PALADIN RESOURCES LTD
ACN 061 681 098
ANNUAL
REPORT
2002
CONTENTS
CORPORATE DIRECTORY
COMPANY SNAPSHOT
CHAIRMAN'S LETTER
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
12
13
18
19
20
21
43
44
46
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 6-11 and in the
directors’ report on pages 13-17.
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,
financial
available on our website
information
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
SHARE REGISTER
AUDITORS
SOLICITORS TO THE COMPANY
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
Computershare Investor Services Pty Limited
Level 2, 45 St Georges Terrace
Perth Western Australia 6000
Telephone:
Facsimile:
(+61 8) 9323 2000
(+61 8) 9323 2033
PricewaterhouseCoopers
QV1, 250 St George's Terrace
Perth Western Australia 6000
Blakiston & Crabb
1202 Hay Street
West Perth Western Australia 6005
COMPANY SNAPSHOT
4
• URANIUM DEVELOPMENT STRATEGY IN PLACE
-
Langer Heinrich acquisition adds another quality project
- Combined with Kayelekera, owns 2 of the most advanced projects in Africa
- Potential to place Paladin in top 5 uranium producers in world
• DATABASE ADDS VALUE FOR SHAREHOLDERS
- Ashburton Project spun out into independent exploration company (Marengo)
- Platinum project farm-outs successfully achieved
MINERAL RESOURCE STRUCTURE
PALADIN RESOURCES LTD
URANIUM ACTIVITIES
NON-URANIUM ACTIVITIES
AFRICA
100%
Langer Heinrich
Deposit, Namibia
90%
Kayelekera
Deposit, Malawi
Near term development
opportunity
AUSTRALIA
100%
Manyingee
Deposit
100%
Oobagooma
Deposit
Ponton
Project
Frome
Project
DATABASE
Au, PGM, Cu, Search
Davenport
Project
Mt Lofty
Project
Arunta
Project
Ashburton
Project
(Marengo
Spin Off)
5
CHAIRMAN’S LETTER
Dear Shareholder
Paladin continues to focus on its resource businesses, primarily to secure and develop uranium
assets in Australia and Africa. Additionally, we continue to evaluate and extract wealth from our
resource database. Significant advances have been achieved in both fields during the year.
The uranium markets are showing strength with the spot uranium price having risen from a low of
US$6.90 to be poised just below US$10 per pound. The industry appears to be entering a period of
growth with new electricity generation plants and demand for new, long term contracts.
The highlight for Paladin for the year was our acquisition of the Langer Heinrich deposit in Namibia.
This deposit has been thoroughly evaluated by Gencor, including trial mining and pilot milling, to show
a global resource of 34,730t U3O8 at a grade of 0.056% U3O8. Langer Heinrich ranks with Kayelekera
and Manyingee as a uranium resource ready for updated feasibility study, development and mining.
Paladin now has almost 100 million pounds of uranium in its inventory from these three deposits. Our
assessment to date on Langer Heinrich is very positive and shows a particularly robust, low
production cost deposit. In addition Namibia is a favourable country for uranium mining and for a
source of development funds.
We continue to seek funding for the feasibility study for our Kayelekera project. The government of
Malawi is very supportive and recognises the premier position Kayelekera represents in the country.
We continue to assess several funding avenues.
Previous work on our database resulted in a series of gold properties in the Ashburton region of
Western Australia. During the year these properties were vended into an independant company,
Marengo Mining Ltd, and the shares distributed to Paladin shareholders. This is a good example of
our value adding from the Company’s comprehensive database.
The Langer Heinrich and Kayelekera deposits are the two most advanced uranium projects in Africa
and our ownership gives Paladin various project and corporate opportunities which can be pursued
and are being evaluated. Between them these projects could potentially produce 2,000 tonnes per
annum of U3O8 which would place Paladin in the top 5 producers in the world. To strengthen our
African program we have appointed Leon Pretorius, an African uranium geologist and environmental
scientist, as Operations Manager-Africa.
With the focus maintained on the uranium projects, Paladin is seeking to exit its involvement with
Coretel; the broadband telco provider. Coretel has not been able to resolve its problems with the
supplier; Nortel, and Coretel has entered Voluntary Administration in an attempt to unravel the issue.
This year has been difficult for Paladin, but the positive, strengthening uranium market for the first
time in nearly a decade and the very favorable aspects of the Langer Heinrich project both indicate a
period of near term growth for the Company.
Dr D Dunnet
CHAIRMAN
6
REVIEW OF OPERATIONS
Summary
Paladin has pursued its two pronged strategy to create wealth for its shareholders, viz,
(cid:190) Development of its uranium assets, focusing in Southern Africa; and
(cid:190) Generation of gold, copper and platinum projects in Australia, leveraging off its database.
The resource arm of Paladin has a strong emphasis on uranium. The positive short and medium term
market outlook for this commodity, the strong in-house uranium expertise and the exciting project
development opportunities it has identified, particularly in Southern Africa, combine to make a solid
platform from which to increase shareholder value.
With the recent acquisition of the Langer Heinrich Deposit, Paladin believes that, in
combination with Kayelekera, it has control of the two most advanced uranium projects in
Africa. Between them these projects could potentially produce 2,000 tonnes per annum of
uranium oxide which would place Paladin in the top 5 uranium producers in the world.
Our opportunity for growth is further enhanced by the extensive proprietary database which we own
and the gold and platinum projects which are generated by evaluation of this information resource.
Our past activities in this area clearly demonstrate that we are capable of achieving such objectives.
Database evaluation has already resulted in the assembly of the Ashburton gold tenements and the
spinning out of a new independent exploration company, Marengo Mining Ltd. Paladin shareholders
received a 1:12 in-specie distribution of shares in this company, which is expected to list on ASX.
Paladin has also generated two gold/platinum projects from its database. The Mt Lofty Project in
South Australia has been joint ventured to a Canadian company and the Arunta Project in the
Northern Territory is currently being negotiated for joint venture farm-out.
7
LANGER HEINRICH URANIUM PROJECT
The Langer Heinrich Uranium Project is situated in Namibia, Southern Africa. It is owned 100% by
Paladin through a wholly owned Namibian subsidiary (Langer Heinrich Uranium (Pty) Ltd). Langer
Heinrich represents a major underdeveloped uranium resource with A$22M spent on this project by
previous owners – the Southern African mining house, General Mining and Finance Corporation
Limited (Gencor) from 1973 to 1998 and Acclaim Uranium NL (now Aztec Mining Ltd– “Acclaim”)
1999 to mid 2002. Paladin acquired the Langer Heinrich Project in August 2002.
Project Details
The project is located 80km east of the major seaport town of Walvis Bay, Namibia in Southern Africa.
The Langer Heinrich deposit is covered by Mineral Development Retention License (MDRL) 2236.
Namibia is a politically stable country having excellent infrastructure and an extensive mining industry
involving uranium, diamonds, gold and basemetals. Operations include the huge Rossing Uranium
Mine which has been in continuous production since 1977. The Namibian Government actively
encourages growth of its mining industry and is able to offer attractive loan fund facilities to support
development of suitable projects. The Langer Heinrich Uranium Project qualifies for such support.
Project History
Gencor, during its period of ownership, carried out extensive exploration including detailed resource
definition work and thorough mining, metallurgical and processing studies to evaluate the project for
possible development. Approximately 25,000m of percussion and reverse circulation drilling, 2,000m
of diamond drilling and excavation of 32 rectangular 2m x 1m exploratory shafts (up to 22m depth)
was carried out to establish the necessary confidence in the ore reserve status of the deposit. The
culmination of the Gencor studies involved construction of a 300,000 tonnes per annum (tpa) dry
screening plant (1978) and completion of intensive high quality metallurgical work utilising a purpose
built pilot plant from 1977 to end of 1979. All work was carried out to the highest of standards and this
now provides an excellent database for project reassessment.
When Acclaim purchased Langer Heinrich they carried out a drilling program to verify the Gencor ore
resource work (2,800m/107 holes), commenced key environmental baseline data gathering studies
and completed a prefeasibility study by December 1999. The prefeasibility study produced a positive
outcome indicating that an economic mining operation could be established treating 850,000 tpa of
ore utilising tried and proven processing technologies. The Acclaim study indicated the project was
capable of strong returns with an IRR of 53% and an NPV (at 10%) of US$37M on projected sales at
US$14/lb uranium oxide. This prefeasibility model was based on an 11 year mine life operation
producing approximately 1,000tpa uranium oxide with an identified mineable resource containing
11,930t U3O8 at a grade of 0.11% (0.034% U3O8 cut off). Production costs of US$5.70/lb, as
identified by the Acclaim study, place the Langer Heinrich Project in the very low operating cost
category confirming existence of an economically robust project with very good justification to pursue
its future development. A $5M bankable feasibility study was recommended for completion as a
result of the prefeasibility work and Acclaim’s efforts in 2000 and 2001 concentrated mainly on trying
to secure the necessary funds. The subsequent downturn in uranium prices and the change of
management and corporate direction of Acclaim effectively placed the project into a holding position
until its sale to Paladin.
Geology
Langer Heinrich is a calcrete related uranium deposit associated with valley-fill sediments occurring
within an extensive Tertiary palaeodrainage system. The calcretes are limestone deposits formed as
chemical precipitates developed under arid to semi-arid climate conditions. At Langer Heinrich
calcretization has affected a complex sequence of conglomerates, grits, sandstone, silts and clay
deposited in a braided stream depositional environment.
The uranium mineralisation takes the form of carnotite which is a secondary oxidised mineral
containing both uranium and vanadium. The deposit occurs over a 15km length with seven higher
grade pods (Details 1 to 7) occurring within a lower grade mineralised envelope. The carnotite occurs
8
as thin films lining cavities and fracture planes and as grain coatings and disseminations in the
calcretized sediments. Mineralisation is 1m to 30m thick and is 50m to 1,100m wide depending on
the width of the palaeovalley.
After calcrete development and mineralisation, part of these sediments were subsequently eroded as
a result of uplift rejuvenated river flows. This has dissected and modified both the calcrete and
associated mineralisation. Today the deposit is blanketed by up to 8m of river sands and scree
associated with the prevailing ephemeral drainage system.
Ore Resources
A resource study was undertaken by Acclaim and the uranium resource inventory for Langer Heinrich
has been reported as follows:-
• The deposit has been estimated (JORC category “Inferred”) to comprise a Total Global
Resource (“in-situ”) of 61.63Mt at an average grade of 0.056% U3O8 containing 34,753t U3O8,
using a 0.02% U3O8 cut-off. This includes all drilled area (i.e. Details 1 to 7).
• An estimate of optimised “in-situ” total resources for all Details was made on the basis of a
Cut-off of 0.034% U3O8 determined from pit optimisation studies. This showed a total of
10.9Mt of ore is available at an average grade of 0.11% U3O8, which contains 11,930t U3O8.
Future Programme
Although Paladin is confirming the favourable potential for development of the Langer Heinrich
Project, the viability of such an operation has yet to be fully tested by a bankable feasibility study.
A four month evaluation program is underway (began in August) during which Paladin will re-examine
all Gencor and Acclaim findings to determine a more appropriate, technically focussed and lower cost
bankable feasibility study. Paladin is confident it will achieve significant optimisation to produce a
more streamlined basis for determination of project feasibility. Funding for the bankable feasibility
study is available in part via attractive loan arrangements from the Namibian Government and this will
be pursued.
KAYELEKERA PROJECT
The Kayelekera project is located in the northern part of Malawi in Southern Africa. The Project is
situated 8km south of the main road that connects the townships of Karonga and Chitipa. It is
accessible via dirt road and is 40kms to the west of the provincial town of Karonga. Exclusive
Prospecting Licence “EPL 070” covers the Kayelekera deposit.
The Kayelekera Deposit offers a robust uranium project development opportunity. A final feasibility
study is required and this work will be largely based on, and assisted by, the extensive feasibility
studies carried out by its previous owners in the period 1982-1990. Concessional finance to complete
an updated bankable feasibility study is currently being sought.
The Kayelekera Uranium Project is owned 90% by Paladin through its wholly owned Malawi
subsidiary (Paladin Africa Ltd). This project is technically advanced with A$9M spent by previous
owners (CEGB of UK), culminating in completion of a final feasibility study in 1990 which showed the
project to be uneconomic on the parameters then utilised. Paladin reviewed the engineering and
mining concept utilised in this existing bankable feasibility study and found project performance could
be improved, incorporating modern processing technology and using upgraded mining techniques.
Modelling of the new mining concept indicates that the project can be optimised with a positive
financial outcome. Approximately US$2.7M is required for a new updated bankable feasibility study
and Paladin is currently seeking concessional funding to initiate Phase I (US$1.2M) of the study for
this project.
9
The Kayelekera Project presents an ideal platform for initiation of a much needed modern mining
industry in Malawi. The Malawi Government is very supportive of the project and the Company is
currently working with relevant departments to access the required funds.
MANYINGEE DEPOSIT
The Manyingee Uranium Project is located in the North West of Western Australia, 85 kilometres
inland from the coastal township of Onslow. Access to the site is along station tracks, either from the
North West Coastal Highway (39km) or from the Barradale-Onslow road 22km to the west. The
Tubridgi Natural Gas Pipeline passes 500 metres east of the licence area. The property is protected
by 3 Mining Leases totalling 13km2.
The Project contains an indicated and inferred resource of 12Mt of ore at a grade of 0.09% U3O8
containing 11,000t of U3O8 in permeable sandstone and is amenable to In-situ Leach mining (ISL).
Paladin proposes to develop the project to an ISL uranium mine over a three year period starting with
an Environmental Impact Statement, followed by reserve drilling, a field leach trial and feasibility
study. The Project is currently mothballed and no field work was carried out on the project during the
year, with the Southern African projects being given priority for development.
FROME PROJECTS
The Frome Projects are located in South Australia, 500km north of Adelaide, within the Frome Basin
which also hosts the Beverley and Honeymoon uranium ISL operations.
Throughout the year Paladin further rationalised its tenement holdings concentrating on the
outstanding targets in the region. The Company now holds interests in the Reaphook/Siccus Joint
Venture and the Heathgate Joint Venture. Details are as follows:-
Reaphook/Siccus Joint Venture
The joint venture covers EL2392 on the western margin of the Frome Basin. Perilya Limited is
earning an 85% interest. Paladin and its joint venture partner Signature Resources Ltd will retain a
15% free carried interest to bankable feasibility stage. The agreement allows Perilya to explore for
base metals and gold, with the original joint venture partners retaining 100% of the rights for uranium.
During the year Perilya identified several base metal targets, mainly zinc, within rocks of the Adelaide
Geosyncline. Exploration including drilling work is planned to be carried out once Native Title
clearance is completed.
Heathgate Joint Venture
In November 2001 Paladin signed a joint venture with Heathgate Resources Ltd, owner of the
Beverley ISL uranium mining operation which reached full production earlier this year. Heathgate
Resources is an Australian affiliate of General Atomics of the USA.
The two tenements, (EL’s 2389 and 2394), cover 1,500km² and are located immediately north of the
Beverley Mine tenements. Heathgate will earn an 80% interest in these properties with Paladin
retaining a free carried interest of 20% and 15% respectively until completion of a bankable feasibility
study and a decision to mine.
Heathgate commenced exploration with an airborne electromagnetic survey to identify prospective
palaeochannels. The data is currently being evaluated.
10
OOBAGOOMA PROJECT
The Oobagooma Project is located 75km north east of Derby in the Kimberley Region of Western
Australia on freehold land owned by the Commonwealth and used by the military. The area is
covered by two EL applications covering 392km². The project was explored by Afmeco from 1983 to
1986 during which time extensive zones of uranium mineralisation were discovered. Afmeco
calculated total geological resources of 8.2Mt of ore at a grade of 0.12% U3O8 containing 9,950t U3O8
using geostatisical methods employing a 0.03% U3O8 cut off.
No work was carried out on this project during the year. The main exploration effort, once the
tenements have been granted, will be to confirm continuity of the uranium mineralisation by infill
drilling concentrating on mineralised redox fronts as re-interpreted and further develop the reserves
for consideration of a future ISL mining operation.
NON URANIUM ACTIVITIES
MT LOFTY PROJECT
The Mt Lofty Project is located in the southern Mt Lofty Ranges east and south of Adelaide in South
Australia. Exploration targets for the project include platinum/palladium mineralisation associated with
uranium mineralisation in albite altered hosted rocks. The targets are located in Palaeo Proterozoic
basement inliers of the Adelaide Geosyncline.
EL2863 covering the Houghton Inlier and EL2862 covering the southern Myponga Inlier total 324km²
of prospective ground and were granted in October 2001. Both Inliers contain uranium prospects
associated with albite altered host rocks.
A joint venture agreement was reached with Balmain Resources Pty Ltd, who will spend a total of
$750,000 over four years to earn a 45% equity interest. Paladin will be the project operator.
The drillhole sampling of the Inglewood and Houghton Prospects on EL2863 confirmed the Pt/Pd
association with the known uranium mineralisation. Sampling from the Inglewood Prospect
delineated a core of encouraging Pt/Pd mineralisation including two intersections of 4m of 1.2ppm
Pt/Pd and 8m at 0.88ppm Pt/Pd mineralisation. At Houghton the Pt/Pd grades were found to be
lower, in the range of 20ppb to 60ppb combined Pt/Pd over 5m and 15m lengths. Further ground
mapping and sampling is required along with evaluation of the airborne magnetic and radiometric data
to further identify and prioritise target for drilling.
Approval for initial ground access has been cleared with the relevant freehold land owners over the
known target areas.
ARUNTA PROJECT
EL9890 is located 200km north east of Alice Springs in the Northern Territory. The tenement includes
43 blocks or 142km². Native Title negotiations with the Central Land Council have been completed
and EL9890 was granted for six years on 21 May 2002.
Recent research results by Australian Geological Survey Organisation indicate the metabasic and
ultrabasic intrusions in the Eastern Arunta Region have potential for Platinum Group Metals (PGM)
and multi-element PGM, Au, Cu, Ag, Pb mineralisation. Explorers working on adjacent ground
confirm the potential for high grade multi-element PGM, Au, Cu, Ag mineralisation especially in the
Riddoch Amphibolite. Paladin’s EL9890 covers a 15km strike length of this prospective unit and
shows along with a high grade uranium prospect considerable indications for multi-element
mineralisation.
Geochemical blanket exploration methods including stream sediment sampling and modern soil
sampling methods have not been applied on the tenement and this has the potential to identify new
PGM, Cu, Au, Ag targets on the property.
11
DATABASE PROJECT GENERATION
Paladin owns a comprehensive Proprietary Database covering uranium, platinum, copper and gold
exploration results and an extensive technical library. Paladin plans to more fully utilize this asset to
identify new high quality PGM and/or gold/copper exploration projects. It is anticipated this
component of work will generate a strong portfolio of gold/platinum projects offering the Company
good opportunities for both joint venture farm-out and exploration in its own right.
MARENGO GOLD SPIN-OFF
Database evaluation resulted in the assembly of the Ashburton gold tenements which have
prospective ground, definable drill targets and an excellent associated project database all emanating
from its primary database. Paladin elected to spin off a new gold exploration company (Marengo
Mining Ltd) with a specific focus on the Ashburton region. The new company is independent of
Paladin with an experienced and respected Managing Director and Board. Paladin will retain
2,500,000 options (exercisable at 20 cents on or before 28 February 2008) and Paladin shareholders
have received a 1:12 in-specie distribution of shares in this company which is expected to soon list on
the ASX.
OTHER INVESTMENTS
CORETEL PTY LTD
Coretel Pty Ltd, the telecommunications company in which Paladin has the right to an 85% equity,
appointed Voluntary Administrators, Mr Louis Nilant and Mr Oren Zohar, of Clout & Associates,
Chartered Accountants in August 2002.
The Coretel network was finally established in April 2002 after a 15 month delay. On start-up of this
network new customer connections were immediately established in the Mandurah and Bunbury
regions and numerous other customer opportunities identified confirming the company’s business
plan. The start-up delay was caused by the company’s principal telco equipment vendor who was
unable to provide the necessary service in time severely constraining Coretel’s ability to develop its
business in the south west target region of Western Australia. The necessary cash flow targets were
therefore not possible to achieve and required Paladin to inject additional funds into Coretel while it
waited to become fully operational.
Coretel believes it has a justified case against the principal vendor for delays and disruption to
establishment of its network and Coretel’s legal advice is that the claim has a good chance of
succeeding.
Although Coretel’s business is now trading cash positive and able to meet current operating
expenses, it believes that the step of placing itself in Voluntary Administration is necessary to attempt
to resolve the debts accumulated during this period of disruptive delay and ensure that current
revenue, potential new business and possible new funds raised will be focused to grow Coretel.
ST SYNERGY LTD
Principal efforts in the past 12 months have been to position ST Synergy correctly in the global
marketplace and establish a structure amenable to sustainable profitable growth and accelerate
commercialisation of the award winning enterprise knowledge management system.
The company has entered into a strategic partnership with the Spherion Group (a Fortune 500
company). Spherion will be the primary implementation, training and support partner both in Australia
and worldwide.
ST Synergy will continue its primary effort of strengthening its marketing and sales areas and is
exploring several other avenues to expand into both the US and Asian markets.
Paladin holes a 23% equity interest in ST Synergy.
12
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
13
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 2002.
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 past 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.
14
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, Alcaston Mining NL, ST Synergy Ltd, Thundelarra
Exploration Ltd and Chatsworth Stirling Pty Ltd.
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 $96,079 (2001: $892,065)
was written off. Expenditure totalling $2,808,937(2001: $2,574,398) has been carried forward on
other areas where operations are continuing. The consolidated results are as follows:
Operating loss after income tax
2002
$
2,226,113
2001
$
1,795,117
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 6 to 11 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.
15
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 28 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 2001
Expired during year
Balance at date of this report
(ii) Exercisable at 35 cents, on or before
30 July 2000.
Balance at 1 July 2001
Expired during year
Balance at date of this report
(iii) Exercisable at 15 cents, on or before
30 November 2004.
Balance at 1 July 2001
Issued during year
Balance at date of this report
(iv) Exercisable at 25 cents,
on or before 31 August 2000
Balance at 1 July 2001
Expired during year
Balance at date of this report
Number of Options
2001
2002
-
-
-
-
-
-
-
4,700,000
4,700,000
230,000
(230,000)
-
1,500,000
(1,500,000)
-
-
-
-
-
-
-
2,275,000
(2,275,000)
-
16
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 2001
Expired during year
Balance at date of this report
Listed Options
(vi) Exercisable at 10 cents,
on or before 21 January 2004
Balance at 1 July 2001
Issued during year
Balance at date of this report
(vii) Exercisable at 20 cents, on or before
31 October 2000
Balance at 1 July 2001
Expired during year
Balance at date of this report
(viii) Exercisable at 15 cents, on or before
31 May 2003
Balance 1 July 2001
Issued during year
Less exercised during year
Balance at date of this report
Directors' Interests
2002
D Dunnet
J Borshoff
G Swaby
R W Crabb
2001
D Dunnet
J Borshoff
G Swaby
R W Crabb
Fully Paid
Shares
6,087,828
12,458,394
1,595,515
3,848,572
Fully Paid
Shares
6,087,828
12,158,394
1,595,515
3,968,572
Options*
376,367
776,263
132,960
322,381
Options*
376,367
576,263
132,960
322,381
Number of Options
2002
2001
-
-
-
2,000,000
(2,000,000)
-
-
62,250,000
62,250,000
-
-
-
-
-
-
18,936,638
(18,936,638)
-
52,203,071
100,000
-
52,303,071
-
52,226,294
(23,223)
52,203,071
Options**
645,201
1,779,774
227,931
566,940
Options ***
1,000,000
1,500,000
1,200,000
1,000,000
The particulars of Directors' interests in shares and options are as at the date of this report.
*
**
***
Listed and exercisable at 15 cents on or before 31 May 2003
Listed and exercisable at 10 cents on or before 21 January 2004
Unlisted and exercisable at 15 cents on or before 30 November 2004
17
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 and is not performance linked.
Non-executive Directors of Paladin Resources Ltd
Name
Directors’ Fees 1
$
2002 2001
Consulting Fees
$
2002 2001
Options
$
2002 2001
Total
$
2002
2001
D Dunnet
R Crabb
20,000
15,000
20,000
15,000
11,097
-
3,150
-
6,000
6,000
-
-
37,097
21,000
23,150
15,000
Executive Directors of Paladin Resources Ltd
Name
Directors’ Fees 1
$
2002 2001
Consulting Fees
$
2002 2001
Options
$
2002 2001
Total
$
2002
2001
J Borshoff
G Swaby
15,000
15,000
15,000 144,375
15,000
70,800
150,000
80,800
9,000
7,200
-
-
168,375 165,000
95,800
93,000
There are no other executives in the Company.
The amounts disclosed above for remuneration relating to options are the assessed fair values of
options at the date they were granted during the year ended 30 June 2002. Fair values have been
assessed using the Black Scholes option pricing models. This value has not been included in the
statement of Financial Performance.
1 During the year the Directors of the Company waived their fees in relation to the 1999/2000 and
2000/2001 years totalling $96,000.
Meetings of Directors
The following table sets out the number of meetings of the Company's Directors held during the
year ended 30 June 2002 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
10
10
10
10
10
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 27th day of September 2002
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 2002
18
Revenue from ordinary
activities
Notes
CONSOLIDATED
PARENT ENTITY
2002
$
2001
$
2002
$
2001
$
2
258,724
74,963
325,858
46,843
_____________________________________________
Exploration costs written off
(96,079)
(892,065)
(37,326)
(52,143)
Borrowing costs
3
(51,585)
(30,837)
-
-
General and administration
(489,268)
(535,267)
(501,771)
(547,226)
Write down of investments
(1,445,000)
(80,731)
(1,574,531)
(884,517)
Written down value of exploration
property sold
Share of net loss of associate
accounted for using the equity
method
Loss from ordinary activities
before income tax
-
-
(57,470)
(402,905)
(331,180)
-
-
-
_____________________________________________
2,226,113
1,795,117
1,845,240 1,437,043
Income tax expense
4
-
-
-
-
_____________________________________________
Total changes in equity other than
those resulting from transactions
with owners as owners
20
2,226,113
_____________________________________________
1,845,240 1,437,043
1,795,117
Basic and diluted earnings per
share (cents)
31
(1.05)
(1.18)
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 2002
19
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
2002
$
2001
$
2002
$
2001
$
5
6
7
8
9
10
11
12
13
286,890
210,158
-
-
576,841
23,092
28,604
8,530
175,509
183,931
-
-
577,250
22,500
28,604
8,530
497,048
637,067
359,440
636,884
_____________________________________________
-
236,991
544,000
1,566,997
2,808,937
-
639,896
1,602,578
1,661,825
2,574,398
3,039,009 2,865,909
1,056,709 1,056,709
1,241,953 2,342,665
35,807
-
23,469
-
5,156,925
_____________________________________________
5,361,140 6,301,090
6,478,697
5,653,973
_____________________________________________
5,720,580 6,937,974
7,115,764
14
15
236,517
32,610
317,824
35,311
230,333
32,610
314,980
35,311
_____________________________________________
TOTAL CURRENT LIABILITIES
269,127
353,135
262,943
350,291
_____________________________________________
NON CURRENT LIABILITIES
Interest bearing liabilities
Other
16
17
731,787
20,000
588,651
30,000
-
-
-
-
_____________________________________________
TOTAL NON CURRENT LIABILITIES
751,787
618,651
-
-
_____________________________________________
TOTAL LIABILITIES
NET ASSETS
PARENT ENTITY INTEREST EQUITY
18
Contributed equity
19
Reserves
20
Accumulated losses
TOTAL EQUITY
22
1,020,914
_____________________________________________
350,291
971,786
262,943
4,633,059
_____________________________________________
5,457,637 6,587,683
6,143,978
181,170
19,099,393 18,565,369
19,099,393 18,565,369
-
-
(14,647,504) (12,421,391)
(13,822,926)(11,977,686)
_____________________________________________
181,170
4,633,059
_____________________________________________
5,457,637 6,587,683
6,143,978
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 2002
20
CONSOLIDATED
PARENT ENTITY
Notes
2002
$
2001
$
2002
$
2001
$
Cash flows from operating
activities
Payments to suppliers and
employees
Interest received
Interest paid
Rental income
Net cash outflow from
operating activities
29
Cash flows from investing
activities
Payments for property, plant
and equipment
Exploration and evaluation
expenditure
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
(521,486)
6,275
(51,585)
82,833
(226,334)
19,681
(30,837)
28,107
(468,157)
6,242
-
-
(230,629)
19,668
-
-
_____________________________________________
(483,963)
(210,961)
_____________________________________________
(461,915)
(209,383)
(19,805)
(36,606)
(4,749)
-
(299,537)
-
(386,422)
-
-
42,066
(465,080)
5,000
(1,609,244)
(250,231)
-
27,175
(94,796)
-
(3,750)
-
(386,422) (1,609,244)
(261,602)
(754,465)
27,175
-
(210,497)
42,066
_____________________________________________
(663,698)
(654,398) (2,601,886)
_____________________________________________
(2,328,986)
Cash flows from financing
activities
Share placement
Fundraising costs
Repayment of borrowings
Mortgage funding
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
867,650
(153,078)
(3,305)
146,443
3,438,030
(63,077)
(282,244)
-
867,650 3,438,030
(63,077)
(153,078)
-
-
-
-
_____________________________________________
857,710
3,092,709
714,572 3,374,953
_____________________________________________
(289,951)
554,340
(401,741)
562,106
576,841
22,501
577,250
15,144
_____________________________________________
5
286,890
576,841
175,509
577,250
_____________________________________________
Non-cash financing and
investing activities
30
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 2002
21
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.
(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 2002 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
22
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2002
1. STATEMENT OF ACCOUNTING POLICIES (Contd)
(D)
EARNINGS PER SHARE
(i) Basic Earnings per share
Basic earnings per share is determined by dividing net profit after income tax
attributable to members of the company, excluding any costs of servicing equity
other than ordinary shares, by the weighted average number of ordinary shares
outstanding during the financial year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic
earnings per share to take into account the after income tax effect of interest and
other financing costs associated with dilutive potential ordinary shares and the
weighted average number of shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary shares.
(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.
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
23
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2002
1.
(I)
STATEMENT OF ACCOUNTING POLICIES (Contd)
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.
(J)
RECEIVABLES
All trade debtors are recognised at the amounts receivable as they are due for
settlement no more than 30 days.
Collectibility of trade debtors is reviewed on an ongoing basis. Debts which are known
to be uncollectible are written off. A provision for doubtful debts is raised when some
doubt as to collection exists.
(K)
INVESTMENTS
Interests in listed and unlisted securities, other than controlled entities and associates in
the consolidated financial statements, are brought to account at cost and dividend
income is recognised in the statement of financial performance when receivable.
Controlled entities and associates are accounted for in the consolidated financial
statements as set out in note 1(a).
(L)
TRADE AND OTHER CREDITORS
These amounts represent liabilities for goods and services provided to the consolidated
entity prior to the end of the financial year and which are unpaid. The amounts are
unsecured and are usually paid within 30 days of recognition.
(M)
BORROWING COSTS
Borrowing costs are recognised as expenses in the period in which they are incurred.
Borrowing costs include interest on bank overdrafts and short-term and long-term
borrowings.
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
24
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2002
2. REVENUE
CONSOLIDATED
PARENT ENTITY
2002
$
2001
$
2002
$
2001
$
Revenue from outside the operating
activities
Interest
Property rental
Proceeds on sale of investments
Building contribution
Reversal of accrual for Directors’ fees
Proceeds from sale of exploration property
6,275
104,333
42,116
10,000
96,000
-
19,681
28,107
27,175
-
-
-
6,242
-
42,116
-
96,000
181,500
19,668
-
27,175
-
-
-
_____________________________________________
258,724
74,963
325,858
46,843
_____________________________________________
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
investments
-
- exploration properties
- subsidiary
Loan forgiven
Expenses:
Depreciation
- property, plant and equipment
- buildings
13,462
-
124,030
10,000
2,128
-
-
-
13,462
124,030
-
-
2,128
-
-
-
_____________________________________________
17,087
11,903
23,665
11,903
17,087
-
23,665
-
_____________________________________________
Total depreciation
28,990
35,568
17,087
23,665
_____________________________________________
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 2002
25
CONSOLIDATED
PARENT ENTITY
2002
$
2001
$
2002
$
2001
$
3. OPERATING LOSS (Contd)
Other charges against assets:
Provision for non-recovery of
- convertible notes and unsecured loan 1,445,000
-
intercompany loan
-
-
-
investment in controlled entity
96,079
Exploration expenditure written off
-
Write down of investment
-
-
-
892,065
55,684
1,445,000
87,397
42,134
37,326
-
-
803,786
121,779
52,143
55,684
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 30%
(2001: 34%)
Tax effect of permanent differences:
Non-deductible expenditure
(2,701)
4,297
(2,701)
4,297
51,585
30,837
-
-
_____________________________________________
(1,845,240) (1,437,043)
(2,226,113)
_____________________________________________
(1,795,117)
(667,834)
(610,340)
(553,572)
(488,595)
579,086
434,836
472,359
351,353
_____________________________________________
(137,242)
(175,504)
(88,748)
(81,213)
Tax benefit not recognised
88,748
175,504
81,213
137,242
_____________________________________________
Income tax attributable to operating
loss
The Directors estimate that the
potential future income tax benefit at
30 June 2002 in respect of tax losses
not brought to account is:
-
-
-
-
_____________________________________________
1,753,129
_____________________________________________
1,147,838 1,066,625
1,664,381
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
286,890
576,841
175,509
577,250
_____________________________________________
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2002
26
CONSOLIDATED
2002
$
2001
$
PARENT ENTITY
2001
2002
$
$
210,158
23,092
183,931
22,500
_________________________________________________
579,034
(550,430)
_____________________________________________
579,034
(550,430)
-
-
-
-
-
28,604
-
28,604
_____________________________________________
-
28,604
-
28,604
_____________________________________________
-
8,530
-
8,530
_____________________________________________
5,973,945 5,713,448
(2,934,936) (2,847,539)
_____________________________________________
-
-
-
-
-
-
3,039,009 2,865,909
_____________________________________________
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
236,991
639,896
1,056,709 1,056,709
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 2002
27
10. NON CURRENT INVESTMENTS (Contd)
ACCOUNTED FOR USING THE EQUITY METHOD
Investment in associate
Name
Traded*
Principal
Activity
Ownership
Interest
2002
2001
Consolidated
Carrying Amount
2002
$
2001
$
Parent Entity
Carrying Amount
2002
$
2001
$
ST Synergy Ltd Knowledge
Management
Software
23%
23% 236,991 639,896
1,056,709 1,056,709
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 2002, the shares
traded at 25¢ 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)
Loan-unsecured (ii)
Less provision for non-recovery
CONSOLIDATED
PARENT ENTITY
2002
$
2001
$
2002
$
2001
$
639,896
-
(200,000)
(202,905)
964,410
6,666
(200,000)
(131,180)
236,991
639,896
-
-
-
-
-
-
-
-
-
-
882,197
1,524,085
278,162
437,266
2,393,561
279,503
-
-
1,635,000
354,000
(1,445,000)
_____________________________________________
1,961,605 1,961,605
(1,263,652) (1,221,518)
1,635,000 1,602,578
-
-
-
-
1,602,578
-
-
354,000
(1,445,000)
544,000
1,602,578
1,241,953 2,342,665
_____________________________________________
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
JUNE 2002
28
11 OTHER FINANCIAL ASSETS (Contd)
(i) Investments in Controlled Entities
NAME
COUNTRY OF
INCORPORATION
PERCENTAGE
INTEREST HELD
2002
2001
COST OF PARENT
ENTITY’S
INVESTMENT
2002
$
2001
$
Australia
Eden Creek Pty Ltd *
Paladin Energy
Minerals NL *
Australia
Etron Properties Pty Ltd * Australia
Paladin (Africa) Ltd
Malawi
Less provision for non-
recovery of investment –
Eden Creek Pty Ltd
100%
100%
1,700,002 1,700,002
100%
100%
100%
100%
100%
100%
1
261,602
-
1
261,602
-
1,961,605 1,961,605
(1,263,652) (1,221,518)
697,953
740,087
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
2001
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
2002
11,371
34,279
1,123,812
(6,965)
(569,228)
(331,667)
261,602
On the 6 February 2002 the parent entity incorporated Paladin Exploration Pty Ltd with $1 issued
capital.
In May 2002, Paladin Exploration Pty Ltd converted its status to that of a public company and
changed its name to Marengo Mining Limited. In May 2002, Paladin was issued with a total of
9,438,684 shares at a total issue price of $94. In April 2002, Paladin sold its Ashburton tenement
interests to Marengo for $181,500 by way of an issue of 9,361,315 shares that were issued in May
2002. The Ashburton tenements were originally represented by eight applications for exploration
licences and since the applications were made, four had been converted into full exploration
licences. Paladin is also entitled to reimbursement of costs of $132,122 that will be paid out of the
proceeds of the public issue pursuant to the prospectus issued by Marengo.
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2002
29
11 OTHER FINANCIAL ASSETS (Contd)
Acquisition of controlled entities (Contd)
Through an in specie distribution involving Paladin and the shareholders of Paladin, Paladin in
June 2002 distributed the 18,800,000 shares held in Marengo to the Paladin shareholders as a
return of capital/in specie distribution. The in specie distribution was on a one for twelve basis
(one Marengo share for every 12 shares held in Paladin).
On 29 May 2002 Paladin granted Marengo an exclusive licence to use for mineral exploration,
mining and development all information which has been collected, captured collated, organised
and arranged by Paladin in relation to a defined area of influence in the Ashburton region.
As consideration for the grant of the licence, Paladin received 2,500,000 unlisted share options in
Marengo, exercisable at 20 cents per share, on or before 28 February 2008.
Outflow of cash to acquire controlled
entity, net of cash acquired
Cash consideration
Less: balances acquired
Cash
Outflow of cash
ii)
Funding to Coretel Pty Ltd
CONSOLIDATED
PARENT ENTITY
2002
$
2001
$
2002
$
2001
$
-
-
261,602
11,371
-
-
261,602
-
_____________________________________________
-
250,231
-
261,602
_____________________________________________
Paladin Resources Ltd holds $1,635,000 (2001: $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. In
addition a further $354,000 was advanced during the year. The carrying amount of these
receivables has been written down to $544,000 as at 30 June 2002 by the directors to reflect
their assessment of the recoverable amount.
12. NON CURRENT PROPERTY
PLANT & EQUIPMENT
Land and buildings - at cost
Less provision for depreciation
1,175,474
(23,806)
1,160,418
(11,903)
-
-
-
-
_____________________________________________
1,151,668
_____________________________________________
1,148,515
-
-
Plant and equipment – at cost
Less provision for depreciation
400,856
(377,387)
400,886
(365,079)
_____________________________________________
400,856
(377,387)
400,886
(365,079)
Technical database – at cost
Less amortisation
262,500
(227,464)
262,500
(201,214)
-
-
-
-
23,469
35,807
23,469
35,807
_____________________________________________
_____________________________________________
35,036
61,286
-
-
_____________________________________________
Project generation database – at cost
Less amortisation
593,932
(237,108)
593,932
(177,715)
-
-
-
-
_____________________________________________
356,824
416,217
-
-
_____________________________________________
1,566,997
1,661,825
23,469
35,807
_____________________________________________
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2002
30
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 – 2002
Carrying amount at start of year
Additions
Depreciation/amortisation
expense (Note 3)
Total
$
Freehold
Land &
Buildings
$
Plant &
Equipment
Database
$
$
1,661,825 1,148,515
15,056
19,805
35,807
4,749
477,503
-
(114,633)
(85,643)
_____________________________________________
(17,087)
(11,903)
Carrying amount at end of year
1,566,997 1,151,668
23,469
391,860
_____________________________________________
Parent Entity - 2002
Carrying amount at start of year
Additions
Depreciation/amortisation
expense (Note 3)
35,807
4,749
(17,087)
-
-
-
35,807
4,749
(17,087)
-
-
-
_____________________________________________
Carrying amount at end of year
23,469
-
23,469
-
_____________________________________________
13. NON CURRENT ASSETS
- OTHER
(a) Exploration Expenditure
Carrying amount at start of year
Movements:
Direct expenditure for year
Sale of tenements
Deconsolidation of subsidiary
Expenditure written off
CONSOLIDATED
PARENT ENTITY
2002
$
2001
$
2002
$
2001
$
2,574,398
3,001,383
-
48,393
388,088
-
(57,470)
(96,079)
3,750
-
-
(52,143)
_____________________________________________
465,080
-
-
(892,065)
94,796
(57,470)
-
(37,326)
2,808,937
_____________________________________________
2,574,398
-
-
14. ACCOUNTS PAYABLE
Trade creditors and accruals
236,517
317,824
230,333
314,980
_____________________________________________
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2002
31
CONSOLIDATED
PARENT ENTITY
2002
$
2001
$
2002
$
2001
$
15. CURRENT PROVISIONS
Employee entitlements
(See Note 32)
32,610
35,311
32,610
35,311
_____________________________________________
16. NON CURRENT INTEREST
BEARING LIABILITIES
Secured
Bank loans
Total secured non-current interest
bearing liabilities
731,787
588,651
-
-
_____________________________________________
731,787
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 7.2% on $260,000 and 8.35% on
$472,500 (2001: 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
17. OTHER
Loan from non-related party
(unsecured)
1,151,668
_____________________________________________
1,148,515
-
-
20,000
30,000
-
-
_____________________________________________
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2002
32
PARENT ENTITY
2002
Shares
2001
Shares
PARENT ENTITY
2001
2002
$
$
18. CONTRIBUTED EQUITY
(a) Share Capital
Ordinary shares
Fully paid
226,744,825 201,094,825
19,099,393 18,565,369
_____________________________________________
Date
(b) Movements in
Number of Shares
ordinary share capital:
Issue Price
¢
Total
$
July 2000
October 2000 Placement
Balance at start of year
Entitlement Issue
June 2001
Option Conversions
Placement
Less: Transaction costs arising on
share issues
115,610,888
23,122,143
21,673,360
23,223
40,765,211
-
Balance start of year
Issue to acquire joint venture interest
July 2001
December 2001 Placement
January 2002 Placement
Placement
March 2002
Less: Transaction costs arising on
share issues
Capital reduction (refer Note 11)
201,194,825
1,000,000
1,500,000
12,500,000
10,550,000
-
3.5¢
6¢
15¢
3.25¢
5¢
2¢
2¢
3.8¢
15,190,416
809,275
1,300,402
3,483
1,324,870
(63,077)
18,565,369
50,000
30,000
250,000
400,900
(147,498)
(49,378)
Balance 30 June 2002
226,744,825
19,099,393
______________________________________________
(c) Issued Options
(i) Unlisted and exercisable at 20 cents, on or before
Number of Options
2002
2001
31 July 2000
Balance at 1 July 2001
Expired during year
Balance at 30 June 2002
(ii) Unlisted and exercisable at 35 cents, on or before
30 July 2000.
Balance at 1 July 2001
Expired during year
Balance at 30 June 2002
(iii) Unlisted and exercisable at 15 cents, on or before
30 November 2004
Balance at 1 July 2001
Issued during year
Balance at 30 June 2002
-
-
-
-
-
-
230,000
(230,000)
-
1,500,000
(1,500,000)
-
-
4,700,000
4,700,000
-
-
-
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2002
33
18. CONTRIBUTED EQUITY (Contd)
(c)
Issued Options (Contd)
(iv) Unlisted and exercisable at 25 cents,
on or before 31 August 2000
Balance at 1 July 2001
Expired during year
Balance at 30 June 2002
(v) Unlisted and exercisable at 20 cents
on or before 31 March 2001
Balance at 1 July 2001
Expired during year
Balance at 30 June 2002
(vi) Listed and exercisable at 10 cents, on or before
21 January 2004
Balance at 1 July 2001
Issued during year
Balance at 30 June 2002
(vii) Listed and exercisable at 20 cents, on or before
31 October 2000
Balance at 1 July 2001
Less expired during year
Balance at 30 June 2002
(iv) Exercisable at 15 cents, on or before
31 May 2003
Balance 1 July 2001
Issued during year
Less exercised during year
Balance at 30 June 2002
(d) Ordinary Shares
Number of Options
2002
2001
-
-
-
-
-
-
2,275,000
(2,275,000)
-
2,000,000
(2,000,000)
-
-
62,250,000
62,250,000
-
-
-
-
-
-
18,936,638
(18,936,638)
-
52,203,071
100,000
-
52,303,071
-
52,226,294
(23,223)
52,203,071
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.
19. RESERVES
Option Application Reserve
Issue of 62,250,000 options at $0.003
Less expenses of issue
CONSOLIDATED
PARENT ENTITY
2002
$
2001
$
2002
$
2001
$
186,750
(5,580)
-
-
186,750
(5,580)
-
-
_____________________________________________
181,170
-
181,170
-
_____________________________________________
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2002
34
20. 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
2002
$
2001
$
2002
$
2001
$
12,421,391 10,626,274
11,977,686 10,540,643
2,226,113
_____________________________________________
1,845,240 1,437,043
1,795,117
14,647,504 12,421,391
_____________________________________________
13,822,926 11,977,686
21. 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 2002 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 2002/2003, estimated outlays by the Company and the economic entity are
$295,200 (2001: $473,209). Commitments beyond 2002/2003 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.
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2002
35
22. EQUITY
Total equity at beginning of financial year
CONSOLIDATED
2002
$
6,143,978
2001
$
4,564,142
PARENT ENTITY
2001
2002
$
$
6,587,683 4,649,774
Total changes in equity
recognised in the statement of
financial performance
Transactions with owners as
owners:
Contributions of equity, net of
transaction costs
(2,226,113)
(1,795,117)
(1,845,240) (1,437,043)
764,572
3,374,953
764,572 3,374,953
Capital reduction
(49,378)
-
(49,378)
-
_____________________________________________
Total equity at the end of the
financial year
23. AUDITOR’S REMUNERATION
Remuneration for audit or review
of the financial reports of the
parent entity or any entity in the
economic entity:
4,633,059
_____________________________________________
5,457,637 6,587,683
6,143,978
CONSOLIDATED
2002
$
2001
$
PARENT ENTITY
2001
2002
$
$
Auditors of parent entity
22,050
22,674
22,050
22,674
Taxation advisory services
12,460
50,658
12,460
50,658
_____________________________________________
24. REMUNERATION OF DIRECTORS
Income paid or payable, or otherwise
made available to directors by entities
in the economic entity and related
parties
34,510
73,332
34,510
73,332
_____________________________________________
Directors of Entities in
the Economic Entity
2002
$
2001
$
Directors of Parent
Entity
2002
$
2001
$
319,472
299,450
319,472
299,450
_____________________________________________
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2002
36
Directors of Entities in
the Economic Entity
2002
2001
Directors of Parent
Entity
2002
2001
24. 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
$30,000
$70,000
$90,000
$160,000
to
to
to
to
to
to
$19,999
$29,999
$39,999
$79,999
$99,999
$169,999
-
1
1
-
1
1
1
1
-
1
-
1
-
1
1
-
1
1
1
1
-
1
-
1
_____________________________________________
Included in the above are directors fees, consulting fees and the fair value of options granted to
directors. 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 27). The amounts disclosed above for remuneration relating to options are
the assessed fair values of options at the date they were granted during the year ended 30 June
2002. Fair values have been assessed using the Black Scholes option pricing models. This
value has not been included in the statement of Financial Performance.
During the year the Directors of the Company waived their fees in relation to the 1999/2000 and
2000/2001 years totalling $96,000.
25. REMUNERATION OF EXECUTIVES
One executive, being a director, received $168,375 during the year ended 30 June 2002
(2001: 1 executive $165,000). The remuneration relating to options are the assessed fair
values of options at the date they were granted during the year ended 30 June 2002. Fair values
have been assessed using the Black Scholes option pricing models. This value has not been
included in the statement of Financial Performance.
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2002
37
26. SEGMENT REPORTING
Business segments
The consolidated entity operates in the following segments:-
Resources
Strong resource focus on uranium together with a proprietary database covering gold, copper
and platinum.
Software
23% investment in ST Synergy Ltd, a Knowledge Management software company listed on ASX.
Telecommunications
Convertible notes with a right to an 85% equity interest in Coretel Pty Ltd, a niche
telecommunications company.
Property
Commercial premises located in Belmont, Perth, Western Australia.
Industry Segments
2002
Other revenue
Unallocated revenue
Total segment revenue
Profit/(loss) from ordinary
activities before income
tax expense
Resources Soft-
Tele-
Property Consolidated
ware communications
$
48,391
$
-
$
$
$
-
114,333
162,724
96,000
258,724
(411,254)
(402,905)
(1,445,000)
33,046
(2,226,113)
Income tax expense
-
-
-
-
-
Loss from ordinary
activities after income
tax expense
(411,254)
(402,905)
(1,445,000)
33,046
(2,226,113)
Total assets
3,583,707 236,991
544,000
1,289,275
5,653,973
Segment liabilities
Unallocated liabilities
Total liabilities
262,941
-
Investment in associate
-
236,991
Acquisitions of property, plant
and equipment, and other
non-current segment assets
392,837
Depreciation and
amortisation expense
102,730
Other non-cash expenses
23,957
-
-
-
-
-
-
-
-
262,941
757,973
1,020,914
-
236,991
15,056
407,893
11,903
114,633
1,445,000
-
1,468,957
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2002
26. SEGMENT REPORTING (Contd)
38
Resources Soft-
Tele-
Property Consolidated
ware communications
Industry Segments
2001
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
Segment liabilities
Unallocated liabilities
Total liabilities
(1,437,043) (331,180)
348,911
-
Investment in associate
-
824,514
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
-
-
-
Geographical Segments
$
$
$
-
-
-
-
-
28,120
74,963
28,120
74,963
(26,894)
(1,795,117)
-
-
(26,894)
(1,795,117)
-
-
-
-
-
-
-
348,911
622,875
971,786
824,514
1,160,418
1,625,498
11,903
121,211
-
945,621
Acquisitions of property,
plant and equipment,
and other non-
current segment assets
3,723,214
639,896
1,602,578 1,150,076
7,115,764
Segment revenues
Segment assets
2002
$
2001
$
2002
$
2001
$
2002
$
2001
$
Australia
258,724
74,963
4,856,707
6,390,077
336,314 1,290,778
Africa
-
-
797,266
725,687
71,579
334,720
258,724
74,963
5,653,973
7,115,764
407,893 1,625,498
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2002
27. RELATED PARTIES
Related parties of Paladin Resources Ltd fall into the following categories:
Directors
39
(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 24 and the Directors’ Report.
(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)
(iv)
Fees
for geological and consulting services were paid/payable (balance
outstanding at 30 June 2002 and included in trade creditors $75,625) to a
company in which J Borshoff is a director and shareholder;
for geological and consulting services were paid/payable (balance
Fees
outstanding at 30 June 2002 and included in trade creditors $4,257) to a company
in which D Dunnet is a director and shareholder;
Fees for company secretarial and consulting services were paid/payable (balance
outstanding at 30 June 2002 and included in trade creditors $8,800) 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 24.
Fees for legal services totalling $25,969 (2001: $93,582) were paid/payable
(balance outstanding at 30 June 2002 and included in trade creditors $8,459) 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:
2002
Number
D Dunnet
J Borshoff
G Swaby
R W Crabb
Shares
6,087,828
12,458,394
1,595,515
3,848,572
Options*
376,367
776,263
132,960
322,381
Options**
645,201
1,779,774
227,931
566,940
Options ***
1,000,000
1,500,000
1,200,000
1,000,000
2001
Number
D Dunnet
J Borshoff
G Swaby
R W Crabb
Fully Paid
Shares
6,087,828
12,158,394
1,595,515
3,968,572
Options*
376,367
576,263
132,960
322,381
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2002
40
27. RELATED PARTIES (Contd)
(d)
Directors’ holdings (Contd)
The particulars of Directors' interests in shares and options are as at the date of this
report.
*
Listed and exercisable at 15 cents on or before 31 May 2003
** Listed and exercisable at 10 cents on or before 21 January 2004
*** Unlisted and exercisable at 15 cents on or before 30 November 2004
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.
28. 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:-
Acquisition of Langer Heinrich Uranium Project
On 9 September 2002, Paladin announced it had satisfactorily completed its due diligence
resulting in completion of the acquisition of the Langer Heinrich Uranium Project in Namibia,
Southern Africa. The project is held in a Namibian company, Langer Heinrich Uranium (Pty) Ltd
which in turn is wholly owned by Lahndrik Holdings SA (“Lahndrik”), a company incorporated in
Luxemburg. Paladin, through its subsidiary Paladin Energy Minerals Ltd, acquired 100% of
Lahndrik from Aztec Resources Ltd for cash consideration of $10,000 together with a production
royalty of 12 cents per kilogram of yellowcake sold and delivered to a buyer. In addition $5,000
was paid in respect of intercompany loans.
Issue of Shares and Options
On 5 September 2002 the Company allotted 1,795,000 fully paid shares and 750,000 options
(10¢ - 21 January 2004) as part of remuneration arrangements for technical consulting in
connection with the Southern African uranium projects (Langer Heinrich and Kayelekera
deposits).
On 10 September 2002 the Company announced a Share Purchase Plan Offer for shareholders
at a price of 2.3 cents per share. This was partially underwritten to the amount of $350,000 on a
best endeavours basis by Kirke Securities Ltd.
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2002
29. RECONCILIATION OF NET CASH OUTFLOW FROM OPERATING
ACTIVITIES TO OPERATING LOSS AFTER INCOME TAX
41
Operating loss after income tax
2,226,113
1,795,117
1,845,240 1,437,043
CONSOLIDATED
2002
$
2001
$
PARENT ENTITY
2001
2002
$
$
Non cash items:
Depreciation and amortisation
Exploration expenditure written off
Provision for non-recovery of
intercompany loan
Provision for non-recovery of
investments
Provision for non-recovery of
Profit on sale of exploration
Gain on disposal of subsidiary
Profit on sale of investments
Share of loss in associate using
equity method
Liabilities forgiven
Change in operating assets and
liabilities:
Increase (Decrease) in trade debtors
Decrease (Increase) in operating
liabilities
(Decrease) Increase in prepayments
Net cash outflow from operating
activities
(114,633)
(96,079)
(121,211)
(892,065)
(17,087)
(37,326)
(23,665)
(52,143)
-
-
(87,397)
(803,785)
(1,445,000)
(55,684)
(1,487,134)
(177,463)
-
124,030
13,462
-
-
2,128
(402,905)
106,000
(331,180)
-
124,030
-
13,462
-
-
-
-
2,128
-
-
54,944
(38,474)
29,309
(4,787)
26,561
(8,530)
(157,778)
8,530
87,348
(8,530)
(174,897)
8,530
_________________________________________________
483,963
209,383
461,915
210,961
_____________________________________________
30. NON CASH FINANCING AND
INVESTMENT ACTIVITIES
Acquisition of mining tenements
satisfied by issue of shares
50,000
Increase in receivable from
controlled entity due to issuant of shares
-
-
-
-
50,000
-
-
Reduction in capital due to in-specie
distribution of subsidiary
31. EARNINGS PER SHARE
49,378
-
49,378
-
_____________________________________________
(a) Basic and diluted Loss Per Share
Weighted average number of ordinary shares on issue during
the year used in the calculation of basic earnings per share
Earnings used in calculated diluted and basic earnings per share
(b) Diluted Earnings Per Share
Diluted earnings per share is the same as basic earnings per share as there are no potential
ordinary shares that are dilutive.
Consolidated
2001
2002
(cents)
(cents)
(1.05)
(1.18)
______________________
211,336,743 151,377,525
______________________
(2,226,113) _ ((1,795,117)
______________________
PALADIN RESOURCES LTD AND CONTROLLED ENTITIES
NOTES TO AND FORMING PART OF THE
FINANCIAL REPORT (Contd)
30 JUNE 2002
42
32. 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
2002
$
32,610
2001
$
35,311
______________________
Number
4
Number
4
______________________
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.
33. 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
43
The Directors declare that the financial statements and notes set out on pages 18 to 42.
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 2002 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 27th day of September 2002 in accordance with a resolution of the Directors.
J Borshoff (Director)
Independent Audit Report to the Members of
Paladin Resources Limited
44
Independent Audit Report to the Members of
Paladin Resources Limited (contd)
45
ADDITIONAL INFORMATION
Pursuant to the Listing Requirements of Australian Stock Exchange Limited as at
24 September 2002.
(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
22
109
220
1,144
386
1,881
218
381
121
95
74
889
46
21.01.2004
OPTIONHOLDERS
30
213
109
205
63
620
746 shareholders hold less than a marketable parcel of shares.
861 optionholders (31.05.2003) hold less than a marketable parcel of options.
583 optionholders (21.01.2004) hold less than a marketable parcel of options.
(b)
Substantial shareholders (5% or more of issued capital)
J Borshoff and associated companies
(c)
The twenty largest shareholders hold 29.96% of the total shares issued.
Holder
No. of Shares %
Aylworth Holdings Pty Ltd
Resource Capital Invest Corp
Grundy Nominees Pty Ltd
Shar Holdings Pty Ltd
Merrill Lynch (Australia) Nominees Pty Ltd
Mr R W Crabb & Mrs C J Crabb
Plough Lane Superannuation Pty Ltd
Mr J U Blanchard III
Mr G Buchanan & Mrs H Buchanan
Wakeford Holdings Pty Ltd
Ms Kim Heron
Mr R Pilley
Alpenrose Investments Inc
National Nominees Limited
Citywide Investments Pty Ltd
Mr B Marks
Aurex Pty Ltd
Bellcourt Holdings Pty Ltd
Roxtel Pty Ltd
Berne No 132 Nominees Pty Ltd
11,843,237
10,769,230
6,750,000
3,778,401
3,746,049
3,704,572
2,820,000
2,777,778
2,700,000
2,601,800
2,100,000
2,000,000
1,730,000
1,724,200
1,666,667
1,666,667
1,571,427
1,500,000
1,500,000
1,499,625
5.18
4.71
2.95
1.65
1.64
1.62
1.23
1.22
1.18
1.14
0.92
0.88
0.76
0.75
0.73
0.73
0.69
0.66
0.66
0.66
___________________
68,449,653
29.96
___________________
ADDITIONAL INFORMATION (Contd)
47
(d)
The twenty largest optionholders (31.05.2003) hold 64.09% of the total options issued.
Holder
No. of Options %
Resource Capital Invest Corp
Plough Lane Superannuation Pty Ltd
Mr L McKenzie
Mr A Graf
Bellcourt Holdings Pty Ltd
Mr G Deacon
Mr R Martorella
Mr A Miller
Jis Corporation
J D Trading Pty Limited
Lusend and Company
Comsec Nominees Pty Limited
Dimi Pty Ltd
Mr M Boyne
Mr R Pilley
Mr J Hellier & Mrs D Hellier
Mr A Harrison
Mrs A Borg
Miss M Du Toit
Aylworth Holdings Pty Ltd
10,769,230
4,250,000
2,500,000
1,523,867
1,500,000
1,450,000
1,165,000
1,051,000
1,039,000
1,036,672
1,020,000
1,000,000
1,000,000
741,000
600,000
595,885
595,500
560,000
560,000
557,500
20.59
8.13
4.78
2.91
2.87
2.77
2.23
2.01
1.99
1.98
1.95
1.91
1.91
1.42
1.15
1.14
1.14
1.07
1.07
1.07
___________________
33,514,654
64.09
___________________
ADDITIONAL INFORMATION (Contd)
48
(e)
The twenty largest optionholders (21.01.2004) hold 71.03% of the total options issued.
Holder
No. of Options %
Social Investments Pty Ltd
Mr L Evans
Dr S-L Chiam
Kapiri Holdings Pty Ltd
Mr A Dimmock
Ms S Proud
Wakeford Holdings Pty Ltd
Mandevilla Pty Ltd
Goffacan Pty Ltd
Aylworth Holdings Pty Ltd
Cossack Resources Pty Ltd
Hermes Capital Pty Ltd
Redclaw Enterprises Pty Ltd
Mr A Todarello
Mr L Pretorius
Grundy Nominees Pty Ltd
Shar Holdings Pty Ltd
Largess Corporation Pty Ltd
Mr R Crabb & Mrs C Crabb
Mr M Carter
8,250,000
8,000,000
5,120,301
3,000,000
2,544,843
2,398,594
2,256,886
2,071,429
2,000,000
1,691,892
1,321,703
1,000,000
1,000,000
800,000
750,000
678,572
539,772
537,594
529,225
500,000
13.10
12.70
8.13
4.76
4.04
3.81
3.58
3.29
3.17
2.69
2.10
1.59
1.59
1.27
1.19
1.08
0.86
0.85
0.84
0.79
___________________
44,990,811
71.43
___________________
(f)
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.
49
ADDITIONAL INFORMATION (Contd)
Pursuant to the Listing Requirements of Australian Stock Exchange Limited as at
24 September 2002.
(g)
Mining Tenements held –
URANIUM PROJECTS
WESTERN AUSTRALIA
Project
Tenement
Manyingee
3 ML’s
Oobagooma
4 EL(A)’s
Ponton
1 EL
SOUTH AUSTRALIA
Project
Tenement
Curnamona
Siccus
Lake Elder
Mt Yerila
1 EL
1 EL
1 EL
1 EL
NORTHERN TERRITORY
Project
Tenement
Napperby
N E Arunta
1 EL
1 EL
MALAWI - AFRICA
Project
Tenement
Kayelekera
1 EPL
NAMIBIA – AFRICA
Project
Tenement
Langer Heinrich
1 MDRL
Interest
%
100%
100%
100%
Interest
%
100%
90%
20%
15%
Interest
%
100%
100%
Interest
%
90%
Interest
%
100%
JV Partner/s
Operator
-
-
-
JV Partner/s
Operator
-
-
-
-
-
Signature Resources NL
Paladin
Heathgate Resources Pty Ltd Heathgate Resources Pty Ltd
Heathgate Resources Pty Ltd
J E Risinger
Heathgate Resources Pty Ltd
JV Partner/s
Operator
-
-
-
-
JV Partner/s
Operator
Balmain Resources Pty Ltd
Paladin
JV Partner/s
-
Operator
-
ADDITIONAL INFORMATION (Contd)
(g)
Mining Tenements held (Contd)
50
NON-URANIUM PROJECTS
SOUTH AUSTRALIA
Project
Mt Lofty Ranges
Teneme
nt
2 EL’s
Interest
%
100%
JV Partner/s
Operator
Balmain Resources Pty Ltd
Paladin
Reaphook Jv
1 EL
7.5%
Perilya Limited
Perilya Limited
NORTHERN TERRITORY
Project
Davenport
Teneme
nt
3 EL(A)’s
Interest
%
30%
JV Partner/s
Operator
Newmont NFM Pty Ltd
Newmont NFM Pty Ltd
EL
EPL
MDRL
ML
(A)
Exploration Licence (Australia)
Exclusive Prospecting Licence (Malawi)
Mineral Deposit Retention Licence (Namibia)
Mining Lease (Australia)
Pending Application
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)