performance Rights Plans and Long-Term Incentive Plans respectively, with the following inputs:
Grant date
Performance rights granted under the LTIP
21 July 2015
28 July 2014
20 December 2013
21 December 2012
22 December 2011
Performance rights granted under the PRP
21 July 2015
2 May 2014
1 May 2013
Performance rights
Fair value
at grant
date
$
Share price
at grant
date
$
Expected
volatility
%
Expected
dividends
%
Risk-free
interest
rate
%
2.8
3.1
2.0
4.1
6.6
3.8
3.3
3.9
3.9
4.8
3.1
6.8
10.4
3.9
3.5
4.1
45.0
45.0
45.0
37.0
39.4
45.0
44.0
40.0
2.6
4.1
3.5
5.7
4.8
2.6
4.9
4.4
2.0
2.7
2.9
2.7
3.1
2.1
2.7
2.8
The movement in the number of performance rights during the year is set out below:
Opening balance
Rights granted
Rights vested and exercised
Rights forfeited
Closing balance
2015
Number
2014
Number
2,157,530
1,987,322
1,949,343
1,439,670
(623,720)
(204,816)
(821,379)
(1,064,646)
2,661,774
2,157,530
Recognition and measurement of share-based payments
The fair values of share-based payment transactions measured at grant date are recognised as an employee benefit expense,
with a corresponding increase in equity over the period during which the employees become unconditionally entitled to the
instruments. If the employee does not meet a non-market condition, such as a service condition or Internal KPIs, any cumulative
previously recognised expense is reversed.
The fair values of the share-based payment transactions granted are adjusted to reflect market vesting conditions. Non-market
vesting conditions are included in assumptions about the number of instruments that are expected to become exercisable and are
updated at each balance sheet date. The impact of the revision to original estimates, if any, is recognised in the Income Statement
with a corresponding adjustment to equity.
78
OZ Minerals / Annual Report 2015 This section presents information about the Consolidated Entity’s financial assets and liabilities, its exposure to financial risks,
as well as its objectives, policies and processes for measuring and managing risks.
The Consolidated Entity’s activities expose it primarily to the following financial risks:
− Commodity prices
− Foreign currency exchange rates
− Interest rates
− Equity security prices
− Credit risk
− Liquidity risk
14 Financial assets and liabilities
14.1 Non-derivative financial instruments
Recognition and measurement
Financial assets and liabilities are recognised when a member of the Consolidated Entity becomes party to the contractual
provisions of an instrument.
(i)
Financial assets
The Consolidated Entity classifies its financial assets into the following categories:
− Financial assets at fair value through other comprehensive income;
− Financial assets at fair value through profit and loss; and
− Loans and receivables at amortised cost.
Financial assets measured at amortised cost are recognised initially at fair value plus any directly attributable transaction costs.
Trade receivables are carried at fair value. Concentrate sales receivables are recognised in accordance with the recognition and
measurement criteria disclosed in Note 1. Provisional payments in relation to trade receivables are usually due within 30 days
from the date of invoice issue, with final settlement usually due within 60 days. Other receivables are recognised initially at fair
value and subsequently measured at amortised cost using the effective interest method.
The Consolidated Entity derecognises a financial asset or part of it when, and only when, the contractual rights to the cash flows
from the financial asset expire or the financial asset is transferred to another party without retaining control or substantially all
risks and rewards of the asset. On de-recognition of a financial asset, the difference between the carrying amount (measured
at the date of de-recognition) and the consideration received (including any new asset obtained less any new liability assumed)
and any cumulative gain or loss that had been recognised in equity is recognised in the Income Statement.
A financial asset measured at amortised cost is assessed at each reporting date as to whether there is any objective evidence of
impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected
as a result of future events, no matter how likely, are not recognised.
An impairment loss in respect of financial assets measured at amortised cost is recognised in the Income Statement and is measured
as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the
asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account.
In the event that an impairment loss is reversed, it will be to the extent that the asset’s carrying amount does not exceed what the
carrying amount would have been had the impairment not been recognised at the date the impairment is reversed. The amount
of the reversal is recognised in the Income Statement.
(ii)
Financial liabilities
All financial liabilities are recognised initially at fair value and net of directly attributable transaction costs. Trade and other
payables represent liabilities for goods and services provided to the Consolidated Entity prior to the end of the financial year
which are unpaid. The amounts are non-interest-bearing, unsecured and are usually paid within 30 days of recognition.
The Consolidated Entity de-recognises financial liabilities when its obligations are discharged, cancelled or expire. The difference
between the carrying amount of the liability de-recognised and the consideration paid and payable is recognised in the
Income Statement.
79
OZ Minerals / Annual Report 2015 14.2 Derivative financial instruments
Derivatives are initially recognised at fair value on the date the derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. Changes in the fair value of any derivative instrument are recognised
in the Income Statement.
Where an embedded derivative is identified and the derivative’s risks and characteristics are not considered to be closely related
to the underlying host contract, the fair value of the derivative is recognised on the Balance Sheet and changes in the fair value
of the embedded derivative are recognised in the Income Statement.
14.3 Equity securities
Significant accounting
judgements
—
A
J
Accounting for investments in equity securities
Judgement is required in assessing whether power over the investee exists where the
Consolidated Entity holds less than a majority of the voting rights. Factors considered include
rights arising from other contractual arrangements, any contractual arrangements with
other vote holders, as well as the Consolidated Entity’s voting and potential voting rights.
Despite holding 21.1 percent of Toro Energy Limited’s (‘Toro’) voting rights, it was determined
that OZ Minerals does not exert significant influence over Toro considering the distribution
of voting rights among Toro’s other shareholders and given OZ Minerals does not have
board or management representation and does not participate in the financial or operating
policies of Toro.
Financial assets measured at fair value include investments in equity instruments which are not held for trading. The Consolidated
Entity recognises fair value changes in Other Comprehensive Income based on an irrevocable election at initial recognition.
Amounts related to the change in fair value of equity securities are classified in Other Comprehensive Income and are never
reclassified to profit and loss at a later date.
Carrying value of investments in equity securities
34.3
(4.5)
214.4
(67.5)
0.1
176.8
m
$
250
200
150
100
50
0
p e nin g 2 0 1 4
R e classific atio n s
O
D is p o sals
F o reig n e xc h a n g e
N et c h a n g e
differe n c es
in fair v alu e
Clo sin g 2 0 1 4/
p e nin g 2 0 1 5
O
(126.5)
(18.5)
31.8
D is p o sals
N et c h a n g e
in fair v alu e
Clo sin g 2 0 1 5
2014 Investments ($m)
2015 Investments ($m)
Sandfire Resources NL – 136.2
Toro Energy Limited – 33.8
Beadell Resources Ltd – 2.8
Renaissance Minerals Limited – 2.8
Other investments – 1.2
Toro Energy Limited – 29.5
Beadell Resources Ltd – 1.8
Other investments – 0.5
80
Notes to the Consolidated Financial Statements — Risk Management continuedOZ Minerals / Annual Report 2015 15 Financial risk management
OZ Minerals’ Group Treasury Function (‘Group Treasury’) manages the financial risks of the Consolidated Entity. Group Treasury
identifies, evaluates and manages financial risks in close co-operation with OZ Minerals’ operating units. The Board approves
principles for overall risk management, as well as policies covering specific risk areas, such as market, credit and liquidity risk.
The Consolidated Entity holds the following financial instruments as presented on the face of the Balance Sheet:
Carried at fair value using level 1 valuation
technique (based on share prices quoted
on the relevant stock exchanges)
Carried at fair value using level 2 valuation
technique (quoted market prices of copper,
gold and silver adjusted for specific settlement
terms in sales contracts)
Investments in equity securities
Trade receivables
Carried at amortised cost
Cash and cash equivalents
Other receivables
Lease receivables
Trade payables
Other payables
The carrying value of each of these items approximates fair value.
15.1 Commodity price risk management and sensitivity analysis
The Consolidated Entity is exposed to commodity price volatility on the sale of metal in concentrates such as copper and gold,
which are priced on, or benchmarked to, open market exchanges. OZ Minerals aims to realise average copper prices, which are
materially consistent with the prevailing average market prices for the same period.
The Consolidated Entity manages uneven exposure to price by managing shipment schedules or undertaking London Metals
Exchange (‘LME’) futures transactions. The financial impact of LME futures transactions are recognised in the Income Statement
in other income or other expenses.
At reporting date, if commodity prices changed by the historical average five-year annual commodity price movement of 15 percent
for copper as per the LME, and 11 percent for gold and 16 percent for silver as per the London Bullion Market Association (all other
variables held constant), the Consolidated Entity’s after tax profit would have changed by $9.0 million (2014: $13.3 million).
The application of a five-year change in commodity price reflects the variability management applies in forecast sensitivity analysis.
In accordance with Australian Accounting Standards, the sensitivity analysis is only on outstanding trade receivables that are subject
to commodity price risk at the end of the year, which were $91.4 million (2014: $120.1 million), and does not include the impact of
the movement in commodity prices on the total sales for the year.
81
OZ Minerals / Annual Report 2015 15.2 Foreign currency exchange risk management and sensitivity analysis
The Consolidated Entity is exposed to foreign currency risk arising from assets and liabilities that are held in currencies other
than the Australian dollar.
All OZ Minerals operations have a functional currency of Australian dollars. An entity’s functional currency is the currency
of the primary economic environment in which the entity operates. Determination of an entity’s functional currency requires
management’s judgement when considering a number of factors, including the currency that mainly influences sales prices,
costs of production, and competitive forces and regulations which impact sales prices. In addition, consideration must be given
to the currency in which financing and operating activities are undertaken.
Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the date of the
transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year
end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income Statement.
The carrying amount of the Consolidated Entity’s financial assets and financial liabilities by its currency risk exposure at the reporting
date is disclosed below. During 2015, the Consolidated Entity had a policy of holding cash balances in a range of 60:40 percent to
40:60 percent of US dollars to Australian dollars. In early 2016, the Company determined to maintain its cash holdings in Australian
dollars, with US dollars maintained only to meet US$ commitments.
2015
Cash and cash equivalents
Trade receivables
Trade payables
Total
2014
Cash and cash equivalents
Trade receivables
Trade payables
Total
The US dollar exchange rates during the year were as follows:
A$:US$
Denominated in
US$ presented
in A$m
Other currencies
presented
in A$m
268.0
91.4
(0.6)
358.8
120.9
120.1
(2.1)
238.9
–
–
(2.2)
(2.2)
–
–
–
–
Total
A$m
268.0
91.4
(2.8)
356.6
120.9
120.1
(2.1)
238.9
Average rate
31 December spot rate
2015
0.7527
2014
0.9020
2015
0.7287
2014
0.8183
At reporting date, if the foreign currency exchange rates strengthened/(weakened) against the functional currency by five percent
(2014: five percent), and all other variables were held constant, the Consolidated Entity’s after tax profit would have changed by
$13.3 million (2014: $8.4 million).
The sensitivity analysis includes only outstanding foreign currency denominated monetary items at the reporting date and adjusts
their translation for a five percent change in the foreign currency rate (2014: five percent).
15.3 Equity securities price risk management and sensitivity analysis
The Consolidated Entity is exposed to equity securities price risk, which arises from investments held and classified on the
Balance Sheet as investments in equity securities. At reporting date, if the share price of entities in which the Consolidated Entity
has equity investments increased or decreased by one percent, the Consolidated Entity’s equity would change by $0.3 million
(2014: $1.8 million).
15.4 Interest rate risk management and sensitivity analysis
The Consolidated Entity does not have any borrowings at 31 December 2015, and therefore is not exposed to interest rate risk
on borrowings. The Consolidated Entity carries term deposits with fixed interest rates. The effect of a change in interest rates
at balance date would not have a significant impact on the after tax profit as substantially all cash deposits have fixed interest
rate terms.
82
Notes to the Consolidated Financial Statements — Risk Management continuedOZ Minerals / Annual Report 2015 15.5 Credit risk management
Credit risk refers to the risk that any counterparty will default on its contractual obligations resulting in financial loss to the
Consolidated Entity. Counterparty credit risk arises through sales of metal in concentrate on normal terms of trade, through
deposits of cash, finance lease receivable and settlement risk on foreign exchange transactions.
At the reporting date, the carrying amount of financial assets in the balance sheet represents the maximum credit exposure
on cash and cash equivalents, trade receivables, other receivables and lease receivables.
The credit risk on cash and cash equivalents is managed by restricting financial transactions to banks which are assigned S&P
equivalent of A1 short-term credit ratings by international credit rating agencies and limiting the amount of funds that can
be invested with a single counterparty in accordance with OZ Minerals’ Credit Risk Management Policy.
Credit risk in trade receivables is managed by undertaking a regular risk assessment process and reviewing credit limits of
customers. As there are a relatively small number of transactions, they are closely monitored to ensure risk of default is kept
to an acceptably low level. Sales contracts require a provisional payment of at least 90 percent of the estimated value of each
sale, either promptly after vessel loading or upon vessel arriving at the discharge port. Where applicable, sales are covered
by letter of credit arrangements with approved financial institutions.
The maximum exposure to credit risk for trade receivables at the reporting date by geographic region of the customer was:
Europe
Asia
Australia
Total
2015
$m
34.9
27.5
29.0
91.4
2014
$m
105.6
11.4
3.1
120.1
Major customers who individually accounted for more than 10 percent of total revenue contributed approximately 56 percent of total
revenue (2014: 67 percent). These customers also represent 28.1 percent of the trade receivables balance as at 31 December 2015
(2014: 99.3 percent). There have been no instances of customer default during 2015 and there are no significant receivables which
are past due at the reporting date.
15.6 Liquidity risk management
Liquidity risk is the risk of encountering difficulty in meeting obligations associated with financial liabilities. OZ Minerals manages
liquidity risk by conducting regular reviews of the timing of cash outflows and the maturity profiles of term deposits in order to
ensure sufficient funds are available to meet its obligations.
The Consolidated Entity had access to the following borrowing facilities, which were undrawn at the end of the year.
Revolving facility
Expires on
Security
November 2016
Unsecured
2015
US$m
200.0
2014
US$m
200.0
83
OZ Minerals / Annual Report 2015 16 Contingencies
Significant accounting
judgements
—
A
J
Contingencies
By their nature, contingencies will only be resolved when one or more uncertain future
events occur or fail to occur. Determination of contingent liabilities disclosed in the Financial
Statements requires the exercise of significant judgement regarding the outcome of future
events. In the event of an unfavourable outcome of a number of matters listed below,
the financial results of OZ Minerals in future periods may be impacted unfavourably.
Recognition and measurement
Provisions for legal claims and other liabilities are recognised when:
− there is 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 can be reliably estimated.
Bank guarantees
OZ Minerals Group Treasury Pty Ltd has provided certain bank guarantees to third parties, primarily associated with the terms
of mining leases, exploration licences and office leases, in respect of which the relevant entity is obliged to indemnify the bank
if the guarantee is called upon. At the end of the financial year, no claims have been made under any of these guarantees.
The amount of some of these guarantees may vary from time to time depending upon the requirements of the recipient. These
guarantees are backed by deposits, which amounted to $34.8 million as at 31 December 2015 (31 December 2014: $34.8 million).
Presently, all guarantees are voluntarily cash backed by deposits in order to reduce the bank fees payable; however, should the
need arise all funds can be withdrawn as and when required.
Class action
OZ Minerals is the Respondent in a Federal Court proceeding alleging that certain former Zinifex shareholders, who received
shares in OZ Minerals on 1 July 2008 as a result of the merger between Oxiana and Zinifex, suffered loss or damage because
OZ Minerals engaged in misleading or deceptive conduct on a number of occasions before the merger and/or breached its
continuous disclosure obligations.
The class action was filed against OZ Minerals on 25 February 2014. A Further Amended Statement of Claim was filed on
4 July 2014, a Second Further Amended Statement of Claim was filed on 24 March 2015 and a Third Further Amended Statement
of Claim was filed on 7 December 2015.
OZ Minerals filed its defence to the class action on 1 September 2014. A Further Amended Defence was filed on 25 March 2015,
and a Second Further Amended Defence was filed on 18 December 2015.
OZ Minerals denies that it engaged in misleading or deceptive conduct or breached its continuous disclosure obligations and
is vigorously defending the proceedings. Even if liability is found to exist, it is possible, that OZ Minerals may be able to transfer
some of its liability to third parties via claims for contribution and apportionment defences.
Cross claims have been filed against third parties, including certain current and former directors and officers of Oxiana and Zinifex and
advisers to these entities. Claims for payment of legal fees have been received from certain current and former directors and officers
of the Consolidated Entity and an adviser who are cross respondents in the current proceedings. The Consolidated Entity is providing
moneys in relation to these claims under Deeds of Indemnity and other indemnities. Depending on the outcome of the proceedings,
the Consolidated Entity may be able to recover some of these monies. However, the outcome of the proceedings is uncertain.
The Company has received particulars of the loss alleged to have been suffered by the applicant, Mr Mitic, in the class action
proceedings. This information only relates to the applicant, and does not include the loss alleged to have been suffered by all
Group Members in these proceedings. The information received in relation to the applicant is not sufficient to enable a reliable
estimate of the loss alleged to have been suffered by the applicant and all Group Members in the proceedings to be made, or
to make an assessment of the financial effect on the Consolidated Entity. OZ Minerals is vigorously defending these proceedings.
Mediation in the class action is expected to occur in early March 2016 and the trial is scheduled to commence on 1 June 2016.
Estimates obtained by OZ Minerals indicate that its legal fees, counsel fees and expert fees, and the fees of the parties for whom
it is providing funds pursuant to indemnities, as noted above, for the period from 1 January 2016 up to and including mediation,
will be approximately $5.8 million, including GST.
84
Notes to the Consolidated Financial Statements — Risk Management continuedOZ Minerals / Annual Report 2015 Since the end of the financial year, the Company has received particulars of the loss alleged to have been suffered by the Applicant
and Group Members in the class action proceedings. Having considered this information and all the circumstances, the Company
believes that it is not in a position to calculate with sufficient reliability an estimate of the possible obligation in respect of the class
action even if it were found to exist. OZ Minerals is vigorously defending these proceedings.
There are a number of variables associated with class action litigation and significant uncertainty regarding the outcome (including
uncertainty as to the Consolidated Entity’s ability to recover costs). It is not possible or practicable to make an assessment on the
outcome of these proceedings, or to provide a reliable estimate of its financial effect on the Consolidated Entity. OZ Minerals has
concluded that it is not probable that a present obligation exists and accordingly, no provision has been recognised in the balance
sheet at 31 December 2015.
Deeds of indemnity
The Consolidated Entity has granted indemnities under Deeds of Indemnity with current and former Executive and Non-executive
Directors, former officers, the General Counsel – Special Projects, the former Group Treasurer and each employee who was a
director or officer of a controlled entity of the Consolidated Entity, or an associate of the Consolidated Entity, in conformity with
Rule 10.2 of the OZ Minerals Limited Constitution.
Each Deed of Indemnity indemnifies the relevant director, officer or employee to the fullest extent permitted by law for liabilities
incurred while acting as an officer of OZ Minerals, its related bodies corporate and any associated entity, where such an office is or
was held at the request of the Company. Under these indemnities, the Company meets the legal costs incurred by Company officers
in responding to investigations by regulators and may advance funds to meet defence costs in litigation, to the extent permitted
by the Corporations Act 2001(Cth).
Claims for payment of legal expenses have been received from certain current and former directors and officers of the Company
and its related bodies corporate who are cross respondents in the class action proceedings that the Company is currently involved
in. The Consolidated Entity is providing moneys in relation to these claims under the relevant Deeds of Indemnity and, depending
on the outcome of the proceedings, may be able to recover some of those monies. However, there is no certainty regarding the
outcome of the class action proceedings.
Employees
The Consolidated Entity has a policy that it will, as a general rule, support and hold harmless an employee who, while acting
in good faith, incurs personal liability to others as a result of working for the Consolidated Entity.
Auditor
No indemnity has been granted to an auditor of the Consolidated Entity in their capacity as auditors of the Consolidated Entity.
Warranties and indemnities
The Company has given certain warranties and indemnities to the purchasers of assets and businesses that have been sold.
Warranties have been given in relation to various matters, including the sale of assets, taxes and information. Indemnities have
also been given by the Consolidated Entity in relation to matters, including compliance with law, environmental claims, a failure
to transfer or deliver all assets and payment of taxes.
Tax related contingencies
The Consolidated Entity is subject to the ATO’s routine program of tax reviews and audits. The Consolidated entity may also be
subject to routine tax reviews and audits in overseas jurisdictions. The final outcome of any tax review or audit cannot be determined
with an acceptable degree of reliability. The Consolidated Entity believes that it is making adequate provision for its taxation liabilities
and is taking reasonable steps to address potentially contentious issues with the ATO and tax authorities in overseas jurisdictions.
However, there may be an impact on the Consolidated Entity if any revenue authority review or audit results in an adjustment that
increases the Consolidated Entity’s taxation liabilities.
Former Cambodian operations
The Australian Federal Police (AFP) advised OZ Minerals in September 2014 that it was conducting an investigation of OZ Minerals’
2009 acquisition of the remaining equity holding in the Okvau exploration joint venture in Cambodia in relation to foreign bribery
claims. Since the end of the financial year, the Company has been advised by the AFP that the scope of the AFP’s investigation is
being extended to OZ Minerals’ former Cambodian operations generally. The AFP is continuing its investigation and OZ Minerals
is continuing to cooperate with the AFP. OZ Minerals has concluded that it is not probable that a present obligation exists and,
accordingly, no provision has been recognised in the balance sheet at 31 December 2015.
Other
OZ Minerals Limited and its controlled entities are defendants from time to time in other legal proceedings or disputes, arising
from the conduct of their business. OZ Minerals does not consider that the outcome of any of these proceedings or disputes is likely
to have a material effect on the Company’s or the Consolidated Entity’s financial position.
85
OZ Minerals / Annual Report 2015 Notes to the Consolidated Financial Statements
—
Group Structure and Other Information
17 Parent entity disclosures
As at, and throughout, the financial year ended 31 December 2015, the parent entity of the Consolidated Entity was
OZ Minerals Limited.
Results of the parent entity
Write-up of investment in subsidiary
Provision for non-recovery of loan to subsidiary
Net other expense
Net profit/(loss) for the year
Other comprehensive loss
Total comprehensive income/(loss)
Financial position of the parent entity
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Treasury shares
Retained earnings
Accumulated losses
Total equity
2015
$m
95.7
(39.4)
(29.9)
26.4
(4.9)
21.5
2.4
2,224.9
2,227.3
10.3
0.9
11.2
2014
$m
92.8
(118.2)
(17.1)
(42.5)
(0.5)
(43.0)
3.1
2,222.0
2,225.1
12.2
0.9
13.1
2,216.1
2,212.0
2,058.9
2,058.9
(0.6)
365.4
(207.6)
–
356.1
(203.0)
2,216.1
2,212.0
OZ Minerals Limited is able to manage its net current liability position by its ability to control the timing of dividends from
its subsidiaries.
Refer to Note 16 for contingencies and Note 18 for Deed of Cross Guarantee disclosures. The parent entity’s capital expenditure
commitment as at 31 December 2015 was nil (2014: nil).
Franking account details
Franking account balance at beginning of year
Franking credits from income tax paid during the year
Franking debits from income tax refund received during the year
Franking account balance at end of year
0.9
–
–
0.9
0.9
–
–
0.9
86
OZ Minerals / Annual Report 2015 Basis of consolidation
Investments in subsidiaries
Subsidiaries are those entities over which the Consolidated Entity is capable of exerting control. The Consolidated Entity controls
an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect
those returns through its power over the entity. Where the Consolidated Entity holds less than a majority of the voting rights,
other relevant factors are considered in assessing whether power over the entity exists. Factors considered include rights arising
from other contractual arrangements, any contractual arrangements with other vote holders, as well as the Consolidated Entity’s
voting and potential voting rights.
The Consolidated Entity reassesses whether it controls an entity if facts and circumstances indicate that there has been a change
in one of the factors which indicate control. Subsidiaries are consolidated from the date on which control is assessed to exist
until the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries
by the Consolidated Entity.
Intercompany transactions, balances and unrealised gains and losses on transactions between companies controlled by the
Consolidated Entity are eliminated on consolidation.
Subsidiaries
The wholly owned controlled entities of OZ Minerals Limited are listed below:
Entity
Minotaur Resources Holdings Pty Ltd
OZ Exploration Pty Ltd
OZ Minerals Equity Pty Ltd
OZ Minerals Group Treasury Pty Ltd
OZ Minerals Holdings Limited
OZ Minerals Insurance Pte Ltd
OZ Minerals International (Holdings) Pty Ltd
OZ Minerals Investments Pty Ltd
OZ Minerals Jamaica Limited
OZ Minerals Prominent Hill Operations Pty Ltd
OZ Minerals Prominent Hill Pty Ltd
OZ Minerals Zinifex Holdings Pty Ltd
OZ Minerals Carrapateena Pty Ltd
OZ Exploration Chile Limitada
OZM Carrapateena Pty Ltd
OZ Exploration (USA) LLC
ZRUS Holdings Pty Ltd
OZ Minerals Agincourt Holdings Pty Ltd (deregistered on 16 February 2015)
OZ Minerals Agincourt Pty Ltd (deregistered on 16 February 2015)
OZ Minerals Europe Ltd (deregistered on 20 March 2015)
OZ Minerals Superannuation Pty Ltd (deregistered on 16 February 2015)
Country of incorporation
Australia
Australia
Australia
Australia
Australia
Singapore
Australia
Australia
Jamaica
Australia
Australia
Australia
Australia
Chile
Australia
USA
Australia
Australia
Australia
Channel Islands
Australia
87
OZ Minerals / Annual Report 2015 18 Deed of cross guarantee
The Company and all its Australian domiciled subsidiaries listed in Note 17 to the Consolidated Financial Statements, except for
OZ Minerals Equity Pty Ltd, are party to a Deed of Cross Guarantee (‘Deed’).
The effect of the Deed is that the Company guarantees to each creditor payment in full of any debt in the event of winding up
of any of the subsidiaries under certain provisions of the Corporations Act 2001. If a winding up occurs under other provisions of the
Act, the Company will only be liable in the event that after six months any creditor has not been paid in full. The subsidiaries have
also given similar guarantees in the event that the Company is wound up.
Set out below is the Consolidated Statement of Comprehensive Income and Consolidated Balance Sheet of the entities
within the Deed.
Consolidated Statement of Comprehensive Income
of the entities within the Deed of Cross Guarantee
Revenue from sale of concentrates
Other income
Net foreign exchange gains
Changes in inventories of ore and concentrate
Consumables, concentrate purchases and other direct costs
Employee benefit expenses
Exploration and evaluation expenses
Freight expenses
Royalties expense
Depreciation expense
Restructuring expense – employee benefits
Write-down of assets
Provision for receivable/investment in subsidiaries which are not within the Deed
Other expenses
Profit before net financing income and income tax from continuing operations
Financing income
Financing expenses
Net financing income
Profit before income tax from continuing operations
Income tax expense from continuing operations
Profit from continuing operations
Profit from discontinuing operations after income tax
Profit for the year
Other comprehensive loss
Net change in fair value of investments in equity securities, net of tax
Total comprehensive profit/(loss) for the year
2015
$m
879.4
5.4
32.4
79.8
2014
$m
831.0
15.3
18.8
78.7
(259.0)
(353.4)
(63.9)
(32.2)
(54.1)
(47.9)
(285.1)
(7.6)
–
–
(63.5)
183.7
7.5
(4.7)
2.8
186.5
(59.5)
127.0
–
127.0
(18.5)
108.5
(69.2)
(53.2)
(45.6)
(23.5)
(296.1)
–
–
(2.0)
(48.2)
52.6
7.3
(3.7)
3.6
56.2
(18.3)
37.9
6.9
44.8
(67.5)
(22.7)
88
Notes to the Consolidated Financial Statements — Group Structure and Other Information continuedOZ Minerals / Annual Report 2015 2015
$m
545.2
91.4
6.3
143.2
4.9
791.0
186.6
31.8
252.2
34.8
2014
$m
212.5
120.1
6.7
147.7
6.0
493.0
105.7
176.8
252.2
42.2
1,261.8
1,331.8
3.0
1,770.2
2,561.2
3.0
1,911.7
2,404.7
62.2
1.7
9.2
8.6
81.7
102.6
3.6
33.4
139.6
221.3
2,339.9
2,058.9
281.6
(0.6)
72.1
3.2
10.9
4.2
90.4
43.1
3.3
21.4
67.8
158.2
2,246.5
2,058.9
187.6
–
2,339.9
2,246.5
Consolidated Balance Sheet of the entities within
the Deed of Cross Guarantee
Current assets
Cash and cash equivalents
Trade receivables
Other receivables
Inventories
Prepayments
Total current assets
Non-current assets
Inventories
Investments in equity securities
Intangible assets – Carrapateena
Lease receivable
Property, plant and equipment
Investment in subsidiaries which are not party to the Deed
Total non-current assets
Total assets
Current liabilities
Trade payables and accruals
Other payables
Employee benefits
Provisions
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Employee benefits
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Retained earnings
Treasury shares
Total equity
89
OZ Minerals / Annual Report 2015 19 Key management personnel
Key management personnel remuneration
Key management personnel (‘KMP’) are accountable for planning, directing and controlling the affairs of the Company and its
controlled entities. The KMP remuneration for the Consolidated Entity was as follows:
Short-term employee benefits
Other long-term benefits
Post-employment benefits
Termination benefits
Share-based payments
Total
2015
$
2014
$
3,547,871
4,253,906
(110,856)
(156,157)
147,428
125,228
562,320
286,135
1,073,726
(532,953)
4,432,898
4,763,750
Information regarding individual directors’ and executives’ compensation and some equity instrument disclosures as required
by Corporations Regulation 2M.3.03 is provided in the Remuneration Report. Apart from the details disclosed below, no director
has entered into a material contract with the Consolidated Entity since the end of the previous financial year and there were no
material contracts involving directors’ interests existing at year-end.
Recognition and measurement of wages and salaries and short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months
of the reporting date, are recognised in the provision for employee benefits in respect of employees’ services up to the reporting
date and are measured at the amounts expected to be paid, inclusive of on costs, when the liabilities are settled. The expense
for non-accumulating sick leave is recognised when the leave is taken and measured at the rates paid or payable.
Recognition and measurement of other long-term employee benefits
Long-term employee benefits include annual leave liabilities, which are expected to be settled in the period greater than 12 months
from balance date and long service leave liabilities. Other long-term benefits are recognised in the provision for employee benefits
and measured as the present value of expected future payments to be made in respect of services provided by employees up to
the reporting date using the projected unit credit method. 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 market yields at the
reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated
future cash outflows.
Transactions with related parties
A number of KMP, or their related parties, hold positions in other entities that may result in them having control or significant
influence over the financial or operating policies of those entities. Where the Consolidated Entity transacts with the KMP and
their related parties, the terms and conditions of these transactions are no more favourable than those available, or which might
reasonably be expected to be available, on similar transactions to non-KMP related entities on an arm’s length basis.
90
Notes to the Consolidated Financial Statements — Group Structure and Other Information continuedOZ Minerals / Annual Report 2015 20 Remuneration of auditors
Audit services provided by KPMG
Audit and review of Financial Reports and other audit work under the Corporations Act 2001,
including audit of subsidiary Financial Statements
KPMG Australia
Overseas KPMG firms
Total fees for audit services provided by KPMG
Other services provided by KPMG Australia
Taxation compliance and other taxation advisory services
Other services
Total fees for other services provided by KPMG Australia
Total fees
21 New accounting standards
(i)
Mandatory Standards adopted during the year
2015
$
2014
$
532,000
33,343
565,343
165,882
120,000
285,882
851,225
481,500
29,253
510,753
193,446
27,500
220,946
731,699
In the current year, the Consolidated Entity has adopted all of the new and revised Standards and Interpretations issued by the
Australian Accounting Standards Board that are relevant to its operations and effective for the current annual reporting period.
The adoption of these new and revised Australian Accounting Standards and Interpretations has not had a significant impact
on the Consolidated Entity’s accounting policies or the amounts reported during the year.
(ii)
Early adoption of Standards
The Consolidated Entity has applied AASB 2014-1 Amendments to Australian Accounting Standards for the first time in the
annual reporting period beginning 1 January 2015. The Consolidated Entity also elected to early adopt the following standards:
− AASB 2015-1 Amendments to Australian Accounting Standards (Improvements 2013-2014 Cycle);
− AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101; and
− AASB 2015-3 Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality.
The adoption of these amendments did not have any significant impact on the Consolidated Entity’s results or its accounting
policies as these amendments either clarified the existing requirements or clarified disclosures, which have been incorporated
into these financial statements.
(iii)
Issued Standards and pronouncements not early adopted
At the date of authorisation of the Financial Statements, the following AASB Standards and interpretations were in issue but
not yet effective. The Consolidated Entity has not yet assessed the full impact of the below Standards; however, none are expected
to have a material impact on the transaction and balances recognised in the Financial Statements:
− AASB 9 Financial Instruments (as issued in December 2010 and December 2014) replaces the existing guidance in AASB 139
Financial Instruments: Recognition and Measurement. The Consolidated Entity elected to early adopt AASB 9 (as issued in
December 2009) from 1 January 2010. As permitted under the transitional provisions, there is no requirement for it to transition
to the latest version as it does not apply mandatorily before 1 January 2018 and is not expected to have a material impact when it
is first adopted for the year ending 31 December 2018.
− AASB 15 Revenue from Contracts with Customers changes the timing (and in some case, the quantum) of revenue recognised
from customers. The Standard does not apply mandatorily before 1 January 2018 and is not expected to have a material impact
when it is first adopted for the year ending 31 December 2018.
The following standards, all consequential amendments and interpretations are mandatory from 1 January 2016, have not been
adopted early by the group, and will be first adopted for the year ending 31 December 2016. They are not expected to have
material impact on application:
− AASB 2014-3 Accounting for Acquisitions of Interests in Joint Operations;
− AASB 2014-4 Clarification of Acceptable Methods of Depreciation and Amortisation;
− AASB 2014-9 Equity Method in Separate Financial Statements; and
− AASB 2014-10 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture.
91
OZ Minerals / Annual Report 2015 —
Directors’ Declaration
1. In the opinion of the Directors of OZ Minerals Limited (‘the Company’):
(a) the Consolidated Financial Statements and Notes set out on pages 61 to 91 and the remuneration disclosures that are
contained in the Remuneration Report on pages 43 to 55, are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the financial position of the Consolidated Entity as at 31 December 2015 and of its
performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001;
(b) the directors draw attention to page 57 to the consolidated financial statements, which includes a statement of compliance
with International Financial Reporting Standards.
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due
and payable.
2. There are reasonable grounds to believe that the Company and the consolidated entities identified in Note 18 to the
Consolidated Financial Statements will be able to meet any obligations or liabilities to which they are or may become subject
to by virtue of the Deed of Cross Guarantee between the Company and those consolidated entities pursuant to ASIC Class
Order 98/1418.
3. The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive
Officer and Chief Financial Officer for the financial year ended 31 December 2015.
Signed in accordance with a resolution of the directors.
Neil Hamilton
Chairman
Perth
10 February 2016
Andrew Cole
Managing Director & Chief Executive Officer
Adelaide
10 February 2016
92
OZ Minerals / Annual Report 2015
—
Independent Auditor’s Report
Independent auditor’s report to the members of OZ Minerals Limited
Report on the Financial Report
We have audited the accompanying Financial Report of OZ Minerals Limited (‘the Company’), which comprises the Consolidated
Balance Sheet as at 31 December 2015, and Consolidated Statement of Comprehensive Income, Consolidated Statement of
Changes in Equity and Consolidated Statement of Cash Flows for the year ended on that date, notes 1 to 21 comprising a summary
of significant accounting policies and other explanatory information and the Directors’ Declaration of the Consolidated Entity
comprising the Company and the entities it controlled at the year’s end or from time to time during the financial year.
Directors’ responsibility 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 is free from material misstatement whether due
to fraud or error. In the introduction to the Notes to the Consolidated Financial Statements set out on page 57, the Directors
also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the Financial
Statements of the Consolidated Entity comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the Financial Report based on our audit. We conducted our audit in accordance
with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating
to audit engagements and plan and perform the audit to obtain reasonable assurance whether the Financial Report is free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Financial Report.
The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of
the Financial Report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant
to the entity’s preparation of the Financial Report that gives a true and fair view in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by the Directors, as well as evaluating the overall presentation of the Financial Report.
We performed the procedures to assess whether in all material respects the Financial Report presents fairly, in accordance with
the Corporations Act 2001 and Australian Accounting Standards, a true and fair view which is consistent with our understanding
of the Consolidated Entity’s financial position and of its performance.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
KPMG, an Australian partnership
and a member firm of the KPMG network
of independent member firms affiliated
with KPMG International Cooperative
(‘KPMG International’), a Swiss entity.
Liability limited by a scheme
approved under Professional
Standards Legislation.
93
OZ Minerals / Annual Report 2015
—
Independent Auditor’s Report continued
Auditor’s opinion
In our opinion:
(a) the Financial Report of the Consolidated Entity is in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2015 and of its performance
for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
(b) the Financial Report also complies with International Financial Reporting Standards as disclosed in the introduction to the
Notes to the Consolidated Financial Statements set out on page 62.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 43 to 55 of the Directors’ Report for the year ended 31 December
2015. 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 auditing standards.
Auditor’s opinion
In our opinion, the Remuneration Report of OZ Minerals Limited for the year ended 31 December 2015 complies with Section 300A
of the Corporations Act 2001.
KPMG
Michael Bray
Partner
Melbourne
10 February 2016
94
OZ Minerals / Annual Report 2015
—
Shareholder Information
Capital
Share capital comprised 303,470,022 fully paid ordinary shares on 18 March 2016.
Shareholder details
At 18 March 2016, the Company had 51,236 shareholders. There were 7,460 shareholdings with less than a marketable parcel
of $500 worth of ordinary shares
Top 20 investors at 18 March 2016
Name
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
National Nominees Limited
BNP Paribas Noms Pty Ltd
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