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22 February 2018
The Manager, Companies
Australian Securities Exchange
Companies Announcement Centre
20 Bridge Street
Sydney NSW 2000
Dear Sir/Madam,
OZ Minerals 2017 Annual and Sustainability Report
Directors’ Report
OZ Minerals today announced its results for the full year ended 31 December 2017. Attached is the 2017
Annual and Sustainability Report including:
•
•
•
•
Remuneration Overview and Report
FY17 Financial Report
Sustainability Report
Sincerely,
Michelle Pole
Company Secretary and Senior Legal Counsel
OZ Minerals Limited | ABN: 40 005 482 824 | Level 1, 162 Greenhill Road, Parkside South Australia 5063
T: +61 8 8229 6600 | F: +61 8 8229 6601 | info@ozminerals.com | www.ozminerals.com
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2017
Annual and
Sustainability
Report
C o n t e n tS
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Contents
2017 Snapshot
Message from the Chairman and CEO
Operating review
Company Strategy
Prominent Hill
Carrapateena
West Musgrave
Exploration and Growth
Governance
Directors’ Report
Financial Review
Remuneration Overview and Report
Sustainability Report
Mineral Resources and Ore Reserves
Financial Report
Shareholder Information
02
05
06
06
08
10
12
13
14
19
29
37
57
81
91
131
Cautionary statement
The sustainability section of this report contains
forward-looking statements that relate to our activities,
plans and objectives. Actual results may significantly
differ from these statements, depending on a variety
of factors. The term ‘material topic’ is used for
voluntary sustainability reporting to describe topics
that could affect our sustainability performance. By
their nature, forward-looking statements involve risk
and uncertainty because they relate to events and
circumstances that will occur in the future and may
be outside OZ Minerals' control. Given these risks
and uncertainties, undue reliance should not be
placed on forward looking statements.
0 2
112,008
tonnes of copper produced
126,713
ounces of gold produced
C OPP ER PRICE
S NA P SHO T
$/lb
4.5
3.5
2.5
1.5
US$/lb
A$/lb
Jan 13
Jan 14
Jan 15
Jan 16
Jan 17
Jan 18
GOL D PRICE
$/oz
2,000
1,600
1,200
800
US$/oz
A$/oz
Jan 13
Jan 14
Jan 15
Jan 16
Jan 17
Jan 18
/ Copper guidance achieved for third consecutive
year and gold guidance exceeded
/ Cost performance at the bottom of the annual
guidance range
/ Cash balance lifted to $729 million after investment
into Carrapateena and ore inventory
/ Prominent Hill mine life further extended to 2029.
18 per cent increase in underground ore Reserve
provides for expected underground production rate
of 3.5–4 Mtpa from 2019 through to 2029
/ Carrapateena construction progressing on schedule
and budget
/ West Musgrave in pre-feasibility with a parallel
exploration program looking at district potential
/ two new international earn-in agreements and one
new Australian agreement established, taking pipeline
of potential growth opportunities to seven
/ Port Augusta selected as preferred location for
progressing Concentrate treatment Plant studies.
ANNUAL AND SUSTAINABILITY REPORT 2017 2 0 1 7 S nA P S Hot
0 3
$1,023m
revenue
operating Mine
Mine in construction
Study Phase
exploration
NT
Eloise
OLD
WA
West Musgrave
Mount Woods
Coompana
SA
Prominent Hill
Carrapateena
Punt Hill
NSW
AL L AS SETS
Prominent Hill
/ open pit and underground operations
/ Copper concentrate (containing gold and silver)
Carrapateena
/ Project in construction
/ Commissioning in Q4 2019
/ Copper concentrate (containing gold and silver)
West Musgrave
/ With Cassini Resources Limited
/ Pre-feasibility study underway
/ Commercialisation of copper/nickel
magmatic sulphide mineralisation
Eloise
/ With Minotaur exploration Limited
/ targeting Cannington style lead/zinc/silver
mineralisation and high grade copper/gold
mineralisation
Punt Hill
/ With Red Metal Limited
/ targeting IoCG mineralisation 50km
south of Carrapateena project
Mount Woods
Oaxaca
/ With Minotaur Exploration Limited
/ With Acapulco Gold Corp
/ Targeting brownfield copper resources
around Prominent Hill
Coompana
/ targeting copper/zinc VHMS
systems in southern Mexico
Alvito
/ With Mithril Resources Ltd
/ With Avrupa Minerals Ltd
/ targeting copper/nickel magmatic
/ targeting shallow IoCG mineralisation
sulphide mineralisation
in southern Portugal
ACT
VIC
TAS
MEXICO
Oaxaca
FULL YEAR FINANCIAL RESULTS S UMM ARY
PORTUGAL
Group revenue
Underlying eBItDA
net depreciation and amortisation
Underlying eBIt
net financing income
Income tax expense
Underlying nPAt
non-underlying items net of tax
nPAt
Dividends per share (cents)
2017
$m
1,023.1
539.4
(218.7)
320.7
8.7
(98.3)
231.1
–
231.1
20
2016
$m
822.9
373.8
(208.7)
165.1
9.0
(39.8)
134.3
(26.5)
107.8
20
Alvito
Photo: Carrapateena access decline progress // November 2017
0 4
2017 FINANCIAL AND OPERATIONAL HIGHLIGHTS
/ $1,023m revenue achieved
/ Phase 1 construction of Carrapateena
/ $231.1m statutory net profit after tax
/ $729m cash balance with no debt
/ earnings per share: 77.4 cents
/ total dividends for 2017: 20 cents per share,
fully franked
/ third consecutive year copper production
and cost guidance met at Prominent Hill
/ Carrapateena native title Mining
Agreement signed with the Kokatha
Aboriginal Corporation
commenced
/ West Musgrave advanced to pre-feasibility
study as project indicates economic viability
/ expanding portfolio of exploration projects
with two international earn-in joint ventures,
in Mexico and Portugal, added to our pipeline
and a further earn-in established near the
Carrapateena project.
ANNUAL AND SUSTAINABILITY REPORT 2017 M eS S A Ge fRoM tHe CH A I R M An
AnD Ce o
0 5
Message from the Chairman and CEO
Board renewal program
This phase of the Board renewal program is
drawing to a close. In 2017, Neil Hamilton
stepped down as Chairman after seven years
on the Board. Paul Dowd also stepped down
after eight years of service. Charles Lenegan
is to retire at the Annual General Meeting
in April 2018 after eight years’ service.
We thank Neil, Paul and Charles for their
valuable support and guidance.
Rebecca McGrath, who has been a director
of OZ Minerals since 2010, was appointed
Chairman. Three new non-executive directors
– Tonianne Dwyer, Peter Tomsett and Peter
Wasow – were appointed during the year,
and together they bring a depth of technical,
operational and senior management
experience from the resources sector and
other industries.
Shareholder returns
The Board’s current policy is to target a
minimum dividend payment of 20 per cent
of net cash generation, while maintaining a
strong balance sheet for investments such as
Carrapateena, buyback or other investment
opportunities. As a result of another strong
year, the Board declared a total, fully-franked
dividend for 2017 of 20 cents per share,
made up of a half year payment of six cents
per share and an end-year payment of
14 cents. 2017 earnings per share totaled
77.4 cents.
2018 priorities
The outlook for copper is optimistic with
demand coming from traditional uses for
copper such as infrastructure and transport.
New uses for copper, stemming from a
global focus on the environment, also
contribute to the projected growth in
demand. These new uses include electric
vehicle batteries and cabling, renewable
energy generation and storage, and the
need for efficient and reliable transmission
of power; all of which require high usage
of copper by weight. These innovations
with a need for copper, combined with a
projected global mine supply shortfall due
to declining head grades and a lack of new
mines being developed in the coming years,
suggest that copper will remain a sought
after commodity.
Dear Shareholders,
2017 was a positive year for OZ Minerals,
achieving or exceeding our production
and cost guidance, advancing our growth
strategy and growing our cash balance
to $729 million. This positions us strongly
to support our growth strategy whilst
rewarding our shareholders with a 14 cents
final dividend. These achievements were
supported by our lean and agile approach
to delivery, our focus on building a culture
of innovation, and our capacity to work
together with our stakeholders to create
value for all.
Growing the company
and delivering to strategy
Prominent Hill demonstrated its ability to
deliver reliable and predictable results as
it achieved annual production and cost
guidance for the third consecutive year.
Its mine life was further extended to 2029
as a result of an 18 per cent increase in
underground ore reserves, underlining its
pedigree as a long life asset.
A financially robust Carrapateena copper–
gold project progressed to construction and
the West Musgrave copper–nickel project
advanced to pre-feasibility.
These developments and the broader
execution of our growth strategy will
see OZ Minerals become a multi-mine
company within the next five years and
allow us to leverage a more robust
foundation to grow shareholder value.
Innovation, safety and community
This year we pursued innovation to drive
results. We took inspiration from within
and outside our industry to learn lessons
in technology and culture that we could
adapt and apply.
There was marked progress in safety
performance at Prominent Hill during the
year, after we implemented a number of
safety improvement programs. Our overall
total recordable injury frequency (TRIF)
rate was 6.39 compared to 6.8 in 2016.
We continue to strengthen our approach
to safe work.
We completed a Native Title Mining
Agreement with the Kokatha Aboriginal
Corporation and the Partnership
Management Committee is meeting
quarterly to ensure progress is made on
our commitments, including employment
and business opportunities, as the
Carrapateena project progresses.
Looking ahead, we will continue to deliver
value for shareholders, enable growth and
position ourselves well to capitalise on the
encouraging macroeconomic sentiment
through:
/ strengthening our reputation through
the reliable delivery of the Prominent Hill
mine plan
/ on-budget and on-schedule construction
of Carrapateena
/ completing the West Musgrave
pre-feasibility study
/ continuing to strengthen our approach
to safe work
/ enhancing organisational culture by
leveraging agility, lean operations and
an innovative mindset
/ maintaining our future growth pipeline
by increasing the number of exploration
and study opportunities, and seeking
acquisitions that provide foot-holds
into priority mineralised belts
/ drilling of the Khamsin and Fremantle
Doctor mineralised systems and developing
a Carrapateena ‘phase two’ expansion plan
/ simplifying our governance systems
/ maintaining our focus on fostering
innovation and collaboration through
the business.
Finally, we would like to close by thanking
our employees, community and contract
partners, and other stakeholders for their
contribution in the past year. Their effort,
support and interest are vital to the success
of your company. Thank you.
Rebecca McGrath
Chairman
Adelaide, 22 February 2018
Andrew Cole
Managing Director and CEO
Adelaide, 22 February 2018
0 6
Company Strategy
In 2017, we made major progress towards
our vision of becoming a copper-core,
global modern mining company that
delivers superior value with multiple
operating assets and a diverse exploration
and project pipeline. Our alignment with
our vision and strategy translated into
performance and achievement.
Lean business
Running a lean and agile business allows us to improve productivity
and channel the right resources to support growth and innovative
thinking. We support this way of working through simplified systems,
processes and technology, and we continuously seek ideas from our
people to improve the way we operate.
In 2017, Prominent Hill delivered at the top end of production
guidance and at the bottom of cost guidance, enabling us to take
advantage of improved copper prices and grow revenue to over
$1 billion.
Another example of lean business is our agile project evaluation at
Carrapateena. This enabled the mine’s design to be updated during
the feasibility study to relocate all underground development to
footwall host rocks in the south-west from the north-east. This move
allows the ore body to be reached earlier and for infrastructure to be
established completely outside of the mineralised zone.
Copper core
Our focus on a copper core means we leverage our existing
capabilities to promote copper as a key driver of earnings and
opportunistically target base metal assets.
Prominent Hill and Carrapateena are examples of projects that are
well aligned to our strategy, with both assets producing some of the
highest grade copper concentrates in the world. West Musgrave also
demonstrates how we can apply our in-house competencies, skillsets
and cumulative knowledge to other base metals.
Safe
Our overall total recordable injury frequency (TRIF) rate is 6.39. We
achieved a 41% TRIF reduction at Prominent Hill. We implemented
several improvement initiatives at Prominent Hill in 2017 including
a site Leadership Development Program to promote safety leadership
and a changed mindset of the importance of safety outcomes.
We also recorded 104 consecutive days injury free during the year.
R N M INING CO
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M u ltiple assets
H o w we work to
ANNUAL AND SUSTAINABILITY REPORT 2017
E
A M O D
Lean busin
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R N M INING CO
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CREATION
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M u ltiple assets
H o w we work to
Capital di s c i p l
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C oM PAn y S tR A t eGy
0 7
Customer focus
Our proposed, innovative Concentrate Treatment Plant (CTP) would
enable the secondary processing of copper concentrate to remove
iron and other impurities, increasing the percentage of copper in
concentrate from between 30 and 40 per cent to between 55 and
60 per cent.
The CTP could be a potential strategic differentiator for OZ Minerals
that would allow us to produce high quality concentrate for our
customers against a backdrop of increasing impurities and decreasing
global concentrate grades in the copper concentrate market.
Port Augusta in South Australia has been identified as the preferred
location. Study work has also included geotechnical investigations,
cultural heritage and environmental works. Studies and test work
are continuing in 2018.
Multiple assets
Exploration and building a pipeline of growth and exploration
opportunities are important parts of our growth strategy. Our
approach to exploration sees us partnering with highly-regarded
explorers with potential opportunities that suit our portfolio.
We’ve been working hard on our exploration growth pipeline
and strategic projects with the aim of becoming a multi-asset
company.
We began development on Carrapateena, our copper–gold
project north of Port Augusta in South Australia.
West Musgrave also progressed from an exploration project to a
pre-feasibility study (PFS). This followed positive results from the
further scoping study that showed an investable base case for
Nebo-Babel and a potential upside through resource conversion.
The focus of the PFS is on regional potential as West Musgrave,
much like Carrapateena, is a new mineral province with attractive
near-mine and district opportunities.
How we work together
How we work together – how we deliver results – is as important to
us as what we deliver. A strong set of behavioural principles helps us
to build a culture that embraces change and allows us to operate in
an agile way and set up for the next phase of our growth journey.
In 2017, we made the decision to relocate our head office to the
Adelaide Airport business district. The move, scheduled for mid-
2018, reflects the next phase of our growth and will provide a
modern work environment that will improve collaboration.
Capital discipline
One of the ways we leverage capital discipline is to look at where
capital can be used efficiently to develop projects and operate assets.
We adopted an early contractor involvement (ECI) model with the
Carrapateena project to further accelerate construction readiness,
reduce project delivery risk, and drive cost and schedule certainty.
This model enabled us to proactively manage risk, particularly in
relation to minimising contract or contractor interfaces,
maintaining capital discipline and leveraging the specialist capability
of contractors.
We are continually looking for opportunities to control costs.
0 8
Prominent Hill
Prominent Hill is a copper–gold-silver mine
located 130 km south-east of Coober Pedy
in South Australia, with a mine life that
currently extends to 2029.
Prominent Hill consistently and reliably
delivers results. It met copper and gold
production and cost guidance for the third
consecutive year in 2017 and generated
$452 million in free cash.
Highlights for 2017 included:
/ achieving annual copper and gold guidance
despite severe weather early in the year
/ improved safety performance with a 41%
reduction in TRIF
/ entering into an 18-month power purchase
agreement to provide price certainty for
Prominent Hill’s power supply until the end
of 2018
/ breaking through the second permanent
access decline from the underground
mine into the open pit, which yielded
improvements to underground operations,
enhanced productivity and reduced costs
/ partnering with technology specialists
to evaluate advanced analytics and machine
learning to optimise plant effectiveness
/ achieving the milestone of mining one
million tonnes of ore from the open pit
since it began its life in 2009.
Prominent Hill’s transition to an
underground-only mining operation steadily
progressed through the year. The open pit
closure has been brought forward to the
first quarter of 2018 as we implemented
opportunities to accelerate open pit mining.
In 2017, decommissioned equipment from
the open pit was progressively removed
from site and open pit activities began
transitioning to the underground team.
Safety is an ongoing priority at Prominent Hill
and we implemented several improvement
strategies during the year. These
improvements have significantly reduced
Prominent Hill’s TRIF rate and we set a new
site record of 104 days recordable injury free.
The Prominent Hill mine
has achieved copper
guidance for three
consecutive years and
continues to generate
value through strong
operational discipline and
the delivery of consistent,
safe, cost effective
production.
Our focus for 2018 is on:
/ enhancing operational risk management
with a focus on leadership and safe
behaviours
/ maintaining strong operating discipline
to reliably deliver results in the bottom
half of the cost curve
/ continuing to extend mine life year
on year
/ completing the demobilisation of the
open pit and ensuring an uninterrupted
transition to underground-only production
/ completing work on waste dump
rehabilitation as part of a continuous
mine closure strategy
/ establishing increased opportunities to link
local businesses and the traditional owners
of the land where the Prominent Hill mine
is based.
Safety improvement
initiatives included:
/ focusing on safety behaviour in the
underground
/ implementing new safety, health,
environment and community
performance standards
/ embedding a Critical Risk Observation
program into ours and our contractors
work practices across site. Critical risks
and their controls were derived from an
extensive risk assessment process
/ establishing an updated Principle Hazard
Management Plan for Vehicle Operations
with higher standards for equipment,
road design and operator requirements
/ continuing programs to reduce
musculoskeletal injury; revising the
occupational hygiene management plan;
and establishing an improved targeted
monitoring program
/ improving access and response to medical
emergencies on site, with the merger and
relocation of the Medical and Emergency
Response facility.
Power was a focus this year. In mid-2017, we
entered into an 18-month power purchase
agreement, securing price certainty to the
end of 2018. Energy supply and transmission
options are currently in design and a range
of energy saving programs are underway.
In August 2017, BHP advised it intended to
end Prominent Hill’s access on 30 August
2020 to BHP’s transmission line from
Davenport to Olympic Dam. OZ Minerals
power strategy will be announced to the
market in Q1 2018 and will encompass
approaches to power transmission.
The year also saw Prominent Hill’s mine
life further extended to 2029, following an
18 per cent increase in underground ore
reserve to 39 Mt. Our aim is to continue
extending Prominent Hill’s underground
mine life year on year. An estimated 80 Mt
of underground mineral resource has not
been converted to ore reserve and this
could further extend mine options.
Underground mining, combined with
stockpile processing, will maintain the
plant at full capacity to 2023. With open
pit related costs already incurred, we
expect to realise substantial cash flow
through this period.
(a) Please refer to the Mineral Resources and Ore Reserves
section (page 81) for full disclosure.
ANNUAL AND SUSTAINABILITY REPORT 2017 o PeR A tInG R eV IeW
0 9
112,008
tonnes of copper produced
126,713
ounces of gold produced
OVE RVIEW
Location: 650 km north-west of
Adelaide, 130 km south-east of the
town of Coober Pedy
Product: Copper concentrate
(containing gold and silver)
Mining method: open pit and
underground mine, transitioning to
underground-only mine in Q1 2018
Processing method: Conventional
crushing, grinding and flotation
Resources: estimated at 140 Mt @ 1.2%
copper, 0.5 g/t gold and 3 g/t silver(a)
Reserves: 74 Mt @ 1.0% copper, 0.6 g/t
gold and 3 g/t silver (730 kt copper and
1.5 Moz gold)(a)
1 0
Carrapateena
Phase one construction of the Carrapateena
project began in 2017 following the Board’s
decision in August to approve development
of the $916 million copper–gold mine.
Carrapateena is one of Australia’s largest
new mining developments. It is an iron-
oxide, copper–gold deposit, located in South
Australia’s highly prospective Gawler Craton
region. The ore reserve tonnage estimate is
79 million tonnes with a copper equivalent
grade of 2.31 per cent.
A feasibility study update informed the
Board’s development decision. The study
confirmed an estimated 20-year mine life
and a Q4 2019 commissioning date, after
which Carrapateena’s plant will progressively
ramp up over an 18-month period to a
throughput rate of 4.25 Mtpa. The life of
mine average annual production is estimated
to be 65,000 tonnes of copper and 67,000
ounces of gold.
2017 project highlights included:
/ successfully delivering all works
scheduled on-time and on-budget
/ jointly receiving the Premier’s Award for
Social Inclusion 2017 for our partnering
agreement with the Kokatha Aboriginal
Corporation, traditional owners of the
land on which the project is built
/ successfully using an early contractor
involvement model to secure approximately
50 per cent of pre-production capital
for construction contracts in lump sum
contracts
/ partnering with the Industry Capability
Network and appointing a local community
relations contact to facilitate local access
to information on contract packages and
sustainable local procurement
/ commencing phase one construction
of a staged work program. Phase two
construction is scheduled to start in Q2
2018. Subject to mining lease approval,
phase two will see the construction of the
on-site processing plant and other major
operational infrastructure.
We identified multiple improvements
through the feasibility study and our agile
project evaluation and delivery meant
that these were implemented quickly to
improve the project’s economics and risk
management.
The mine design was updated during the
feasibility study to allow all underground
capital development to be moved to footwall
host rocks in the south-west from the north-
east. This is an example of our agile project
evaluation and delivery in action – we can
now reach the ore body earlier and establish
infrastructure out of the mineralised zone.
Our ongoing relationships and engagement
with the traditional owners, pastoralists
and local communities are based on mutual
respect, understanding and trust. These have
been instrumental in progressing the project.
By way of example, the Native Title Mining
Agreement (NTMA) was reached with the
Kokatha Aboriginal Corporation in just
12 months. The strong relationships
established between senior members of
OZ Minerals and Kokatha in 2016, during
development of a partnering agreement,
made the formal NTMA’s rapid development
possible. A Partnering Management
Committee with representatives of Kokatha
and OZ Minerals now meets quarterly to
operationalise the NTMA.
We also received valuable feedback on
Carrapateena’s Mining Lease Proposal from
engagement and consultation activities
with local communities, landowners and
businesses in the Upper Spencer Gulf.
One of Australia’s largest
undeveloped copper
deposits, Carrapateena,
will be a 4.25 Mtpa
underground sub-level
cave operation, with an
estimated mine life of
20 years.
Carrapateena is expected
to generate operating
cash flow by Q4 2019.
Carrapateena is located
in a region highly
prospective for additional
resources, with known
mineralisation at Khamsin
and Fremantle Doctor.
(b) Please refer to the Mineral Resources and Ore Reserves
section (p. 81) for full disclosure.
(c) This information was extracted from the Carrapateena
project Feasibility Study Update report’ released to the
ASX on 24 August 2017 and is available at 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.
ANNUAL AND SUSTAINABILITY REPORT 2017 o PeR A tInG R eV IeW
1 1
134 Mt
resource 1.5% copper,
0.6 g/t gold2
US$0.62/lb
bottom quartile, average C1 costs
over life of mine
OVE RVIEW
Location: 250 km south-east of Prominent
Hill, 160 km north of the regional centre of
Port Augusta, in South Australia
Deposit: Iron–oxide, copper-gold
Status: Project feasibility study update
completed, phase one construction underway
Resources: Total estimated indicated,
inferred and measured resources (based on
$70 nSR cut-off grade) of 134 Mt at 1.5%
copper, 0.6 g/t gold (1,970 kt copper and
2.6 Moz of gold)(b)
Reserves: 79 Mt @ 1.8% copper, 0.7 g/t gold
(1,400 kt copper and 1.8 Moz of gold)(b)
Estimated annual production:
Approximately 65,000 tonnes of copper and
approximately 67,000 ounces of gold
Robust financials(c): nPV is ~$910 million
IRR of approximately 20% on a post tax basis
at copper/gold AUS consensus pricing
1 2
West Musgrave
The West Musgrave copper–nickel project is
the first project in our exploration pipeline
to advance through the stages to a pre-
feasibility study.
The Project is located in the highly
prospective Musgrave Province of Western
Australia near the South Australian and
Northern Territory borders and it is Australia’s
largest undeveloped copper–nickel deposit.
OZ Minerals decided to proceed to the next
stage of our earn-in agreement, following
the November release of the further scoping
study results from our joint venture partner,
exploration company, Cassini Resources.
Under this agreement we can earn 51 per
cent of the Project by spending $19 million
within 18 months and up to 70 per cent by
spending a total of $36 million.
The further scoping study demonstrated
an investable base case for the Nebo-Babel
deposits with upside potential through
resource conversion. We are looking to
develop the Nebo-Babel deposits into a low
cost, scalable, long life operation. It presents
as a gently-dipping orebody conducive to
large-scale open pit mining.
The further scoping study evaluated
several development scenarios ranging
from six to 12 Mtpa throughput. The study
demonstrated the Project’s economic viability
at all of the throughput scenarios with strong
annual nickel and copper production and
low operating costs. The 10 Mtpa scenario
presented the most financial potential.
At 10+ Mtpa, the Project has an estimated
annual production rate of 20,000–25,000
tonnes of nickel, 25,000–30,000 tonnes of
copper and 700–1,000 tonnes of cobalt.
The project has an eight-year mine life but
as the confidence of the resource improves,
it is likely to extend to beyond 15 years.
Its average net cash flow is expected to
be $120-$150 million(d).
Nebo and Babel contain a combined
indicated and inferred mineral resource
estimate of 283 million tonnes at 0.39
per cent copper and 0.36 per cent nickel.
The copper equivalent grade is 1–1.2 per
cent. The Succoth inferred mineral resource
estimate is 156 million tonnes at 0.6 per
cent copper(e). A significant amount of the
Nebo-Babel mineral resource occurs beneath
shallow cover of less than 50 metres.
The Musgrave area is an exciting new
mineral province with attractive near-mine
and district opportunities.
OZ Minerals will be managing the PFS
which will focus on improving metallurgical
recoveries, lower cost non-process
infrastructure, and resource conversion.
Cassini will manage a four million dollar
exploration program that will focus on
regional potential, including the One Tree
Hill prospect and Succoth copper deposit.
(d) This information was extracted from the West Musgrave
Project to progress to Pre-Feasibility Study report released to
the ASX on 14 November 2017 and is available at 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.
(e) The information regarding the West Musgrave Project was
extracted from Cassini Resources’ ASX Release entitled
‘Nebo-Babel Scoping Study’ dated 13 April 2015 and ‘Positive
Nebo-Babel Optimisation Study Results’ dated 14 April 2016
and is available at cassiniresources.com.au/investor-relations/
asx-announcements. The information in this report that relates
to exploration results has not been compiled by OZ Minerals.
The reported information has been derived from publically-
available information arising from exploration activity reported
by Cassini Resources. OZ Minerals makes no comment or
representation regarding the exploration, verification and
evaluation techniques adopted in respect of the historical
exploration results reported in this announcement.
ANNUAL AND SUSTAINABILITY REPORT 2017 o PeR A tInG R eV IeW
1 3
Exploration and Growth
OZ Minerals’ dynamic pipeline of potential
growth opportunities advanced and
expanded in 2017.
drilling. An early site visit identified copper
mineralisation and alteration consistent with
a magnetite-hosted IOCG system.
/ 35 metres at 0.35% Cu and 0.05 g/t Au
from 197 metres at J1 conductor, Hole
EL17D06
Two new international earn-in agreements
were signed, Oaxaca in Mexico and Alvito
in Portugal, and one new Australian
agreement was established for Punt Hill near
our Carrapateena project in South Australia.
The Yandal One exploration joint venture
with Toro Energy, and the Intercept Hill
exploration joint venture with Red Tiger
were exited when drilling programs did
not meet the required technical hurdles.
We conducted drilling and geophysics
programs during the year to progress
projects in our exploration portfolio with
some encouraging results from Eloise,
including 27 metres at 2.42% Cu and
0.71 g/t Au from 435 metres in Hole
EL17D06(f).
In a major undertaking, we made our
extensive and growing bank of exploration
and growth data more readily accessible.
We partnered with Amazon Web Services
to consolidate and simplify the way these
large and complex exploration data sets
are stored, accessed and analysed.
We anticipate spending $10–$15 million
on exploration in 2018, which excludes
expenditure on the West Musgrave project
($20–$30 million) and the Carrapateena
district ($8–$10 million).
Oaxaca with Acapulco Gold Corp
comprises three newly-identified base
metal properties in Oaxaca, South Mexico.
Acapulco Gold is a private exploration
company based in Canada with significant
experience and a discovery track record
in Mexico.
The sites being targeted have the potential
for volcanic-hosted massive sulphide (VHMS)
deposits. VHMS deposits are significant
contributors to the global production of
copper, zinc, lead and silver.
Geological mapping and geochemical
sampling were undertaken in 2017 to
identify high priority targets. Subsequent
reconnaissance mapping and sampling
resulted in the discovery of surface copper
mineralisation. Drill hole permitting for
Riqueza Marina is currently underway,
with a drill program expected to commence
in mid-2018.
Alvito with Avrupa Minerals targets iron-
oxide copper–gold (IOCG) mineralisation at
the Alvito site, located 60 km south-east of
Lisbon. Avrupa Minerals is a Canadian-listed
exploration company.
The Alvito project is characterised by a 24
km long copper-in-soil anomaly with limited
In 2017, a ground geophysics program was
completed across the entire project area,
highlighting numerous targets, including a
positive gravity anomaly that coincides with
a key geological contact. Drilling of priority
targets is set to commence in the first half
of 2018.
Intercept Hill with Red Tiger Resources
is an IOCG exploration project located 30 km
north-west of the Carrapateena project.
Targets were generated from reprocessed
geophysical data and the work indicated
that significant anomalies may have been
overlooked. Four drill holes were completed
during 2017 with no significant results.
This project was subsequently exited.
Coompana with Mithril Resources
consists of seven exploration licences in
South Australia’s far western Coompana
Province. Mithril is an experienced nickel
and copper exploration company based
in South Australia.
A significant amount of airborne and ground
geophysics has been conducted in the area
by the South Australian Department of State
Development in collaboration with PACE
Copper. A scientific drill program sponsored
by Geological Survey of South Australia in
conjunction with Geoscience Australia was
undertaken in 2017 and results are expected
in 2018.
Eloise with Minotaur Exploration
focuses on Cannington-style lead–zinc–silver
mineralisation and Eloise-style high grade
copper–gold mineralisation in the highly
prospective Eastern Succession of the
Mount Isa block in Queensland.
A drilling program in 2017 completed four
additional diamond drill holes (~3,000 m)
that tested the Iris and Electra anomalies,
with all holes intercepting low-grade
copper–gold mineralisation.
The focus of work has now moved to the
southern portion of the licences, which hosts
the eastern flank of the Levuka shear zone.
A 90 line-kilometre electromagnetic survey
completed over this area identified a large
number of interpreted bedrock conductors,
including the large Jericho anomaly.
The Jericho prospect comprises two linear,
multi-plate conductive zones 3–4 km in
length, modelled to be 50–275 m below
surface. The prospect was tested by
eight diamond drill holes and copper
was intersected in all holes. Some of the
better intersections returned include:
/ 27 metres at 2.42% Cu and 0.71 g/t Au
from 435 metres at J2 conductor, Hole
EL17D06
/ 46 metres at 0.74% Cu and 0.17 g/t Au
from 214 metres at J1 conductor, Hole
EL17D09
/ 4.4 metres @ 1.6% Cu and 0.5 g/t Au from
456 metres at J2 conductor, Hole EL17D09.
A single drill hole was completed at the
Arlington and St Louis prospects. Pyrrhotite
and minor chalcopyrite were returned in
both holes. Exploration in 2018 will continue
to focus on the southern licence area,
and will include further drill testing of the
Jericho conductor.
Mount Woods with Minotaur
Exploration targets copper resources in
the tenements surrounding OZ Minerals’
Prominent Hill mine. It is focused on
identifying and drilling IOCG and iron
sulphide–copper–gold (ISCG) targets.
This innovative agreement gave Minotaur
access to OZ Minerals’ repository of
exploration data from over 15 years so
they can use their regional expertise to
interrogate the database for new drill testing
targets. This also provides an opportunity
to accelerate the search for new copper
resources in the Prominent Hill district.
Four priority conductors were identified and
drilled in late 2017, with only minor skarn
related mineralisation intersected at the
Maverick prospect.
Punt Hill with Red Metal targets IOCG
mineralisation in the area adjacent to
Carrapateena. Red Metal is an ASX-listed,
Australian mineral explorer with exploration
experience in Australia’s most productive
mineral provinces.
Previous work on Punt Hill uncovered many
examples of IOCG mineralisation and one
of the new prospects shows a number of
geophysical similarities to the deposits at
Carrapateena. Subject to the successful
negotiation of a Native Title Mining
Agreement, drilling is expected to take
place in the second half of 2018.
(f) The information regarding the Eloise project was extracted
from Minotaur Exploration’s ASX release entitled ‘High
grade copper–gold confirmed at ‘Jericho’, Eloise JV,
Cloncurry’ dated 3 November 2017 and is available at
www.minotaurexploration.com.au/investor-information/
asxannouncements. The information in this report that relates
to exploration results has not been compiled by OZ Minerals.
OZ Minerals makes no comment or representation regarding
the exploration, verification and evaluation techniques
adopted in respect of the historical exploration results
reported in this announcement.
1 4
Governance
OZ Minerals provides
strong governance to
enable lean business
processes, clear
accountability and room
for innovation. This is
fundamental to our
business strategy.
OZ Minerals’ management
structure
OZ Minerals’ management structure,
Governance and Risk Policy, and supporting
standards provide clear guidelines and
reporting structures to ensure our activities
reinforce the corporate strategy and are
conducted in a financially, environmentally
and socially responsible way.
OZ Minerals’ Board is committed to adopting
the recommended corporate governance
practices set out in the ASX Corporate
Governance Council Principles and
Recommendations.
The Board is responsible for overseeing
the management of the Company. The
Board has adopted a Board Charter that
sets out its roles and responsibilities, which
includes setting the Company’s goals and
objectives, reviewing and monitoring the
Company’s material risks and its system of
internal compliance and controls, setting
an appropriate corporate governance
framework, and determining broad
policy issues for the Company. The Board
also ensures that specific powers and
responsibilities have been delegated to the
Company’s Executive Committee and that
the overall strategy is aimed at delivering
value for shareholders.
The Board currently comprises seven
directors, one executive director and six
non-executive directors. The executive
director is Managing Director and Chief
Executive Officer, Andrew Cole. The Board
has a unitary structure. All non-executive
directors, including the Chairman, are
independent. The proportion of women
on the Board is 43 per cent(g).
Three standing committees help the
Board with the effective discharge of
its responsibilities.
Audit Committee – assists the Board in
the effective discharge of its responsibilities
in relation to financial reporting and
disclosure processes, internal financial
controls, funding, financial risk management,
including hedging and the internal and
external audit functions, and oversight of
the internal control and risk management
system’s effectiveness.
Human Resources and Remuneration
Committee – assists the Board in
discharging its responsibilities relating to
the remuneration of directors, executives
and employees, succession planning, and
the Diversity and Inclusion Policy’s
establishment and monitoring.
Sustainability Committee – assists the
Board in the effective discharge of its
responsibilities in relation to safety, health,
environment and community (SHE&C) issues
for the OZ Minerals Group. This includes
managing the risks relating to SHE&C issues
by meeting the Company’s requirements
for internal notification, investigation,
reporting and continuous improvement,
and overseeing the public reporting and
disclosure processes insofar as they relate
to SHE&C risks.
The Directors’ Report presents additional
information on directors and officers,
such as their qualifications, experience,
special responsibilities and attendance
at OZ Minerals Board meetings and
Board committee meetings.
OZ Minerals management team
Management is responsible for implementing
management systems across the business,
and monitoring the application and
effectiveness of these systems through
internal and external audits. Training and
competency is part of the continuous
improvement process and is detailed in
the Performance Standards.
Michelle Pole was appointed OZ
Minerals’ Company Secretary effective
13 December 2017.
Robert Fulker resigned as Chief Operating
Officer effective 23 November 2017.
A global search is underway to fill this
position. In the interim, Myles Johnston
(General Manager Carrapateena Operations)
and John Penhall (General Manager
Prominent Hill) have joined the Executive
Committee.
(g) On 1 November 2017, OZ Minerals announced changes
to the Board which will see Charles Lenegan retire from
the Board at OZ Minerals’ Annual General Meeting on
24 April 2018. Non-executive Director, Peter Wasow, who
was appointed to the Board as a non-executive Director
effective 1 November 2017, will succeed Mr Lenegan
as Chairman of the Audit Committee from that date,
if elected at the Annual General Meeting.
Other changes to the board include:
/ Neil Hamilton and Paul Dowd retired as non-executive
directors at the 24 May 2017 Annual General Meeting
/ Rebecca McGrath succeeded Neil Hamilton as
Chairman of the Board at the 24 May 2017 Annual
General Meeting
/ Tonianne Dwyer and Peter Tomsett were appointed
as non-executive directors, effective 22 March 2017.
Further information can be found in the Company’s
announcement entitled ‘OZ Minerals appoints new Non-
Executive Director’ released to the ASX on 1 November
2017, which is available at ozminerals.com/media/asx/
ANNUAL AND SUSTAINABILITY REPORT 2017 G o VeRnAnCe
1 5
Management Structure
OZ Minerals Ltd Board of Directors
Rebecca McGrath
Chairman and
Independent Non-executive Director
Andrew Cole
Managing Director
and Chief Executive Officer
Charles Lenegan
Independent
Non-executive Director
Julie Beeby
lndependent
Non-executive Director
Peter Tomsett
Independent
Non-executive Director
Tonianne Dwyer
Independent
Non-executive Director
Peter Wasow
Independent
Non-executive Director
Board Committees
Audit
Committee
Human Resources and
Remuneration Committee
Sustainability
Committee
OZ Minerals Ltd management team
Andrew Cole
Managing Director
and Chief Executive Officer
Warrick Ranson
Chief Financial Officer(h)
Mark Irwin
Chief Commercial Officer(i)
Mark Rankmore
Head of People
and Performance
Robert Mancini
Head of Legal(j)
Kerrina Chadwick
Head of
Corporate Affairs
Asset managers and line managers
Employees
(h) Commenced 4 December 2017. Luke Anderson resigned
as Chief Financial Officer effective 29 September 2017.
(i) Commenced 2 January 2018.
(j) Robert Mancini resigned as Company Secretary
effective 13 December 2017 and resigned as Head
of Legal effective February 2018.
S U P P O R T I N G D O C U M E N T S
/ Corporate Governance Statement
/ OZ Minerals Policies and supporting Standards
/ Board and Committee Charters
/ Company Constitution
/ Code of Conduct
ozminerals.com/about/corporate-governance/
1 6
Governance Framework
Company Constitution / Code of Conduct / Board Charter
Audit
Committee Charter
Human Resources and
Remuneration Committee Charter
Sustainability
Committee Charter
Governance and Risk Policy
To ensure ethical, fit-for-purpose business
processes are used to meet the highest
corporate governance standards and identify
opportunities and threats using robust
processes across OZ Minerals.
Market Dividend Policy
To ensure fair trading in the securities of
OZ Minerals and to outline the principles to
be considered for the payment of a dividend
by OZ Minerals in accordance with the ASX
listing rules and Corporations Act.
Finance and Accounting Policy
To ensure OZ Minerals complies with
all financial and accounting regulatory
obligations with a view to being a leader
in fiscal discipline, reporting, disclosure
and transparency.
Securities Trading Standard
To set out the policy of OZ Minerals for
employees (full time, part time and casual),
directors, consultants and contractors
of OZ Minerals trading in securities of
the Company.
Policies and Standards
Health and Safety Policy
To strive to be an injury and occupational
disease-free workplace whilst achieving
operational excellence.
Diversity and Inclusion Policy
To foster a culture that values individual
differences which are leveraged to deliver
optimal outcomes for OZ Minerals.
Exploration and Resource
Development Policy
To underpin the growth of OZ Minerals
by identifying, securing and delivering
additional mineral opportunities outside
our current portfolio.
Operations and Asset
Management Policy
To ensure the safe and effective delivery
of world-class operations through sound
application of consistent performance.
Environment and Community Policy
To ensure OZ Minerals delivers sound
environmental outcomes whilst supporting
the creation of shared value for the
communities in which we operate.
Ethics and Human Rights Policy
To help protect the human rights of
our stakeholders and to prevent human
rights breaches from occurring at OZ
Minerals’ assets.
Continuous Disclosure Standard
To ensure timely and accurate information
is provided equally to all shareholders and
market participants, consistent with the
OZ Minerals’ commitment to its continuous
disclosure obligations.
Anti-bribery and Corruption Policy
To ensure directors, officers and employees
understand, observe and comply with
anti-bribery and anti-corruption laws and
regulations, and a set of How We Work
Together principles.
Performance standards
Environment
Social
Safety
Health and wellbeing
Process standards (including Enterprise Risk Management)
Business planning
Legal and compliance
Finance and commercial
Human resources
Communications and reporting
Information and data
Operations and engineering
Reference documents
Asset documents
ANNUAL AND SUSTAINABILITY REPORT 2017 G o VeRnAnCe
1 7
Governance Framework
All corporate and further-developed asset
documents comply with the laws and
regulations of the jurisdiction in which
each asset operates.
Internal and external audits
OZ Minerals conducts regular audits to
systematically and objectively verify that
it conforms to performance management
standards and legal requirements, and
in order to recommend ways to improve
safety, health and wellbeing along with
environmental and social performance.
Further audits are undertaken commensurate
with the risk profile.
The governance
framework at OZ Minerals
has been designed to
enable lean business
processes that drive
clear accountabilities
and create room for
innovation.
We focus on what matters, and set processes
that create value, embrace the devolved
business model and provide clarity for new
assets, partners, suppliers and employees
coming into OZ Minerals.
Our values and behaviours drive transparency
and fair dealing, and propagate a culture of
performance and devolved accountability
– this allows us to deliver on our Company
strategy. OZ Minerals’ Code of Conduct
applies standards for appropriate ethical
and professional behaviour and guides
OZ Minerals’ employees, directors,
contractors and partners.
The Code of Conduct reinforces the
importance of our values in carrying out our
responsibilities to shareholders, employees,
customers, suppliers, consumers and
the broader community. It provides clear
guidelines as to our expectations in regards
to a number of specific issues, such as
conflict of interest, gifts, entertainment and
gratuities, anti-bribery, fraud and corruption,
equal opportunity, whistleblowing and
conflicts of interest.
OZ Minerals’ nine Company policies
work synergistically to provide a clear
representation of our intent while providing
a platform for multiple assets to work
together under a devolved model. Policy
documents, our Securities Trading Standard
and our Continuous Disclosure Standard
are available both internally and externally
and are used to clearly articulate what we
strive for to all stakeholders, partners and
communities.
Underpinning the policies are performance
standards that are grouped into four key
areas. These are safety, environment, health
and wellbeing, and social. They define the
minimum required performance to manage
sustainability opportunities and threats.
These standards will be used to audit asset
performance and set the standards for any
new assets to achieve. They are provided to
contractors and partners to outline what we
expect when they work at an OZ Minerals
asset. These documents are structured
so that each asset, contractor or partner
can use or develop their own business
standards and processes to meet our
standards, in keeping with our lean,
devolved business model.
OZ Minerals is revising its business process
standards so that they describe, in the
simplest possible way, processes or the
management activities that occur across
the business in a repeatable manner. They
are the activities that we undertake that
are unique to OZ Minerals, and they will be
used by OZ Minerals’ employees and assets.
They define the inputs and outputs required,
the processes people must follow and the
delegations that they can work within.
1 8
ANNUAL AND SUSTAINABILITY REPORT 2017 DI ReCtoR S' R ePoR
t
1 9
Directors’
Report
2 0
Announcement to
the Market Results
We have provided the announcement to
market results in accordance with Australian
Securities Exchange (ASX) Listing Rule 4.2A
and Appendix 4E for the Consolidated
Entity (OZ Minerals) comprising OZ
Minerals Limited (OZ Minerals Limited or
the ‘Company’) and its controlled entities
for the year ending 31 December 2017
(financial year) compared to the year ending
31 December 2016 (comparative year).
Consolidated results, commentary on results and outlook
31 December
2017
$m
31 December
2016
$m
Movement
$m
Movement
%
1,023.1
231.1
822.9
107.8
200.2
123.3
24.3
114.4
Revenue
Profit after tax attributable to
OZ Minerals Limited equity holders
The commentary on the consolidated results and outlook, including changes in state of affairs
and likely developments of the Consolidated Entity, is set out on pages 6–13 and within the
Financial Review section of the Directors’ Report (pp. 29–35).
net tangible assets per share
31 December 2017
31 December 2016
$ per share
$ per share
Net tangible assets per share
8.42
7.04
In accordance with Chapter 19 of the ASX Listing Rules, net tangible assets per share
represents the total assets less intangible assets, less liabilities ranking ahead of, or equally
with, ordinary share capital, and 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 a fully franked
dividend of 14 cents per share, to be paid on 26 March 2018. The record date for entitlement
to this dividend is 12 March 2018. The financial impact of the dividend amounting to $41.8
million has not been recognised in the Consolidated Financial Statements for the year ended
31 December 2017 and will be recognised in subsequent Consolidated Financial Statements.
Dividends announced or paid since 1 January 2016
Record date
Payment date
Unfranked
cents per share
Fully franked
cents per share
Total dividends
$m
12 March 2018
26 March 2018
7 September 2017
21 September 2017
10 March 2017
24 March 2017
9 September 2016
23 September 2016
24 February 2016
10 March 2016
–
–
–
6*
14*
14
6
14
–
–
41.8
17.9
41.8
18.1
42.5
* The unfranked dividends were declared to be conduit foreign income for Australian income tax purposes.
Independent auditor’s report
The above announcement of the results to the market is based upon the Consolidated
Financial Statements and we have included the Independent Auditor’s Report to OZ Minerals
Limited members (p. 127).
ANNUAL AND SUSTAINABILITY REPORT 2017
Directors’ Report
Your directors present
the OZ Minerals Annual
Report 2017, together
with the Consolidated
Financial Statements,
for the year ending
31 December 2017.
OZ Minerals Limited is
a Company limited by
shares that is incorporated
and domiciled in Australia.
DI ReCtoR S' R ePoR
t
2 1
Principal activities
OZ Minerals mines and processes ore that contains copper, gold and silver; sells concentrate;
undertakes exploration activities; and develops mining projects. The Company’s activities
occur both within Australia and internationally. More information on OZ Minerals principal
activities can be found on pages 6–13 and within the Financial Review (pp. 29–35).
Significant changes in state of affairs
OZ Minerals state of affairs are consistent with prior years (as discussed on pages 6–13
and 29–35).
Dividends
Since the end of the financial year, the Board of Directors has resolved to pay a fully
franked dividend of 14 cents per share. This will be paid on 26 March 2018 and the date of
record for entitlement to this dividend will be 12 March 2018. The financial impact of the
dividend, amounting to $41.8 million, has not been recognised in the Consolidated Financial
Statements for the financial year ending 31 December 2017 and will be recognised in
subsequent Consolidated Financial Statements.
Dividends announced or paid since 1 January 2016
Record date
Payment date
Unfranked
cents per share
Fully franked
cents per share
Total dividends
$m
12 March 2018
26 March 2018
7 September 2017
21 September 2017
10 March 2017
24 March 2017
9 September 2016
23 September 2016
24 February 2016
10 March 2016
–
–
–
6*
14*
14
6
14
–
–
41.8
17.9
41.8
18.1
42.5
* The unfranked dividends were declared to be conduit foreign income for Australian income tax purposes.
2 2
Directors and officers
oZ Minerals directors and officers for the financial year ending 31 December 2017 and up to the date of this report
Position
Experience and expertise
OZ Minerals special
responsibilities
during 2017
Other directorships
at currently listed
entities
Previous directorships
at listed entities (within
the last three years)
Non-executive Director of
CSR Limited from February
2012 to October 2016
Non-executive Director
of Incitec Pivot Limited
since September 2011
Non-executive Director
of Goodman Group
since April 2012
Chairman of the Board
(appointed 24 May
2017)
Member of Human
Resources and
Remuneration
Committee
Chairman of
Human Resources
and Remuneration
Committee (resigned
24 May 2017)
Member of the Audit
Committee (resigned
24 May 2017)
Managing Director and
Chief Executive Officer
None
None
Current directors
Rebecca McGrath
Independent
Non-executive Chairman
Appointed as a Non-
executive Director on
9 November 2010 and
Chairman on 24 May 2017
BTP (Hons),
MA (App.Sci), FAICD
Ms McGrath is an internationally experienced
business leader, director and chairman. Ms McGrath’s
executive career included 24 years with BP Plc. She
held a range of senior executive and group executive
roles in Australia, Europe and U.K, including Chief
Financial Officer, Chief Operating Officer and Executive
Management Board member Australia and New
Zealand. Ms McGrath is a member of the JP Morgan
Australia Advisory Council, Chairman of Investa
Office Management Holdings Pty Ltd and a member
of the Victorian Council of the Australian Institute of
Company Directors.
Andrew Cole
Managing Director and
Chief Executive Officer
Appointed on
3 December 2014
BAppSc (Hons) in
Geophysics MAICD
Mr Cole has over 25 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).
Julie Beeby
Independent
Non-executive Director
Appointed on
19 April 2016
BSc (Hons I), PhD (Physical
Chemistry), MBA, FAICD,
FTSE
Dr Beeby was the former Chief Executive Officer of
Brisbane-based gas producer, Westside Corporation.
Dr Beeby has more than 25 years’ operations, project
and strategy experience in the resources sector,
including the minerals and petroleum industries. Dr
Beeby also has experience in mergers and acquisitions.
Dr Beeby has been the Chairman of Powerlink Qld (Qld
Electricity Transmission Corporation Ltd) since 2014
and has been a Board member since 2008.
Tonianne Dwyer
Independent
Non-executive Director
Appointed on
22 March 2017
BJuris (Hons), LLB (Hons)
Ms Dwyer is an independent non-executive public
company director. Ms Dwyer spent over 20 years in
investment banking and real estate fund management
and was a Director of Investment Banking at
Societe Generale/Hambros Bank advising on M&A,
restructuring and refinancing. Ms Dwyer was Head of
Fund Management at the LSE listed property company,
Quintain Estates & Development plc and was later
appointed to the Board as an Executive Director. Ms
Dwyer is a graduate member of Australian Institute of
Company Directors and a member of Chief Executive
Women and Women Corporate Directors.
Member of the
Sustainability
Committee
Member of the
Human Resources
and Remuneration
Committee (resigned
24 May 2017)
Member of the Audit
Committee (appointed
24 May 2017)
Chairman of the
Human Resources
and Remuneration
Committee (appointed
24 May 2017)
Member of the
Human Resources
and Remuneration
Committee (22 March
2017 to 24 May 2017)
Member of the Audit
Committee (appointed
22 March 2017)
Non-executive Director
of Whitehaven Coal Ltd
since July 2015
None
Non-executive Director of
Cardno Limited from 2012
to 2016
Non-executive Director
of DEXUS Property
Group
Non-executive Director
of ALS Limited since July
2016
Non-executive Director
of Metcash Limited
since June 2014
ANNUAL AND SUSTAINABILITY REPORT 2017 DI ReCtoR S' R ePoR
t
2 3
Position
Experience and expertise
OZ Minerals special
responsibilities
during 2017
Other directorships
at currently listed
entities
Previous directorships
at listed entities (within
the last three years)
Current directors
Charles Lenegan
Independent
Non-executive Director
Appointed on
9 February 2010
BSc (Econ)
Peter Tomsett
Independent
Non-executive Director
Appointed on
22 March 2017
BEng (Hons I), MSc
Peter Wasow
Independent
Non-executive Director
Appointed on
1 November 2017
B. Comm, GradDip
(Management), Fellow
(CPA Australia)
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).
Mr Tomsett’s international career has spanned a wide
range of technical, operational and senior management
roles in the mining industry. He spent 20 years with
global gold and copper company Placer Dome Inc. in a
number of senior roles, including President and Chief
Executive Officer until its acquisition. Mr Tomsett has
been a director of the Minerals Council of Australia,
the World Gold Council and the International Council
for Mining and Metals. Mr Tomsett served as Non-
executive Chairman of the TSX and ASX listed Equinox
Minerals until its acquisition in 2011.
Mr Wasow has extensive experience in the resources
sector as both a senior executive and director. He held
the position of Managing Director and Chief Executive
Officer of Alumina Limited until mid 2017. He formerly
held the position of Executive Vice President and Chief
Financial Officer, Santos Limited and in a 20-year plus
career at BHP he held senior positions including Vice
President, Finance and other senior roles in Petroleum,
Services, Corporate, Steel and Minerals.
Mr Wasow is currently the senior independent Director
of the privately held GHD Group. He was also Non-
Executive Director of Alcoa of Australia Limited, AWA
Brazil Limitada, AWAC LLC and Non-Executive Director
of ASX-listed Alumina from 2011 to 2013.
Mr Wasow has been also been a member of the
Business Council of Australia, and director of the
International Aluminium Institute and APPEA.
Former directors
Neil Hamilton
Independent
Non-executive Chairman
Appointed as a Non-
executive Director on
9 February 2010 and
Chairman on 13 April 2010
LLB
Neil Hamilton retired as a
Non-executive Director and
Chairman on 24 May 2017
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 Advisor to UBS.
None
Chairman of the Audit
Committee
Member of
Sustainability
Committee
Non-executive Director of
Turquoise Hill Resources
from August 2012 to May
2014
Non-executive Director of
Talisman Energy Inc from
December 2009 to June
2015
Non-executive
Chairman of Silver
Standard Resources Inc
since May 2008
Senior Independent
Director of Acacia
Mining plc since April
2013
None
Managing Director and
Chief Executive Officer
of Alumina Limited from
January 2014 to May 2017
Chairman of the
Sustainability
Committee (appointed
24 May 2017)
Member of the
Sustainability
Committee (22 March
2017 to 24 May 2017)
Member of the
Human Resources
and Remuneration
Committee (appointed
22 March 2017)
Member of the Audit
Committee (appointed
1 November 2017)
Member of
Sustainability
Committee (appointed
1 November 2017)
None
Chairman of OZ
Minerals Limited Board
Member of Human
Resources &
Remuneration
Committee
Non-executive Director
of Metcash Limited from
February 2008 to August
2016
2 4
Position
Experience and expertise
OZ Minerals special
responsibilities
during 2017
Other directorships
at currently listed
entities
Previous directorships
at listed entities (within
the last three years)
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
Paul Dowd
Independent
Non-executive Director
Appointed on
23 July 2009
BSc (Eng)
Paul Dowd retired as a
Non-executive Director
on 24 May 2017
Officers
Michelle Pole
Company Secretary
Appointed on
13 December 2017
LLB, GDLP
Robert Mancini
Head of Legal
Appointed on
17 August 2015
LLB, BCom
Mr Mancini resigned as
Company Secretary of OZ
Minerals on 13 December
2017
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.
Ms Pole also holds office of OZ Minerals’ Senior
Legal Counsel. Ms Pole spent most of her career in a
leading national law firm before moving in-house to
the mineral resources sector. Ms Pole has particular
experience in commercial transactions, corporate
advisory and compliance with the ASX, ASIC and other
regulatory bodies. As well as being a Certificated
Member of the Governance Institute, Ms Pole holds a
Bachelor of Laws from The University of Adelaide and a
Graduate Diploma in Legal Practice.
Mr Mancini holds a Bachelor of Laws and a Bachelor
of Commerce majoring in Economics and Finance. 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, gas and mining sectors, both domestically
and internationally, as well as in dispute resolution
management.
ANNUAL AND SUSTAINABILITY REPORT 2017 DI ReCtoR S' R ePoR
t
2 5
Meeting attendance
Attendance at oZ Minerals Limited Board and committee meetings (1 January 2017 to 31 December 2017)
Board meetings
Audit
Board committee meetings
Human resources and
remuneration
Sustainability
A
14
14
14
12
14
12
2
5
5
B
14
14
14
12
14
12
2
5
5
A
3
–
3
3
6
–
1
3
–
B
3
–
3
4
6
–
1
3
–
A
5
–
3
2
–
2
–
–
3
B
5
–
3
3
–
3
–
–
3
A
–
–
4
–
4
3
1
2
–
B
–
–
4
–
4
3
1
2
–
Current directors
Rebecca McGrath(a)
Andrew Cole
Julie Beeby(b)
Tonianne Dwyer(c)
Charles Lenegan
Peter Tomsett(c)
Peter Wasow(d)
Former directors
Paul Dowd(e)
Neil Hamilton(e)
Note: Andrew Cole and Non-executive Directors who are not Board Committee members also participated in scheduled Board Committee meetings throughout the year.
A = the number of meetings attended during the time the director held office.
B = the number of meetings held during the time the director held office.
(a) Appointed as Chairman of the Board and resigned from the Audit Committee on 24 May 2017.
(b) Appointed to the Audit Committee and resigned from the Human Resources and Remuneration Committee on 24 May 2017.
(c) Appointed as Non-executive Director on 22 March 2017.
(d) Appointed as Non-executive Director on 1 November 2017.
(e) Ceased as a Non-executive Director on 24 May 2017.
Directors’ interests
Directors’ interests in the ordinary
shares of oZ Minerals Limited
Director
Rebecca McGrath
Andrew Cole
Julie Beeby
Tonianne Dwyer
Charles Lenegan
Peter Tomsett
Peter Wasow
Total
Shares number
33,035
10,000
14,000
10,000
20,750
–
–
87,785
Environmental regulation
OZ Minerals and its activities in Australia and overseas are subject to environmental
regulations. OZ Minerals’ Prominent Hill operations, Carrapateena project, Australian
exploration activities and concentrate shipping activities operate under various licences and
permits under Commonwealth, state and territory laws, in addition to the licensing and
permit arrangements which apply to its overseas activities.
OZ Minerals regularly monitors its compliance with its licenses and permits in various ways,
including through its own environmental audits as well as those conducted by regulatory
authorities and other third parties. OZ Minerals uses a documented process to classify and
report any exceedance of a licence or permit condition, as well as any incident reportable
to the relevant authorities. All instances of reportable environmental non-compliance
and significant incidents are reviewed by the Executive Committee and the Sustainability
Committee of the OZ Minerals Board of Directors as a part of this process. A formal report is
also prepared to identify 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 ninth 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 OZ Minerals’ processes that were developed to meet
the Act’s requirements to assure that the reported emissions, energy production and energy
consumption were prepared in accordance with the Act.
2 6
Insurance and indemnity
During the financial year, OZ Minerals Limited paid premiums with respect to a contract
insuring its directors, officers and related bodies corporate against certain liabilities incurred
while acting in that capacity. The insurance contract prohibits disclosure of the liability’s
nature 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 former 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, to
conform 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.
No indemnity has been granted to an auditor of the Consolidated Entity in their capacity
as auditor 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.
Audit and non-audit services
KPMG continues in office in accordance with the Corporations Act 2001. A copy of the lead
auditor’s independence declaration is set out on page 92 as required under section 307C of
the Corporations Act 2001 and this forms part of the Directors’ Report.
OZ Minerals Limited, 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.
The Audit Committee has, following the passing of a resolution by the Committee,
provided the Board with advice in relation to KPMG providing non-audit services.
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 non-audit services provided by the auditor did not compromise the
auditor independence requirements of the Corporations Act 2001 because:
/ all non-audit services were reviewed by the Audit Committee to ensure they did not impact
the integrity and objectivity of the external auditor
/ none of the services undermined the general principles relating to auditor independence as
set out in APES 110 Code of Ethics for Professional Accountants. These include 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.
Amounts paid or payable to the external
auditor (KPMG) and its network firms
for audit and non-audit services
2017
$
Audit services provided by KPMG Australia
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 fee for audit services
provided by KPMG
Other assurance services provided
by KPMG (Sustainability work)
Total audit and assurance fee
Tax compliance and other tax
advisory services
Other services provided by KPMG
Total non-audit fee
Total fees
425,000
23,549
448,549
50,000
498,549
180,000
44,328
224,328
722,877
ANNUAL AND SUSTAINABILITY REPORT 2017 DI ReCtoR S' R ePoR
t
2 7
Matters subsequent to the end of the financial year
Since the end of the financial year, the Board of Directors has resolved to pay a fully franked
dividend of 14 cents per share on 26 March 2018. The record date for entitlement to this
dividend is 12 March 2018. The financial impact of the dividend amounting to $41.8 million
has not been recognised in the Consolidated Financial Statements for the year ended
31 December 2017 and will be recognised in subsequent Consolidated Financial Statements.
There have been no other events subsequent to the reporting date which have significantly
affected or may significantly affect OZ Minerals’ operations or results in future years.
Rounding of amounts
The Company is of a kind referred to in ASIC Corporations Instrument 2016/191 (Rounding
in financial/directors’ reports). Amounts in the financial statements and Directors’ Report have
been rounded off in accordance with the instrument to the nearest million dollars to one
decimal place, or in certain cases, to the nearest dollar. All amounts are in Australian dollars
unless otherwise stated.
Operating and financial review
Our operations are reviewed on pages 6–13 and the Financial Review (pp. 29–35) forms part
of the Directors’ Report.
Remuneration report
The Remuneration Report which has been audited by KPMG is set out on pages 40–55,
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 ozminerals.com/about/corporate-governance/
corporate-governance-statement.
Signed in accordance with a resolution of the directors.
Rebecca McGrath
Chairman
Adelaide, 22 February 2018
Andrew Cole
Managing Director and CEO
Adelaide, 22 February 2018
2 8
ANNUAL AND SUSTAINABILITY REPORT 2017 f InAnC I A L R eV IeW
2 9
Financial Review
FI NANCIAL REVIE W
/ Net profit after tax of $231.1 million
/ Total revenue of $1.02 billion
/ Underlying EBITDA(a) of $539.4 million
and EBITDA margin of 53 per cent
/ Net assets of $2.52 billion, with cash
of $729.4 million and no debt.
OZ Minerals net profit after tax for the year was $231.1 million, which was an increase of
$123.3 million (or 114%) compared to 2016. Strong production performance at Prominent
Hill in 2017 enabled OZ Minerals to fully capitalise on the buoyant copper price and deliver an
underlying net annual profit after tax of $231.1 million, an increase of $96.8 million (or 72%)
compared to 2016. EBITDA margins improved 18 per cent year on year despite the marginally
lower volume of copper sold. OZ Minerals’ cash balance of $729.4 million, an increase of
$73.7 million compared to 2016 after capital investment at Carrapateena, expenditure on
exploration activities, tax payments, and dividend payments to shareholders.
Prominent
Hill
Carrapateena
Exploration
and
development
Corporate
Total
Total
2017
$m
1,023.1
(440.1)
(10.9)
(0.6)
16.8
(5.2)
583.1
(215.7)
367.4
2017
$m
2017
$m
2017
$m
2017
$m
2016
$m
–
–
–
–
–
–
–
1,023.1
822.9
(440.1)
(380.3)
(0.1)
(20.5)
(31.5)
(36.7)
(5.2)
(20.1)
3.3
(22.6)
(24.3)
–
–
(5.2)
–
(5.2)
–
–
–
16.8
(10.5)
(1.1)
(6.3)
2.7
(20.2)
(18.3)
539.4
373.8
–
(3.0)
(218.7)
(208.7)
(20.2)
(21.3)
320.7
165.1
8.7
9.0
(98.3)
(39.8)
231.1
134.3
–
(26.5)
Net revenue
Cost of goods sold
Corporate general and
administration
Exploration and other
income/(expense)
Net realisable value
adjustments
Foreign exchange
(loss)/gain
Underlying EBITDA
Net depreciation
Underlying EBIT
Net finance income
Income tax expense
Underlying net profit after tax
Non underlying items net of tax(b)
Net profit after tax for the year attributable to equity holders of OZ Minerals Limited
231.1
107.8
Basic and diluted earnings per share (cents per share)
77.4
35.7
(a) 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. 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.
(b) The non-underlying item net of tax is the settlement and legal cost associated with the class action incurred in 2016.
3 0
Variance analysis – underlying net profit after tax, 31 December 2017 compared to 31 December 2016
350
300
250
n
o
i
l
l
i
m
$
200
150
100
0
182.5
1.3
31.5
2.4
58.9
Increase in mine
costs:
Mine production 0.6
Deferred waste (49.3)
Depreciation 17.2
(31.5)
Total
231.1
Increase in Tax
and interest:
Income tax
Interest
Total
(58.5)
(0.4)
(58.9)
134.3
5.8
Increase in revenue
due to sales volume:
(20.4)
Copper
28.5
Gold
(2.3)
Silver
5.8
Total
Increase in revenue
due to higher
commodity prices:
Copper
Gold
Silver
Total
176.3
4.2
2.0
182.5
Underlying NPAT
for the year ended
31 December 2016
Sales
volume
Sales
price
TCRC and
royalties
Mine costs
Other costs
Tax and
interest
Underlying NPAT
for the year ended
31 December 2017
Net revenue
2017 revenue was $188.2 million higher when compared to 2016 as solid production
from Prominent Hill benefited from buoyant copper prices. Contained copper sold of
112,288 tonnes was comparable to 2016 while gold sales of 132,285 ounces were
21 percent higher.
In 2017 the average A$ copper price was 25 per cent higher than in 2016, while the
average A$ gold price was two per cent higher.
Treatment charges and refining costs (TCRC) were lower by $12.0 million as a result
of improved trading terms and lower refining charges.
Cost of goods sold
Cost of goods sold in 2017 was higher than the previous year by $59.8 million resulting from
an increased proportion of underground ore, higher power costs and royalties attributable to
the higher revenue base.
Mining costs were $20.6 million lower in 2017 as a result of the reduction in open pit mining
activity ($41.0 million), offset by increased higher grade underground mining of $20.4
million. As a result of the declining open pit mine strip ratio (approximately 0.5:1 in 2017
compared to 1:1 in 2016), the deferral of mining costs to the balance sheet was also lower
by $32.6 million in 2017.
Processing costs increased by $7.7 million, primarily due to higher power prices.
Royalties expenses increased by $10.7 million due to higher sales compared to the
prior period.
During the year, 10 million tonnes of ore were milled (2016: 9.8 million tonnes), including
2.5 million tonnes of underground ore (2016: 2.1 million tonnes). The cash inventory
adjustment of $68.7 million in 2017 was $16.7 million lower than 2016 as open pit
mining concluded in line with the mine plan and was partially displaced by increased
underground ore production. 6.1 million tonnes of open pit ore was stockpiled compared
to 7.7 million tonnes in 2016.
ANNUAL AND SUSTAINABILITY REPORT 2017
f InAnC I A L R eV IeW
3 1
Other costs
Exploration and evaluation costs of $16.3
million were incurred during the year in
progressing the West Musgrave Project and
other exploration earn-in arrangements
and $5.0 million was incurred in relation
to corporate development, including
due diligence costs associated with other
non-organic growth opportunities. During
the year $3.0 million in government grant
funding was received relating to the
development of the Concentrate Treatment
Plant (CTP) technology.
Corporate general and administration costs
of $31.5 million comprise costs incurred
in direct support of operating activities
($11.0 million) and those related to largely
corporate activities ($20.5 million). Costs
allocated to support operating activities
cover a range of services and expenditure
provided at the corporate office to
the Prominent Hill, Carrapateena, and
Exploration and Development operating
segments. These include costs for sales
and marketing, strategic sourcing, business
services, information technology and
insurance.
The income tax expense of $98.3 million
was higher than the previous year as a
result of the higher profit and the benefit
of tax losses recognised in the previous year.
Net depreciation and amortisation expense
increased by $10.0 million compared to
2016. This was predominantly due to the
higher value ore milled.
Cash balance and cash flow
342.9
197.0
n
o
i
l
l
i
m
$
1,000
900
800
700
600
655.7
67.0
5.2
729.4
Opening January
2017 cash balance
Operating
activities
Investing
activities
Financing
activities
Effect of exchange
rate changes
Closing December
2017 cash balance
Operating cash flows
Operating cash flows of $342.9 million for the year were $18.8 million higher than in 2016,
with the benefit of higher commodity prices partially offset by tax payments. Customer
receipts were $126.3 million higher as a result of the higher copper price realised during the
year. Income tax payments of $79.2 million were made during the year representing the tax
payment for 2016 of $65.5 million and the commencement of PAYG instalments for 2017
at the end of the year of $13.7 million.
Investing cash flows
Net investing cash flows of $197 million represent payments for property plant and
equipment and mine development at Prominent Hill, development costs at Carrapateena,
and receipts from the sale of surplus mining equipment.
The payments incurred related to:
/ $118.7 million in capitalised Carrapateena mine development costs
/ $16.7 million in CTP study costs
/ $46.9 million in underground operation mine development costs
/ $19.6 million of other sustaining capital expenditure
/ $4.9 million in receipts from equipment sales.
Financing activities
Cash outflows relating to financing activities of $67.0 million comprised $59.7 million in
dividend payments to shareholders and $7.3 million relating to the purchase of shares to
settle the Company’s share based compensation liabilities.
Since the end of the financial year, the Board of Directors have resolved to pay a final
dividend amounting to $41.8 million in respect of the 2017 financial year. This final dividend
will be fully franked for Australian tax purposes.
3 2
Balance sheet
Total equity increased by $162.0 million during the year to $2,516.3 million. This was mainly
due to the current year profit of $231.1 million, which was partially offset by $59.7 million of
dividends and a $7.2 million (net of tax) decrease in the value of gold derivative contracts.
The movement in the net assets of the Company since 31 December 2016 is provided below:
Movement in net assets since 31 December 2016
189.8
52.5
99.7
Increase in trade
receivables as a
result of timing
of sales
PP&E reduction
due to open pit
mining partially
offset by capital
expenditure at
Carrapateena
20.6
19.7
Reduction in
other assets
mainly related to
amortisation of
the lease
receivable and
sale of surplus
mining equipment
Increase in
trade payables
predominantly
due to increase
in accruals for
Carrapateena
14.0
2,516.3
Increase in tax
and other
liabilities:
current tax
provision of
$101.1m for
2017 will be paid
in 2018
2,800
2,600
2,400
2,354.3
73.7
Increase in
inventory as a
result of open pit
ore stockpiles
2,200
n
o
i
l
l
i
m
$
2,000
200
0
Net asset 2016
Cash
Inventory
Trade
receivables
Property plant
and equipment
including Carrapateena
Other assets
Trade payables
Tax and other
liabilities
Net assets 2017
The Company ended the year with a cash balance of $729.4 million and undrawn debt
facilities of $100 million, with an uncommitted facility for $300 million, providing the liquidity
and flexibility for the Company to execute its growth strategy.
Inventories at 31 December 2017 were $746.9 million, of which non-current ore stockpiles
increased by $124.4 million in line with the accelerated open pit mining strategy. A net
realisable value write back of $16.8 million was applied to the low grade gold ore stockpiles
(the estimated net realisable value is based on revenue expected to be derived from metal
contained in the ore stockpiles, based on the processing operational plan, after adjustment
for incremental costs). As open pit ore stockpiles are consumed following pit closure in
2018, the costs of mining open pit ore and the related capitalised depreciation (collectively
comprising open pit ore inventory) will be amortised progressively and recognised in the
income statement.
Trade receivables at the end of the year of $121.9 million were higher at 31 December 2017
due to the timing of shipments.
Property plant and equipment (PP&E) decreased during the year mainly due to depreciation
of Prominent Hill PP&E assets by $323.5 million which was partially offset by capitalised
underground development costs of $46.9 million, development capital expenditure at
Carrapateena of $145.4 million and sustaining capital expenditure of $19.6 million. The
Carrapateena Exploration assets of $284.9 million were reclassified as PP&E in 2017.
ANNUAL AND SUSTAINABILITY REPORT 2017
f InAnC I A L R eV IeW
3 3
Risks
OZ Minerals’ operating results, financial results and performance are subject to a wide range
of risks and uncertainties (both opportunities and threats) that can be financial, political,
operational and environmental. The Consolidated Entity manages and mitigates these
risks, where appropriate, to minimise adverse impacts from threats and maximise beneficial
outcomes from opportunities. OZ Minerals’ flat corporate governance structure and direct
communication channels ensures timely responses to emerging risks. Our risk management
framework emphasises risk aware decision-making to achieve enhanced business outcomes.
The Board has oversight responsibility and determines the overall risk appetite for the
Consolidated Entity. OZ Minerals operates a risk management system with multiple lines of
defence. Line managers, operational staff and corporate functions establish standards for
managing risk and the Board and its committees review risk management as a part of their
oversight and inspection role. The Company identified risks and mitigating factors that have
the potential to affect future operating and financial performance (provided in the table
below). Developing mitigating controls for threats minimises the adverse impact on the
Company’s performance, but the Company’s future operations and financial performance
may be significantly impacted should any of these elements fail or be disrupted.
Risks and mitigating factors that could affect oZ Minerals’ future operating and financial performance
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
Company’s income and cash flow.
Prominent Hill now operates an integrated underground mine with multiple
areas. This mitigates sole dependence on the open pit.
The Company has an active program which focuses on using 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 it is shipped to overseas destinations from the port of Adelaide.
Spillage risks (and environmental impact) are mitigated by using customised
containers with lids and rotainers to load concentrate onto ships.
The Company is developing a power strategy to align with its business
strategy, particularly in the Gawler Craton.
OZ Minerals has a clear pipeline of projects and gated plans which ensure a
disciplined approach to leverage the large resource base.
OZ Minerals evaluates each opportunity with due care and relies on expert
opinion, both internal and external where necessary, to ensure that any
potential transaction will be value accretive to the Company’s shareholders.
OZ Minerals’ maintains a segregated approach to the identification
and review of potential transactions and projects to ensure appropriate
governance is applied over the assessment of financial risk and returns.
Continuity of power supply
The Prominent Hill mine and
Carrapateena project are both
located in South Australia, which
experienced significant power
disruption in 2016.
Growth strategy
A key element of the Company’s
growth strategy is growth through
acquisition or development of
value accretive copper assets.
OZ Minerals competes with other power users for
competitively-priced uninterrupted power supply within
the prevailing environment of volatile electricity prices
and power outages in the state.
Prominent Hill power supply contracts will be
renegotiated in 2018. The Carrapateena power
infrastructure and supply agreements are currently
being developed.
The existence of a large resource at the Prominent Hill
operation, Carrapateena, Khamsin, Fremantle Doctor,
West Musgrave (JV), other exploration joint ventures
and prospectivity of the Gawler Craton.
In a climate of prospective commodity prices and
expected long-term shortages in copper supplies,
OZ Minerals competes with other entities to
acquire and develop projects that generate superior
shareholder value.
3 4
Context
Risk
Mitigation/actions
Operational risks
Project execution
Successful execution of OZ
Minerals’ growth strategy depends
on its ability to deliver projects on
time and within budget and scope.
Mine development projects are inherently exposed
to risks of scope definition, cost estimation accuracy
and other external factors which present threats
and opportunities to a project’s cost, efficiency
and profitability. These are not all within the
Company’s control.
OZ Minerals ensures its projects go through a process of internal and
external independent review to verify the engineering, technical and
financial scope definitions and other assumptions.
The Company manages project costs by sound procurement practices
and governance.
Contract management
Many aspects of the Prominent Hill
operations, Carrapateena project
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 (e.g. electricity, fuel and other key
consumables)
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
risks of non-performance by contractors, while deriving the highest value
for shareholders.
Geotechnical failure
The open pit and underground
mining operations remain subject
to geotechnical uncertainty and
adverse weather conditions.
These could manifest as pit wall
failures or rock falls, mine collapse,
cave-ins or other failures to
mine infrastructure and reduced
productivity.
Estimates of reserves
and resources
Reserve and resource assessments
involve areas of estimation and
judgement.
Customer management
OZ Minerals markets high
grade copper concentrate to
overseas and local customers.
Any disruption to the logistics
chain from production through to
delivery to the customer can result
in significant financial impact.
Market risks
Commodity prices and
exchange rates
/ changes in economic conditions that impact on
the margins required by contracting partners
/ changes in mining assumptions, such as ore
grades and pit designs.
The operating results of OZ Minerals depend
on the performance of contractors.
The open pit depth will increase until mining ceases
in 2018 and the concurrent mining of multiple
underground areas will lead to increased underground
mining activities.
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. Where possible, activities are undertaken to reduce the risk of
geotechnical failure.
The preparation of these estimates involves application
of significant judgment and no assurance of mineral
recovery levels or the commercial viability of deposits
can be provided. The Company reviews and publishes
its reserves and resources annually.
A concentrate’s marketability depends 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 as
well as fluorine and uranium impurities.
Regulators in various jurisdictions may change limits
or their approach to impurity assessment guidelines
in concentrate. This 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.
OZ Minerals does not control copper, gold, silver or
other base metal prices in the global commodities
market or the Australian/US dollar exchange rate.
The reserve and resource estimates and mine plans have been carefully
prepared by the Company in compliance with the Joint Ore Reserves
Committee (JORC) guidelines and in some instances are 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. These match smelter demand and production from the
Prominent Hill mine to concentrate grade and timing, along with a range
of controls to manage the fluorine and uranium impurities.
OZ Minerals has multiple marketing options including, but not limited to,
ore blending, concentrates blending and additional flotation treatment in
the processing plant.
OZ Minerals maintains a diverse customer portfolio to mitigate against the
risk of regulatory changes to importation requirements.
OZ Minerals manages its exposure to copper price on sales by entering into
derivative contracts that settle at the same time as the contractual quotation
period for the sale.
OZ Minerals has entered into gold derivative contracts to fix gold price on
60 per cent of the gold expected to be sold from Q3 2018 to 2021.
OZ Minerals’ functional currency is the Australian dollar and US dollars are
only held to meet US dollar commitments.
OZ Minerals does not take active steps to hedge currency risk.
OZ Minerals operates mines with a low cost of production relative to global
copper producers. This ensures resilience to low commodity prices and an
ability to maximise margins during high commodity prices.
ANNUAL AND SUSTAINABILITY REPORT 2017 f InAnC I A L R eV IeW
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Context
Risk
Mitigation/actions
Safety, health, environment, and community (SHEC )
Operational safety failures
resulting in injury or fatality
OZ Minerals undertakes operations in areas which
may pose a safety risk including, but not limited to,
handling explosives, underground operations subject
to rock fall, confined spaces, areas where heavy and
light vehicles interact, manual handling and operating
at height.
A fly-in fly-out operation also introduces risk that is
inherent in air travel, as contractors and employees are
regularly required to commute by aircraft.
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 the contractors
who work at our sites.
Active engagement at all levels of operations and with senior leadership
teams, combined with activities focused on identifying and eliminating
drivers of safety incidents, has delivered significant successes and resulted
in a sustained reduction in the severity of injuries.
Mine rehabilitation
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.
Maintenance of community
relations and good title
The Company works closely with local communities,
particularly the Indigenous communities in South
Australia.
Agreements with the Commonwealth of Australia
govern the terms of access to areas located within
the ‘green zone’ of the Woomera Prohibited Area.
Climate change
Severe climate change can cause disruption to mine
production, logistics and water supply as a result of
extreme weather events.
As regulatory agencies respond to climate change
over the medium term, costs of inputs may rise and
restrictions may be placed on how certain resources
are provided, transported and used, which may impact
our licence to operate.
Climate change combined with regulatory changes
also has the potential to be a catalyst for growth
in industries that require copper and could result in
upward pressure on copper prices.
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. Management seeks external assistance and review,
where appropriate, to estimate these costs.
However, actual closure costs may be higher or lower than estimated as
these are costs to be incurred following the closure of mining operations
over a long time period.
Access and compensation agreements are in place with communities
affected by mining activities. These are reviewed and updated from time
to time.
The Company actively engaged with the traditional owners of Carrapateena
and this culminated in a partnering agreement with the Kokatha Aboriginal
Corporation.
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 these
may have on our 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 operational disruptions.
The Company’s governance structure and risk management process
specifically focus on climate change risks to identify key risks and develop
response plans.
OZ Minerals is committed to reducing the energy intensity of our operations,
developing innovative practices in relation to chemical processing and being
more efficient in our transportation and processing activities.
The Company’s power strategy will consider renewable energy, power
security and reliability for its operations.
Business strategies, prospects and likely developments
This report sets out our business strategies and prospects for future financial years; likely
developments in OZ Minerals’ operations; and the expected results of our operations in
future financial years. We provide this information to help shareholders make an informed
assessment about the business strategies and prospects for the Consolidated Entity’s future
financial years. We have not included details that could give rise to a likely material detriment
to OZ Minerals, such as information that is commercially sensitive, confidential or could give
a third party a commercial advantage.
3 6
ANNUAL AND SUSTAINABILITY REPORT 2017 ReM Un eR A tIo n o VeR V IeW AnD RePoR
t
3 7
Remuneration
Overview
and Report
3 8
Remuneration
Overview
Remuneration to executive key management personnel in 2017
Full details of the audited cost to the Company of executive key management personnel (KMP) remuneration, calculated in accordance
with the accounting standards and the Corporations Act 2001, are available in Table 11 of the Remuneration Report (p. 51).
We’ve prepared the table below (unaudited), which includes details of remuneration actually delivered to executive KMP in 2017,
to be transparent with our shareholders regarding remuneration outcomes.
Remuneration to executive key management personnel (unaudited)
Current
Andrew Cole
Managing Director
and CEO
Mark Rankmore
Head of People
and Performance
Warrick Ranson(c)
Chief Financial Officer
Former
Luke Anderson(d)
Chief Financial Officer
Robert Fulker(e)
Chief Operating Officer
Cash salary
$
Short term
incentives
$
739,976
626,250
730,384
671,250
386,832
380,542
38,052
388,738
495,785
436,694
470,874
211,200
211,200
–
–
375,900
328,000
346,000
2017
2016
2017
2016
2017
2017
2016
2017
2016
Long term
incentives
Termination
Benefits(a)
Super-
annuation(b)
Total
remuneration
$
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
7,157
–
142,486
–
$
$
10,024
1,376,250
19,616
1,421,250
13,168
18,645
3,615
5,012
29,215
10,276
19,364
611,200
610,387
41,667
400,907
900,900
917,456
836,238
(a) Termination benefits include the value of benefits such as payment for notice period and leave balances paid upon termination.
(b) Represents direct contributions to superannuation funds based on quarterly contribution limits under Super Guarantee Charge regulations (in 2016 contributions were based on annual contribution
limits). Amounts greater than the maximum superannuation level have been paid and included in cash salary.
(c) Appointed 4 December 2017.
(d) Resigned effective 29 September 2017.
(e) Ceased to be KMP from 23 November 2017 and resigned on 10 February 2018.
ANNUAL AND SUSTAINABILITY REPORT 2017 ReM Un eR A tIo n o VeR V IeW
3 9
Letter from the Chairman of the Human
Resources and Remuneration Committee
Dear Shareholders,
On behalf of the Board of Directors, I am
pleased to provide you with the 2017
Remuneration Report for OZ Minerals.
2017 was a successful year for the Company.
We achieved or bettered our production
and cost guidance, extended the mine
life at Prominent Hill and commenced the
development of Carrapateena. We also
advanced our growth strategy whilst at
the same time ensured that the company’s
balance sheet remained strong. The success
of the Company during the year was a
direct result of the talent, hard work and
dedication of the Company’s employees
and stakeholders. More detail on the
Company’s performance is contained in
the Directors Report.
Remuneration outcomes in 2017
As in previous years, we have continued to
seek to ensure that remuneration outcomes
reflect the performance of the Company
and are aligned to shareholder’s experience.
In addition we sought to ensure that
executive remuneration remained market
competitive, easy to understand and could
be clearly communicated to executives and
shareholders.
Key outcomes for 2017 include:
/ Executive salaries were held at 2016 levels
during 2017
/ The strong performance of the Company
against the KPIs set by the Board for the
2017 year supported short term incentive
awards to KMPs on average 84.5% of
their maximum annual short term incentive
opportunity. Details of the KPI outcomes
can be found in section 3.2 of the
Remuneration Report
/ Reflecting the strong performance of the
Company and his leadership during 2017,
the Board determined to award 83.5% of
the maximum annual short term incentive
opportunity to the Managing Director and
Chief Executive Officer, Andrew Cole
/ The lapsing of 382,251 performance rights
following the resignations of KMPs Luke
Anderson and Robert Fulker.
Developments for remuneration
for 2018 and beyond
As activity picks up in the mining sector
and the Company enters the next phase of
its growth journey, we recognise the need
to continue to ensure reward mechanisms
are appropriately aligned. The Board also
considers it vital that Key Management
Personnel and other critical senior
management in the business are retained
during the construction and commissioning
of Carrapateena.
Accordingly the Board approved:
/ a remuneration review for the Company
for 2018. The last company-wide review
was in 2012
/ fixed remuneration increase for Managing
Director and CEO, Andrew Cole to
$800,000 per annum. This recognises
the increased scale and complexity of
the Company and its operations, and
positions his remuneration competitively
with comparable companies. His short term
incentive opportunity was also increased
from 100% to 120% for 2018. His fixed
remuneration has not been increased since
joining the Company in 2014
/ fixed remuneration increase for Head of
People and Performance, Mark Rankmore,
to $470,000 per annum to reflect increases
in the scope of his role
/ no other increases to KMP fixed
remuneration
/ one-off issue of performance rights in 2018
to ongoing KMP (other than Andrew Cole)
under an Alignment Plan. The number of
rights issued will represent 20% of the
KMP’s fixed remuneration with vesting
subject only to continuing employment on
the second anniversary of the award.
During 2017 the Company also commenced
a review of its executive remuneration
incentive structure to ensure that it continues
to align the interests of executives with those
of shareholders. This review has highlighted
some opportunities for improved alignment
which will be further developed during 2018
with a view to implementation in 2019. We
intend to consult with shareholders on these
proposals prior to implementation.
Meanwhile, following a review of the
existing Long Term Incentive plan Total
Shareholder Return comparator group
the Board has determined to amend the
comparator group of companies to give
better alignment to the Company.
Seven new comparator companies will
be added to the peer group consisting
of Independence Group, Western Areas,
Avanco Resources, First Quantum Minerals,
Antofagasta, Freeport McMoRan and
Dundee Precious Metals. Two companies
will be removed from the peer group, being
MMG Limited and Katanga Mining. These
changes will apply to the 2018 award.
The Board considers this group better reflects
the growth in the scale and complexity of
the operations of the Company. The Board
also recognises that a larger comparator
group is more reflective of shareholder
opportunity whilst also reducing the volatility
of the outcome for executives.
Finally, the Board decided not to increase the
fees paid to Non-executive Directors in 2017.
During 2018 it is intended to undertake
a review of the roles and responsibilities
of the Board and its committees and their
respective fees. Board and committee fees
have not been increased since 2012.
The Board is determined to continue our
focus on the longer-term business strategy
and deliver consistent, well-aligned and
transparent remuneration outcomes.
Thank you for your ongoing support
of OZ Minerals.
Yours sincerely,
Tonianne Dwyer
Chairman Human Resources and
Remuneration Committee
Adelaide
22 February 2018
4 0
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 2017. This
Remuneration Report forms part of the
Directors’ Report and has been audited in
accordance with the Corporations Act 2001.
1.0 Key management personnel
The Consolidated Entity’s key management
personnel (KMP) during 2017 are listed in
Table 1, and consist of the non-executive
directors (NED) and executive KMP who
are accountable for planning, directing and
controlling the affairs of the Company and
its controlled entities.
table 1 – KMP during 2017
Name
Position
Period as KMP during the year
Executive KMP
Andrew Cole
Managing Director and CEO
All of 2017
Mark Rankmore
Head of People and Performance
All of 2017
Warrick Ranson
Chief Financial Officer
Appointed 4 December 2017
Former
Luke Anderson
Chief Financial Officer
Resigned 29 September 2017
Robert Fulker
Chief Operating Officer
Ceased to be KMP on 23 November 2017
Non-executive directors
Rebecca McGrath
Independent Chairman(a)
Julie Beeby
Independent NED
All of 2017
All of 2017
Tonianne Dwyer
Independent NED
Appointed 22 March 2017
Charles Lenegan
Independent NED
All of 2017
Peter Tomsett
Peter Wasow
Former
Independent NED
Independent NED
Appointed 22 March 2017
Appointed 1 November 2017
Neil Hamilton
Independent Chairman
Retired 24 May 2017
Paul Dowd
Independent NED
Retired 24 May 2017
(a) Rebbeca McGrath was elected to be an Independent Chairman by shareholders in the Annual General Meeting on 24 May 2017.
2.0 Remuneration policy
table 2 – Remuneration principles
2.1 Overview of remuneration
policy and practices
The remuneration principles outlined in
Table 2 demonstrate the links between
remuneration and business strategies
and their impact on OZ Minerals actual
remuneration arrangements. The overriding
business objective is to achieve superior
returns compared to the Company’s peers
in the resources sector.
Business needs and
market alignment
OZ Minerals remuneration policy is focused on achieving our corporate objectives.
Remuneration is set having regard to market practices and aligned with achieving
shareholder returns.
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.
Fixed remuneration is set at a competitive level and positioned to take in to account
the challenges of attracting and retaining high performers in business critical roles,
particularly in the mining industry. The ‘at-risk’ components of remuneration depend
on challenging goals and are focused on incentivising executive KMP to achieve
business critical objectives and shareholder returns.
Talent management
Remuneration policy is tightly linked with our performance and talent management
frameworks to reward and recognise employees who achieve their role
accountabilities and to engage future leaders.
Governance,
transparency and
communication with
shareholders
OZ Minerals is committed to developing and maintaining remuneration policies and
practices that maximise value. We will openly communicate these to shareholders
and other relevant stakeholders, and will always be within legal, regulatory and
industrial requirements. The Board has absolute discretion to develop, implement and
review key aspects of remuneration.
ANNUAL AND SUSTAINABILITY REPORT 2017 ReM Un eR A tIo n RePoR t
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2.2 Remuneration consultants
The Board of Directors and Human Resources and Remuneration Committee seek and
consider advice from independent remuneration consultants to ensure that they have all
the relevant information at their disposal to determine executive KMP remuneration. The
engagement of remuneration consultants is governed by internal protocols that set the
parameters around the interaction between management and consultants to minimise the
risk of any undue influence and ensure compliance with the Corporations Act 2001.
PROTOCOL S
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 by the Committee and any relationships that exist
between any Executive KMP and the consultant
/ communication between the remuneration consultants and executive KMP is restricted to
minimise the risk of undue influence on the remuneration consultant
/ 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 Board and the Human Resources and Remuneration Committee use remuneration
consultants’ advice and recommendations from time to time. The Board makes its decisions
after it considers the issues and the advice from Human Resources and Remuneration
Committee and consultants.
During 2017, PwC were engaged to review the Company’s executive remuneration
framework. Their observations will form the basis of further work to be undertaken during
2018 to ensure that remuneration arrangements continue to align with shareholder interests
in pursuit of the Company’s strategy. The work completed did not constitute a remuneration
recommendation in accordance with the Corporations Act 2001. The fee for work conducted
was $108,834 (including GST).
4 2
2.3 Review of executive KMP remuneration
Executive KMP remuneration levels are reviewed annually by the Board with help from the
Human Resources and Remuneration Committee and external remuneration consultants as
required. The review makes sure that executive KMP remuneration remains consistent with
the Company’s remuneration policies and guiding principles, and considers:
/ the Company’s remuneration policy and practices
/ relevant market benchmarks using salary survey data from the Australian industrial
and resources sectors
/ the skills and experience required of each role in order to grade positions accurately
and attract high calibre people
/ individual performance against role expectation, set objectives, leadership behaviours
and development plans
/ Company strategy, business plans and budgets.
2.4 Executive KMP remuneration components
table 3 – Remuneration mix
Total fixed remuneration (TFR)
At-risk remuneration
Short term incentive (STI)
Long term incentive (LTI)
The 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.
A variable, performance based, annual cash incentive
plan designed to reward high performance against
challenging, clearly defined and measurable objectives.
These 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
which is linked to the Company’s medium to long
term TSR and share price performance. A three-year
performance period applies.
The mix of fixed and at-risk remuneration varies depending on the role and grading of
executives as well as 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 ratio percentage of fixed to at-risk remuneration would be as follows.
executive KMP remuneration mix
Managing Director and CEO
28.6%
28.6%
42.8%
Head of People and Performance
43.5%
26.1%
30.4%
Chief Operating Officer
Chief Financial Officer
37.0%
37.0%
29.6%
29.6%
33.4%
33.4%
Fixed
STI
LTI
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table 4 – Questions and answers about executive KMP remuneration
Total fixed remuneration (TFR)
What is included in total fixed remuneration?
When and how is fixed remuneration reviewed?
Short term incentive (STI)
An executive KMP’s total fixed remuneration comprises salary and certain other benefits (including statutory
superannuation contributions) that may be taken in an agreed form, such as 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
and CEO and other executive KMP must be approved by the Board after recommendations by the Human Resources
and Remuneration Committee. The Company seeks to position the fixed remuneration between the 50th and 75th
percentile (or higher) of remuneration for business critical roles in comparable companies within the mining market and
where appropriate, the broader general industry market.
Why does the Board think an STI plan is appropriate? Variable performance based remuneration strengthens the link between pay and performance. The purpose of these
What are the performance conditions?
programmes 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 that determined STI outcomes in 2017 were: (a) Company key performance indicators (KPIs)
and (b) individual KPIs.
The Company KPI hurdle in 2017, accounts for 90% of the STI award for the Managing Director and CEO and
50% of the STI award for other KMP and the balance was attributable to individual KPIs.
(a) Company KPIs
Company KPIs are set and weighted at the beginning of each year. They 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 key areas of focus in 2017 included improving the Company’s operational and financial performance,
sustainability performance and progressing strategic growth objectives.
table 4.1 – Company KPIs in 2017 that applied to executive KMP
KPI category
KPI detail
% weighting
Operational and financial
EBITDA, net cash flow, corporate efficiency
Sustainability
safety improvement, safety behaviours, leadership effectiveness
Strategy and growth
concentrate production and sales, Carrapateena development,
growth pipeline
40
20
40
b) Individual KPIs
Individual KPIs vary for each executive KMP based on their accountabilities.
The Board assesses and sets the KPIs for the Managing Director and Chief Executive Officer award, and the Managing
Director and Chief Executive Officer assesses and sets the KPIs for each of the other executive KMP in consultation with
the Board.
Is there an overriding financial performance
condition or other condition?
Yes. The availability of the STI Pool is at the discretion of the Board, which takes into account the interests of the
Company and shareholders. The Board can choose not to pay or reduce the amount of the STI otherwise payable.
How is the STI structured to reward
exceptional performance?
The STI plan is designed to reward executive KMP at three pre-determined performance levels – threshold,
target and maximum.
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.
Maximum performance represents outstanding performance, set at a stretch level.
4 4
What is the value of the STI opportunity?
table 4.2 – the target and maximum StI reward opportunity for executive KMP in 2017
Executive KMP
Andrew Cole
Luke Anderson(a)
Robert Fulker
Mark Rankmore
Warrick Ranson(b)
Target STI
(as % of TFR)
Maximum STI
(as % of TFR)
70
56
56
42
56
100
80
80
60
80
(a) Resigned 29 September 2017, ineligible for STI payment.
(b) Appointed 4 December 2017, ineligible for STI payment.
The Managing Director and CEO assesses the business performance of executive KMP 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. The Board also reviews the performance assessment of all executives who
report directly to the Managing Director and CEO, with a view to understanding, endorsing and/or discussing individual
circumstances, performance, leadership behaviours and future development. The Human Resources and Remuneration
Committee and the Board assess the performance of the Managing Director and CEO against the performance targets
and objectives set for that year.
The Board considers the method of assessing STI as described above to be appropriate as the Managing Director and
CEO has oversight of his direct reports and the day to day function of the Company, whilst the Board and Human
Resources and Remuneration Committee have overall responsibility for determining whether Executive KMP have
met the performance targets and objectives set for that year.
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.
This is at the Board’s discretion and conditional upon the individual performance of the relevant executive.
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 take into account 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
/ 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 shareholder returns.
How is STI assessed?
What happens to STI awards when
an executive ceases employment?
Long term incentive (LTI)
Why does the Board consider
a LTI Plan to be appropriate?
How is the award delivered?
The LTI is granted using performance rights under the OZ Minerals LTI plan (detailed below).
Was a grant made in 2017?
A grant was made on 27 January 2017 to all continuing participants in the LTI plan. The number of performance
rights granted to each executive was calculated as their LTI dollar opportunity divided by the adjusted five-day volume
weighted average price of OZ Minerals as at the start of the performance period. The performance period for the 2017
LTI grant is 1 January 2017 to 31 December 2019.
What was the value of the 2017
grant for executive KMP?
table 4.3 – the LtI grant to executive KMP in 2017
Executive KMP
Andrew Cole
Luke Anderson(a)
Robert Fulker(b)
Mark Rankmore
Warrick Ranson(c)
2017 LTI grant
as % of TFR
2017 LTI grant allocation
$
150
90
90
70
–
1,125,000
472,500
450,000
280,000
–
(a) Resigned 29 September 2017, LTI was granted to Mr Anderson in 2017. All rights lapsed upon cessation of employment.
(b) Ceased to be KMP effective 23 November 2017 and resigned 10 February 2018, LTI granted to Mr Fulker in 2017 lapsed upon
cessation of employment.
(c) Appointed 4 December 2017, ineligible for the 2017 LTI grant.
ANNUAL AND SUSTAINABILITY REPORT 2017 ReM Un eR A tIo n RePoR t
4 5
What are the performance conditions?
The two performance conditions, referred to as the vesting conditions are: (a) the executive KMP meeting the service
condition; and (b) OZ Minerals meeting the LTI performance 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).
Performance conditions
The LTI plan performance conditions for 2017 were as follows:
1. Total shareholder return (TSR)
Relative TSR is the primary LTI performance hurdle measured against a comparator group. The Board considers TSR
to be an appropriate performance hurdle because it ensures that a proportion of each participant’s remuneration is
linked to shareholder value and 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 it is the most widely
used long term incentive hurdle in Australia. The Company employs an independent organisation to calculate the TSR
ranking to ensure an objective assessment of the relative TSR comparison. Performance rights in respect to this hurdle
will vest in accordance with the following table.
table 4.4 – Performance rights vested according to total shareholder return
TSR of OZ Minerals relative to TSRs
of constituents of the nominated peer group
Proportion of performance rights that vest
Below 50th percentile
50th percentile
0%
50%
Between 50th percentile and 75th percentile (not inclusive)
Straight line vesting between 50% and 100%
75th percentile or above
100%
The TSR performance hurdle accounts for 70% of the LTI award.
2. Absolute share price growth
Absolute share price growth is the second LTI performance hurdle. This hurdle will be satisfied if the OZ Minerals share
price has increased by at least 20% over the performance period. Performance rights in respect to this hurdle will vest in
accordance with the following table.
table 4.5 – Performance rights vested according to absolute share price growth
OZ Minerals share price growth
over the performance period
Proportion of performance – related
performance rights that vest
Less than 20%
20% or greater
0%
100%
The absolute share price growth hurdle accounts for 30% of the LTI award.
Why were the performance conditions chosen?
It is standard market practice to link individual executive performance (including mandatory service periods) and
Company performance to the vesting of performance rights. The conditions link executives’ retention and performance
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 achieve shareholders returns.
4 6
What is the comparator group?
The comparator companies selected for 2017 are considered to be alternative investment vehicles for local and global
investors. They are impacted by commodity prices and cyclical factors in a similar way to OZ Minerals.
table 4.6 – 2017 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
What happens to performance rights granted under
the LTI plan when an executive ceases employment?
What happens in the event of a change of control?
Is there any ability for the Company to ‘clawback’
LTI awards?
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?
If the executive’s employment is terminated for cause, or if they resign, 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 (or a cash equivalent amount will be paid) in accordance with the OZ Minerals’
Equity Incentive Plan Rules and any other conditions of grant.
In the event of a takeover or change of control at OZ Minerals, the Board has the 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 on the portion of the relevant
performance period that has elapsed up to the change of control. The Board retains discretion to determine if the
remaining performance rights will vest or lapse.
In the event of fraud, dishonesty, gross misconduct or material misstatement of the financial statements, the Board may
make a determination that could include 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
was obtained.
Generally, there is no dilution of shareholders’ pre-existing equity as shares allocated to LTI plan participants 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. 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.
ANNUAL AND SUSTAINABILITY REPORT 2017 3.0 Company performance
and remuneration outcomes
3.1 Company performance
We present a summary of OZ Minerals’
business performance as measured by a
range of financial and other indicators.
3.2 STI performance
and outcomes for 2017
The Chairman and the Board, with the
assistance of the Chair of the Human
Resources and Remuneration Committee,
reviewed the Managing Director and
CEO’s performance against 2017 KPIs. The
Managing Director and CEO reviews the
performance of each of the other executive
KMP against their 2017 individual KPIs, and
seeks the approval of the Board and Human
Resources and Remuneration Committee to
determine award outcomes.
ReM Un eR A tIo n RePoR t
4 7
table 5 – Company performance(a)
Measure
Underlying EBITDA – $ million
Net profit/(loss) after income tax – $ million
Net cash inflow from operating activities
– $ million
Basic earnings/(loss) per share – cents
Share price at end of year – $
Dividends paid per share – cents
2017
539.4
231.1
342.9
77.4
9.16
20
2016
373.8
107.8
324.1
35.7
7.89
20
2015
434.9
130.2
429.8
42.9
4.05
6
2014
352.4
2013
(215.5)
48.5
(294.4)
221.5
179.1
16.0
3.48
20
(97.1)
3.15
30
(a) Refer to the Financial Review section (p. 29) in the Directors Report for a commentary on the consolidated results, including
underlying performance of the Consolidated Entity.
The Company scorecard contains enterprise level KPIs. The scorecard was assessed against the
KPI’s in 2017, which resulted in a Board-approved score of 3.9.
table 6 – 2017 summary company KPI performance
Measure
KPI
Link to
strategy
2017 performance summary
Financial
delivery (30%)
Lean
business
Financial and
operations
(40% total)
Governance
and
organisation
efficiency
(10%)
Lean
business
Safe
Safety
performance
(10%)
Sustainability
(20% total)
Leadership
effectiveness
(10%)
Strong
values
Outcome
Exceeded
Achieved
Target EBITDA of $406 million was exceeded.
The outcome reflected consistent performance
from Prominent Hill operations and improved cost
performance. Net operating cash flow target of
$162 million was also exceeded.
Ongoing progress was made in continuing to
simplify internal governance and systems based
on the Company's operating model and lean
operating culture. Performance Standards were
finalised and rollout of Company Process Standards
commenced. Consistent financial and operating
performance has also demonstrated increasing
commitment to innovation and exploring new
ways of generating value.
TRIFR of 6.39 reflected ramp-up of activity at
Carrapateena and improvements made at Prominent
Hill. Severity of injury has reduced from 2016
levels and all significant incidents were reported,
investigated and subsequently reviewed by the
Executive Committee for corrective action.
Partly
achieved
Exceeded
Leadership effectiveness improved throughout the
year through a targeted change programme to
align senior leaders to company strategy and How
We Work Together principles, setting the long term
leadership culture for the Company. Leadership
effectiveness was also demonstrated by continued
improvements in developing innovation across the
Company and ongoing improvements in cost control,
operational performance and progressing growth
opportunities consistent with the Company strategy.
4 8
table 6 cont.
Measure
KPI
Organic
growth (20%)
Link to
strategy
Copper core
Strategy and
growth
(40% total)
Pipeline
growth (10%)
Multiple
assets
Concentrate
quantity and
quality (10%)
Customer
focus
2017 performance summary
Outcome
The Carrapateena project was approved by the
Board of Directors for full construction at a budgeted
cost of $916 million. Work was completed to
confirm an extended mining life at Prominent Hill
until 2029. The West Musgrave project (an earn-in
agreement with Cassini Resources) Scoping Study
was completed and the project has proceeded to
Pre-Feasibility Stage.
The exploration pipeline grew during the year,
resulting in nine active drilling projects being
maintained with various joint venture partners
within Australia, Portugal and Mexico.
All budgeted concentrate produced by the Prominent
Hill operation was sold in line with customer
contracts with no breach in contract specifications
whilst maintaining sufficient budgeted inventory.
Study programme for the Concentrate Treatment
Plant also progressed.
Exceeded
Achieved
Exceeded
table 7 – StI award percentage for executive KMP
In accordance with the procedure set out in Section 2.0, an assessment was undertaken of
the performance of each of the eligible Executive KMP against their 2017 KPIs.
Executive KMP
Company KPI
performance
Individual KPI
performance
Overall performance
outcome
(as per cent of
maximum performance)
(as per cent of
maximum performance)
(as per cent of
maximum performance)
Current
Andrew Cole
Mark Rankmore
Warrick Ranson(a)
Former
Luke Anderson(b)
Robert Fulker(c)
83.5
83.5
–
–
83.5
83.5
92.5
–
–
80.5
83.5
88
–
–
82
(a) Appointed 4 December 2017, ineligible for STI payment.
(b) Resigned 29 September 2017, ineligible for STI payment.
(c) Ceased to be KMP on 23 November 2017 and resigned effective 10 February 2018, eligible for STI payment as completed
full year service.
ANNUAL AND SUSTAINABILITY REPORT 2017 ReM Un eR A tIo n RePoR t
4 9
table 8 – StI payments to executive KMP in 2017
Name
Andrew Cole
Mark Rankmore
Warrick Ranson(c)
Former
Luke Anderson(d)
Robert Fulker(e)
Payment
$
626,250
211,200
–
–
328,000
Maximum potential
value of payment(a)
Per cent of maximum
grant awarded(b)
Per cent of maximum
grant forfeited
$
750,000
240,000
–
420,000
400,000
%
83.5
88
–
–
82
%
16.5
12
–
100
18
(a) The minimum potential value of the payments was nil. The maximum potential value of payment represents the achievement of stretch performance.
(b) Rounded to the nearest whole decimal place.
(c) Appointed 4 December 2017, ineligible for STI payment.
(d) Resigned effective 29 September 2017, ineligible for STI payment.
(e) Ceased to be KMP on 23 November 2017 and resigned effective 10 February 2018 eligible for STI payment as completed full year service.
3.3 LTI performance and outcomes
Performance rights granted under the OZ Minerals LTI Plan are granted for no consideration. Performance rights carry no dividend or voting
rights. One ordinary share in the Company will be allocated on vesting of a performance right. The vesting condition for each grant is the
relative TSR performance and absolute share price growth 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. Details of the prior awards for
relevant executive KMP 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 15. Additional details are set out in
Note 12 to the Financial Statements
The LTI awards on foot during the year (including those granted as part of the 2017 LTI awards) are detailed below.
table 9 – LtI awards on foot
Grant
date
Rights
Maximum
value of
grant(a)
$
Fair value per
performance
right(b)
Performance period
Expiry date
Vesting outcome
Current
Andrew Cole
24/7/2017
135,446
1,353,106
5/7/2016
201,223
1,722,469
21/7/2015
154,344
27/1/2017
16/3/2016
21/7/2015
33,711
74,184
35,577
754,742
336,773
635,015
173,972
Mark Rankmore
Former
Luke Anderson(c)
27/1/2017
56,887
568,301
Robert Fulker(d)
16/3/2016
126,771
1,084,646
4/12/2015
27/1/2017
23,680
54,179
115,795
541,248
16/3/2016
120,734
1,033,483
4.29
3.88
3.47
6.20
3.56
2.82
6.20
3.56
2.82
6.20
3.56
1/1/2017 – 31/12/2019
15/2/2020
To be determined
1/1/2016 – 31/12/2018
15/2/2019
To be determined
1/7/2015 – 30/6/2018
15/8/2018
To be determined
1/1/2017 – 31/12/2019
15/2/2020
To be determined
1/1/2016 – 31/12/2018
15/2/2019
To be determined
1/7/2015 – 30/6/2018
15/8/2018
To be determined
1/1/2017 – 31/12/2019
15/2/2020
1/1/2016 – 31/12/2018
15/2/2019
1/7/2015 – 30/6/2018
15/8/2018
1/1/2017 – 31/12/2019
15/2/2020
1/1/2016 – 31/12/2018
15/2/2019
Lapsed
Lapsed
Lapsed
Lapsed
Lapsed
(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 2017 grant, this was $9.99 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) Resigned effective 29 September 2017.
(d) Ceased to be KMP on 23 November 2017 and resigned effective 10 February 2018.
5 0
4.0 Executive KMP employment
arrangements
Remuneration arrangements for executive
KMP are formalised in executive service
agreements. Each agreement provides
for the payment of fixed remuneration,
performance-related cash bonuses
under the STI plan, other benefits, and
participation in the Company’s LTI plan.
table 10 – executive KMP key provisions
Name
Term of contract
2017 TFR Notice period
Termination benefit
$
750,000
Current
Andrew Cole
Permanent –
ongoing until notice
has been given by
either party.
Mark Rankmore
400,000
Permanent –
ongoing until notice
has been given by
either party.
Warrick Ranson
525,000
Permanent –
ongoing until notice
has been given by
either party.
Former
Luke Anderson
525,000
Permanent –
ongoing until notice
has been given by
either party.
Robert Fulker
500,000
Permanent –
ongoing until notice
has been given by
either party.
Twelve months fixed
remuneration in the
case of termination
by the Company.
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 required
for termination by Company
for cause.
Three months’ notice
by either party.
Company may elect to make
payment in lieu of notice.
No notice required for
termination by Company
for cause.
Three months’ notice
by either party.
Company may elect to make
payment in lieu of notice.
No notice required for
termination by Company
for cause.
Three months’ notice
by either party.
Company may elect to make
payment in lieu of notice.
No notice required for
termination by Company
for cause.
Three months’ notice
by either party.
Company may elect to make
payment in lieu of notice.
No notice required for
termination by Company
for cause.
Six months fixed
remuneration in the
case of termination
by the Company.
Nine months fixed
remuneration in the
case of termination
by the Company.
Nine months fixed
remuneration in the
case of termination
by the Company.
Nine months fixed
remuneration in the
case of termination
by the Company.
ANNUAL AND SUSTAINABILITY REPORT 2017 ReM Un eR A tIo n RePoR t
5 1
5.0 Executive KMP remuneration
table 11 – total rewards to executive KMP
Salary,
fees and
allowances
$
Accrued
annual
leave(a)
$
Current
Andrew Cole
Managing Director
& CEO
Mark Rankmore
Head of People
& Performance
Warrick Ranson
Chief Financial Officer(f)
Former
Luke Anderson
Chief Financial Officer(g)
Robert Fulker
Chief Operating
Officer(h)
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
739,976
(15,379)
730,384
36,503
386,832
(12,923)
380,542
21,299
10,024
19,616
13,168
18,645
626,250
671,250
211,200
211,200
38,052
1,141
3,615
–
–
–
388,738
(26,547)
495,785
17,070
436,694
(22,131)
470,874
2,747
5,012
29,215
10,276
19,364
–
–
–
375,900
328,000
346,000
Super-
annuation(b)
Short term
incentive
Other
long term
benefits(c)
Termination
benefits(d)
Value of
performance
rights(e)
Total
remuneration
Per cent of
remuneration
‘at-risk’
$
$
$
$
–
–
–
–
–
–
$
$
135,731
1,513,346
154,440
1,622,010
66,357
75,202
–
–
671,777
710,634
42,864
–
7,157
(128,510)
240,988
–
128,510
1,050,786
16,744
9,817
7,143
3,746
56
–
(4,862)
4,306
(5,899)
142,486
(122,390)
767,036
4,671
–
122,390
966,046
%
50
51
41
40
0
–
(53)
48
27
48
(a) Annual leave has been separately categorised and is measured on an accrual basis and reflects the movement in the accrual over the twelve-month period. Any reduction in accrued annual leave
reflects more leave taken/cashed out than that which accrued in the period.
(b) Represents direct contributions to superannuation funds based on quarterly contribution limits under Super Guarantee Charge regulations (in 2016 contributions were based on annual contribution
limits). Amounts greater than the maximum superannuation level have been paid and included in cash salary.
(c) Represents the net accrual movement for long service leave (LSL) over the twelve-month period which will only be paid if executive KMP meets the required service conditions.
(d) Termination benefits include the value of benefits such as payment for notice period and leave balances paid upon termination.
(e) 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.
(f) Appointed 4 December 2017.
(g) Resigned 29 September 2017. Benefits include the termination benefits.
(h) Ceased to be KMP effective on 23 November 2017 and resigned 10 February 2018.
5 2
6.0 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. 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 not to increase the fees paid to non-executive
directors in 2017 based on the Human Resources and Remuneration Committee’s
recommendation.
The Board intends to review the Board and Committee fees as part of its review of the Board
and committee structure during 2018.
table 12 – Details of neD remuneration
Fees
Board
Audit
Sustainability
Human Resources and Remuneration
Chairman
Member
$ per annum
$ per annum
313,285
43,056
21,528
21,528
120,314
21,528
10,764
10,764
All Directors (including the Chairman) are entitled to superannuation contributions (or
cash in lieu thereof) equal to 9.5 per cent calculated on base Board and Committee fees,
and are entitled to be reimbursed for travel 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.
ANNUAL AND SUSTAINABILITY REPORT 2017 ReM Un eR A tIo n RePoR t
5 3
6.2 Total fees paid to NEDs
In 2017, NEDs received $1,141,368 (2016: $1,059,764) in total fees, compared to the maximum approved fees payable of $2,700,000.
table 13 – total remuneration paid to neDs
Current
Rebecca McGrath
Chairman
Julie Beeby
Non-executive Director
Tonianne Dwyer(b)
Non-executive Director
Charles Lenegan
Non-executive Director
Peter Tomsett(b)
Non-executive Director
Peter Wasow(c)
Non-executive Director
Former
Neil Hamilton(d)
Chairman
Paul Dowd(d)
Non-executive Director
Board fees and
cash benefits
Committee fees
Non-monetary
benefits
Superannuation(a)
Total
remuneration
$
$
241,654
120,314
120,314
80,209
93,723
120,314
120,314
17,160(e)
43,056
28,002
14,352
31,629
53,820
53,820
$
–
–
–
–
–
–
–
93,723
23,244
–
$
$
18,808
15,520
14,090
8,983
11,908
16,543
16,543
11,112
277,622
178,890
162,406
103,544
137,260
190,677
190,677
128,079
20,052
5,382
138,145
323,796
50,131
120,314
–
–
17,940
43,056
–
–
–
–
–
2,416
27,850
4,791
19,251
6,467
15,520
142,936
343,047
74,538
178,890
2017
2016
2017
2016
2017
2017
2016
2017
2017
2017
2016
2017
2016
(a) Represents direct contributions to superannuation funds based on quarterly contribution limits under Super Guarantee Charge regulations (in 2016 contributions were based on annual contribution
limits). Amounts greater than the maximum superannuation level have been paid and included in cash salary.
(b) Appointed a Non-executive Director on 22 March 2017.
(c) Appointed a Non-executive Director on 1 November 2017.
(d) Ceased to be a Non-executive Director on 24 May 2017.
(e) Committee fee were paid during the period not as Chairman.
5 4
7.0 Equity instrument disclosure relating to KMP
The movement in the number of shares held by each KMP during the year is set out below.
table 14 – KMP shareholdings
Balance at
1 January 2017
(or date commenced
as KMP)
$
Non-executive directors
Current
Rebecca McGrath
Julie Beeby
Tonianne Dwyer(b)
Charles Lenegan
Peter Tomsett(b)
Peter Wasow(c)
Former
Neil Hamilton(d)
Paul Dowd(d)
Executive KMP
Current
Andrew Cole
Mark Rankmore
Warrick Ranson(e)
Former
Luke Anderson(f)
Robert Fulker(g)
Total
20,645
8,000
–
20,750
–
–
39,500
10,800
10,000
–
–
–
–
109,695
Shares granted as
remuneration
Shares acquired on
exercise of rights
Net other
movements
Balance at
31 December 2017
(or date ceased
to be KMP)(a)
$
_
–
–
–
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$
$
12,390
6,000
10,000
–
–
–
–
–
–
–
–
–
–
33,035
14,000
10,000
20,750
–
–
39,500
10,800
10,000
–
–
–
–
28,390
138,085
(a) The following number of shares (included in the holdings above) were held on behalf of KMP (i.e. indirectly beneficially held shares) as at 31 December 2017.
(b) Appointed Non-executive Director 22 March 2017.
(c) Appointed Non-executive Director 1 November 2017.
(d) Ceased to be a Non-executive Director 24 May 2017.
(e) Appointed 4 December 2017.
(f) Resigned 29 September 2017.
(g) Ceased to be KMP on 23 November 2017 and Resigned 10 February 2018.
ANNUAL AND SUSTAINABILITY REPORT 2017 ReM Un eR A tIo n RePoR t
5 5
table 15 – KMP performance rights holdings
Balance at
1 January 2017
Granted as
remuneration
Value of rights
granted(a)
Vested(b) Exercised
Value of
rights vested/
exercised
Lapsed
Net other
movements
Balance at
31 December
2017
Current
Andrew Cole
Mark Rankmore
Warrick Ranson(c)
Former
Luke Anderson(d)
Robert Fulker(e)
Total
$
581,444
209,053
–
352,775
335,982
135,446
33,711
–
56,887
54,179
280,223
1,479,254
355,567
109,761
–
150,451
120,734
736,513
–
–
–
–
–
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
207,338
174,913
382,251
–
–
–
–
–
–
491,013
143,472
–
–
–
634,485
(a) The fair value of the performance rights granted to Mr Cole on 24 May 2017 was calculated on the grant date as $4.29 (the fair value has been calculated by an independent advisor based on a
Monte Carlo simulation model). The fair value of the performance rights granted to other KMP on 27 January 2017 was calculated on the grant date as $6.20 (the fair value has been calculated by an
independent advisor 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 31 December 2019.
(b) The number of vested performance rights at 31 December 2017 that were not exercisable was nil (2016: nil).
(c) Appointed 4 December 2017.
(d) Resigned 29 September 2017.
(e) Ceased to be KMP on 23 November 2017 and Resigned 10 February 2018.
8.0 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.
5 6
ANNUAL AND SUSTAINABILITY REPORT 2017 S U St A InA B I L It y RePoR
t
5 7
Sustainability
Report
5 8
Format and scope
This is our second year of publishing a
combined annual and sustainability report
to support our approach to creating
value in a financially, environmentally
and socially responsible manner for our
shareholders and other stakeholders.
You’ll find examples of sustainability in
practice embedded throughout the report
to reflect how sustainability is integrated
into our operations.
We disclose sustainability data in accordance
with selected Global Reporting Initiative (GRI)
Standards (version G4), a comprehensive set
of guidelines that cover all dimensions of
sustainability. We also reference supporting
documents which form part of our
sustainability disclosure. These documents
are publicly available on our website to
make specific information more accessible.
We use a materiality assessment to
determine key topics that matter most to
our stakeholders and us. The sustainability
section of this report focuses on these
topics. The material topics have not
changed substantially from last year.
We prioritise sustainability topics based on
the significance of economic and social
impact and the relevance to our stakeholders
and the decisions they make. Material topics
identified as having a high priority for both
the business and stakeholders are discussed
in this report. Other topics are mentioned in
the report and on the Company website.
We identified material topics in compliance
with the GRI guidance on materiality and
completeness, and with reference to a range
of internal and external considerations and
priorities. The process included extensive
document review, surveys, and dialogue
with internal and external stakeholders.
We report on all aspects of OZ Minerals’
operations and our operating subsidiaries,
including joint ventures where we have
operational control, for the 2017 calendar
year (unless otherwise stated).
OZ Minerals’ sustainability
performance is recognised
OZ Minerals was selected as member of the
Dow Jones Sustainability Indices (DJSI) in 2017.
This recognises our corporate sustainability
leadership within our industry. Since
RobecoSAM launched the globally renowned
DJSI series in 1999, it has driven innovation
in environmental, social and corporate
governance (ESG) investment.
FTSE Russell confirms that OZ Minerals Ltd
has been independently assessed according
to the FTSE4Good criteria, and has satisfied
the requirements to become a constituent
of the FTSE4Good Index. The FTSE4Good
Index Series is designed to measure the
performance of companies demonstrating
strong environmental, social and governance
practices. The FTSE4Good indices are used by
a wide variety of market participants to create
and assess responsible investment funds and
other products.
Materiality Matrix
l
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k
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fl
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s
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a
energy and
emissions
Local
Communities
Business
ethics
economic
Performance
Water
occupational
Heath and Safety
Indigenous
People
Significance of economic, enviromental and social impacts
LOWHIGHHIGHANNUAL AND SUSTAINABILITY REPORT 2017
SU St A InA B I L It y R ePoR t
5 9
5 9
Environment
SUPPORTING DOCUMENTS
Sustainability governance:
Sustainability Committee charter,
Community and environment Policy
ozminerals.com/about/corporate-governance
Management approach:
Governance framework, p. 17
environmental Performance Standards
ozminerals.com/sustainability/environment
Sustainability framework:
GRI content index
ozminerals.com/media/reports/sustainability
Performance data:
environmental data tables, pp. 74–77
6 0
26%
decrease
in Scope 1
emissions
15%
reduction
in carbon dioxide
emissions
Energy use and greenhouse gas emissions
The majority of OZ Minerals’ energy use
occurs at the Prominent Hill mine. The
two main areas of energy consumption
are the processing plant (electricity) and
mining vehicles (diesel fuel). Prominent Hill’s
mining activities are transitioning as the
open pit approaches the end of its life. As
mining transitions underground there will
be less waste, fewer trucks operating and
less diesel consumption.
We have reported energy use and
greenhouse gas emissions in line with
National Greenhouse and Energy
Reporting Scheme (NGERS):
/ Overall Scope 1 emissions decreased
by 26 per cent compared to the
previous year
/ Diesel use is Prominent Hill’s primary source
of Scope 1 greenhouse gas emissions
/ 300,000 tonnes of Scope 1 and
Scope 2 carbon dioxide equivalent
emissions were generated in total,
a 15 per cent reduction compared
to the previous year.
OZ Minerals is committed to reducing
the energy intensity of our operations;
developing innovative practices in relation
to chemical processing; and being more
efficient in our transportation and processing
activities. A statement on OZ Minerals’
climate change risks is provided on page 35.
Management approach:
oZ Minerals emissions and Resource
efficiency Performance Standard
ozminerals.com/sustainability/environment
Annual reporting obligation:
national Greenhouse and energy Reporting
Scheme (nGeRS)
Performance data:
energy and greenhouse gas data table, p. 74
Air quality
Dust is the main air emission relevant to
our assets. It is generated by stockpiling
and moving materials with vehicles that
are driven on unsealed surfaces. We use
a range of control measures to reduce the
amount of dust we generate, including
regular road maintenance and speed
restrictions. We have verified that air
quality management has effectively
prevented adverse impacts on workers,
the community and the environment,
through comprehensive sampling at
Prominent Hill and Carrapateena. There
are no ozone-depleting substances,
persistent organic pollutants or stack
emissions produced at Prominent Hill and
Carrapateena. Air quality is also affected
by sulphur and nitrogen oxides that are
generated by burning fuels. During blasting,
gases like carbon monoxide and oxides of
nitrogen are generated.
Management approach:
oZ Minerals Air emissions Performance Standard
ozminerals.com/sustainability/environment
Annual reporting obligation:
national Pollutant Inventory (nPI)
Performance data:
Air quality data table, p. 74
ANNUAL AND SUSTAINABILITY REPORT 2017 t
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6 1
Water
Prominent Hill and Carrapateena are situated
in areas with an average annual rainfall
of less than 200 millimetres per year and
they depend on groundwater to sustain
operations. Our wellfields are located on
nearby pastoral stations and, in the majority
of cases, the pastoralists draw water from
a shallower or discrete aquifer. Our water
monitoring program monitors water levels
and quality in previously-agreed pastoral
wells on neighbouring stations. We closely
monitor the surrounding groundwater
sources and report these results to the
relevant stakeholders. To ensure our control
measures are effective, we conduct ongoing
surface water monitoring to detect any
potential changes in downstream surface
water quality from baseline values, including
acidity, salinity and water level.
Waste
Waste is managed on site at the integrated
waste rock and tailings storage facility at
Prominent Hill. Over the reporting period,
Prominent Hill produced six million tonnes
of waste rock and eight million tonnes of
tailings. No potential acid-forming (PAF)
material was mined. Most of the waste rock
generated is placed in the rock dumps, with
a proportion of non-acid forming (NAF) rock
used to construct mine infrastructure, such
as the tailings storage facility and roads.
When PAF rock is encountered, it is
encapsulated in designated PAF cells
within the waste landform. These PAF
cells are then encapsulated within NAF
rock to prevent surface water runoff
using physical control measures to
prevent impact to the environment.
Our tailings performance standard sets out
our approach to manage waste within the
Tailings Storage Facility (TSF). These standards
are written to ensure the TSF is designed,
constructed and managed to achieve the
following outcomes: prevent seepage rates
to groundwater, ensure that the tailings
are both physically and chemically stable,
be protective of terrestrial and avian life,
and comply with regulatory and licence
requirements. The facility is run under a
TSF Operations Management Plan which
has been developed to comply with these
standards.
As part of our tailings management,
we conduct water sampling to monitor
parameters including depth to water, salinity,
pH, and metals at and surrounding the
tailings storage facility and open pit.
Management approach:
oZ Minerals Water Performance Standard,
oZ Minerals tailings Performance Standard,
oZ Minerals Waste and Waste Water
Performance Standard
ozminerals.com/sustainability/environment
Performance data:
Water data table, p. 74
Management approach:
Waste and Wastewater Performance Standard,
Waste Rock and ore Performance Standard
and tailings Performance Standard
ozminerals.com/sustainability/environment
Performance data:
Waste data table, p. 74
Land and biodiversity
Prominent Hill has formal management and
monitoring plans for two bird species, the
chestnut-breasted whiteface and the thick-
billed grasswren (eastern subspecies). Both
of these species are on the International
Union for Conservation of Nature (IUCN)
Red List of Threatened Species. OZ Minerals
has established a Significant Environmental
Benefit (SEB) offset area to protect and
enhance the birds’ habitat.
At Carrapateena, three IUCN species are
listed within the area – two vulnerable
species (the Malleefowl and plains rat) and
one endangered species (Pernatty knob-
tailed gecko). The plains rat is the only
species within the local area of proposed
operations. Our monitoring continues to
indicate that mining activities will have
minimal impact on the surrounding natural
environment.
Management approach:
Land and Biodiversity Performance Standard
ozminerals.com/sustainability/environment
Performance data:
Land and Biodiversity table, p. 75
6 2
Rehabilitation and closure
OZ Minerals’ operations have conceptual
mine closure plans and several documents
and programs detailing closure, including the
Supporting Works Plan and the Program for
Environment Protection and Rehabilitation.
The Supporting Works Plan is reviewed
annually to ensure closure assumptions are
in line with current operational activities.
The documents include rehabilitation and
closure completion criteria to achieve post-
mining designated land use and to minimise
environmental liability. A mine’s closure
plan is updated throughout its operational
life so that the risks and unknowns are
identified and reduced over time. We provide
for the estimated costs of rehabilitating,
decommissioning and restoring the areas
disturbed during the mine’s operation.
SU STAINABILITY IN PRACTICE
Progressive rehabilitation has been taking
place at Prominent Hill. With the imminent
closure of the open pit, rock armouring of
the north dump was completed during the
year and rock armouring of the south dump
was 97 per cent complete at year’s end.
Stakeholder engagement on mine
closure occurs throughout a mine’s life.
The potential social and environmental
impacts of mine closure are considered in
our conversations with governments and
local communities. We keenly support
community initiatives and sustainable local
businesses as a part of our community
engagement program.
Management approach:
Rehabilitation and Closure Performance Standard
ozminerals.com/sustainability/environment
Energy efficiency program
at Prominent Hill
OZ Minerals conducted an energy efficiency
audit at Prominent Hill with support
from the South Australian Government
Energy Productivity Program. Two energy
productivity opportunities were identified
as immediate opportunities and will form
part of our energy program in 2018. The
initiatives will improve the energy efficiency
of our mining operation and reduce
greenhouse gas emissions.
We are committed to developing and
shaping a modern energy landscape for
all our mining operations. A company-wide
power strategy is being developed and will
be released in Q1 2018.
ANNUAL AND SUSTAINABILITY REPORT 2017 t
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6 3
6 3
Social
SUPPORTING DOCUMENTS
Sustainability governance:
Sustainability Committee charter,
Community and environment Policy,
ethics and Human Rights Policy
ozminerals.com/about/corporate-governance
Management approach:
Governance framework, p. 17
Social Performance Standards
ozminerals.com/sustainability/social
Sustainability framework:
GRI content index
ozminerals.com/media/reports/sustainability
Performance data:
Social performance data tables, p. 75
Stakeholder engagement table, p. 76
6 4
Stakeholder engagement
We seek to build and maintain strong,
supportive relationships with the local
communities where we operate. Our assets
have community engagement programs
that include engagement with regulatory
bodies, government agencies, communities,
land owners, traditional owners and local
pastoralists within the sphere of influence
of the operational and project activities.
These programs ensure input from the local
community and government and provide
the opportunity for us to understand
the environmental, social and economic
implications of our projects.
We also engage with key community groups
and stakeholders who may potentially be
affected by the asset’s activities to better
understand the risks and social impacts.
We provide accurate and relevant
information in a timely manner, and
anticipate and proactively address
community and stakeholder issues and
concerns when consulting with them.
Mechanisms are in place to capture
complaints and grievances and ensure they
are promptly addressed. Our assets also
monitor and review major communications
and consultation activities to assess their
effectiveness and promote employee and
external stakeholder feedback.
Management approach:
Stakeholder engagement Performance Standard
ozminerals.com/sustainability/social
Performance data:
Stakeholder engagement table, p. 76
Socioeconomic contributions
We make significant contributions to local,
regional and national economies directly
through the payment of taxes and royalties
to governments, as well as payments to
our workforce and suppliers. In 2017 we:
/ paid more than $56.0 million in
wages and benefits
/ spent $736 million on goods
and services
/ contributed approximately $52.9 million
in royalties.
Activities at Prominent Hill and
Carrapateena significantly contributed
to local and regional economies in
South Australia, by $161 million in total.
Operationally, significant value is generated
through employment with our contracting
partners and ourselves, and investments
in community development initiatives
and programs. The direct benefits of our
investments include improved infrastructure,
health, safety awareness, education and
training, and local business development.
Performance data:
Socioeconomic data table, p. 75
Community investment and sponsorship
We have contributed to a broad range of
local and regional programs. In addition
to funding, our employees and contract
partners provided in-kind assistance through
the donation of time, expertise and resources
for community events and initiatives.
We supported locally organised initiatives
that provide long-term benefits to our
host communities and are aligned with the
community’s wishes. Our sponsorships and
community investment initiatives strive to
support organisations or projects to achieve
sustainable outcomes.
Community investment
We contributed $0.27 million to sponsorship
of local organisations and programs in 2017,
including the Royal Flying Doctor Service
(see also Sustainability in practice on page
70), SA School of the Air, Coober Pedy Area
School and the Umoona Tjutagku Health
Service. We have assisted the sustainability of
our smaller host communities by sponsoring
key local events in communities including
Coober Pedy, Carrieton, Glendambo, William
Creek, Oodnadatta and Marree.
Sponsorship:
oZ Minerals sponsorship guidelines
ozminerals.com/sustainability
Performance data:
Community investment data table, p. 75
Total spent
on community
investment
$272,776
Health 41%
education 7%
Industry 11%
Community Appeal 41%
ANNUAL AND SUSTAINABILITY REPORT 2017 SU St A InA B I L It y R ePoR t
6 5
In support of the TTC and ahead of formal
registration in 2018, we have elected
to adopt these quantitative information
disclosures for the year ended 31 December
2017, as summarised in the performance
data tables.
External documents:
Board of taxation’s tax transparency Code (ttC)
taxboard.gov.au
Performance data:
tax data table, p. 77
Management approach:
Local enterprise Performance Standard
ozminerals.com/about/corporate-governance
Performance data:
Procurement data table, p. 75
Our greatest supply impact is through
contracting mining and other services.
The largest material inputs include diesel
fuel, explosives, grinding media used in
the processing plant, and cement used in
the underground mine. These materials are
sourced from large, reputable organisations
with operations in Australia.
At the Carrapateena project, where
construction is currently ramping up, we
have employed a community relations
team to engage with local businesses
and communities and encourage local
participation. We are also collaborating with
the local business organisation to drive local
content activities and facilitate connecting
local businesses to the Carrapateena project
supply chain.
Tax transparency
The Board of Taxation’s voluntary Tax
Transparency Code (TTC) was endorsed
by the Australian Government in 2016
and is designed to encourage greater
transparency within the corporate sector
of its compliance with Australian tax laws.
We support the initiative to ensure Australian
businesses and subsidiaries of multinational
companies operating in Australia pay tax
on their profits, as required under Australian
tax legislation.
Local procurement
We seek to create sustainable benefits for
the regions around our assets and source
local employees and suppliers where possible.
We preferentially purchase goods and services
locally, within the region or within the state.
National or international procurement is
only considered when local procurement is
not available or not competitive. We also
help local businesses to understand our
pre-qualification processes and procurement
standards. Local and Aboriginal and Torres
Strait Islander peoples are encouraged to
apply for positions and tender for business
opportunities with our assets.
In 2017, OZ Minerals’ spent $161 million
with South Australian regional and local
suppliers and contractors. These figures do
not include wages and salaries paid to major
contractors or expenditure by contractors
in the local region.
total spend on suppliers by region
Total
$735 million
Australia
$699 million
South
Australia
$161 million
International 5%
Australia 95%
national 77%
South Australia 23%
Regional 20%
Local 80%
6 6
Indigenous peoples and cultural heritage
A genuine partnership with land-connected
Aboriginal and Torres Strait Islander peoples
is built on trust, respect and integrity. It
allows us to build a common understanding
and language, identify opportunities, learn
from each other and work towards shared
goals. A comprehensive understanding
of the culture and social structure of host
communities is required to ensure respectful,
inclusive and effective engagement. Each
asset has dedicated personnel to ensure
regular liaison with Indigenous communities.
The requirements regarding engagement
with Indigenous communities are set out
in the Land-Connected Indigenous Peoples
Performance Standard. In line with the
standard, each asset must operate in
accordance with the principles of the UN
Declaration of the Rights of Indigenous
Peoples (UNDRIP). Our partnering approach
with Indigenous peoples is based on
principles of equality, transparency and
mutual benefit. It respects and protects
the rights of Indigenous peoples and is in
line with the values of ‘Free prior and
informed consent’.
Ethics and human rights
Our internal governance is guided by
international guidelines, such as the UN
Guiding Principles on Business and Human
Rights, United Nations Universal Declaration
on Human Rights, Voluntary Principles on
Security and Human Rights, International
Labour Organisations Conventions and
the International Council on Mining and
Metals principles. We further reinforce our
expectations of employees through our Code
of Conduct. We have a variety of programs
to promote a culture of compliance
and ethical business. Asset induction
SU STAINABILITY IN PRACTICE
Management approach:
the Land-connected Indigenous Peoples
Performance Standard, and the Cultural
Heritage Performance Standard
ozminerals.com/about/corporate-governance
We provide cultural heritage and awareness
training and information on how to avoid
damage to cultural heritage, along with
project obligations and requirements.
Cross-cultural awareness training programs
are offered to employees and selected
contractor representatives at Prominent
Hill, with a new training program under
development specifically for Carrapateena
operations. The training includes raising
awareness on heritage and artefact finds and
working in areas of cultural significance.
Prominent Hill continues to actively engage
with the Antakirinja Matu – Yankunytjatjara
traditional owners to collaborate on matters
of shared ownership and shared value,
such as cultural heritage management
and cultural awareness training for OZ
Minerals employees and contractors. We
also support training programs, identify
employment opportunities and identify
business development programs.
training raises awareness of human rights
responsibilities with senior management,
employees, contractors (particularly
security forces and human resources), and
other stakeholders in the asset’s sphere of
influence. From time to time, we also provide
our employees with training on topics
covered within the human rights standards.
Maintaining and improving our systems
and processes helps to ensure there are no
human rights violations in our operations or
in our supply chain.
Management approach:
ethics and Human Rights Policy, the Human
Rights Performance Standard, Code of Conduct
ozminerals.com/about/corporate-governance
Keeping the future good for all of us
The relationship between OZ Minerals and the traditional owners of the
land where we operate is critical to the long-term success of our operations.
The Kokatha people are the traditional owners of a large section of the
land in South Australia’s north, including land on which the Carrapateena
project is located. OZ Minerals and the Kokatha Aboriginal Corporation
developed a Partnering Agreement which provided the basis for a Native
Title Mining Agreement for the Carrapateena project. This informs and
underpins the relationship and determines the nature, parameters and values
of the partnership over the mine’s life and beyond. The partnering approach
adopted by OZ Minerals and the Kokatha Aboriginal Corporation is based
on principles of equity, transparency and mutual benefit.
“This approach makes us partners, working together to co-design solutions.
While this process is more challenging to undertake than transactional
partnering, it offers far greater strategic value. Our partnering agreement
NGANAMPA PALYANKU KANYINTJAKU translated, means keeping the
future good for all of us in Kokatha. This encapsulates the outcome of
the process and the feelings of my community.” Chris Larkin, Chairman,
Kokatha Aboriginal Corporation
ANNUAL AND SUSTAINABILITY REPORT 2017 t
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6 7
6 7
Safety
A strong safety culture
and employing proactive
initiatives remains
our emphasis.
SUPPORTING DOCUMENTS
Management approach:
Health and Safety Policy
ozminerals.com/about/corporate-governance
Safety performance standards:
Isolation, fixed and mobile equipment,
electrical safety, fall prevention,
Confined spaces, Ground control, explosives,
fire prevention, Aviation, Inundation
ozminerals.com/sustainability/safety
Sustainability framework:
GRI content index
ozminerals.com/media/reports/sustainability
Performance data:
Safety data table, p. 77
6 8
ANNUAL AND SUSTAINABILITY REPORT 2017 SU St A InA B I L It y R ePoR t
6 9
Safety culture and leadership
We understand that mining activities
may involve additional hazards which can
impact people’s safety. We’re committed
to identifying, evaluating and managing all
of the associated threats for the actual and
potential adverse impacts of mining activities
as far as reasonably practicable.
Our target is to achieve an injury and
occupational disease-free workplace,
by ensuring hazards are identified and
managed at the source. All safety incidents
are thoroughly investigated, we share what
we’ve learned and we implement corrective
action. Safety data is collected for the entire
workforce, including employees, contractors
and visitors working on our sites, and it is
reported to management, including to the
Managing Director and Chief Executive
Officer. We also conduct yearly internal
audits against select company processes
and standards.
Active engagement from our senior
leadership, combined with activities
focused on identifying and eliminating
causes of incidents. However, Carrapateena
experienced an increase in recordable
injuries during ramp-up of work in 2017.
Significant incidents and incident trends are
comprehensively reviewed by the Board’s
Sustainability Committee, to ensure we
learn from incidents, we comply with our
approved processes, and we implement
additional controls where necessary.
Safety programs
Effective safety management means we:
/ provide a safe working environment
with supportive processes and systems
/ empower our workforce to raise
safety issues before there is potential
for an incident
/ thoroughly investigate incidents when
they occur
/ implement controls to prevent the
likelihood of reoccurrence using sound
risk management practices.
Safety statistics are calculated per one
million working hours. In 2017, the total
recordable injury frequency rate (TRIFR) per
million hours worked decreased from 6.80
in 2016 to 6.39.
Our lead indicators are monitored to reduce
workplace hazards and injuries. Incidents
with potential or actual consequences are
internally rated and assessed for their
impact on safety, health, environment,
community and financial metrics. This
classification helps us to identify significant
incidents that warrant an in-depth review
and analysis. Significant incidents are those
deemed to have:
/ potential or actual consequences
rated at level four or above
/ actual consequences rated at level four
or above for injury and illness incidents
and at level three and above for all other
incident types.
Potential and actual significant safety
incidents are thoroughly investigated
using the incident–cause–analysis method.
In 2018, we will continue our focus on
health and safety communications, with
visible leadership, accountability and
continuous reinforcement from all levels of
management. This will help to drive a strong
safety culture.
We have a number of initiatives in place
to mature our safety culture. Our focus is
on developing strong leaders and promoting
safety leadership across our business and
with our contracting partners. All of our
employees and the employees of our
contract partners are empowered to cease
operations if necessary to ensure the safety
of the workforce.
We are committed to preventing work-
related accidents, injuries and illnesses.
Our key safety programs include a Critical
Risk Program and Byrnecut’s Under Ground
Safety Improvement Program.
In 2018, we will
continue our focus
on health and safety
communications,
with visible leadership,
accountability and
continuous reinforcement
from all levels of
management. This
will help to drive a
strong safety culture.
Management approach:
fitness for Work Performance Standard,
Medical Programs Performance Standard
ozminerals.com/sustainability
7 0
Contractor management
Our projects are delivered in partnership
with contractors and suppliers, and we
rely in part on their capabilities to carry out
our operations. Our management system
defines the requirements and practices for
working with contractors and suppliers.
Major contractors sign agreements with
requirements consistent with our Code of
Conduct, policies and standards. They must
share our values and exhibit behaviour that
ensures the safety of the workforce.
Contractors are subject to a pre-qualification
process and are comprehensively evaluated
against criteria including safety, health,
environment and community aspects as
well as risk management, internal auditing
processes and employee management.
Minimum performance criteria (safety
and environment) and performance criteria
(including operating performance and site
management) are developed and applied
to our contracts.
Major contractors
must share our values
and exhibit behaviour
that ensures the safety
of the workforce.
Training and emergency preparedness
We offer a wide range of development
opportunities including formal programs,
technical and compliance training, online
learning and mentoring. This year, our
workforce undertook 11,363 hours of
employee training, mostly at Prominent
Hill where the greatest number of our
employees are based.
Our crisis management procedures detail
the roles, responsibilities and processes our
corporate crisis management team would
follow in the event of a crisis. The team
includes representatives from operations,
legal, commercial, safety, environment,
community, media and government relations.
We define a crisis as an event that seriously
threatens people, operations, assets, the
environment or our long-term prospects and
reputation. Our assets have specific crisis
management plans that outline the response
to be initiated in the event of a crisis. We
hold regular crisis training events and
simulation exercises involving both the mine
and the corporate crisis management teams.
SU STAINABILITY IN PRACTICE
Royal Flying Doctor Service
OZ Minerals is proud to be an ongoing
financial supporter of the Royal Flying
Doctor Service (RFDS). The RFDS is an
invaluable support in times of need as
our assets and exploration projects are
located in remote and regional locations
with limited infrastructure and access.
In 2016–17, the RFDS central operations
conducted over 320 aeromedical retrievals
for emergency evacuations and primary
health care in the communities surrounding
Prominent Hill. The RFDS has been saving
lives in outback Australia for 90 years,
retrieving the critically ill or injured and
providing urgent transfers of patients
between regional and metropolitan
hospitals to higher levels of care.
ANNUAL AND SUSTAINABILITY REPORT 2017 t
SU St A InA B I L It y R ePoR t
S U St A InA B I L It y RePoR
7 1
7 1
Health and
wellbeing
Strong workplace culture
contributes to employee
health and wellbeing.
SUPPORTING DOCUMENTS
Management approach:
Health and Safety Policy
ozminerals.com/about/corporate-governance
Health and wellbeing standards:
Medical programs, occupational exposure
control, fitness for work, Lone workers and
remote travel, Hazardous materials
ozminerals.com/sustainability
Sustainability framework:
GRI content index
ozminerals.com/media/reports/sustainability
7 2
People and performance
In 2017, we changed the name of our
human resources department to People
and Performance. This better reflects our
focus on innovation and recognises that our
people drive performance, which is central
to OZ Minerals’ success.
“This is part of being a modern mining
company. This change to People and
Performance reinforces our strategy
and How We Work Together principles. By
demonstrating these principles, we enable
growth, innovation and collaboration.”
Mark Rankmore, OZ Minerals’
Head of People and Performance.
Health and wellbeing programs
We have implemented a series of programs
that promote, maintain and enhance a
healthy lifestyle, in view of the impact of
physical, mental, emotional and social
health on overall employee wellbeing.
Our fitness-for-work program includes a
wide range of activities and education in
fatigue management, employee assistance
programs, role-based assessments,
ergonomic assessments, fitness, and drug
and alcohol programs. We intend to provide
employees with the necessary education
and information to self-manage their own
fitness-for-work. All our workplaces have a
zero alcohol and drug policy.
Mental health is an important health risk that
continues to be a concern across the mining
industry. We offer an employee assistance
program (EAP) with free, professional and
confidential counselling to all employees,
contractors, and their immediate family
members. The EAP is provided through a
leading global health and wellness company
and helps to address work or personal issues
through a network of accredited counsellors.
We offer an array of benefits to our
employees including performance-based
incentive plans, career development
opportunities, paid parental leave and
health and wellbeing services, such as health
insurance, medical check-ups and health
education programs.
Management approach:
fitness for Work Performance Standard,
Medical Programs Performance Standard
ozminerals.com/sustainability/healthandwellbeing
Ethical conduct training
Employment
Our mandatory online training courses
reinforce our Code of Conduct and the
information in our policies. We provide
training and education on key legal and
ethical risk areas. Our employees enrol in
online learning courses that include our
equal employment opportunity program and
ethics and conduct program, as well as an
anti-harassment and bullying program. Each
program includes awareness training based
on site-specific needs.
Our open pit mining contractor is gradually
demobilising as Prominent Hill transitions
to an underground-only operation in
2018. This transition will have an impact
on the number of people working at the
mine and we are supporting the affected
personnel with redeployment opportunities,
redundancy packages and outplacement
services. The greatest impact will be on the
open pit mining contracting company and
its employees.
Performance data:
employment data table, p. 77
ANNUAL AND SUSTAINABILITY REPORT 2017 SU St A InA B I L It y R ePoR t
7 3
Diversity and inclusion
Women comprise 20 per cent of the
workforce directly employed by OZ Minerals.
Some individual contributors and functional
leadership areas have more than 23 per cent
female representation.
All employees are entitled to parental leave.
In 2017, four women took parental leave
and three returned to work after their
parental leave had ended. A retention rate of
85 per cent was maintained after 12 months.
We offer competitive remuneration for
our employees that reflects the job type,
years of experience, and the length of time
employees have held their position. We
review earnings annually by gender and
job band level to make sure that employee
remuneration remains equitable and in line
with market trends.
Twenty five per cent of our total workforce is
covered by collective bargaining agreements.
We value diversity in our workforce as it
helps us innovate and do things differently.
We believe diversity and inclusion provides
us with a strategic advantage that stems
from applying a variety of capabilities,
ideas and insights into problem solving
and decision making.
employee diversity at oZ Minerals
Management approach:
Diversity and Inclusion Policy
ozminerals.com/about/corporate-governance
Performance data:
Diversity data table, p. 77
Under 30 years old
30–50 years old
over 50 years old
female
Indigenous
80%
60%
40%
20%
0%
Business and
functional leadership
Department managers
Superintendents/
senior specialists
tertiary/supervisor
Individual contributors
SU STAINABILITY IN PRACTICE
The University of Adelaide
Ingenuity 2017 expo
OZ Minerals seeks to think and do things differently. We take an
approach that encourages innovation, embraces disruption and seeks
to make innovation a habit that results in value-creating outcomes.
We partnered with the University of Adelaide on the Ingenuity
2017 Expo and were able to support the development of future
STEM leaders and showcase upcoming technology and solutions
within computer science, engineering and mathematics. The Mining
Engineering Group Ingenuity Presentation Prize, which is supported
by OZ Minerals, was awarded to the project: Modelling diffusion in
a sub-level caving operation in Carrapateena Mine.
7 4
Sustainability
performance data
Environment
energy
Energy consumption (GJ)
Energy consumed
Energy produced
Energy consumed (net)
Prominent Hill
Carrapateena
Group office
total
Note: OZ Minerals did not sell energy in 2017.
emissions
2,680,535
62,820
1,013
2,744,368
1,865
8,302
0
10,167
2,678,670
54,518
1,013
2,734,201
Total direct and indirect emissions
2016–2017
2015–2016
2014–2015
Greenhouse gas emissions Scope 1 (t Co2-e)(a)
Greenhouse gas emissions Scope 2 (t Co2-e)(b)
total of Scope 1 and Scope 2 (t Co2-e)
Methane CH4 (t Co2-e)
nitrous oxide n2o (t Co2-e)
Sulphur hexafluoride Sf6 (t Co2-e)
oxides of nitrogen (t)
Sulphur dioxide (t)
total volatile organic compounds (VoC) (t)
Particulate matter <10 um (t)
105,648
177,306
282,954
146
342
11
342
1.30
108
3,310
142,669
190,825
333,494
198
446
11
994
0.85
52
4,488
180,290
199,209
379,499
267
567
11
1,242
1.11
86
5,899
Note: The reporting period is July 2016 to June 2017. The energy and emissions boundary is based on operational control as defined by the National Greenhouse and Energy Reporting (NGER) Act 2007.
The applied global warming potential (GWP) rates and emission factors are based on the NGER Act (2007) and the National Pollutant Inventory.
(a) Scope 1 refers to emissions produced directly by operations, primarily resulting from combustion of various fuels and includes CO2-equivalent values for greenhouse gases such as CH4, N20 and SF6.
(b) Scope 2 refers to indirect emissions resulting from the import of electricity from external parties; commonly the electricity grid.
Water withdrawal
Water withdrawal
Surface (ML) water
Surface
water
Groundwater
(mine dewatering)
Groundwater
(wellfield)
Rainwater/
stormwater
Municipal
water supply
Total
recycled
% Total
recycled
Prominent Hill
Carrapateena
total
Water discharge
0
0
0
514
9
523.3
5,312
102
5,414
0
–
0
0
271
271
843
14
857
14%
12%
14%
Water discharge (ML)
Subsurface
Surface
Sewers
Land (dust suppression)
Land
Treatment facilities
Groundwater
Prominent Hill
Carrapateena
total
Waste
0
0
0
0
0
0
0
0
0
415
59
474
0
6
6
843
0
843
0
10
10
Mineral waste
Overburden (t)
Material moved (t)
Total ore mined (t)
Liquid fossil fuels (kL)
Lubricants (kL)
Explosives (t)
Prominent Hill
Carrapateena
total
0
355,500
355,500
25,272,373
355,500
25,627,873
16,963,931
0
16,963,931
37,210
426
37,636
686
0
686
3,407
44
3,451
ANNUAL AND SUSTAINABILITY REPORT 2017 SU St A InA B I L It y R ePoR t
7 5
non-mineral waste
Non-mineral waste
Solid recycled (t)
Liquid recycled (l)
Landfill (t)
Incineration (t) On-site storage (t)
Hazardous transported (t)
Prominent Hill
Carrapateena
total
1,094
149
1,243
60,600
0
60,600
967
687
1,654
157
9
166
0
0
0
22
21
43
Rehabilitation and closure
Land management (ha)
Total landholding
Mine footprint
Land disturbed
Land rehabilitated
Prominent Hill
Carrapateena
environmental compliance
11,401
1,070
2,045
121
0
60
0
7
total volume of significant spills
300 kL of saline water
Monetary value of significant fines ($A)
0
Social
Socioeconomic contribution
$millions
Revenues
Operations
Employees
Payments to
providers of capital
Payments to
government
Region(a)
Revenue, other
income and
financing income(b)
operating
expenses(b)
employee
benefit
expenses(b)
Dividend
payments to
shareholders
Providers
of funds(b)
Income
taxes paid
Royalties(b)
Community
investment
Community
investments
Economic
value
retained(d)
South Australia
(total oZ
Minerals)
1,040.6
(274.8)
(56.2)
(59.7)
(3.8)
(98.3)
(52.9)
(0.3)
494.6
overview revenues
overview community investment
Categories
Revenue
other income
financing income
total
$millions
Categories
$millions
1,023.1
Health
5.0
education
12.5
Industry (c)
1,040.6
Community appeal
total
(0.11)
(0.02)
(0.03)
(0.11)
(0.27)
overview operating expenses
Categories
$millions
Procurement
Changes in inventories
190.2
Region
$millions
Raw materials
(332.3)
South Australia - local
exploration and evaluation
(21.1)
South Australia - regional
freight expenses
(63.6)
national
net foreign exchange losses
(6.3)
International
other expenses
total
(41.7)
total
(274.8)
129.8
32.1
538.1
35.7
735.7
(a) Amounts are divided into the region identified below based
on where the operation is located (e.g. Prominent hill is
located in South Australia). The region include the following
entities: South Australia: Corporate Office, Prominent Hill
Mine, Carrapateena. The entities located outside Australia are
not defined as operating segments of OZ Minerals.
(b) As disclosed in the income statement of the OZ Minerals
audited financial statements for the year ended
31 December 2017.
(c) The community investment category ‘Industry’ includes
sponsorships, events and money paid to industry associations
to support various events and activities related to the
mining industry.
(d) Economic value retained is calculated as revenues less
economic value distributed.
7 6
Stakeholder engagement
Stakeholder group
About the stakeholder
Engagement
Customers
Employees
Smelters, refiners and downstream copper product
fabricators around the globe. With a key interest in product
quality and a greater awareness of global labour issues,
human rights and downstream product safety due to the
nature of their business.
employees are predominantly South Australian based,
fly-in fly-out employees covered by collective bargaining
agreements. Key topics for employees include: occupational
health and safety, employment, diversity and equal
opportunity, training and education, and personal
wellbeing.
Regular formal and informal communication with marketing department staff.
Personal visits by marketing department and process management staff. Site
visits to customer plants and customer representatives encouraged to visit
oZ Minerals’ operations. Production of parcels as per customer specifications.
Regular communication with staff through presentations and discussions,
through the intranet, email alerts, hard copy newsletters, noticeboard items
and a regular electronic letter from the Ceo.
Refer to the safety, and health and wellbeing section for information about our
safety programs.
Governments
Local, state and national regulators and government
agencies.
Regular formal and informal communications with operational senior
management and staff through site visits, meetings, events and reporting,
partnership in South Australian Government Copper Strategy.
Industry associations Mining and minerals industry.
Representatives on boards and committees, engagement on specific projects.
Investment
community
Mainstream brokers, financial analysts and fund managers,
sustainability and ethical investment analysts, retail
investment advisers, existing and potential shareholders,
both domestically and internationally.
Annual General Meeting, Annual Reports and Sustainability Reports, Quarterly
Reports and webcasts, ASX releases, Company website, direct phone contact with
investor relations, presentations at industry conferences, briefings and site visits,
investor presentations.
Local communities
Individuals and groups local to our operations, including
pastoralists, traditional owners, local Aboriginal groups,
development groups, local businesses and councils.
Media
Print, radio, television and online platforms.
Location-specific community relations personnel, community meetings, formal
and informal communications, as well as social media.
Dedicated media relations function. Regular engagement with business and
regional media through teleconferences, regular one-on-one discussions,
interviews, ASX releases, media releases and site visits.
Non-government
organisations
Local, regional and international environmental, human
rights, development, corporate social responsibility and
sustainability organisations.
Liaise directly with operational management, environment and community
relations departments on specific issues. Annual Reports and Sustainability
Reports and media releases.
Shareholders
Retail and institutional shareholders.
Annual General Meeting, Annual Reports and Sustainability Reports, Quarterly
Reports, and webcasts, website (where all releases and other information on
oZ Minerals is maintained and regularly updated), and investor presentations.
Suppliers
from local businesses to large international organisations.
Regular meetings with commercial and operational staff.
Other mining
companies and
academia
other mining companies, mining regulators, industry
associations and minerals industry academics, Industry
Alliance with representatives of resource companies in the
Coober Pedy region and Coober Pedy Council.
Papers and presentations given by executives at various industry-related
conferences. Location-specific industry meetings, informal communication and
working groups.
ANNUAL AND SUSTAINABILITY REPORT 2017 SU St A InA B I L It y R ePoR t
7 7
tax
Australian tax-related contribution summary
$millions
Reconciliation to income tax payable
$millions
Corporate income tax(a)
Government royalties
State payroll taxes and other
total
employee PAyG
79.2
52.9
Profit before income tax expense
Permanent differences
2.5
temporary differences
134.6
– Difference in accounting and tax depreciation
18.4
– Provisions and Accruals
(a) Corporate Income Tax represents cash outflows in 2017 in relation to income tax payment for
December 2016 totalling $65.5m and two monthly PAYG installments relating to 2017 income
year totalling $13.7m.
– Derivatives
– exploration deductions
– Loss on disposal of asset
Reconciliation of accounting profit to income tax expense
$millions
– other
Accounting profit before income tax expense
tax at Australian tax rate of 30%
Permanent differences
Use of R&D tax offsets
Prior period adjustments
Income tax expense
effective tax rate
329.4
(98.8)
(4.1)
4.2
0.3
(98.3)
29.8%
International related party dealings
for the year ended 31 December 2017, oZ Minerals did not have any dealings
with international related parties for the purposes of the taxation’s voluntary
tax transparency Code (ttC).
taxable income before utilisation of carried forward
restricted tax losses
Utilisation of carried forward restricted tax losses
taxable income after utilisation of carried forward losses
tax at Australian tax rate of 30%
Utilisation of R&D offsets
Income tax payable
PAyG installments for December 2017
net income tax payable post PAyG installments
329.4
13.6
155.8
(3.7)
5.6
(40.1)
(3.2)
(2.8)
454.6
(57.8)
396.8
(119.0)
4.2
(114.8)
13.7
(101.1)
Health and wellbeing
Diversity
Company profile 2017
Full time
Part time
Fixed term
Casual
Employees
Contractors
Workforce
South Australia
M
241
F
54
M
0
F
3
M
16
F
6
M
7
F
2
Total
329
M
870
F
Total
131
1,001
New employees 2017
Age group <36
Age group 36–55
Age group >55
M
28
M
17
Age group <36
South Australia
Turnover 2017
South Australia
Safety
Safety performance
employee fatalities
Contractor fatalities
tRIfR (employees and contractors)
LtIfR (employees and contractors)
Significant safety incidents(a)
(a) As defined by OZ Minerals internal classification.
F
8
F
12
2017
0
0
6.39
0.36
65
M
31
F
12
Age group 36–55
M
19
F
5
M
6
M
4
Age group >55
F
0
F
2
2016
0
0
6.80
1.07
71
2015
0
0
5.30
0.90
61
Total
1,330
Total
85
Total
59
7 8
Independent Limited Assurance
Report to the Directors of OZ Minerals Ltd
Conclusion
Based on the evidence
we obtained from the
procedures performed,
we are not aware of any
material misstatements in
the information subject to
assurance, which has been
prepared by OZ Minerals
Limited in accordance
with GRI G4 Sustainability
Reporting Guidelines for the
year ended 31 December
2017.
Information Subject to Assurance
The Selected Sustainability Information, as presented in the OZ Minerals Limited
Sustainability Report 2017 and available on OZ Minerals Limited’s website, comprised
the following:
Selected Sustainability Information
Value assured
Fatalities
Total Recordable Injury Frequency Rate (TRIFR)
Lost Time Injury Frequency Rate (LTIFR)
0
6.39
0.36
Greenhouse gas emissions Scope 1 (t C02-e) July 2016 – June 2017
105,648
Greenhouse gas emissions Scope 2 (t C02-e) July 2016 – June 2017
177,306
Energy consumed (GJ)
Energy produced (GJ)
Rehabilitation and closure
2,744,368
10,167
Management approach
Criteria Used as the Basis of Reporting
The criteria used in relation to the Sustainability Report content are the GRI G4
Sustainability Reporting Guidelines published by the Global Reporting Initiative (GRI) and
Company-specific definitions.
Basis for Conclusion
We conducted our work in accordance with Australian Standard on Assurance
Engagements ASAE 3000 (Standard). In accordance with the Standard we have:
/ used our professional judgement to plan and perform the engagement to obtain
limited assurance that we are not aware of any material misstatements in the Selected
Sustainability Information, whether due to fraud or error;
/ considered relevant internal controls when designing our assurance procedures, however
we do not express a conclusion on their effectiveness; and
/ ensured that the engagement team possess the appropriate knowledge, skills and
professional competencies.
Summary of Procedures Performed
Our limited assurance conclusion is based on the evidence obtained from performing
the following procedures:
/ enquiries with relevant OZ Minerals Limited personnel to understand the internal controls,
governance structure and reporting process of the Selected Sustainability Information;
/ reviews of relevant documentation;
/ analytical procedures over the Selected Sustainability Information;
/ site visits to Corporate Head Office (Adelaide) and Prominent Hill mine site;
/ walkthroughs of the Selected Sustainability Information to source documentation;
/ agreeing the selected information included in the Sustainability Report 2017 to
relevant underlying sources on a sample basis for mine closure;
/ agreeing the selected claims included in disclosures to source documentation
/ an assessment that the indicators reported were in accordance with the GRI G4
Core level of disclosures
/ reviewing the Sustainability Report in its entirety to ensure it is consistent with our
overall knowledge of the assurance engagement.
© 2018 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. All rights reserved. The KPMG name and logo are registered
trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
ANNUAL AND SUSTAINABILITY REPORT 2017 I nDePe nDe n t LI M It eD AS S U R AnCe R ePoR
t
7 9
How the Standard Defines Limited Assurance and
Material Misstatement
The procedures performed in a limited assurance engagement vary in nature and timing
from, and are less in extent than for a reasonable assurance engagement. Consequently the
level of assurance obtained in a limited assurance engagement is substantially lower than
the assurance that would have been obtained had a reasonable assurance engagement been
performed.
Misstatements, including omissions, are considered material if, individually or in the
aggregate, they could reasonably be expected to influence relevant decisions of the Directors
of OZ Minerals Limited.
Use of this Assurance Report
This report has been prepared for the Directors of OZ Minerals Limited for the purpose of
providing an assurance conclusion on the Selected Sustainability Information and may not be
suitable for another purpose. We disclaim any assumption of responsibility for any reliance on
this report, to any person other than the Directors of OZ Minerals Limited, or for any other
purpose than that for which it was prepared.
Management’s responsibility
Management are responsible for:
/ Determine that the criteria is appropriate to meet the needs of intended users, being OZ
Minerals Limited and their stakeholders.
/ Prepare and present the information subject to assurance in accordance with the criteria.
This includes disclosing the criteria, including any significant inherent limitations.
/ Establish internal controls that enable the preparation and presentation of the information
subject to assurance that is free from material misstatement, whether due to fraud or error.
/ Tell us of any known and/or contentious issues relating to the information subject to
assurance.
/ Maintain integrity of the website.
Our Responsibility
Our responsibility is to perform a limited assurance engagement in relation to the Selected
Sustainability Information for the year ended 31 December 2017, and to issue an assurance
report that includes our conclusion.
Our Independence and Quality Control
We have complied with our independence and other relevant ethical requirements of the
Code of Ethics for Professional Accountants issued by the Australian Professional and Ethical
Standards Board, and complied with the applicable requirements of Australian Standard on
Quality Control 1 to maintain a comprehensive system of quality control.
KPMG
Melbourne
22 February 2018
© 2018 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. All rights reserved. The KPMG name and logo are registered
trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
8 0
ANNUAL AND SUSTAINABILITY REPORT 2017 MIn eR A L R eSoU R CeS
AnD o Re R eSeR VeS
8 1
Mineral
Resources and
Ore Reserves
8 2
Mineral Resources
and Ore Reserves 2017
OZ Minerals’ Mineral Resources and Ore Reserves
The 2017 Mineral Resources and Ore Reserves of OZ Minerals are summarised in the table below along with the 2016 Mineral Resources
and Ore Reserves for comparison.
Tonnes
Mt
160
130
300
74
79
150
Cu
%
1.0
1.5
1.2
1.0
1.8
1.4
Resources
Prominent Hill
Carrapateena
Total
Reserves
Prominent Hill
Carrapateena
Total
Note: Table subject to rounding errors.
2017
2016
Au
g/t
Ag
g/t
Cu
kt
Au
Moz
Ag
Tonnes
Moz
Mt
0.7
0.6
0.6
0.6
0.7
0.7
3
7
4
3
9
6
1,600
2,000
3,600
730
1,400
2,100
3.5
2.6
6.1
1.5
1.8
3.3
14
28
42
7
22
29
172
134
307
75
70
145
Cu
%
1.0
1.5
1.2
1.0
1.8
1.4
Au
g/t
Ag
g/t
Cu
kt
Au
Moz
Ag
Moz
0.7
0.6
0.6
0.6
0.7
0.7
3
7
4
3
8
6
1,770
1,970
3.7
2.6
3,740
6.3
740
1,300
2,040
1.4
1.7
3.1
15
28
43
7
19
26
Information in the table above was drawn from the following:
Deposit
Prominent Hill
Prominent Hill
Prominent Hill
Carrapateena
Carrapateena
Prominent Hill
Prominent Hill
Prominent Hill
Carrapateena
Carrapateena
Mineral Resources 2015
Mineral Resources 2016
Mineral Resources 2017
Mineral Resources 2016
Mineral Resources 2017
Ore Reserves 2015
Ore Reserves 2016
Ore Reserves 2017
Ore Reserves 2016
Ore Reserves 2017
Estimate date
30 June 2015
1 July 2016
30 June 2017
18 November 2016
18 November 2016
30 June 2015
1 July 2016
30 June 2017
20 October 2016
4 August 2017
Release date
4 November 2015
15 November 2016
21 November 2017
9 December 2016
24 August 2017
4 November 2015
15 November 2016
21 November 2017
7 November 2016
24 August 2017
Note: All Mineral Resources and Ore Reserves are estimates. The Mineral Resource and Ore Reserve statements and their accompanying explanatory notes can be viewed in full at:
ozminerals.com/operations/resources-reserves.html
ANNUAL AND SUSTAINABILITY REPORT 2017 The Prominent Hill
Mineral Resources and
Ore Reserves remain
robust with the majority
of changes due to
mining depletion.
MIn eR A L R eSoU R CeS
AnD o Re R eSeR VeS
8 3
Prominent Hill 2017 Mineral Resources and Ore Reserves
The Prominent Hill Mineral Resource as at 30 June 2017 has been estimated at 163 million
tonnes of copper-gold mineralisation grading 1.0 percent copper, 0.7 grams per tonne gold
and 2.7 grams per tonne silver. The Mineral Resource contains 7% fewer copper tonnes
and 6% fewer gold ounces than the previous Mineral Resource estimate.
Open pit mineral resources
/ The Prominent Hill Open Pit Mineral Resource estimate decreased by 14 million tonnes
(64 per cent), 140 thousand tonnes of copper metal (62 per cent) and 290 thousand
ounces of gold metal (66 per cent) as a result of mining depletion.
Underground mineral resources
/ The Prominent Hill Underground Mineral Resource estimate decreased by 1.4 million tonnes
(1 per cent), 30 thousand tonnes of copper metal (2 per cent) and 70 thousand ounces
of gold metal (2 per cent). However relative to the 2016 estimate, the estimated Mineral
Resource has now increased in confidence with increased Measured (+15%) and Indicated
(+23%) classified material tonnages and decreased Inferred (-17%) classified material
tonnage.
/ Diamond drilling activities, mostly in the southern Prominent Hill Shear Zone and Volcanics,
resulted in the addition of approximately 3 million tonnes of new copper mineralisation at
1.2 per cent copper and 0.7 grams per tonne gold to the Mineral Resource, predominantly
into the Measured and Indicated estimation classifications. In addition, drilling also
upgraded approximately 5 million tonnes of existing 2016 Inferred Mineral Resource
estimation to the Measured and Indicated estimation classification in 2017.
/ Additional tonnage due to diamond drilling fully offset underground mining tonnage
depletion for the twelve month period. Reductions in the estimated Inferred Mineral
Resources were driven by re-evaluated geological and grade continuity interpretations,
influenced by updated diamond drilling information, changes to the NSR calculation’s metal
recoveries and updated estimation parameters.
Stockpiles
/ Surface ore stockpiles as of 30 June 2017 had increased by 6.8 million tonnes (30 per cent),
45 thousand copper metal tonnes (68 per cent) and 140 thousand gold ounces (33 per
cent). 6.7 million tonnes (98 per cent) of the stockpile growth was directly attributable to
Open Pit ore mining.
8 4
Copper mineral resources at Prominent Hill – 30 June 2017
Category
Tonnes
Mt
Cu
%
Au
g/t
Ag
g/t
Cu
kt
Au
Koz
Ag
Moz
Open Pit(a) – 0.25% Cu cut-off
Measured
Indicated
Inferred
Total
Underground(b) – $57 NSR cut-off
Measured
Indicated
Inferred
Total
Surface Stocks
Measured
Total
Measured
Indicated
Inferred
Total
3
5
0
8
33
34
53
120
1.2
1.0
1.1
1.1
1.5
1.1
1.1
1.2
0.5
0.6
0.6
0.6
0.5
0.7
0.5
0.6
12
0.8
0.4
48
39
53
140
1.3
1.1
1.1
1.2
0.5
0.7
0.5
0.5
4
2
2
3
3
3
2
3
2
3
3
2
3
36
47
0
83
490
380
570
50
84
0
130
500
760
910
0.4
0.3
0.0
0.7
4
3
4
1,400
2,200
11
93
170
620
430
570
720
840
910
1
5
4
4
1,600
2,500
13
Note: Table subject to rounding errors.
(a) Within the final pit design.
(b) Net smelter return (NSR) details can be found in the 2017 explanatory notes: ozminerals.com/operations/resources-reserves.
Gold mineral resources at Prominent Hill – 30 June 2017
Category
Tonnes
Mt
Cu
%
Au
g/t
Ag
g/t
Cu
kt
Au
Koz
Ag
Moz
Open Pit(c) – 0.5 g/t Au cut-off Below 0.25% Cu
Indicated
Inferred
Total
Underground(d) – $57 NSR cut-off
Indicated
Inferred
Total
Surface Stocks
Measured
Total
Measured
Indicated
Inferred
Total
0
0
0
2
6
7
0.1
0.1
0.1
0.0
0.0
0.0
0.8
1.3
0.9
2.6
2.4
2.4
15
0.1
0.8
15
2
6
23
0.1
0.0
0.0
0.1
0.8
2.3
2.4
1.3
1
1
1
1
1
1
2
2
1
1
2
0
0
0
0
3
3
12
0
12
150
440
580
0.0
0.0
0.0
0.1
0.1
0.2
17
380
1.1
17
0
3
20
380
160
440
970
1.1
0.1
0.1
1.3
Note: Table subject to rounding errors.
(c) Within the final pit design.
(d) Net smelter return (NSR) details can be found in the 2017 explanatory notes: ozminerals.com/operations/resources-reserves.
ANNUAL AND SUSTAINABILITY REPORT 2017 MIn eR A L R eSoU R CeS
AnD o Re R eSeR VeS
8 5
Prominent Hill Ore Reserves
The Ore Reserves at 30 June 2017 were
estimated to be 74 million tonnes at 1.0
percent copper and 0.6 grams per tonne
gold for 730 thousand tonnes of contained
copper and 1.5 million ounces of contained
gold. The 2017 Ore Reserve contains 1%
less copper tonnes than the previous Ore
Reserve estimate.
Open Pit Ore Reserves
/ The Ore Reserves decreased due to
mining depletion almost exclusively.
Underground Ore Reserves
/ Underground Ore Reserve copper and
gold metal has increased by ~13 and
~27 per cent respectively, driven by
increased confidence in the Mineral
Resource estimate, improved design
inputs and lateral (across and along
strike) mining area expansions.
Summary of the ore reserves at Prominent Hill – 30 June 2017
Category
Open Pit
Proved
Probable
Total
Underground
Proved
Probable
Total
Surface Stocks
Proved
Prominent Hill all mining areas
Proved
Probable
Total
Note: Table subject to rounding errors.
Tonnes
Mt
Cu
%
Au
g/t
Ag
g/t
Cu
kt
Au
Koz
Ag
Moz
3
5
8
19
20
39
1.1
0.9
1.0
1.6
1.2
1.4
0.5
0.6
0.6
0.4
0.8
0.6
27
0.4
0.6
49
25
74
0.9
1.1
1.0
0.6
0.7
0.6
4
2
3
4
3
3
2
3
3
3
33
42
74
300
240
540
50
92
140
270
490
760
110
550
450
280
730
870
580
1,500
0.4
0.4
0.7
2
2
4
2
5
2
7
8 6
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 Resources and
Ore Reserves Statement, 30 June 2017 other
than changes due to depletion since 1 July
2017. Depletion for the six months to 31
December 2017 amounts to approximately
5.2 million tonnes at 1.3% Cu, 0.6 g/t Au
and 3 g/t Ag.
Competent Persons’ Statements Prominent Hill Mineral Resources
& 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 2017, which
was released to the market on 21 November 2017 and is available at
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 BSc (Geology) has over 20 years of relevant experience as a geologist including ten
years in iron-oxide–copper–Gold-style deposits.
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.
The 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 the open pit ore reserves is based on and fairly
represents information and supporting documentation compiled by Michael Wood BEng
(Min), a Competent Person who is a Member of the Australasian Institute of Mining and
Metallurgy (AusIMM Membership No. 225408).
Michael Wood is a full time employee of OZ Minerals Limited. Michael Wood is a
shareholder in OZ Minerals Limited and is entitled to participate in the OZ Minerals
Performance Rights plan.
Michael Wood has over 11 years of experience as a mining engineer including six 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’
(the JORC Code). Michael Wood consents to the inclusion in the report of the matters based
on his information in the form and context in which they appear.
The information in this report that relates to the underground ore reserves is based on and
fairly represents information and supporting documentation compiled by Luke Sandery BEng
(Min), a Competent Person who is a Member of the Australasian Institute of Mining and
Metallurgy (AusIMM Membership No. 212082).
Luke Sandery is a full time employee of OZ Minerals Limited. Luke Sandery is a shareholder in
OZ Minerals Limited and is entitled to participate in the OZ Minerals Performance Rights plan.
Luke Sandery has over 11 years of experience as a mining engineer including six 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 JORC Code. Luke
Sandery 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 compiled 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).
ANNUAL AND SUSTAINABILITY REPORT 2017 Carrapateena Mineral Resources
and Ore Reserves
The complete Carrapateena Mineral
Resource and Ore Reserve statements can
be found at: ozminerals.com/operations/
resources-reserves.html
MIn eR A L R eSoU R CeS
AnD o Re R eSeR VeS
8 7
Carrapateena Mineral Resources
The Carrapateena 2017 Mineral Resources is summarised in the table below. The Mineral
Resource is current as of 18 November 2016 and has been restated in 2017. The 17 October
2016 Mineral Resource is also shown below for comparison.
Year
2016
2016
2017
Classification
Tonnes
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Mt
126
7
133
61
65
8
134
61
65
8
134
Cu
%
1.5
1.0
1.5
1.4
1.6
0.8
1.5
1.4
1.6
0.8
1.5
Estimate Date
Release Date
17 October 2016
7 November 2016
18 November 2016
9 December 2016
18 November 2016
24 August 2017
Note: Table subject to rounding errors.
The Mineral Resource statement includes additional drilling from 2016 which focused on the
upper part of the deposit between 4200mRL – 4600mRL. The aims of the drilling were to
confirm grade and geological continuity across the deposit and upgrade a proportion of the
Mineral Resource to Measured Resources.
The differences in resource tonnages and grades between the November 2016 Mineral
Resource and the October 2016 Mineral Resource are immaterial although the November
2016 Mineral Resource has a higher level of confidence.
Carrapateena Mineral Resources – 18 november 2016(a)
Classification
Tonnes
Measured
Indicated
Inferred
Total
Mt
61
65
8
134
Cu
%
1.4
1.6
0.8
1.5
Au
g/t
0.6
0.6
0.4
0.6
Ag
g/t
Cu
kt
Au
Moz
6
7
4
7
880
1,030
60
1,970
1.2
1.3
0.1
2.6
Ag
Moz
12.4
14.7
0.9
27.9
Note: Table subject to rounding errors.
(a) All material, whether mineralised or not, contained in a reasonable prospects shape designed at a $70 NSR cut-off value.
8 8
Carrapateena Ore Reserves
The Pre-feasibility Study and Ore
Reserve estimate has been updated for
the 2016 Mineral Resource Estimate as at
18 November 2016. The update includes
a revision to the mine access and material
handling system, and modifications to the
mining footprint where required. Based
on the mining and processing schedules
completed for the study update, together
with ongoing metallurgical test-work, the
Carrapateena Project is no longer reliant
on the incorporation of a Concentrate
Treatment Plant (CTP), and has not
been included.
Carrapateena ore Reserves as at 4 August 2017(a)
Classification
Tonnes
Proved
Probable
Total
Note: Table subject to rounding errors.
(a) Based on $100 NSR cut-off value.
Mt
0
79
79
Cu
%
0.0
1.8
1.8
Au
g/t
0.0
0.7
0.7
Ag
g/t
0
9
9
Cu
kt
0
1,400
1,400
Au
Moz
0
1.8
1.8
Ag
Moz
0
22
22
Material changes in Carrapateena Mineral Resources
and Ore Reserves
OZ Minerals confirms that it is not aware of any new information or data that would
materially affect the Carrapateena Mineral Resource estimate as at 18 November 2016
or Carrapateena Ore Reserve estimate as at 4 August 2017.
Competent Persons’ Statements
Carrapateena Mineral Resources and Ore Reserve
The information set out in these tables is a summary of information relating to Carrapateena
Mineral Resources and Ore Reserves set out in the documents, Carrapateena Project Mineral
Resource, released originally on 9 December 2016 and subsequently re-stated on 24 August
2017; and Carrapateena Ore Reserve Statements and Explanatory Notes released on
24 August 2017 and are available at 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 (108430) and a Member of the Australian Institute
of Geoscientists (5683).
Stuart Masters BSc (Geology), CFSG, has over 30 years of relevant and continuous experience
as a geologist including 12 years in iron-oxide–Copper–Gold-style deposits. Stuart Masters
has visited the site on ten occasions since OZ Minerals acquired the project including three
times since the 2013 Mineral Resource was reported and once since the 2015 Mineral
Resource was originally reported.
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 it appears.
Stuart Masters CS-2 Pty Ltd.
ANNUAL AND SUSTAINABILITY REPORT 2017 MIn eR A L R eSoU R CeS
AnD o Re R eSeR VeS
8 9
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 2017 were
completed in accordance with the guiding principles contained within the policy, suitably
modified to meet current company structures, delegated authorities and estimate
requirements.
These 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.
The information in this report that relates
to Carrapateena Ore Reserves is based
on and fairly represents information and
supporting documentation compiled by
Murray Smith B.Eng. (Mining), a Competent
Person who is a Member and Chartered
Professional of the Australasian Institute
of Mining and Metallurgy (AusIMM
Membership No. 111064).
Murray Smith is a full time employee of
Mining Plus Pty Ltd, and prior to the 2017
Carrapateena Feasibility Study had no
dealings with OZ Minerals Limited. Murray
Smith is not a shareholder in OZ Minerals
Limited, and is considered to be independent
of OZ Minerals Limited.
Murray Smith BEng (Min) has over 20 years
of experience as a mining engineer, and 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). Murray Smith
consents to the inclusion in this report of
the matters based on his information in
the form and context in which it appears.
The Ore Reserve estimate has been
compiled 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).
9 0
ANNUAL AND SUSTAINABILITY REPORT 2017 f InAnC I A L R ePoR
t
9 1
Financial
Report
9 2
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 of OZ Minerals
Limited for the financial year ended 31 December 2017 there have been:
i. no contraventions of the auditor independence requirements as set
out in the Corporations Act 2001 in relation to the audit; and
ii. no contraventions of any applicable code of professional conduct in
relation to the audit.
KPMG
Paul Cenko
Partner
Adelaide
22 February 2018
© 2018 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. All rights reserved. The KPMG name and logo are registered
trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
ANNUAL AND SUSTAINABILITY REPORT 2017 f InAnC I A L R ePoR
t
9 3
Consolidated Statement
of Comprehensive Income
For the year ended 31 December 2017
Revenue
Net foreign exchange (losses)/gains
Other income
Changes in inventories of ore and concentrate
Consumables and other direct costs
Employee benefit expenses
Exploration and evaluation expenses
Freight expenses
Royalties expense
Depreciation expense
Legal costs associated with Class Action
Other expenses
Profit before net financing income and income tax
Financing income
Financing expenses
Net financing income
Profit before income tax
Income tax expense
Profit for the year attributable to equity holders of OZ Minerals Limited
Other comprehensive income
Items that will not be reclassified subsequently to future Income Statements
Change in fair value of investments in equity securities, net of tax
Items that may be reclassified subsequently to future Income Statements
Net (losses)/gains on cash flow hedges, net of tax
Other comprehensive loss for the year, net of tax
Total comprehensive income for the year attributable
to equity holders of OZ Minerals Limited
Basic and diluted earnings per share
Basic and diluted earnings per share
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying Notes.
Notes
1
7
3
13
2
2017
$m
1,023.1
(6.3)
5.0
190.2
(332.3)
(56.2)
(21.1)
(63.6)
(52.9)
(323.5)
–
(41.7)
320.7
12.5
(3.8)
8.7
329.4
(98.3)
231.1
(0.2)
(7.2)
(7.4)
223.7
Cents
77.4
2016
$m
822.9
2.7
6.8
227.8
(313.7)
(60.4)
(29.3)
(52.9)
(42.2)
(361.5)
(37.9)
(35.1)
127.2
13.8
(4.8)
9.0
136.2
(28.4)
107.8
(10.3)
3.6
(6.7)
101.1
Cents
35.7
9 4
Consolidated Statement
of Changes in Equity
Notes
Issued
capital $m
Retained
earnings $m
Cash flow hedge
reserve $m
Treasury
shares $m
Total
equity $m
For the year ended 31 December 2017
Balance as at 1 January 2017
Total comprehensive income for the year
Profit for the year
Other comprehensive gain/(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 2017
For the year ended 31 December 2016
Balance as at 1 January 2016
Total comprehensive income for the year
Profit for the year
Other comprehensive gain/(loss)
Total comprehensive income for the year
Transactions with owners, recorded directly in equity
Dividends
Share-based payment transactions, net of income tax
Share buy-back
Purchase of treasury shares
Exercise of performance rights
Total transactions with owners
Balance as at 31 December 2016
2,029.0
323.8
–
–
–
–
–
–
–
–
2,029.0
231.1
(0.2)
230.9
(59.7)
5.3
–
(8.0)
(62.4)
492.3
2,058.9
285.6
–
–
–
–
–
(29.9)
–
–
(29.9)
2,029.0
107.8
(10.3)
97.5
(60.6)
6.9
–
–
(5.6)
(59.3)
323.8
4
12
4
12
11
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying Notes.
3.6
–
(7.2)
(7.2)
–
–
–
–
–
(3.6)
–
–
3.6
3.6
–
–
–
–
–
–
3.6
(2.1)
2,354.3
–
–
–
–
–
(7.3)
8.0
0.7
(1.4)
231.1
(7.4)
223.7
(59.7)
5.3
(7.3)
–
(61.7)
2,516.3
(0.6)
2,343.9
–
–
–
–
–
–
(7.1)
5.6
(1.5)
(2.1)
107.8
(6.7)
101.1
(60.6)
6.9
(29.9)
(7.1)
–
(90.7)
2,354.3
ANNUAL AND SUSTAINABILITY REPORT 2017 f InAnC I A L R ePoR
t
9 5
Consolidated
Balance Sheet
At 31 December 2017
Current assets
Cash and cash equivalents
Trade receivables
Lease receivable
Other receivables
Inventories
Prepayments
Assets held for sale
Total current assets
Non-current assets
Inventories
Investments in equity securities
Derivative financial instruments
Exploration assets - Carrapateena
Lease receivable
Property, plant and equipment
Total non-current assets
Total assets
Current liabilities
Trade payables and accruals
Other payables
Current tax provision
Employee benefits
Provisions
Derivative financial instruments
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Employee benefits
Provisions
Derivative financial instruments
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Cash flow hedge reserve
Retained earnings
Treasury shares
Total equity attributable to equity holders of OZ Minerals Limited
The above Consolidated Balance Sheet should be read in conjunction with the accompanying Notes.
Notes
8
5
7
5
13
13
7
8
7
3
9
13
3
9
13
11
2017
$m
729.4
121.9
19.6
10.8
262.5
3.9
–
1,148.1
484.4
18.0
–
–
–
1,175.8
1,678.2
2,826.3
94.1
3.5
101.1
10.0
6.7
11.6
227.0
47.4
1.8
29.1
4.7
83.0
310.0
2,516.3
2,029.0
(3.6)
492.3
(1.4)
2,516.3
2016
$m
655.7
69.4
–
7.8
197.1
4.9
9.4
944.3
360.0
18.2
5.1
284.9
27.5
990.6
1,686.3
2,630.6
74.4
3.0
69.0
9.0
8.3
11.1
174.8
63.5
2.0
36.0
–
101.5
276.3
2,354.3
2,029.0
3.6
323.8
(2.1)
2,354.3
9 6
Consolidated Statement
of Cash Flows
For the year ended 31 December 2017
Notes
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Payments for exploration and evaluation
Payment of income tax
Financing costs
Interest received
Net cash inflows from operating activities
Cash flows from investing activities
Payment for property, plant and equipment
Payment for Carrapateena evaluation expenditure
Proceeds from disposal of investments
Net cash outflows from investing activities
Cash flows from financing activities
Dividends paid to shareholders
Payments for share buy-back
Payments for acquisition of treasury shares
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
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying Notes.
6
4
11
2017
$m
1,000.3
(568.5)
(21.6)
(79.2)
(0.9)
12.8
342.9
(151.2)
(45.8)
–
(197.0)
(59.7)
–
(7.3)
(67.0)
78.9
655.7
(5.2)
729.4
2016
$m
874.0
(529.9)
(29.3)
–
(2.0)
11.3
324.1
(99.8)
(25.6)
3.3
(122.1)
(60.6)
(29.9)
(7.1)
(97.6)
104.4
552.5
(1.2)
655.7
ANNUAL AND SUSTAINABILITY REPORT 2017 f InAnC I A L R ePoR
t
9 7
Notes to the Consolidated
Financial Statements
Group Performance
The principal business activities of
OZ Minerals Limited (OZ Minerals or
the Company) and its controlled entities
(collectively the ‘Consolidated Entity’)
were the mining and processing of
ore containing copper, gold and silver,
undertaking exploration activities and
development of mining projects.
1. Operating Segments
Segment
Principal activities
Prominent Hill
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 1, 162 Greenhill Road, Parkside, 5063,
South Australia, Australia.
Carrapateena
Exploration &
Development
The Consolidated Financial Statements of OZ
Minerals Limited and its controlled entities
for the year ended 31 December 2017:
Corporate
(corporate activities)
Mining and processing ore containing 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 containing copper, gold and silver to customers in Asia,
Europe and Australia.
Exploration, evaluation and development associated with the Carrapateena project
located in South Australia.
Exploration and evaluation activities associated with other projects and include
exploration arrangements with Minotaur Exploration Ltd, Cassini Resources Limited,
Toro Energy Limited, Mithril Resources, Acapulco Gold, Red Tiger Resources, Avrupa
Minerals and Corporate Development 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.
/ 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
/ have amounts rounded off to within the
nearest million dollars to one decimal
place unless otherwise stated, in
accordance with Instrument 2016/191,
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
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, other commercial costs, pricing
adjustments, and gains/losses from copper derivative contracts.
net Revenue by geographical region
/ 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 2017, as discussed in
Note 4, no 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.
)
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
400
200
0
10.3
139.8
534.7
10.4
118.1
438.7
2017
Asia
2016
Asia
Copper
Gold
Silver
4.8
64.8
229.6
3.7
43.8
132.1
2017
Australia
2016
Australia
8.1
0.5
30.5
2017
Europe
16.3
1.5
58.3
2016
Europe
Revenue information presented on the previous page is based on the location of the
customer’s operations. Major customers who individually accounted for more than ten per cent
of total revenue contributed approximately 75 per cent of total revenue (2016: 69 per cent).
9 8
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.
Prominent Hill
$m
Carrapateena
$m
Exploration &
Development
$m
Corporate
$m
Consolidated
$m
31 December 2017
Revenue – Copper
Revenue – Gold and Silver
Treatment and refining charges(a)
Net Revenue
Mining
Processing
Freight expense
Site general and administration
Royalties
Deferred waste adjustment
Inventory adjustment
Cost of goods sold
Corporate general and administration
Exploration and other income/(expenses)
Net realisable value adjustments
Foreign exchange gain/(loss)
Underlying EBITDA
Depreciation of PPE
Capitalised depreciation into inventory
Net Depreciation
Underlying EBIT
Net finance income
Income tax expense
Underlying Net Profit after tax
Net Profit for the year attributable to equity holders of OZ Minerals Limited
(a) Treatment and refining charges includes other commercial costs.
880.9
229.4
(87.2)
1,023.1
(275.6)
(99.0)
(63.6)
(21.7)
(52.9)
4.0
68.7
(440.1)
(10.9)
(0.6)
16.8
(5.2)
583.1
(320.5)
104.8
(215.7)
367.4
–
–
–
–
–
–
–
–
–
–
–
–
–
(5.2)
–
–
(5.2)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(0.1)
(20.1)
–
–
(20.2)
–
–
–
(5.2)
(20.2)
–
–
–
–
–
–
–
–
–
–
–
–
(20.5)
3.3
–
(1.1)
(18.3)
(3.0)
–
(3.0)
(21.3)
880.9
229.4
(87.2)
1,023.1
(275.6)
(99.0)
(63.6)
(21.7)
(52.9)
4.0
68.7
(440.1)
(31.5)
(22.6)
16.8
(6.3)
539.4
(323.5)
104.8
(218.7)
320.7
8.7
(98.3)
231.1
231.1
ANNUAL AND SUSTAINABILITY REPORT 2017 f InAnC I A L R ePoR
t
9 9
Prominent Hill
$m
Carrapateena
$m
Exploration &
Development
$m
Corporate
$m
Consolidated
$m
725.1
197.0
(99.2)
822.9
(296.2)
(91.3)
(52.9)
(19.7)
(42.2)
36.6
85.4
(380.3)
(10.5)
0.7
(10.5)
(4.1)
418.2
(356.5)
152.8
(203.7)
214.5
–
–
–
–
–
–
–
–
–
–
–
–
–
(12.9)
–
–
(12.9)
(3.1)
–
(3.1)
(16.0)
–
–
–
–
–
–
–
–
–
–
–
–
(0.5)
(16.4)
–
–
(16.9)
–
–
–
(16.9)
–
–
–
–
–
–
–
–
–
–
–
–
(25.7)
4.3
–
6.8
(14.6)
(1.9)
–
(1.9)
(16.5)
725.1
197.0
(99.2)
822.9
(296.2)
(91.3)
(52.9)
(19.7)
(42.2)
36.6
85.4
(380.3)
(36.7)
(24.3)
(10.5)
2.7
373.8
(361.5)
152.8
(208.7)
165.1
9.0
(39.8)
134.3
(26.5)
107.8
31 December 2016
Revenue – Copper
Revenue – Gold and Silver
Treatment and refining charges(a)
Net Revenue
Mining
Processing
Freight expense
Site general and administration
Royalties
Deferred waste adjustment
Inventory adjustment
Cost of goods sold
Corporate general and administration
Exploration and other income/(expenses)
Net realisable value adjustments
Foreign exchange gain
Underlying EBITDA
Depreciation of PPE
Capitalised depreciation into inventory
Net Depreciation
Underlying EBIT
Net finance income
Income tax expense
Underlying Net Profit after tax
Non underlying items net of tax(b)
Net Profit for the year attributable to equity holders of OZ Minerals Limited
(a) Treatment and refining charges includes other commercial costs.
(b) The non-underlying item net of tax is the settlement and legal cost associated with the class action incurred in 2016.
1 0 0
2. Earnings per share
Basic and diluted earnings per share – cents
Basic and diluted earnings per share
2017
77.4
2016
35.7
Inputs used in calculating basic and diluted earnings per share – $ millions
Profit after tax
Weighted average number of ordinary shares on issue
used in the calculation of basic earnings per share
231.1
107.8
298,582,892
301,740,328
Basic earnings per share is calculated by dividing the profit attributable to equity holders of
OZ Minerals Limited, 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.
3. Income tax
Income tax expense comprises current and deferred tax of the Consolidated Entity. Current
and deferred tax expenses are recognised in Other Comprehensive Income or directly in
equity as is appropriate.
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 company of the tax consolidated group.
Income tax expense in the Income Statement
Current income tax (expense)/benefit
Deferred income tax (expense)/benefit
Income tax (expense)/benefit
Reconciliation of income tax expense
to pre-tax profit
Profit before income tax
Income tax expense at the Australian tax rate of 30 per cent
Adjustments:
Non-deductible expenditure
Revision for prior periods
Research and development benefits
Recognition of previously unrecognised tax losses
Income tax expense
2017
$m
(111.3)
13.0
(98.3)
2017
$m
329.4
(98.8)
(0.7)
0.3
0.9
–
(98.3)
2016
$m
(69.0)
40.6
(28.4)
2016
$m
136.2
(40.9)
(2.1)
1.0
–
13.6
(28.4)
RE C OVERABILITY OF
DE FE RRED 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.
ANNUAL AND SUSTAINABILITY REPORT 2017 f InAnC I A L R ePoR
t
1 0 1
Deferred tax assets and liabilities
Opening
balance
$m
Recognised
in Income
Statement
$m
Recognised
in Equity
$m
Closing
balance
$m
2017
Restricted tax losses
Property plant and equipment
Inventories
Provisions and accruals
Derivative financial instruments
Other
Net deferred tax liabilities
2016
Unrestricted tax losses and offsets
Restricted tax losses
Property plant and equipment
Inventories
Provisions and accruals
Derivative financial instruments
Other
Net deferred tax liabilities
49.5
(135.6)
(4.8)
11.2
1.8
14.4
(63.5)
8.3
49.0
(170.6)
(4.8)
10.5
–
5.0
(102.6)
(17.0)
30.2
0.1
(0.8)
1.7
(1.2)
13.0
(8.3)
0.5
35.0
–
0.7
3.3
9.4
40.6
–
–
–
–
3.1
–
3.1
–
–
–
–
–
(1.5)
–
(1.5)
32.5
(105.4)
(4.7)
10.4
6.6
13.2
(47.4)
–
49.5
(135.6)
(4.8)
11.2
1.8
14.4
(63.5)
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.
Unrecognised tax losses
During the year, a review of unrecognised tax losses was undertaken and as a result no
additional restricted tax losses were recognised in the Balance Sheet. Restricted tax losses of
$178.1 million tax effected (2016: $178.1 million tax effected) remain unrecognised in the
Balance Sheet at 31 December 2017. Capital tax losses of $595.0 million tax effected (2016:
$592.5 million tax effected) remain unrecognised in the Balance Sheet at 31 December 2017.
1 0 2
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.
4. Dividends
Since the end of the financial year, the Board of Directors has resolved to pay a fully franked
dividend of 14 cents per share, to be paid on 26 March 2018. The record date for entitlement
to this dividend is 12 March 2018. The financial impact of the dividend amounting to $41.8
million has not been recognised in the Consolidated Financial Statements for the year ended
31 December 2017 and will be recognised in subsequent Consolidated Financial Statements.
The details in relation to dividends announced or paid since 1 January 2016
are set out below:
Record date
Date of
payment
Unfranked
cents per share(a)
Fully franked
cents per share
Total dividends
$m
12 March 2018
26 March 2018
7 September 2017
21 September 2017
10 March 2017
24 March 2017
9 September 2016
23 September 2016
24 February 2016
10 March 2016
–
–
–
6
14
14
6
14
–
–
41.8
17.9
41.8
18.1
42.5
(a) For Australian income tax purposes, the unfranked dividends was declared to be conduit foreign income.
ANNUAL AND SUSTAINABILITY REPORT 2017 f InAnC I A L R ePoR
t
1 0 3
Net Cash and
Capital Employed
NET REALISABLE
VA LUE OF INVENTORIES
5. Inventories
Inventories are recognised at the lower
of cost and net realisable value (‘NRV’).
Net realisable value 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 net realisable value 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 net
realisable value and may therefore impact
the carrying value of inventories.
)
m
$
(
e
u
a
v
l
y
r
o
t
n
e
v
n
I
350
300
250
200
150
100
50
0
321.0
228.6
31 December 2017
31 December 2016
191.2
127.7
163.4
131.4
50.5
48.2
Concentrates
at cost
Ore stockpile
(current) at cost
Ore stockpile
(non current)
at cost
Ore stockpile
(non current)
at NRV
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
2017
$m
50.5
191.2
20.8
262.5
321.0
163.4
484.4
746.9
20.8
21.2
Stores and
consumables
at cost
2016
$m
48.2
127.7
21.2
197.1
228.6
131.4
360.0
557.1
An assessment of the net realisable value of non-current ore resulted in an adjustment to increase
the value of inventory by $16.8 million in respect of low grade gold ore stockpiles being recognised
in 2017 (2016: reduce by $10.5 million). The increase is a reversal of previous impairment.
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 twelve months after balance date are
classified as current assets, all other inventories are classified as non-current.
1 0 4
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
FX loss on cash balances
Share based payments
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
2017
$m
231.1
323.5
7.9
5.2
5.3
5.4
(55.5)
1.0
(189.8)
(5.4)
0.8
(5.7)
19.1
342.9
2016
$m
107.8
361.5
7.3
1.2
6.9
9.6
25.9
–
(227.3)
5.2
(1.8)
(0.7)
28.5
324.1
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, at call deposits and
cash equivalents.
ANNUAL AND SUSTAINABILITY REPORT 2017 7. Property, Plant and Equipment
2017
At cost
Accumulated depreciation and impairment losses
Closing carrying amount
Reconciliation of carrying amounts
Opening carrying amount
Reclassification of Exploration assets
Additions and transfers including deferred mining
Depreciation expense
Closing carrying amount
2016
At cost
Accumulated depreciation and impairment losses
Closing carrying amount
Reconciliation of carrying amounts
Opening carrying amount
Additions and transfers including deferred mining
Transfer of Tunnel Boring Machine to Assets held for sale
Depreciation expense
Closing carrying amount
f InAnC I A L R ePoR
t
1 0 5
Plant and
equipment
$m
Mine property
and development
$m
Freehold land
and buildings
$m
Capital work
in progress
$m
Total
$m
1,151.9
(838.4)
313.5
345.0
–
12.4
(43.9)
313.5
1,139.6
(794.6)
345.0
389.6
9.4
–
(54.0)
345.0
1,666.5
(1,336.4)
330.1
557.6
–
45.7
(273.2)
330.1
1,621.2
(1,063.6)
557.6
774.5
82.1
–
(299.0)
557.6
187.8
(126.9)
60.9
66.8
–
0.5
(6.4)
60.9
187.3
(120.5)
66.8
75.5
(0.2)
–
(8.5)
66.8
471.3
3,477.5
–
(2,301.7)
471.3
1,175.8
21.2
330.7
119.4
990.6
330.7
178.0
–
(323.5)
471.3
1,175.8
21.2
2,969.3
–
(1,978.7)
21.2
990.6
22.2
8.4
(9.4)
–
21.2
1,261.8
99.7
(9.4)
(361.5)
990.6
The original acquisition of Carrapateena provided for two further payments upon commercial
production being reached.
/ US$50 million on production of copper, uranium, gold or silver.
/ US$25 million on production of rare earths, iron or any other commodity.
The further payments amounting to US$75 million do not constitute a liability and are not
recognised in OZ Minerals balance sheet because OZ Minerals ha not reached the specified
performance milestones on which payment is required.
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 it 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.
1 0 6
RE C OVERABILITY
OF A SSETS
Cash Generating Units are tested for
impairment when there is an indication
that the CGU may be impaired. Examples
of impairment indicators include the group’s
net assets exceeding its market capitalisation,
unfavourable fluctuations in commodity
prices and foreign exchange rates or a
decline in the CGU’s operating performance.
The Consolidated Entity undertook a review of
the Prominent Hill and Carrapateena CGU’s to
determine whether there was any indication
that these CGU’s had suffered an impairment
loss. The Consolidated Entity concluded that
there was no such indicators that either CGU
was impaired at reporting date.
In reviewing for impairment indicators,
the group assessed for negative trends in
the significant judgements and assumptions
which may impact the CGU’s valuation in
future periods, including:
/ Future cash flows based on Board
approved internal budgets and forecasts
which reflect expectations of resources and
reserves, mine plans, short and long term
commodity prices and foreign exchange
rates, operating and capital costs.
/ The value of Mineral Resources not
modelled in Board approved budgets
based on the use of an appropriate
resource valuation multiple to the
contained copper equivalent within
the Resources applicable to the CGU.
/ The discount rate applied to the cash flows
which reflects current market conditions.
In addition, the Consolidated Entity
monitors for impairment indicators by
considering the impact of the above
judgements and assumptions on the
valuation of CGU’s through periodic
updates to its business valuation models.
Such assumptions are subject to variation
as a result of changes in future economic
and operational conditions. Consequently,
the carrying value of the Consolidated
Entity’s CGU’s may differ in future years
if assumptions made do not eventuate
and actual outcomes are less favourable
than present assumptions.
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.
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.
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 mining inventory
Mine property and development
Units of ore extracted over mining inventory
applicable to the development
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.
During 2017, the useful life of mine property and development and processing plant assets
depreciated on a units of production basis were reassessed and are now based on mining
inventory (previously reserves), which includes all reserves and a portion of resources which are
expected to be mined or processed in the course of the current mine plan. This more closely
aligns to the benefits received by the assets from their use.
ANNUAL AND SUSTAINABILITY REPORT 2017 f InAnC I A L R ePoR
t
1 0 7
ORE RES ER V ES A ND R ES OU RC ES E ST IMATE S
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,
capitalised exploration, 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.
CARRYING VALUE OF CAPITALISED
EXPLORATION EXPENDITURE
Exploration assets
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.
Exploration assets-tangible
Exploration assets-Intangible
2017
$m
32.7
45.8
(78.5)
–
2016
$m
–
32.7
–
32.7
2017
$m
252.2
–
(252.2)
–
2016
$m
252.2
–
–
252.2
Opening Balance
Additions
Transfers
Closing Balance
Following the decision to proceed with development of the Carrapateena mine, the Consolidated
Entity transferred the balance of exploration assets related to the Carrapateena project to Property
Plant and Equipment in accordance with the accounting policy described below.
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 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 these agreements
OZ Minerals does not assume any liabilities or hold any rights to other assets that the holder
of the tenement may possess.
1 0 8
Assets held for sale
The Tunnel Boring Machine previously classified as Non-current Assets Held for Sale and
Discontinued Operations in accordance with AASB 5 was sold during the year.
8. Lease receivable
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 is expected to be recovered by OZ Minerals from a resale of the
equipment to Thiess.
The finance lease receivable of $19.6m as at 31 December 2017 comprises $27.5m from
the comparative year, less a $7.9 million (2016: $7.3 million) amortisation charge against
the finance lease receivable during the year.
9. Provisions
MINE REHA BILITATION , RE S TO RATIO N
AND DISMA NTL IN G OBLIGATION S
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 twelve months) and non-current components based on the expected timing of these
cash flows.
ANNUAL AND SUSTAINABILITY REPORT 2017 f InAnC I A L R ePoR
t
1 0 9
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.
2017
$m
2016
$m
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 utilised
Provisions released
Closing carrying amount
2.9
3.8
6.7
–
29.1
29.1
3.8
2.9
29.1
35.8
6.3
2.0
8.3
2.3
33.7
36.0
2.0
8.6
33.7
44.3
Mine
rehabilitation
provision
Equipment
demobilisation
provision
33.7
2.8
–
(7.4)
29.1
8.6
0.3
(6.0)
–
2.9
10. Capital expenditure commitments
The Consolidated Entity has entered into various contracts with suppliers for the construction
of the Carrapateena Mine and Underground Sustaining Capital works at Prominent Hill. The
total capital expenditure commitment in relation to these contracts as at 31 December 2017
was $405 million (2016: $71 million), of which $303 million is expected to be incurred in
2018 and the balance in 2019. Where cancellable, the estimated termination cost of the
commitments as at 31 December 2017 was $41.5 million (2016: $5.0 million).
1 1 0
Contributed Equity
11. Issued capital
298,664,750 shares (2016: 298,664,750 shares)
2017
$m
2,029.0
2016
$m
2,029.0
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.
Shares acquired as part of an on-market share buyback programme are cancelled and presented as a deduction to issued capital, and
measured at the amount paid 2017: nil (2016:$29.9m).
12. Share-based payments
Total expenses arising from share-based payment transactions recognised during the year as part of employee benefit expenses was $5.3m
(2016: $6.9m). 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
2017: 1 July 2017 to 1 July 2018
2016: 1 July 2016 to 1 July 2017
2015: 22 July 2015 to 1 July 2016
Service period
2017: 1 July 2017 to 1 July 2018
2016: 1 July 2016 to 1 July 2017
2015: 22 July 2015 to 1 July 2016
Vesting conditions
Percentage vesting based on individual
performance against Key Performance Indicators
2017: 1 January 2017 to 31 December 2019
2016: 1 January 2016 to 31 December 2018
2015: 1 July 2015 to 30 June 2018
2014: 1 July 2014 to 30 June 2017
2013: 20 December 2013 to 19 December 2016
2017: 1 January 2017 to 31 December 2019
2016: 1 January 2016 to 31 December 2018
2015: 1 July 2015 to 30 June 2018
2014: 28 July 2014 to 15 July 2017
2013: 20 December 2013 to 19 December 2016
1. Total Shareholder Return (TSR)
tSR performance measured
Comparator Group
75th percentile or greater
Between the 50th and 75th percentile
50th percentile
Less than 50th percentile
2. Absolute Share Price Growth(a)
oZ Minerals Share Price Growth
over the Performance Period
Less than 20%
20% or greater
Percentage of vesting
100
Between 50 and 100 vest progressively
by using a straight-line interpolation
50
Nil
Percentage of vesting
Nil
100
Exercise price
Not applicable – provided at no cost
Not applicable – provided at no cost
(a) The LTI Plan performance vesting conditions for periods 2015 and prior were set only on Total Shareholder Return (TSR). The LTI Plan performance vesting conditions for 2016 and 2017
were set on both Total Shareholder Return (TSR) and Absolute Share Price Growth, weighted at 70% and 30% respectively.
ANNUAL AND SUSTAINABILITY REPORT 2017 f InAnC I A L R ePoR
t
1 1 1
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 meeting both the service condition and the
performance condition. The shares on vesting of performance rights rank equally in all respects with previously issued fully paid ordinary
shares when issued.
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
Fair value at
grant date
$
Share price
at grant date
$
Expected
volatility
per cent
Expected
dividends
Per cent
Risk-free
interest rate
per cent
1 January 2017
MD & CEO Tranche One (70%)
MD & CEO Tranche Two (30%)
Other KMP Tranche One (70%)
Other KMP Tranche Two (30%)
1 January 2016
MD & CEO Tranche One (70%)
MD & CEO Tranche Two (30%)
Other KMP Tranche One (70%)
Other KMP Tranche Two (30%)
21 July 2015
Performance rights granted under the PRP
1 July 2017
1 July 2016
21 July 2015
4.6
3.5
6.5
5.6
4.1
3.5
3.7
3.2
2.8
7.3
5.8
3.8
7.2
7.2
9.2
9.2
5.2
5.2
5.2
5.2
3.9
7.5
6.8
3.9
50.0
50.0
50.0
50.0
50.0
50.0
50.0
50.0
45.0
50.0
50.0
45.0
2.7
2.7
2.2
2.2
3.8
3.8
3.8
3.8
2.6
2.6
3.3
2.6
1.7
1.7
2.0
2.0
2.0
2.0
2.0
2.0
2.0
1.8
1.8
2.1
Performance rights
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
2017
Number
2,634,996
887,047
(1,114,212)
(401,577)
2,006,254
2016
Number
2,661,774
1,895,830
(1,000,724)
(921,884)
2,634,996
Recognition and measurement of share-based payments
The fair value 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 KPI’s, any cumulative previously recognised expense
is reversed.
The fair value of the share-based payment transactions granted are adjusted to reflect market vesting conditions at the time of grant, and are
not subsequently adjusted. 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 for non-market conditions,
if any, is recognised in the Income Statement with a corresponding adjustment to equity. Changes as a result of market conditions are not
adjusted after the initial grant date.
1 1 2
Risk Management
13. 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.
This note 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
/ Credit Risk
/ 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)
Investments in equity securities
Trade Receivables
Derivative Financial Instruments
Carried at amortised cost
Cash and cash equivalents
Other receivables
Trade payables
Other payables
The carrying value of each of these items approximates fair value.
ACCOUNTING FOR INVESTMENTS
IN EQUITY SECURITIES
Investments in equity securities
The Consolidated Entity holds investments in equity instruments $18.0m (2016: $18.2m).
Judgement is required in assessing whether
power over an 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 per cent 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
amongst 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 the Income Statement at a later date.
Recognition and measurement
Financial assets and liabilities are recognised when the Consolidated Entity becomes party
to the contractual provisions of an instrument.
Non-derivative 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, including those containing an embedded derivative, are carried at fair
value. On adoption of AASB 9, the embedded derivative and the receivables are accounted
for as one instrument and measured at fair value through profit or loss and recognised in
the Income Statement as part of ‘Revenue’.
ANNUAL AND SUSTAINABILITY REPORT 2017 f InAnC I A L R ePoR
t
1 1 3
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.
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, the asset’s carrying amount can not exceed
what the carrying amount would have been had the impairment not been recognised. The
amount of the reversal is recognised in the Income Statement.
Non-derivative 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 derecognises financial liabilities when its obligations are discharged,
cancelled or expire. The difference between the carrying amount of the liability derecognised
and the consideration paid and payable is recognised in the Income Statement.
Derivative financial instruments
Recognition and measurement
Derivative financial instruments 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, or Other Comprehensive Income, based the designation and effectiveness of the
hedge instrument.
Derivative financial instruments that have been designated as a hedge instrument 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. Formal designation of
the hedge and documentation of the relationship between the hedging instrument and the
hedged item is finalised at the inception of the transaction.
Changes in the fair value of the derivative financial instrument which has been designated
in a hedge relationship will be recognised in Other Comprehensive Income if the hedging
relationship remains effective and the underlying hedge item has not been recognised in the
Income Statement, or recognised in the Income Statement if the hedge relationship is no
longer effective or the underlying hedged item has been recognised in the Income Statement.
Any ineffective portion of changes in the fair value of derivative financial instruments
is recognised immediately in the Income Statement. The amount recognised in Other
Comprehensive Income is reclassified to the Income Statement in the same period as the
underlying item is recognised in the Income Statement.
1 1 4
33,000
28,000
23,000
18,000
13,000
8,000
l
)
z
o
d
o
g
(
d
e
r
e
t
n
e
s
t
c
a
r
t
n
o
c
d
r
a
w
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o
F
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 the prevailing forward copper price at the time of shipment
of concentrates to customers which matches the quotation period of the underlying sale.
Gold derivative contracts
OZ Minerals has entered into gold forward contracts to manage its risk of fluctuations in
cash flows arising from forecast gold sales in US$ due to movements in gold prices and
the AUD:USD foreign exchange rates. The Company has designated these gold derivative
contracts as cash flow hedges.
The hedged gold sales represent around 54 per cent of forecast sales (gold oz.) in the
period from 2018 to 2021 and around 60 per cent of the gold contained in stockpiles at
31 December 2017. This programme is reviewed on a quarterly basis.
The forward contracts have been designated as cash flow hedges under AASB 9 and were
assessed to be fully effective in managing the underlying risk. Accordingly, a tax-effected fair
value reduction of $7.2 million (net of tax) was recognised in Other Comprehensive Loss. At
31 December 2017, contracts for 267,137 ounces of gold were outstanding with an average
strike price of $1,736 per ounce, as reflected in the chart below:
Forward contracts entered (gold oz)
OZ Minerals average gold forward strike price (A$ per gold oz)
F
o
r
w
a
r
d
r
a
t
e
(
A
U
D
p
e
r
o
z
)
1,850
1,810
1,770
1,730
1,690
1,650
Q3 2018
Q4 2018
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
HEDGE EFFE CT IVE N E SS
A hedge relationship which is established at inception is assessed for effectiveness in
managing the underlying risk. Where a derivative has expired or is assessed to be ineffective,
all future fair value changes will be recognised in the Income Statement. Determination
of effectiveness requires the exercise of significant judgement regarding mine plans, sales
forecasts and recoverable metal contained in mineral resources and reserves.
ANNUAL AND SUSTAINABILITY REPORT 2017
f InAnC I A L R ePoR
t
1 1 5
Copper derivative contracts
The consolidated entity manages the exposure to volatility in copper price on completed sales
from contractual Quotation Pricing adjustments, by entering into copper derivative contracts
at the time of concentrate shipments which fix the forward price at the time of shipment.
These derivative contracts are designated as hedges and are recognised within the Income
Statement as part of ‘Revenue’. As a result of these hedges, the impact of changes in copper
price after the date of sale on the Income Statement is expected to be negligible.
Commodity price sensitivity analysis
Due to the copper price hedging activity, if copper prices were to vary, the expected impact
on the Income Statement would be negligible. As such, the below analysis focuses on
the impact of movements in gold prices, as variations in silver prices have been deemed
immaterial for the purpose of this analysis. In accordance with Australian Accounting
Standards, the sensitivity analysis is on all financial assets and liabilities deemed material to
the Consolidated Entity.
+10% movement in Gold prices
-10% movement in Gold prices
Impact on Income
Statement
net of tax
Impact on Other
Comprehensive Income
net of tax
Impact on Income
Statement
net of tax
Impact on Other
Comprehensive Income
net of tax
1.6
–
1.6
1.2
–
1.2
–
(0.4)
(0.4)
–
(0.8)
(0.8)
(1.6)
–
(1.6)
(1.2)
–
(1.2)
–
0.4
0.4
–
0.8
0.8
A 10% movement in gold prices, which is based on reasonably possible changes over a
financial year and reflects the variability management applies in forecasting sensitivity, results
in a $1.6 million after tax impact on the Income Statement on the trade receivables balance
of $121.9 million (2016: $69.4 million) and $0.4 million after tax impact on the derivative
financial liability of $16.3 million (2016: $11.4 million). In accordance with accounting
standards, the impact has been calculated on the outstanding balance that is subject to
commodity price risk and does not include the impact of the movement in commodity prices
on the total revenue for the year.
2017
Trade receivables
Gold hedges (FEC’s)
Total
2016
Trade receivables
Gold hedges (FEC’s)
Total
1 1 6
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 revenue,
costs of production, and competitive forces and regulations which impact revenue. 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
financial assets and liabilities denominated in foreign currencies are recognised in the Income
Statement except for gold derivative contracts which are recognised in Other Comprehensive
Income. 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.
2017
Cash and cash equivalents
Derivative financial instruments
Trade receivables
Trade payables
Total
2016
Cash and cash equivalents
Derivative financial instruments
Trade receivables
Trade payables
Total
Denominated in US$
presented in A$m
Other currencies
presented in A$m
42.6
(16.3)
119.7
(0.2)
145.8
64.1
(11.1)
69.4
(1.3)
121.1
–
–
–
–
–
–
–
–
(0.1)
(0.1)
Total
A$m
42.6
(16.3)
119.7
(0.2)
145.8
64.1
(11.1)
69.4
(1.4)
121.0
The US dollar exchange rates during the year were as follows:
Average rate
31 December spot rate
2017
2016
2017
2016
A$:US$
0.7669
0.7441
0.7794
0.7219
At reporting date, if the foreign currency exchange rates strengthened/(weakened)
against the functional currency by 5 per cent and all other variables were held constant,
the Consolidated Entity’s after tax profit would have changed by $5.7 million, and Other
Comprehensive Income would have changed by $0.6 million (2016: after tax profit
$4.7 million, and Other Comprehensive Income $0.6 million).
The sensitivity analysis includes only outstanding foreign currency denominated monetary
items at the reporting date and adjusts their translation for a 5 per cent change in the
foreign currency rate.
ANNUAL AND SUSTAINABILITY REPORT 2017 f InAnC I A L R ePoR
t
1 1 7
Interest rate risk management and sensitivity analysis
The Consolidated Entity does not have any borrowings at 31 December 2017 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.
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 receivables and derivative financial instruments.
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, derivative assets 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 A-1 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 regular risk assessment 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 per cent of the estimated value of each
sale either promptly after vessel loading or upon the 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:
Asia
Australia
Total
2017
$m
82.9
39.0
121.9
2016
$m
46.7
22.7
69.4
Major customers who individually accounted for more than 10 per cent of total revenue
contributed approximately 75 per cent of total revenue (2016: 69 per cent). These customers
also represent 89 per cent of the trade receivables balance as at 31 December 2017 (2016:
96 per cent). There have been no instances of customer default during 2017 and there are
|no significant receivables which are past due at the reporting date.
Credit risk on derivative financial instruments is managed by restricting transactions only with
counterparties who are at least Category Two members of the LME, or which are assigned
S&P equivalent of A-1 short term credit ratings by international credit rating agencies.
1 1 8
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 following table reflects all contractual repayments from recognised financial assets and
liabilities at the reporting date, including derivative financial instruments. For derivative
financial instruments, the market value is presented, whereas for the other obligations the
respective undiscounted cash flows for the respective upcoming financial years are presented.
Less than
1 year
1 – 2 years
2 – 5 years
Greater than
5 years
2017
Cash and cash equivalents
Trade receivables
Other receivables
Lease receivable
Trade payables
Derivative financial liabilities
Total
2016
Cash and cash equivalents
Trade receivables
Other receivables
Lease Receivable
Derivative financial assets
Trade payables
Derivative financial liabilities
Total
729.4
121.9
10.8
19.6
(94.1)
(11.6)
776.0
655.7
69.4
7.8
27.5
–
(74.4)
(11.1)
674.9
–
–
–
–
–
–
–
–
–
–
–
0.6
–
–
0.6
–
–
–
–
–
(4.7)
(4.7)
–
–
–
–
4.5
–
–
4.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
729.4
121.9
10.8
19.6
(94.1)
(16.3)
771.3
655.7
69.4
7.8
27.5
5.1
(74.4)
(11.1)
680.0
The Consolidated Entity had access to the following borrowing facilities which were undrawn at the end of the year.
Expires on
Security
Revolving facility
November 2019
Unsecured
2017
A$m(a)
100.0
2016
A$m
–
2017
US$m
–
2016
US$m
100.0
(a) The standby credit facility of A$100m was renegotiated to a three year committed facility of AU$100m with an uncommitted accordion facility for an additional AU$300m which remains subject to
financial institution approval.
ANNUAL AND SUSTAINABILITY REPORT 2017 CONTINGE NCIES
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.
f InAnC I A L R ePoR
t
1 1 9
14. Contingencies
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 $52.9 million as at 31 December 2017 (31 December 2016: $34.6 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.
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 former 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).
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.
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
that time, the Company has been advised by the AFP that the scope of the AFP’s investigation
has been extended to OZ Minerals’ former Cambodian operations generally. OZ Minerals
understands that the AFP is continuing its investigation and OZ Minerals is continuing to fully
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 2017.
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.
1 2 0
Group structure
and other information
15. Parent entity disclosures
As at, and throughout the financial year ended 31 December 2017, the parent entity of the
Consolidated Entity was OZ Minerals Limited.
Provision for non-recovery of loan to subsidiary
Net other expense
Net profit/(loss) for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss)
Financial position of the parent entity
Current assets
Non-current assets
Total assets
Liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Treasury shares
Retained earnings
Accumulated losses
Total equity
2017
$m
8.5
(8.7)
(0.2)
0.2
–
2.9
2,125.9
2,128.8
109.5
0.4
109.9
2,018.9
2,029.0
(1.4)
239.8
(248.5)
2,018.9
2016
$m
(1.0)
(29.0)
(30.0)
(12.2)
(42.2)
2.7
2,160.5
2,163.2
79.6
0.4
80.0
2,083.2
2,029.0
(2.1)
304.8
(248.5)
2,083.2
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 14 for Contingencies and Note 16 for Deed of Cross Guarantee disclosures. The
parent entity’s capital expenditure commitment as at 31 December 2017 was nil (2016: 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
Franking debits from franked dividend paid during the year
Franking account balance at end of year
2017
$m
0.9
82.7
(3.5)
(25.6)
54.5
2016
$m
0.9
–
_
–
0.9
ANNUAL AND SUSTAINABILITY REPORT 2017 f InAnC I A L R ePoR
t
1 2 1
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
Carrapateena Pty Ltd
CTP Assets Pty Ltd
CTP Operations Pty Ltd
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
Country of incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Singapore
Australia
Australia
Jamaica
Australia
Australia
Australia
Australia
Chile
Australia
USA
Australia
1 2 2
16. Deed of cross guarantee
The Company and all its Australian domiciled subsidiaries listed in Note 15 to the
Consolidated Financial Statements, except for OZ Minerals Equity Pty Ltd, OZ Minerals
International (Holdings) Pty Ltd, and ZRUS Holdings 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 (losses)/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
Legal costs associated with Class Action
Other expenses
Profit before net financing income
and income tax from continuing operations
Financing income
Financing expenses
Net financing income
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive loss
Total comprehensive profit for the year
2017
$m
1,023.1
4.7
(5.8)
190.2
(332.3)
(56.2)
(21.1)
(63.6)
(52.9)
(323.5)
–
(41.1)
321.5
12.5
(3.8)
8.7
330.2
(98.4)
231.8
(7.4)
224.4
2016
$m
822.9
6.3
2.6
227.8
(313.7)
(60.4)
(25.1)
(52.9)
(42.2)
(361.5)
(37.9)
(34.9)
131.0
13.8
(4.8)
9.0
140.0
(28.4)
111.6
(6.7)
104.9
ANNUAL AND SUSTAINABILITY REPORT 2017 f InAnC I A L R ePoR
t
1 2 3
Consolidated Balance Sheet of the entities
within the Deed of Cross Guarantee
Current assets
Cash and cash equivalents
Trade receivables
Lease receivable
Other receivables
Inventories
Prepayments
Assets held for sale
Total current assets
Non-current assets
Inventories
Investments in equity securities
Derivative financial instruments
Exploration 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
Current tax liabilities
Employee benefits
Provisions
Derivative financial instruments
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Employee benefits
Provisions
Derivative financial instruments
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Cash flow hedge reserve
Retained earnings
Treasury shares
Total equity
2017
$m
722.5
121.9
19.6
10.8
262.5
3.8
–
1,141.1
484.4
18.0
–
–
–
1,175.8
3.0
1,681.2
2,822.3
93.6
3.5
101.1
10
6.7
11.6
226.5
47.3
1.8
29.1
4.7
82.8
309.5
2,512.9
2,029.0
(3.6)
488.9
(1.4)
2,512.9
2016
$m
648.0
69.4
–
6.6
197.1
4.9
9.4
935.4
360.0
18.2
5.1
284.9
27.5
990.6
3.0
1,689.3
2,624.7
72.6
3.0
69.0
9.0
8.3
11.1
173.0
63.5
2.0
36.0
-
101.5
274.5
2,350.2
2,029.0
3.6
319.7
(2.1)
2,350.2
1 2 4
17. 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
4,135,136
4,737,886
2017
$
2016
$
Other long term benefits
Post-employment benefits
Termination benefits
Share-based payments
Total
13,182
128,230
149,643
(48,812)
4,377,379
22,540
168,272
–
480,542
5,409,240
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.
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 twelve 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.
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 twelve 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.
ANNUAL AND SUSTAINABILITY REPORT 2017 f InAnC I A L R ePoR
t
1 2 5
18. 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
2017
$
2016
$
KPMG Australia
Overseas KPMG firms
Total fee for audit services provided by KPMG
Other assurance services provided by KPMG including Sustainability work
Total audit and assurance fee
Tax compliance and other tax advisory services
Other services provided by KPMG
Total non-audit fee
Total fees
425,000
23,549
448,549
50,000
498,549
180,000
44,328
224,328
722,877
439,722
34,990
474,712
71,900
546,612
160,124
5,125
165,249
711,861
19. New accounting standards
(i) Changes in accounting policies and mandatory standards adopted during the year
The accounting policies applied by the Consolidated Entity in these Consolidated Financial Statements are consistent with those applied
by the Consolidated Entity in its Annual Report for the year ended 31 December 2016. The Consolidated Entity has adopted all of the
new, revised or amending standards that are mandatory. The adoption of these new and revised Australian Accounting Standards 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 not early adopted any standards in the Annual Report during the year ended 31 December 2017.
During 2016 the Consolidated Entity elected to early adopt AASB9 Financial Instruments.
(iii) Issued Standards and pronouncements not early adopted
At the date of authorisation of the Financial Statements the following has been issued but were not yet effective.
AASB 15 Revenue from Contracts with Customers
AASB 15 changes the timing (and in some case, the quantum) of revenue recognised from customers. Currently revenue for domestic sales
is recognised when the concentrates are delivered to the customers’ premises, which is the point when the customer takes over the risk and
rewards of ownership transfer. The Consolidated Entity’s assessment indicates that under AASB 15, revenue will continued to be recognised
on the same basis when the customer obtains control of the concentrates.
Revenue for export sales is currently recognised when shipments of concentrates are loaded on to the vessel as the risk and reward of
ownership is transferred to the customer at that point. The Consolidated Entity’s assessment under AASB 15 indicates that the export
contracts are made up of two performance obligations. The first obligation to deliver the concentrates to the port of shipment and the
second obligation is to organise shipping of the concentrate, which will be satisfied when concentrates are delivered to the destination port.
The Consolidated Entity assessed that revenue relating to the first obligation of delivery of the concentrates to the port of shipping will be
recognised at that point and revenue relating to the shipping obligation will be recognised in future periods upon delivery of concentrates.
On the basis of the above the new standard is not expected to materially impact the Consolidated Entity’s net profit after tax. The
Consolidated Entity will adopt this standard effective 1 January 2018.
AASB 16 Leases
AASB16 eliminates the distinction between operating and finance leases and brings all leases (other than short term and low value leases)
onto the balance sheet. The standard does not apply mandatorily before 1 January 2019. The Consolidated Entity is currently undertaking
an analysis of transition options and the on-going financial reporting impact.
1 2 6
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 93 to 125
and the remuneration disclosures that are contained in the Remuneration Report
on pages 40 to 55, are in accordance with the Corporations Act 2001, and:
(i) give a true and fair view of the financial position of the Consolidated Entity as
at 31 December 2017 and of its performance for the year ended on that date;
and
(ii) comply with Australian Accounting Standards and the Corporations
Regulations 2001;
(b) the directors draw attention to page 97 of 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 16, 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 2016/785.
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 2017.
Signed in accordance with a resolution of the directors.
Rebecca McGrath
Chairman
Adelaide
22 February 2018
Andrew Cole
Managing Director
and Chief Executive Officer
Adelaide
22 February 2018
ANNUAL AND SUSTAINABILITY REPORT 2017 InDePe nDe n t AU D ItoR ' S RePoR
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Independent
Auditor’s Report
Report on the audit of the Financial Report
To the shareholders of OZ Minerals Limited
Opinion
We have audited the Financial Report of the Consolidated Entity.
In our opinion, the accompanying Financial Report of OZ Minerals Limited is in accordance
with the Corporations Act 2001, including
/ giving a true and fair view of the Consolidated Entity’s financial position as at
31 December 2017 and of its financial performance for the year ended on that date; and
/ complying with Australian Accounting Standards and the Corporations Regulations 2001.
The Financial Report comprises the:
/ Consolidated balance sheet as at 31 December 2017;
/ Consolidated statement of comprehensive income, consolidated statement of changes
in equity, and consolidated statement of cash flows for the year then ended;
/ Notes including summary of significant accounting policies; and
/ Directors’ Declaration.
The Consolidated Entity consists of OZ Minerals Limited (the Company) and the entities
it controlled at the year end and from time to time during the financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the Financial Report section of our report.
We are independent of the Consolidated Entity in accordance with the Corporations Act
2001 and the relevant ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code).
We have fulfilled our other ethical responsibilities in accordance with the Code.
Key audit matters
The Key Audit Matters we identified are:
/ Carrying value of Prominent Hill Property, Plant and Equipment (PP&E)
/ Valuation of Low Grade Gold Ore Stockpiles
Key Audit Matters are those matters that, in our professional judgment, were of most
significance in our audit of the Financial Report of the current period.
These matters were addressed in the context of our audit of the Financial Report as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.
© 2018 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with
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trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.
1 2 8
Carrying value of Prominent Hill PP&E (contained within total PP&E $1,175.8m)
Refer to Note 7 to the Financial Report
The key audit matter
The carrying value of Prominent Hill PP&E is a key audit matter due to the audit effort
involved in assessing the Group’s determination that no impairment indicators existed
in relation to the Prominent Hill PP&E.
Important factors included:
/ The significance of this determination and its effect on the extent and granularity of
the Group’s assessment of the carrying value. The presence of impairment indicators
would necessitate a detailed analysis by the Group of the recoverable amount of
Prominent Hill PP&E. In light of the quantum of the Prominent Hill PP&E (being 25%
of total assets), the presence of impairment indicators would impact the scope of
our work.
/ The historic sensitivity of the Group’s modelling to external and internal conditions.
This heightens the likelihood of small changes in conditions from previous years
leading to indicators of impairment.
In assessing the presence of impairment indicators, we particularly focused on the
external and internal conditions listed below. We assessed each condition against the
equivalent in the previous impairment assessment and the Group’s mine plan (where
applicable), for inconsistent or negative trends, which may indicate impairment of the
carrying value.
/ Commodity price and foreign exchange rate forecasts.
/ Prominent Hill operational plans and budgets, in particular:
> Metal production levels planned: these are dependent on extraction of ore from
the mine, estimated grades of metal in the ore body, and ability to recover metal
contained in the ore extracted.
> Capital expenditure and operating costs: such as underground mining costs,
processing costs, freight and TCRC (treatment costs and refining charges).
/ Discount rate based on market evidence of comparable organisations within the
same industry.
/ The valuation multiples used by the Group to ascribe value to the ore bodies
known to exist at Prominent Hill but have not been included in the Group’s primary
impairment indicator assessment.
We involved senior audit team members, including KPMG valuations specialists,
with experience in the industry for this key audit matter.
How the matter was addressed in our audit
Involving our valuations specialists, our procedures included:
/ We tested the controls for the Group’s compilation of their operational plans and
budgets for Prominent Hill PP&E into their primary impairment indicator assessment,
including board authorisation of key inputs. In assessing the due process involved
into its compilation, we critically evaluated the following key forecast inputs for
accuracy:
> Metal production levels against historical production levels and the capacity to
achieve forecast production;
> Capital expenditure against historical capital expenditure and for consistency
with the planned activities that may require capital; and
> Operating costs, against historical amounts and for consistency with the mine
plan.
/ In assessing for negative trends in the forecast cash flows of Prominent Hill PP&E, we
challenged the Group’s key internal inputs from above against those in the previous
impairment assessment. Specific to Prominent Hill’s future production levels we used
our knowledge of previous production levels and evaluated against:
> Board approved current business model.
> The Mineral Resources and Ore Reserves Statements prepared by the Group in
accordance with Joint Ore Reserves Committee (JORC) requirements for ore to be
mined and processed. These requirements govern evaluation and reporting of the
existence of mineral resources.
> Findings from external specialists, engaged by the Group in prior years that
remain relevant, to assess the accuracy of JORC Resource and Reserve estimates
for information which may indicate that estimates of ore to be mined and
processed are not achievable.
/ We assessed the relevant discount rates sourced from comparable market rates for
negative trends against the previous impairment assessment;
/ We compared forecast commodity prices and foreign exchange rates applicable to
the Group’s businesses, via published analyst and broker data, for negative trends
against the previous impairment assessment;
/ In assessing for negative trends in the value ascribed to the ore bodies known to
exist at Prominent Hill but have not been included in the impairment indicator
assessment calculation, we compared the valuation multiples used to market data
for comparable transactions and prior period valuation multiples.
ANNUAL AND SUSTAINABILITY REPORT 2017 InDePe nDe n t AU D ItoR ' S RePoR
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1 2 9
Valuation of Low Grade Gold Ore Stockpiles ($163.4 million)
Refer to Note 5 to the Financial Report
The key audit matter
Significant judgment is required to be exercised by the Group in their assessment of
the value of low grade gold ore which will be combined with copper ore to be mined
in the future to produce concentrate. The valuation of low grade gold ore stockpiles
is a key audit matter because significant judgment is required by us in evaluating the
Group’s assessment of the value. The Group’s assessment is based on a model which
estimates future revenue expected to be derived from low grade gold ore contained
in existing ore stockpiles, less selling costs and further processing costs to convert ore
into concentrate. We particularly focus on those judgments listed below which impact
the valuation model:
How the matter was addressed in our audit
Our procedures included:
/ We tested the controls relevant to:
> the Group’s valuation of low grade gold ore stockpiles, including board
authorisation of key inputs to the assessment such as commodity prices, foreign
exchange rates, and processing costs; and,
> the Group’s process for recording and monitoring volumes and grades of
stockpiled low grade gold ore such as the use of quantity surveyors and
management review and approval of grades.
/ Future metal production levels which are dependent on the volume and grade of
/ We assessed the methodology applied by the Group in determining the value of
existing low grade gold ore stockpiles.
/ Future processing costs of low grade gold ore, and related selling costs.
/ Future commodity prices and foreign exchange rates expected to prevail when the
concentrate containing gold from existing low grade gold ore stockpiles is processed
and sold.
/ The timing of production which depends on the available capacity of the mill.
In assessing this key audit matter, we used team members who understand the
Group’s business, industry and the relevant economic environment.
low grade gold ore stockpiles against the requirements of Accounting Standards for
determining the net realisable value of inventories which are yet to be converted into
finished goods.
/ We compared the results of quantity surveyors to volume of low grade gold ore
stockpiles.
/ We compared grades of stockpiled low grade gold ore to stockpiled low grade
gold ore in previous periods, and against grades reported in the JORC Ore Reserves
Statement.
/ We evaluated the Group’s key assumptions used to determine the value of low grade
gold ore stockpiles by:
> comparing forecast processing costs of low grade gold ore against historical
actual processing costs to assess forecast processing cost assumptions;
> assessing forecast selling costs by comparing to trends from evaluation of
existing customer sales contracts;
> assessing commodity prices and foreign exchange rates applied by the Group
against published analyst and broker data about commodity prices and foreign
exchange rates expected to prevail in the future; and,
> checking that low grade gold ore was only forecast to be processed when there
was capacity in the mill.
1 3 0
Other Information
Other Information is financial and non-
financial information in OZ Minerals Limited’s
annual reporting which is provided in
addition to the Financial Report and the
Auditor’s Report. This includes the 2017
Snapshot, Message from the Chairman
and CEO, OZ Minerals’ Company Strategy,
Prominent Hill Overview, Carrapateena
Overview, West Musgrave Overview,
Exploration and Growth Overview,
Governance Overview, Results for
Announcement to the Market, Directors’
Report including the Operating and
Financial Review, Remuneration Overview
and Report, Sustainability Report, Reserves
and Resources 2017, Letter from the
Chairman of the Human Resources and
Remuneration Committee and Shareholder
Information. The Directors are responsible
for the Other Information.
Our opinion on the Financial Report does
not cover the Other Information and,
accordingly, we do not and will not express
an audit opinion or any form of assurance
conclusion thereon, with the exception of
the Remuneration Report and our related
assurance opinion.
In connection with our audit of the Financial
Report, our responsibility is to read the
Other Information. In doing so, we consider
whether the Other Information is materially
inconsistent with the Financial Report or
our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
We are required to report if we conclude that
there is a material misstatement of this Other
Information, and based on the work we have
performed on the Other Information that we
obtained prior to the date of this Auditor’s
Report we have nothing to report.
Report on the
Remuneration Report
Opinion
In our opinion, the Remuneration Report
of OZ Minerals Limited for the year ended
31 December 2017, complies with Section
300A of the Corporations Act 2001.
Directors’ responsibilities
The Directors of the Company are
responsible for the preparation and
presentation of the Remuneration Report
in accordance with Section 300A of the
Corporations Act 2001.
Our responsibilities
We have audited the Remuneration Report
included within the Director’s report for the
year ended 31 December 2017.
Our responsibility is to express an opinion
on the Remuneration Report, based on
our Audit conducted in accordance with
Australian Auditing Standards.
KPMG
Paul Cenko
Partner
Adelaide
22 February 2018
Responsibilities of Directors
for the Financial Report
The Directors are responsible for:
/ preparing the Financial Report that gives
a true and fair view in accordance with
Australian Accounting Standards and the
Corporations Act 2001;
/ implementing necessary internal control
to enable the preparation of a Financial
Report that gives a true and fair view and is
free from material misstatement, whether
due to fraud or error; and
/ assessing the Consolidated Entity’s ability to
continue as a going concern. This includes
disclosing, as applicable, matters related to
going concern and using the going concern
basis of accounting unless they either
intend to liquidate the Consolidated Entity
or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for
the audit of the Financial Report
Our objective is:
/ to obtain reasonable assurance about
whether the Financial Report as a whole is
free from material misstatement, whether
due to fraud or error; and
/ to issue an Auditor’s Report that includes
our opinion.
Reasonable assurance is a high level of
assurance, but is not a guarantee that
an audit conducted in accordance with
Australian Auditing Standards will always
detect a material misstatement when it
exists.
Misstatements can arise from fraud or error.
They are considered material if, individually
or in the aggregate, they could reasonably
be expected to influence the economic
decisions of users taken on the basis of this
Financial Report.
A further description of our responsibilities
for the Audit of the Financial Report is
located at the Auditing and Assurance
Standards Board website at: http://www.
auasb.gov.au/auditors_files/ar2.pdf.
This description forms part of our
Auditor’s Report.
ANNUAL AND SUSTAINABILITY REPORT 2017
SH A ReHoL DeR I n f oR M A
tIo n
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Shareholder
Information
Capital
Share capital comprised 298,664,750 fully paid ordinary shares on 14 February 2018.
Shareholder details
At 14 February 2018, OZ Minerals had 40,986 shareholders. There were 812 shareholdings
with less than a marketable parcel of $500 worth of ordinary shares.
top 20 investors at 14 february 2018
Name
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
National Nominees Limited
BNP Paribas Nominees Pty Ltd
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