PALADIN RESOURCES LTD
ACN 061 681 098
ANNUAL
REPORT
2001
CONTENTS
CORPORATE DIRECTORY
COMPANY SNAPSHOT
CHAIRMAN'S LETTER
URANIUM MARKET
REVIEW OF OPERATIONS
CORPORATE GOVERNANCE STATEMENT
DIRECTORS' REPORT
STATEMENTS OF FINANCIAL PERFORMANCE
STATEMENTS OF FINANCIAL POSITION
STATEMENTS OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDIT REPORT TO THE MEMBERS
ADDITIONAL INFORMATION
2
3
4
5
6
9
17
18
23
24
25
26
46
47
48
The financial report covers both Paladin Resources Ltd as an individual entity and the
consolidated entity consisting of Paladin Resources Ltd and its controlled entities.
Paladin Resources Ltd is a company limited by shares, incorporated and domiciled in
Australia. Its registered office and principal place of business is:
Paladin Resources Ltd
1st Floor, 245 Churchill Avenue
SUBIACO WA 6008
A description of the nature of the consolidated entity’s operations and its principal
activities is included in the review of operations and activities on pages 9-16 and in the
directors’ report on pages 18-22.
Through the use of the internet, we have ensured that our corporate reporting is timely,
complete, and available globally at minimum cost to the company. All press releases,
available on our website
information
financial
www.paladinresources.com.au.
and other
statements
is
DIRECTORS
CORPORATE DIRECTORY
Chairman
Dr Douglas Dunnet
Managing Director
Mr John Borshoff
Director
Ms Gillian Swaby
Director
Mr Rick Wayne Crabb
COMPANY SECRETARY
Ms Gillian Swaby
REGISTERED OFFICE
1st Floor, 245 Churchill Avenue
Subiaco Western Australia 6008
(PO Box 201, Subiaco)
Telephone:
Facsimile:
Email:
Web:
(+61 8) 9381 4366
(+61 8) 9381 4978
paladin@paladinresources.com.au
www.paladinresources.com.au
SHARE REGISTER
AUDITORS
SOLICITORS TO THE COMPANY
Computershare Registry Services Pty Ltd
Level 2, 45 St Georges Terrace
Perth Western Australia 6000
Telephone:
Facsimile:
(+61 8) 9323 2000
(+61 8) 9323 2033
PricewaterhouseCoopers
The Quadrant, 1 William Street
Perth Western Australia 6000
Blakiston & Crabb
1202 Hay Street
West Perth Western Australia 6005
4
COMPANY SNAPSHOT
Paladin has adopted a threefold strategy to maximise value to its shareholders.
• FOCUS ON MINERAL RESOURCE EFFORT
- Develop uranium assets concentrating on Kayelekera
-
Initiate platinum search utilising proprietary database
• PROCEED TO LARGER RAISING THROUGH POSSIBLE DUAL LISTING ON ALTERNATIVE
INVESTMENT MARKET OF LONDON STOCK EXCHANGE (AIM).
• DEVELOP AND DIVEST TELCO INVESTMENT
-
List as separate dedicated telco
- On listing, distribute Paladin equity in Coretel (formerly Netcare) to shareholders
OPPORTUNITY BASE
*85%
PALADIN RESOURCES LTD
CORETEL
(formerly Netcare
* Convertible Notes
AFRICA
90%
Kayelekera
resource project
AUSTRALIA
100%
Manyingee &
Oobagooma
resource projects
Ponton & Frome
exploration
projects
URANIUM
•
•
High quality projects
Strong in-house expertise
OPPORTUNITY THRU
DATABASE
•
Utilisation for
platinum search
DATABASE
100%
Platinum, Copper /
Gold Search
LEVERAGE
•
•
Funding
Shareholder
23%
ST SYNERGY
5
CHAIRMAN’S LETTER
Dear Shareholder
Paladin has made significant steps forward during the year to position the Company for growth on
several fronts.
While the uranium price has been stagnant over the last two to three years, Paladin has used this
period to invest in high technology groups, ST Synergy and Coretel (previously Netcare). Our
strategy has been to use our management skills and access to capital to advance these companies to
commercialisation and public listing.
Both companies are proceeding successfully. ST Synergy, specialising in Knowledge Management
software, was listed in 11 May 2001 after a 12 month gestation period with Paladin retaining 23% of
the company. Coretel is developing a specialised high bandwidth communications network initially in
southern Western Australia. The initial rollout is complete, the customer base is being developed and
a listing is anticipated. Paladin currently holds the right to 85% and it is expected that, as this
investment is not considered part of our core mining business, the shareholding will be distributed
pro-rata to our Paladin shareholders.
The recent strong rise in the uranium price and world recognition of the role uranium must play in the
generation of base load electricity has allowed Paladin to bring its substantial uranium assets to the
fore. Various aspects of the Kayelekera Project have been advanced during the year with the
objective of undertaking the new feasibility study using third world concessional funding. This process
is well advanced and the project is strongly endorsed by the Government of Malawi. It is anticipated
that the project will proceed quickly towards commercial development and thus take advantage of the
increasingly strong uranium price.
Paladin has also turned its attention to the latent non-uranium exploration value in its valuable
proprietary database. This study is well advanced to identify Australian uranium prospects which also
have geochemical signatures for platinum group metals. These projects will take advantage of the
high prices and market interest in these metals and it is anticipated that exploration on the prospects
will be leveraged by farm-in expenditures.
There has been considerable international interest in Paladin’s strategies for uranium, platinum group
metals and the investments. The Company has raised sufficient capital to support its various
objectives and we are currently evaluating a dual listing on London’s Alternative Investment Market.
I am confident that these various objectives are strengthening the corporate base for Paladin
shareholders and expect to see a re-rating in the share price in the near future.
Dr D Dunnet
CHAIRMAN
6
URANIUM MARKET IMPROVEMENT
The strong renewal of interest in uranium should assure the sustained growth of the nuclear industry.
This has been stimulated by the recently announced US Government energy policy initiatives
declaring that nuclear energy for production of electricity in the US must form the major plank of its
overall energy plans
As a consequence, the uranium market is reacting very positively to this re-focus and already the
price of the uranium yellowcake product has increased 30% since January 2001.
Latest survey results show nuclear fuelled electricity power stations are proving to be highly
competitive base load power producers. The 1999 costs for US electricity producers show the
following (in US currency)
Nuclear - 1.83¢/Kwh
(Includes levy for waste management)
Coal - 2.07¢/Kwh
Oil - 3.18¢/Kwh
(Excludes cost for atmospheric pollution)
Gas - 3.52¢
Paladin is placed in a prime position to benefit from these developments and market
improvement as it has maintained a portfolio of quality uranium projects, both in Australia and
Africa, assembled over the past 4½ years together with in-house expertise in this commodity
spanning more than 25 years.
7
NUCLEAR ENERGY FOR ELECTRICITY MOVING FORWARD
World nuclear output increases in 2000.
IAEA figures show a 2% increase in nuclear electric output in 2000, to 2447.5 billion kWh worldwide.
With six new reactors coming on line and one closing down, total nuclear capacity increased to 351
327 MWe, from 438 reactors. Cumulative operating experience from civil nuclear reactors at the end
of the year exceeded 9,800 reactor years, which means that the 10,000 mark passed about the end of
May (2001).
NucNet news # 165/01, cf reactor table on web site.
Swedish poll reaffirms nuclear support.
The latest Sweden energy opinion poll shows that 77% of the public opposes any premature closure
of the country's 11 nuclear power plants, and 83% think it important that nuclear power's lack of
carbon emissions be considered in determining Sweden's energy policy. Only 10% said phasing out
nuclear energy should be a national priority, compared with 73% for controlling greenhouse gases
and 13% protecting unspoiled rivers from hydroelectric development.
NucNet news # 444/00.
European finance for Ukraine nuclear plants.
The European Bank for Reconstruction & Development has approved (by an 89% vote apart from
abstentions) a US$ 215 million loan towards completion of two new nuclear power plants in the
Ukraine, Khmelnitski-2 and Rovno-4. This EBRD funding, though a modest part of the US$ 1480
million required, was a key factor in their completion to western safety standards. Conditions on the
loan included safety enhancement of all 13 Ukraine nuclear power reactors, independence for the
country's nuclear regulator, and fundamental reform of the electricity market.
NucNet business news # 134 & 137/00, news # 427/00, PPNN Newsbrief 4/00, eNEI 25/1/01.
US energy plan backs nuclear generation.
President Bush's national energy plan puts forward a range of initiatives to secure the US energy
future over the next two decades. It includes provisions to boost electricity generation from nuclear
power as well as encouragement for exploiting fossil fuel reserves, tax breaks for pollution-reducing
technology and streamlining approval for new powerlines. Federal agencies will need to add an
energy impact statement to their routine environmental one, and they will be required to expedite
permits and approvals for energy-related projects.
Times 17/5/01, AFX 17/5/01.
World uranium production up, price follows.
In 2000, uranium mine production appears to have increased 35,000t U about 12% over 1999 to
about 41,300t U3O8 (35,000t U). This is primarily due to Canadian and Australian increases (30% and
27% respectively), but supported by former Soviet Union countries. Central African production
declined slightly, southern Africa held steady, and US production dropped. This year has seen a
steady improvement in price, with the spot market rising 15%.
Ux Weekly 26/3/01.
Finns vote for waste repository.
The Finnish parliament has ratified last year's decision in principle to proceed with a geological
disposal facility for spent nuclear fuel at Olkiluoto. Both commerce and environment committees of
parliament supported the motion which was passed 159 - 3. The decision means that construction of
the facility is recognised as a public good, after twenty years of preparatory work including site
characterisation and environmental assessment. There was much public input and the local
community supported the proposal.
Posiva 18/5/01.
US public support for nuclear energy grows.
A March survey showed that public support for building new nuclear power plants has increased to
two thirds of the population, up 24% over 18 months and 15% since January. The most pronounced
increase was in the West, where 62% supported new plants compared with only 33% in 1999. Overall
81% now say it is very important for President and Congress to deal urgently with energy policies,
while reliable supply and environment protection are the top goals in this.
NEI Nuclear Energy Overview 2/4/01.
8
French record for nuclear electric export
The French utility EdF has reported domestic sales of 397.5 billion kWh and exports of 77.3 billion
kWh, the total worth EUR 34 billion, for 2000. Revenue from outside the domestic market was 25% of
total.
NucNet business news # 32/01.
Beverley mine officially opened.
Heathgate Resources' Beverley ISL uranium mine in NE South Australia was officially opened on 21
February, by the state's Deputy Premier. It is on track to produce 1000 t/yr U3O8 for at least 15 years,
and exploration on surrounding leases is expected to identify additional reserves.
Heathgate 21/2/01.
US nuclear plants' new production record.
US nuclear power plants last year generated 3.7% more electricity than the year before, their previous
best year, producing 755 billion kWh with an average capacity factor of almost 90%.
NucNet news 87/01.
Record French nuclear electricity production.
Electricite de France last year had record production levels from its 58 nuclear reactors, together with
improvements in safety and unit performance. Output increased 5.4% to 395 billion kWh, unit
availability factor exceeded 80% (with the newer large units being 85% and 95%), production costs
per kWh fell, while safety performance improved. EdF is seeking a 20% reduction in production cost
per kWh from 1998 to 2002. So far it has achieved 7%, as debt levels drop and output increases.
Nuclear power provides about 75% of France's electricity.
NucNet business news 26/01.
TEPCO reaffirms reactor program.
Major Japanese utility TEPCO has deferred plans for 12 major fossil fuel power plants, but has made
it clear that it will maintain schedules for four nuclear plants, partly on account of greenhouse
considerations.
NucNet business news # 14/01, UI NB 01.07.
US expects numerous plant uprates.
The US Nuclear Regulatory Commission expects 46 applications to increase the power of individual
nuclear reactors to be processed over the next five years. These will range up to a 20% increase in
reactor capacity, and altogether total 1600 MWe. It currently has 17 such requests under review, six
of which are for 15% or more, and says that all such applications are given a high priority.
Nucleonics week 2/8/01.
New US energy legislation.
The US House of Representatives has passed The Securing of America's Future Energy Act 2001.
The comprehensive 511-page bill includes provisions for supporting construction of new nuclear
power capacity, boosting university nuclear science and engineering programs, and funding nuclear
energy R&D. Despite also including a limited version of the President's proposal for oil drilling in
Alaska's Arctic National Wildlife Reserve, it was passed by a vote of 240-189. The bill has attracted
criticism that it is unduly favourable to the oil and gas industry, and the Senate version is expected to
increase provision for energy conservation.
NEI 2/8/01, IHT 3/8/01.
New Japanese reactor starts up.
Onagawa-3, Japan's newest reactor, is reported to have started up and to have achieved grid
connection at the end of May. It is a 825 MWe boiling water reactor and is due to be in full commercial
operation in January 2002.
NucNet business news # 66/01.
US solicits new site applications.
The US Department of Energy is seeking applications from US utilities to participate in a study of
potential sites for new nuclear power plants. The study is to sort out what is needed for the NRC's
Early Site Application licensing process at any selected site, and will be funded by DOE to the extent
of $700,000 for initial site studies. Entergy, Exelon and Dominion Resources have all expressed
interest in trying out the new streamlined site licensing process.
US DOE, Federal Register 27/8/01, Dow Jones 27/8/01.
9
REVIEW OF OPERATIONS
Summary
Commencing in 1997 Paladin assembled a number of quality uranium projects in Australia and Africa
using its extensive technical and exploration database. These projects, which contain in excess of
32,000 tonnes of uranium oxide (72m lbs at 0.14% U3O8), were selected with the aim of bringing them
into production in a staged manner. In order, this is now planned to start with the Kayelekera open-
cut project in Malawi, Africa followed by the Manyingee ISL project in Western Australia. The
Oobagooma ISL Project in Western Australia would be the back-up resource after Manyingee.
Although uranium prices have been depressed over the past 4 years Paladin strongly believes that
prices are about to rise. This belief has been validated to a large degree by the recently announced
strong support for nuclear energy by both the US and UK Governments which will have a dramatic
positive impact on uranium prices. Our production startups are planned to coincide with a buoyant
future uranium market enabling Paladin to achieve profitable long term contracts for its yellowcake
product.
With its unique proprietary database, Paladin will also be in a position to fully utilize this project
generation asset to identify high quality platinum exploration opportunities. This concept is based on
the geological associations of U-Cu-Au-PGM. This component of work is expected to provide
substantial funding leverage to the Company.
In preparation for possible development of the Kayelekera Project it is planned to dual list Paladin on
AIM in London during 2002 thereby enabling the Company to access larger capital markets to support
the planned growth of the Company. A London listing is considered a more appropriate market to
expand into because of the international nature of uranium as an energy commodity. In the lead up
period to this dual listing it is intended to start work on project generation, advance the Kayelekera
Project Bankable Feasibility Study and fully evaluate the pros and cons of an AIM dual listing.
STRATEGIC FRAMEWORK – MINERAL RESOURCE FOCUS
10
the Knowledge Management computer software sector
In May 2001 Paladin announced a strategy to allow the Company to maintain focus on its
considerable mineral resources while still benefiting its shareholders with the investments it has made
in
the
telecommunications sector (Coretel Pty Ltd – formerly Netcare Corporation Pty Ltd). In this new
arrangement Coretel is proposed to be listed on the ASX as a dedicated telecommunications
company. Paladin plans to distribute its 85% equity in this company to its shareholders on a 1:5 basis
leaving the Company and its management in a position to concentrate exclusively on development of
its mineral resources.
(ST Synergy Ltd) and
Paladin owns two valuable sets of underdeveloped assets - firstly, its advanced uranium projects
spearheaded by Kayelekera and secondly, its minerals exploration database uniquely suitable for
platinum group metals, copper and gold search.
Kayelekera has excellent potential as a uranium project and Paladin should be in a position to
minimise the early development risk without diluting equity in this project by financing the Bankable
Feasibility Study through concessional third world funding.
Concurrent with the development of its uranium mining operations Paladin plans to evaluate its
extensive proprietary uranium exploration database with the aim of defining quality platinum/gold
projects and targets using uranium as the key pathfinder element. Once generated these new
platinum projects would then be further explored through joint venture farm-outs. Beyond field visits
including sampling for verifying geochemical work during the project generation phase, Paladin does
not plan to carry out exploration in its own right but will utilise third party funds to further explore the
non-uranium projects.
It is Paladin’s objective to realise the potential of both these asset groups by leverage funding
generated through third parties. Overall this approach should provide opportunity for further
shareholder wealth creation through developing the non-uranium assets and the African energy
resources company.
11
URANIUM ACTIVITIES
Kayelekera
The Kayelekera Uranium Project is located in Malawi, Southern Africa and is owned 90% by Paladin
through a wholly owned Malawi subsidiary (Paladin Africa Ltd). This project is technically advanced
with $9 million spent by previous owners, culminating in a full feasibility study in 1990. Recent
financial modelling based on an engineering review of the old feasibility study incorporating modern
processing technology and using upgraded mining techniques indicates that the project can be
optimised with a positive financial outcome. Approximately $6.75 million is required for a new
updated feasibility study and Paladin is currently seeking concessional funding for this project.
The democratically elected Malawi Government is committed to encourage the private sector to
assume a leading role in the economic development of the country. The Kayelekera Project presents
an ideal platform for initiation of a modern mining industry in Malawi and Paladin is well supported by
the Government of Malawi to establish such an operation. To validate its support for the mining
industry the Malawian Government held its 1st International Mining Conference in August 2000 to
bring attention to the broader investor community of the project opportunities in that country.
Work on Kayelekera is concentrating on the completion of the Bankable Feasibility Study. During this
period re-evaluation of the extensive project database will also be carried out to identify further
resources and extend the Kayelekera minelife beyond the planned 10 years.
The Bankable Feasibility Study has been divided into two stages, each of nine months duration.
During Stage I, only that work necessary to validate the revised mining model developed by Paladin
will be undertaken. This will principally involve the collection of metallurgical samples from diamond
core drilling for radiometric ore sorting and gravity concentration test work to verify key elements of
the project mining model.
At the conclusion of this work, if the viability of the Project as proposed is verified, the second phase
of the study will be committed. By adopting such a staged assessment, the capital risk in the
Bankable Feasibility Study is reduced considerably.
In Stage II in addition to finalising the technical/engineering aspects, efforts will also concentrate on
the environmental aspects of the Project as well as negotiations for project finance. A marketing
program will also be initiated at this stage to ensure finalisation of the contracts for the yellowcake
product. The detailed Bankable Feasibility Study of the revised mining operation concept will be
completed by the end of this second nine month period.
Plant and mine construction is planned for Year Three with yellowcake production starting in early
Year Four.
12
Manyingee Project
The Manyingee Uranium Project is located in Western Australia and is 100% owned by Paladin.
Manyingee is intended to become Australia’s third In Situ Leach (ISL) uranium project, utilising a
technology which is growing in significance worldwide because of its environmental acceptability and
lower capital and operating costs. Manyingee is an advanced project, which can be brought into
production relatively quickly to take advantage of the forecast upturn in the uranium market. The
previous owners spent in excess of $16 million on the project including a trial field testing of the in-situ
leach method producing a small quantity of yellowcake.
A plan has been developed to bring this project to full feasibility within a three year period. It is
planned that the project will produce 500 tonnes of uranium oxide per year with a mine life in excess
of 10 years.
The feasibility work on this Project will be suspended until either the Kayelekera Project Bankable
Feasibility Study is completed or Manyingee is justified by increased market demands. Minimal work
will therefore be carried out on this project in the coming year.
Oobagooma Project
The Oobagooma Project, 100% owned by Paladin and located in the Kimberly Region of Western
Australia, is a uranium resource considered suitable for the ISL mining method. Wide spaced drilling
in the 1980’s identified a resource of 10,000t of U3O8 at a grade of 0.12%. This project has value as
an excellent back-up resource for the Manyingee Project. The tenements are currently in application
stage.
13
No work is planned on this project in the mid term. Work is planned to commence when the
Manyingee development program is well advanced and will comprise a back-up uranium resource for
the Manyingee operation.
Ponton Project
The Ponton Creek Project is located 200 kilometres east of Kalgoorlie, Western Australia.
A clear target for immediate infill and resource definition drilling is defined. Contiguous downhole
radiometric anomalies occur at the Double 8 Prospect along 15 kilometres of the Raeside Channel.
Within this anomalous zone the 1000 cps contour line of the downhole logs outlines a 6 kilometre
zone, showing good potential for economic uranium mineralisation containing 15,000 to 20,000t U3O8
possibly suitable for ISL mining application.
Pending environmental program approval by the relevant State Government authority a short program
to verify the existence of the mineralised zone in the Double 8 Prospect is planned in the forthcoming
year.
Frome Projects
Joint venture farm-outs are being sought on these exploration projects. Heathgate Resources (owner
of the producing Beverly ISL Mine) has indicated interest in joint venturing in two of the Frome
tenements.
14
Non-Uranium Activities - The Paladin Exploration Database
THE PLATINUM STORY
The "Most Precious" Precious Metal
•
•
•
•
•
Platinum Group Metals (PGM’s) consist of 6 elements - platinum, palladium, rhodium, ruthenium, iridium and osmium.
Only 164tonnes(t) of platinum was produced in year 2000.
Over 20 times more gold and over 125 times more silver are usually produced annually.
Approximately 90% of all platinum group metal supplies come from South Africa (mostly platinum and rhodium) and
Russia (mostly palladium).
All the platinum ever mined would fit in a room less than 8m to a side.
Platinum group metals have become a hot commodity on the back of strong demand for use in jewellery, electronics, catalysts
and decreasing production from Russia.
The price of platinum has jumped dramatically in recent years averaging US$350 per oz in 1999, US$567 per oz in 2000 and
US$450 per oz in September 2001. Experts at Johnson Matthey predict demand will be 10% ahead of supply. Excess demand
has also lifted the price of platinum's sister metal palladium.
Johnson Matthey estimates that when fuel cell vehicles are in commercial production, each vehicle will require about 5.5grams to
8.5grams of platinum. In the U.S. alone this will result in 10t to 14t of additional platinum demand. This is significant when it is
considered the supply shortfall was 9t in 2000 with the same situation expected in 2001 and continued production deficits in the
years beyond.
The Multi-Purpose Industrial Metal
•
•
•
Platinum group metals are integral to the production of about 20% of all consumer goods.
Over 50% of platinum group metal demand is for industrial end use.
Auto-catalysts petroleum, anti-cancer drugs, fiber-optic cables, eyeglasses, fertilizers, explosives, paints and
pacemakers all rely on platinum group metals.
• World platinum jewellery demand is growing strongly.
•
Today, the finest and most elegant jewellery contains platinum. China and the US are major consumers buying
almost 85% of the world’s platinum jewellery each year. China may soon overtake Japan as major consumer of
platinum.
Demand for Platinum has Outpaced Supply
•
•
•
•
•
•
Demand for platinum was approximately 174t in 2000.
New Clean Air legislation in the US has necessitated significantly more platinum group metals per catalytic converter
to meet dramatically harsher controls. Japan and Europe have followed suite.
Supplies of platinum from Russia, the world's second largest producer of platinum, have been dropping consistently
since 1992.
In 2000 the auto-catalysts sector required 51t of platinum, 146t palladium and 16t of rhodium.
Japan is the largest buyer of platinum in the world.
Investment demand around the world is rising.
When Paladin Resources was listed in 1994 it acquired the archival exploration database and data
reference system assimilated over 20 years by Uranerz Australia Pty Ltd the Australian subsidiary of
the German mining corporation Uranerzbergbau GmbH (“Uranerzbergbau”). Uranerz explored
continuously for 20 years throughout Australia and spent over $40m during this period.
The Australian database covers all the major metallogenic regions of Australia concentrating
particularly in WA, NT, SA and Qld, where widespread exploration and project generation activities
were carried out by Uranerz during the late 1970’s and throughout the 1980’s. In the 1980’s the
Australian exploration team concentrated in particular on the development of an exploration model for
copper/gold/uranium deposits of the Olympic Dam and Ernst Henry type and uranium/PGM’s/gold
targets of the Coronation Hill type. This was also part of a worldwide study involving all Uranerz
subsidiaries with the results included in the database.
In Paladin’s opinion there is excellent opportunity through use of its database to discover platinum
group metal targets focussing on certain geological settings occurring within Proterozoic rocks of
Australia.
Although the Uranerz project generation team outlined numerous target zones for copper/gold/iron
oxide deposits, no concentrated effort has been made previously to evaluate the database specifically
for platinum target types and which have the potential for rich rewards.
Paladin has used the database only sparingly. The main utilisation of the database to date by Paladin
was its decision in 1997 to concentrate on uranium exploration with the result that in a very short time
the Company acquired in-ground uranium resources in excess of 70 million pounds, highlighting the
competitive advantage available with this valuable asset.
15
Paladin does not plan to spend its own funds exploring the projects generated by this current work,
but intends to preserve funds by farming out selected projects to interested parties. This is
anticipated overall to generate expenditure by joint venture partners in the vicinity of $7m to $12m
over a 2 to 5 year period on Paladin projects.
Mt Lofty Project (100%)
In July 2001 Paladin applied for two Exploration Licences in the Mt Lofty Ranges, South Australia
covering ground prospective for platinum/palladium.
These applications initiate the Company’s strategy to develop targets prospective for PGM’s through
utilisation of its proprietary database and application of certain target criteria not previously applied in
search models for this commodity.
The database contains some preliminary geochemical data collected from reconnaissance work
carried out in this area in which all 3 of the prospects sampled returned anomalous values (up to a
maximum of 0.35 parts per million combined platinum/palladium) confirming a strong association of
PGM’s with specific geological signatures in this area. The numerous other prospects within the
ground applied for remain to be tested for PGM presence.
The ability to quickly and effectively isolate anomalous zones as demonstrated with the Mt Lofty
Project does, in the opinion of the Directors, demonstrate the potential of this valuable information
asset for such project generation work.
Yambla Project (100%)
Exploration Licence Application 9890 is located 100 kms NE of Alice Springs and was originally
applied for its uranium potential in 1997. The property is also considered to be highly prospective for
platinum/palladium. Recently announced highly anomalous Pt/Pd results on adjoining ground, held by
Tanami Gold NL has highlighted this potential.
16
CORPORATE
Coretel Pty Ltd
Revision of Terms
In April 2001 Paladin advised it would not proceed with the merger agreement with Coretel and
announced a revised agreement creating a framework which has significant benefits for both
companies. Paladin agreed to pay a further $750,000 working capital into this telecommunications
company for an opportunity to earn a total 85% equity interest. This cash injection was required to
complete the initial network rollout, attract a highly leveraging customer base and payment for certain
capital equipment. The new arrangements also contemplate the listing on the ASX of Coretel as a
dedicated telecommunications company. It is the intention that, at listing, Paladin’s equity in Coretel
will be distributed to its shareholders on a proposed 1:5 basis.
The new arrangement is considered by the Directors of Paladin to be superior to the previous merger
model allowing the Company to maintain its focus on its considerable mineral resource assets while
still benefiting its shareholders with the investment it has made in the telecommunications sector.
Status
Coretel has completed its initial infrastructure rollout. This has involved deployment of a high quality
wireless infrastructure as the main delivery technology for the emerging network. The central
Belmont transmission node will service the Perth metropolitan region and its Serpentine transmission
node will service the potentially large customer base immediately south of Perth. In addition
Serpentine represents the first leg of the network backbone planned to extend to the city of Bunbury
100km to the south. The Company hopes to take full advantage of the wireless delivery technology
which is that it allows for rapid penetration (compared to fibre and copper) and therefore opportunity
to capture a greater market share in regions which currently have little or no high capacity broadband
transmission service. The emphasis is to build its customer base and to list on ASX.
ST Synergy Ltd
ST Synergy Ltd, a Knowledge Management software company, listed on the ASX on 11 May 2001
raising $2 million. Paladin has a 23% equity interest in ST Synergy. This company has a developed
and proven marketable product and is currently operating at 70 sites. ST Synergy elected to go
public to access sufficient capital funds to enable it to fully commercialise this exciting product to
target markets on the east coast of Australia and South East Asia.
17
CORPORATE GOVERNANCE STATEMENT
Corporate Governance
The Board is responsible for the overall Corporate Governance of the Group (“the Group”)
including the strategic direction, establishing goals for management and monitoring the
achievement of these goals. The Board has also established a framework for the management of
the Group including setting levels of remuneration for Executive Directors, Managers and senior
personnel, an overall framework of internal control and the establishment of appropriate ethical
standards.
The Board regularly reviews operational and financial performance and reviews and approves
detailed budgets and investment opportunities. Being a small company at present, the Board
works closely with executive management to identify and manage operational, financial and
legislative risk. Whilst the Corporate Governance policies and procedures have been in place
since the incorporation of the Company, they were formally adopted by the Board in May 1996.
Audit Committee
The Company is not of a size which justifies having a separate Audit Committee, however, matters
typically dealt with by such a committee are dealt with by the full Board.
Composition of the Board
The composition of the Board is determined using the following principles:
• The Board should comprise four Directors. This number may be increased where it is felt that
additional expertise is required in specific areas, or when an outstanding candidate
materialises.
• The Chairman of the Board should be a Non-Executive Director.
• The Board should comprise Directors with a broad range of expertise.
When a vacancy exists, through whatever cause, or where it is considered that the Board would
benefit from the services of a new director with particular skills, the Board selects a candidate or
panel of candidates with the appropriate expertise and experience. The Board then appoints the
most suitable candidate who must stand for election at the next general meeting of shareholders.
The Company does not have a formal Nomination Committee.
Independent Professional Advice
Each Director has the right to seek independent professional advice at the Group’s expense.
However, prior approval of the Chairman is required, which may not be unreasonably withheld.
Remuneration
Remuneration levels are set by the Board in accordance with industry standards to attract suitably
qualified and experienced Directors and senior executives. The Board obtains independent advice
on the appropriateness of remuneration packages.
Ethical Standards
All Directors, managers and employees are to act with the utmost integrity and objectivity, striving
at all times to enhance the reputation and performance of the Group.
DIRECTORS' REPORT
18
The Directors present their report on the consolidated entity consisting of Paladin Resources Ltd
and the entities it controlled at the end of, or during, the year ended 30 June 2001.
Directors
The Directors in office at the date of this report are:
Dr Douglas Dunnet (Chairman - Non-Executive)
B.Sc. (Hons) PhD. F.AusIMM
Dr Dunnet is a geologist with over 30 years experience. He has a strong background in financial
management of mineral project initiation and development in Australia and North America,
including 14 years with the Anaconda group of companies.
In 1984 Dr Dunnet became a principal of Aurex Pty Ltd, a contracting and consulting company. In
1987 he initiated the listing of and became Managing Director of Orion Resources NL. He was
subsequently instrumental in acquiring a 45% interest in the Yilgarn Star Gold Mine near Southern
Cross and guiding Orion to its market capitalisation of over $130 million prior to the takeover by
Sons of Gwalia NL. This included the successful transition from significant open pit mining to major
underground mining operations producing in excess of 100,000ozs per annum.
Mr John Borshoff (Managing Director)
B.Sc. F.AusIMM
Mr Borshoff is a geologist who has been involved in the Australian exploration and mining industry
for 26 years. Mr Borshoff worked for International Nickel and Canadian Superior Mining before
joining a German mining group, Uranerz
He became Chief
Geologist/Exploration Manager during the period 1981-1986 and served as its chief executive from
1987 to mid 1991 when the German parent of Uranerz made the decision to close its Australian
operations. Uranerz primary focus was for the search and development of uranium projects with
the company operating extensively throughout Australia, North America and Africa.
from 1976
to 1991.
Mr Borshoff has extensive experience in uranium, gold and base metal exploration, company
management and administration.
Ms Gillian Swaby (Director/Company Secretary)
B.Bus. FCIS
Ms Gillian Swaby has been involved in financial and corporate administration for listed companies,
covering a broad range of industry sectors, for over 20 years. Gillian has extensive experience in
the area of secretarial practice, management accounting and corporate and financial management
and sits on a number of advisory committees. She is Chair of the WA Council of Chartered
Secretaries of Australia, a Director on the National Board and lecturer for the Securities Institute of
Australia. Gillian is the principal of a corporate consulting company and is also a Director and
Company Secretary of a number of listed and unlisted companies. Gillian brings to the Board a
high level of technical competence and experience in the corporate arena.
19
DIRECTORS’ REPORT (Contd)
Directors (Contd)
Mr Rick W. Crabb (Director - Non-Executive)
B. Juris (Hons), LLB, MBA
Mr Crabb is a partner with the legal practice, Blakiston and Crabb and a Director of the investment
bank, Chatsworth Stirling Pty Ltd. He holds degrees of Bachelor of Jurisprudence (Honours),
Bachelor of Laws and Master of Business Administration from the University of Western Australia.
He has practised as a solicitor since 1980 and was previously a partner with a major law firm. He
specialises in mining, corporate and commercial law. Mr Crabb is also a director of Menzies Court
Holdings Limited, Ashburton Minerals NL and Alcaston Mining NL.
Principal Activity
The principal activity of the economic entity constituted by Paladin Resources Ltd and the entities it
controlled during the financial year was mineral exploration and investments in technology
companies.
Results of Operations
The economic entity's policy is to write off acquisition and exploration costs associated with
abandoned or non-commercial areas and to this extent an amount of $892,065 (2000: $220,835)
was written off. Expenditure totalling $2,574,398 (2000: $3,001,383) has been carried forward on
other areas where operations are continuing. The consolidated results are as follows:
Operating loss after income tax
2001
$
1,795,117
2000
$
822,188
Dividends
No dividend has been paid during the financial year and no dividend is recommended for the
current year.
Review of Operations
A detailed review of the economic entity's operations is set out on pages 9 to 16 of this report.
Significant Changes in the State of Affairs
There were no significant changes in the state of affairs of the economic entity during the financial
year not otherwise dealt with in this report.
20
DIRECTORS’ REPORT (Contd)
Matters Subsequent to the End of the Financial Year
There has not arisen in the interval between the end of the financial year and the date of this report
any item, transaction or event of a material and unusual nature likely, in the opinion of the
Directors of the Company, to affect substantially the operations of the economic entity, the results
of these operations or the state of affairs of the economic entity in subsequent financial years with
the exception of those matters disclosed in Note 27 of the financial statements.
Environmental Regulations
The consolidated entity is subject to significant environmental regulation in respect to its
exploration
The Company aims to ensure the appropriate standard of environmental care is achieved, and in
doing so, that it is aware of and is in compliance with all environmental legislation. The Directors
of the Company reviewed the Company’s projects during the year and are not aware of any breach
of environmental legislation for the financial year under review.
Likely Developments
Likely developments in the operations of the economic entity constituted by Paladin Resources Ltd
and the entities it controls from time to time are set out in the attached review of operations.
Options over Unissued Capital
Unlisted Options
(i) Unlisted and exercisable at 20 cents, on or before
31 July 2000
Balance at 1 July 2000
Expired during year
Balance at 30 June 2001
(ii) Exercisable at 35 cents, on or before
30 July 2000.
Number of Options
2000
2001
230,000
(230,000)
-
230,000
-
230,000
Balance at 1 July 2000
Expired 30 July 2000
Balance at date of this report
1,500,000
(1,500,000)
-
1,500,000
-
1,500,000
(iii) Exercisable at 20 cents, on or before
31 May 2000.
Balance at 1 July 2000
Exercised during year
Expired during year
Balance at date of this report
(iv) Exercisable at 25 cents,
on or before 31 August 2000
Balance at 1 July 2000
Expired during year
Balance at date of this report
-
-
-
-
4,100,000
(100,000)
(4,000,000)
-
2,275,000
(2,275,000)
-
2,275,000
-
2,275,000
21
Number of Options
2001
2000
2,000,000
-
(2,000,000)
-
-
2,000,000
-
2,000,000
-
-
-
16,961,181
(16,961,181)
-
18,936,638
-
(18,936,638)
-
18,686,638
250,000
-
18,936,638
-
11,561,083
40,665,211
100,000
(23,223)
52,303,071
-
-
-
-
-
-
DIRECTORS’ REPORT (Contd)
Options over Unissued Capital (Contd)
Unlisted Options (Contd)
(v) Exercisable at 20 cents,
on or before 31 March 2001
Balance 1 July 2000
Issued during year
Expired during year
Balance at date of this report
Listed Options
(vi) Exercisable at 20 cents,
on or before 31 July 1999
Balance at 1 July 2000
Less expired during year
Balance at date of this report
(vii) Exercisable at 20 cents, on or before
31 October 2000
Balance at 1 July 2000
Issued during year
Expired during year
Balance at date of this report
(viii) Exercisable at 15 cents, on or before
31 May 2003
Balance 1 July 2000
Issued August 2000 (Entitlement Issue)
Issued June 2001 (Placement)
Issued subsequent to 30 June 2001
Less exercised during year
Balance at date of this report
Directors' Interests
2001
Dunnet
J Borshoff
G Swaby
R W Crabb
2000
D Dunnet
J Borshoff
G Swaby
R W Crabb
Fully Paid
Shares
6,087,828
12,158,394
1,595,515
3,968,572
Fully Paid
Shares
5,551,468
11,931,587
1,595,515
3,968,572
Options**
376,367
576,263
132,960
322,381
Options*
552,778
750,000
187,500
520,365
The particulars of Directors' interests in shares and options are as at the date of this report.
*
**
Listed and exercisable at 20 cents on or before 31 October 2000.
Listed and exercisable at 15 cents on or before 31 May 2003
22
DIRECTORS’ REPORT (Contd)
Directors’ and Executives’ Emoluments
Remuneration levels are set by the Board in accordance with industry standards to attract suitably
qualified and experienced Directors and senior executives.
Non-executive Directors of Paladin Resources Ltd
Name
D Dunnet
R Crabb
Directors’ Fees
$
2001 2000
15,000
20,000
15,000
15,000
Consulting Fees
$
2001 2000
13,320
3,150
-
-
Total
$
2001 2000
28,320
23,150
15,000
15,000
Executive Directors of Paladin Resources Ltd
Name
J Borshoff
G Swaby
Directors’ Fees
$
2001 2000
150,000
15,000
70,773
15,000
Consulting Fees
$
2001 2000
150,000
80,800
-
-
Total
$
2001 2000
150,000
165,000
70,773
96,300
There are no other executives in the Company.
Meetings of Directors
The following table sets out the number of meetings of the Company's Directors held during the
year ended 30 June 2001 and the number of meetings attended by each Director.
Number of meetings held
Number of meetings attended by:
D Dunnet
J Borshoff
G Swaby
R W Crabb
12
9
12
12
12
Insurance of Officers
During the financial year, the Company has paid premiums to insure each of the following persons
against certain liabilities arising out of their conduct while acting in the capacity of officer of the
company.
J. Borshoff
D. Dunnet
G. Swaby
R. Crabb
Under the terms of the insurance contract, the nature of liabilities insured against and the premium
paid cannot be disclosed.
DATED at Perth this 28th day of September 2001
Signed in accordance with a resolution of Directors.
J Borshoff (Director)
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
STATEMENTS OF FINANCIAL PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2001
23
Revenue from ordinary
activities
Notes
CONSOLIDATED
PARENT ENTITY
2001
$
2000
$
2001
$
2000
$
2
74,963
387,745
46,843
387,745
_____________________________________________
Exploration costs written off
(892,065)
(220,835)
(52,143)
(170,800)
Borrowing costs
3
(30,837)
-
-
-
General and administration
(535,267)
(546,106)
(547,226)
(460,463)
Other
(80,731)
(357,360)
(884,517)
(493,038)
Share of net loss of associate
accounted for using the equity
method
Loss from ordinary activities
before income tax
(331,180)
(85,632)
-
-
_____________________________________________
1,795,117
822,188
1,437,043
736,556
Income tax expense
4
-
-
-
-
_____________________________________________
Total changes in equity other than
those resulting from transactions
with owners as owners
19
1,795,117
_____________________________________________
1,437,043
736,566
822,188
Basic earnings per share (cents)
30
(1.18)
(0.76)
The above statements of financial performance should be read in conjunction with the accompanying notes.
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
STATEMENTS OF FINANCIAL POSITION
AS AT 30 JUNE 2001
24
CURRENT ASSETS
Cash
Receivables
Investments
Other
TOTAL CURRENT ASSETS
NON CURRENT ASSETS
Receivables
Investments in associate
Other financial assets
Property, plant & equipment
Other
TOTAL NON CURRENT
ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Accounts payable
Provisions
Notes
CONSOLIDATED
PARENT ENTITY
2001
$
2000
$
2001
$
2000
$
5
6
7
8
9
10
11
12
13
576,841
23,092
28,604
8,530
22,501
27,287
109,335
-
577,250
22,500
28,604
8,530
15,144
27,287
109,335
-
637,067
159,123
636,884
151,766
_____________________________________________
-
639,896
1,602,578
1,661,825
2,574,398
-
964,410
-
622,618
3,006,383
2,865,909 2,897,346
1,056,709 1,050,042
618,149
2,342,665
59,472
35,807
48,393
-
6,478,697
_____________________________________________
6,301,090 4,673,402
4,593,411
7,115,764
_____________________________________________
6,937,974 4,825,168
4,752,534
14
15
317,824
35,311
157,379
31,013
314,980
35,311
144,381
31,013
_____________________________________________
TOTAL CURRENT LIABILITIES
353,135
188,392
350,291
175,394
_____________________________________________
NON CURRENT LIABILITIES
Interest bearing liabilities
Other
16
17
588,651
30,000
-
-
-
-
-
-
_____________________________________________
TOTAL NON CURRENT LIABILITIES
618,651
-
-
-
_____________________________________________
TOTAL LIABILITIES
NET ASSETS
PARENT ENTITY INTEREST EQUITY
18
Contributed equity
19
Accumulated losses
TOTAL EQUITY
21
971,786
188,392
350,291
175,394
_____________________________________________
6,143,978
_____________________________________________
6,587,683 4,649,774
4,564,142
18,565,369 15,190,416
18,565,369 15,190,416
(12,421,391) (10,626,274)
(11,977,686)(10,540,642)
_____________________________________________
6,143,978
_____________________________________________
6,587,683 4,649,774
4,564,142
The above statements of financial position should be read in conjunction with the accompanying notes.
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2001
25
CONSOLIDATED
PARENT ENTITY
Notes
2001
$
2000
$
2001
$
2000
$
Cash flows from operating
activities
Payments to suppliers and
employees
Interest received
Interest paid
Rental income
Net cash outflow from
operating activities
28
Cash flows from investing
activities
Payments for property, plant
and equipment
Sale of property, plant and equipment
Exploration and evaluation
expenditure
Sales of exploration certificates
Mines Department bond redeemed
Payments for investments
Investment in controlled entity
Loans to controlled entities
Sale proceeds on investments
Net cash outflow from
investing activities
Cash flows from financing
activities
Share placement
Fundraising costs
Repayment of borrowings
Net cash inflow
from financing activities
Net increase/(decrease)
in cash held
Cash at the beginning of the
financial year
Cash at the end of the
financial year
(226,334)
19,681
(30,837)
28,107
(289,414)
15,452
-
-
(230,629)
19,668
-
-
(289,414)
15,452
-
-
_____________________________________________
(209,383)
(273,962)
_____________________________________________
(210,961)
(273,962)
(36,606)
-
(20,771)
20,000
-
-
(20,771)
20,000
(465,080)
-
5,000
(1,609,244)
(250,231)
-
27,175
(412,495)
48,000
-
(891,737)
-
-
304,293
(3,750)
-
(1,609,244)
(261,602)
(754,465)
27,175
(38,158)
48,000
-
(891,737)
-
(364,096)
304,293
_____________________________________________
(2,328,986)
(942,469)
_____________________________________________
(2,601,886)
(952,710)
3,438,030
(63,077)
(282,244)
640,000
(39,796)
-
3,438,030
(63,077)
-
640,000
(39,796)
-
_____________________________________________
3,092,709
_____________________________________________
3,374,953
600,204
600,204
554,340
(626,468)
562,106
(616,227)
22,501
648,969
15,144
631,371
_____________________________________________
5
576,841
22,501
577,250
15,144
_____________________________________________
Non-cash financing and
investing activities
29
The above statements of cash flows should be read in conjunction with the accompanying notes.
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT
30 JUNE 2001
26
1. STATEMENT OF ACCOUNTING POLICIES
(A)
BASIS OF ACCOUNTING
This general purpose financial report has been prepared in accordance with Accounting
Standards, other authoritative pronouncements of the Australian Accounting Standards
Board, Urgent Issues Group Consensus Views and the Corporations Act 2001.
It is prepared in accordance with the historical cost convention, except for certain assets
which, as noted, are at valuation. Unless otherwise stated, the accounting policies
adopted are consistent with those of the previous year. Comparative information is
reclassified where appropriate to enhance comparability.
As a result of the early adoption, on 1 July 2000, of AASB 1041 Revaluation of Non-
Current Assets, no reconciliations of the movements in non-current assets, other than
property and plant and equipment and capitalised exploration have been included in the
notes to the financial statements.
(B)
PRINCIPLES OF CONSOLIDATION
The consolidated accounts incorporate the assets and liabilities and results of all
entities controlled by Paladin Resources Ltd as at 30 June 2001 and the results of all
controlled entities for the year then ended. Paladin Resources Ltd and its controlled
entities together are referred to in this financial report as the economic entity. The
effects of inter-entity transactions have been eliminated from the consolidated accounts.
Where controlled entities are acquired during the year, their results are included only
from the date control commences.
On acquisition of some or all of the shares in a controlled entity, the identifiable net
assets acquired are measured at their fair value. The excess of the fair value of the
purchase consideration over the fair value of identifiable assets acquired (ie: goodwill) is
amortised over a period of twenty years. Where a discount on acquisition arises, that
discount is accounted for by reducing proportionately the fair value of the non monetary
assets acquired until the discount is eliminated. Any residual discount is immediately
recognised in the statement of financial performance.
Investments in associates are accounted for in the consolidated financial statements
using the equity method. Under this method, the consolidated entity’s share of the
profits or losses of associates is recognised as revenue in the consolidated statement of
financial performance and its share of movements in reserves is recognised in
consolidated reserves. Associates are those entities over which the consolidated entity
exercises significant influence, but not control.
(C)
EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE
Costs incurred during the exploration, evaluation and development stages of specific
areas of interest are accumulated. Such costs are written off unless the Directors
consider that the costs are expected to be fully recouped through the successful
development of the area, or where activities to date have not reached a stage to allow
reasonable assessment regarding existence of economically recoverable reserves.
Costs are written off as soon as an area has been abandoned or is considered to be
non-commercial.
Expenditure is not carried forward in respect of any area of interest/mineral resource
unless the Company's rights of tenure to that area of interest are current. Once
production commences, expenditure accumulated in respect of areas of interest will be
amortised on a unit of production basis against the economically recoverable mineral
resources.
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
27
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2001
1. STATEMENT OF ACCOUNTING POLICIES (Contd)
(D)
EARNINGS PER SHARE
Basic earnings per share is determined by dividing the operating result after income tax
attributable to members of Paladin Resources Ltd by the weighted average number of
ordinary shares on issue during the financial year, adjusted for bonus elements in
ordinary shares issued during the year.
(E)
CASH
For the purposes of the statements of cash flows, cash includes deposits which are
readily convertible to cash on hand and which are used in the cash management
function on a day-to-day basis, net of outstanding bank overdrafts.
(F)
DATABASES
(i) Project Generation Database
The project generation database, consists of unpublished and generally unavailable
exploration, geological and other data. The cost of this database is amortised on a
straight line basis over a period of 10 years.
(ii) Technical Database
The technical database includes an extensive technical library and published
exploration data. The Directors consider that this information diminishes in value
over time and accordingly periodic amortisation charges are raised on a straight line
basis over a period of 10 years.
(G)
VALUATION OF NON-CURRENT ASSETS
The carrying amounts of non-current assets are reviewed to determine whether they are
in excess of their recoverable amounts at balance date. If the carrying amount of a non-
current asset exceeds the recoverable amount, the asset is written down to the lower
amount. Unless otherwise stated, in assessing recoverable amounts, the relevant cash
flows have not been discounted to their present value.
(H)
ACQUISITION OF ASSETS
The purchase method of accounting is used for all acquisitions of assets regardless of
whether equity instruments or other assets are acquired. Cost is measured as the fair
value of the assets given up, shares issued or liabilities undertaken at the date of
acquisition plus incidental costs directly attributable to the acquisition. Where equity
instruments are issued in an acquisition, the value of the instruments is at the value
agreed between the parties. Transaction costs arising on the issue of equity
instruments are recognised directly in equity.
(I)
INCOME TAX
Tax effect accounting procedures are followed whereby the income tax expense in the
statement of financial performance is matched with the accounting profit after allowing
for permanent differences. The future tax benefit relating to tax losses is not carried
forward as an asset unless the benefit is virtually certain of realisation. Income tax on
cumulative timing differences is set aside to the deferred income tax or the future
income tax benefit accounts at the rates which are expected to apply when those timing
differences reverse.
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
28
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2001
2. REVENUE
Revenue from outside the operating
activities
Interest
Profit on sale of fixed assets
Sale of exploration certificates
Property rental
Proceeds on sale of investments
CONSOLIDATED
PARENT ENTITY
2001
$
2000
$
2001
$
2000
$
19,681
-
-
28,107
27,175
15,452
20,000
48,000
-
304,293
19,668
-
-
-
27,175
15,452
20,000
48,000
-
304,293
_____________________________________________
74,963
387,745
46,843
387,745
_____________________________________________
3. OPERATING LOSS
Loss from ordinary activities before
income tax expense includes the
following specific net gains and expenses:
Net gains
Net gain on disposal
- property, plant and equipment
-
investments
Expenses:
Depreciation
- property, plant and equipment
- buildings
-
2,128
20,000
-
-
2,128
20,000
-
_____________________________________________
2,128
20,000
2,128
20,000
_____________________________________________
23,665
11,903
50,942
-
23,665
-
50,942
-
_____________________________________________
Total depreciation
35,568
50,942
23,665
50,942
_____________________________________________
Amortisation
-
- project generation database
technical database
26,250
59,393
26,250
59,393
-
-
-
-
_____________________________________________
Total amortisation
85,643
85,643
-
-
_____________________________________________
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2001
29
CONSOLIDATED
PARENT ENTITY
2001
$
2000
$
2001
$
2000
$
3. OPERATING LOSS (Contd)
Other charges against assets:
Provision for non-recovery of
intercompany loan
-
-
investment in controlled entity
Exploration expenditure written off
Net loss on disposal of investments
Write down of investment
Other provisions:
Employee entitlements
Borrowing costs:
Interest paid/payable
4.
INCOME TAX
The aggregate amount of income tax
attributable to the financial year differs
from the amount calculated on the
operating loss. The differences are
reconciled as follows:
Operating loss before income tax
Income tax (benefit) calculated at 34%
(2000: 36%)
Tax effect of permanent differences:
Non-deductible expenditure
-
-
892,065
-
55,684
-
-
220,835
53,067
-
803,786
121,779
52,143
-
55,684
135,678
-
170,800
53,067
-
4,297
10,340
4,297
10,340
30,837
-
-
-
_____________________________________________
(1,795,117)
(736,556)
_____________________________________________
(1,437,043)
(822,188)
(610,340)
(295,988)
(488,595)
(265,160)
434,836
152,397
351,353
121,569
_____________________________________________
(143,591)
(175,504)
(137,242)
(143,591)
Tax benefit not recognised
175,504
143,591
137,242
143,591
_____________________________________________
Income tax attributable to operating
loss
The Directors estimate that the
potential future income tax benefit at
30 June 2001 in respect of tax losses
not brought to account is:
-
-
-
-
_____________________________________________
1,664,381
_____________________________________________
1,066,625 1,071,600
1,710,794
This benefit for tax losses will only be obtained if:
(i)
the economic entity derives future assessable income of a nature and of an amount
sufficient to enable the benefit from the deductions for the losses to be realised;
the economic entity continues to comply with the conditions for deductibility imposed by tax
legislation; and
no changes in tax legislation adversely affect the economic entity in realising the benefit
from the deductions for the losses.
(ii)
(iii)
5. CASH
Cash at bank and on hand
576,841
22,501
577,250
15,144
_____________________________________________
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2001
30
CONSOLIDATED
2001
$
2000
$
PARENT ENTITY
2000
2001
$
$
23,092
27,287
22,500
27,287
_________________________________________________
579,034
(550,430)
751,095
(641,760)
_____________________________________________
579,034
(550,430)
751,095
(641,760)
28,604
109,335
28,604
109,335
_____________________________________________
28,604
98,219
28,604
98,219
_____________________________________________
8,530
-
8,530
-
_____________________________________________
5,713,448 4,958,984
(2,847,539) (2,061,638)
_____________________________________________
-
-
-
-
-
-
2,865,909 2,897,346
_____________________________________________
6. CURRENT RECEIVABLES
Sundry debtors
7. CURRENT INVESTMENTS
Listed investment – at cost
Less write-down
Listed investment –
at Directors’ Valuation
The market value of shares listed
on a prescribed stock exchange
8. OTHER
Prepayments
9. NON CURRENT
RECEIVABLES
Loan to controlled entities
- unsecured
Less provision for non-recovery
10. NON CURRENT INVESTMENTS –
ACCOUNTED FOR USING THE
EQUITY METHOD
Shares in associate
639,896
964,410
1,056,709 1,050,042
Shares in associate
Investments in associates are accounted for in the consolidated financial statements using the equity
method of accounting and are carried at cost by the parent entity.
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2001
31
10. NON CURRENT INVESTMENTS (Contd)
ACCOUNTED FOR USING THE EQUITY METHOD
Investment in associate
Name
Traded*
Principal
Activity
Ownership
Interest
2001
2000
Consolidated
Carrying Amount
2001
$
2000
$
Parent Entity
Carrying Amount
2001
$
2000
$
ST Synergy Ltd Knowledge
Management
Software
23%
30% 639,896 964,410
1,056,709 1,050,042
Of the total shareholding of 5,897,353 fully paid shares held in ST Synergy Ltd, 4,397,353 shares are
held in escrow pursuant to Australian Stock Exchange Ltd Listing Rules following the listing of the
company on ASX and cannot be traded before 11 May 2003. The balance are freely tradable and are
quoted on Australian Stock Exchange Ltd. At 30 June 2001, the shares traded at 26¢ per share.
Movements in carrying amount
of investment in associate
Carrying amount at start of year
Investment
Amortisation of goodwill
Share of operating loss
Carrying amount at the end
of the financial year
Summary of the performance
and financial position of associate
The aggregate losses, assets and
liabilities of associates are:
Losses from ordinary activities
Assets
Liabilities
11. OTHER FINANCIAL ASSETS
Shares at cost – controlled entities (i)
Less provision for non-recovery
Convertible notes (ii)
CONSOLIDATED
PARENT ENTITY
2001
$
2000
$
2001
$
2000
$
964,410
6,666
(200,000)
(131,180)
-
1,050,042
(50,000)
(35,632)
639,896
964,410
-
-
-
-
-
-
-
-
-
-
437,266
2,393,561
279,503
237,552
922,940
812,785
-
-
1,602,578
_____________________________________________
1,961,605 1,700,003
(1,221,518) (1,081,854)
-
1,602,578
-
-
-
1,602,578
_____________________________________________
2,342,665
618,149
-
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
JUNE 2001
32
11 OTHER FINANCIAL ASSETS (Contd)
(i) Investments in Controlled Entities
NAME
COUNTRY OF
INCORPORATION
PERCENTAGE
INTEREST HELD
2001
2000
COST OF PARENT
ENTITY’S
INVESTMENT
2001
$
2000
$
Eden Creek Pty Ltd *
Paladin Energy
Minerals NL
Etron Properties Pty Ltd
Paladin (Africa) Ltd
Less provision for non-
recovery of investment –
Eden Creek Pty Ltd
Australia
100%
100%
1,700,002
1,700,002
Australia
Australia
Malawi
100%
100%
100%
100%
-
-
1
261,602
-
1
-
-
1,961,605
1,700,003
(1,221,518)
(1,081,854)
740,087
618,149
All investments comprise ordinary shares and all shares held are unquoted.
* These entities are not required to prepare or lodge audited accounts.
Acquisition of controlled entities
On 29th October 2000 the parent entity acquired 100% of the issued share capital of Etron Properties Pty Ltd
for $261,602. On 4th August 2000, the parent entity acquired 100% of the issued capital of Paladin (Africa)
Ltd for 10¢ (2 kwacha). At the time of acquisition Paladin (Africa) Ltd had cash of 10¢ and issued share
capital of 10¢. The operating results of these newly controlled entities have been included in the
consolidated statement of financial performance since the date of acquisition.
Details of the acquisition of Etron Properties Pty Ltd are as follows:
Fair value of identifiable net assets of controlled entity acquired.
Cash
Receivables
Land & Buildings
Trade Creditors
Bank Loan – Secured
Unsecured Loans
Cash Consideration
11,371
34,279
1,123,812
(6,965)
(569,228)
(331,667)
261,602
Outflow of cash to acquire controlled
entity, net of cash acquired
Cash consideration
Less: balances acquired
Cash
CONSOLIDATED
PARENT ENTITY
2001
$
2000
$
2001
$
2000
$
261,602
11,371
-
-
261,602
-
-
-
_____________________________________________
Outflow of cash
250,231
-
261,602
-
_____________________________________________
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2001
33
11 OTHER FINANCIAL ASSETS (Contd)
ii)
Convertible Notes
Paladin Resources Ltd holds $1,602,578 in unsecured convertible notes in Coretel Pty Ltd, entitling
it on conversion to 85% of the issued capital of that company. Interest is accruing at 9.85% per
annum with conversion at the election of Paladin.
12. NON CURRENT PROPERTY
PLANT & EQUIPMENT
Land and buildings - at cost
Less provision for depreciation
1,160,418
(11,903)
-
-
-
-
-
-
_____________________________________________
1,148,515
_____________________________________________
-
-
Plant and equipment – at cost
Less provision for depreciation
400,886
(365,079)
400,886
(341,414)
_____________________________________________
400,886
(365,079)
400,886
(341,414)
Technical database – at cost
Less amortisation
262,500
(201,214)
262,500
(174,964)
-
-
-
-
35,807
59,472
35,807
59,472
_____________________________________________
_____________________________________________
61,286
87,536
-
-
_____________________________________________
Project generation database – at cost
Less amortisation
593,932
(177,715)
593,932
(118,322)
-
-
-
-
_____________________________________________
416,217
475,610
-
-
_____________________________________________
1,661,825
622,618
35,807
59,472
_____________________________________________
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2001
34
12. NON CURRENT PROPERTY
PLANT & EQUIPMENT (Contd)
Reconciliations
Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning
and end of the current are set out below:
Consolidated – 2001
Carrying amount at start of year
Addition through acquisition of entity
(Note 11)
Additions
Depreciation/amortisation
expense (Note 3)
Total
$
Freehold
Land &
Buildings
$
Plant &
Equipment
Database
$
$
622,618
1,123,812
-
1,123,812
59,472
-
563,146
-
36,606
36,606
-
-
(121,211)
(85,643)
_____________________________________________
(11,903)
(23,665)
Carrying amount at end of year
1,661,825
1,148,515
35,807
477,503
_____________________________________________
Parent Entity - 2001
Carrying amount at start of year
Depreciation/amortisation
expense (Note 3)
59,472
(23,665)
-
-
59,472
(23,665)
-
-
_____________________________________________
Carrying amount at end of year
35,807
-
35,807
-
_____________________________________________
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2001
35
CONSOLIDATED
PARENT ENTITY
2001
$
2000
$
2001
$
2000
$
3,001,383
2,663,441
48,393
192,944
387,777
171,000
(220,835)
465,080
-
(892,065)
26,249
-
(170,800)
_____________________________________________
2,574,398
-
3,750
-
(52,143)
3,001,383
5,000
48,393
-
-
-
_____________________________________________
2,574,398
3,006,383
48,393
-
317,824
157,379
314,980
144,381
_____________________________________________
13. NON CURRENT ASSETS
- OTHER
(a) Exploration Expenditure
Carrying amount at start of year
Movements:
Direct expenditure for year
Acquisition costs
Expenditure written off
(b) Mines Department Bonds
14. ACCOUNTS PAYABLE
Trade creditors
15. CURRENT PROVISIONS
Employee entitlements
(See Note 31)
35,311
31,013
35,311
31,013
_____________________________________________
16. NON CURRENT INTEREST
BEARING LIABILITIES
Secured
Bank loans
Total secured non-current interest
bearing liabilities
588,651
-
-
-
_____________________________________________
588,651
-
-
-
_____________________________________________
The bank loans of the controlled entity are secured by a first mortgage over the controlled entity’s
freehold land and buildings, being charged interest at the rate of 7.9% on $116,151 and 8.35% on
$472,500.
Assets pledged as security
The carrying amounts of non-current assets pledged as security are:
First mortgage
Freehold land and buildings
1,148,515
_____________________________________________
-
-
-
17. OTHER
Loan from non-related party
30,000
-
-
-
_____________________________________________
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2001
36
PARENT ENTITY
2001
Shares
2000
Shares
PARENT ENTITY
2000
2001
$
$
18. CONTRIBUTED EQUITY
(a) Share Capital
Ordinary shares
Fully paid
201,094,825 115,610,888
18,565,369 15,190,416
_____________________________________________
Date
(b) Movements in
Number of Shares
ordinary share capital:
Issue Price
¢
Total
$
01.07.99
31.08.99
30.10.99
26.10.99
31.03.00
31.03.00
30.06.00
31.07.00
31.10.00
29.06.01
103,410,888
Balance at start of year
250,000
Placement
Exercise of Unlisted Options
100,000
Acquisition – Kayelekera Uranium Project 2,850,000
5,000,000
Placement
4,000,000
Acquisition – 10% ST Synergy Ltd
Less: Transaction costs arising on
share issues
-
8¢
20¢
6¢
12¢
7.5¢
14,119,215
20,000
20,000
171,000
600,000
300,000
(39,796)
______________________________________________
Balance at start of year
Entitlement Issue
Placement
Option Conversions
Placement
Less: Transaction costs arising on
share issues
115,610,888
23,122,143
21,673,360
23,223
40,665,211
-
3.5¢
6¢
15¢
3.25¢
15,190,416
809,275
1,300,402
3,483
1,324,870
(63,077)
30.06.01
Balance at end of year
201,094,825
18,565,369
______________________________________________
(c) Issued Options
(i) Unlisted and exercisable at 20 cents, on or before
31 July 2000
Balance at 1 July 2000
Expired during year
Balance at 30 June 2001
(ii) Unlisted and exercisable at 35 cents, on or before
30 July 2000.
Balance at 1 July 2000
Expired during year
Balance at 30 June 2001
(iii) Unlisted and exercisable at 20 cents, on or before
Number of Options
2001
2000
230,000
(230,000)
-
230,000
-
230,000
1,500,000
(1,500,000)
-
1,500,000
-
1,500,000
31 May 2000
Balance at 1 July 2000
Less exercised during year
Less lapsed during year
Balance at 30 June 2001
-
-
-
-
4,100,000
(100,000)
(4,000,000)
-
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2001
37
18. CONTRIBUTED EQUITY (Contd)
(d) Issued Options
(iv) Unlisted and exercisable at 25 cents,
on or before 31 August 2000
Balance at 1 July 2000
Expired during year
Balance at 30 June 2001
(v) Unlisted and exercisable at 20 cents
on or before 31 March 2001
Balance at 30 June 2000
Issued during year
Expired during year
Balance at 30 June 2001
(vi) Listed and exercisable at 20 cents, on or before
31 July 1999
Balance at 1 July 2000
Less expired during year
Balance at 30 June 2001
(vii) Listed and exercisable at 20 cents, on or before
31 October 2000
Balance at 1 July 2000
Issued during year
Less expired during year
Balance at 30 June 2001
(iv) Exercisable at 15 cents, on or before
31 May 2003
Number of Options
2001
2000
2,275,000
(2,275,000)
-
2,275,000
-
2,275,000
2,000,000
-
(2,000,000)
-
-
2,000,000
-
2,000,000
-
-
-
(16,961,181)
(16,961,181)
-
18,936,638
-
(18,936,638)
-
18,686,638
250,000
-
18,936,638
Balance 1 July 2000
Issued August 2000 (Entitlement Issue)
Issued June 2001 (Placement)
Less exercised during year
Balance at 30 June 2001
-
11,561,083
40,665,211
(23,223)
52,203,071
-
-
-
-
-
(e) Ordinary 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 and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is
entitled to one vote, and upon a poll each share is entitled to one vote.
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2001
38
19. ACCUMULATED LOSSES
Accumulated losses at beginning of
financial year
Net loss attributable to members of
Paladin Resources Ltd
Accumulated losses at the end of
the financial year
CONSOLIDATED
PARENT ENTITY
2001
$
2000
$
2001
$
2000
$
10,626,274
9,804,086
10,540,643 9,804,086
1,795,117
_____________________________________________
1,437,043
736,556
822,188
12,421,391 10,626,274
_____________________________________________
11,977,686 10,540,642
20. COMMITMENTS AND CONTINGENT LIABILITIES
There were no outstanding commitments or contingent liabilities, which are not disclosed in the
financial statements of the economic entity and the Company as at 30 June 2001 other than:
(a) Exploration Tenement Leases
In order to maintain the tenements in which the Company and other parties are involved, all
parties are committed to meet the conditions under which the tenements were granted in
accordance with the relevant mining legislation in Australia. These commitments relate to
tenement lease rentals and the minimum expenditure requirements of the Western Australian,
Northern Territory and South Australian Mines Departments attaching to the tenements and are
subject to re-negotiation upon expiry of the exploration leases or when application for a mining
licence is made. In 2001/2002, estimated outlays by the Company and the economic entity are
$473,209 (2000: $1,042,680). Commitments beyond 2001/2002 are dependent upon whether
existing rights of tenure are renewed or new rights of tenure are acquired.
(b) Acquisition Costs
The economic entity acquired a call option on 19 June 1998 in relation to the purchase of the
Oobagooma Uranium Deposit. As a condition to the option contract, the economic entity granted
a put option to the current holder of the Oobagooma Uranium Deposit. Both the call and put
options have an exercise price of $750,000. Both of the options are subject to the Department of
Minerals & Energy granting tenements comprising 2 exploration licence applications. The
$750,000 is payable by the economic entity within 10 business days of the later of the grant of
the tenements or the exercise of either the call or put option. The options will expire 3 months
after the date on which either of the tenements are granted.
In relation to the Manyingee Uranium Project, the re-negotiated acquisition terms provide for a
payment of $750,000 to the vendors only if all project development approvals have been
obtained.
(c) Acquisition of Balance of 50% Interest in Paladin Brightstar Joint Venture
On 26 June 2000 Paladin agreed to acquire the 50% joint venture interest from Brightstar Power
Corporation Pty Ltd, giving Paladin full ownership of the Paladin Brightstar Joint Venture. The
consideration is the issue of 1 million shares at 5 cents per share which were allotted on 27 July
2001 (refer Note 26). The transfer of the tenements is subject to approval of the Minister for
Primary Industry Resources in South Australia.
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2001
39
21. EQUITY
Total equity at beginning of financial year
CONSOLIDATED
2001
$
4,564,142
2000
$
4,315,129
PARENT ENTITY
2000
2001
$
$
4,649,774 4,315,129
Total changes in equity
recognised in the statement of
financial performance
Transactions with owners as
owners:
Contributions of equity, net of
transaction costs
Total equity at the end of the
financial year
22. AUDITOR’S REMUNERATION
Remuneration for audit or review
of the financial reports of the
parent entity or any entity in the
economic entity:
(1,795,117)
(822,188)
(1,437,043)
(736,556)
3,374,953
1,071,201
3,374,953 1,071,201
_____________________________________________
6,143,978
_____________________________________________
6,587,683 4,649,774
4,564,142
CONSOLIDATED
2001
$
2000
$
PARENT ENTITY
2000
2001
$
$
Auditors of parent entity
22,674
19,500
22,674
19,500
Remuneration for other services
by the parent entity auditors
23. REMUNERATION OF DIRECTORS
Income paid or payable, or otherwise
made available to directors by entities
in the economic entity and related
parties
50,658
12,000
50,658
12,000
_____________________________________________
73,332
31,500
73,332
31,500
_____________________________________________
Directors of Entities in
the Economic Entity
2001
$
2000
$
Directors of Parent
Entity
2001
$
2000
$
299,450
279,093
299,450
279,093
_____________________________________________
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2001
40
Directors of Entities in
the Economic Entity
2001
2000
Directors of Parent
Entity
2001
2000
23. REMUNERATION OF
DIRECTORS (Contd)
Number of parent entity Directors
whose total income from the parent
entity or related parties was within the
following bands:
$10,000
$20,000
$70,000
$90,000
$120,000
$150,000
$160,000
to
to
to
to
to
to
to
$19,999
$29,999
$79,999
$99,999
$129,999
$159,999
$169,999
1
1
1
-
-
-
1
1
1
1
-
-
1
-
1
1
1
-
-
-
1
1
1
1
-
-
1
-
_____________________________________________
Included in the above are consulting fees. Consulting fees in the form of management fees and
geological fees were paid during the year in the normal course of business to firms of
consultants, of which Directors are the principals (refer Note 26).
24. REMUNERATION OF EXECUTIVES
One executive, being a director, received $165,000 during the year ended 30 June 2001
(2000: 1 executive $150,000).
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2001
41
25. SEGMENT REPORTING
Industry Segments
2001
Resources Soft-
Tele-
Property Consolidated
ware communications
3,723,214
639,896
1,602,578 1,150,076
7,115,764
Other revenue
$
46,843
Total segment revenue
46,843
$
-
-
Loss from ordinary
activities before income
tax expense
(1,437,043) (331,180)
Income tax expense
-
-
Loss from ordinary
activities after income
tax expense
Total assets
Total liabilities
(1,437,043) (331,180)
348,911
-
-
824,514
Investments in associate
Acquisitions of property, plant
and equipment, and other
non-current segment assets
Depreciation and
amortisation expense
Other non-cash expenses
465,080
109,308
945,621
Net cash outflow from
operating activities
(210,961)
Industry Segments
2000
Other revenue
387,745
Total segment revenue
387,745
-
-
-
-
-
-
Loss from ordinary
activities before income
tax expense
(736,556)
(85,632)
Income tax expense
-
-
Loss from ordinary
activities after income
tax expense
(736,556) (85,632)
Total assets
3,788,124 964,410
$
$
$
-
-
-
-
-
28,120
74,963
28,120
74,963
(26,894)
(1,795,117)
-
-
(26,894)
(1,795,117)
-
-
-
-
-
-
-
-
-
-
-
-
622,875
971,786
-
824,514
1,160,418
1,625,498
11,903
121,211
-
945,621
24,319
235,280
-
-
387,745
387,745
-
(822,188)
-
-
-
(822,188)
-
4,752,534
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2001
25. SEGMENT REPORTING (Contd)
42
Industry Segments
2000
Resources Soft-
Tele-
Property Consolidated
ware communications
$
$
$
$
$
Total liabilities
188,392
-
Investments in associate
-
964,410
Acquisitions of property, plant
and equipment, and other
non-current segment assets
580,548
Depreciation and
amortisation expense
136,585
Other non-cash expenses
273,902
Net cash outflow from
operating activities
273,962
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
188,392
964,410
580,548
136,585
273,902
273,962
Geographical Segments
Segment revenues
Segment assets
Acquisitions of property,
plant and equipment,
and other non-
current segment assets
2001
$
2000
$
2001
$
2000
$
2001
$
2000
$
Australia
74,963 387,745
6,390,077
4,361,567 1,290,778
276,345
Africa
-
-
725,687
390,967
334,720
304,203
74,963 387,745
7,115,764
4,752,534,
1,625,498
580,548
26. RELATED PARTIES
Related parties of Paladin Resources Ltd fall into the following categories:
Directors
(a)
The following persons were Directors of Paladin Resources Ltd during the financial year:
D Dunnet
J Borshoff
G Swaby
R W Crabb
(b)
Remuneration of Directors is disclosed in Note 23 and the Directors’ Report.
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2001
43
26. RELATED PARTIES (Contd)
(c)
Transactions with director-related entities
The following transactions with Directors and director-related entities occurred during the
year on normal commercial terms and conditions:
(i)
(ii)
(iii)
Fees for geological and consulting services were paid/payable to a company in
which J Borshoff is a director and shareholder;
Fees for geological and consulting services were paid/payable to a company in
which D Dunnet is a director and shareholder;
Fees for company secretarial and consulting services were paid/payable to a
company in which G Swaby is a director and shareholder; and
All of the above have been included in Directors’ remuneration in Note 23.
(iv)
Fees for legal services totalling $93,582 (2000: $42,514) were paid/payable to
Blakiston and Crabb, Solicitors, a firm in which R Crabb is a partner.
(d)
Directors’ holdings
Aggregate number of shares and share options of Paladin Resources Ltd held directly,
indirectly or beneficially by directors of their director related entities at balance date:
D. Dunnet
J. Borshoff
G. Swaby
R. Crabb
D. Dunnet
J. Borshoff
G. Swaby
R. Crabb
2001
Number
Shares
Options*
6,087,828
12,158,394
1,595,515
3,223,810
376,367
576,263
132,960
322,381
2000
Number
Shares Options**
5,398,095
10,931,587
1,329,596
3,223,810
323,904
750,000
187,500
520,365
*
Listed and exercisable at 15 cents on or before 31 May 2003
** Listed and exercisable at 20 cents on or before 31 October 2000.
During the prior year one Director exercised 100,000 unlisted 31 May 2000 options at a
total exercise price of $20,000.
Wholly-owned Group Transactions
The wholly-owned group consists of Paladin Resources Ltd, the ultimate parent entity and
the wholly-owned controlled entities set out in Note 11. Transactions between Paladin
Resources Ltd and its controlled entities consist of the transfer of funds amongst the
companies for day to day financing. Inter-company balances are unsecured and are not
interest bearing. The balance in respect of inter-group loans is set out in Note 9. In
addition, in August 2000, Paladin Energy Minerals NL transferred its interest in the
Kayelekera Uranium Project in Malawi, Southern Africa, to Paladin (Africa) Ltd at its book
value of $465,935. The consideration is reflected as a loan owing to Paladin Energy
Minerals NL and forms part of the inter-company balance referred to above.
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2001
44
27. EVENTS SUBSEQUENT TO BALANCE DATE
There has not arisen since the end of the financial year any item, transaction or event of a
material and unusual nature likely, in the opinion of the Directors of the Company, to affect
substantially the operations of the economic entity in subsequent financial years with the
exception of.
Issue of Shares
On 27 July 2001, the Company issued 1 million fully paid shares in satisfaction of the
consideration for the acquisition of the remaining 50% joint venture interest in the Paladin
Brightstar Joint Venture (refer Note 20 (c)).
28. RECONCILIATION OF NET CASH
OUTFLOW FROM OPERATING
ACTIVITIES TO OPERATING LOSS
AFTER INCOME TAX
CONSOLIDATED
2001
$
2000
$
PARENT ENTITY
2000
2001
$
$
Operating loss after income tax
1,795,117
822,188
1,437,043
736,556
Non cash items:
Depreciation and amortisation
Exploration expenditure written off
Provision for non-recovery of
intercompany loan
Provision for non-recovery of
investment in controlled entity
Profit on sale of fixed assets
Profit/(loss) on sale of investments
Sundry income allocated to
investing activities
Share of loss in associate using
equity method
Change in operating assets and
liabilities:
Write down of investment
(Decrease) in trade debtors
(Increase) in operating liabilities
Increase in prepayments
Net cash outflow from operating
activities
(121,211)
(892,065)
(186,585)
(220,835)
(23,665)
(52,143)
(50,942)
(170,800)
-
-
-
2,128
-
(803,785)
(135,678)
-
20,000
(53,067)
(121,779)
-
2,128
-
20,000
(53,067)
-
48,000
(331,180)
(35,632)
-
-
48,000
-
(55,684)
(38,474)
(157,778)
8,530
-
(23,555)
(96,552)
-
(55,684)
(4,787)
(174,897)
8,530
-
(23,555)
(96,552)
-
_________________________________________________
209,383
273,962
210,961
273,962
_____________________________________________
29. NON CASH FINANCING AND
INVESTMENT ACTIVITIES
Acquisition of mining tenements
satisfied by issue of shares
Part acquisition of 30% of
ST Synergy Ltd satisfied by
issue of shares
-
-
-
171,000
300,000
471,000
-
-
-
-
300,000
300,000
_____________________________________________
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2001
45
30. EARNINGS PER SHARE
(a) Basic Loss Per Share
Weighted average number of ordinary shares on issue during
the year used in the calculation of basic earnings per share
(b) Diluted Earnings Per Share
Consolidated
2000
(cents)
2001
(cents)
(1.18)
(.76)
______________________
151,377,525 107,092,260
______________________
Diluted earnings per share is the same as basic earnings per share as there are no potential
ordinary shares that are dilutive.
31. EMPLOYEE ENTITLEMENTS
Provision for Annual Leave & Long Service Leave
Aggregate employment entitlement liability
Employee numbers
Average number of employees during the financial year
PARENT ENTITY
2001
$
35,311
2000
$
31,013
______________________
Number
4
Number
5
______________________
Superannuation
The Company contributes to employees’ superannuation plans in accordance with the
requirements of Occupational Superannuation Legislation. Contributions by the parent entity
represent a defined percentage of each employee's salary. Employee contributions are
voluntary.
32. FINANCIAL INSTRUMENTS
(a)
Credit Risk Exposure
The credit risk of financial assets of the consolidated entity which have been
recognised on the statement of financial position is generally the carrying amount, net
of any provisions for doubtful debts.
(b)
Interest Rate Risk Exposure
The consolidated entity’s exposure to interest rate risk is limited to the floating market
rate for the cash deposit, convertible debt and a property mortgage. All other financial
assets and liabilities are non interest bearing. The weighted average interest rate on
cash deposits, convertible debt and property mortgage is 5%, 9.85% and 8.1%,
respectively.
(c)
Net Fair Value of Financial Assets and Liabilities.
The net fair value of cash, convertible debt and non interest bearing monetary
financial assets and financial liabilities of the consolidated entity approximates their
carrying value.
DIRECTORS’ DECLARATION
46
The Directors declare that the financial statements and notes set out on pages 23 to 45.
a)
b)
comply with Accounting Standards, the Corporations Regulations 2001 and other
mandatory professional reporting requirements; and
give a true and fair view of the Company’s and consolidated entity’s financial position as
at 30 June 2001 and of their performance, as represented by the results of their
operations and their cash flows, for the financial year ended on that date.
In the Directors’ opinion
(a)
(b)
the financial statements and notes are in accordance with the Corporations Act 2001; and
there are reasonable grounds to believe that the company will be able to pay its debts as
and when they become due and payable; and
This declaration is made in accordance with a resolution of the Directors.
Signed at Perth this 28th day of September 2001 in accordance with a resolution of the Directors.
J Borshoff (Director)
Independent Audit Report to the Members of
Paladin Resources Limited
Matters relating to the electronic presentation of the audited financial report
47
PricewaterhouseCoopers
ABN 52 780 433 757
The Quadrant
1 William Street
PERTH WA 6000
GPO Box D198
PERTH WA 6840
DX 77 Perth
Australia
Telephone +61 8 9238 3000
Facsimile +61 8 9238 3999
Direct Phone +61 8 9238 3479
Direct Fax +61 8 9238 3377
This audit report relates to the financial report of Paladin Resources Limited (the Company) for the financial year ended
30 June 2001 included on the Company’s web site. The Company’s directors are responsible for the integrity of the Paladin
Resources Limited web site. We have not been engaged to report on the integrity of this web site. The audit report refers only to
the financial report identified below. It does not provide an opinion on any other information which may have been hyperlinked
to/from the financial report. If users of this report are concerned with the inherent risks arising from electronic data
communications they are advised to refer to the hard copy of the audited financial report to confirm the information included in
the audited financial report presented on this web site.
Scope
We have audited the financial report of the Company for the financial year ended 30 June 2001 as set out on pages 23 to 46. The
Company's directors are responsible for the financial report which includes the financial statements of the Company and the
consolidated financial statements of the consolidated entity comprising the Company and the entities it controlled at the end of, or
during, the financial year. We have conducted an independent audit of the financial report in order to express an opinion on it to
the members of the Company.
Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance as to whether
the financial report is free of material misstatement. Our procedures included examination, on a test basis, of evidence
supporting the amounts and other disclosures in the financial report, and the evaluation of accounting policies and significant
accounting estimates. These procedures have been undertaken to form an opinion as to whether, in all material respects, the
financial report is presented fairly in accordance with Accounting Standards, other mandatory professional reporting
requirements and the Corporations Act 2001 in Australia so as to present a view which is consistent with our understanding of the
Company's and the consolidated entity's financial position, and performance as represented by the results of their operations and
their cash flows.
The audit opinion expressed in this report has been formed on the above basis.
Audit opinion
In our opinion, the financial report of the Company is in accordance with:
(a)
the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the Company’s and consolidated entity’s financial position as at 30 June 2001 and
of their performance for the financial year ended on that date; and
complying with Accounting Standards and the Corporations Regulations 2001; and
(b)
other mandatory professional reporting requirements.
PricewaterhouseCoopers
Chartered Accountants
David J Smith
Partner
Perth, Western Australia
28 September 2001
ADDITIONAL INFORMATION
48
Pursuant to the Listing Requirements of Australian Stock Exchange Limited as at
27th September 2001.
(a)
Distribution and number of holders
31.05.2003
SHAREHOLDERS OPTIONHOLDERS
1
1,001
5,001
10,001
100,001
-
-
-
-
-
1,000
5,000
10,000
100,000
maximum
23
108
241
1,098
316
1,786
220
392
126
101
85
924
671 shareholders hold less than a marketable parcel of shares.
830 optionholders (31.05.2003) hold less than a marketable parcel of options.
(b)
Substantial shareholders (5% or more of issued capital)
J Borshoff and associated companies
D Dunnet and associated companies
(c)
The twenty largest shareholders hold 34.03% of the total shares issued.
Holder
No. of Shares %
Aylworth Holdings Pty Ltd
Resource Capital Invest Corp
Shar Holdings Pty Ltd
Serlett Pty Ltd
Merrill Lynch (Australia) Nominees Pty Ltd
Grundy Nominees Pty Ltd
Mr R W Crabb & Mrs C J Crabb
Ms K Heron
Mr J U Blanchard III
Plough Lane Superannuation Pty Ltd
ANZ Nominees Limited
Mr J Dennis
Alpenrose Investments Inc
Langley Holdings Pty Ltd
Avalanche Pty Ltd
Citywide Investments Pty Ltd
Mr B Marks
Aurex Pty Ltd
Ross Asset Management Ltd
Bellcourt Holdings Pty Ltd
11843237
10769230
4516401
4303366
4061999
4000000
3824572
2800000
2777778
2738462
2081855
2042112
1730000
1720000
1666700
1666667
1666667
1571427
1538461
1500000
5.88
5.32
2.23
2.13
2.01
1.98
1.89
1.38
1.37
1.35
1.03
1.01
0.86
0.85
0.82
0.82
0.82
0.78
0.76
0.74
___________________
68,818,934
34.03
___________________
ADDITIONAL INFORMATION (Contd)
49
(c)
The twenty largest optionholders (31.05.2003) hold 58.01% of the total options issued.
Holder
No. of Options %
Resource Capital Invest Corp
Serlett Pty Ltd
Plough Lane Superannuation Pty Ltd
Ross Asset Management Ltd
Bellcourt Holdings Pty Ltd
Mr J A Hellier & Mrs D M Hellier
Jis Corporation
Lusend and Company
Mr Australia Garments Pty Ltd
Mr D Rivers & Mrs L W Rivers
Viewade Pty Ltd
Jorac Pty Ltd
Kreskin Pty Ltd
Mr B Lee & Mrs A Lee
Overnight Nominees Pty Ltd
Rovon Investments Pty Ltd
Miss M C Du Toit
Aylworth Holdings Pty Ltd
Ianball Investments Pty Ltd
Mr I C Duncan and Mrs E A Duncan
10769230
3586462
1538462
1538461
1500000
1100000
1039000
1020000
1000000
1000000
1000000
683000
615000
611042
600000
600000
560000
557500
517000
500000
20.59
6.86
2.94
2.94
2.87
2.10
1.99
1.95
1.91
1.91
1.91
1.31
1.18
1.17
1.15
1.15
1.07
1.06
0.99
0.96
___________________
30,335,157
58.01
___________________
(e)
Voting rights
For all shares, voting rights are one vote per member on a show of hands and one vote
per share in a poll.
50
ADDITIONAL INFORMATION (Contd)
Pursuant to the Listing Requirements of Australian Stock Exchange Limited as at
27th September 2001.
(f)
Mining Tenements held –
URANIUM PROJECTS
WESTERN AUSTRALIA
PROJECT
MANYINGEE
OOBAGOOMA
PONTON
TENEMENT
3M’s
4E(A)’s
1E
INTEREST %
100%
100%
100%
JV PARTNER/S
-
-
-
OPERATOR
-
-
-
SOUTH AUSTRALIA
PROJECT
LAKE ELDER
CURNAMONA PROJECT
SICCUS JOINT VENTURE
TENEMENT
2EL’s
4EL’s
1EL’s
INTEREST %
100%
100%
90%
EMU WELL JOINT VENTURE
1EL
90%
JV PARTNER/S
-
-
Signature
Resources NL
J.E. Risinger`
OPERATOR
-
-
Paladin
Resources Ltd
Paladin
Resources Ltd
NORTHERN TERRITORY
PROJECT
NAPPERBY
N E ARUNTA
MALAWI - AFRICA
PROJECT
KAYELEKERA
TENEMENT
2EL(A)’s
1EL(A)
INTEREST %
100%
100%
JV PARTNER/S
-
-
OPERATOR
-
-
TENEMENT
1 EPL
INTEREST %
90%
JV PARTNER/S
Balmain Resources
Pty Ltd
OPERATOR
Paladin
Resources Ltd
ADDITIONAL INFORMATION (Contd)
(f)
Mining Tenements held (Contd)
51
NON-URANIUM PROJECTS
WESTERN AUSTRALIA
ASHBURTON BASIN
4E(A)’s
100%
SOUTH AUSTRALIA
MT LOFTY RANGES
2E(A)’s
100%
-
-
REAPHOOK JOINT VENTURE
1EL
7.5%
Perilya Limited
-
Paladin
Resources Ltd
Perilya Limited
NORTHERN TERRITORY
PROJECT
DAVENPORT
TENEMENT
2EL(A)’s
INTEREST %
30%
JV PARTNER/S
Normandy Gold
Exploration Pty Ltd
OPERATOR
Normandy Gold
Exploration Pty
Ltd
E
E(A)
M
EL
EL(A)
EPL
Exploration Licence (WA)
Exploration Licence Application (WA)
Mining Lease (WA)
Exploration Licence (SA and NT)
Exploration Licence Application (SA and NT)
Exclusive Prospecting Licence (Malawi)