Paladin Energy
Annual Report 2003

Plain-text annual report

PA L ADIN P A L A D I N R E S O U R C E S A C N 0 6 1 6 8 1 0 9 8 L T D A N N U A L R E P O R T 2 0 0 3 This concise report has been derived from the full financial report for the year ended 30 June 2003. The full financial report and auditor's report will be sent to members on request, free of charge. Please call 08 9381 4366 and a copy will be forwarded to you. Alternatively, you can access both the full financial report and the concise report via the internet at our website: www.paladinresources.com.au. The concise financial report cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of Paladin Resources Ltd and its controlled entities as the full financial report. 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 5 to 10 and in the Directors' Report on pages 12 to 15. 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 statements and other information is available on our website www.paladinresources.com.au. Front Cover: Langer Heinrich Uranium Project. P A L A D I N R E S O U R C E S L T D C O N T E N T S COMPANY SNAPSHOT MINERAL RESOURCE STRUCTURE CHAIRMAN'S LETTER URANIUM UPTURN FOR CLEAN ELECTRICITY SUMMARY OF REVIEW OF OPERATIONS REVIEW OF OPERATIONS CORPORATE GOVERNANCE STATEMENT DIRECTORS' REPORT CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE DISCUSSION AND ANALYSIS OF CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE CONSOLIDATED STATEMENT OF FINANCIAL POSITION DISCUSSION AND ANALYSIS OF CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF CASH FLOWS DISCUSSION AND ANALYSIS OF CONSOLIDATED STATEMENT OF CASH FLOWS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DIRECTORS' DECLARATION INDEPENDENT AUDIT REPORT TO THE MEMBERS ADDITIONAL INFORMATION CORPORATE DIRECTORY a n n u a l r e p o r t 2 0 0 3 2 2 3 4 5 6 11 12 16 16 17 18 19 19 20 23 24 25 28 1 C O M P A N Y S N A P S H O T P A L A D I N M O V I N G T O W A R D P R O D U C T I O N (cid:2) Uranium price up 25% in 12 months, now at 5 year high (US$12.20/lb) (cid:2) Company owns Langer Heinrich Uranium Project – a world class uranium deposit (cid:2) Bankable Feasibility Study planned for Langer Heinrich testing a 1,000tpa uranium operation (equivalent to 88,000 oz gold) running over 10 years plus M I N E R A L R E S O U R C E S T R U C T U R E PALADIN RESOURCES LTD U R A N I U M A C T I V I T I E S N O N - U R A N I U M A C T I V I T I E S AFRICA AUSTRALIA DATABASE 100% Langer Heinrich Deposit, Namibia (cid:1) Near term development opportunity 90% Kayelekera Deposit, Malawi 100% Manyingee Deposit 100% Oobagooma Deposit Au, PGM, Cu, Search (cid:2) Ashburton Project (Marengo Spin Off) Platinum, Copper/Gold Search Frome Project Davenport Project Mt Lofty Project Arunta Project 2 P A L A D I N R E S O U R C E S L T D C H A I R M A N ’ S L E T T E R Dear Shareholder This year has in many ways been an important watershed year for Paladin and one which has seen both consolidation and rationalisation. Consolidation has occurred with focus on our exciting Langer Heinrich Uranium Project in Namibia which gave a positive Pre-Feasibility Study and efforts are now underway to secure funding for the 12 month Bankable Feasibility Study. The uranium price is nearing a 5 year high, having cracked the critical US$10/lb U3O8 barrier early in the year, now at US$12.20/lb and seemingly poised to go higher. The timing is well set for the next stage on development for the Langer Heinrich Project. Financial modelling at a conservative long term contract price for uranium of US$14.00/lb U3O8, a project producing 1,000t U3O8 over 10 years shows an NPV10% of US$50M. To better understand the scope of the Langer Heinrich Deposit, it has the equivalent in mineable resources of 968,000 oz of gold, would produce the equivalent of 88,000 oz of gold per year and have a mine operating cost of US$163/oz in equivalent gold terms. Several organisations are indicating interest in supporting the to date indicate these resources can be expanded to hopefully allow a small but profitable underground mining operation. Absolut Resources Corp, our joint venture partner, has indicated it will fund the next stage of the evaluation as part of its earn-in. Most of you will have been aware of the shareholder dissent which occurred early this year and which unfortunately created an enormous distraction both to the Board and staff at a critical time in the Langer Heinrich pre-feasibility evaluation. The resolutions presented at the Extraordinary General Meeting to remove the Board were soundly defeated, however to accommodate renewed emphasis on the African projects and introduce new blood, Doug Dunnet and Gillian Swaby resigned as directors. We are pleased to have Leon Pretorius as the new director and believe his African and technical experience will be invaluable for the Langer Heinrich Project. I would like to again sincerely thank Doug and Gill for their dedicated contribution as directors since listing of the Company in 1994. Paladin's interest in Coretel was successfully disposed of after Coretel went into voluntary administration. Unfortunately our original Coretel investment did not achieve the desired objectives due principally to the severe downturn in the telco sector. Coretel was merged with eSpan Solutions, in which Paladin can have a 30% equity interest through its $800,000 convertible note. This note matures in 2006 accruing a 5% annual compounding interest. There is also a fully funded litigation against Coretel's equipment supplier, Nortel and Paladin will receive 30% of any damages claim found against that company. Considering many companies which divested into hi tech lost all value in their assets, we believe, under the circumstances, Paladin has done well to redeem part of the funds it BFS funding and these are currently being pursued. invested in Coretel. The other uranium projects of the Company, Kayelekera and Manyingee, will remain on hold while Langer Heinrich is being evaluated, although with improving uranium price interest may expand into the Kayelekera project earlier. In terms of our non uranium activities, Marengo, the gold company which Paladin spun out, is making a second serious effort to list on the ASX. An updated prospectus is prepared incorporating an additional gold project from the prospective Laverton region and should assist greatly in the listing of this company. Also Paladin, through its database, has identified a gold resource in the Mt Lofty Ranges east of Adelaide. A resource of some 20,000ozs already exists and results It is indeed pleasing to see general renewed investor interest in the resource sector. This has combined with the rising uranium price to improve Paladin's share price. If, as is expected, this important investment climate continues I feel sure Paladin has an exciting year ahead. Rick Crabb CHAIRMAN a n n u a l r e p o r t 2 0 0 3 3 U R A N I U M U P T U R N F O R C L E A N E L E C T R I C I T Y The price of uranium is rising steadily due to emerging Similar concessions are expected to eventually be positive supply/demand fundamentals. The increasing provided to the nuclear industry at large to awareness of customers, suppliers and governments combat vital greenhouse gas emission issues that nuclear energy must maintain a key role in the giving added impetus for increased nuclear power supply of electricity both on economic and utilisation. environmental grounds is placing clear upward pressure on the uranium market. Some important developments reinforcing this trend are:- In the European Union (EU) an extensive EU-wide study on energy carried out in 2002 made it clear that nuclear energy which provides 35% of EU The recent temporary failure of a major uranium electricity is already an important means of mine causing immediate increase in the uranium reducing greenhouse emissions and is price reflecting a market fragility and vulnerability fundamental in the EU's ability to meet stipulated in terms of supply and the critical need to Kyoto targets. EU states are not expected to establish diversity in supply sources for the mid to jeopardise the significant contribution that nuclear long term. power provides in this regard. In the US, the Senate is considering a In Europe Switzerland, Finland and Sweden have comprehensive energy bill which includes strengthened their resolve to maintain and/or substantial support for nuclear energy. This increase their dependency on nuclear power. includes funding support for the construction of a Bulgaria, Czechoslovakia, Ukraine and Rumania high temperature nuclear reactor for hydrogen are all moving forward to construct additional production to advance the development of the nuclear generating capacity. hydrogen fuel cell technology and enable the US to maintain industrial supremacy. If implemented this technology would require massive input from sustainable energy sources namely nuclear power. In recognition of its very low environmental effects the Ontario Government (Canada) has extended tax concessions from renewables (hydro, wind) to now also include nuclear power, making this technology even more competitive. In Asia China, India, South Korea, Taiwan and Japan are maintaining their imperatives to increase dependency on nuclear power for generation of clean electricity. With its quality advanced uranium projects, Paladin is well placed to benefit and advantage its shareholders from this improving uranium outlook. 4 P A L A D I N R E S O U R C E S L T D ◆ ◆ ◆ ◆ ◆ ◆ S U M M A R Y O F R E V E I W O F O P E R A T I O N S Paladin has two key asset sets; a portfolio of quality offer development possibilities for the future. With uranium projects spearheaded by its Langer Heinrich uranium prices at a 5 year high (US$12.20/lb Project and the potential of an extensive exploration September 2003), Paladin is one of few juniors globally database that has still to be fully exploited. that can offer attractive speculative possibilities for this URANIUM The objective of the Company is to develop into a southern African junior energy company centered on its Langer Heinrich Uranium Project in Namibia. A positive Pre-Feasibility Study completed by Paladin during the year confirmed the justification to take this project to a Bankable Feasibility Study ("BFS"). This is estimated to cost approximately A$3M-A$3.5M and take 12 months to complete. The Company is currently in discussions with its engineers (Fluor Daniel) to obtain the detailed scheduling and costing for the BFS and is discussing funding options for it with several interested parties. commodity giving investors the possibility of strong upside. In accumulating its uranium assets, consideration was always given by the Company to acquiring projects with the potential to be low cost operations and suitable for smaller companies to develop. DATABASE A further objective of the Company is to continue taking advantage of its extensive database and utilise third party funds for exploration (via joint venture farm- out). The Australian database continues to generate project possibilities. An example of this has been the Mt Lofty Joint Venture where a gold resource has been Paladin's uranium portfolio also contains the identified. Kayelekera, Manyingee and Oobagooma Projects and, whilst Langer Heinrich is the first choice, the others URANIUM PROJECT SUMMARIES CRITERIA LANGER HEINRICH KAYELEKERA MANYINGEE OOBAGOOMA Paladin equity 100% 90% 100% 100% Location Namibia, Southern Africa Malawi, Southern Africa West Pilbara, West Australia West Kimberley, West Australia Deposit Type Calcrete Sandstone Sandstone Sandstone Resources tonnes U3O8 11,000t U3O8 @ 0.11% (additional potential available) 11,547t U3O8 @ 0.15% 7,860t U3O8 @ 0.12% 9,950t U3O8 @ 0.14% Mining Method Conventional open pit Conventional open pit In-Situ Leach In-Situ Leach Previous Owners Gencor Limited (South African Central Electricity Cogema Cogema Mining group) Acclaim (WA Company) Generating Board (UK utility) (French utility) (French utility) Past Expenditure A$20M A$9M A$16M A$5M Activity/Status 1973-1980, 1999 to present - Active 1982 - 1990 On hold 1979-1988 On hold 1982-1985 On hold Project Significance Large resource, good Revised mining concept One of only three Large resource infrastructure with good potential for development positive indicating potential Australian advanced for development ISL projects potential Timeframe ◆ 1 year BFS ◆ 18 months BFS ◆ 3 year staged ◆ 1 year construction ◆ 1 year construction feasibility study ◆ 2 year reserve / resource drilling ◆ 10 year (at least) mine life ◆ 10 year mine life ◆ 1 year construction ◆ 3 year feasibility ◆ 10 year mine life study a n n u a l r e p o r t 2 0 0 3 5 R E V I E W O F O P E R A T I O N S LANGER HEINRICH URANIUM PROJECT Langer Heinrich has the capacity to be a very low In August 2002 Paladin announced the purchase of the Langer Heinrich Uranium Deposit located in Namibia, Southern Africa, from Aztec Resources Ltd ("Aztec" - formerly Acclaim Uranium NL). The purchase consideration was $15,000 together with a very soft production royalty of 12 cents per kilogram of yellowcake product sold and delivered to a buyer. Aztec sold this Project after the company changed corporate management and direction to pursue other interests. The Langer Heinrich Uranium Project is 100% owned by Paladin through its wholly owned Namibian subsidiary (Langer Heinrich Uranium (Pty) Ltd). The Langer Heinrich deposit was discovered in 1973 by Gencor Limited, a major South African Mining House (now part of BHP Billiton). This is a calcrete type deposit containing a global resource of 29,900t U3O8 at a grade of 0.06% contained in 7 discrete mineralised zones along a 15km length within an extensive paleodrainage system. The deposit is located in the Namib Desert, 80km east of the major seaport of Walvis Bay. The Paladin Directors decided to acquire the Langer Heinrich Project for the following principal reasons: - The improving market outlook worldwide for the use of nuclear energy for production of electricity. Uranium Oxide spot price continues to improve (up 25% in 12 months and now US$12.20 per pound). Market analysts are predicting substantial increases in the price of this commodity in the mid-term. cost uranium producer. In March 2003 Paladin completed the Pre-Feasibility Study, the results showing clearly that the project should be taken to final feasibility determination. The Mineable Resource at the 344ppm U3O8 cut off is estimated at 10,114,000t of ore grading 0.11% U3O8 containing 11,155t U3O8 and this resource is the basis of the project Pre-Feasibility assessment and financial modelling. Paladin has estimated a geological resource for the deposit of 50Mt at 0.06% containing 29,900t U3O8 at a cut off of 200ppm U3O8. Opportunity exists for additional mineralisation to be found within the existing tenement as indicated by open-ended drilling. Current analysis indicates the project is robust and able to support a 10 year mine life producing 1,000tpa uranium oxide at a low operating cost. The cost of the proposed BFS is estimated to be in the vicinity of A$3M and is expected to take 12 months to complete. Fluor has been selected as the engineers to manage the BFS. With the improving uranium price and the feature that a premium in the vicinity of 20%-25% can typically be negotiated above the spot price for U3O8 sold under long term sales contracts, it is anticipated that long term sale contracts in the vicinity of US$13.00- US$15.00/lb U3O8 will be possible for 2003/4 and beyond when the Project starts production. Financial modelling shows that with a base annual production of 1,000t U3O8 using an example sale price of US$14.00/lb U3O8, midway in this range, the Project, over its 10 year mine life, is capable of producing strong returns as 6 P A L A D I N R E S O U R C E S L T D ◆ ◆ ◆ r e v i e w o f o p e r a t i o n s c o n t i n u e d Test mining trench and pit (Gencor 1978). In background 21 dumps of graded ore for various lithogical types. shown by the following key performance indicator table:- Key Project Performance Indicators US$ Total Operating Surplus Cash Positive Project NPV (10%) Project IRR Debt/Equity Ratio Operating Costs Mining Processing Admin Total OPEX Capital Costs Equipment Facilities & Infrastructure Project Development Contingencies Total CAPEX $167M Year 3 $50M 35% 0.60 US$/t $4.47 $6.81 $3.00 $14.28/t or $6.54/lb U3O8 US$M $20M $6.2M $7.3M $3.4M $36.9M Estimated production costs of US$6.54/lb U3O8 place the Project favourably in the lower quartile for cost of production. At this stage of determination, capital costs for establishment of the operation are estimated to be US$37M. The results to date show that Paladin has acquired a premier project in Langer Heinrich, capable of taking the Company to its next stage of development. Detailed scheduling and costing of the BFS has begun with Fluor. Negotiations are also underway with several funding agencies who are offering the possibility of assistance in funding of the BFS. One of these funding groups has indicated willingness to fund in the order of US$400,000 by way of a non refundable grant. Fluor, in conjunction with Paladin, is now preparing a formal application to secure this grant. In addition Paladin has received early indication that a major Institution is willing to fund the balance of the BFS less Paladin's direct costs. There are certain criteria that Paladin will need to meet to enable this to occur. Nonetheless this is regarded as a major breakthrough and discussions are underway to define the required parameters that will ensure a firm commitment is forthcoming. It is envisaged that this Institution will then also take up equity in the Project assuming a positive BFS outcome. a n n u a l r e p o r t 2 0 0 3 7 r e v i e w o f o p e r a t i o n s c o n t i n u e d The development schedule for the Langer Heinrich Project is envisaged as follows:- 2004 Year 2005 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2006 Q1 Q2 Task BFS EIS Reserves Sampling Testwork Engineering Financial Analysis Project Commitment Construction Implementation KAYELEKERA PROJECT The Kayelekera Uranium Project is located in the northern part of Malawi in Southern Africa, 8km south of the main road that connects the townships of Karonga and Chitipa. It is 40km to the west of the provincial town of Karonga. Exclusive Prospecting Licence "EPL 070" covers the Kayelekera deposit. Mid 2006 (Paladin Africa Ltd). This Project has had A$9M spent by previous owners, culminating in completion of a final feasibility study in 1990 which showed the project to be uneconomic on the parameters then utilised. Modelling of a new mining concept by Paladin 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. A final feasibility study is required on this Project The Project is currently on hold while the Langer before decision to develop can be made and this work Heinrich Project is being advanced. will be largely based on, and assisted by, the extensive feasibility studies carried out by its previous owners in the period 1982-1990. The Kayelekera Project presents an ideal platform for initiation of a much needed modern mining industry in Malawi and may therefore be viewed sympathetically The Kayelekera Uranium Project is owned 90% by by international funding organisations. Paladin through its wholly owned Malawi subsidiary 8 P A L A D I N R E S O U R C E S L T D r e v i e w o f o p e r a t i o n s c o n t i n u e d MANYINGEE PROJECT The Manyingee Uranium Project is located in the northwest of Western Australia, 85km inland from the coastal township of Onslow. Good access to the site exist, either via the North West Coastal Highway (39km) or 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 6.4Mt of ore at a grade of 0.12% U3O8 containing 7,680t of U3O8 in permeable sandstone and previous trial test work indicates the deposit is amenable to In-situ Leach Mining (ISL). 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. OOBAGOOMA PROJECT 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. QUASAR-PALADIN JOINT VENTURE Paladin has a joint venture in South Australia on EL3001 and EL3078 with Quasar Resources Pty Ltd, a wholly owned subsidiary of Heathgate Resources Ltd (“Heathgate”), owner of the Beverley ISL uranium mining operation in the Frome Basin which reached full production in 2001. Heathgate Resources is an Australian affiliate of General Atomics of the USA. The two tenements cover 1,500km2 and are located immediately north of the Beverley Mine tenements. Heathgate can earn an 80% interest in these properties with Paladin retaining a free carried interest of 20% and 15% respectively until completion of a bankable The Oobagooma Project is located 75km north east of feasibility study and a decision to mine. 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. Heathgate carried out an electromagnetic airborne TEMPEST survey over the properties to identify prospective palaeochannels. The data delineated numerous targets and rotary mud drilling has commenced to test these prospective zones. Ground magnetic, gravity surveys, geological mapping, soil and rock chip sampling were also conducted over an area of approximately 6km2 in the Woolatchi Creek area of EL3001 at a location NW from Moolawatana a n n u a l r e p o r t 2 0 0 3 9 r e v i e w o f o p e r a t i o n s c o n t i n u e d homestead. An elongated magnetic anomaly Paladin retains a convertible note of $800,000 with a approximately 1800m by 300m was located along with term of 4 years. The convertible note will accrue a number of small intense bullseye features in part interest at a rate of 5% per annum payable at maturity. coincident with a TEMPEST anomaly located by the On the present corporate structure Paladin has the right regional airborne survey previously carried out. A to a 30% equity in this new merged group via its number of small residual gravity features are also convertible note facility and this conversion is at present. This may represent an iron oxide/copper/gold Paladin's discretion. Pursuant to Coretel's DOCA, prospect located within an eastern extension of the Mt Paladin will also receive 30% of the net proceeds from Baddage Block containing Mesoproterozoic granitic, the damages claim which is currently underway against volcanic and metasedimentary rocks beneath a thin Nortel (equipment supplier to Coretel). This action is Cretaceous sedimentary cover. Modelling of the fully funded by an independent insurance litigator. magnetic data has identified a number of steeply dipping magnetic horizons warranting further COMMERCIAL PROPERTY assessment. Drill testing is planned following receipt Negotiations are currently underway for the sale of this of soil and rock chip sampling results and completion building. of heritage surveys. NON URANIUM ACTIVITIES MT LOFTY JOINT VENTURE PROJECT The first pass exploration work on the Mt Lofty Joint Venture tenements with Paladin as operator has been undertaken, with Absolut Resources Corp. ("Absolut") completing its minimum expenditure of $60,000 to earn a 10% interest in the Project. Absolut can earn a total of 45% on expenditure of a further $345,000 on EL2863. The investigations to date involving ground magnetic and soil geochemical surveys, systematic rock chip sampling, surface mapping and evaluation of old mine data have isolated high grade gold mineralisation in the Stockyard Gully area. The joint venture partners are encouraged with the results of the first pass investigations. Paladin, has proposed further exploration once the small exemption area within the prospective zone has been lifted by the Mines Department and access clearance has been achieved to carry out drilling in the Forest Reserve area. Absolute has agreed to fund the next stage of evaluation subject to the approval of its placement with the TSX Venture Exchange and continue earning further equity in the joint venture. The exploration work which is planned will involve RC drilling targeted to test both depth extension and lateral continuity of the identified mineralisation. OTHER INVESTMENTS CORETEL PTY LTD Additionally Etron has the opportunity of receiving a further $40,000 from one of the tower lessees to be paid on completion of construction of their facility on the property. MARENGO MINING LIMITED As reported last year, Paladin spun off this new gold exploration company as a consequence of its database with specific focus on the prospective Ashburton region of Western Australia and a view to list this on the Australian Stock Exchange (ASX) mid 2002. Unfortunately the ensuing downturn in equity markets has to date not afforded Marengo this opportunity. With renewed market interest in the resources sector, the Directors of Marengo have advised that consideration is again being given to seek a listing on the ASX. This is scheduled to occur during the 4th quarter 2003. Marengo's 100% ownership of a significant portion of the Ashburton Structural Corridor, gives it an excellent opportunity to discover Carlin style gold deposits in a region which already hosts one very successful gold mining operation and is the focus for aggressive exploration programmes by major resource companies. Also the recent acquisition by Marengo of a new project in the Laverton area of WA gives the company prime exploration ground in a proven gold producing region. Marengo currently has only 13.6 million shares on issue and with cash at bank of some $300,000 is well positioned to take advantage of a market upturn to gain The Deed of Company Arrangement (DOCA) for Coretel ASX listing. entered into by the Avanti Group International Pty Ltd was finalised 22 November 2002. Coretel has been successfully merged with e-Span Solutions Pty Ltd (e-Span). This Telco business is operating from the existing Coretel premises at Belmont. 1 0 P A L A D I N R E S O U R C E S L T D C O R P O R A T E G O V E R N A N C E S T A T E M E N T 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 three 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. a n n u a l r e p o r t 2 0 0 3 1 1 ◆ ◆ ◆ D I R E C T O R S ’ R E P O R T 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 2003. DIRECTORS The Directors in office at the date of this report are: Mr Rick W. Crabb (Chairman) 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. 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 from 1976 to 1991. 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. Mr Borshoff has extensive experience in uranium, gold and base metal exploration, company management and administration. Dr Leon Pretorius (Director - Non-Executive) BSc(Hons), MSc, PhD, FAusIMM (CP), MAIG, PrSciNat Dr Pretorius is a geochemist with 30 years experience working both in Australia and Africa. He has extensive experience in uranium, gold, base metal and industrial mineral exploration and has a sound knowledge of opencast mining operations in Sub-Saharan Africa. From 1984 to 1990 Dr Pretorius was Managing Director of Australian publicly listed company Keela-Wee Exploration Ltd and since has been actively involved in the resource sector both in Australia and Southern Africa. Dr Pretorius was appointed a director on 27 March 2003. 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. 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 $41,272 (2002: $96,079) was written off. Expenditure totalling $3,166,276 (2002: $2,808,937) has been carried forward on other areas where operations are continuing. The consolidated results are as follows: Operating loss after income tax 571,633 2,226,113 2003 $ 2002 $ 1 2 P A L A D I N R E S O U R C E S L T D D I R E C T O R S ’ R E P O R T 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 5 to 10 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. 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 5 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) Exercisable at 15 cents, on or before 30 November 2004 Balance at 1 July 2002 Issued during year Balance at date of this report Listed Options (ii) Exercisable at 10 cents, on or before 21 January 2004 Balance at 1 July 2002 Issued during year Balance at date of this report (iii) Exercisable at 15 cents, on or before 31 May 2003 Balance 1 July 2002 Issued during year Less expired during year Balance at date of this report NUMBER OF OPTIONS 2003 2002 4,700,000 - 4,700,000 - 4,700,000 4,700,000 62,250,000 - 750,000 62,250,000 63,000,000 62,250,000 52,303,071 52,203,071 - 100,000 (52,303,071) - - 52,303,071 a n n u a l r e p o r t 2 0 0 3 1 3 D I R E C T O R S ’ R E P O R T DIRECTORS' INTERESTS 2003 R W Crabb J Borshoff L Pretorius Fully Paid Shares Options* Options** 5,964,746 566,940 12,458,394 1,778,345 8,000,000 750,000 1,000,000 1,500,000 - The particulars of Directors' interests in shares and options are as at the date of this report. * Listed and exercisable at 10 cents on or before 21 January 2004 ** Unlisted and exercisable at 15 cents on or before 30 November 2004 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. Name Directors' Fees Consulting Fees $ $ Options $ Total $ 2003 2002 2003 2002 2003 2002 2003 2002 Non-executive Directors of Paladin Resources Ltd R Crabb D Dunnet D R Kennedy L Pretorius+ 12,000 15,000 28,576 - 30,000 20,000 4,000 3,000 - - - - 20,000 11,097 - - Executive Directors of Paladin Resources Ltd J Borshoff 12,000 15,000 153,500 144,375 G Swaby 7,000 15,000 52,000 70,800 - - - 1,500 - - 6,000 40,576 21,000 6,000 30,000 37,097 - - 4,000 24,500 - - 9,000 165,500 168,375 7,200 59,000 93,000 D Dunnet resigned 10 December 2002 D R Kennedy was appointed 10 December 2002 and resigned on 27 March 2003 L Pretorius was appointed on 27 March 2003 G Swaby resigned on 1 February 2003 +The $20,000 consulting fees was paid through the issue of 1,000,000 fully paid shares at $0.02 each and 750,000 options at $0.002 each in the Company. 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 2003. Fair values have been assessed using the Black Scholes option pricing models. This value has not been included in the statement of Financial Performance. As at 30 June 2003, a total of $427,606 due to directors, former directors and their companies was included in trade creditors: Agreement was reached between the Company (represented by the independent Director, Dr Leon Pretorius) and other Directors, former Directors and associates of Directors of Paladin in relation to the satisfaction of debts totalling $402,836. It was agreed repayment would only be made out of the balance reached by Paladin from sale by Etron Properties Pty Ltd of the property at 5-7 Belmont Avenue, Belmont. It is further understood that if Paladin does not receive sufficient monies to satisfy these debts then the balance of those debts shall be forgiven and released in full. 1 4 P A L A D I N R E S O U R C E S L T D D I R E C T O R S ’ R E P O R T MEETINGS OF DIRECTORS The following table sets out the number of meetings of the Company's Directors held during the year ended 30 June 2003 and the number of meetings attended by each Director. Number of meetings held: Number of meetings attended by: R W Crabb J Borshoff L Pretorius G Swaby D Dunnet D R Kennedy 12 12 12 2 8 6 3 Number of meetings entitled to attend: 12 12 2 8 6 4 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. R Crabb J Borshoff L Pretorius G Swaby D Dunnet D R Kennedy Under the terms of the insurance contract, the nature of liabilities insured against and the premium paid cannot be disclosed. DATED at Perth this 30th day of September 2003 Signed in accordance with a resolution of Directors. J Borshoff DIRECTOR a n n u a l r e p o r t 2 0 0 3 1 5 C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P E R F O R M A N C E f o r t h e y e a r e n d e d 3 0 J u n e 2 0 0 3 Notes Revenue from ordinary activities Exploration costs written off Borrowing costs General and administration Bad debts written off Write down of investments Write back of investments Share of net loss of associate accounted for using the equity method Loss from ordinary activities before income tax Income tax expense Total changes in equity other than those resulting from transactions with owners as owners CONSOLIDATED 2003 $ 148,905 (41,272) (59,503) (556,971) (81,800) 2002 $ 258,724 (96,079) (51,585) (489,268) - - (1,445,000) 256,000 - (236,992) 571,633 - (402,905) 2,226,113 - 571,633 2,226,113 Basic and diluted earnings per share (cents) 4 (0.27) (1.05) The above statement of financial performance should be read in conjunction with the accompanying notes. D I S C U S S I O N & A N A L Y S I S O F C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P E R F O R M A N C E f o r t h e y e a r e n d e d 3 0 J u n e 2 0 0 3 In August 2002 the Company purchased the Langer Heinrich Uranium Deposit located in Namibia, southern Africa on the back of an improving market outlook worldwide for the use of nuclear energy for production of electricity and an increasing uranium price. At the time of purchase, the uranium price was US$9.75/lb U3O8 having now reached US$12.20 at the date of signing these accounts. In March 2003 Paladin completed the Pre-Feasibility Study, with the results showing that the Project should be taken to final feasibility determination. Detailed scheduling and costing of the Bankable Feasibility has begun with Fluor and negotiations are underway with several funding agencies who are offering the possibility of assistance in funding the Bankable Feasibility Study. Evaluation of the proprietary database produced the Mt Lofty Project which became the subject of a joint venture with Absolut Resources Corp. Absolut has earned a 10% interest by expenditure of $60,000 and can earn a total of 45% by expending a further $345,000. In relation to the investment in Coretel Pty Ltd, the Deed of Company Arrangement was finalised in November 2002. Negotiations with the purchaser of that company resulted in Paladin retaining a convertible note of $800,000 with a 4 year term, which accrues interest at 5% per annum. As a result of this, $256,000 has been written back against the investment to bring the book value to $800,000. The commercial premises produced rental revenue totalling $122,674 with associated borrowing costs of $59,503. As a result of the Deed of Company Arrangement for Coretel, an amount of $81,800 was written off as bad debts relating to the prior year. As a result of equity accounting for ST Synergy Ltd, Paladin's consolidated loss included $200,000 in respect of amortised goodwill and $36,992 as the share of the operating loss of that company. 1 6 P A L A D I N R E S O U R C E S L T D C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N a s a t 3 0 J u n e 2 0 0 3 CONSOLIDATED CURRENT ASSETS Cash Receivables Property Plant & Equipment 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 Interest bearing liabilities Other 2003 $ 121,829 171,279 1,132,955 1,426,063 24,438 - 800,000 318,871 3,166,276 4,309,585 5,735,648 471,188 37,097 731,943 50,000 2002 $ 286,890 210,158 - 497,048 - 236,991 544,000 1,566,997 2,808,937 5,156,925 5,653,973 236,517 32,610 - - TOTAL CURRENT LIABILITIES 1,290,228 269,127 NON CURRENT LIABILITIES Interest bearing liabilities Other TOTAL NON CURRENT LIABILITIES - 20,000 20,000 731,787 20,000 751,787 TOTAL LIABILITIES 1,310,228 1,020,914 NET ASSETS 4,425,420 4,633,059 PARENT ENTITY INTEREST EQUITY Contributed equity Reserves Accumulated losses TOTAL EQUITY 19,470,094 19,099,393 174,463 181,170 (15,219,137) (14,647,504) 4,425,420 4,633,059 The above statement of financial position should be read in conjunction with the accompanying notes. a n n u a l r e p o r t 2 0 0 3 1 7 D I S C U S S I O N & A N A L Y S I S O F C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N a s a t 3 0 J u n e 2 0 0 3 ASSETS Current assets increased by $929,015, due in the main part to the reclassification of the commercial property from non current to current assets, reflecting the fact that negotiations are currently underway for its sale. Offsetting this, non current assets reduced by $847,340 as a result of the property reclassification, the write-back of the investment held in Coretel (increase of $256,000) and the reduction in value of ST Synergy Ltd as a result of equity accounting (decrease of $236,991). Exploration efforts centred mainly on the Langer Heinrich Uranium Project, resulted in a net increase of capitalised exploration expenditure of $357,339 LIABILITIES The reclassification of the commercial property as detailed above resulted in a corresponding reclassification of the attaching mortgage from non current to current liabilities. Overall, total liabilities increased by $289,314 largely reflecting the remuneration remaining unpaid to Directors. Details of this are set out in the accompanying Directors' Report. EQUITY Contributed equity increased by $370,701 as a result of share issues totalling $401,950 with offsetting transaction costs of $31,249. 1 8 P A L A D I N R E S O U R C E S L T D C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S f o r t h e y e a r e n d e d 3 0 J u n e 2 0 0 3 Cash flows from operating activities Payments to suppliers and employees Interest received Interest paid Rental income Net cash outflow from operating activities Cash flows from investing activities Payments for property, plant and equipment Exploration and evaluation expenditure Payments for investments Sale proceeds on investments Payment for controlled entities net of cash acquired Net cash outflow from investing activities Cash flows from financing activities Share placement Fundraising costs Repayment of borrowings Mortgage funding Loan funding Net cash inflow from financing activities Net decrease in cash held Cash at the beginning of the financial year Cash at the end of the financial year CONSOLIDATED 2003 $ 2002 $ (346,710) (521,486) 1,793 (59,503) 122,674 (281,746) (235) (256,525) - - (4,649) (261,409) 366,050 (37,956) - - 50,000 378,094 6,275 (51,585) 82,833 (483,963) (19,805) (299,537) (386,422) 42,066 - (663,698) 867,650 (153,078) (3,305) 146,443 - 857,710 (165,061) (289,951) 286,890 121,829 576,841 286,890 D I S C U S S I O N & A N A L Y S I S O F C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S f o r t h e y e a r e n d e d 3 0 J u n e 2 0 0 3 CASH FLOWS FROM OPERATING ACTIVITIES The net cash outflow decreased to $281,746 reflecting the increased creditor position at year end. INVESTING ACTIVITIES The outflow reduced significantly from $663,698 to $261,409 reflecting the payments made in the prior year in relation to the investment in Coretel Pty Ltd. FINANCING ACTIVITIES Fundraising from share issues accounted for the majority of cash inflows, together with loan funding of $50,000. a n n u a l r e p o r t 2 0 0 3 1 9 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S f o r t h e y e a r e n d e d 3 0 J u n e 2 0 0 3 This concise financial report relates to the consolidated entity consisting of Paladin Resources Ltd and the entities it controlled at the end of, or during, the year ended 30 June 2003. The accounting policies adopted are consistent with those of the previous year. 1. BASIS OF ACCOUNTING The financial report has been prepared on the basis of accounting principles applicable to a going concern, which assumes the commercial realisation of the future potential of the Company's and consolidated entity's assets and the discharge of their liabilities in the normal course of business. The Board considers that the Company is a going concern and recognises that additional funding is required to ensure that the Company can continue to fund its and the consolidated entity's operations for the twelve month period from the date of this financial report. Such additional funding, as occurred during the year ended 30 June 2003 and has occurred subsequent to balance date as discussed in Note 5, can be derived from either one or a combination of the following: The Belmont commercial property is currently under negotiation for sale; the sale of which should release additional working capital after repayment of debts; Marengo Mining Pty Ltd is expected to list on the ASX in the December 2003 quarter, crystallizing reimbursement payments to Paladin of $132,000; Absolut Resources will fund 100% of the exploration on the Mt Lofty Joint Venture during earn-in and this will partially offset Paladin operating costs; The strategic investment relationship entered into with the Contiguous Millennium Fund, a global resource investment fund, provides the opportunity to access necessary funding for ongoing working capital. In addition, the Company is currently in discussion with a number of parties in relation to funding of the Langer Heinrich Bankable Feasibility Study; and The placement of securities under ASX Listing Rule 7.1 or an excluded offer pursuant to the Corporations Act 2001. In consideration of the foregoing factors, the Directors believe it is appropriate to adopt the going concern basis of accounting in the preparation of this concise financial report. There were no changes in accounting policies for the year ended 30 June 2003. 2. SEGMENT INFORMATION 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 totalling $800,000 with a 4 year term, accruing interest at 5% per annum. These arise from the Company's original investment in Coretel Pty Ltd, a niche telecommunications company. Property Commercial premises located in Belmont, Perth, Western Australia. 2 0 P A L A D I N R E S O U R C E S L T D ◆ ◆ ◆ ◆ ◆ N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S f o r t h e y e a r e n d e d 3 0 J u n e 2 0 0 3 2. SEGMENT INFORMATION CONTINUED Industry Segments 2003 Resources Software Telecommunications Property Consolidated $ $ $ $ $ Other revenue Total segment revenue 25,857 25,857 - - - - 123,048 123,048 148,905 148,905 Loss from ordinary activities before income tax expense (554,663) (236,992) 256,000 (35,978) (571,633) Income tax expense - - - - - Loss from ordinary activities after income tax expense (298,663) (236,992) 256,000 (35,978) (571,633) Total assets Segment liabilities Unallocated liabilities Total liabilities 3,772,267 151,047 Acquisitions of property, plant and equipment, and other non-current segment assets 398,846 Depreciation and amortisation expense 96,693 Other non-cash expenses - Industry Segments 2002 Other revenue 48,391 Unallocated revenue Total segment revenue Profit/(loss) from ordinary activities - - - - - - 800,000 1,163,381 5,735,648 - - - (256,000) 731,943 - 18,713 81,800 882,990 427,238 1,310,228 398,846 115,406 (174,200) - 114,333 162,724 96,000 258,724 before income tax expense (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 262,941 - Unallocated liabilities Total liabilities 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 11,903 407,893 114,633 1,445,000 - 1,468,957 a n n u a l r e p o r t 2 0 0 3 2 1 N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S f o r t h e y e a r e n d e d 3 0 J u n e 2 0 0 3 2. SEGMENT INFORMATION CONTINUED Geographical Segments Segment revenues Segment assets current segment assets 2003 $ 2002 $ 2003 $ 2002 $ 2003 $ 2002 $ Acquisitions of property, plant and equipment, and other non- Australia Africa 148,905 258,724 4,597,412 4,856,707 17,042 336,314 - - 1,138,236 797,266 381,804 71,579 148,905 258,724 5,735,648 5,653,973 398,846 407,893 3. DIVIDENDS No dividend has been paid during the financial year and no dividend is recommended for the current year. 4. EARNINGS PER SHARE (a) Basic and diluted Loss Per Share CONSOLIDATED 2003 (cents) (0.27) $ 2002 (cents) (1.05) $ Weighted average number of ordinary shares on issue during the year used as the denominator in calculating basic earnings per share 208,280,686 211,336,743 Earnings used in calculating diluted and basic earnings per share (571,633) (2,226,113) (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. 5. EVENTS SUBSEQUENT TO BALANCE DATE There has not arisen since the end of the financial year any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect substantially the operations of the economic entity in subsequent financial years with the exception of:- Issue of Shares and Options On 12 August 2003, the Company issued 5,000,000 fully paid shares at 1 cent per share to Contiguous Millennium Fund together with the following unlisted options to provide additional working capital: Number of Options Exercise Price Expiry Date 4,500,000 4,200,000 3,800,000 1.1 cents 1.2 cents 1.3 cents 31 March 2004 31 December 2004 30 November 2005 In addition, on 4 September 2003, 3,000,000 fully paid shares at 1 cent per share were issued to Dr L Pretorius, a director, in lieu of consulting services. SALES REVENUE There was no sales revenue during the year (2002: nil) FULL FINANCIAL REPORT Further financial information can be obtained from the full financial report which is available, free of charge, on request from the Company. A copy may be requested by calling (08) 9381 4366. P A L A D I N R E S O U R C E S L T D 6. 7. 2 2 D I R E C T O R S ’ D E C L A R A T I O N The directors declare that in their opinion, the concise financial report of the consolidated entity for the year ended 30 June 2003 as set out on pages 16 to 22 complies with Accounting Standard AASB 1039: Concise Financial Reports. The financial statements and specific disclosures included in this concise financial report have been derived from the full financial report for the year ended 30 June 2003. The concise financial report cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report, which as indicated in Note 7, is available on request. This declaration is made in accordance with a resolution of the directors. John Borshoff DIRECTOR Perth 30th September 2003 a n n u a l r e p o r t 2 0 0 3 2 3 I N D E P E N D E N T A U D I T R E P O R T T O T H E M E M B E R S O F P A L A D I N R E S O U R C E S L T D SCOPE We have audited the concise financial report of Paladin Resources Ltd (the Company) for the financial year ended 30 June 2003 as set out on pages 16 to 23, in order to express an opinion on it to the members of the Company. The Company's Directors are responsible for the concise financial report. Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance as to whether the concise financial report is free of material misstatement. We have also performed an independent audit of the full financial report of the company and its controlled entities for the year ended 30 June 2003. Our audit report on the full financial report was signed on 30 September 2003 and was not subject to any qualification. Our procedures in respect of the audit of the concise financial report included testing that the information in the concise financial report is consistent with the full financial report and examination on a test basis, of evidence supporting the amounts, discussion and analysis and other disclosures which were not directly derived from the full financial report. These procedures have been undertaken to form an opinion whether, in all material respects, the concise financial report is presented fairly in accordance with Accounting Standard AASB 1039 : Concise Financial Reports, issued in Australia. The audit opinion expressed in this report has been formed on the above basis. AUDIT OPINION In our opinion, the concise financial report of the Company and its controlled entities for the year ended 30 June 2003 complies with Accounting Standard AASB 1039 : Concise Financial Reports. RSM BIRD CAMERON PARTNERS Chartered Accountants Perth, WA Dated: 30 September 2003 S C CUBITT Partner 2 4 P A L A D I N R E S O U R C E S L T D A D D I T I O N A L I N F O R M A T I O N P u r s u a n t t o t h e L i s t i n g R e q u i r e m e n t s o f A u s t r a l i a n S t o c k E x c h a n g e L i m i t e d a s a t 3 0 S e p t e m b e r 2 0 0 3 (a) Distribution and number of holders SHAREHOLDERS OPTIONHOLDERS 21.01.2004 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - maximum 21 105 216 1,073 399 1,814 31 211 110 195 65 612 832 shareholders hold less than a marketable parcel of shares. 587 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 35.37% of the total shares issued. Holder Aylworth Holdings Pty Ltd Merrill Lynch (Australia) Nominees Pty Ltd Mr G J Buchanan & Mrs H J Buchanan Dr L E Pretorius Mr R A Healy & Mrs H M Healy Nefco Nominees Pty Ltd Mr R J Pilley Reynolds (Nominees) Pty Limited Citicorp Nominees Pty Limited Mrs J A Godwin Shar Holdings Pty Ltd Mr R W Crabb & Mrs C J Crabb Mr J U Blanchard III Calm Holdings Pty Ltd Strategic Consultants Pty Ltd Mr H Leung Tarmel Pty Limited Alpenrose Investments Inc Aurex Pty Ltd Trio Investments Pty Ltd No. of Shares 11,843,237 11,414,985 10,080,434 8,000,000 7,500,000 5,000,000 5,000,000 5,000,000 4,544,863 3,938,300 3,778,401 3,748,050 2,777,778 2,750,000 2,184,800 2,000,000 1,867,141 1,730,000 1,701,861 1,698,655 % 4.33 4.17 3.68 3.00 2.74 1.83 1.83 1.83 1.66 1.44 1.38 1.37 1.02 1.01 0.80 0.73 0.68 0.63 0.62 0.62 96,558,505 35.37 a n n u a l r e p o r t 2 0 0 3 2 5 A D D I T I O N A L I N F O R M A T I O N P u r s u a n t t o t h e L i s t i n g R e q u i r e m e n t s o f A u s t r a l i a n S t o c k E x c h a n g e L i m i t e d a s a t 3 0 S e p t e m b e r 2 0 0 3 (d) The twenty largest optionholders (21.01.2004) hold 70.07% of the total options issued. Holder Mr Lionel Henry Evans Mr A D Dimmock Dr S L Chiam Kapiri Holdings Pty Ltd Danny A Baayoun & Co Pty Ltd Ms S Proud Wakeford Holdings Pty Ltd Mandevilla Pty Ltd Aylworth Holdings Pty Ltd Mr P J Hay Mrs V I Sanos & Mr M L Sanos Miss L J Petrie Mr A Harrison Mr G W Thomas Hermes Capital Pty Ltd Mr A Todarello Dr L E Pretorius Grundy Nominees Pty Ltd Mr J Grover Shar Holdings Pty Ltd No. of Shares 8,000,000 5,982,198 5,120,301 3,000,000 2,500,000 2,348,594 2,256,886 2,071,429 1,691,892 1,500,000 1,500,000 1,449,177 1,283,055 1,066,166 1,000,000 800,000 750,000 678,572 594,286 539,772 % 12.70 9.50 8.13 4.76 3.97 3.73 3.58 3.29 2.69 2.38 2.38 2.30 2.04 1.69 1.59 1.27 1.19 1.08 0.94 0.86 44,732,328 70.07 2 6 P A L A D I N R E S O U R C E S L T D A D D I T I O N A L I N F O R M A T I O N P u r s u a n t t o t h e L i s t i n g R e q u i r e m e n t s o f A u s t r a l i a n S t o c k E x c h a n g e L i m i t e d a s a t 3 0 S e p t e m b e r 2 0 0 3 (e) Voting rights For all shares, voting rights are one vote per member on a show of hands and one vote per share in a poll. (f) Mining Tenements held - Project Tenement Interest % JV Partner/s Operator URANIUM PROJECTS WESTERN AUSTRALIA Manyingee Oobagooma SOUTH AUSTRALIA Siccus Lake Elder Mt Yerila NORTHERN TERRITORY 3 ML's 100% 4 EL(A)'s 100% - - - - 1 EL 1 EL 1 EL 90% 20% 15% Signature Resources NL Paladin Quasar Resources Pty Ltd Quasar Resources Pty Ltd Quasar Resources Pty Ltd J E Risinger Quasar Resources Pty Ltd N E Arunta 1 EL 100% - - MALAWI - AFRICA Kayelekera 1 EPL 90% Balmain Resources Pty Ltd Paladin NAMIBIA - AFRICA Langer Heinrich 1 MDRL 100% - - NON-URANIUM PROJECTS SOUTH AUSTRALIA Mt Lofty Ranges 2 EL's 90% Absolut Resources Corporation Paladin Reaphook JV 1 EL 7.5% Perilya Limited Perilya Limited NORTHERN TERRITORY Davenport 3 EL(A)'s 30% Newmont NFM Pty Ltd Newmont NFM Pty Ltd EPL Exclusive Prospecting Licence (Malawi) MDRL Mineral Deposit Retention Licence (Namibia) ML (A) M EL Mining Lease (Australia) Pending Application Mining Lease (WA) Exploration Licence (SA and NT) EL(A) Exploration Licence Application (SA and NT) EPL Exclusive Prospecting Licence (Malawi) a n n u a l r e p o r t 2 0 0 3 2 7 C O R P O R A T E D I R E C T O R Y DIRECTORS Mr Rick Wayne Crabb (Chairman) Mr John Borshoff (Managing Director) Dr Leon Pretorius (Director) COMPANY SECRETARY Ms Gillian Swaby REGISTERED OFFICE 1st Floor, 245 Churchill Avenue Subiaco Western Australia 6008 (PO Box 201, Subiaco) Telephone: (+61 8) 9381 4366 Facsimile: (+61 8) 9381 4978 Email: Web: paladin@paladinresources.com.au www.paladinresources.com.au SHARE REGISTER Computershare Investor Services Pty Limited AUDITORS SOLICITORS TO THE COMPANY Level 2, 45 St George’s Terrace Perth Western Australia 6000 Telephone: (+61 8) 9323 2000 Facsimile: (+61 8) 9323 2033 RSM Bird Cameron Partners 8 St George’s Terrace Perth Western Australia 6000 Blakiston & Crabb 1202 Hay Street West Perth Western Australia 6005 2 8 P A L A D I N R E S O U R C E S L T D L A N G E R H E I N R I C H U R A N I U M D E P O S I T T e s t M i n i n g T r e n c h ( G e n c o r 1 9 7 8 ) . E x c a v a t e d 8 0 , 0 0 0 t o f o r e g r a d i n g 0 . 0 1 % U 3 O 8 . P A L A D I N R E S O U R C E S L T D A C N 0 6 1 6 8 1 0 9 8 1st Floor, 245 Churchill Avenue, Subiaco WA 6008 www.paladinresources.com.au 

Continue reading text version or see original annual report in PDF format above