PALADIN RESOURCES LTD
A.C.N. 061 681 098
GRAND CENTRAL 1ST FLOOR, 26 RAILWAY ROAD
SUBIACO WESTERN AUSTRALIA 6008
PO BOX 201, SUBIACO WESTERN AUSTRALIA 6904
TELEPHONE: (+61 8) 9381 4366 FAX: (+61 8) 9381 4978
EMAIL: paladin@paladinresources.com.au
Web: www.paladinresources.com.au
Ref: 3640v1
7 October 2005
The Company Announcements Officer
Australian Stock Exchange Limited
Exchange Centre
20 Bridge Street
SYDNEY NSW 2000
Dear Sir/Madam
By Electronic Lodgement
2005 Annual Report and Notice of Annual General Meeting
Attached please find 2005 Annual Report together with Notice of Annual General Meeting as
forwarded to shareholders.
Yours faithfully
Paladin Resources Ltd
JOHN BORSHOFF
Managing Director
PALADIN RESOURCES LTD
A.C.N. 061 681 098
GRAND CENTRAL 1ST FLOOR, 26 RAILWAY ROAD
SUBIACO WESTERN AUSTRALIA 6008
PO BOX 201, SUBIACO WESTERN AUSTRALIA 6904
TELEPHONE: (+61 8) 9381 4366 FAX: (+61 8) 9381 4978
EMAIL: paladin@paladinresources.com.au
Web: www.paladinresources.com.au
NOTICE OF ANNUAL GENERAL MEETING
PROXY FORM
AND
MANAGEMENT INFORMATION CIRCULAR
Date of Meeting
9 November 2005
Time of Meeting
2.30pm
Place of Meeting
The Celtic Club
48 Ord Street
West Perth, Western Australia
NOTICE OF ANNUAL GENERAL MEETING
TO THE HOLDERS OF ORDINARY SHARES OF PALADIN RESOURCES LTD:
The Annual General Meeting (the “Meeting”) of Paladin Resources Ltd (the “Company”)
will be held at the Celtic Club, 48 Ord Street, West Perth, Western Australia on
Wednesday, 9 November 2005 at 2:30pm, Perth time, for the following purposes:
FINANCIAL REPORT
To receive and consider the consolidated Financial Statements of the Company for
the financial year ended 30 June 2005, and the Directors’ and Auditors’ Reports
thereon.
Resolution 1: Election of Sean Reveille Llewelyn as Director
To consider and, if thought fit, to pass the following resolution as an ordinary
resolution:
“That Mr Sean Reveille Llewelyn be elected as a Director.”
Resolution 2: Election of George Edward Pirie as Director
To consider and, if thought fit, to pass the following resolution as an ordinary
resolution:
“That Mr George Edward Pirie be elected as a Director.”
Resolution 3: Election of Ian Urquhart Noble as Director
To consider and, if thought fit, to pass the following resolution as an ordinary
resolution:
“That Mr Ian Urquhart Noble be elected as a Director.”
Resolution 4: Election of Rick Wayne Crabb as Director
To consider and, if thought fit, to pass the following resolution as an ordinary
resolution:
“That Mr Rick Wayne Crabb be re-elected as a Director.”
2696v1
1
Resolution 5: Approval of Termination Payment to John Borshoff
To consider and, if thought fit, to pass the following resolution as an ordinary
resolution:
"That pursuant to section 200B(1) of the Corporations Act and Listing Rule
10.19 of the Listing Rules of Australian Stock Exchange Limited, the
shareholders approve John Borshoff's entitlement to the termination payment
specified in his employment contract dated 27 July 2005 with the Company
and to the making of the termination payment by the Company in accordance
with the terms of John Borshoff's employment contract, further details of
which are set out in the Explanatory Memorandum accompanying this Notice
of Meeting."
Voting Exclusions
The Company will in accordance with Listing Rule 10.19 of the Listing Rules of
Australian Stock Exchange Limited disregard any votes cast on Resolution 5 by
John Borshoff or any associate of John Borshoff. However, the Company need not
disregard a vote if:
•
•
it is cast by a person as proxy for a person who is entitled to vote, in
accordance with the directions on the proxy form; or
it is cast by the person chairing the meeting as proxy for a person who is
entitled to vote, in accordance with a direction on the proxy form to vote as
the proxy decides.
Resolution 6: Directors’ Fees
To consider and, if thought fit, to approve the following resolution as an ordinary
resolution:
“That the total pool of fees payable to directors be increased from A$125,000 to
A$400,000.”
Voting Exclusions
The Company will in accordance with Listing Rule 10.17 ASX, disregard any votes
cast on Resolution 6 by a director of the Company, and an associate of the
director. However, the Company need not disregard a vote if:
•
•
it is cast by a person as proxy for a person who is entitled to vote, in
accordance with the directions on the proxy form; or
it is cast by the person chairing the meeting as proxy for a person who is
entitled to vote, in accordance with a direction on the proxy form to vote as
the proxy decides.
2696v1
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Resolution 7: Change of Auditors
To consider and, if thought fit, to approve the following resolution as an ordinary
resolution:
“That Ernst and Young be appointed as the Company’s auditor.”
Resolution 8: Ratification of Issue of Shares to Balmain Resources Pty Ltd
To consider and, if thought fit, to approve the following resolution as an ordinary
resolution:
“That, for the purposes of listing rule 7.4 of the Listing Rules of Australian Stock
Exchange Limited, and for all other purposes, the Company approve and ratify
the allotment and issue of 4,350,000 fully paid Ordinary Shares to Balmain
Resources Pty Ltd at an issue price of A$1.235 per share, further details of
which are set out in the Explanatory Memorandum accompanying this Notice of
Meeting.”
Voting Exclusions
For the purposes of Resolution 8:
(1)
(2)
The shares issued are fully paid ordinary shares which rank pari passu
with existing shares.
The Company will disregard any votes cast by Balmain Resources Pty
Ltd or any associate of Balmain Resources Pty Ltd. However, the
Company need not disregard a vote if:
•
•
it is cast by a person as proxy for a person who is entitled to vote, in
accordance with the directions on the proxy form; or
it is cast by the person chairing the meeting as proxy for a person
who is entitled to vote, in accordance with a direction on the proxy
form to vote as the proxy decides.
Resolution 9: Remuneration Report
To consider and, if thought fit, to approve the following resolution as an ordinary
resolution:
“To adopt the Remuneration Report for the year ended 30 June 2005.”
Note: The vote on this resolution is advisory only and does not bind the Directors
of the Company
2696v1
3
OTHER BUSINESS
To transact such other business as may properly come before the Meeting.
Information in relation to each of the foregoing resolutions accompanies this Notice of
Meeting.
The Directors have determined the close of business on 7 November 2005 as the
snapshot date for determining Shareholders who are entitled to attend and vote at the
Meeting.
If you cannot attend the Meeting in person, you are encouraged to date, sign and deliver
the accompanying proxy and return it prior to 2:30pm Perth time on 7 November 2005.
Information in relation to proxy voting is set out in the following documentation.
DATED at Perth, Western Australia, on 3 October 2005.
By order of the Board
(signed) Gillian Swaby
Company Secretary
2696v1
4
MANAGEMENT INFORMATION CIRCULAR
3 October 2005
SOLICITATION OF PROXIES
This Information Circular is furnished in connection with the solicitation of proxies by the
management of PALADIN RESOURCES LTD (the “Company”) for use at the Annual General
Meeting of the Company (the “Meeting”) to be held on Wednesday, 9 November 2005, and any
adjournments thereof, at the time and place and for the purposes set forth in the accompanying
Notice of Annual General Meeting.
VOTING BY PROXIES
This section headed “Voting by Proxies” only applies to registered holders (a “Shareholder”) of
Ordinary shares of the Company (“Ordinary Shares”).
The form of proxy accompanying this Information Circular confers discretionary authority upon
the proxy nominee with respect to any amendments or variations to the matters identified in the
Notice of Annual General Meeting and any other matters that may properly come before the
Meeting. On any ballot, the Ordinary Shares represented by the proxy will be voted or withheld
from voting in accordance with the instructions of the Shareholder as specified in the proxy with
respect to any matter to be acted on. If a choice is not specified with respect to any matter,
the Ordinary Shares represented by a proxy given to management are intended to be
voted in favour of the resolutions contemplated herein. A Shareholder has the right to
appoint a person (who need not be a Shareholder) to attend and act for the Shareholder
and on the Shareholder’s behalf at the Meeting other than the persons designated in the
form of proxy and may exercise such right by inserting the name in full of the desired
person in the blank space provided in the form of proxy. Proxies must be delivered prior to
2:30pm Perth time on 7 November 2005 to either of the following:
Computershare Investor Services Pty Limited
GPO Box D182
PERTH WA 6840 AUSTRALIA
Telephone:
Australia: 1300 85 05 05
Overseas: +61 (0) 3 9415 4000
Computershare Investor Service Inc
Attention: Proxy General
100 University Avenue
9th Floor
TORONTO, ON M5J 2Y1 CANADA
Telephone: 1-800-564-6253/514-982-7555
Or
Facsimile:
Australia:
Overseas:
08 9323 2033
+61 8 9323 2033
Or
Facsimile: 1 866 249 7775
Management of the Company are not aware of any amendments to the matters to be presented
for action at the Meeting or of any other matters to be presented for action at the Meeting.
2696v1
5
ADVICE TO BENEFICIAL HOLDERS OF SHARES
The information set forth in this section is of significant importance to persons who
beneficially own Ordinary Shares, as a substantial number of such persons do not hold
Ordinary Shares in their own name. Persons who hold Ordinary Shares through their brokers,
intermediaries, trustees or other persons, or who otherwise do not hold such securities in their
own name (referred to in this section as “Beneficial Holders”) should note that only proxies
deposited by persons whose names appear on the records of the Company may be recognized
and acted upon at the Meeting. If Ordinary Shares are listed in an account statement provided
to a Beneficial Holder by a broker, then in almost all cases those Ordinary Shares will not be
registered in the Beneficial Holder’s name on the records of the Company. Such Ordinary
Shares will more likely be registered under the names of the broker or an agent of that broker.
In Canada, the vast majority of shares are registered under the name of CDS & Co. (the
registration name for The Canadian Depository for Securities Limited, which acts as nominee for
many Canadian brokerage firms). Ordinary Shares held by brokers, agents or nominees can
only be voted (for or against resolutions) upon the written instructions of the Beneficial Holder.
Without specific instructions, brokers, agents and nominees are prohibited from voting securities
for their clients. Therefore, Beneficial Holders should ensure that instructions respecting
the voting of their Ordinary Shares are communicated to the appropriate person by the
appropriate time.
Applicable regulatory policy requires intermediaries/brokers to seek voting instructions from
Beneficial Holders in advance of shareholders’ meetings. Each intermediary/broker has its own
mailing procedures and provides its own return instructions to clients, which should be carefully
followed by Beneficial Holders to ensure that their Ordinary Shares are voted at the Meeting.
The purpose of the form of proxy or voting instruction form supplied to a Beneficial Holder by its
broker, agent or nominee is limited to instructing the registered Shareholder (the broker or agent
of the broker) how to vote on behalf of the Beneficial Holder. The majority of brokers now
delegate responsibility
Investor
instructions
Communications Company (“IICC”). IICC typically supplies a voting instruction form, mails those
forms to the Beneficial Holders and asks Beneficial Holders to return the forms to IICC or follow
specified telephone voting procedures. IICC then tabulates the results of all instructions received
and provides appropriate instructions respecting the voting of Ordinary Shares to be represented
at the appropriate Meeting. A Beneficial Holder receiving a voting instruction form from
IICC cannot use that form to vote Ordinary Shares directly at the Meeting - the voting
instruction forms must be returned to IICC or the telephone procedures completed well in
advance of the Meeting in order to have such shares voted.
for obtaining
from clients
Independent
to
Although Beneficial Holders may not be recognized directly at the Meeting for the purpose of
voting shares registered in the name of their broker, agent or nominee, a Beneficial Holder may
attend at the Meeting as proxy holder for the Shareholder and vote the Ordinary Shares, as the
case may be, in that capacity. Beneficial Holders who wish to attend at the Meeting and
indirectly vote their Ordinary Shares, as the case may be, as proxy holder for the registered
Shareholder, should enter their own names in the blank space on the form of proxy or voting
instruction form provided to them and return the same to their broker (or the broker’s agent) in
accordance with the instructions provided by such broker (or agent), well in advance of the
Meeting.
2696v1
6
REVOCATION OF PROXIES
A Shareholder executing and delivering a proxy has the power to revoke it in accordance with
the provisions of the Australian Corporations Act, which provides that every proxy may be
revoked by an instrument in writing executed by the Shareholder or by his or her attorney
authorized in writing and delivered either to the registered office of the Company at any time up
to and including the last business day preceding the day of the Meeting, or any adjournment
thereof at which the proxy is to be used, or to the chairman of the Meeting on the day of the
Meeting or any adjournment thereof, or in any other manner permitted by law.
A proxy is valid only in respect of the Meeting.
PERSONS MAKING THE SOLICITATION
This solicitation of proxies is made by management of the Company. The cost of the solicitation
has been and will be borne by the Company.
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
As of 19 September 2005, the issued and outstanding capital of the Company consists of
406,285,713 Ordinary Shares. Subject to certain exclusions of votes contemplated below, each
Ordinary Share is entitled to be voted at the Meeting. On a ballot, each Ordinary Share is
entitled to one vote.
The snapshot date for determination of the Shareholders entitled to attend and vote at the
Meeting is close of business on 7 November 2005.
A simple majority of votes cast are required to approve all matters to be submitted to a vote of
Shareholders at the Meeting.
PARTICULARS OF MATTERS TO BE ACTED ON
Resolutions 1, 2, 3, & 4: Election of Directors
Messrs Llewelyn, Pirie and Noble were appointed as directors of the Company since the last
Annual General Meeting. In accordance with the Company’s Constitution, they cease to hold
office at the next Annual General Meeting following their appointment, however, being eligible,
are all offering themselves for election.
Further, the Company’s Constitution provides that at each Annual General Meeting one-third of
the Directors or, if their number is not a multiple of three, then the number nearest to but not
more than one-third of the Directors must retire from office. Mr Crabb, therefore, retires from
office in accordance with this requirement and submits himself for re-election.
Information in respect of each Director seeking election, as well as in respect of John Borshoff,
an existing director of the Company, who is not required by the Company’s Constitution to retire
at this Annual General Meeting, is set out below:
2696v1
7
Name and Residence
Position with
Paladin
Principal Occupations
during preceding 5 years
Ordinary
Shares
beneficially
owned
directly
or indirectly
Partner: Blakiston and Crabb
(1980 to 2004).
5,964,746
(1.47%)
Rick Wayne Crabb
Perth, Australia
Sean Reveille Llewelyn
Gold Coast, Australia
George Edward Pirie
Toronto, Canada
Chairman
(27 March 2003 to
present); Non-
Executive Director
(8 February 1994 to
present)
Non-Executive
Director
(12 April 2005 to
present)
Non-Executive
Director
(1 June 2005 to
present)
None
President and CEO:
Breakwater Resources Inc.
(4 July 2005 to present);
Placer Dome Canada
(December 2002 to 31
December 2004).
None
None
16,000
(0%)
Ian Urquhart Noble
Gold Coast, Australia
None
Non-Executive
Director
(29 June 2005 to
present)
John Borshoff
Perth, Australia
Managing Director Managing Director of the
Company (24 September
1993 to present)
14,591,394
(3.59%)
Resolution 5: Approval of Termination Payment to John Borshoff
Shareholder approval is being sought in Resolution 5 to John Borshoff's entitlement to the
termination payment specified in his employment contract dated 27 July 2005 with the Company
("Employment Contract") and to the making of the termination payment by the Company in
accordance with the terms of the Employment Contract in certain events of termination
described below. The Company's obligation to make the termination payment is conditional on
shareholders approving the obligation by 30 November 2005.
John Borshoff has been the Company's Managing Director since 24 September 1993. A new
contract was entered into with Mr Borshoff engaging Mr Borshoff as the Company's Managing
Director for a period of 3 years commencing on 1 March 2005. His term of office may be
extended for a further period of 2 years by mutual agreement.
The termination payment is equal to two times the average of the base salary component of
John Borshoff's remuneration package for the two year period immediately preceding the
termination of Mr Borshoff's employment ("Termination Payment"). At the date of this Notice,
John Borshoff's base salary was $400,000 per annum (inclusive of statutory superannuation).
2696v1
8
John Borshoff's total remuneration package will be reviewed annually, the first review of which
will take effect on 1 January 2006, by mutual agreement and with regard to market movements
in remuneration levels of executive resource and mining companies in Australia. John Borshoff's
total remuneration package cannot be reduced as a result of an annual review.
In addition to his base salary, at the Board's discretion John Borshoff is entitled to performance
based short term incentives and to long term incentives in the form of participation in any
employee performance incentive programs should they be established by the Company. He is
also entitled to be reimbursed for all reasonable travelling, entertainment, accommodation and
general expenses incurred in connection with his employment. The Company will also take out
life insurance coverage for him to the value of $1,000,000.
Under the Employment Contract the Company must pay the Termination Payment to John
Borshoff if the Employment Contract is terminated prior to the end of the term in the following
circumstances:
(a)
(b)
by the Company without cause, including as a result of the Company's shareholders
resolving to remove John Borshoff as a director of the Company; or
by John Borshoff as a result of the Company's repudiation or breach of the Employment
Contract or because the Company requests Mr Borshoff to assume responsibilities not
reasonably consistent with the services required of him under the Employment Contract
or to perform a substantially lower level of services to those required of him under the
Employment Contract.
However, the Termination Payment must not be paid, unless otherwise determined by the
Directors, if the Employment Contract is terminated in the following circumstances:
(a)
by John Borshoff without cause;
(b)
by the Company as a result of John Borshoff's gross misconduct, neglect, incapacity or
death, bankruptcy, unremedied breach or serious or persistent breach or other lawful
termination by the Company in accordance with the terms of the Employment
Agreement; or
(c)
by the Company or John Borshoff if for any reason the terms of the Employment Contract
become illegal or offend any statute relating to the conduct of the Company's business.
Termination payments
Corporations Act
Section 200B(1) of the Corporations Act prohibits a company from giving a person a benefit in
connection with that person's retirement from a board or managerial office without shareholder
approval under section 200E. Retirement from an office includes loss of office, resignation from
office and death of a person at a time when they held office.
The Company's obligation under the Employment Contract to make the Termination Payment to
John Borshoff and the making of the Termination Payment to Mr Borshoff on the terms of the
Employment Contract is the giving of a benefit in connection with Mr Borshoff's retirement from a
board or managerial office for the purposes of section 200B(1) of the Corporations Act.
2696v1
9
Information requirements
For the purposes of section 200E of the Corporations Act the following details regarding the
benefit is provided:
The amount of the payment or the manner in which its value is to be calculated and any
matter, event or circumstance that will or is likely to affect the calculation of that value:
The Termination Payment is equal to two times the average of the base salary component of
John Borshoff's remuneration package for the two year period immediately preceding the
termination of Mr Borshoff's employment. The amount of the Termination Payment is therefore
dependent upon Mr Borshoff's base salary. Mr Borshoff's existing base salary and the basis for
future salary reviews are summarised above.
Resolution 6: Directors’ Fees
Shareholder approval is being sought to increase the total pool of fees available from which to
pay directors’ fees. The quantum is currently set at A$125,000 per annum, however, given the
recent Board expansion and growth of the Company, it is considered that this level needs to be
increased. This is necessary to attract and retain directors of a calibre required to effectively
guide and monitor the business of the Company.
The Directors’ fees have been considered and A$400,000 has been decided as an appropriate
maximum level of Directors’ fees. This will also allow for non-executive directors to be
remunerated appropriately for the expectations placed upon them both by the Company and the
regulatory environment in which it operates. It should be noted that Directors’ fees have not
increased since 2001.
Resolution 7: Change of Auditors
The auditor, Ernst & Young was appointed on 21 June 2005 to replace RSM Bird Cameron
Partners. The Board of Directors resolved at a Board meeting on 16 June 1005 to seek approval
from the Australian Securities and Investments Commission (ASIC) for RSM Bird Cameron
partners to resign as auditor. This situation arose as the Canadian member firm of RSM
International was unable to assist RSM Bird Cameron Partners in the audit of the required
AGAAP to CGAAP reconciliation note and accordingly this firm and its Canadian international
affiliate were not able to provide the professional services required by the Company for the year
ended 30 June 2005. It was, therefore, necessary for RSM Bird Cameron partners to resign as
auditor of the Company to permit another accounting firm who could provide the required
professional services, to be appointed as auditor to the Company for the year ended 30 June
2005. In these circumstances, it was appropriate for ASIC to permit a resignation, at a date
other than the next Annual General Meeting. Ernst and Young consented to act as auditor,
subject to the approval of ASIC. Approval was granted by ASIC on 21 June 2005.
The Board unanimously recommends that shareholders vote in favour of appointing Ernst and
Young as the Company’s auditor.
2696v1
10
Resolution 8: Ratification of Issue of Shares to Balmain Resources Pty Ltd
Shareholder approval is being sought for the ratification of the issuance of 4,350,000 fully paid
Ordinary Shares to Balmain Resources Pty Ltd (“Balmain”) at an issue price of A$1.235. The
shares are in consideration for the purchase of Balmain’s remaining 10% interest in the
Kayelekera Uranium Project bringing the Company’s interest in the project to 100%.
Australian Stock Exchange Listing Rule 7.4 permits the ratification of previous issuances of
securities made without prior shareholder approval provided the issuance did not breach the
15% threshold set by Listing Rule 7.1. The effect of such ratification is to restore a Company’s
maximum discretionary power to issue further shares up to 15% of the issued capital of the
Company without requiring shareholder approval.
The rights and restrictions attached to the Ordinary Shares issued to Balmain are the same as
the existing issued and outstanding ordinary shares and, accordingly, rank equally in all respects
with the existing Ordinary Shares on issue.
Resolution 9: Remuneration Report
The Board is voluntarily submitting its Remuneration Report to shareholders for consideration
and adoption by way of a non-binding resolution.
The Remuneration Report forms part of the Directors’ Report, included in the 2005 Annual
Report, which Remuneration Report is incorporated by reference herein. The Report:
• Explains the Boards policy for determining the nature and amount of remuneration of
executive directors and senior executives of the Company;
• Explains the relationship between the Board’s remuneration policy and the Company’s
performance;
• Sets out remuneration details for each Director and the most highly remunerated senior
executives of the Company; and
• Details and explains any performance conditions applicable to the remuneration of
executive directors and senior executives of the Company.
A reasonable opportunity will be provided for discussion of the Remuneration Report at the
meeting.
INCORPORATING INFORMATION BY REFERENCE
On 8 September 2005, the Company held a General Meeting (“September Meeting”) to approve
certain issuances of ordinary shares. In furtherance of the September Meeting, a Notice of
General Meeting, Proxy Form and Information Circular date 2 August 2005 was mailed to
shareholders (“August Information Circular”), which described the issuances of ordinary shares
referenced above and which also provided certain other information concerning the Company
that was prescribed by Canadian securities laws. Certain information in the August Information
Circular is incorporated by reference into this Management Information Circular. In particular,
the Summary Compensation Table, the Option Grants During the Most Recently Completed
Financial Year, the Aggregated Options Exercised during the Most Recently Completed
Financial Year and Financial Year-End Option Values, Employment Contracts, Composition of
the Remuneration Committee, Report on Executive Compensation, Remuneration of Directors,
Performance Graph and Equity Compensation Plan Information and all of the information related
thereto is incorporated by reference herein.
2696v1
11
In addition, in respect of the disclosure requirement in Canada under National Instrument 58-101
relating to disclosure of corporate governance practices of the Company, the Company has
previously made this disclosure in its 2005 Annual Report. As such, the Corporate Governance
Statement contained in the 2005 Annual Report is incorporated by reference into this
Management Information Circular.
The August Information Circular and the 2005 Annual Report are both filed on www.asx.com.au
and on SEDAR at www.sedar.com. Copies of the August Information Circular and the 2005
Annual Report will both be provided free of charge to shareholders of the Company upon written
request of the Company.
AVAILABILITY OF DOCUMENTS
In addition to as otherwise contemplated herein, the Company will provide to any person, upon
request to the Company Secretary, one copy of the following documents (i) the comparative
financial statements of the Corporation filed with the applicable securities regulatory authorities
for the Company’s most recently completed year in respect of which such financial statements
have been issued, together with the report of the auditors thereon, Management’s Discussion
and Analysis and any interim financial statements of the Company filed with the applicable
securities regulatory authorities subsequent to the filing of the annual financial statements and
(ii) the Notice of Meeting and Explanatory Memorandum filed with the applicable securities
regulatory authorities in respect of the most recent annual meeting of Shareholders of the
Company which involved the election of directors.
Copies of the above documents will be provided free of charge to security holders of the
Company. The Company may require the payment of a reasonable charge by any person or
company who is not a security holder of the Corporation, and who requests a copy of such
document. Additionally, copies of publicly filed information concerning the Company can be
found at www.asx.com.au or at www.sedar.com.
APPROVAL OF THIS INFORMATION CIRCULAR
The contents and the sending of this Information Circular have been approved by the directors of
the Company.
By order of the Board
(signed) Gillian Swaby
Company Secretary
2696v1
12
*
1
0
Q
1
0
0
0
0
0
S
*
1301011221012102012221332120133322113
000001
000
PDN
MR JOHN SMITH 1
FLAT 123
123 SAMPLE STREET
THE SAMPLE HILL
SAMPLE ESTATE
SAMPLEVILLE VIC 3030
I/We being a member/s of Paladin Resources Ltd and entitled to attend and vote hereby appoint
All correspondence to:
Computershare Investor Services Pty Limited
GPO Box D182 Perth
Western Australia 6840 Australia
Enquiries (within Australia)
1300 557 010
(outside Australia)
61 3 9415 4000
Facsimile
61 8 9323 2033
www.computershare.com
Securityholder Reference Number (SRN)
*I1234567890*
*I1234567890*
I 1234567890
I ND
or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the meeting on my/our behalf and to vote in
accordance with the following directions (or if no directions have been given, as the proxy sees fit) at the Annual General Meeting of Paladin Resources Ltd to be held at The Celtic Club, 48 Ord Street, West
Perth, Western Australia on 9 November 2005 at 2.30 pm WST and at any adjournment of that meeting.
IMPORTANT: FOR ITEM 6 BELOW
If the Chairman of the Meeting is your nominated proxy, or may be appointed by default, and you have not directed your proxy how to vote on Item 6 below, please place a mark in
this box. By marking this box you acknowledge that the Chairman of the Meeting may exercise your proxy even if he has an interest in the outcome of that Item and that votes
cast by him, other than as proxy holder, would be disregarded because of that interest. If you do not mark this box, and you have not directed your proxy how to vote, the
Chairman of the Meeting will not cast your votes on Item 6 and your votes will not be counted in computing the required majority if a poll is called on this Item. The Chairman of
the Meeting intends to vote undirected proxies in favour of Item 6.
For
Against
Abstain*
For
Against
Abstain*
1
2
3
4
5
Election of Sean Llewelyn as
Director
Election of George Pirie as
Director
Election of Ian Noble as
Director
Election of Rick Crabb as
Director
Approval of Termination
Payment to John Borshoff
6
Directors' Fees
7
Change of Auditors
8
Ratify Issue of Shares to
Balmain Resources Pty Ltd
9
Remuneration Report
* If you mark the Abstain box for a particular item, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in
computing the required majority on a poll.
In addition to signing the Proxy form in the above box(es) please provide the information below in case we need to contact you.
P D N
1 9 P R
PDN_WIP_142254/000001/000001/i
How to complete the Proxy Form
1 Your Address
This is your address as it appears on the company’s share register. If this information is incorrect, please mark the box and make the correction on the
form. Securityholders sponsored by a broker (in which case your reference number overleaf will commence with an ‘x’) should advise your broker of any
changes. Please note, you cannot change ownership of your securities using this form.
2 Appointment of a Proxy
If you wish to appoint the Chairman of the Meeting as your proxy, mark the box. If the individual or body corporate you wish to appoint as your proxy is
someone other than the Chairman of the Meeting please write the full name of that individual or body corporate in the space provided. If you leave this
section blank, or your named proxy does not attend the meeting, the Chairman of the Meeting will be your proxy. A proxy need not be a securityholder of
the company. Do not write the name of the issuer company or the registered securityholder in the space.
3 Votes on Items of Business
You may direct your proxy how to vote by placing a mark in one of the three boxes opposite each item of business. All your securities will be voted in
accordance with such a direction unless you indicate only a portion of voting rights are to be voted on any item by inserting the percentage or number of
securities you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on a given item, your proxy may vote as he or she
chooses. If you mark more than one box on an item your vote on that item will be invalid.
4 Appointment of a Second Proxy
You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you wish to appoint a second proxy, an additional Proxy Form
may be obtained by telephoning the company's share registry or you may copy this form.
To appoint a second proxy you must:
(a) on each of the first Proxy Form and the second Proxy Form state the percentage of your voting rights or number of securities applicable to that
form. If the appointments do not specify the percentage or number of votes that each proxy may exercise, each proxy may exercise half your
votes. Fractions of votes will be disregarded.
(b) return both forms together in the same envelope.
5 Signing Instructions
You must sign this form as follows in the spaces provided:
Individual: where the holding is in one name, the holder must sign.
Joint Holding: where the holding is in more than one name, all of the securityholders should sign.
Power of Attorney: to sign under Power of Attorney, you must have already lodged this document with the registry. If you have not
previously lodged this document for notation, please attach a certified photocopy of the Power of Attorney to this form
when you return it.
Companies: where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that
person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a
Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director
or a Company Secretary. Please indicate the office held by signing in the appropriate place.
If a representative of a corporate Securityholder or proxy is to attend the meeting the appropriate "Certificate of Appointment of Corporate
Representative" should be produced prior to admission. A form of the certificate may be obtained from the company's share registry or at
www.computershare.com.
Lodgement of a Proxy
This Proxy Form (and any Power of Attorney under which it is signed) must be received at an address given below no later than 48 hours before the
commencement of the meeting at 2.30 pm WST on 9 November 2005. Any Proxy Form received after that time will not be valid for the scheduled
meeting.
Documents may be lodged:
IN PERSON
Registered Office - Grand Central, 1st Floor, 26 Railway Road, SUBIACO WESTERN AUSTRALIA 6008 AUSTRALIA
Share Registry - Computershare Investor Services Pty Limited, Level 2, Reserve Bank Building, 45 St Georges Terrace, Perth WA 6000
Australia
Registered Office - Grand Central, 1st Floor, 26 Railway Road, SUBIACO WESTERN AUSTRALIA 6008 AUSTRALIA
Share Registry - Computershare Investor Services Pty Limited, GPO Box D182, Perth WA 6840 Australia
61 8 9323 2033
BY MAIL
BY FAX
Another very exciting year.
Paladin Resources Ltd
Grand Central, 1st Floor,
26 Railway Road, Subiaco
Western Australia 6008
Telephone: (+61 8) 9381 4366
Facsimile: (+61 8) 9381 4978
Email: paladin@paladinresources.com.au
Web: www.paladinresources.com.au
Paladin Resources Ltd
2005 Annual Report
DIRECTORS
Mr Rick Crabb
Mr John Borshoff
Mr Sean Llewelyn
Mr George Pirie
Mr Ian Noble
Ms Gillian Swaby
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Company Secretary
REGISTERED OFFICE
Grand Central, 1st Floor,
26 Railway Road, Subiaco
Western Australia 6008
(PO Box 201, Subiaco, 6904)
Telephone: (+61 8) 9381 4366
Facsimile: (+61 8) 9381 4978
Email: paladin@paladinresources.com.au
Web: www.paladinresources.com.au
SHARE REGISTERS
Australia - Head Office
Computershare Investor Services Pty Ltd
Level 2, 45 St Georges Terrace
Perth Western Australia 6000
Telephone: (+61 8) 9323 2000
Facsimile: (+61 8) 9323 2033
North America
Computershare Investor Services Pty Ltd
100 University Avenue, 11th Floor
Toronto Ontario M5J 2Y1
Telephone: (+1) 416 263 9200
Facsimile: (+1) 416 263 9261
INVESTOR RELATIONS
Australia - Head Office
Ms Gillian Swaby
Grand Central, 1st Floor,
26 Railway Road, Subiaco
Western Australia 6008
(PO Box 201, Subiaco, 6904)
Telephone: (+61 8) 9381 4366
Facsimile: (+61 8) 9381 4978
Email: gillian.swaby@paladinresources.com.au
North America
Mr Greg Taylor
Ontario, Canada
Business/Cell: (416) 605 5120
Facsimile: (905) 844 6532
Email: greg.taylor@paladinresources.com.au
AUDITORS
Ernst & Young
11 Mounts Bay Road, Perth
Western Australia 6000
SOLICITORS TO THE COMPANY
Blakiston & Crabb
1202 Hay Street, West Perth
Western Australia 6005
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STOCK EXCHANGE LISTINGS
Australian Stock Exchange and Toronto Stock
Exchange
Munich, Berlin, Stuttgart and Frankfurt Stock
Exchanges
Code: PDN
Code: PUR
C O N T E N T S
Company Objectives
Company Performance
Chairman’s Letter
Company Snapshot
The Nuclear Advance
Management Discussion and Analysis
Review of Operations
Financial Review
Corporate Governance Statement
Directors’ Report
Remuneration Report
Auditor’s Independence Declaration
Contents of the Financial Report
Statements of Financial Performance
Statements of Financial Position
Statements of Cash Flows
Notes to the Financial Report
Directors’ Declaration
Independent Audit Report - Australia
Auditors’ Report - Canada
Additional Information
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The Annual 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. 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.
Paladin Resources Ltd
www.paladinresources.com.au
Paladin is one of the leading
emerging uranium producers in
the world. It has accumulated
quality uranium projects
suitable for development in both
Southern Africa and Australia
during a period of extended
downturn in the uranium
market. This unique vision has
allowed the Company to attain
strong share market
performance and provide a solid
foundation to its shareholders
for future growth.
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Objectives
The primary objective of Paladin is to create shareholder wealth through:-
• Developing the considerable opportunities it has
generated to become a significant player in the global
uranium supply market
• Operating with a safe best practice philosophy and with
due regard for the environment, rewarding employee
performance and providing a fulfilling work environment
for them
• Contributing to the growth and prosperity of the
countries in which it operates by conducting operations
in an efficient and effective manner and by seeking out
opportunities for expansion
• Responding to the attitudes and expectations of the
communities in which it operates as part of its corporate
social responsibility obligations
• Acting with integrity, honesty and cultural sensitivity in
all of its dealings
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Performance
B O A R D O F D I R E C T O R S
(left to right) Mr Sean Llewelyn, Non-Executive
Director; Mr George Pirie, Non-Executive Director;
Ms Gillian Swaby, Company Secretary; Mr John
Borshoff, Managing Director; Mr Ian Noble, Non-
Executive Director; Mr Rick Crabb, Non-Executive
Chairman.
In the past two years Paladin has achieved the following milestones:-
Best performing resource stock on the Australian Stock
Exchange (ASX) in the year to June 2004 (+1127%)
Best performing resource stock on the ASX in the year
to December 2004 (+840%)
Best performing stock overall in S&P/ASX 200 in the
year to June 2005 (+740%)
•Entered the S&P/ASX 300 in March 2005
•Entered the S&P/ASX 200 in May 2005
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Chairman’s Letter
It is indeed a rare event when, as Chairman, you can
look back on the previous year’s letter to shareholders
and conclude that your prediction of an “exciting”
year ahead was a major understatement!
In April 2005, Paladin successfully dual
listed on the Toronto Stock Exchange (TSX)
and it is fair to say that, with good volumes
of trading on both the TSX and the ASX,
the Company has been one of the most
successful dual listings.
This strong institutional support in both
Australia and North America has seen
Paladin’s market capitalisation grow from
some A$47 million to some A$520 million
during the financial year. It has since
grown, as at 31 August 2005, to A$696
million. Paladin has been the best
performing stock on the ASX and,
importantly, it entered the S&P/ASX 200
effective close of trade 17 June 2005.
Paladin has benefited from the intense
interest that now exists in the world energy
debate and the realisation of the critical
role that uranium will play for many years,
if not decades, to come. However, it is only
due to the work undertaken by John
Borshoff and fellow Directors and staff over
the previous 7 years, mostly within a
sceptical and unsupportive investor
environment, to accumulate near-
production uranium deposits, that Paladin
can now be seen as an important emerging
contributor to world energy supply.
Most importantly though, throughout this
remarkable period of market and media
attention, Paladin’s Board and
management has been focused on
delivering the project outcomes promised.
The Langer Heinrich feasibility study was
successfully completed and, due to
fundraising and operational groundwork
previously undertaken, implementation of
the project construction plan was underway
in rapid time. The Kayelekera feasibility
study was commenced as expected in April
2005 and it is apparent that the valuable
experience gained by both Paladin’s and
GRD Minproc’s staff on Langer Heinrich will
greatly assist this study’s timely completion.
Considerable work has been undertaken by
Paladin’s experienced marketing team to
intimately understand the current state of
the uranium market and also to establish
Paladin’s credentials with product end
users. Much work has been undertaken on
new project identification and
development. We feel that Paladin’s
extensive proprietary uranium database
and experienced uranium industry
operatives give the Company an edge in
what is becoming a competitive market.
Thus, much of the project generation work
must necessarily be kept confidential until
outcomes are achieved.
Significant work has been undertaken, to
expand and enhance existing corporate
governance policies and procedures.
Paladin aims to achieve best practice in this
regard and I wish to thank our company
secretary, Gillian Swaby for all her valuable
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work particularly on the TSX listing and
corporate governance. On this theme,
during the year a Board restructure was
undertaken. Executive Director Leon
Pretorius retired from the Board but
remains involved in a consultative role with
Company activities. My thanks to Leon for
his important work and support whilst a
Director. The Company and its shareholders
are fortunate that Sean Llewellyn, George
Pirie and Ian Noble have joined the Board. I
consider that we have a sound combination
of technical, financial, marketing and legal
skills with much commercial and uranium
experience. Importantly, I feel that the
Board works well together, is made up of
independent thinkers and can engage in
open and robust debate where needed.
I extend, on behalf of the Board and
shareholders, a special thank you to our
Managing Director, Mr John Borshoff. It is
fair to say that John has enjoyed being
vindicated for holding his ground on his
uranium strategy but also retains a strong
sense of reality and has not lost focus on
the important tasks ahead. I also extend my
thanks to the Paladin staff and consultants,
for sharing our dream and working
professionally in the growing business.
Dare I say it for a third year running but –
the coming 12 months promises to be
another exciting period for Paladin!
Mr Rick Crabb
CHAIRMAN
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Company Snapshot
The New Energy in the Market
Emerging uranium producer with an initial primary
focus in Southern Africa
• Paladin is clearly differentiated as a leader in this
market space
Langer Heinrich Uranium Project, Namibia
• Bankable Feasibility Study successfully completed
• 25 year Mining Licence granted
• Project finance (credit committee approved)
• Project construction commenced
• September 2006 planned start up
Kayelekera Project, Malawi
• Bankable Feasibility Study commenced
Uranium price at 25 year high
• Mid to long term supply shortages predicted
Successful dual listing on Toronto Stock Exchange
(TSX), Canada
Paladin Share Price
Performance
3
2.5
2
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1 Nov
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1 Jan
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1 Mar
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1 May
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1 Jul
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1 Sep
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The Nuclear Advance
N E W M I N I N G S U P P L Y E S S E N T I A L
The economic, technological and environmental imperatives offered by
nuclear power could result in a ten-fold increase in nuclear energy during
the 21st century. Today – in 30 countries representing 2/3 of humankind –
there are 439 reactors producing 16 percent of global electricity.
Uranium Demand Increasing
- Mine Supply the Key
World requirement for U3O8 is currently
about 77,000t per year rising between
1,200t to 2,400t per year and is forecast to
be around 125,000t per year by the early
2020’s. Currently mine production is
around 47,000t per year with the other
30,000t required to meet demand coming
from the down blending of weapons grade
material and inventories. These inventories
have now been consumed to the extent
that they can no longer be used to dictate
the downward pricing of uranium – as had
been the case for the past 25 years. Annual
mining output is expected to increase to
54,000t in the next 3 to 5 years but the
supply situation is expected to remain
tight with upward pressure on prices
predicted to continue. Fundamental
changes are needed to remedy the mine
supply shortage in the mid to long term to
be able to feed the ever growing fuel
requirement of nuclear reactors. The focus
now is fully on increasing exploration
spending and expanding mine production
to meet future demand.
Uranium Spot Price Graph
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The Nuclear Advance
Nuclear acceptance and
implementation for production of
electricity is upon the world as can
be evidenced by the following 2004
reported milestones.
W O R L D
The International Atomic Energy Agency
(IAEA) raises nuclear capacity projection:
IAEA has significantly increased its
projection of world nuclear generating
capacity 15 years hence. It now anticipates
at least 60 new plants in the next 15 years,
with 430 GWe in place in 2020 - 130 GWe
more than projected in 2000 and 17% more
than now. The change is based on specific
plans and actions in a number of countries,
including China, India, Japan, Russia,
Finland and France, coupled also with the
changed outlook due to the Kyoto
Protocol. This would allow nuclear power
to maintain a 17% share in electricity
production in 2020.
World nuclear output up in 2004: The
world’s 439 nuclear reactors generated
3.7% more power last year than in 2003,
with a steady 16% share of world output,
according to IAEA figures.
Nuclear competitiveness improved since
1998: A joint report by the OECD Nuclear
Energy Agency and the IAEA shows that
nuclear power has increased its
competitiveness over the last seven years.
Nuclear power is comfortably cheaper than
coal in seven of ten countries and cheaper
than gas in all but one.
Call for acceleration of nuclear renaissance:
Ministers, senior officials and experts from 74
countries attended a 2-day conference in Paris
organised by the IAEA in 2005. They affirmed
the important role of nuclear power as a
proven and economically competitive
technology in meeting world energy needs in
the light of environmental, energy security
and price stability considerations.
Environmentalists’ attitudes changing:
Stewart Brand, founder of The Whole Earth
Catalogue, has written about
Environmental Heresies in the May 2005
issue of MIT’s Technology Review. “Over the
next ten years, I predict, the mainstream of
the environmental movement will reverse
its opinion and activism in four major areas:
population growth, urbanisation,
genetically engineered organisms, and
nuclear power.” Patrick Moore, one of the
founders of Greenpeace has significantly
changed his position on nuclear power,
which he now favours. He states significant
reduction in greenhouse gas emissions
seems unlikely given continued heavy
reliance on fossil fuel consumption. UK
environmentalist James Lovelock, now sees
nuclear energy as key to our planet’s future
health. Lovelock said “civilization is in
imminent danger, and has to use nuclear -
the one safe, available energy source.”
A S I A
A S I A
China and Nuclear: China expects the share
of its power supplied by nuclear generation
to grow to 4 percent by 2020 from 2.3
percent today. To meet that goal, it must
build about two new reactors every year.
Shen Wenquan, Vice Chairman of China
National Nuclear Corporation’s science and
technology committee, said at an industry
conference in Shanghai: “After 2020,
nuclear power’s growth will increase much,
much faster. Its importance in China’s
energy framework will be indisputable.”
Shen forecast that by 2060, nuclear power
could provide about a third of the country’s
energy needs.
Japan outlines hydrogen targets: An
evaluation by Japan’s Atomic Energy
Research Institute has indicated that by
2010 it expects to confirm the safety of
high-temperature reactors and establish
operational technology to make hydrogen
thermo chemically.
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South Korean plans for hydrogen: The
Korea Atomic Energy Research Institute has
embarked upon a US$1 billion R&D and
demonstration program aiming to produce
commercial hydrogen using nuclear heat
around 2020.
Japan looks to double nuclear share by
2050: Japan’s Atomic Industrial Forum has
released a report on the future prospects
for nuclear power in the country. It brings
together a number of considerations
including 60% reduction in carbon dioxide
emissions and 20% population reduction
but with constant GDP. Nuclear generating
capacity in 2050 is seen as 90 GWe. This
means doubling both nuclear generating
capacity and nuclear share to about 60% of
total power produced. In addition, some 20
GW (thermal) of nuclear heat will be
utilised for hydrogen production.
USA-India Accord on nuclear power: The
US President announced that he will ask
Congress to end nuclear sanctions against
India. The agreement aims to put India on
the same footing as China. The IAEA has
welcomed the agreement as it will
effectively bring India into the
international non-proliferation regime. It
will also mean that India will be able to buy
uranium and reactors on world markets,
and sell its own smaller reactors to
developing countries.
U S A
Hydrogen production development: One
step towards the nuclear-driven hydrogen
economy has been demonstrated in the
USA by the Department of Energy and
Ceramatec Inc, with the laboratory-scale
electrolytic production of hydrogen from
steam at over 800°C.
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Dutch reversal on nuclear policy: The
ruling coalition in the Netherlands has
reversed its previous policy of closing down
the countries only remaining nuclear power
reactor by 2013, and is looking at
increasing the nuclear contribution - for
energy security reasons and to limit
greenhouse gas emissions. The change is
based on a Government report on
sustainable energy.
Swedish political change of view: Recently
the leadership of the Governing Centre
Party of Sweden has indicated a substantial
reversal of its earlier anti-nuclear position,
saying that climate change must be put
ahead of nuclear decommissioning. A
March public opinion poll showed 83%
support for maintaining or increasing
nuclear power in Sweden, and a similar
proportion saying that limiting greenhouse
gas emissions should be the top
environmental priority.
German conservative parties set out
nuclear policy: In a pre-election manifesto,
the German CDU and CSU opposition
parties have promised longer operating
lives for the country’s nuclear power plants,
abandoning the present intended phase-
out. They state “A global solution to the
carbon dioxide problem that does not
contain nuclear power is unthinkable.”
UK report queries renewables: A 127-page
report from the House of Lords Science &
Technology Committee raised major
questions about the practicality and cost of
the UK government’s policy targets for
renewable energy - basically wind. The
report comments that the government may
need to accept the need for new nuclear
plants if it wants a secure supply of
affordable electricity for the UK, with low
carbon emissions.
GLOSSARY OF TERMS
c/kWh
GDP
GW
GWe
cents per kilowatt hour
Gross Domestic Product
gigawatt
gigawatt electric
p/kWh
U3O8
t
Mt
pence/kilowatt hour
uranium oxide (yellowcake)
tonnes
million tonnes
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Management Discussion and Analysis
The following Management Discussion and
Analysis (MD&A) for Paladin Resources Ltd
should be read in conjunction with the
Directors’ Report and Financial Report for
the year ended 30 June 2005. The effective
date of this discussion and analysis is
1 September 2005.
The financial information presented in this
MD&A has been prepared in accordance
with Australian Accounting Standards,
other authoritative pronouncements of the
Australian Accounting Standard Board,
Urgent Issues Group Consensus Views, the
Corporations Act 2001 and the historical
cost convention.
This MD&A also includes additional
information in order for the Company to
comply with reporting requirements of
applicable Canadian securities law, as the
Company is listed on the Toronto Stock
Exchange (trading commenced on Friday,
29 April 2005).
Overview
The Company primarily operates in the
resource industry with some consequential
activity in the financial investment and
property industries. The principal activity
of the Company is the evaluation and
development of uranium projects in Africa
and Australia.
The main activities undertaken during the
year were completion of a Bankable
Feasibility Study and commencement of
mine construction at the Langer Heinrich
Uranium Project in Namibia;
commencement of a Bankable Feasibility
Study for the Kayelekera Uranium Project
in Malawi; acquisition of financial
investment in Deep Yellow Ltd upon sale of
non core uranium projects; sale of its
property business segment and completion
of two share placements raising net funds
of A$39,789,306.
Forward Looking Statements
Some of the statements contained in this
MD&A, including those relating to
strategies and other statements, are
predictive in nature, and depend upon or
refer to future events or conditions, or
include words such as “expects”, “intends”,
“plans”, “anticipates”, “believes”,
“estimates” or similar expressions that are
forward looking statements. Forward
looking statements include, without
limitation, the information concerning
possible or assumed further results of
operations as set forth herein. These
statements are not historical facts but
instead represent only expectations,
estimates and projections regarding future
events and are qualified in their entirety by
the inherent risks and uncertainties
surrounding future expectations generally.
The forward looking statements contained
in this MD&A are not guarantees of future
performance and involve certain risks and
uncertainties that are difficult to predict.
The future results of the Company may
differ materially from those expressed in
the forward looking statements contained
in this MD&A due to, among other factors,
the risks and uncertainties inherent in the
business of the Company. The Company
does not undertake any obligation to
update or release any revisions to these
forward looking statements to reflect
events or circumstances after the date of
this MD&A or to reflect the occurrence of
unanticipated events.
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Management Discussion and Analysis
Review of Operations
IN SUMMARY
It has been a year of ground breaking
achievements for Paladin. After entering
the S&P/ASX 200 in May 2005 Paladin came
out a clear winner as the best performing
company in that category for the year
ending 30 June 2005 in terms of share price
increase. The Company’s share price
improved dramatically in this period from
A$0.135 per share to A$1.175 per share.
This ongoing upward recalibration of the
Company has been the result of two critical
developments:–
• Paladin’s persistence in accumulating
advanced quality uranium projects
between 1997 and 2002 during a period
of extended depressed outlook for this
commodity; and
• The continued recovery that has
occurred in the nuclear industry causing
the price for uranium to rise to a 25 year
high, needing clear focus on mine
production to alleviate forecast supply
shortages.
Paladin remains in a unique position being
the only junior uranium company in the
world so well prepared to benefit from the
uranium upswing. Paladin has a solid
portfolio of advanced quality uranium
projects. These are the Langer Heinrich
Uranium Project in Namibia, the Kayelekera
Uranium Project in Malawi and the
Manyingee Uranium Project in Western
Australia.
The Langer Heinrich Uranium Project is
undergoing development with production
expected in September 2006 and the
Kayelekera Uranium Project is undergoing a
Bankable Feasibility Study, expected to be
completed toward the end of 2006. The
Company’s Western Australian uranium
projects are not being progressed because
of negative uranium policies adopted by
the State Labour Government. These
projects, nevertheless, still represent
significant assets of the Company and
which could be considered for development
later in the decade, particularly with the
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Management Discussion and Analysis
Review of Operations
strong support now being shown by the
Australian Federal Government.
Add to this the extensive uranium database
which the Company owns covering both
Australia and Africa and it becomes evident
that Paladin, overall, is very well placed to
benefit from the considerable opportunities
which are now becoming available from
this uranium boom.
P R O J E C T S U M M A R Y
With the recognised shortage of uranium
supply which is forecast Paladin has
expanded its interests to include a 12%
equity holding (fully diluted) in Deep
Yellow Ltd an Australian publicly listed
company with exploration focusing in
Australia, namely Northern Territory and
South Australia.
LANGER HEINRICH
PROJECT
KAYELEKERA
PROJECT
MANYINGEE
PROJECT
OOBAGOOMA
PROJECT
LOCATION/EQUITY
Namibia 100%
ex GENCOR
Malawi 100%
ex CEGB
West Australia 100%
ex TOTAL
West Australia 100%
ex Cogema
RESOURCES
HISTORICAL
EXPENDITURE
32,800t U3O8
@ 0.07%
10,850t U3O8
@ 0.12%
10,890t U3O8
@ 0.09%
9,950t U3O8
@ 0.12%
A$20M
A$9M
A$16M
A$5M
MAIN ACTIVITY PERIOD
1973 - 1980
Feasibility studies
1982 - 1990
Feasibility studies
1979 - 1988
Feasibility studies
1982 - 1985
Pre-feasibility
WORK REQUIRED
Project
Construction
15 months BFS
3 year staged BFS
2 year reserve
drilling
CURRENT STATUS
PROJECT
CONSTRUCTION
BFS COMMENCED
MAY 2005
ON HOLD
IN 12 MONTHS
Commissioning
BFS completed
ON HOLD
N/A
N/A
Paladin’s overall uranium resource inventory totals 64,500t or 144Mlb of contained U3O8 at
an average grade of 0.09% U3O8.
For the dual listing on the TSX, National Instrument 43-101 compliant reports have been
released for the Langer Heinrich and Kayelekera Projects.
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A N T I C I P A T E D P R O D U C T I O N S C H E D U L E
Project
Production Start
Production (U308) million pounds
LANGER HEINRICH
(STAGE 1)
KAYELEKERA
LANGER HEINRICH
(STAGE 2)
TOTAL
SEPTEMBER 2006
APRIL 2008
JULY 2008
2.60
2.30
1.10
6.00MLB
D E V E L O P M E N T S C H E D U L E v e r s u s U R A N I U M D E M A N D O U T L O O K
Scheduled Mine Production
Required to Balance
)
0
0
0
1
X
(
8
O
3
U
s
d
n
u
o
P
140,000
120,000
100,000
80,000
60,000
2004
2005
2006
2007
2008
2009
Langer Heinrich
100% (Namibia)
BFS-US$3.2M
CONSTRUCTION
PRODUCTION - 2.6Mlb pa (1,180 tpa) - 15 YEARS PLUS
Kayelekera
100% (Malawi)
PRE-FEASIBILITY
UPDATE
BFS-US$2.3M
CONSTRUCTION
PRODUCTION
2.2Mlb (1,000 tpa) -10 YEARS
Uranium database
exploitation
Manyingee
100% (W. Aust)
GLOBAL EXPLORATION COMMENCED - IDENTIFY NEW PROJECT OPPORTUNITIES
PRE-FEASIBILITY COMPLETED (PROJECT ON HOLD) DEVELOPMENT OPPORTUNITY 2012 & BEYOND
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Management Discussion and Analysis
Review of Operations
LANGER HEINRICH URANIUM PROJECT
The Langer Heinrich Uranium Project in
Namibia is owned 100% by Paladin through
its wholly owned Namibian subsidiary,
Langer Heinrich Uranium (Pty) Ltd. Paladin
purchased the Langer Heinrich Project in
August 2002. Langer Heinrich is a calcrete
type uranium deposit containing a mineral
resource of 38,400t U3O8 at a grade of
0.06% (200ppm cut off) in seven designated
mineralised zones, named as Details 1 to 7,
within a 15 kilometre length of an
extensive palaeodrainage system. The
deposit is located in the Namib Desert, 80
kilometres east of the major seaport of
Walvis Bay.
The Bankable Feasibility Study (“BFS”) of
the Langer Heinrich Project was completed
in April 2005. The BFS confirmed that
Langer Heinrich can be developed as a
profitable uranium mining operation. An
application was made to the Ministry of
Mines and Energy in Namibia for a mining
licence covering the Langer Heinrich
deposit and this was granted for a 25-year
term from 26 July 2005.
The mining operation is designed to
produce 1,180 tonnes (2.6Mlbs) per annum
(tpa) of uranium oxide concentrate (U3O8)
from 1.5Mtpa of calcrete associated ores by
ore beneficiation, alkaline leaching
(heating to 750C), counter-current
decantation, ion exchange, precipitation
and calcining to produce saleable U3O8.
The JORC (1999) Code compliant Mineral
Resource base used for the BFS pit
optimisation work has been previously
announced and is summarised as follows:-
T O T A L E S T I M A T E D R E C O V E R A B L E R E S O U R C E S
Cut-off
Measured
Indicated
Inferred
ppm
300
Mt
15.24
ppm
740
t U3O8
11,208
Mt
9.01
ppm
660
t U3O8
5,900
Mt
22.02
ppm
710
t U3O8
15,703
Utilising the Measured and Indicated Resources, and using a uranium price of US$25/lb
U3O8, the BFS determined the following Ore Reserves:-
U3O8 Price
US$/lb
Ore (Mt)
Grade U3O8
(ppm)
Recovered
U3O8 (t)
Waste (Mt)
Total (Mt)
Strip Ratio
Waste:ore
Cut-off
U3O8 (ppm)
25
22.24
705
14,107
40.02
62.26
2.1:1
250
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The BFS Ore Reserves generated from the
Indicated and Measured Resources,
determined a scheduled mine life of 11
years and a process plant life of 15 years.
Based on the mill throughput design, the
BFS demonstrates that 1,180tpa of U3O8
can be produced for the first 11 years at a
head feed grade of 0.0875% U3O8 and
401tpa U3O8 over the last 4 years, using the
accumulated low grade stockpile grading
0.032% U3O8.
Capital costs including a 10% contingency
total US$92M. During the BFS process it
became evident that a longer project life
utilising the available Inferred Resources is
possible, and this made minimisation of
operating costs a priority objective.
Increasing capital expenditure to facilitate
this exhibits, on an incremental basis,
comparatively small impact on project
economics, compared to operational cost
increases and long term performance.
Paladin has employed the core project
development personnel and development
of the project has commenced. It is
anticipated that construction will be
completed by September 2006. The project
will be funded via a debt/equity package.
A 10,000-metre reverse-circulation drilling
program is underway to test a previously
unknown 5km fertile palaeochannel
discovered during the 2004 drilling. This
mineralisation is similar to the existing
known Langer Heinrich deposits and is
expected to add to the present mineral
resources of the Project.
KAYELEKERA PROJECT
The Kayelekera Uranium Project is located
in northern Malawi, 40 kilometres west of
the provincial town of Karonga and 8
kilometres south of the main road that
connects Karonga with the township of
Chitipa to the west.
The Kayelekera Uranium Project is owned
100% by Paladin through its wholly owned
Malawi subsidiary Paladin (Africa) Ltd
having purchased the remaining 10%
equity interest in August 2005 from
Balmain Resources Pty Ltd for a
consideration of 4,350,000 fully paid shares
in Paladin, valued at the time at A$1.235
per share.
In 2004 the Paladin 2000 Pre-Feasibility
Study was updated in the light of
increasing uranium prices. This work
showed the project could be considered
viable on the parameters utilised (i.e. 1,000t
U3O8 year production at US$20/lb U3O8,
acid leach process and 10 year mine life).
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Management Discussion and Analysis
Review of Operations
As part of this programme Hellman and
Schofield Pty Ltd (H&S), mineral resource
specialists, completed a resource estimate
for the Kayelekera Uranium Project. These
are reported here according to the JORC
(1999) Code. This work indicates the
Inferred Resources in the 300ppm and
500ppm cut off ranges are as follows:-
• 9.4Mt of ore at 0.12% U3O8 containing
10,850t U3O8 (300ppm cut-off)
• 7Mt of ore at 0.14% U3O8 containing
9,900t U3O8 (500ppm cut-off)
(Although the appropriate cut-off for
mining will not be known until the BFS is
completed, a range is provided although it
is expected it will be in the vicinity of
300ppm U3O8.)
The deposit has been extensively drilled
previously and verification of this work
together with some additional drilling
which is underway will allow the present
Inferred Resources and the possible
additional resources to be upgraded to
Measured and Indicated Resource
categories for the BFS mine modelling.
In April 2005 Paladin announced the go-
ahead of a US$2.3M BFS as a result of the
improved economics shown by the pre-
feasibility work. Overall project
management of the BFS has been awarded
to GRD Minproc, based in Johannesburg.
On current scheduling it is anticipated the
BFS will be completed by August 2006.
With early approvals, production start-up is
expected in early/mid 2008 with annual
production of 1,000t of U3O8 (2.3Mlb) over
the currently planned ten-year mine life.
Paladin is providing in-country logistical
and technical support for the BFS. A
permanent office has been established in
Lilongwe, the capital of Malawi, staffed by
a company representative to both liaise
with Government Departments and
facilitate field activities. A field base has
also been established at Karonga (600km
north of Lilongwe) to support on-site
activities at Kayelekera and support local
BFS activities.
An eleven-hole 680-metre diamond drilling
program to provide fresh, unweathered
drill core for metallurgical testwork was
completed in August 2005. Approximately
two tonnes of drill core samples will be
shipped to Johannesburg in South Africa
for test work at a commercial metallurgical
laboratory.
A 5,000m RC drilling programme
commenced in August 2005 to more clearly
define the peripheral mineralisation for pit
optimisation purposes and increase the
currently stated resource base. Some
sterilisation work is also planned.
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MANYINGEE PROJECT
OOBAGOOMA 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 exists,
either via the North West Coastal Highway
(39km) or the Barradale-Onslow road 22km
to the west. The Tubridgi Natural Gas
Pipeline passes 500 metre east of the
licence area. The property is protected by
3 Mining Leases totalling 13km2.
The project contains JORC (1999) Code
compliant Indicated Resources of 7.9Mt of
ore at a grade of 0.1% U3O8 containing
8,080t of U3O8 and an Inferred Resource of
4.2Mt of ore at 0.067% U3O8 containing
2,810t of U3O8 in permeable sandstone.
Previous field 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 during the year,
with the Southern African development
projects being given priority.
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.
Using geostatisical methods Afmeco
calculated total geological resources of
8.2Mt of ore at a grade of 0.12% U3O8
containing 9,950t U3O8 (300ppm 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.
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Paladin has a solid portfolio of advanced quality uranium
projects and remains in a unique position being the only
junior uranium company in the world so well prepared to
benefit from the uranium upswing.
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QUASAR-PALADIN JOINT VENTURE
URANIUM DATABASE ACTIVITIES
Paladin is in joint venture in South Australia
on EL3001 and EL3078 with Quasar
Resources Pty Ltd, a wholly owned
subsidiary of Heathgate Resources Ltd,
owner of the Beverley ISL uranium mining
operation in the Frome Basin which
commenced operations in 2001. Heathgate
Resources is an Australian affiliate of
General Atomics of the USA.
The two tenements cover 1,050km2 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 feasibility study and a
decision to mine.
DEEP YELLOW LTD
Paladin has farmed out 3 non-core
Australian uranium projects to Deep Yellow
Ltd (Deep Yellow - an Australian ASX listed
company). These include Napperby and
Northeast Arunta in the Northern Territory
and Paladin’s 90% share of the Siccus Joint
Venture in the Frome Basin in South
Australia. Northeast Arunta and Napperby
were sold for A$100,000 cash, a 2% gross
royalty, 15,000,000 fully paid shares in Deep
Yellow and 25,000,000 1c options expiring
on 31 December 2007. Paladin’s share of
the Siccus Joint Venture was sold for
7,500,000 fully paid shares in Deep Yellow,
and 12,500,000 12c options expiring on 15
July 2008.
The most advanced of the projects is the
Napperby Project in the Northern Territory.
A drilling programme at Napperby was
completed in August 2005 by Deep Yellow.
559 holes were drilled and 2,500 samples
were collected during the programme.
Paladin owns a unique uranium database,
compiled over 30 years of investigations by
the international uranium mining house
Uranerzbergbau in Germany. The database
incorporates all aspects of the uranium
mining and exploration industry and
includes detailed exploration data for
Africa and Australia. It can be used to
quickly research uranium prospects,
deposits and mineralisation on a country by
country basis. The Company continues to
evaluate opportunities for acquiring
additional uranium projects from this
database.
N O N U R A N I U M A C T I V I T I E S
MT LOFTY PROJECT
The first pass exploration work on the Mt
Lofty Joint Venture tenements was
completed with Absolut Resources Corp.
(“Absolut”) completing its minimum
expenditure of A$60,000 to earn a 10%
interest in the project. Absolut can earn a
total of 45% on expenditure of a further
A$345,000 on EL2863. Absolute has agreed
to fund the next stage of evaluation and
continue earning further equity in the joint
venture. The investigations to date have
isolated high grade gold mineralisation in
the Stockyard Gully area.
Encouraging results of the first pass
investigations warrant 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. No active exploration
was carried out on this project during the
year due to this access clearance being
delayed. The planned exploration work
will involve RC drilling, targeted to test
both depth extension and lateral continuity
of the identified mineralisation.
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Management Discussion and Analysis
Financial Review
Statements of Financial Performance
Revenue from ordinary activities
Expenses from ordinary activities
Year Ended 30 June
2005
A$000
2,975
(4,359)
Profit/(loss) from ordinary activities before and after income tax expense
(1,384)
Profit/(loss) per share – basic and diluted
Cents
(0.38)
2004
A$000
785
(595)
190
Cents
0.07
Revenues from ordinary activities have increased to A$2,974,917 in 2005 as a result of the one off proceeds received
in 2005 from sale of land and buildings and sale of tenements which exceeded the revenue from sale of investment
in ST Synergy Ltd in 2004.
On 11 March 2005, an offer was accepted for sale of the commercial premises (land and buildings located in
Belmont, Western Australia) for A$1,200,000, subject to due diligence. On 2 May 2005, this offer became
unconditional and settlement occurred on 24 June 2005. This thereby discontinues the Company’s operations in the
property business segment.
On 9 December 2004, the Company announced the sale of non-core uranium properties to Deep Yellow Ltd (Deep
Yellow) being the Napperby and Northeast Arunta Projects located in Northern Territory, Australia. The sale
consideration totalled A$810,000 and comprised A$100,000 cash payment, 15,000,000 fully paid ordinary shares in
Deep Yellow (A$360,000), 25,000,000 unlisted Deep Yellow options exercisable at 1 cent on or before 31 December
2007 (A$350,000), and a 2% gross royalty (A$Nil). As a result of this sale, from 9 December 2004, the Company has
a financial investment in Deep Yellow shares and options.
Expenses from ordinary activities have increased significantly to A$4,358,593 in 2005 when compared to 2004
relating to the cost of land and buildings sold, the cost of tenements sold, the A$894,438 provision for non-recovery
of convertible note and interest receivable owing from Didasko Technologies Pty Ltd, the increase in borrowing
costs and the expanded corporate activities attributable to the significant growth of the Company in the last year.
As a result of the Company’s previous investment in the telecommunications business segment the Company retains
a convertible note of A$800,000 with Didasko Technologies Pty Ltd for a term of 4 years with a maturity date of 20
November 2006. The convertible note accrues interest at a rate of 5% per annum which is payable at maturity and
the Company retains the right to convert the note into Didasko Ltd (100% holding company of Didasko
Technologies Pty Ltd) shares.
During the year the Company made a provision for non-recovery of the convertible note and interest receivable of
A$894,438 as a result of Didasko Ltd and Didasko Technologies Pty Ltd entering into Deeds of Company
Arrangements with their respective creditors. However, the Company will use all legal means available to seek full
recovery of amounts owing from Didasko Technologies Pty Ltd.
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The loss for the year ended 30 June 2005 of (A$1,383,676) compares unfavourably to the profit for the year ended
30 June 2004 of A$189,872. In 2004 the result was positively impacted by the A$537,555 profit on sale of
investment in ST Synergy Limited. In 2005 the result was negatively impacted by the A$894,438 provision for non-
recovery of convertible note and interest receivable from Didasko Technologies Pty Ltd and the increase in
borrowing and corporate costs, which more than offset the profit from sale of tenements and land and buildings.
Earnings Per Share
The earnings per share noted on the Statements of Financial Performance reflected the profit or loss from ordinary
activities for the specific reported periods and the increase in number of fully paid ordinary shares in 2005.
Segment Disclosure
During the year the Company operated in the following business segments - primarily resources and
consequentially financial investments and property. In the Statements of Financial Performance in 2005 the
Company reflects a more dominant resource focus than in 2004 as a result of the continued divestment of non core
financial investment and property business segments.
The resources business segment has been impacted by the sale of tenements on 9 December 2004, reflected by
A$810,000 in proceeds on sale and A$24,425 in cost of assets sold, and the increase in borrowing and corporate
costs.
The provision for non-recovery of amounts owing from Didasko Technologies Pty Ltd has impacted the financial
investments segment by A$894,438 in relation to convertible note and interest receivable assets.
The sale of commercial premises located in Belmont, Western Australia on 24 June 2005 has impacted the property
segment by A$1,200,000 in proceeds on sale and A$1,095,838 cost of assets sold.
The Company operates in two geographic segments – Australia and Africa. In the Statements of Financial
Performance in 2005 the Company continued to reflect predominantly the Australian geographic segment as a
result of the capital nature of the current African activities.
Statements of Financial Position
Total current assets
Total non current assets
Total assets
Total current liabilities
Total liabilities
Net assets
Equity:
Contributed equity
Reserves
Accumulated losses
Total equity
30 June
2005
A$000
40,057
10,979
51,036
1,325
1,325
49,711
65,950
174
(16,413)
49,711
30 June
2004
A$000
5,802
4,928
10,730
1,320
1,320
9,410
24,265
174
(15,029)
9,410
Current assets have increased to A$40,057,355 at 30 June 2005 as a result of the funds received from issue of shares
and draw down of borrowings, exceeding the payments for project evaluation and development, plant and
equipment, and corporate costs. Of the A$39,489,026 held in cash as at 30 June 2005, A$38,184,703 has been
invested in short term commercial bank bills. This increase has occurred even though the sale of commercial
premises in Belmont, Western Australia, was classified as current property, plant and equipment at 30 June 2004 to
the value of A$1,114,242.
Non current assets have increased by A$6,048,794 during the year as a result of project development activities for
the Langer Heinrich Uranium Project in Namibia; evaluation activities for the Kayelekera Uranium Project in Malawi;
purchase of plant and equipment; and financial investment in Deep Yellow shares and options. This increase
occurred even though a provision was recorded for the non-recovery of convertible note and interest receivable
owing from Didasko Technologies Pty Ltd, which impacted non current assets by A$894,438.
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Management Discussion and Analysis
Financial Review
Statements of Financial Position (continued)
Current liabilities remain unchanged at 30 June 2005 primarily as a result of the offset of the sale of commercial
premises in Belmont, Western Australia (which repaid bank loans of A$733,326 and A$402,836 in specific accounts
payable) with the A$500,000 debt draw down on a A$2,000,000 loan facility established with Société Générale
Australia Branch on 30 September 2004 and higher payables at 30 June 2005 from the increase in project evaluation
and development activities.
Following settlement of the commercial premises on 24 June 2005 for A$1,200,000, the specific creditor balances
totalling A$402,836 were paid out in full prior to 30 June 2005. These outstanding creditor balances relate to
unclaimed salaries and fees owing to Directors, former Directors and associates of Directors of the Company for the
years 2002 to 2003.
Contributed equity increased by A$41,685,106 during the year from both share placements which raised net funds
of A$39,789,306, proceeds from the exercise of share options which contributed A$1,574,800 and A$321,000
transferred from reserves relating to the fair value of options granted to Société Générale Australia Branch on
establishment of A$2,000,000 loan facility which were exercised during the year. The number of fully paid ordinary
shares on issue at 30 June 2005 is 400,885,713, an increase of 67,200,000 during the year. Share options of
33,600,000 remain outstanding at 30 June 2005 to Directors, employees, and consultants directly engaged in
corporate, project evaluation and development work for the Company.
Accumulated losses increased to A$16,412,941 at 30 June 2005 as a result of the loss for the year discussed under
Statements of Financial Performance above.
Segment Disclosure
In the Statements of Financial Position in 2005 the Company reflects a dominant resource business segment with
the continued project evaluation and development of uranium projects; the provision recorded for non-recovery of
convertible note and interest receivable owing from Didasko Technologies Pty Ltd; and the sale of commercial
premises in Belmont, Western Australia.
In the Statements of Financial Position in 2005 the Company reflected a significant increase in the African
geographical segment attributable to the focus on the Langer Heinrich Uranium Project in Namibia, and the
Kayelekera Uranium Project in Malawi.
Statements of Cash Flows
Net cash outflow from operating activities
Net cash outflow from investing activities
Net cash inflow from financing activities
Net increase in cash held
Cash at the beginning of the financial year
Cash at the end of the financial year
Year ended 30 June
2005
A$000
(1,281)
(5,000)
41,131
34,850
4,639
39,489
2004
A$000
(99)
(38)
4,654
4,517
122
4,639
Net cash outflows from operating activities increased to (A$1,281,331) in 2005 primarily from higher payments to
suppliers and employees relating to expanded corporate activities attributable to the significant growth of the
Company in the past year.
In 2005 investing activities represented a net cash outflow of (A$4,999,125) as a result of the Langer Heinrich
Uranium Project development, Kayelekera Uranium Project evaluation, and payments for plant and equipment.
This occurred despite the A$1,200,000 received on sale of commercial premises in Belmont, Western Australia and
A$100,000 received on sale of tenements. This represents a significant change from 2004 where a net cash outflow
of A$39,112 was recorded as a result of the A$537,839 received on sale of investment in ST Synergy Ltd.
Net cash inflows from financing activities increased to A$41,130,780 in 2005 from share placements and proceeds
from exercise of share options. The number of shares issued in 2005 was 67,200,000 (at an average issue price of
A$0.63) which are similar to the 68,100,000 issued in 2004 (at a lower average issue price of A$0.07). In 2005 a
A$500,000 debt draw down was received relating to the Langer Heinrich Bankable Feasibility Study loan facility
established with Société Générale Australia Branch on 30 September 2004; and repayment of A$733,326 in bank
loans relating to the sale of commercial premises in Belmont, Western Australia. No significant debt draw downs or
repayments existed in the comparative period for 2004.
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Overall the net increase in cash in 2005 was A$34,850,324. This was higher than the net increase in cash in 2004
despite the increased project evaluation and development, payments for plant and equipment, and corporate costs;
as a result of higher proceeds from share placements.
The cash at 30 June 2005 of A$39,489,026 represents a considerable increase in cash from the comparative period in
2004.
Liquidity and Capital Resources
The Company’s principal source of liquidity as at 30 June 2005 is cash of A$39,489,026 (30 June 2004 – A$4,638,702).
The majority of this amount is invested in short term commercial bank bills.
The Company’s principal sources of cash for the year ended 30 June 2005 were share placements, proceeds from
exercise of share options and draw down of unsecured bank loans.
The following is a summary of the Company’s outstanding commitments as at 30 June 2005:
Payments due by period
Total
A$
Less than 1 year
A$
Exploration tenements
Operating leases
Manyingee acquisition
3,076,000
684,571
750,000
1,776,000
142,917
-
Total commitments
4,510,571
1,918,917
1 to 5 years
A$
1,300,000
541,654
-
1,841,654
Unknown
A$
-
-
750,000
750,000
In relation to the Manyingee Uranium Project, the re-negotiated acquisition terms provide for a payment of
A$750,000 by the Company to the vendors when all project development approvals are further obtained.
In addition to the above, the Company acquired a call option on 19 June 1998 in relation to the purchase of the
Oobagooma Uranium Project and, in turn, granted a put option to the original holder of the Project. Both the call
and put options have an exercise price of A$750,000 and are subject to the Department of Minerals & Energy
granting tenements comprising 2 exploration licence applications. The A$750,000 is payable by the Company
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 the tenements are granted.
The Company has no other off balance sheet arrangements.
Outstanding Share Information
As at 1 September 2005 the Company had 401,385,713 fully paid ordinary shares issued and outstanding. The
following table sets out the fully paid ordinary shares issuable under the Company Employee Share Incentive
Option Plan:
As at 1 September 2005
Outstanding shares
Issuable under Employee Share Incentive Option Plan
Total
Number
401,385,713
33,350,000
*434,735,713
* Note that on 6 July 2005, the Company announced the purchase of the remaining 10% joint venture interest in
the Kayelekera Uranium Project in Malawi for 4,350,000 ordinary fully paid shares. This is subject to a private
escrow agreement which is not finalised and as such these shares have not been included above.
Critical Accounting Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of
revenues and expenses during the reporting period. Significant areas requiring the use of management estimates
relate to the determination of the carrying value or impairment of interests in mineral properties and financial
investments.
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Management Discussion and Analysis
Financial Review
Statements of Cash Flows (continued)
Financial Instruments
At 30 June 2005 the Company has exposure to interest rate risk which is limited to the floating market rate for cash
and unsecured bank loans.
The Company does not have foreign currency risk for non-monetary assets and liabilities of the Namibia and
Malawi operations as these are translated into Australian currency using historic rates of exchange. The Company
has no significant monetary foreign currency assets and liabilities.
The Company currently does not engage in any hedging or derivative transactions to manage interest rate or
foreign currency risks.
Transactions with Related Parties
During the year ended 30 June 2005 payments were made to Director related entities in the normal course of
business as follows:
Mr John Borshoff – Managing Director - fees paid for geological and consulting services totalling A$212,184 to a
company of which Mr John Borshoff is a director and shareholder.
Dr Leon Pretorius – Executive Director (resigned 12 April 2005) - fees paid for geological and consulting services
totalling A$120,000 to a company of which Dr Leon Pretorius is a director and shareholder.
Mr Michael Blakiston – Alternate Director for Chairman (resigned 20 December 2004) - fees paid for legal services
totalling A$69,788 to Blakiston & Crabb, Solicitors, a firm in which Mr Michael Blakiston is a partner.
Internal Controls
The Company has made no changes to its internal controls over financial reporting since 31 March 2005 that have
materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial
reporting.
Disclosure Controls
The Company has formalised a Disclosure Control Policy and applied this policy to the preparation of the 30 June
2005 Annual Report. An evaluation of the Company’s disclosure controls and procedures used during the 30 June
2005 Annual Report preparation process has been undertaken which concluded that the disclosure controls and
procedures were effective.
Canadian GAAP
In the Financial Report for the year ended 30 June 2005 the Company has presented Canadian GAAP reporting in a
separate note in order to comply with applicable Canadian securities law as a result of listing the Company’s
ordinary shares on the Toronto Stock Exchange.
The loss for the year ended 30 June 2005 of (A$1,383,676) as reported in the Financial Statements prepared in
accordance with Australian GAAP has been increased by A$2,969,096 to (A$4,352,772) to accord with Canadian
GAAP. This adjustment relates to the requirement under Canadian GAAP to account for the stock-based
compensation issued to employees using a fair value-based method of accounting (an expense of A$2,969,096 on
the basis of allocating the total value over the vesting period).
For the year ended 30 June 2004 the profit, as reported in accordance with Australian GAAP, has been reduced to a
loss of (A$355,128) to accord with Canadian GAAP. This adjustment also relates to the requirement under Canadian
GAAP to account for the stock-based compensation issued to employees using a fair value-based method of
accounting (an expense of A$545,000 as there was no vesting period).
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Corporate Governance Statement
CORPORATE GOVERNANCE FRAMEWORK
The Board of Directors of Paladin Resources Ltd is responsible for the corporate governance of the Consolidated
Entity.
Paladin has adopted systems of control and accountability as the basis for the administration of corporate
governance.
This Corporate Governance Statement outlines the key principles and practices of the Company which, taken as a
whole, is the system of governance.
Shareholders are reminded that Paladin operates with a dual listing in Australia on the Australian Stock Exchange
(ASX) and in Canada on the Toronto Stock Exchange (TSX). In formulating our governance framework, the
regulatory requirements in both Australia and Canada have been taken into account.
The Company has complied with each of the Ten Essential Corporate Governance Principles and the corresponding
Best Practice Recommendations as published by the ASX Corporate Governance Council. Further the Company has
also complied with the Ontario Securities Commission’s corporate governance requirements as set out in National
Instrument 58-101, Disclosure of Corporate Governance Practices, which came into force on June 30, 2005.
The Company reviews and amends its corporate governance policies as appropriate to reflect the growth of the
Company, current legislation and good practice. The website (www.paladinresources.com.au) includes copies or
summaries of key corporate governance policy documents.
RELATIONSHIP WITH SHAREHOLDERS
The Company places a high priority on communications with and accountability to shareholders. The Board
recognises that shareholders, as the ultimate owners of the Company, are entitled to receive timely and relevant
high quality information about their investment. Similarly, prospective investors should be able to make an
informed decision when considering the purchase of shares in Paladin.
To safeguard the effective dissemination of information, the Board has implemented a Disclosure Control Policy,
detailed later in this Statement, and adopted a Shareholder Communications Policy. These reinforce the Company’s
commitment to its continuous disclosure obligations imposed by law.
Information will be communicated to shareholders by:-
• Ensuring that published financial and other statutory reports are prepared in accordance with applicable laws
and industry best practice;
• Ensuring the disclosure of full and timely information about the Company’s activities in accordance with the
general and continuous disclosure principles in the ASX Listing Rules, the Corporations Act in Australia and all
relevant legislation in Canada;
• Providing detailed reports from the Chairman and the Managing Director at the Annual General Meeting;
• Placing all material information released to the market (including notices of meeting and explanatory
materials) on the Company’s website as soon as practical following release; and
• Placing the Company’s market announcements and financial data for the preceding three years on its website.
In addition, the website includes a facility to allow interested parties to subscribe to receive, electronically, public
releases and other relevant material concerning the Company.
Shareholders are encouraged to attend Annual General Meetings and ask questions of Directors and senior
management and also the Company’s external auditors, who are required to be in attendance. In the event that
shareholders are unable to attend meetings, they are encouraged to lodge proxies signifying their approval or
otherwise of the business to be considered.
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Corporate Governance Statement
BOARD OF DIRECTORS
Role of the Board
The Board guides and monitors the business of Paladin on behalf of shareholders, by whom they are elected and to
whom they are accountable. The Board is responsible for setting corporate direction, defining policies and
monitoring the business of the Company, to ensure it is conducted appropriately and in the best interests of
shareholders.
The role of the Board is to oversee and guide the management of the Company with the aim of protecting and
enhancing the interests of its shareholders, taking into account the interests of other stakeholders including
employees, customers, suppliers and the wider community.
The Board operates under a Charter and has a written Code of Conduct which establishes guidelines for its conduct.
The purpose of the Code is to ensure that Directors act honestly, responsibly, legally and ethically and in the best
interests of the Company.
The Board is responsible for setting the strategic direction and establishing goals for management and the
monitoring of the achievements against these goals.
Composition of the Board
The Board comprises four Non-executive Directors, including the Chairman and one Executive Director, being the
Managing Director. The names of the Directors, both in office at the date of this report and those who held the
position during the past year, are set out in the Directors’ Report. This information includes their status as non-
executive, executive or independent, their qualifications and experience and length of service.
The structure of the Board has evolved over the past year to reflect the changing needs of the Company to ensure
an appropriate mix of skills and experience are available to oversee the growth of Paladin to its full potential.
Skills sets represented at Board level include managerial, technical, financial, corporate, legal and commercial.
Particularly, members have a broad range of qualifications, experience and expertise in the uranium business.
Director Independence
Directors are expected to bring independent views and judgement to the Board’s deliberations. All of the Non-
executive Directors are considered by the Board to be independent. In considering whether a Director is
independent, the Board has regard to the independence criteria set out in the ASX Corporate Governance Council’s
Principles of Good Corporate Governance and Best Practice Recommendations and the Corporate Governance
Guidelines developed by the Ontario Securities Commission pursuant to National Policy 58-201 and other facts,
information and circumstances that the Board considers relevant.
The Board assesses the independence of new Directors prior to appointment and reviews the independence of all
Directors as appropriate.
Mr Rick Wayne Crabb was a principal of the legal firm, Blakiston and Crabb, until 30 June 2004. Blakiston and
Crabb is the main provider of legal services to the Company in respect of matters concerning Australian law.
Accordingly, Mr Crabb does not fit within paragraph 3 of the Independence Test as determined by box 2.1 of ASX
Corporate Governance Council Principles (“Independence Test”) because this paragraph excludes any person who
has been a principal of a material advisor within the previous 3 year period. Mr Crabb passes all other aspects of
the Independence Test. The Board of Paladin (in the absence of Mr Crabb) considered Mr Crabb demonstrates he
consistently makes decisions and takes actions which are designed to be in the best interest of the Company. The
Board notes the fees paid to Blakiston and Crabb are not material to the Company and were not high enough to
be material to Mr Crabb’s practice at the firm Blakiston and Crabb during the time he was a partner there and are
not relevant at all past his date of retirement from that firm. Therefore, the Board considers Mr Crabb to be
independent.
Meetings of the Board
The Board meets formally at least six times a year and on other occasions, as required. On the invitation of the
Board, members of senior management attend and make presentations at Board meetings. Non-executive Directors
are able meet without executive Directors and management being present, as considered appropriate. Due to the
restructuring and expansion of the Board in the final quarter (prior to this, the Board comprised only one Non-
executive Director), no such meetings were held in the year to 30 June 2005.
The Board holds an annual strategic planning session with management at which the Company’s strategic plans for
each operating activity and the group as a whole are presented. This was held in April, 2005 over a 2 day period.
At this session, the Board reviewed and endorsed strategies designed to progress development of the Company into
a major supplier of uranium.
Retirement and Re-election
The Constitution of the Company requires one third of the Directors, other than the Managing Director, to retire
from office at each Annual General Meeting. Directors who have been appointed by the Board are required to
retire from office at the next Annual General Meeting and are not taken into account in determining the number
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of Directors to retire by rotation at that Annual General Meeting. Directors cannot hold office for a period in
excess of three years or later than the third Annual General Meeting following their appointment without
submitting themselves for re-election. Retiring Directors are eligible for re-election by shareholders. Details of
those Directors seeking re-election at the 2005 Annual General Meeting are set out in the Directors’ Report.
The Board does not believe that any Director has served on the Board for a period which could, or be perceived to,
materially interfere with his ability to act in the best interests of the Company.
In reaching this conclusion, the Board has noted that each of R Crabb (the Chairman) and J Borshoff (the Managing
Director) will have each served on the Board for 11 years. Notwithstanding their period of service, the Board
concluded that both Directors retain independence of character and judgement and continue to make outstanding
contributions at Board level. Both bring their unique skills to the Board and participate in robust constructive
debate.
Nomination and Appointment of New Directors
If it is necessary to appoint a new Director to fill a vacancy on the Board or to complement the existing Board, a
wide potential base of possible candidates is considered and external consultants are engaged to assist in the
selection process, if required. The Board assesses the qualifications of the proposed new Director against a range of
criteria including background, experience, professional skills, personal qualities, the potential for the candidate’s
skills to augment the existing Board and the candidate’s availability to commit to the Board’s activities. If these
criteria are met and the Board appoints the candidate as a Director, that Director must retire at the next following
Annual General Meeting and will be eligible for re-election by shareholders at that Annual General Meeting.
New Directors appointed to the Board are invited to participate in an induction programme which includes
provision of comprehensive written material regarding the Company such as:-
•
Information on the financial, strategic and operational position of the Company;
• A comprehensive letter of appointment which sets out the Company’s expectations on acceptance of the
position;
• A written statement which sets out the duties, rights and responsibilities they undertake on becoming a
Director together with material detailing the operations, policies and practices of the Company; and
• Copies of previous minutes of Board meetings together with recent Annual Reports and interim financial
statements.
Further, new Directors are invited to attend briefing sessions with the Managing Director and key members of the
senior management team where they may ask questions and direct any queries they may have to the Chairman or
the Managing Director or obtain any other briefings they feel necessary from the Chairman or the Managing
Director. They are encouraged to attend site visits in liaison with the Managing Director, at appropriate times.
Directors agree to participate in continuous improvement programs from time to time, as considered appropriate.
Evaluation of Board Performance
Improvement in Board processes and effectiveness is a continuing objective and the primary purpose of Board
evaluation is to identify ways to improve performance. The Chairman is responsible for conducting an annual
review of the Board performance.
The Chairman conducted a review during the year of the Board’s operations, structure and membership analysing
its strengths and weaknesses. It was determined that a greater mix of skills and expertise, in the form of non-
executive directors, was required at the Company’s current stage of development which led to a restructure of the
Board composition.
As discussed earlier, under the heading Composition of the Board the Board membership underwent a major
restructure during the last quarter of the financial year. Accordingly, an appropriate assessment on the
effectiveness of Board members’ interaction and individual contributions in terms of the current Board composition
could not be made.
An evaluation of the performance of the Board will be carried out in the first quarter of the 2006 calendar year.
This process will involve completion of individual questionnaires focused on process, structure, effectiveness and
contributions and will take into consideration benchmarking of progress towards strategic goals. Responses to the
questionnaire will be collated and discussed at the Board’s annual strategic planning session and recommendations
for improvement will be considered.
Knowledge, Skills and Experience
To assist Directors to maintain an appropriate level of knowledge, skill and experience in the operations of the
Company, Directors have the opportunity to undertake site visits to familiarize themselves with the Company’s
operations.
Directors are also provided with papers, presentations and briefings on the Company’s operations and on matters which
may affect the Company. These are provided in addition to Board papers and are designed to assist the Directors to
gain relevant and timely information to assist in their decision making process. Directors are also encouraged to
undertake continuing education relevant to the discharge of their obligations as Directors of the Company. Subject to
prior approval by the Company Secretary, the reasonable cost of such education is met by the Company.
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Corporate Governance Statement
BOARD OF DIRECTORS (continued)
Position Descriptions
The Board has developed and adopted written position descriptions for the Non-Executive Chairman of the Board,
the Chairman of each Board Committee, the Managing Director and the Company Secretary.
These delineate the role and responsibility of each position and provide clarity on the expectations for those
individuals occupying these key positions within the Company.
Conflicts of Interest
The Code of Conduct for Directors, a copy of which is available on the Company’s website, sets out the procedure to
be followed if there is, or may be, a conflict between the personal or other interests of a Director and the business
of the Company. A Director with an actual or potential conflict of interest in relation to a matter before the Board
does not receive the Board papers relating to that matter and when the matter comes before the Board for
discussion, the Director withdraws from the meeting for the period the matter is considered and takes no part in
the discussions or decision-making process.
Minutes reporting on matters in which a Director is considered to have a conflict of interest are not provided to
that Director, however, the Director is given notice of the nature of the matter for discussions and, as much as
practicable, of the general nature of the discussion or decision reached.
Remuneration
Details of the remuneration policies and practices of the Company and the remuneration paid to the Directors
(executive and non-executive) and Senior Executives are set out in the Remuneration Report included in the
Directors’ Report. Shareholders will be invited to consider and to approve the Remuneration Report at the Annual
General Meeting in 2005.
In relation to the Non-executive Directors there are no termination or retirement benefits.
Independent advice
The Board and its Committees may seek advice from independent experts whenever it is considered appropriate.
With the consent of the Chairman, individual Directors may seek independent professional advice, at the expense of
the Company, on any matter connected with the discharge of their responsibilities. No Director availed himself of
this right during the course of the year.
BOARD COMMITTEES
The Board has established Audit, Nomination and Remuneration Committees which assist in the discharge of the
Board’s responsibilities.
Board approved charters set out the terms of reference and rules governing these Committees.
Audit Committee
Due to the size and composition of the Board prior to 12 April 2005 (being two executive Directors and one Non-
executive Director), no formal committee was formed until 12 April 2005. At this date, the Board commenced its
expansion and the committee was formed, comprising R Crabb, C Davis and S Llewelyn. Prior to this date the duties
usually carried out by an audit committee were performed by R Crabb who has relevant financial and industry
experience to qualify him to perform this role.
The Audit Committee assists the Board in discharging its responsibilities to ensure that the Company complies with
appropriate and effective accounting, auditing, internal control, business risk management, compliance and
reporting practices in accordance with the Audit Committee Charter.
The role of the Audit Committee is to:
• Monitor the integrity of the financial statements of the Company, reviewing significant financial reporting
judgments;
• Review the Company’s internal financial control system and, unless expressly addressed by a separate risk
committee or by the Board itself, risk management systems;
• Monitor and review the effectiveness of the Company’s internal audit function (if any);
• Monitor and review the external audit function including matters concerning appointment and remuneration,
independence and non-audit services; and
• Perform such other functions as assigned by law, the Company's constitution, or the Board.
The Audit Committee comprises three members, all of whom are independent Non-executive Directors. The current
members of the Audit Committee are:-
– Chairman
George Pirie
Sean Llewelyn – Non-Executive Director
– Non-Executive Director
Ian Noble
Non-Executive, Independent Director
Independent Director
Independent Director
The Audit Committee meets at least once a quarter and at any other time requested by a Board member, Company
Secretary or external auditor. The external auditors attend at least twice a year and on other occasions where
circumstances warrant.
The number of meetings of the Audit Committee during the reporting period and the names on the attendance
record is set out in the Directors’ Report.
The external auditors are Ernst and Young who were appointed as the Company’s auditors in June 2005.
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Nomination Committee
The Company established a separate Nomination Committee on 1 June 2005 comprised of all members of the
Board. 4 out of 5 Directors are independent Non-executive Directors. Prior to that date, the functions of the
Nomination Committee were carried out by the full Board, but not under a specific Nomination Committee Charter.
The responsibilities of the Nomination Committee include:-
• Reviewing the size and composition of the Board and making recommendations to the Board on any
appropriate changes;
• Developing and planning for identifying, assessing and enhancing Director competencies;
• Making recommendations on the appointment and removal of Directors;
• Evaluating Board performance so that individual and collective performance is regularly and fairly assessed; and
• Providing new Directors with an induction into the Company and provide all Directors with access to on going
education relevant to their position.
The Chairman of the Board will chair the Nomination Committee and the Committee shall meet at least once per
year and at such additional times as is necessary to fulfil its duties. Having regard to the size of the Board, it is
considered appropriate that all members of the Board are members of the Nomination Committee.
Prior to the formation of the Nomination Committee, the full Board met to consider the matters of Board
composition and Board appointments on 2 occasions. No meetings of the Nomination Committee were held prior
to 30 June 2005.
Remuneration Committee
The Company established a separate Remuneration Committee on 1 June 2005. Prior to that date, the functions of
the Remuneration Committee were carried out by the full Board.
The role of the Committee, in accordance with the Remuneration Committee Charter, is to assist the Board with
respect to remuneration by reviewing and making appropriate recommendations on:-
a) Remuneration packages of executive Directors, Non-executive Directors and senior executives; and
b) Employee incentive and equity based plans including the appropriateness of performance hurdles and total
payments proposed.
The ASX Listing Rules and the Constitution require that the maximum aggregate amount of remuneration to be
allocated among the Non-executive Directors be approved by the shareholders in general meeting. In proposing
the maximum amount for consideration by shareholders, and in determining the allocation, the Remuneration
Committee will take into account the time demands made on Directors and such factors as fees paid on Non-
executive Directors in comparable Australian companies.
The remuneration paid to Directors and senior executives is shown in the Directors’ Report.
The Remuneration Committee comprises three members, all of whom are independent Directors. The Chairman of
the Board is the Chairman of the Remuneration Committee and the Committee shall meet at least twice a year and
otherwise as required.
The current members of the Remuneration Committee are:-
– Chairman
Rick Crabb
Sean Llewelyn – Non-Executive Director
– Non-Executive Director
George Pirie
Non-Executive, Independent Director
Independent Director
Independent Director
Prior to the formation of the Remuneration Committee, the full Board met to consider key remuneration matters
on 3 occasions. No meetings of the Remuneration Committee were held prior to 30 June 2005.
FINANCIAL REPORTING
CEO and CFO Sign-offs
In accordance with the Corporations Act 2001, ASX Corporate Governance Principle 4 (Safeguard Integrity in
Financial Reporting) and Canadian Securities Law, relevant declarations, statements and certifications have been
provided by the Managing Director and the Chief Financial Officer in relation to the Company’s 30 June 2005
Annual Report, including financial statements.
International Financial Reporting Standards
In July 2002, the Financial Reporting Council announced that Australia would adopt international Financial
Reporting Standard (IFRS). The Company will be required to report under IFRS in its financial statements for the
first quarter ended 30 September 2005, half year ended 31 December 2005, third quarter ended 31 March 2006,
and the year ending 30 June 2006.
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Corporate Governance Statement
DISCLOSURE CONTROLS
Paladin is committed to ensuring that shareholders and the market are provided with full and timely information
and that all stakeholders have equal and timely access to material information concerning the Company.
The Company understands and respects that timely disclosure of price sensitive information is central to the
efficient operation of the Australian Stock Exchange’s and Toronto Stock Exchange’s securities market and has
adopted a Disclosure Control Policy with underlying procedures covering public announcements, the prevention of
selective or inadvertent disclosure, conduct of investor and analysts briefings, and media communications. This
policy reflects the commitment of the Directors and management to promoting consistent disclosure practices
aimed at accurate, timely and broadly disseminated disclosure of material information to the market. The Company
has formed a Disclosure Control Committee which has responsibility for overseeing and co-ordinating disclosure of
all public information. Members of this Committee are the Managing Director, Company Secretary and Chief
Finance Officer.
RISK MANAGEMENT
The Company has established a Risk Management Policy which sets out a framework for a system of risk
management and internal compliance and control, whereby the Board delegates day-to-day management of risk to
the Managing Director. The Managing Director, with the assistance of senior management as required, has
responsibility for identifying, assessing, treating and monitoring risks and reporting to the Board on risk
management. The Company’s risk management system is evolving. This is an on-going process and it is recognised
that the level and extent of the risk management system will evolve commensurate with the evolution and growth
of the Company’s activities.
SECURITIES OWNERSHIP AND DEALINGS
The Company has a Policy for Trading in Company Securities which is binding on all Directors and employees. The
purpose of this policy is to provide a brief summary of the law on insider trading and other relevant laws, set out
the restrictions on dealing in securities by people who work for or are associated with Paladin and assist in
maintaining market confidence in the integrity of dealings in Paladin’s securities.
CODES OF CONDUCT
The Board has approved a Code of Conduct for Directors (incorporating underlying Guidelines for the
Interpretation of Principles) together with a Code of Business Conduct and Ethics, which applies to all Directors,
Officers and Employees including those employed by subsidiaries, in all countries where Paladin does business. A
copy of the Code is available on the Company’s website.
These Codes demonstrate and codify Paladin’s commitment to appropriate and ethical corporate practices.
Compliance with the Codes will also assist the Company to effectively manage its operating risks and meeting its
legal and compliance obligations, as well as enhancing Paladin’s corporate reputation.
The principles outlined in this document are intended to:
• Establish a minimum global standard of conduct by which all Paladin employees are expected to abide;
• Protect the business interests of Paladin, its employees and customers;
• Maintain Paladin’s reputation for integrity; and
• Facilitate compliance by Paladin employees with applicable legal and regulatory obligations.
The Code of Business Conduct and Ethics addresses honesty and integrity, following the law, conflicts of interest,
confidentiality, protection of Company assets, dealing with public officials, responsibility for international
operations, employment practices, record keeping and community relations.
The Board has appointed the Company Secretary as the Company’s compliance officer in the case of employees, and
the Chairman of the Audit Committee in the case of Directors and officers, as the person responsible for receiving
reports of breaches of the Code and this is the mechanism by which compliance with the Code is monitored.
The Board has also approved a Whistleblower Policy which documents commitment to maintaining an open
working environment in which employees and contractors are able to report instances of unethical, unlawful or
undesirable conduct without fear of intimidation or reprisal.
The purpose of the Whistleblower Policy is to:
• Help detect and address unacceptable conduct;
• Help provide employees and contractors with a supportive working environment in which they feel able to raise
issues of legitimate concern to them and to the Company; and
• Help protect people who report unacceptable conduct in good faith.
The Company has a firm commitment to protecting the privacy of any personal information that it collects and
holds and recognizes its obligations under the existing privacy legislation. It has adopted a Privacy Policy which
provides details on the collection and use of personal information, circumstances under which it can be disclosed,
management and security of personal information and how it can be accessed.
Any changes to the above Codes and Policies are considered by the Board for approval.
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Directors’ Report
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 2005.
Directors
The following persons were Directors of Paladin Resources Ltd (“Company”) and were in office for this entire
period unless otherwise stated:
Current
Mr Rick Wayne Crabb (Non-Executive Chairman)
Mr John Borshoff (Managing Director)
Mr Sean Llewelyn (Non-Executive Director)
appointed 12 April 2005
Mr George Pirie (Non-Executive Director)
appointed 1 June 2005
Mr Ian Noble (Non-Executive Director)
appointed 29 June 2005
Former
Mr Michael Blakiston
(Alternate Director for Mr Rick Wayne Crabb)
resigned 20 December 2004
Dr Leon Pretorius (Executive Director)
resigned 12 April 2005
Mr Cliff Davis (Non-Executive Director)
appointed 12 April 2005 and resigned 31 May 2005
Principal Activity
The principal activity of the Consolidated Entity was evaluation and development of uranium projects in Africa and
Australia.
Review of Operations
A detailed operational and financial review of the Consolidated Entity is set out on pages 11 to 26 of this report
under the section titled Management Discussion and Analysis.
Dividends
No dividend has been paid during the financial year and no dividend is recommended for the current year.
Significant Changes in the State of Affairs
There were no significant changes in the state of affairs of the Consolidated Entity during the financial year not
otherwise dealt with in this report.
Matters Subsequent to the End of the Financial Year
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
Consolidated Entity in subsequent financial years with the exception of the following the financial effects of which
have not been provided for in the 30 June 2005 Financial Report:
Langer Heinrich Uranium Project, Namibia – Mining Licence Approval Granted
On 27 July 2005, the Company announced that the Minister of Mines in Namibia approved the granting of a 25
year Mining Licence to Langer Heinrich Uranium (Pty) Ltd, wholly owned by the Company, allowing full scale
development of the mining operation to proceed. During the Mining Licence approval process a significant amount
of preparatory work has been carried out, including negotiations with construction engineers; water and power
utilities; identification and ordering of long lead time equipment items; establishment of office facilities in
Swakopmund; and identification of key development personnel.
Langer Heinrich Uranium Project, Namibia – Bank Approval for Project Finance
On 29 August 2005, the Company announced that it had accepted credit committee approved offers of financing
totalling US$71,000,000 for the Langer Heinrich Uranium Project in Namibia. The financing is being provided by
Société Générale Australia Branch (as lead arranger), Nedbank Ltd and Standard Bank of South Africa Ltd and
consists of a 7 year Project Finance Facility of US$65,000,000 and a Standby Cost Overrun Facility of US$6,000,000.
Draw down of the financing is subject to completion of legal due diligence and documentation, and fulfilment of
other conditions precedent usual for this type of funding.
Kayelekera Uranium Project, Malawi – Purchase 10% interest
On 6 July 2005, the Company announced the purchase of the remaining 10% joint venture interest in the
Kayelekera Uranium Project in Malawi. The consideration of A$5,372,250 will be satisfied by the issue of 4,350,000
ordinary fully paid shares at an issue price of A$1.235 per share. The purchase is conditional upon the joint venture
partner entering into a private escrow agreement in dealing with the 4,350,000 shares in the Company.
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Directors’ Report
Matters Subsequent to the End of the Financial Year (continued)
Sale of Non-Core South Australian Uranium Property Database
On 18 July 2005, the Company announced the sale of a non-core uranium exploration property in the Frome Basin
in South Australia together with the licence for a comprehensive regional database to Deep Yellow Ltd (Deep
Yellow). The consideration received comprises 7,500,000 fully paid ordinary shares in Deep Yellow and 12,500,000
unlisted Deep Yellow options exercisable at 12 cents on or before 15 July 2008.
Allotment of Shares and Issue of Employee Options
On 15 July 2005, the Company announced the allotment of 150,000 fully paid ordinary shares after exercise of
employee options, and the granting of 250,000 unlisted employee options exercisable at A$1.50 on or before 15
July 2008. On 5 August 2005, the Company announced the allotment of 350,000 fully paid ordinary shares after
exercise of employee options.
Langer Heinrich Uranium Project, Namibia – Bank Guarantee
On 26 July 2005, the Company issued a N$5,000,000 (Namibian dollars) (A$998,279) bank guarantee as part of the
mine construction activities, on behalf of Langer Heinrich Uranium (Pty) Ltd, wholly owned by the Company. The
guarantee was issued from the loan facility established with Société Générale Australia Branch on 30 September
2004, leaving the Company with a current approximate available facility for draw down of A$500,000.
Likely Developments
Likely developments in the operations of the Consolidated Entity constituted by the Company and the entities it
controls from time to time are set out under the section titled Management, Discussion and Analysis.
Environmental Regulations
The Consolidated Entity is subject to significant environmental regulation in respect to its evaluation and
development activities.
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.
Information on Directors
Mr Rick Wayne Crabb (Non-Executive Chairman) Age 48
B. Juris (Hons), LLB, MBA
Mr Crabb holds degrees of Bachelor of Jurisprudence (Honours), Bachelor of Laws and Master of Business
Administration from the University of Western Australia. He has practiced as a solicitor from 1980 to 2004
specialising in mining, corporate and commercial law. Mr Crabb now focuses on his public company directorships
and investments. He is also a director of Port Bouvard Ltd (since 1996), Ashburton Minerals Ltd (since 1999),
Alcaston Mining NL (since 2001), Thundelarra Exploration Ltd (since 2003) and Ottoman Energy Ltd (since 2004).
Mr Crabb was appointed a Director on 8 February 1994.
Former directorships of listed companies in last three years
ST Synergy Ltd from 2001 to 2005
Deep Yellow Ltd from 2003 to 2004
Aldershot Resources Ltd from 2004 to 2005
Special Responsibilities
Chairman of the Board
Chairman of Audit Committee from 12 April 2005 to 1 June 2005
Chairman of Remuneration Committee from 1 June 2005
Chairman of Nomination Committee from 1 June 2005
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Mr John Borshoff (Managing Director) Age 60
B.Sc., F.AusIMM, FAICD
Mr Borshoff is a geologist who has been involved in the Australian and African exploration and mining industry for
33 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’s primary focus was for the search and development of Uranium
Projects with the company operating extensively throughout Australia, North America and Africa.
Mr Borshoff founded Paladin Resources Ltd and was appointed a Director on 24 September 1993. He has extensive
experience in uranium, gold and base metal exploration, company management, strategic planning and
administration.
Special Responsibilities
Managing Director
Member of Nomination Committee from 1 June 2005
Mr Sean Reveille Llewelyn (Non-Executive Director) Age 57
LL.B
Mr Llewelyn, first qualified as a solicitor in Australia and England. His life work however has been in finance and
merchant banking having worked for more than 20 years in this capacity in Australia, the UK, the USA and South
Africa. His considerable experience has been on derivatives, structured finance and early stage investment relating
to the metal markets. He has been involved with uranium for over 10 years and has a comprehensive understanding
of the uranium market.
Mr Llewelyn was involved as a key player in the formation of a joint venture company between Anglo Gold and
First Rand International to assume marketing responsibility for uranium on behalf of Nuclear Fuels Corporation of
South Africa (Nufcor).
Mr Llewelyn was appointed to the Board on 12 April 2005.
Special Responsibilities
Member of Audit Committee from 12 April 2005
Member of Remuneration Committee from 1 June 2005
Member of Nomination Committee from 1 June 2005
Mr George Edward Pirie (Non-Executive Director) Age 52
B.Com (Hons)
Mr Pirie has 24 years experience in the mining business. In 1980 he was with Pamour Porcupine Mines, a division of
Noranda and then joined Dome Mines Limited in 1985, holding various positions until April 1999 when he was
promoted to Chief Financial Officer for Placer Dome North America, where he was responsible for re-establishing
both Placer Dome U.S. and Placer Dome Canada. In January 2000, he joined Placer Dome Canada as Chief Financial
Officer and was appointed Acting President and Chief Executive Officer of Placer Dome Canada in October 2001.
He was responsible for the formation of the Porcupine Joint Venture in July of 2002 and was promoted to Executive
Vice President of Placer Dome Inc. and President and Chief Executive Officer of Placer Dome Canada in December
2002. Mr Pirie resigned his position with Placer Dome effective 31 December 2004.
Mr Pirie currently serves on several boards including: Ontario Mining Association, Mining Association of Canada,
Canadian Mineral Industry Education Foundation, Mirarco Mining Innovation, Co-Chair of the Mining Cluster
Initiative for the Ministry of Northern Development & Mines, and effective 4 July 2005 appointed President and
Chief Executive Officer of Breakwater Resources Inc.
Mr Pirie was appointed to the Board on 1 June 2005.
Special Responsibilities
Chairman of Audit Committee from 1 June 2005
Member of Remuneration Committee from 1 June 2005
Member of Nomination Committee from 1 June 2005
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Information on Directors (continued)
Mr Ian Urquhart Noble (Non-Executive Director) Age 64
BSc (Metallurgy), ARCST
Mr Noble has more than 40 years experience covering the mining, chemical and nuclear industries with a strong
emphasis in the mining and mineral processing fields. He is an internationally recognised consultant, specialising in
hydrometallurgy and comminution, and has been involved in many of the major mining developments within
Australia and overseas. He has held senior management positions with both Wright Engineers Australia Ltd and
Fluor Australia and took a lead role in the design of Australia’s two major uranium processing plants.
Mr Noble’s initial involvement with uranium was with Wright Engineers Pty Limited on the Rabbit Lake project in
Canada. In Australia, in 1976, he was Lead Engineer on the Ranger Uranium Feasibility Study, followed by a three
year involvement in the design construction phase, initially as Process Engineering Manager, and then a period as
Project Engineer for the hydrometallurgical plant, and finally a year on site as Pre-Commissioning and
Commissioning Manager. He was subsequently Lead Process Engineer for the design of Western Mining
Corporation’s Olympic Dam Project.
Mr Noble was appointed to the Board on 29 June 2005.
Special Responsibilities
Member of Audit Committee from 29 June 2005
Member of Nomination Committee from 29 June 2005
Mr Michael Gerrard Blakiston (Alternate Director for Mr Rick Wayne Crabb) Age 47
B.Juris.LL.B
Mr Blakiston is a Solicitor in the firm Blakiston & Crabb. For some years he has practised extensively in the field of
corporate and resource law and has had considerable experience in commercial and corporate management. Mr
Blakiston is a Director of Rox Resources Ltd (since 2003), Vulcan Resources Ltd (since 2002), Colltech Australia Ltd
(since 2003), Australian Development Capital Ltd (since 2003), Alcaston Mining NL (since 2005), Aurora Oil and Gas
Ltd (since 2003) and Platinum Australia Ltd (since 2000).
Mr Blakiston’s appointment as Alternate Director ceased on 20 December 2004.
Former directorships of listed companies in last three years
Antares Energy Ltd from 2000 to 2002
Black Range Minerals Ltd from 1994 to 2004
GFB Ltd from 2002 to 2005
Ranger Minerals Ltd from 1988 to 2002
Southern Amity Ltd from 2001 to 2002
Special Responsibilities
Alternate Director for Chairman of the Board
Dr Leon Eugene Pretorius (Executive Director) Age 54
BSc(Hons), MSc, PhD, FAusIMM (CP), MAIG, PrSciNat
Dr Pretorius is a geochemist with 33 years experience working both in Australia and Africa. He has extensive
experience in gold, base metal, industrial mineral, uranium 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 resigned from the Board on 12 April 2005.
Special Responsibilities
Technical Executive Director
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Mr Clifford John Davis (Non-Executive Director) Age 62
Mr Davis has more than 40 years international experience in the operation and development of both underground
and open pit gold and base metal mines. His career has given him extensive exposure to mining operations in
locations throughout North America, Europe and Africa. Mr Davis is a graduate in mining engineering from the
Royal School of Mines in London, England. Mr Davis has held numerous senior executive positions at levels up to
President, Chief Executive Officer, and Chief Operating Officer with a variety of large multinational mining
companies and smaller development companies. These have included Rio Tinto, Kennecott, TVX Gold Inc, Echo Bay
Mines Ltd, and Gabriel Resources.
Mr Davis is based in Toronto and is currently a director of Tiberon Minerals Ltd (since 2003), Rio Narcea Gold Mines
Ltd (since 2004) and DRC Resources Corporation (since 2005), all listed on the Toronto Stock Exchange.
Mr Davis was appointed to the Board on 12 April 2005 and resigned on 31 May 2005.
Former directorships of listed companies in last three years
Defiance Mining Corporation from 2002 to 2004
Special Responsibilities
Member of Audit Committee from 12 April 2005 to 31 May 2005
Ms Gillian Swaby (Company Secretary) Age 45
B.Bus, FCIS, FAICD
Ms Swaby has been involved in financial and corporate administration for listed companies, as both Director and
Company Secretary covering a broad range of industry sectors, for over 25 years. Ms Swaby has extensive
experience in the area of secretarial practice, management accounting and corporate and financial management
and sits on a number of advisory committees.
Ms Swaby is past Chair of the Western Australian Council of Chartered Secretaries of Australia, a former Director on
their National Board and lecturer for the Securities Institute of Australia. Ms Swaby is the principal of a corporate
consulting company and was a member of the Paladin Board for a period of 9 years.
Directors’ Meetings
The number of Directors’ meetings and meetings of committees held in the period each Director held office during
the financial year, and the number of meetings attended by each Director are:
Name
Mr Rick Crabb
Mr John Borshoff
Mr Sean Llewelyn
Mr George Pirie
Mr Ian Noble
Mr Michael Blakiston
Dr Leon Pretorius
Mr Cliff Davis
Board of Directors’ meetings
Audit Committee meetings
Number
attended
Number eligible
to attend
Number
attended
Number eligible
to attend
12
14
7
1
-
2
6
3
14
14
7
1
-
2
6
7
2
-
2
1
-
-
-
1
2
-
2
1
-
-
-
1
Resignation, Election and Continuation in Office of Directors
Dr Leon Pretorius and Mr Cliff Davis resigned as Directors during the year.
Mr Sean Llewelyn, Mr George Pirie and Mr Ian Noble were appointed Directors during the year. In accordance with
the Constitution of the Company they retire as Directors at the Annual General Meeting and, being eligible, offer
themselves for re-election.
Mr Rick Crabb is a Director retiring by rotation who, being eligible, offers himself for re-election at the Annual
General Meeting.
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Directors’ Report
Remuneration Report
The remuneration report is set out under the following main headings:
A Principles used to determine the nature and amount of remuneration
B Details of remuneration
C Service agreements
D Share-based compensation
A Principles used to determine the nature and amount of remuneration
The Remuneration Committee, on behalf of the Board of Directors, monitors compensation of Directors and
Executives of the Company. The Remuneration Committee was formed on 1 June 2005 and prior to this date this
function was carried out by the entire Board.
Generally, compensation is provided by the Company to its Directors and Executives, by way of base salary, short-
term bonus, granting of employee options and superannuation. The overall objective is to ensure that
remuneration is fair and reasonable and sufficient to attract and retain qualified and experienced Directors and
Executives.
The remuneration program for the Directors and Executives of the Company is designed to ensure that the level
and form of remuneration achieves certain objectives, including:
(a) attracting and retaining talented, qualified and effective Directors and Executives;
(b) motivating their short and long-term performance; and
(c)
aligning their interests with those of the Company's shareholders.
Given the evolving nature of the Company’s business, the Remuneration Committee continues to review and
redesign the overall compensation plan for Directors and Executives so as to continue to address the objectives
identified above.
Company Performance
The overall level of remuneration takes into account the growth in shareholder wealth of the Company. The chart
below compares, assuming an initial investment of $100, the yearly percentage change in the cumulative total
shareholder return on the Company’s Ordinary Shares against the cumulative total shareholder return of the
S&P/ASX 200 Index for the Company's five most recently completed financial years.
T H E C O M P A N Y P E R F O R M A N C E A G A I N S T T H E S & P / A S X 2 0 0 I N D E X
4000
3500
3000
2500
2000
1500
1000
500
0
June 01
June 02
June 03
June 05
June 05
The Company
S&P/ASX 200 Index
30 June 2001
30 June 2002
30 June 2003
30 June 2004
30 June 2005
Paladin
S&P/ASX 200 Index
A$100.00
A$100.00
A$100.00
A$93.53
A$36.67
A$88.00
A$450.00
A$102.75
A$3,916.67
A$124.40
As a result of the evaluation and development nature of the Company’s activities the overall level of remuneration
does not focus on the earnings of the Company.
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Directors’ Fees
Fees payable to Non-Executive Directors are set at A$40,000 per annum, inclusive of any superannuation
obligations. Exceptions to this fee structure are the Chairman of the Audit Committee who receives an additional
A$5,000 per annum, and the Chairman of the Board who receives an additional A$10,000 per annum.
Compensation paid to the Managing Director is set out under Section C Service agreements.
In addition, the Company’s Constitution provides for additional remuneration to be paid if any of the Directors are
called upon to perform extra services or make any special exertions on behalf of the Company or the business of
the Company. The Directors may remunerate such Director in accordance with such services or exertions, and such
remuneration may be either in addition to or in substitution for the Directors’ fees referred to above.
Base Salary
The first step to attracting and retaining talented, qualified and effective Directors and Executives is paying base
salaries which are competitive in the markets in which the Company operates. Competitive salary information on
companies earning comparable revenues in a similar industry is complied from a variety of sources, including
surveys conducted by independent consultants and national and international publications.
Expatriate Benefits
Executives who are required to fulfil their responsibilities as an expatriate receive benefits including health
insurance, car allowances and tax advisory services.
Short-term Bonus
The Company provides short-term bonuses to Directors and Executives of up to 20% of base salary.
The short-term bonuses are based on achieving the following measures where these are applicable to the specific
Director or Executive:
(a) performance of the Company in meeting its objectives;
(b)
additional uranium resources delineated;
(c)
(d)
(e)
financial performance of the Company;
increase in market capitalisation of the Company; and
such other matters determined by the Remuneration Committee in its discretion.
These measures have been selected to align the interests of Directors and Executives with shareholders. The
Remuneration Committee is responsible for assessing whether the measures are met and will take into account,
amongst other things, the progress of the Company in meeting its objectives, the increase in uranium resources, the
financial performance of the Company, and the growth in market capitalisation.
The short term bonus payments may be adjusted up or down in line with under or over achievement against the
measures. This is at the discretion of the Remuneration Committee.
Company Employee Share Incentive Option Plan
The Company believes that encouraging its Directors and Executives to become shareholders is the best way of
aligning their interests with those of its shareholders. Equity participation is accomplished through the Company’s
employee option plan. Options are granted to Directors and Executives taking into account a number of factors,
including the amount and term of options previously granted, base salary, short-term bonuses and competitive
factors.
Information on the Employee Share Incentive Option Plan is set out under Section D Share-based compensation.
Options granted during the year included specific performance conditions that are required to be met by the
Company in order for the options to vest.
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Directors’ Report
Remuneration Report (continued)
B
Details of remuneration (this information has been audited)
Details of the remuneration of each Director of the Company and each of the Executives of the Company and the
Consolidated Entity are set out in the following tables.
Directors of the Company
Mr Rick Crabb
(Non-Executive Chairman)
Mr John Borshoff
(Managing Director)
Mr Sean Llewelyn
(Non-Executive Director)
Mr George Pirie
(Non-Executive Director)
Mr Ian Noble
(Non-Executive Director)
Mr Michael Blakiston
(Alternate Director for
Mr Rick Crabb)
Dr Leon Pretorius
(Executive Director)
Mr Cliff Davis
(Non-Executive Director)
Total
Year
2005
2004
2005
2004
2005
2004
2005
2004
2005
2004
2005
2004
2005
2004
2005
2004
2005
2004
Primary
Salary/Fees
A$
23,991
22,936
64,736
25,000
7,645
-
3,750
-
-
-
-
-
-
25,000
-
-
100,122
72,936
Post Employment
Superannuation
A$
2,159
2,064
5,826
2,250
688
-
-
-
-
-
-
-
-
-
-
-
Equity
Options
A$
299,718
73,200
345,829
83,750
-
-
-
-
-
-
-
-
Other
A$
-
124,689
2212,184
2102,767
-
-
-
-
-
-
369,788
-
Total
A$
325,868
122,889
628,575
213,767
8,333
-
3,750
-
-
-
-
-
299,718
73,200
-
-
4120,000
479,200
419,718
177,400
-
-
-
-
8,673
4,314
945,265
230,150
401,972
206,656
1,456,032
514,056
1. Fees paid in the normal course of business in 2004 for legal services totalling A$24,689 were paid/payable
(balance outstanding at 30 June 2004 and included in trade creditors A$45,659) to Blakiston & Crabb, Solicitors,
a firm in which Mr Rick Crabb was a partner to 30 June 2004;
2. Fees paid in the normal course of business in 2005 for geological and consulting services totalling A$212,184
(2004: A$102,767) were paid/payable (balance outstanding at 30 June 2005 and included in trade creditors
A$Nil (2004 : A$195,227)) to a company of which Mr John Borshoff is a director and shareholder;
3. Fees paid in the normal course of business in 2005 for legal services totalling A$69,788 (2004: A$ not applicable)
were paid/payable to Blakiston & Crabb, Solicitors, a firm in which Mr Michael Blakiston is a partner for the
period he was a Director; and
4. Fees paid in the normal course of business in 2005 for geological and consulting services totalling A$120,000
(2004: A$79,200) were paid/payable (balance outstanding at 30 June 2005 and included in trade creditors: A$Nil
(2004: A$6,600)) to a company of which Dr Leon Pretorius is a director and shareholder.
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Other Executives of the Company and Consolidated Entity
- being the executives receiving the highest remuneration
Year
Primary
Salary/Fees
A$
Post Employment
Superannuation
A$
Equity
Options
A$
Other
A$
Total
A$
2005
226,576
20,392
302,145
-
549,113
2005
-
-
264,775
470,000
334,775
2005
81,667
7,350
81,015
-
170,032
Mr Garnet Halliday1
(Executive General
Manager for Operations
and Development)
Ms Gillian Swaby2
(Company Secretary)
Mr Ron Chamberlain3
(Chief Financial Officer)
Total
2005
308,243
27,742
647,935
70,000
1,053,920
1. Mr Garnet Halliday was appointed on 1 December 2004 at which time he was granted 2,000,000 options at
A$1.00 expiring 30 November 2007 and 1,000,000 options at A$1.25 expiring 30 November 2007.
2. Ms Gillian Swaby has been deemed to be an Executive as of 1 July 2004, prior to this date services to the
Company were of a Non-Executive nature. On 30 November 2004 Ms Gillian Swaby was granted 2,750,000
options at $1.00 expiring 30 November 2007.
3. Mr Ron Chamberlain was appointed on 1 December 2004 at which time he was granted 500,000 options at
A$1.00 expiring 30 November 2007 and 300,000 options at A$1.25 expiring 30 November 2007.
4. Fees paid in the normal course of business in 2005 for company secretarial services totalling A$70,000 were
paid/payable (balance outstanding at 30 June 2005 and included in trade creditors A$19,800) to a company of
which Ms Gillian Swaby is a director and shareholder.
C
Service agreements
Remuneration and other terms of employment for the Managing Director, Executive General Manager for
Operations and Development and Chief Financial Officer are formalised in service agreements.
All contracts with executives may be terminated early by either party with 3 months notice, subject to termination
payments as detailed below.
Mr John Borshoff, Managing Director
•
Term of agreement – 3 years commencing 1 March 2005 renewable for a further 2 year term subject to
agreement.
• Base salary, inclusive of superannuation, of A$400,000 to be reviewed effective 1 January 2006 and annually
thereafter.
•
Payment of a termination benefit on early termination by the Company, other than for gross misconduct,
equal to 2 times base salary for the two years immediately preceding the termination date. This benefit is
subject to approval of Company shareholders to be received no later than 30 November 2005.
Mr Garnet Halliday, Executive General Manager for Operations and Development (from 1 December 2004)
•
Term of agreement – no fixed term.
• Base salary, inclusive of superannuation, for the year ended 1 December 2005, of A$400,000 to be reviewed
annually.
• No termination benefit is specified in the agreement.
Mr Ron Chamberlain, Chief Financial Officer (from 1 December 2004)
•
Term of agreement – no fixed term.
• Base salary, inclusive of superannuation, for the year ended 1 December 2005, of A$152,600 to be reviewed
annually.
• No termination benefit is specified in the agreement.
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Remuneration Report (continued)
D Share-based compensation
Options are granted under the Company Employee Share Incentive Option Plan which was approved by the
Directors on 23 March 2004. Staff eligible to participate in the plan is those who have been continuously employed
by the Company for a period of at least one year.
Options are granted under the plan for no consideration. Options are granted for a three year period, and 100%
of each new tranche becomes exercisable after one year of the date of grant. Entitlements to the options are
vested as soon as they become exercisable and performance conditions have been met.
The terms and conditions of each grant of options affecting remuneration in this or future reporting periods are as
follows:
Grant Date
Date exercisable
Expiry date
Exercise
price
Value per option
at grant date
30 November 2004
30 November 2007
30 November 2004
30 November 2007
20 December 2004
20 December 2007
A$1.25
A$1.00
A$1.00
A$0.1722
A$0.1513
A$0.1513
30 November 2005
30 November 2005
20 December 2005
The above options only vest to the employee on a positive outcome for the Larger Heinrich Uranium Project
bankable feasibility study together with completion of acceptable project funding. These vesting conditions were
selected as a result of the importance of the Larger Heinrich Uranium Project to the Company. The vesting
conditions will be met based on the recommendation of the Board to proceed with development of the project;
and the agreement of lenders to provide project bank finance and completion of equity funding for the project.
Options granted under the plan carry no dividend or voting rights.
The amounts disclosed for emoluments relating to options above are the assessed fair values at grant date of
options granted to Directors and other executives, allocated equally over the period from grant date to vesting
date. Fair values at grant date are independently determined using the Black Scholes Option Valuation
Methodology that takes into account the exercise price, the term of the option, the vesting and market related
criteria, the impact of dilution, the non-tradeable nature of the option, the share price at grant date and expected
price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of
the option.
As a result of the vesting conditions the value of the options at grant date has been apportioned over the relevant
financial years and for remuneration disclosure purposes only the allocation of value for the year ending 30 June
2005 has been included for Directors and Executives.
The model inputs for options granted during the year ended 30 June 2005 included:
(a) options are granted for no consideration, 100% of each tranche vests and is exercisable after one year subject
to vesting conditions noted above
(b) exercise price: A$1.00 - A$1.25
(c) grant date: November-December 2004
(d) expiry date: November-December 2007
(e) share price at grant date: A$0.52 - A$0.56
(f) expected price volatility of the company’s shares: 86.9% - 100%
(g) expected dividend yield: Nil%
(h) risk-free interest rate: 4.90% - 5.03%
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Further details relating to options are set out below:
A
Remuneration
Consisting of
Options
%
95%
67%
80%
66%
86%
59%
B
Value at
grant date
C
Value at
exercise date
D
Value at
lapse date
E
Total of
columns B-D
A$
A$
A$
A$
491,725
567,375
491,725
474,800
416,075
127,310
-
-
-
-
-
-
-
-
-
-
-
-
491,725
567,375
491,725
474,800
416,075
127,310
Mr Rick Crabb
Mr John Borshoff
Dr Leon Pretorius
Mr Garnet Halliday
Ms Gillian Swaby
Mr Ron Chamberlain
A = The percentage of the value of remuneration consisting of options, based on the value at grant date set out
in column B.
B = The value at grant date calculated in accordance with AASB 1046 Director and Executive Disclosure by
Disclosing Entities of options granted during the year as part of remuneration.
C = The value at exercise date of options that were granted as part of remuneration and were exercised during
the year.
D = The value at lapse date of options that were granted as part of remuneration and that lapsed during the
year.
Directors' Interests in Shares and Options of the Company
Mr Rick Crabb
Mr John Borshoff
Mr Sean Llewelyn
Mr George Pirie
Mr Ian Noble
Fully Paid Shares
Options*
Options**
Options***
5,964,746
14,591,394
-
-
16,000
2,250,000
2,500,000
750,000
1,000,000
3,250,000
3,750,000
-
-
-
-
-
-
-
-
-
The particulars of Directors' interests in shares and options are as at the date of this report.
*
**
Unlisted and exercisable at A$0.22 on or before 26 May 2006
Unlisted and exercisable at A$0.32 on or before 26 May 2006
*** Unlisted and exercisable at A$1.00 on or before 20 December 2007; not vested at 30 June 2005
Shares Under Option
Unissued ordinary shares of the Company under option at the date of this report are as follows:
Date options granted
Expiry date
Exercise price of options
Number under option
28 May 2004
28 May 2004
30 June 2004
30 June 2004
30 November 2004
30 November 2004
20 December 2004
15 July 2005
Total
26 May 2006
26 May 2006
26 May 2006
26 May 2006
30 November 2007
30 November 2007
20 December 2007
15 July 2008
A$0.22
A$0.32
A$0.22
A$0.32
A$1.00
A$1.25
A$1.00
A$1.50
7,000,000
2,500,000
3,500,000
500,000
8,050,000
1,300,000
10,250,000
250,000
33,350,000
No option holder has any right under the options to participate in any other share issue of the Company or of any
other entity.
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Directors’ Report
Shares Issued on the Exercise of Options
The following ordinary shares of the Company were issued during the year ended 30 June 2005 on the exercise of
options granted under the Company Employee Share Incentive Option Plan. No amounts are unpaid on any of the
shares.
Date options granted
20 June 2002
28 May 2004 and 30 June 2004
Total
Exercise price of options
Number under option
A$0.15
A$0.22
4,700,000
1,000,000
5,700,000
On 15 July 2005 150,000 options with an exercise price of A$0.22 were exercised resulting in the issue of 150,000
fully paid ordinary shares to employees. On 5 August 2005 350,000 options with an exercise price of A$0.22 were
exercised resulting in the issue of 350,000 fully paid ordinary shares to employees.
Insurance of Officers
During the financial year, the Company has paid premiums to insure the Directors and Specified Executives against
certain liabilities arising out of their conduct while acting as an officer of the Company. Under the terms and
conditions of the insurance contract, the nature of liabilities insured against and the premium paid cannot be
disclosed.
Auditor
Ernst & Young were appointed auditors for the Company on 21 June 2005, which is subject to approval by
shareholders at the 2005 Annual General Meeting. RSM Bird Cameron were the previous auditors for the Company
and resigned effective 21 June 2005 as the Canadian member firm of RSM International was unable to provide the
professional services required.
Non-Audit Services and Auditor Independence
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where
the auditor’s expertise and experience with the Company and/or the Consolidated Entity are important.
Details of the amounts paid or payable to the auditor for audit and non-audit services provided during the year are
set out below.
The Board of Directors has considered the position and is satisfied that the provision of the non-audit services is
compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The
Directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise
the auditor independence requirements of the Corporation Act 2001 as none of the services undermine the general
principles relating to auditor independence as set out in Professional Statement F1, including reviewing or auditing
the auditor’s own work, acting in a management or a decision-making capacity for the Company, acting as advocate
for the Company or jointly sharing economic risk and rewards.
The Directors received an independence declaration from the auditor of the Company and a copy as required under
section 307C of the Corporation Act 2001 is set out on page 44.
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During the year the following fees were paid or payable for services provided by the auditor of the parent entity,
its related practices and non-related audit firms:
CONSOLIDATED
Audit services
Auditors of the Company:
Ernst & Young
RSM Bird Cameron/RSM International
Other auditors of entities in the Consolidated Entity
Total remuneration for audit services
Non audit services
Auditors of the Company:
Taxation services
Other auditors of entities in the Consolidated Entity
Taxation services
Total remuneration for non audit services
This report is made in accordance with a resolution of the directors.
2005
A$
37,923
29,610
3,166
70,699
2,650
5,846
8,496
2004
A$
-
14,650
5,538
20,188
7,090
-
7,090
Mr John Borshoff
Managing Director
Perth, Western Australia
1 September 2005
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Auditor’s Independence Declaration
Auditor’s Independence Declaration to the Directors of Paladin Resources Limited
In relation to our audit of the financial report of Paladin Resources Limited for the financial year ended 30 June
2005, to the best of my knowledge and belief, there have been no contraventions of the auditor independence
requirements of the Corporations Act 2001 or any applicable code of professional conduct.
Ernst & Young
Rudolf Brunovs, Partner
Perth, 1 September 2005
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Paladin Resources Ltd
Financial Report
for the year ended 30 June 2005
Contents of the Financial Report
N O T E
T I T L E
P A G E
STATEMENTS OF FINANCIAL PERFORMANCE ......................................................................................47
STATEMENTS OF FINANCIAL POSITION ................................................................................................48
STATEMENTS OF CASH FLOWS ............................................................................................................49
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ..........................................................................50
SEGMENT INFORMATION ....................................................................................................................54
REVENUE ..............................................................................................................................................56
OPERATING PROFIT/(LOSS)....................................................................................................................56
INCOME TAX ........................................................................................................................................57
DISCONTINUING OPERATION................................................................................................................58
CURRENT ASSETS
CASH ............................................................................................................................................59
RECEIVABLES ................................................................................................................................59
PROPERTY, PLANT AND EQUIPMENT ..........................................................................................59
NON CURRENT ASSETS
RECEIVABLES ................................................................................................................................59
OTHER FINANCIAL ASSETS ..........................................................................................................60
PROPERTY, PLANT AND EQUIPMENT ..........................................................................................62
OTHER ASSETS – MINERAL PROPERTIES ......................................................................................63
CURRENT LIABILITIES
PAYABLES ....................................................................................................................................66
PROVISIONS ..................................................................................................................................66
INTEREST BEARING LIABILITIES ....................................................................................................67
NON CURRENT LIABILITIES
PAYABLES ....................................................................................................................................67
EQUITY
CONTRIBUTED EQUITY ................................................................................................................68
RESERVES ......................................................................................................................................71
ACCUMULATED LOSSES ..............................................................................................................71
TOTAL EQUITY..............................................................................................................................71
FINANCIAL INSTRUMENTS ....................................................................................................................72
DIRECTORS’ AND EXECUTIVES’ DISCLOSURE ......................................................................................72
AUDITORS’ REMUNERATION ................................................................................................................74
COMMITMENTS AND CONTINGENT LIABILITIES ..................................................................................74
EMPLOYEE BENEFITS ............................................................................................................................75
RELATED PARTIES ..................................................................................................................................75
INTERESTS IN JOINT VENTURES ............................................................................................................76
EVENTS SUBSEQUENT TO BALANCE DATE ..........................................................................................76
RECONCILIATION OF OPERATING PROFIT/(LOSS) AFTER INCOME
TAX TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES ............................................................77
NON CASH FINANCING AND INVESTMENT ACTIVITIES........................................................................77
EARNINGS PER SHARE ..........................................................................................................................78
IMPACTS OF ADOPTING AUSTRALIAN EQUIVALENTS TO IFRS ............................................................78
AUSTRALIAN GAAP TO CANADIAN GAAP REPORTING ......................................................................82
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
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Statements of Financial Performance
for the year ended 30 June 2005
Revenue from ordinary activities
Borrowing costs
Depreciation and amortisation
Provision for doubtful debts
Exploration costs written off
General and administration
Write down of convertible note
Write down of intercompany loan
Cost of land and buildings sold
Costs of tenements sold
Cost of investments sold
Expenses from ordinary activities
Profit/(loss) from ordinary activities before income tax
Income tax expense
Profit/(loss) from ordinary activities after income tax
Share issue costs
Total revenues, expenses and valuation adjustments
attributable to members of Paladin Resources Ltd and
recognised directly in equity
Total changes in equity other than those resulting from
transactions with owners as owners
Basic and diluted earnings per share
CONSOLIDATED
PARENT ENTITY
Notes
3
4
4
4
4
4
4
20
5
18(b)
2005
A$000
2,975
(412)
(109)
(17)
(72)
(1,736)
(894)
-
(1,095)
(24)
-
(4,359)
(1,384)
-
(1,384)
(1,010)
2004
A$000
785
(59)
(92)
-
-
2005
A$000
1,165
(354)
(32)
-
-
2004
A$000
662
(2)
(5)
-
-
(429)
(1,698)
(473)
-
-
-
(15)
-
(595)
190
-
190
(39)
(894)
(327)
-
-
-
(3,305)
(2,140)
-
(2,140)
(1,010)
-
(3)
-
-
(589)
(1,072)
(410)
-
(410)
(39)
(1,010)
(39)
(1,010)
(39)
21
32
(2,394)
Cents
(0.38)
151
Cents
0.07
(3,150)
(449)
The above Statements of Financial Performance should be read in conjunction with the accompanying notes.
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Statements of Financial Position
as at 30 June 2005
CONSOLIDATED
PARENT ENTITY
Notes
2005
A$000
2004
A$000
2005
A$000
2004
A$000
Current assets
Cash
Receivables
Property, plant and equipment
Total current assets
Non current assets
Receivables
Other financial assets
Property, plant and equipment
Other – mineral properties
Total non current assets
Total assets
Current liabilities
Payables
Provisions
Interest bearing liabilities
Total current liabilities
Non current liabilities
Payables
Total non current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
39,000
4,518
472
-
24
-
39,472
4,542
39,489
568
-
40,057
-
710
1,268
9,001
10,979
51,036
727
65
533
4,639
49
1,114
5,802
64
800
249
3,815
4,928
10,730
554
33
733
10,183
488
390
-
11,061
50,533
591
65
533
1,325
1,320
1,189
-
-
1,325
49,711
-
-
1,320
9,410
334
334
1,523
49,010
4,106
1,352
26
-
5,484
10,026
528
33
-
561
-
-
561
9,465
24,265
174
18(a)
65,950
24,265
65,950
174
174
174
(16,413)
(15,029)
(17,114)
(14,974)
49,711
9,410
49,010
9,465
7
8
9
10
11
12
13
14
15
16
17
19
20
21
The above Statements of Financial Position should be read in conjunction with the accompanying notes.
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Statements of Cash Flows
for the year ended 30 June 2005
Cash flows from operating activities
Payments to suppliers and employees
Interest received
Borrowing costs paid
Rental income
Other receipts
CONSOLIDATED
PARENT ENTITY
Notes
2005
A$000
2004
A$000
2005
A$000
2004
A$000
(1,831)
(378)
(1,665)
(279)
414
(58)
116
78
32
(59)
169
137
(99)
(19)
(572)
-
-
-
538
-
15
414
-
-
76
(1,175)
(396)
-
(6,311)
500
-
-
-
-
33
(2)
-
137
(111)
(19)
-
(679)
-
-
538
-
-
(38)
(6,207)
(160)
4,762
-
(38)
-
(70)
4,654
4,517
122
4,639
40,800
1,575
(1,011)
500
-
41,864
34,482
4,518
39,000
4,762
-
(38)
-
(50)
4,674
4,403
115
4,518
Net cash outflow from operating activities
30
(1,281)
Cash flows from investing activities
Payments for property, plant and equipment
Project exploration, evaluation and development expenditure
Loans to controlled entities
Loans from controlled entities
Sale of land and buildings
Sale of investments
Payment for controlled entities net of cash acquired
11(a)
Sale of tenements and exploration data
Net cash outflow from investing activities
Cash flows from financing activities
Share placement
Proceeds from exercise of share options
Fundraising costs
Proceeds from borrowings
Repayment of borrowings
Net cash inflow from financing activities
Net increase in cash held
Cash at the beginning of the financial year
Cash at the end of the financial year
Non cash financing and investing activities
7
31
(946)
(5,151)
-
-
1,200
-
(203)
100
(5,000)
40,800
1,575
(1,011)
500
(733)
41,131
34,850
4,639
39,489
The above Statements of Cash Flows should be read in conjunction with the accompanying notes.
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Notes to the Financial Report
for the year ended 30 June 2005
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Nature of Operations
Paladin Resources Ltd (“Company”) operates primarily in the resource industry with some consequential activity
in the financial investment and property industries. The principal business of the Company is the evaluation and
development of uranium projects in Africa and Australia. The Company is incorporated under the laws of
Western Australia with a primary share market listing on the Australian Stock Exchange and additional listings on
the Toronto Stock Exchange in Canada; and Munich, Berlin, Stuttgart and Frankfurt Stock Exchanges in Europe.
The Company’s principal place of business and registered office is Grand Central, First Floor, 26 Railway Road,
Subiaco, Western Australia, 6008.
(b) Basis of Preparation
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
View, the Corporations Act 2001 and the historical cost convention.
This financial report also includes additional information in order for the Company to comply with reporting
requirements of applicable Canadian securities law, as the Company is listed on the Toronto Stock Exchange.
Unless otherwise stated, the accounting policies adopted are consistent with those of the previous year.
Comparative information has been changed where appropriate to be consistent with the presentation adopted
in the current year.
(c) Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of
revenues and expenses during the reporting period. Significant areas requiring the use of management
estimates relate to the determination of the carrying value or impairment of interests in mineral properties and
financial investments.
(d)
Principles of Consolidation
The consolidated financial statements incorporate the assets and liabilities and equity of Paladin Resources Ltd
and of all entities controlled by the Company as at 30 June 2005 and the results of the Company and all
controlled entities for the year then ended. The Company and its controlled entities together are referred to in
this financial report as the Consolidated Entity. The effects of all transactions between entities in the
Consolidated Entity are eliminated in full.
Where control of an entity is obtained during a financial year, its results are included in the consolidated
Statement of Financial Performance from the date on which control commences. Where control of an entity
ceases during a financial year its results are included for that part of the year during which control existed. The
financial statements of controlled entities are prepared for the same reporting period as the Company, using
consistent accounting policies.
(e)
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.
The Company and its wholly-owned Australian controlled entities have decided to implement the tax
consolidation legislation as of 1 July 2003. As a consequence, the Company, as the head entity in the tax
consolidated group, recognises current and deferred tax amounts relating to transactions, events and balances of
the wholly-owned Australian controlled entities in this group as if those transactions, events and balances were
its own, in addition to the current and deferred tax amounts arising in relation to its own transactions, events
and balances. Amounts receivable or payable under an accounting tax sharing agreement with the tax
consolidated entities are recognised separately as tax-related amounts receivable or payable. Expenses and
revenues arising under the tax sharing agreement are recognised as a component of income tax
expense/(revenue).
(f)
Foreign Currency Translation
i)
Transactions
Foreign currency transactions are initially translated into Australian currency at the rate of exchange at the
date of the transaction. At balance date amounts payable and receivable in foreign currencies are
translated to Australian currency at rates of exchange current at that date. Resulting exchange differences
are recognised in determining the profit and loss for the year.
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(ii)
Foreign Controlled Entities
The activities undertaken in Namibia and Malawi are integrated with the activities of the Company. The
assets, liabilities and equity of the Namibia and Malawi operations are consolidated into the Company using
the temporal method of translation whereby non-monetary assets and liabilities and equity items, including
revenue and expenses, are translated into Australian currency using historic rates of exchange, and
monetary assets and liabilities are translated using rates of exchange current at the reporting date. Any
resultant exchange differences are recorded as revenue or expense by the Consolidated Entity.
(g) 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 their market price as at the acquisition
date, unless the notional price at which they could be placed in the market is a better indicator of value.
Transaction costs arising on the issue of equity instruments are recognised directly in equity.
Where an entity or operation is acquired, the identifiable net assets acquired are measured at fair value. The
excess of the fair value of the cost of acquisition over the fair value of the identifiable net assets acquired is
brought to account as goodwill and amortised on a straight line basis over the period during which the benefits
are expected to arise.
(h) Revenue Recognition
Interest revenue from investments in cash and convertible notes is recognised in the Statements of Financial
Performance in the periods in which it is receivable, as this represents the pattern of legal benefit to the
Company.
Rental revenue from leasing of the investment property is recognised in the Statements of Financial Performance
in the periods in which it is receivable, as this represents the pattern of service rendered through the provision of
the property.
(i)
Receivables
All trade debtors are recognised at the amounts receivable as they are due for settlement no more than 30 days
from the date of recognition.
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.
All receivables from the wholly owned group are recognised in the Statements of Financial Position when
receivable and are accounted for in accordance with the principles of consolidation. Interest is charged on
certain receivables from the wholly owned group. A provision for non-recovery is raised in relation to
receivables from the wholly owned group when the asset is not substantiated by the net tangible assets of the
controlled entity.
(j)
Recoverable Amount of Non Current Assets
The recoverable amount of an asset is the net amount expected to be recovered through the cash inflows and
outflows arising from its continued use and subsequent disposal.
Where the carrying amount of a non current asset is greater than its recoverable amount, the asset is written
down to its recoverable amount. The decrement in the carrying amount is recognised as an expense in net profit
or loss in the reporting period in which the recoverable amount write-down occurs.
The expected net cash flows included in determining recoverable amounts of non current assets are discounted
to their present values using a market-determined, risk-adjusted discount rate. The discount rate used for all
assets was 10% (2004: 10%).
(k)
Investments
Interests in listed securities and convertibles notes are brought to account at cost and dividend or interest
revenue is recognised in the Statements of Financial Performance when receivable. The carrying value of listed
securities is compared to market value at each reporting period, and any necessary write downs are recorded
where cost exceeds market value. The carrying value of convertible notes is reviewed on an ongoing basis and a
provision for non-recovery is raised when some doubt as to collection exists.
Investments in controlled entities are brought to account at cost and are accounted for in accordance with the
policy for principles of consolidation. A provision for non-recovery is raised in relation to investments in
controlled entities when the asset is not substantiated by the net tangible assets of the controlled entity.
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Notes to the Financial Report
for the year ended 30 June 2005
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(l)
Depreciation of Property, Plant and Equipment
Depreciation is calculated on a straight line basis to write off the net cost of each item of property, plant and
equipment (excluding land) over its expected useful life to the Consolidated Entity. Estimates of remaining useful
lives are made on a regular basis for all assets. The expected useful lives remained unchanged from the prior year
and are as follows:
Buildings – twenty years
Databases - ten years
Plant and equipment - four to six years
(m) Leasehold Improvements
The cost of improvements to or on leasehold properties is amortised over the unexpired period of the lease or
the estimated useful life of the improvement to the Consolidated Entity, whichever is the shorter. Leasehold
improvements held at the reporting date are being amortised over 5 years.
(n) Operating Leases
Incentives received on entering into operating leases are recognised as liabilities. Lease payments are allocated
between rental expense and reduction of the liability on a straight line basis over the period of the lease.
(o)
Project Exploration, Evaluation and Development Expenditure
Exploration and evaluation expenditure is accumulated separately for each area of interest. Such expenditure
comprises net direct costs and an appropriate portion of related overhead expenditure directly related to
operational activities in the area of interest.
Each area of interest is limited to a size related to a known or probable mineral resource capable of supporting a
mining operation.
Expenditure is carried forward when incurred if 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. Each area of interest is
reviewed regularly.
Expenditure is not carried forward in respect of any area of interest unless the Company’s rights of tenure to that
area of interest are current.
If the project is abandoned or if it is considered unlikely the project will proceed to development, accumulated
costs to that point are written off immediately.
Projects are advanced to development status upon positive outcome from feasibility studies and at this stage all
expenditure is carried forward up to commencement of operations.
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.
Interest Bearing Liabilities
Bank loans are carried at their principal amounts which represent the present value of future cash flows
associated with servicing the debt. Interest is accrued over the period it becomes due and is recorded as part of
other creditors and as an expense.
Joint Ventures
The proportionate interests in assets, liabilities and expenses of a joint venture operation have been incorporated
in the financial statements under the appropriate headings.
Employee Benefits
Provision is made for employee benefits accumulated as a result of employees rendering services up to the
reporting date. Employee benefit expenses and revenues arising in respect of wages and salaries, annual leave,
sick leave, long service leave, non monetary benefits, and other benefits are recognised against profits on a net
basis in their respective categories.
i) Wages and Salaries, Annual Leave and Sick Leave
Liabilities for wages and salaries, annual leave and accumulating sick leave expected to be settled within
twelve months of the reporting date are recognised in respect of employees’ services up to the reporting
date and are measured at their nominal amounts based on remuneration rates which are expected to be
paid when the liabilities are settled.
(p)
(q)
(r)
(s)
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ii)
iii)
iv)
Long Service Leave
The liability for long service leave expected to be settled within 12 months of the reporting date is
recognised and is measured in accordance with (i) above. The liability for long service leave expected to be
settled more than 12 months from the reporting date is recognised and is measured at the present value of
expected future payments to be made in respect of services provided by employees up to the reporting
date. In determining the present value of future cash outflows, the market yield as at the reporting date
on national government bonds which have terms to maturity approximating the terms of the related
liability are used.
Employee Benefit On-costs
Employee benefit on-costs, including payroll tax, are recognised and included in employee benefit liabilities
and costs when the employee benefits to which they relate are recognised as liabilities.
Equity-based Compensation Benefits
Equity-based compensation benefits are provided to employees via the Company Employee Share Incentive
Option Plan.
No accounting entries are made in relation to the Employee Share Incentive Option Plan until the options
are exercised, at which time the amounts received from employees are recognised in the Statements of
Financial Position as share capital. The amounts disclosed for remuneration of Directors and Executives
include the assessed fair value of options at the date they were granted.
(t)
Contributed Equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction,
net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options, or for
the acquisition of a business, are included in the cost of the acquisition as part of the purchase consideration.
(u) 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, fair value of
unlisted options granted and ancillary costs incurred in connection with the arrangement of borrowings.
The fair value of unlisted options granted in relation to establishment of a loan facility is recognised as a
borrowing cost with a corresponding increase in equity and is measured at the date a commitment for the loan
facility is obtained. The fair value at measurement date is independently determined using the Cox, Ross and
Rubinstein Binomial Tree Model that takes into account the exercise price, the term of the option, the vesting
and performance criteria, the impact of dilution, the non tradable nature of the option, the share price at
measurement date and expected price volatility of the underlying share, the expected dividend yield and the risk
free interest rate for the term of the option.
Upon the exercise of options, the balance of the Option Premium Reserve relating to these options is transferred
to share capital.
(v)
Cash
Cash on hand and in banks, short term deposits, and bank bills are stated at nominal value. 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.
(w) Earnings per Share
Basic Earnings Per Share
i)
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 dividends, by the weighted average number of
ordinary shares outstanding during the financial year.
Diluted Earnings Per Share
ii)
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.
(x)
Rounding of Amounts
The Company is of a kind referred to in Class Order 98/0100, issued by the Australian Securities and Investments
Commission, relating to the “rounding off” of amounts in the financial report. Amounts in the financial report
have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases to
the nearest dollar.
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Notes to the Financial Report
for the year ended 30 June 2005
2. SEGMENT INFORMATION
Accounting policy
Segment information is prepared in conformity with the accounting policies of the Company as disclosed in Note 1
and accounting standard AASB 1005 Segment Reporting.
Segment revenues, expenses, assets and liabilities are those that are directly attributable to a segment and the
relevant portion that can be allocated to the segment on a reasonable basis. Segment assets include all assets used by
a segment and consist primarily of operating cash, receivables, property, plant and equipment and project exploration,
evaluation and development expenditure, net of related provisions. Segment liabilities consist primarily of trade and
other creditors, employee benefits and bank loans. Segment assets and liabilities do not include income taxes.
The Consolidated Entity operates in the following segments:
Business segments – primary reporting
Resources
Principal focus on evaluation and development of uranium projects in Africa and Australia. The resource segment
includes ownership of a proprietary database with focus on uranium, gold, copper and platinum resources.
Financial Investments (consequential activity)
This segment consists of investment in convertible notes, listed company shares, and options over listed company
shares.
The Company holds a convertible note from Didasko Technologies Pty Ltd which has a maturity date of 20 November
2006 and accrues interest to the Company at 5% per annum payable upon maturity. The Company has made full
provision for non-recovery of the convertible note and accrued interest up to 31 March 2005 - refer Note 11(c).
The Company acquired shares and options on 9 December 2004 in Deep Yellow Ltd, a company listed on the
Australian Stock Exchange, from the sale of non core uranium properties – refer Note 11(b).
The Company sold a 23% investment in ST Synergy Ltd, a knowledge management software company listed on the
Australian Stock Exchange, during the year ended 30 June 2004.
Property (consequential activity)
Ownership and lease of commercial premises consisting of buildings and telecommunications tower located in
Belmont, Perth, Western Australia. The commercial premises were sold on 24 June 2005 – refer Note 6.
Business segments – primary reporting
Year Ended
30 June 2005
Other revenue
Total segment revenue
Profit/(loss) from ordinary activities before income
tax expense
Income tax expense
Profit/(loss) from ordinary activities after income
tax expense/segment result
Total assets/segment assets
Segment liabilities
Acquisitions of non current assets
Non cash expenses:
Depreciation and amortisation
Provision for doubtful debts
Bad debts written off
Write down of convertible note
Exploration costs written off
Resources
A$000
1,552
1,552
(648)
-
(648)
50,311
1,322
6,431
90
-
-
-
72
Financial
Investments
A$000
Discontinuing Operations
Property
A$000
30
30
(864)
-
(864)
710
-
710
-
-
-
894
-
1,393
1,393
128
-
128
15
3
-
19
17
5
-
-
Consolidated
A$000
2,975
2,975
(1,384)
-
(1,384)
51,036
1,325
7,141
109
17
5
894
72
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Resources
A$000
Financial
Investments
A$000
Discontinuing
Operations Property
A$000
Consolidated
A$000
203
203
(281)
-
(281)
8,720
583
669
73
Business segments – primary reporting
Year Ended
30 June 2004
Other revenue
Total segment revenue
Profit/(loss) from ordinary activities before income
tax expense
Income tax expense
Profit/(loss) from ordinary activities after income
tax expense/segment result
Total assets/segment assets
Segment liabilities
Acquisitions of non current assets
Non cash expenses:
Depreciation and amortisation
Geographical segments – secondary reporting
Year Ended
30 June 2005
Other revenue
Total segment revenue
Loss from ordinary activities before income tax expense
Income tax expense
Loss from ordinary activities
after income tax expense/segment result
Total assets/segment assets
Segment liabilities
Acquisitions of non current assets
Non cash expenses:
Depreciation and amortisation
Provision for doubtful debts
Bad debts written off
Write down of convertible note
Exploration costs written off
Geographical segments – secondary reporting
30 June 2004
Other revenue
Total segment revenue
Profit from ordinary activities before income tax expense
Income tax expense
Profit from ordinary activities after income tax expense/segment result
Total assets/segment assets
Segment liabilities
Acquisitions of non current assets
Non cash expenses:
Depreciation and amortisation
* Namibia and Malawi
413
413
413
-
413
800
-
-
-
Australia
A$000
2,974
2,974
(1,362)
-
(1,362)
42,941
1,195
1,263
109
17
5
894
72
785
785
190
-
190
8,987
1,300
111
92
169
169
58
-
58
1,210
737
-
19
785
785
190
-
190
10,730
1,320
669
92
Africa*
A$000
Consolidated
A$000
1
1
(22)
-
(22)
8,095
130
5,878
-
-
-
-
-
-
-
-
-
-
2,975
2,975
(1,384)
-
(1,384)
51,036
1,325
7,141
109
17
5
894
72
785
785
190
-
190
1,743
20
558
10,730
1,320
669
-
92
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Notes to the Financial Report
for the year ended 30 June 2005
3. REVENUE
Revenue from outside the operating activities:
Interest received from non related parties
Interest received from the wholly owned group (Note 10 (a))
Proceeds on sale of tenements
Property rental
Proceeds on sale of land and buildings
Proceeds on sale of investments
Building contribution
Net foreign exchange gain unrealised
Other
Total revenue from ordinary activities
4. OPERATING PROFIT/(LOSS)
Profit/(loss) from ordinary activities before income tax expense
includes the following specific net gains and expenses:
Net gains/(losses):
Net gain on disposal of investments
Net gain on disposal of land and buildings
Net gain on disposal of tenements
Net loss on disposal of investments
Expenses:
Depreciation and amortisation
- plant and equipment
- buildings
- technical database
- project generation database
- leasehold improvements
Total depreciation and amortisation
Interest paid to non related parties
Employee benefits
Operating lease rental expense
Bad debts written off
Exploration costs written off
Other charges against assets:
Provision for non-recovery of
- intercompany loan
- investment in controlled entity
- investment in convertible note
- doubtful debts to non related parties
CONSOLIDATED
PARENT ENTITY
2005
A$000
2004
A$000
2005
A$000
2004
A$000
769
-
810
121
1,200
-
-
2
73
2,975
-
105
786
-
17
19
-
59
14
109
412
48
49
5
72
-
-
894
17
73
-
-
129
-
538
40
-
5
785
538
-
-
-
6
19
9
59
-
92
59
(3)
-
-
-
-
-
-
-
768
322
-
-
-
-
-
3
72
1,165
-
-
-
-
18
-
-
-
14
32
354
48
33
-
-
327
64
894
-
73
47
-
-
538
-
-
4
662
125
-
-
(176)
5
-
-
-
-
5
2
(3)
-
-
-
3
65
-
-
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CONSOLIDATED
PARENT ENTITY
2005
A$000
2004
A$000
2005
A$000
2004
A$000
5.
INCOME TAX
The aggregate amount of income tax attributable to the
financial year differs from the amount calculated on the
profit/(loss) from ordinary activities. The differences are
reconciled as follows:
Operating profit/(loss) before income tax
(1,384)
190
(2,140)
(410)
Prima facie tax payable on profit/(loss) from ordinary
activities before income tax at 30% (2004:30%)
- economic entity
- parent entity
- other members of the income tax consolidation group
net of intercompany transactions
Tax effect of permanent differences:
Capital (profits)/losses not subject to income tax
Non-deductible expenditure
Income tax adjusted for permanent differences
Tax benefit not recognised
Income tax attributable profit/(loss) from ordinary activities
The Directors estimate that the potential future income
tax benefit at 30 June not brought to account is:
(415)
-
-
(415)
(71)
242
(244)
244
-
57
-
-
57
(197)
15
(125)
125
-
-
(642)
285
(357)
46
242
(69)
69
-
-
(123)
-
(123)
-
12
(111)
111
-
Tax losses *
Capital losses
5,820
1,186
4,039
1,257
2,637
1,303
1,051
1,257
*Includes eligible exploration expenditures
This benefit for tax and capital losses will only be obtained if:
(i)
(ii)
the Consolidated 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 Consolidated Entity continues to comply with the conditions for deductibility imposed by tax legislation (no
expiry date exists for tax and capital losses); and
(iii) no changes in tax legislation adversely affect the Consolidated Entity in realising the benefit from the deductions
for the losses.
Tax Consolidation Legislation
The Company and its wholly owned Australian controlled entities have decided to implement the tax consolidation
legislation as of 1 July 2003. The Australian Taxation Office has been notified of this decision. The accounting policy
on implementation of the legislation is set out in Note 1(e). The impact on the income tax expense for the year is
disclosed in the tax reconciliation above.
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Notes to the Financial Report
for the year ended 30 June 2005
6. DISCONTINUING OPERATION
On 11 March 2005 an offer and acceptance was signed for the sale of the premises for A$1,200,000 subject to due
diligence. On 2 May 2005 this offer became unconditional and settlement occurred on 24 June 2005. This thereby
discontinues the Company’s operations in the property business segment.
Financial information relating to the discontinuing operation for the period to the date of disposal is set out below.
Further information is set out in Note 2.
CONSOLIDATED
2005
A$000
2004
A$000
Financial performance information for the period 1 July 2004
to 24 June 2005 and the year ended 30 June 2004
Revenue from ordinary activities, excluding the sale of commercial premises
Revenue from the sale of commercial premises
Total revenue from ordinary activities
Expenses from ordinary activities, excluding the carrying amount of assets of
commercial premises
Carrying amount of the assets of commercial premises
Total expenses from ordinary activities
Profit from ordinary activities before related income tax
Income tax expense
Net profit
Carrying amount of assets and liabilities as at 24 June 2005 and 30 June 2004
Cash
Trade debtors
Other debtors
Property, plant and equipment
Total assets
Trade creditors
Interest bearing liabilities
Intercompany loan
Total liabilities
Net assets
Cash flow information for the period 1 July 2004 to 24 June 2005 and the year ended 30 June 2004
Net cash inflow from ordinary activities
Net cash inflow from sale of commercial premises
Net cash outflow from repayment of secured bank loans
Net cash outflow from other financing activities
Net increase in cash generated by the commercial premises
Details of the sale of the commercial premises are as follows:
Cash consideration received
Carrying amount of net assets sold
Gain on sale before related income tax
Income tax expense
Gain on sale after related income tax expense
193
1,200
1,393
170
1,095
1,265
128
-
128
10
5
1
1,095
1,111
3
738
324
1,065
46
60
1,200
(733)
(99)
428
1,200
(1,095)
105
-
105
169
-
169
111
-
111
58
-
58
72
24
-
1,114
1,210
4
733
424
1,161
49
74
-
-
(8)
66
-
-
-
-
-
Earnings per share information for the period 1 July 2004 to 24 June 2005
and the year ended 30 June 2004
Basic and diluted earnings per share for discontinued operations
Cents
0.04
Cents
0.02
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7. CASH
Cash at bank and on hand
Bank bills - (a)
Term deposit
Total cash
CONSOLIDATED
PARENT ENTITY
2005
A$000
2004
A$000
2005
A$000
2004
A$000
1,244
38,185
60
39,489
4,639
-
-
4,639
755
38,185
60
39,000
4,518
-
-
4,518
(a)
The bank bills are bearing interest rates between 5.62% and 5.68% (2004: not applicable).
8. CURRENT RECEIVABLES
Trade debtors
Less provision for doubtful debts
Net trade debtors
Interest receivable
Deferred lease rental
Prepayments
GST and VAT
Sundry debtors - (a)
Total current receivables
27
(17)
10
324
33
84
97
20
568
27
-
27
-
-
-
22
-
49
-
-
-
324
33
7
90
18
472
-
-
-
-
-
-
21
3
24
(a)
These amounts generally arise from transactions outside the usual operating activities of the Consolidated Entity
and Company. Interest is not normally charged and collateral is not normally obtained.
9. CURRENT PROPERTY, PLANT AND EQUIPMENT
Land and buildings – at cost
Less provision for depreciation
Total current property, plant and equipment
-
-
-
1,175
(61)
1,114
-
-
-
-
-
-
The land and buildings at 5-7 Belmont Avenue, Belmont were previously classified as a current asset in light of active
negotiations to sell the property. On 24 June 2005 the sale of the property was finalised for A$1,200,000 and as a
result no current property plant and equipment exists as at 30 June 2005.
Reconciliations
Reconciliations of the carrying amounts of land and buildings at the beginning and end of the year are set out below:
Carrying amount at start of year
Depreciation (Note 4)
Cost of land and buildings sold
Carrying amount at end of year
10. NON CURRENT RECEIVABLES
Unsecured loans to wholly owned group - (a)
Less provision for non-recovery
Net unsecured loans to the wholly owned group
Interest receivable - (b)
Less provision for non-recovery
Net interest receivable
Total non current receivables
1,114
(19)
(1,095)
-
-
-
-
94
(94)
-
-
1,133
(19)
-
1,114
-
-
-
64
-
64
64
-
-
-
-
13,453
(3,270)
10,183
94
(94)
-
-
-
-
-
6,985
(2,943)
4,042
64
-
64
10,183
4,106
(a) Of the unsecured loans to the wholly owned group the Company charges interest only on the loan to Langer
Heinrich Uranium (Pty) Ltd. The interest rate payable is the standard commercial lending rate of National
Australia Bank plus 2%. In the year ending 30 June 2005 the average rate charged was 11.2% (2004: 8.6%) and
disclosure of interest revenue earned is set out in Note 3.
This represents interest at 5% per annum on the A$800,000 convertible note effective from 22 November 2002.
At 31 March 2005 the Company ceased to accrue interest on the convertible note and made full provision for
interest receivable at this date; refer Note 11(c).
(b)
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Notes to the Financial Report
for the year ended 30 June 2005
11. NON CURRENT OTHER FINANCIAL ASSETS
Shares at cost – in the wholly owned group
Less provision for non-recovery
Net shares at cost – in the wholly owned group - (a)
Shares at cost – non related party - (b)
Convertible note
Less provision for non-recovery
Net convertible note - (c)
Total non current other financial assets
CONSOLIDATED
PARENT ENTITY
2005
A$000
2004
A$000
2005
A$000
2004
A$000
-
-
-
710
800
(800)
-
710
-
-
-
-
800
-
800
800
1,961
(1,473)
1,961
(1,409)
488
-
800
(800)
-
488
552
-
800
-
800
1,352
(a)
Investments in Material Controlled Entities
NAME
COUNTRY OF
INCORPORATION
PERCENTAGE
INTEREST HELD
COST OF PARENT
ENTITY’S INTEREST
Paladin Energy Minerals NL ƒ
Eden Creek Pty Ltd * ƒ
Etron Properties Pty Ltd *ƒ
Paladin (Africa) Ltd #
Australia
Australia
Australia
Malawi
Lahndrik Holdings SA # 1
Luxembourg
Langer Heinrich Uranium (Pty) Ltd +
Tarquin Investments (Pty) Ltd^ 2
Namibia
Namibia
Total investments in controlled entities
Less provision for non-recovery of investments
Net investments in controlled entities
2005
%
100
100
100
100
100
100
100
2004
%
100
100
100
100
100
100
-
2005
A$000
-
1,700
261
-
-
-
-
2004
A$000
-
1,700
261
-
-
-
-
1,961
(1,473)
488
1,961
(1,409)
552
All investments comprise ordinary shares and all shares held are unquoted.
ƒ
^
*
#
+
1
2
Held by Paladin Resources Ltd
Held by Langer Heinrich Uranium (Pty) Ltd
These entities are not required to prepare or lodge audited accounts
Held by Paladin Energy Minerals NL
Held by Lahndrik Holdings SA
Not audited by Ernst & Young
Acquired on 27 September 2004 for N$900,000 (Namibian dollars) (A$202,548). The only asset in this company is
land and building in the form of an office and apartment with a fair value of A$202,548 which equates to the
cash consideration paid. No goodwill has arisen on acquisition of this entity.
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Outflow of cash to acquire controlled entities,
net of cash acquired
Cash consideration
Less: balances acquired
Cash
Outflow of cash
CONSOLIDATED
PARENT ENTITY
2005
A$000
2004
A$000
2005
A$000
2004
A$000
203
-
203
-
-
-
-
-
-
-
-
-
(b)
(c)
Investments in Non Related Parties
On 9 December 2004, the Consolidated Entity acquired an investment in Deep Yellow Ltd (Deep Yellow) as a
result of the sale of non-core uranium properties. The Consolidated Entity holds 15,000,000 fully paid ordinary
shares and 25,000,000 unlisted options exercisable at one cent on or before 31 December 2007. The holding of
these fully paid ordinary shares represents less than 5% of the ordinary shares of Deep Yellow, an emerging
uranium explorer. The quoted market value of the shares and options in Deep Yellow at 30 June 2005 is
A$2,430,000 based on a share price of 6.7 cents per share (2004: not applicable).
Convertible Note
As a result of the Company’s previous investment in the telecommunications business segment the Company
retains a convertible note of A$800,000 with Didasko Technologies Pty Ltd for a term of 4 years with a maturity
date of 20 November 2006. The convertible note accrues interest at a rate of 5% per annum which is payable at
maturity and the Company retains the right to convert the note into Didasko Ltd (100% holding company of
Didasko Technologies Pty Ltd) shares.
During the year the Company made a provision for non-recovery of the convertible note and interest receivable
of A$894,438 as a result of Didasko Ltd and Didasko Technologies Pty Ltd entering into Deeds of Company
Arrangements with their respective creditors. However, the Company will use all legal means available to seek
full recovery of amounts owing from Didasko Technologies Pty Ltd.
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61
Notes to the Financial Report
for the year ended 30 June 2005
12. NON CURRENT PROPERTY, PLANT AND EQUIPMENT
CONSOLIDATED
PARENT ENTITY
2005
A$000
2004
A$000
2005
A$000
2004
A$000
Plant and equipment – at cost
Less provision for depreciation
Total plant and equipment
Leasehold improvements – at cost
Less provision for depreciation
Total leasehold improvements
Technical database – at cost
Less provision for amortisation
Total technical database
Project generation database – at cost
Less provision for amortisation
Total project generation database
Land and buildings - at cost
Less provision for depreciation
Total land and buildings
Construction work in progress – at cost
753
(480)
273
294
(14)
280
262
(262)
-
579
(415)
164
203
(6)
197
354
420
(394)
26
-
-
-
262
(262)
-
579
(356)
223
-
-
-
-
527
(410)
117
287
(14)
273
-
-
-
-
-
-
-
-
-
-
420
(394)
26
-
-
-
-
-
-
-
-
-
-
-
-
-
Total non current property, plant and equipment
1,268
249
390
26
Reconciliations
Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of
the year are set out below:
Total
Plant and
Equipment
Database
Building
Leasehold
Improvements
A$000
A$000
A$000
A$000
A$000
Construction
Work in
Progress
A$000
Consolidated – 2005
Carrying amount at
start of year
Additions
249
1,149
Depreciation and amortisation
expense (Note 4)
Depreciation capitalised
(90)
(40)
26
298
(17)
(34)
223
-
(59)
-
-
203
-
(6)
Carrying amount at
end of year
Parent Entity - 2005
1,268
273
164
197
Carrying amount at start of year 26
Additions
396
26
109
Depreciation and amortisation
expense (Note 4)
(32)
(18)
Carrying amount at end
of year
390
117
-
-
-
-
-
-
-
-
-
294
(14)
-
280
-
287
(14)
273
-
354
-
-
354
-
-
-
-
D
T
L
S
E
C
R
U
O
S
E
R
N
I
D
A
L
A
P
62
13. NON CURRENT OTHER ASSETS – MINERAL PROPERTIES
Canadian GAAP and securities law requires the following disclosure for the Consolidated Entity’s interests in mineral
property tenements:
Langer Heinrich Uranium Project (Namibia) - Paladin 100%
The Langer Heinrich Uranium Project consists of one Mineral Deposit Retention Licence – MDRL 2236 - covering 4,375
hectares in the Namib Naukluft Desert 180km west of Windhoek, the capital of Namibia, and 80 kilometres east of the
major seaport of Walvis Bay. The project was purchased from Acclaim Uranium NL (now Aztec Mining Ltd) in August
2002. The licence was granted on 16 August 1994 with the current term expiring on 15 August 2005. Rights conferred
by the licence include the right to retain the retention area for future mining operations, carry on prospecting
operations and remove minerals for any purpose other than sale or disposal. In April 2005 the Consolidated Entity
applied for a mining licence covering the Langer Heinrich Uranium Project. Subsequent to year end on 26 July 2005
the Ministry of Mines and Energy in Namibia approved the granting of a Mining Licence for a 25 year term – refer
Note 29(a). The Langer Heinrich Uranium Project is owned through a wholly owned Namibian entity, Langer Heinrich
Uranium (Pty) Ltd.
Kayelekera Uranium Project (Malawi) – Paladin 90%
(Subsequent to 30 June 2005 – Paladin 100%, refer to Note 29(c))
The Kayelekera Uranium Project consists of one exclusive prospecting licence – EPL 070 - covering 15,700 hectares in
northern Malawi 650 kilometres north of Lilongwe, the capital of Malawi, and 40 kilometres west of the provincial
town of Karonga on the shore of Lake Malawi. The Consolidated Entity acquired its interest in the Kayelekera
Uranium Project in February 1988 when it entered into a joint venture with Balmain Resources Pty Ltd, an unlisted
company based in Perth Western Australia. At 30 June 2005 Balmain Resources Pty Ltd retained a 10% free-carried
interest in the project until completion of a bankable feasibility study. Rights conferred by the licence include the
exclusive right to carry on prospecting operations for uranium and associated minerals. EPL 070 was granted on 26
January 1998 with the current term expiring on 25 July 2005 and on 7 July 2005, the licence was renewed for a further
two years to 25 July 2007. On 6 July 2005, agreement was reached whereby the Consolidated Entity will acquire the
10% interest of Balmain Resources Pty Ltd – refer Note 29(b). The Kayelekera Uranium Project is held through a
wholly owned Malawian entity, Paladin (Africa) Limited.
Manyingee Uranium Project (Australia) – Paladin 100%
The Manyingee Uranium Project consists of three granted mining leases – M08/86, M08/87 and M08/88 - covering 1,307
hectares in the North West of Western Australia, 1,100 kilometres north of Perth, the State Capital and 90 kilometres
south of the township of Onslow on the North West coast. The Consolidated Entity purchased the Manyingee Uranium
Project in 1998 from Afmeco Mining and Exploration Pty Ltd (“AFMEX”), a subsidiary company of Cogema of France.
Under the terms (as amended) of the purchase agreement a final payment of A$750,000 is payable to AFMEX when all
development approvals have been obtained. Royalties of 2.5% for the first 2,000 tonnes of uranium oxide and 1.5%
for the following 2,000 tonnes of uranium oxide are also payable to AFMEX and associated companies which formerly
held interests in the project. The three mining leases were granted on May 18, 1989 for a 21-year term renewable for
a further term or terms of 21 years. Rights conferred by the three mining leases include the exclusive right to explore
and mine minerals, subject to environmental and other approvals. The interest in Manyingee is held through the
wholly owned entity, Paladin Energy Minerals NL.
Oobagooma Uranium Project (Australia) – Paladin 100%
The Oobagooma Uranium Project consists of four applications for exploration licences covering 45,200 hectares in the
West Kimberley region of northern Western Australia, 1,900 kilometres north-north-east of Perth, the State Capital
and 70 kilometres north east of the regional town of Derby. The four applications for exploration licences are 04/145
and 04/146 lodged on December 28, 1983 and 04/776 and 04/777 lodged on November 28, 1991 which largely overly
the earlier applications. The Consolidated Entity purchased the Oobagooma Project in 1998 from AFMEX. Under the
terms of the purchase agreement a final payment of A$750,000 is payable to AFMEX when the tenements are
granted. A gross royalty of 1.0% on production is also payable to AFMEX. The applications for exploration licences
remain in the name of Afmeco Pty Ltd (a company associated with AFMEX) until the date that they are granted after
which title will be transferred. The interest in Oobagooma is held through the wholly owned entity, Paladin Energy
Minerals NL.
Other mineral property interests
The Consolidated Entity holds various other mineral property interests, however, these are not considered material
and as a result no further disclosure of mineral property tenement information has been included in the consolidated
schedules of information.
T
R
O
P
E
R
L
A
U
N
N
A
5
0
0
2
63
Notes to the Financial Report
for the year ended 30 June 2005
13. NON CURRENT OTHER ASSETS – MINERAL PROPERTIES (continued)
Environmental contingency
The Consolidated Entity’s exploration activities are subject to various federal, provincial and local laws and regulations
governing the protection of the environment. These laws and regulations are continually changing and generally
becoming more restrictive. The Consolidated Entity has made, and expects to make in the future, expenditures to
comply with such laws and regulations. The impact, if any, of future legislative or regulatory changes cannot be
determined.
The following table summarises the Consolidated Entity’s interest in mineral properties as at 30 June 2005:
Areas of Interest
Acquisition
A$000
Expenditure
A$000
Carrying value
A$000
Langer Heinrich Uranium Project
Kayelekera Uranium Project
Manyingee Uranium Project
Oobagooma Uranium Project
Other Projects
Balance 30 June 2005
15
171
1,157
174
-
1,517
5,031
1,603
646
20
184
7,484
5,046
1,774
1,803
194
184
9,001
The following table summarises the Consolidated Entity’s interest in mineral properties as at 30 June 2004:
Areas of Interest
Acquisition
A$000
Expenditure
A$000
Carrying value
A$000
Langer Heinrich Uranium Project
Kayelekera Uranium Project
Manyingee Uranium Project
Oobagooma Uranium Project
Other Projects
Balance 30 June 2004
15
171
1,157
174
-
1,517
753
791
607
19
128
2,298
768
962
1,764
193
128
3,815
D
T
L
S
E
C
R
U
O
S
E
R
N
I
D
A
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A
P
64
The following table details the consolidated expenditures (parent entity expenditures $Nil) on interests in mineral
properties by area of interest for the year ended 30 June 2005:
Areas of
Interest
Langer
Heinrich
A$000
Kayelekera
Project
A$000
Manyingee
Project
A$000
Oobagooma
Project
A$000
Other
Projects
A$000
Total
Projects
A$000
Balance 30 June 2004
768
962
1,764
193
128
3,815
Acquisition
Property payments
Total Acquisition
Project evaluation and
development expenditure
Interest received
Joint venture contributions
Tenement costs
Labour
Consultants and contractors
Materials and utilities
Transportation and
communications
Outside services
Legal and accounting
Insurance
Camp expenses
Overheads
Other
-
-
(5)
-
6
431
202
47
293
2,661
109
31
50
228
225
Total expenditure
4,278
Write off of expenditure (Note 4)
Cost of tenements sold
-
-
-
-
-
-
-
201
19
34
149
157
21
5
32
136
58
812
-
-
-
-
-
-
30
2
-
-
-
-
-
-
-
5
2
39
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
1
-
-
Balance 30 June 2005
5,046
1,774
1,803
194
-
-
-
(9)
20
38
37
4
19
2
5
2
3
19
12
152
(72)
(24)
184
-
-
(5)
(9)
56
672
258
85
461
2,820
135
38
85
388
298
5,282
(72)
(24)
9,001
T
R
O
P
E
R
L
A
U
N
N
A
5
0
0
2
65
Notes to the Financial Report
for the year ended 30 June 2005
13. NON CURRENT OTHER ASSETS – MINERAL PROPERTIES (continued)
The following table details the consolidated expenditures (parent entity $Nil) on interests in mineral properties by
area of interest for the year ended 30 June 2004:
Areas of
Interest
Langer
Heinrich
A$000
Kayelekera
Project
A$000
Manyingee
Project
A$000
Oobagooma
Project
A$000
Other
Projects
A$000
Total
Projects
A$000
Balance 30 June 2003
257
890
1,714
191
114
3,166
Acquisition
Property payments
Total Acquisition
Project evaluation and
development expenditure
Joint venture contributions
Tenement costs
Labour
Consultants and contractors
Materials and utilities
Transportation and
communications
Outside services
Legal and accounting
Insurance
Camp expenses
Overheads
Other
Total Expenditure
Write off of expenditure
Balance 30 June 2004
-
-
-
(17)
189
79
3
58
4
44
7
15
85
44
511
-
768
-
-
-
-
28
1
-
5
-
-
2
1
14
21
72
-
962
14. CURRENT PAYABLES
Trade creditors and accruals
Lease incentive
Total current payables
15. CURRENT PROVISIONS
Employee benefits (Note 26)
-
-
-
42
1
1
-
-
-
-
-
-
4
2
50
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2
2
-
1,764
193
-
-
(17)
2
10
6
-
2
-
1
2
1
7
-
14
-
128
-
-
(17)
27
228
87
3
65
4
45
11
17
110
69
649
-
3,815
CONSOLIDATED
PARENT ENTITY
2005
A$000
2004
A$000
2005
A$000
2004
A$000
660
67
727
554
-
554
524
67
591
528
-
528
65
33
65
33
D
T
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S
E
C
R
U
O
S
E
R
N
I
D
A
L
A
P
66
CONSOLIDATED
PARENT ENTITY
2005
A$000
2004
A$000
2005
A$000
2004
A$000
16. CURRENT INTEREST BEARING LIABILITIES
Bank loans – secured (a)
Bank loans – unsecured (b)
Total current interest bearing liabilities
-
533
533
733
-
733
-
533
533
-
-
-
(a)
(b)
The bank loans used to finance the purchase of 5-7 Belmont Avenue, Belmont were classified as current liabilities
at 30 June 2004 in light of active negotiations to sell the property and then repay the bank loans. On 24 June
2005 the sale of the property was finalised for A$1,200,000, and the bank loans repaid prior to 30 June 2005.
The bank loans referred to above of the Consolidated Entity were secured by a first mortgage over the
Consolidated Entity’s freehold land and buildings, being charged interest at the rate of 8.16% on A$260,000 and
8.16% on A$472,500 (2004: 7.7% on A$260,000 and 8.05% on A$472,500).
The bank loans from Société Générale Australia Branch are unsecured; however, a negative pledge exists that
imposes certain covenants on the Consolidated Entity. The negative pledge states that subject to certain
conditions, the Consolidated Entity will not provide any entity or other security over its assets, will not incur
indebtedness other than agreed, will not dispose of an interest in any of its assets, undertaking or property and
will not provide indebtedness guarantee to or on behalf of any entity or person except in certain agreed
circumstances. The bank loans bear interest at the bank bill standard yield plus 3%. At 30 June 2005 A$500,000
plus interest has been drawn of the total facility of A$2,000,000. Refer Note 29 (f) for details of draw down
under the facility after 30 June 2005.
Assets pledged as security
The carrying amounts of non current assets pledged as security are:
First mortgage
Freehold land and buildings
17. NON CURRENT PAYABLES
Unsecured loans from wholly owned group - (a)
-
-
1,114
-
-
334
-
-
(a)
The unsecured loans from wholly owned group are interest free and have no fixed terms of repayment.
T
R
O
P
E
R
L
A
U
N
N
A
5
0
0
2
67
Notes to the Financial Report
for the year ended 30 June 2005
18. CONTRIBUTED EQUITY
(a)
Issued and paid up capital
NUMBER OF SHARES
CONSOLIDATED
PARENT ENTITY
2005
A$000
2004
A$000
Ordinary shares fully paid
400,885,713
333,685,713
65,950
24,265
NUMBER OF SHARES
Issue Price
Cents
1¢
1¢
2.1¢
2.58¢
5.25¢
1.1¢
8¢
11¢
Issue Price
A$000
1.2¢
1.3¢
40¢
15¢
5.5¢
-
22¢
A$1.05
Total
A$000
19,470
50
30
133
26
525
50
500
3,520
(39)
24,265
Total
50
49
3,000
705
550
321
220
37,800
(1,010)
65,950
(b) Movements in ordinary share capital
Date
Balance 30 June 2003
Placement
August 2003
September 2003 Issue in lieu of fees
October 2003
October 2003
February 2004
February 2004
February 2004
May 2004
Placement
Issue in lieu of fees
Placement
Option conversions
Placement
Placement
Less: Transaction costs arising on share issues
Balance 30 June 2004
265,585,713
5,000,000
3,000,000
6,350,000
1,000,000
10,000,000
4,500,000
6,250,000
32,000,000
333,685,713
NUMBER OF SHARES
Cents
Options conversions
Options conversions
August 2004
August 2004
September 2004 Placement
December 2004 Options conversions
December 2004 Options conversions
December 2004 Transfer from reserves refer Note 19(b)
Options conversions
March 2005
Placement
April 2005
Less: Transaction costs arising on share issues
4,200,000
3,800,000
7,500,000
4,700,000
10,000,000
-
1,000,000
36,000,000
Balance 30 June 2005
400,885,713
D
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U
O
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E
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N
I
D
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A
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68
Issued Options
(c)
Unlisted Options
(i)
Exercisable at 1.1 cents, on or before 31 March 2004
Balance at 1 July
Issued during year
Exercised during year
Balance at 30 June
The options were exercised in February 2004 raising A$49,500 in contributed equity
and at the time of exercise the shares had a market value of A$400,500.
(ii)
Exercisable at 1.2 cents, on or before 31 December 2004
Balance at 1 July
Issued during year
Exercised during year
Balance at 30 June
The options were exercised in August 2004 raising A$50,400 in contributed equity
and at the time of exercise the shares had a market value of A$651,000.
(iii) Exercisable at 1.3 cents, on or before 30 November 2005
Balance at 1 July
Issued during year
Exercised during year
Balance at 30 June
The options were exercised in August 2004 raising A$49,400 in contributed equity
and at the time of exercise the shares had a market value of A$570,000.
(iv) Exercisable at 5.5 cents, on or before 30 September 2007
Balance at 1 July
Issued during year
Exercised during year
Balance at 30 June
NUMBER OF OPTIONS
2005
2004
-
-
-
-
-
4,500,000
(4,500,000)
-
4,200,000
-
(4,200,000)
-
4,200,000
-
-
4,200,000
3,800,000
-
(3,800,000)
-
3,800,000
-
-
3,800,000
-
10,000,000
(10,000,000)
-
-
-
-
-
These options were issued to Société Générale Australia Branch as part of the establishment of a A$2,000,000
loan facility on 30 September 2004, refer Note 19(b). The options were exercised in December 2004 raising
A$550,000 in contributed equity and at the time of exercise the shares had a market value of A$4,850,000.
Unlisted Options – Directors, Employees and Consultants
On 23 March 2004 the Directors approved the Employee Share Incentive Option Plan for which up to ten percent of
the ordinary shares on issue can be on offer at any one time to Directors, employees and consultants directly engaged
in corporate, project development, exploration and evaluation work for the Company. The maximum term of the
options is 5 years, with the vesting requirements and exercise price of the options determined by the Directors at the
time of grant. The options are convertible into fully paid ordinary shares of the Company on a one for one basis and
may not be exercised within 12 months of their date of grant, except in the case of a takeover bid or a scheme of
arrangement or if otherwise approved by shareholders. Options are granted at no cost under the plan and carry no
dividend or voting rights.
T
R
O
P
E
R
L
A
U
N
N
A
5
0
0
2
69
Notes to the Financial Report
for the year ended 30 June 2005
18. CONTRIBUTED EQUITY (continued)
(c)
Issued Options (continued)
Unlisted Options – Directors, Employees and Consultants (continued)
(v)
Exercisable at 15 cents, on or before 30 November 2004 (granted 20 June 2002)
(No vesting requirements)
Balance at 1 July
Exercised during year
Balance at 30 June
Number of Options
2005
2004
4,700,000
(4,700,000)
4,700,000
-
-
4,700,000
The options were exercised in December 2004 raising A$705,000 in contributed equity
and at the time of exercise the shares had a market value of A$2,279,500
(vi) Exercisable at 22 cents, on or before 26 May 2006
(granted 28 May 2004 to 30 June 2004)
(No vesting requirements)
Balance at 1 July
Issued during year
Exercised during year
Balance at 30 June
The options were exercised in March 2005 raising A$220,000 in contributed equity
and at the time of exercise the shares had a market value of A$1,160,000
(vii) Exercisable at 32 cents, on or before 26 May 2006
(granted 28 May 2004 to 30 June 2004)
(No vesting requirements)
Balance at 1 July
Issued during year
Balance at 30 June
(viii) Exercisable at $1.00, on or before 30 November 2007
(granted 30 November 2004)
(Vest on positive outcome for Langer Heinrich Uranium Project bankable
feasibility study together with completion of acceptable project funding)
Balance at 1 July
Issued during year
Balance at 30 June
(ix) Exercisable at $1.00, on or before 20 December 2007 (granted 20 December 2004)
(Vest on positive outcome for Langer Heinrich Uranium Project bankable feasibility
study together with completion of acceptable project funding)
Balance at 1 July
Issued during year
Balance at 30 June
(x)
Exercisable at $1.25, on or before 30 November 2007 (granted 30 November 2004)
(Vest on positive outcome for Langer Heinrich Uranium Project bankable feasibility
study together with completion of acceptable project funding)
Balance at 1 July
Issued during year
Balance at 30 June
12,000,000
-
(1,000,000)
-
12,000,000
-
11,000,000
12,000,000
3,000,000
-
-
3,000,000
3,000,000
3,000,000
-
8,050,000
8,050,000
-
10,250,000
10,250,000
-
1,300,000
1,300,000
-
-
-
-
-
-
-
-
-
D
T
L
S
E
C
R
U
O
S
E
R
N
I
D
A
L
A
P
70
Listed Options
(xi) Exercisable at 10 cents, on or before 21 January 2004
Balance at 1 July
Expired during year
Balance at 30 June
Number of Options
2005
2004
-
-
-
63,000,000
(63,000,000)
-
(d) Ordinary Shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in
proportion to the number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one
vote, and upon a poll each share is entitled to one vote.
19. RESERVES
Listed option application reserve - (a)
Option premium reserve - (b)
Total reserves
CONSOLIDATED
PARENT ENTITY
2005
A$000
2004
A$000
2005
A$000
2004
A$000
174
-
174
174
-
174
174
-
174
174
-
174
(a) No movement for the years ended 30 June 2005 or 30 June 2004. The Listed Option Application Reserve consists
of proceeds from the issue of listed options, net of expenses of issue. These listed options expired unexercised
and no restriction exists for the distribution of this reserve.
(b)
Increase of A$321,000 for the year ending 30 June 2005 (2004 not applicable). The Option Premium Reserve
arose from granting of 10,000,000 unlisted options exercisable at 5.5 cents on or before 30 September 2007 to
Société Générale Australia Branch as part of the establishment of a A$2,000,000 loan facility on 30 September
2004. These unlisted options have been fair valued using the Cox, Ross and Rubinstein Binomial Tree Model at
the date the Company obtained commitment for the loan facility. As the options were exercised in December
2004 the amount of A$321,000 in Option Premium Reserve has been transferred to contributed equity.
20. ACCUMULATED LOSSES
Accumulated losses at beginning of financial year
(15,029)
(15,219)
(14,974)
(14,564)
Net profit/(loss) attributable to members of
Paladin Resources Ltd
(1,384)
190
(2,140)
(410)
Accumulated losses at the end of the financial year
(16,413)
(15,029)
(17,114)
(14,974)
21. TOTAL EQUITY
Total equity at beginning of financial year
9,410
4,425
9,465
5,080
Total changes in equity recognised in the Statements of
Financial Performance
(2,394)
151
(3,150)
(449)
Transactions with owners as owners:
Contributions of equity
Total equity at the end of the financial year
42,695
49,711
4,834
9,410
42,695
49,010
4,834
9,465
T
R
O
P
E
R
L
A
U
N
N
A
5
0
0
2
71
Notes to the Financial Report
for the year ended 30 June 2005
22. FINANCIAL INSTRUMENTS
Credit Risk Exposure
(a)
The credit risk on financial assets of the Consolidated Entity which have been recognised on the Statements of
Financial Position, other than investments in shares, equates to the carrying amount, net of any provisions for
doubtful debts or non-recovery.
The Consolidated Entity has a concentration of credit risk with Didasko Technologies Pty Ltd at 30 June 2004. At 30
June 2005 the Company has made full provision for non-recovery of the convertible note and interest receivable, refer
Note 11(c).
Interest Rate Risk Exposure
(b)
The Consolidated Entity’s exposure to interest rate risk is limited to the floating market rate for cash and both secured
and unsecured bank loans. The convertible note financial asset bears interest at a fixed rate of 5%, matures on 20
November 2006 and as a result does not provide exposure to interest risk as the Company intends to hold the note
until maturity. All other financial assets and liabilities, in the form of receivables, investments in shares, payables and
provisions, are non-interest bearing. The weighted average interest rate on cash, convertible note and both secured
and unsecured bank loans is 5.6% (2004: 4%), 5% (2004: 5%) and 8.9% (2004: 8%) respectively.
(c) Net Fair Value of Financial Assets and Liabilities
The net fair value of cash, convertible note, both secured and unsecured bank loans and non-interest bearing financial
assets and financial liabilities of the Consolidated Entity equates to their carrying amount, net of any provision for
doubtful debts or non-recovery. The net fair value of investments in shares exceeds carrying amount and the net fair
value is disclosed in Note 11(b).
The net fair value of other monetary financial assets and financial liabilities is based upon market prices where a
market exists or by discounting the expected future cash flows by the current interest rates for assets and liabilities
with similar risks profiles.
The net fair value of equity investments traded on organised markets have been valued by reference to market prices
prevailing at balance date. For non-traded equity investments, the net fair value is an assessment by circumstances
pertaining to a particular investment.
23. DIRECTORS’ AND EXECUTIVES’ DISCLOSURE
The Company has applied the exemption under Corporations Amendments Regulation 2005 which exempts listed
companies from providing remuneration disclosures in relation to Directors and specified Executives in the Financial
Report by Accounting Standard AASB 1046 Director and Executive Disclosures by Disclosing Entities. These
remuneration disclosures are provided in the Remuneration Report section of the Directors’ Report under Details of
Remuneration and are designated as audited.
Shareholdings of Directors and Specified Executives
Mr Rick Crabb
Mr John Borshoff
Mr Sean Llewelyn
Mr George Pirie
Mr Ian Noble
Mr Michael Blakiston (1)
Dr Leon Pretorius (2)
Mr Cliff Davis (3)
Mr Garnet Halliday
Ms Gillian Swaby
Mr Ron Chamberlain
Balance
1 July 2004
5,464,746
13,091,394
-
-
-
-
Net Change
1,000,000
1,500,000
-
-
-
-
8,550,000
(8,550,000)
-
-
5,595,515
-
-
-
1,004,485
-
Balance
30 June 2005
6,464,746
14,591,394
-
-
-
-
-
-
-
6,600,000
-
(1)
(2)
Mr Michael Blakiston’s appointment as Alternate Director ceased on 20 December 2004.
Dr Leon Pretorius resigned from the Board on 12 April 2005 and as such is no longer required to be disclosed in the above table and this fact has been
reflected in the net change column.
(3)
Mr Cliff Davis resigned from the Board on 31 May 2005.
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Option Holdings of Directors
Balance
1 July 2004
Options
Granted
Options
Exercised
Balance
30 June 2005
1,000,000
2,250,000
750,000
-
4,000,000
1,500,000
2,500,000
1,000,000
-
5,000,000
2,250,000
750,000
-
3,000,000
-
-
-
3,250,000
(1,000,000)
-
-
-
3,250,000
(1,000,000)
-
-
-
3,750,000
(1,500,000)
-
-
-
3,750,000
(1,500,000)
-
-
3,250,000
3,250,000
-
-
-
-
-
2,250,000
750,000
3,250,000
6,250,000
-
2,500,000
1,000,000
3,750,000
7,250,000
2,250,000
750,000
3,250,000
6,250,000
Dr Leon Pretorius resigned from the Board on 12 April 2005.
Unlisted and exercisable at A$0.15 on or before 30 November 2004
Unlisted and exercisable at A$0.22 on or before 26 May 2006
***
Unlisted and exercisable at A$0.32 on or before 26 May 2006
**** Unlisted and exercisable at A$1.00 on or before 20 December 2007
Messrs Sean Llewelyn, George Pirie, Ian Noble, Michael Blakiston and Cliff Davis have not been granted options and
therefore do not hold any options at 30 June 2005. Mr Michael Blakiston’s appointment as Alternate Director ceased
on 20 December 2004. Mr Cliff Davis resigned from the Board on 31 May 2005.
Option Holdings of Specified Executives
Balance
1 July 2004
Options
Granted
Options
Exercised
Balance
30 June 2005
-
-
-
1,200,000
2,000,000
500,000
-
3,700,000
-
-
-
2,000,000
1,000,000
3,000,000
-
-
-
2,750,000
-
-
-
(1,200,000)
-
-
-
2,750,000
(1,200,000)
500,000
300,000
800,000
-
-
-
2,000,000
1,000,000
3,000,000
-
2,000,000
500,000
2,750,000
5,250,000
500,000
300,000
800,000
Unlisted and exercisable at A$0.15 on or before 30 November 2004
Unlisted and exercisable at A$0.22 on or before 26 May 2006
***
Unlisted and exercisable at A$0.32 on or before 26 May 2006
**** Unlisted and exercisable at A$1.00 on or before 30 November 2007
***** Unlisted and exercisable at A$1.25 on or before 30 November 2007
Mr Rick Crabb
A$0.15*
A$0.22**
A$0.32***
A$1.00****
Total
Mr John Borshoff
A$0.15*
A$0.22**
A$0.32***
A$1.00****
Total
Dr Leon Pretorius (1)
A$0.22**
A$0.32***
A$1.00****
Total
(1)
*
**
Mr Garnet Halliday
A$1.00****
A$1.25*****
Total
Ms Gillian Swaby
A$0.15*
A$0.22**
A$0.32***
A$1.00****
Total
Mr Ron Chamberlain
A$1.00****
A$1.25*****
Total
*
**
Vested and
exercisable at
30 June 2005
-
2,250,000
750,000
-
3,000,000
-
2,500,000
1,000,000
-
3,500,000
2,250,000
750,000
-
3,000,000
Vested and
exercisable at
30 June 2005
-
-
-
-
2,000,000
500,000
-
2,500,000
-
-
-
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0
2
73
Notes to the Financial Report
for the year ended 30 June 2005
24. AUDITORS’ REMUNERATION
Ernst & Young were appointed auditors for the Company on 21 June 2005, which is subject to approval by
shareholders at the 2005 Annual General Meeting. RSM Bird Cameron were the previous auditors for the Company
and resigned effective 21 June 2005 as the Canadian member firm of RSM International was unable to provide the
professional services required.
During the year the following services were paid to the auditor of the Company, its related practices and non-related
audit firms:
(a) Audit services
Auditors of the Company
Ernst & Young
RSM International
Other auditors of the Consolidated Entity
Audit and review of financial reports
Total audit services
(b) Non audit services
Auditors of the Company
Taxation services
Other auditors of the Consolidated Entity
Taxation services
Total non audit services
CONSOLIDATED
PARENT ENTITY
2005
A$000
2004
A$000
2005
A$000
2004
A$000
37,923
29,610
3,166
70,699
-
14,650
5,538
20,188
37,923
29,610
-
14,650
-
-
67,533
14,650
2,650
7,090
2,650
7,090
5,846
8,496
-
-
7,090
2,650
-
7,090
25. COMMITMENTS AND CONTINGENT LIABILITIES
There were no outstanding commitments or contingent liabilities, which are not disclosed in the financial report of
the Consolidated Entity and the Company as at 30 June 2005 other than:
(a)
Exploration Tenements
Commitments for the exploration tenements of contracted for at the reporting date but not recognised as
liabilities, payable:
Within one year
Later than one year but not later than 5 years
Total exploration tenements commitment
CONSOLIDATED
PARENT ENTITY
2005
A$000
1,776
1,300
3,076
2004
A$000
2005
A$000
2004
A$000
-
-
-
-
-
-
-
-
-
These include commitments relating to tenement lease rentals and, the minimum expenditure requirements of
the Namibian, Malawi, Western Australian, 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.
These are necessary in order to maintain the tenements in which the Consolidated Entity 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 Namibia, Malawi and Australia.
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CONSOLIDATED
PARENT ENTITY
2005
A$000
2004
A$000
2005
A$000
2004
A$000
(b) Operating Leases
Commitments for minimum lease payments in relation to non-cancellable operating leases relating to rental of
offices are payable as follows:
Within one year
Later than one year but not later than 5 years
Total operating lease commitment
143
542
685
-
-
-
100
511
611
-
-
-
(c) Acquisition Costs
The Consolidated Entity acquired a call option on 19 June 1998 in relation to the purchase of the Oobagooma
Uranium Project and, in turn, granted a put option to the original holder of the Project. Both the call and put
options have an exercise price of A$750,000 and are subject to the Department of Minerals & Energy granting
tenements comprising 2 exploration licence applications. The A$750,000 is payable by the Consolidated 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 the tenements are granted.
In relation to the Manyingee Uranium Project, the re-negotiated acquisition terms provide for a payment of
A$750,000 by the Consolidated Entity to the vendors when all project development approvals are further obtained.
CONSOLIDATED
PARENT ENTITY
2005
A$000
2004
A$000
2005
A$000
2004
A$000
26. EMPLOYEE BENEFITS
Provision for Annual Leave and Long Service Leave
Aggregate employment benefit liability
Employee numbers
Average number of employees during the financial year
65
33
65
33
Number
14
Number
4
Superannuation
The Company contributes to employees’ superannuation plans in accordance with the requirements of Occupational
Superannuation Legislation. Contributions by the Company represent a defined percentage of each employee’s salary.
Employee contributions are voluntary.
Employee Share Incentive Option Plan
Details of the Employee Share Incentive Option Plan for the Company are disclosed in Note 18(c).
27. RELATED PARTIES
Directors and Specified Executives
Disclosures relating to Directors and Specified Executives are set out in the Directors’ Report under the section entitled
Remuneration Report and in Note 23.
Wholly Owned Group
The wholly owned group consists of the Company and its wholly owned controlled entities set out in Note 11(a).
Transactions between the Company and other entities in the wholly owned group during the years ended 30 June
2005 and 2004 consisted of:
(a)
(b)
(c)
loans advanced by the Company (Note 10);
loans advanced to the Company (Note 17); and
the payment of interest on the loans to Langer Heinrich Uranium (Pty) Ltd (Note 10(a))
Controlled Entities
The ultimate parent entity in the wholly owned group is Paladin Resources Ltd.
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A
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0
0
2
75
Notes to the Financial Report
for the year ended 30 June 2005
28. INTERESTS IN JOINT VENTURES
(a) Kayelekera Uranium Project – Malawi
A controlled entity (Paladin (Africa) Ltd) has entered into a joint venture operation for the Kayelekera Uranium
Project to develop exclusive prospecting licence – EPL 070 – located in Malawi. The controlled entity has a 90%
participating interest in this joint venture with Balmain Resources Pty Ltd retaining a 10% free carried interest in
the project until completion of a bankable feasibility study. The Consolidated Entity’s interests in the assets
employed in this joint venture are included in the Statements of Financial Position, in accordance with the
accounting policy described in Note 1(r) under the following classifications:
Non current assets
Other - mineral properties
Share of assets employed in joint venture
CONSOLIDATED
PARENT ENTITY
2005
A$000
2004
A$000
2005
A$000
2004
A$000
1,774
1,774
962
962
-
-
-
-
For exploration tenement commitments relating to the Kayelekera Uranium Project refer to Note 25(a).
The Consolidated Entity has increased its ownership in the Kayelekera Uranium Project to 100% after 30 June
2005 – refer Note 29(b).
(b)
The Consolidated Entity also has a number of interests in joint ventures to explore for uranium and other
minerals. The Consolidated Entity’s share of expenditure in respect of these exploration activities is capitalised in
accordance with the accounting policy stated in Note 1(o) and no revenue is generated. The Consolidated
Entity’s share of the assets and liabilities in respect of these joint ventures is not material.
29. 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
Consolidated Entity in subsequent financial years with the exception of the following the financial effects of which
have not been provided for in the 30 June 2005 Financial Report:
(a)
(b)
(c)
(d)
Langer Heinrich Uranium Project, Namibia – Mining Licence Approval Granted
On 27 July 2005, the Company announced that the Minister of Mines in Namibia approved the granting of a 25
year Mining Licence to Langer Heinrich Uranium (Pty) Ltd, wholly owned by the Company, allowing full scale
development of the mining operation to proceed. During the Mining Licence approval process a significant
amount of preparatory work has been carried out, including negotiations with construction engineers; water and
power utilities; identification and ordering of long lead time equipment items; establishment of office facilities
in Swakopmund; and identification of key development personnel.
Langer Heinrich Uranium Project, Namibia – Bank Approval for Project Finance
On 29 August 2005, the Company announced that it had accepted credit committee approved offers of financing
totalling US$71,000,000 for the Langer Heinrich Uranium Project in Namibia. The financing is being provided by
Société Générale Australia Branch (as lead arranger), Nedbank Ltd and Standard Bank of South Africa Ltd and
consists of a 7 year Project Finance Facility of US$65,000,000 and a Standby Cost Overrun Facility of US$6,000,000.
Draw down of the financing is subject to completion of legal due diligence and documentation, and fulfilment
of other conditions precedent usual for this type of funding.
Kayelekera Uranium Project, Malawi – Purchase 10% interest
On 6 July 2005, the Company announced the purchase of the remaining 10% joint venture interest in the
Kayelekera Uranium Project in Malawi. The consideration of A$5,372,250 will be satisfied by the issue by the
Company of 4,350,000 ordinary fully paid shares at an issue price of A$1.235 per share. The purchase is
conditional upon the joint venture partner entering into a private escrow agreement in dealing with the
4,350,000 shares in the Company.
Sale of Non-Core South Australian Uranium Property Database
On 18 July 2005, the Company announced the sale of a non-core uranium exploration property in the Frome
Basin in South Australia together with the licence for a comprehensive regional database to Deep Yellow Ltd
(Deep Yellow). The consideration received comprises 7,500,000 fully paid ordinary shares in Deep Yellow and
12,500,000 unlisted Deep Yellow options exercisable at 12 cents on or before 15 July 2008.
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(e) Allotment of Shares and Issue of Employee Options
On 15 July 2005, the Company announced the allotment of 150,000 fully paid ordinary shares after exercise of
employee options, and the granting of 250,000 unlisted employee options exercisable at A$1.50 on or before 15
July 2008. On 5 August 2005, the Company announced the allotment of 350,000 fully paid ordinary shares after
exercise of employee options.
(f)
Langer Heinrich Uranium Project, Namibia – Bank Guarantee
On 26 July 2005, the Company issued a N$5,000,000 (Namibian dollars) (A$998,279) bank guarantee as part of
the mine construction activities, on behalf of Langer Heinrich Uranium (Pty) Ltd, wholly owned by the Company.
The guarantee was issued from the loan facility established with Société Générale Australia Branch on 30
September 2004, leaving the Company with a current approximate available facility for draw downs of
A$500,000.
CONSOLIDATED
PARENT ENTITY
2005
A$000
2004
A$000
2005
A$000
2004
A$000
30. RECONCILATION OF OPERATING PROFIT/(LOSS)
AFTER INCOME TAX TO NET CASH OUTFLOW
FROM OPERATING ACTIVITIES
Operating profit/(loss) after income tax
(1,384)
190
(2,140)
(410)
Non cash items:
Depreciation and amortisation
Exploration expenditure written off
Provision for non-recovery of intercompany loan
Provision for non-recovery of intercompany investments
Write back of provision for non-recovery of convertible note
(Profit)/loss on sale of investments
Profit on sale of tenements
Profit on sale of land and buildings
Bad debts written off
Provision for doubtful debts
Grant of options on establishment of loan facility
Change in operating assets and liabilities:
Increase/(decrease) in operating assets
Decrease in operating liabilities
Net cash outflow from operating activities
109
72
-
-
894
-
(786)
(105)
5
17
321
(488)
64
(1,281)
31. NON CASH FINANCING AND INVESTMENT ACTIVITIES
(a) Non Cash Financing and Investment Activities
Issue of shares in lieu of technical consulting fees
Options granted to Société Générale Australia
Branch on establishment of loan facility
(b) Unused Loan Facilities
-
321
92
-
-
-
-
(538)
-
-
-
-
-
6
151
(99)
56
-
32
-
327
64
894
-
-
-
-
-
321
(797)
124
5
-
3
65
-
51
-
-
-
-
-
82
93
(1,175)
(111)
-
321
56
-
On 30 September 2004 a A$2,000,000 loan facility was established with Société Générale Australia Branch to
assist with funding the bankable feasibility study of the Langer Heinrich Uranium Project. At 30 June 2005,
A$500,000 plus capitalised interest has been drawn down in relation to this facility – refer Note 16(b).
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U
N
N
A
5
0
0
2
77
Notes to the Financial Report
for the year ended 30 June 2005
32. EARNINGS PER SHARE
(a)
Basic and Diluted Profit/(Loss) Per Share
Weighted average number of ordinary shares on issue during
the year used as the denominator in calculating basic
earnings per share
Earnings used in calculating basic and diluted earnings per share
(b) Diluted Earnings Per Share
CONSOLIDATED
2005
A$000
2004
A$000
(0.38)
0.07
Number
Number
363,040,234
288,130,097
A$000
(1,384)
A$000
190
Diluted earnings per share is the same as basic earnings per share in 2005 as the Consolidated Entity is a loss
position, and diluted earnings per share is the same in 2004 as there are no potential ordinary shares that are
dilutive.
33. IMPACTS OF ADOPTING AUSTRALIAN EQUIVALENTS TO IFRS
The Australian Accounting Standards Board (AASB) is adopting International Financial Reporting Standards (IFRS) for
application to reporting periods beginning on or after 1 January 2005. The AASB has issued Australian equivalents to
IFRS, and the Urgent Issues Group has issued interpretations corresponding to IASB interpretations originated by the
International Financial Reporting Interpretations Committee (IFRIC) or the former Standing Interpretations Committee.
These Australian equivalents to IFRS are referred to hereafter as AIFRS. The adoption of AIFRS will be first reflected in
the Consolidated Entity’s financial statements for the first quarter ended 30 September 2005, half year ended 31
December 2005, third quarter ended 31 March 2006 and the year ending 30 June 2006.
Entities complying with AIFRS for the first time will be required to restate their comparative financial statements to
amounts reflecting the application of AIFRS to that comparative period. Most adjustments required on transition to
AIFRS will be made, retrospectively, against opening retained earnings as at 1 July 2004.
The Company’s management has analysed all of the AIFRS and has identified the accounting policy changes that will
be required. In some cases choices of accounting policies are available, including elective exemptions under
Accounting Standard AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting
Standards. These choices have been analysed to determine the most appropriate accounting policy for the
Consolidated Entity.
The known or reliably estimated impacts on the financial report for the year ended 30 June 2005 had it been prepared
using AIFRS are set out below. The expected financial effects of adopting AIFRS are shown for each line item in the
Statements of Financial Performance and Statements of Financial Position, with descriptions of the differences. No
material impacts are expected in relation to the Statements of Cash Flows.
The figures disclosed in this note are based on the Company management’s best estimates of the quantitative impact
of the changes as at the date of preparing the 30 June 2005 Financial Report. The actual effects of transition to AIFRS
may differ from the estimates disclosed due to:
(1) Ongoing work being undertaken by the AIFRS project teams;
(2)
(3)
Potential amendments to AIFRS’s and interpretations thereof being issued by the standard setters and IFRIC; and
Emerging accepted practice in the interpretation and application of AIFRS and Urgent Issues Group
interpretations.
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(a)
Impact on the Statements of Financial Performance for the year ended 30 June 2005
NOTES
CONSOLIDATED
EXISTING
GAAP
A$000
EFFECT OF
CHANGE
A$000
AIFRS
A$000
EXISTING
GAAP
A$000
PARENT ENTITY
EFFECT OF
CHANGE
A$000
AIFRS
A$000
Revenue from ordinary activities
iv/v
2,975
(2,010)
Other income
Borrowing costs
iii/iv/v
Depreciation and amortisation
iii
Provision for doubtful debts
Exploration costs written off
-
(412)
(109)
(17)
(72)
872
-
19
-
-
965
872
(412)
(90)
(17)
(72)
1,165
-
(354)
(32)
-
-
-
-
-
-
-
-
1,165
-
(354)
(32)
-
-
General and administration
i
(1,736)
(2,969)
(4,705)
(1,698)
(2,969)
(4,667)
Write down of convertible note
Write down of intercompany loan
Cost of land and buildings sold
Costs of tenements sold
iv
v
(894)
-
(1,095)
(24)
-
-
1,095
24
(894)
-
-
-
(894)
(327)
-
-
-
-
-
-
(894)
(327)
-
-
Expenses from ordinary activities
(4,359)
(1,831)
(6,190)
(3,305)
(2,969)
(6,274)
Loss from ordinary activities
before income tax
Income tax expense
Loss from ordinary
activities after income tax
Share issue costs
Total revenues, expenses and
valuation adjustments attributable
to members of Paladin Resources
Ltd and recognised directly in equity
Total changes in equity other than
those resulting from transactions
with owners as owners
(1,384)
(2,969)
(4,353)
(2,140)
(2,969)
(5,109)
-
-
-
-
-
-
(2,969)
(4,353)
(1,010)
(2,140)
(1,010)
(1,384)
(1,010)
(1,010)
-
-
(1,010)
(1,010)
(2,969)
(5,109)
-
-
(1,010)
(1,010)
(2,394)
(2,969)
(5,363)
(3,150)
(2,969)
(6,119)
Basic and diluted earnings per share
Cents
(0.38)
Cents
Cents
(0.82)
(1.20)
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A
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N
N
A
5
0
0
2
79
Notes to the Financial Report
for the year ended 30 June 2005
33. IMPACTS OF ADOPTING AUSTRALIAN EQUIVALENTS TO IFRS (continued)
(b)
Impact on the Statements of Financial Position as at 30 June 2005
NOTES
CONSOLIDATED
EXISTING
GAAP
A$000
EFFECT OF
CHANGE
A$000
AIFRS
A$000
EXISTING
GAAP
A$000
PARENT ENTITY
EFFECT OF
CHANGE
A$000
AIFRS
A$000
Current assets
Cash
Receivables
Total current assets
Non current assets
Receivables
Other financial assets
Property, plant and equipment
Other – mineral properties
Total non current assets
Total assets
Current liabilities
Payables
Provisions
Interest bearing liabilities
Total current liabilities
Non current liabilities
Payables
Total non current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
i
ii
39,489
568
40,057
-
710
1,268
9,001
10,979
51,036
727
65
533
1,325
-
-
1,325
49,711
-
1,806
39,489
2,374
1,806
41,863
-
1,720
-
-
-
2,430
1,268
9,001
1,720
12,699
3,526
54,562
-
-
-
-
-
-
-
727
65
533
-
-
1,325
3,526
53,237
39,000
472
39,472
10,183
488
390
-
11,061
50,533
591
65
533
334
334
1,523
49,010
1,325
1,189
-
1,806
1,806
-
-
-
-
-
39,000
2,278
41,278
10,183
488
390
-
11,061
1,806
52,339
-
-
-
-
-
-
-
591
65
533
1,189
334
334
1,523
1,806
50,816
65,950
174
(16,413)
i/ii
i
-
7,040
(3,514)
65,950
7,214
(19,927)
65,950
174
(17,114)
-
5,320
(3,514)
65,950
5,494
(20,628)
49,711
3,526
53,237
49,010
1,806
50,816
(c) Notes explaining the impacts on the Statements of Financial Performance for the year ended 30 June 2005 and
the Statements of Financial Position as at 30 June 2005
(i)
Equity-based payment transactions
Under AASB 2 Share-based Payment, from 1 July 2004 the Consolidated Entity and Company are required to
recognise an expense for those options that were issued to employees under the Company Employee Share
Incentive Option Plan after 7 November 2002 but that had not vested by 1 January 2005.
This will result in a change to the current accounting policy under which no expense is recognised for
equity-based payment transactions to employees.
If the policy required by AASB 2 had been applied during the year ended 30 June 2005, options to the value
of A$5,320,055 would have been recognised as an increase in the Consolidated Entity and Company share-
based payment reserve as at 30 June 2005. This valuation has been determined using the Cox, Ross and
Rubinstein Binomial Tree Model. A corresponding increase of A$3,514,096 would occur to accumulated
losses at 30 June 2005 to reflect the current year expense portion (A$2,969,096) of the issued options and
the transition date 1 July 2004 adjustment (A$545,000) of the issued options. In addition, as a result of
vesting conditions of the options issued to employees, at 30 June 2005 A$1,805,959 would remain deferred
in receivables, to be expensed in future periods.
For the year ended 30 June 2005, the Consolidated Entity and Company employee benefits expense would
have been A$2,969,096 higher, with a corresponding increase in the net movement in the share-based
payment reserve.
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(ii)
Financial instruments
The Consolidated Entity and Company have opted to apply AASB 132 Financial Instruments: Disclosure and
Presentation and AASB 139 Financial Instruments: Recognition and Measurement from 1 July 2004.
Under AASB 132, the current classification of financial instruments issued by entities in the Consolidated
Entity does not change.
Under AASB 139, financial assets held by entities in the Consolidated Entity will be classified as either at fair
value through the profit and loss, held-to-maturity, available for sale or loans and receivables and,
depending upon classification, measured at fair value or amortised cost.
Non-traded equity securities will be classified as available for sale and measured at fair value, with changes
in fair value recognised directly in equity until the underlying asset is derecognised. If the policy required
by AASB 139 had been applied during the year ended 30 June 2005, Consolidated Entity financial assets as
at 30 June 2005 would have been A$1,720,000 higher (Company: not applicable), with a corresponding
increase in the investment asset reserve.
The convertible note will be classified as held-to-maturity and measured at amortised cost, using the
effective interest rate method.
Loans, receivables and financial liabilities classifications will remain unchanged. Measurement of these
instruments will be at amortised cost, using the effective interest rate method.
(iii) Non current assets held for sale
Under AASB 5 Non current Assets Held for Sale and Discontinuing Operations, a non current asset will be
classified as held for sale if its carrying amount is to be recovered principally through a sale transaction rather
than through continued use. The asset will be measured at the lower of carrying amount and fair value, less
costs to sell.
Under AASB 5 Non current Assets Held for Sale and Discontinuing Operations, a non current asset once
classified as held for sale is no longer required to be depreciated up to the date of sale. This will result in a
change to the current accounting policies under which the asset is measured at the lower of carrying value
and recoverable amount, and depreciation expense is recognised up to date of sale.
If the policy required by AASB 5 had been applied during the year ended 30 June 2005, the Consolidated
Entity’s measurement of the asset remains the same (Company: not applicable) – at carrying amount; and
consolidated depreciation would have been A$18,404 lower, with a corresponding reduction in consolidated
other income as the asset was sold prior to 30 June 2005.
(iv) Disclosure of discontinued operation
During the year ended 30 June 2005, the land and buildings were sold (refer Note 6 Discontinued
Operation). Under AIFRS, the profit or loss relating to the discontinued operation, including both the post
tax gain or loss on the sale and the post tax operating profit or loss up until the date of sale, is required to
be disclosed as a single amount on the face of the Statements of Financial Performance. Under Australian
GAAP, such disclosures may be made either on the face of the Statements of Financial Performance or in the
notes. The Company elected to make the required disclosures in the notes in the year ended 30 June 2005,
thereby resulting in a difference between Australian GAAP and AIFRS.
If the policy required under AIFRS had been applied during the year ended 30 June 2005, the consolidated
revenue from ordinary activities would have been A$1,200,000 lower, the consolidated expenses from ordinary
activities, excluding the carrying amount of the commercial premises, would have been A$1,095,838 lower and
the consolidated carrying amount of net assets of the commercial premises sold disclosed as an expense in the
Statements of Financial Performance would have been A$1,095,838 lower. The consolidated profit from
discontinued operations would have been disclosed in other income. There would have been no effect on the
Company.
(v)
Revenue disclosures in relation to the sale of tenements
Under AIFRS, the revenue recognised in relation to the sale of tenements is the net gain on the sale. This is
in contrast to the current Australian GAAP treatment under which the gross proceeds from the sale are
recognised as revenue and the carrying amount of the assets sold is recognised as an expense. The net
impact on the profit and loss of this difference is nil.
Not including the sale of the discontinuing operation covered in (iv) above, if the policy required under
AIFRS had been applied during the year ended 30 June 2005, the consolidated revenue from ordinary
activities would have been A$810,000 lower, the consolidated carrying amount of tenements sold disclosed
as an expense in the Statements of Financial Performance would have been A$24,425 lower. The
consolidated profit on sale of tenements would have been disclosed in other income. There would have
been no effect on the Company.
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Notes to the Financial Report
for the year ended 30 June 2005
34. AUSTRALIAN GAAP TO CANADIAN GAAP REPORTING
The Company is listed on the Toronto Stock Exchange and as a result this Financial Report includes additional
information in order for the Company to comply with reporting requirements of applicable Canadian securities law.
The financial report of the Company has been prepared in accordance with Australian accounting and reporting
standards (‘Australian GAAP’) which, as applied in the consolidated financial statements for the years ended 30 June
2005 and 30 June 2004, conform in all material respects to those accounting principles generally accepted in the
Canada (‘Canadian GAAP’); except for the significant variances from the application of Canadian GAAP on the
Company’s consolidated financial statements as set out below:
(a)
Consolidated Statements of Income and Accumulated Losses:
Notes
CONSOLIDATED
2005
A$000
2004
A$000
Revenue
Total revenues, as reported in accordance with Australian GAAP
2,975
785
Adjustment to accord with Canadian GAAP relating to:
Reclassification of land and buildings sold
Reduced profit on land and buildings sold
Reclassification of cost of tenements sold
Total revenues, as reported in accordance with Canadian GAAP
Expenses
i
ii
i
(1,095)
(19)
(24)
1,837
-
-
-
785
Total expenses, as reported in accordance with Australian GAAP
(4,359)
(595)
Adjustment to accord with Canadian GAAP relating to:
Reclassification of land and buildings sold
Reclassification of cost of tenements sold
Reversal of depreciation on asset held for sale
Recognition of employee cost expense relating to stock options granted to employees
i
i
ii
iii
Total expenses, as reported in accordance with Canadian GAAP
1,095
24
19
(2,969)
(6,190)
(4,353)
-
-
-
(545)
(1,140)
(355)
(15,574)
(15,219)
(19,927)
(15,574)
Cents
(1.20)
Cents
(0.12)
iv
363,040,234
288,130,097
Loss for year, before and after tax
Accumulated losses, beginning of year
Accumulated losses, end of year
Loss per share – basic and dilutive
Weight average number of shares
- basic and dilutive
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Notes
CONSOLIDATED
2005
A$000
2004
A$000
(b) Consolidated Balance Sheets
Assets
Total current assets, as reported in accordance with Australian GAAP
Adjustment to accord with Canadian GAAP relating to:
Reclassification of land and buildings to non-current
Total current assets, as reported in accordance with Canadian GAAP
Total non current assets, as reported in accordance with Australian GAAP
Adjustment to accord with Canadian GAAP relating to:
Reclassification of land and buildings to non-current
Total non current assets, as reported in accordance with Canadian GAAP
Total assets, as reported in accordance with Canadian GAAP
Liabilities
Total current liabilities, as reported in accordance with Australian GAAP
Adjustment to accord with Canadian GAAP relating to:
Specific land and buildings payables
Land and buildings bank loans
Total current liabilities, as reported in accordance with Canadian GAAP
Total non current liabilities, as reported in accordance with Australian GAAP
Adjustment to accord with Canadian GAAP relating to:
Specific land and buildings payables
Land and buildings bank loans
Total non current liabilities, as reported in accordance with Canadian GAAP
v
v
vi
vii
vi
vii
40,057
5,802
-
(1,114)
40,057
10,979
-
10,979
51,036
4,688
4,928
1,114
6,042
10,730
1,325
1,320
-
-
1,325
-
-
-
-
(403)
(733)
184
-
403
733
1,136
1,320
Total liabilities, as reported in accordance with Canadian GAAP
1,325
Shareholders’ equity
Share capital, as reported in accordance with Australian GAAP
Adjustment to accord with Canadian GAAP relating to:
Grant of warrants
Warrants exercised
Share capital, as reported in accordance with Canadian GAAP
Warrants, as reported in accordance with Australian GAAP
Adjustment to accord with Canadian GAAP relating to:
Grant of warrants
Warrants expired unexercised
Warrants exercised
Warrants, as reported in accordance with Canadian GAAP
Reserves, as reported in accordance with Australian GAAP
Adjustment to accord with Canadian GAAP relating to:
Warrants expired unexercised
Fair value of stock options granted to employees in relation to services
performed and to be performed
Reserves, as reported in accordance with Canadian GAAP
Accumulated losses, as reported in accordance with Australian GAAP
Adjustment to accord with Canadian GAAP relating to:
Recognition of employee cost expense relating to stock options
granted to employees for services performed
Accumulated losses, as reported in accordance with Canadian GAAP
Total shareholders’ equity, as reported in accordance with Canadian GAAP
Total liabilities and shareholders’ equity, as reported in accordance with Canadian GAAP
viii
ix
viii
x
ix
x
iii
iii
65,950
24,265
(8)
5
(8)
1
65,947
24,258
-
8
(3)
(5)
-
174
3
3,514
3,691
-
8
(3)
(1)
4
174
3
545
722
(16,413)
(15,029)
(3,514)
(19,927)
49,711
51,036
(545)
(15,574)
9,410
10,730
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Notes to the Financial Report
for the year ended 30 June 2005
34. AUSTRALIAN GAAP TO CANADIAN GAAP REPORTING (continued)
(c) Notes explaining the adjustments to Consolidated Statements of Income, Accumulated Losses and Balance
Sheets
(i)
Reclassification of assets sold
Under Canadian GAAP the net profit on sale of assets is required to be disclosed in revenue. For Australian
GAAP purposes the gross proceeds on sale of assets have been disclosed in revenue and the cost of assets
sold in expenses. As a result the proceeds on sale of tenements for Australian GAAP purposes of A$250,000
and the proceeds on sale of land and buildings for Australian GAAP purposes of A$1,200,000 are required
to be reduced by the cost of tenements sold of A$24,425 and the cost of land and buildings sold of
$1,095,838, to reflect the Canadian GAAP net profit on sale of tenements of A$225,575 and the net profit
on sale of land and buildings of A$104,162.
(ii) Reversal of depreciation on asset held for sale
Under Canadian GAAP once an asset has been classified as being held for sale, depreciation of the asset
ceases. As a result, to accord with Canadian GAAP the depreciation on the land and buildings assets held
for sale for the year ended 30 June 2005 of $18,404 has been reversed. The Canadian requirements for
disclosure as an asset held for sale have not been met before 30 June 2004, and as such no adjustment has
been made to reverse depreciation on the asset held for sale before this date. As a result of the land and
buildings being sold before 30 June 2005, the $18,404 depreciation reversed is also required to be adjusted
against the Canadian GAAP net profit on sale.
(iii) Recognition of employee cost expense relating to stock options granted to employees
Under Australian GAAP, a Company is not required to account for the fair value of stockbased
compensation. Under Canadian GAAP, stockbased compensation to employees is required to be accounted
for using a fair valuebased method of accounting.
The fair value of options granted to employees during the year ended 30 June 2005 amounts to
A$4,775,055 (30 June 2004 A$545,000) and has been determined using the Cox, Ross and Rubinstein
Binomial Tree Model.
The model inputs for options granted during the year ended 30 June 2005 included:
a)
b)
c)
d)
e)
f)
g)
h)
i)
options are granted for no consideration, 100% of each tranche vests and is exercisable after one year
subject to vesting conditions
exercise price: A$1.00 - A$1.25
grant date: November-December 2004
expiry date: November-December 2007
expected life: 2 years
share price at grant date: A$0.52 - A$0.53
expected price volatility of the company’s shares: 100% - 112%
expected dividend yield: Nil%
risk-free interest rate: 4.90% - 4.97%
When compensation costs are expensed for the year ended 30 June 2005, the expense is A$2,969,096 (year
ended 30 June 2004 - A$545,000) as a result of a vesting period for the options (year ended 30 June 2004 –
no vesting period applicable). The balance of the fair value amount of $1,805,959 at 30 June 2005 is
required to be amortised over the remaining vesting period after 30 June 2005.
(iv) Earnings per share
Both basic and dilutive earnings per share computations presented in the Consolidated Statements of
Income and Accumulated Losses have been based upon the weighted average number of common shares
outstanding during the year. Under Canadian GAAP, an entity is required to calculate the dilutive effect of
options, warrants and similar instruments on its earnings per share using the treasury stock method. In
2004 the outstanding options and warrants of the Company are not considered dilutive in accordance with
the treasury stock method. In 2005 the Company is in a loss position and as such the effects of outstanding
options and warrants are anti-dilutive. Therefore, both basic and dilutive profit or loss per share are the
same figure for both 2005 and 2004 under Canadian GAAP.
(v)
Reclassification of current and non current assets – land and buildings
In order to conform to Canadian GAAP the land and buildings asset have been reclassified to non current
assets as at 30 June 2004 as they do not meet the Canadian requirements for disclosure as an asset held for
sale. As this asset was sold during the year ended 30 June 2005 no adjustment is required as at 30 June 2005.
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(vi) Reclassification of current and non current liabilities – payables
Specific payables of the Company, to be settled only on sale of land and buildings discussed in Note v
above, as at 30 June 2004 have been classified for Australian GAAP purposes as a current liability. To
conform to Canadian GAAP this liability has been reclassified to non current liabilities as contractual
arrangements have been made for repayment from the proceeds received on sale of land and buildings.
(vii) Reclassification of current and non current liabilities – bank loans
Specific land and buildings bank loans of the Company as at 30 June 2004 have been classified for
Australian GAAP purposes as a current liability as it related to the land and buildings discussed in Note v
above. To conform to Canadian GAAP this liability has been reclassified to non current liabilities as
contractual arrangements have been made for repayment from the proceeds received on sale of land and
buildings asset.
(viii) Grant of warrants
Some of the issued share options granted by the Company historically meets the definition of a warrant in
Canada as they were attached to the issue of shares. The warrants are as follows:
During the year ended 30 June 2003, the Company issued 750,000 warrants in lieu of technical consulting
services. These warrants were attached to the issue of 1,795,000 shares and each warrant entitled the
holder to acquire one additional common share at a price of A$0.10 per share up to 21 January 2004.
During the year ended 30 June 2004, the Company issued 12,500,000 warrants as part of a private share
placement issue of 5,000,000 shares. Of these 4,500,000 warrants entitled the holder to acquire one
additional common share at a price of A$0.011 per share up to 31 March 2004; 4,200,000 warrants entitled
the holder to acquire one additional common share at a price of A$0.012 per share up to 31 December
2004; and 3,800,000 warrants entitled the holder to acquire one additional common share at a price of
A$0.013 per share up to 30 November 2005.
The total fair value of warrants issued by the Company noted above was A$8,525.
(ix) Warrants exercised
During the year ended 30 June 2004, 4,500,000 of the warrants issued during the year ended 30 June 2004
were exercised. The fair value of both these warrants exercised was A$1,000.
During the year ended 30 June 2005, the 4,200,000 and 3,800,000 warrants issued during the year ended 30
June 2004 were both exercised. The fair value of both these warrants exercised was $4,000.
(x) Warrants expired unexercised
During the year ended 30 June 2004 the 750,000 warrants issued during the year ended 30 June 2003
expired unexercised. The fair value of these warrants that expired unexercised was A$3,525.
(d) Consolidated Cash Flow Statements
There is no difference between Australian and Canadian GAAP in relation to the preparation of statements of
cash flows. Under Canadian GAAP information pertaining to non-cash investing and financing activities must be
presented as supplemental information on the Statements of Cash Flows and this additional disclosure is
presented below.
Supplementary disclosure of non-cash investing and financing activities
required under Canadian GAAP
Shares issues in lieu of technical consulting fees
Stock options granted to non-employees on establishment of loan facility
Stock options granted to employees for services performed
Year Ended 30 June
2005
A$000
2004
A$000
-
321
3,514
55
-
545
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Notes to the Financial Report
for the year ended 30 June 2005
34. AUSTRALIAN GAAP TO CANADIAN GAAP REPORTING (continued)
(e)
Segment Reporting
As a result of the adjustments made to the Consolidated Statements of Income and the Consolidated Balance
Sheets as described above, the restated segmented information as required under Canadian GAAP is set out
below:
Resources
A$000
1,527
(3,617)
50,311
90
Business segments
Year ended 30 June 2005
Total segment revenue
Profit/(loss) from ordinary activities before and
after income tax expense
Total assets
Depreciation and amortisation
Geographical segments
Year ended 30 June 2005
Total segment revenue
Loss from ordinary activities before and after
income tax expense
Total assets
Depreciation and amortisation
Business segments
Year ended 30 June 2004
Financial
Investments
A$000
30
(864)
710
-
Australia
A$000
1,836
(4,333)
40,584
90
Discontinuing Operations Consolidated
Property
A$000
280
128
15
-
A$000
1,837
(4,353)
51,036
90
Africa*
A$000
Consolidated
A$000
1
(22)
10,452
-
1,837
(4,353)
51,036
90
Resources
A$000
Financial
Investments
A$000
Discontinuing Operations Consolidated
Property
A$000
A$000
Profit/(loss) from ordinary activities before
and after income tax expense
(826)
413
58
(355)
Geographical segments
Year ended 30 June 2004
Loss from ordinary activities before
and after income tax expense
* Namibia and Malawi
Australia
A$000
Africa*
A$000
Consolidated
A$000
(355)
-
(355)
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(f)
Income Tax
Under Australian GAAP tax effect accounting procedures are followed whereby the tax expense is matched with
the accounting profit after allowing for permanent differences. The future tax benefit relating to tax losses is
not carried forward as an asset unless the benefit is virtually certain of realisation. Income tax on cumulative
timing differences is set aside to the deferred income tax or the future income tax benefits accounts at the rates,
which are expected to apply when those timing differences reverse.
Under Canadian GAAP, income taxes are accounted for by the asset and liability method. Under this method,
future tax assets and liabilities are recognised for the future tax consequences attributable to differences
between the financial statement carrying value and the tax basis of assets and liabilities. Future tax assets and
liabilities are measured using the enacted or substantively enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be recovered or settled. The effect on future
tax assets and liabilities of a change in tax rates in recognised in income in the period during which the change
in rates is considered to be substantially enacted.
Despite the contrast in treatment of income tax under Australian and Canadian GAAP no differences exist for the
Company.
(g)
Issued Options
Canadian GAAP requires the disclosure of the weighted average exercise price and the weighted average
contractual life of all issued options outstanding at 30 June 2005. This required disclosure is set out below:
Number of options
11,000,000
3,000,000
8,050,000
10,250,000
1,300,000
33,600,000
Exercise
price
A$
A$0.22
A$0.32
A$1.00
A$1.00
A$1.25
Weighted average
exercise price
A$
Contractual
life
years
Weighted average
contractual life
years
0.92
0.92
2.42
2.50
2.42
A$0.69
1.82
Only the A$0.22 and A$0.32 exercise price issued options are exercisable at 30 June 2005, the A$1.00 and A$1.25
exercise price issued options were granted with vesting conditions which remain outstanding at 30 June 2005.
For the issued options exercisable at 30 June 2005 the weighted average exercise price is A$0.24 and the
weighted average contractual life is 0.92 years.
(h)
Foreign Exchange Data
All amounts included in the Financial Statements are reported in Australian dollars. The following table reflects
the low and high rates of exchange for one Australian dollar, expressed in Canadian dollars in effect during the
periods noted, the rates of exchange at the end of such periods and the average rates of exchange during such
periods, based on the Bank of Canada average noon spot rate of exchange.
Year ended 30 June
Low for period
High for period
Rate at the end of period
Average noon spot rate for year
2005
2004
C$0.8854:A$1
C$0.9843:A$1
C$0.9334:A$1
C$0.9408:A$1
C$0.8784:A$1
C$1.0490:A$1
C$0.9316:A$1
C$0.9580:A$1
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2
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Directors’ Declaration
In the Directors’ opinion
(a)
the financial statements, notes and the additional disclosures included in the Directors’ Report designated as audited,
of the Company and of the Consolidated Entity are in accordance with the Corporation Act 2001, including:
(i)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
(ii) giving a true and fair view of the Company’s and Consolidated Entity’s financial position as at 30 June 2005 and
of their performance, as represented by the results of their operations and their cash flows, for the financial year
ended on that date; and
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
This declaration has been made after receiving the declarations by the chief executive officer and chief financial officer
required by section 295A of the Corporations Act 2001 for the financial period ending 30 June 2005.
This declaration is made in accordance with a resolution of the Directors.
Mr John Borshoff
Managing Director
Perth, Western Australia
1 September 2005
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Independent Audit Report - Australia
To Members of Paladin Resources Limited
Scope
The financial report and directors’ responsibility
The financial report comprises the statement of financial position, statement of financial performance, statement of cash
flows, accompanying notes to the financial statements, and the directors’ declaration for Paladin Resources Limited (the
company) and the consolidated entity, for the year ended 30 June 2005. The consolidated entity comprises both the
company and the entities it controlled during that year.
The directors of the company are responsible for preparing a financial report and the additional disclosures in the
Remuneration Report Section B included in the directors’ report designated as audited (‘the additional disclosures’) that
gives a true and fair view of the financial position and performance of the company and the consolidated entity, and that
complies with Accounting Standards in Australia, in accordance with the Corporations Act 2001. This includes responsibility
for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud
and error, and for the accounting policies and accounting estimates inherent in the financial report and the additional
disclosures.
Audit approach
We conducted an independent audit of the financial report and the additional disclosures in order to express an opinion on
them to the members of the company. Our audit was conducted in accordance with Australian Auditing Standards in order
to provide reasonable assurance as to whether the financial report and the additional disclosures are free of material
misstatement. The nature of an audit is influenced by factors such as the use of professional judgement, selective testing,
the inherent limitations of internal control, and the availability of persuasive rather than conclusive evidence. Therefore,
an audit cannot guarantee that all material misstatements have been detected.
We performed procedures to assess whether in all material respects the financial report and the additional disclosures
present fairly, in accordance with the Corporations Act 2001, including compliance with Accounting Standards in Australia,
and other mandatory financial reporting requirements in Australia, a view which is consistent with our understanding of
the company’s and the consolidated entity’s financial position, and of their performance as represented by the results of
their operations and cash flows.
We formed our audit opinion on the basis of these procedures, which included:
•
•
examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the financial
report and the additional disclosures; and
assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of significant
accounting estimates made by the directors.
While we considered the effectiveness of management’s internal controls over financial reporting when determining the
nature and extent of our procedures, our audit was not designed to provide assurance on internal controls.
We performed procedures to assess whether the substance of business transactions was accurately reflected in the financial
report and the additional disclosures. These and our other procedures did not include consideration or judgement of the
appropriateness or reasonableness of the business plans or strategies adopted by the directors and management of the
company.
Independence
We are independent of the company, and have met the independence requirements of Australian professional ethical
pronouncements and the Corporations Act 2001. We have given to the directors of the company a written Auditor’s
Independence Declaration a copy of which is included in the directors’ report. The Auditors’ Independence Declaration
would have been expressed in the same terms if it had been given to the directors at the date this audit report was signed.
In addition to our audit of the financial report and the additional disclosures, we were engaged to undertake the services
disclosed in the notes to the financial statements. The provision of these services has not impaired our independence.
Audit opinion
In our opinion, the financial report and the additional disclosures included in the directors’ report designated as audited of
Paladin Resources Limited are in accordance with:
(a) the Corporations Act 2001, including:
(i) giving a true and fair view of the financial position of Paladin Resources Limited and the consolidated entity at 30
June 2005 and of their performance for the year ended on that date; and
(ii) complying with Accounting Standards in Australia and the Corporations Act Regulations 2001; and
(b) other mandatory financial reporting requirements in Australia.
Ernst & Young
Rudolf Brunovs, Partner
Perth, 1 September 2005
The Ernst & Young Building
11 Mounts Bay Road
Perth WA 6000
Australia
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Auditors’ Report - Canada
To the Shareholders of Paladin Resources Limited
We have audited the consolidated balance sheet of Paladin Resources Ltd as at June 30, 2005 and the consolidated
statements of operations and accumulated losses and cash flows for the year then ended. These financial statements are
the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that
we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the
company in accordance with Australian generally accepted accounting principles as at June 30, 2005 and for the year then
ended.
Significant differences between the Australian generally accepted accounting principles applied in the accompanying
consolidated financial statements and those under Canadian generally accepted accounting principles are quantified and
explained in Note 34 to the financial statements.
The consolidated financial statements as at June 30, 2004 and for the year then ended, were audited by other auditors who
expressed opinions without reservation on those statements in their reports dated September 29, 2004 and February 28, 2005.
Vancouver, Canada
September 1, 2005
Ernst & Young LLP (A Member of Ernst & Young Global)
Chartered Accountants
Pacific Centre
700 West Georgia Street
PO Box 10101
Vancouver BC V7Y 1C7
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Additional Information
Pursuant to the Listing Requirements of Australian Stock Exchange Limited as at 31 August 2005:
(a) Distribution and number of holders
1 -
1,001 -
1,000
5,000
5,001 -
10,000
10,001 -
100,000
100,001 - maximum
26 shareholders hold less than a marketable parcel of shares.
(b)
The twenty largest shareholders hold 72.82% of the total shares issued.
Holder
ANZ Nominees Limited
Westpac Custodian Nominees Limited
National Nominees Limited
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia Limited
Mr Robert Anthony Healy and Mrs Helen Maree Healy
Aylworth Holdings Pty Ltd
HSBC Custody Nominees (Australia) Limited-GSCO ECSA
Merrill Lynch (Australia) Nominees Pty Ltd
Ms Gillian Swaby
Société Générale Australia Branch
Mr Gregory James Buchanan and Mrs Heather Joy Buchanan
Mr Rick Wayne Crabb and Mrs Carol Jean Crabb
Queensland Investment Corporation
Mr James U Blanchard III C/- Jefferson Financial Inc
Dr Leon Eugene Pretorius
Cogent Nominees Pty Limited
Mr Zac Rossi and Mrs Thelma Rossi
John Borshoff
Mr Leslie Murray McKenzie
SHAREHOLDERS
553
1,611
906
1,134
173
4,377
No. of Shares
56,650,974
49,207,543
32,319,584
18,792,970
18,017,472
13,256,384
12,476,237
10,761,407
6,985,089
5,795,515
5,000,000
3,500,000
3,198,050
3,050,000
2,777,778
2,199,321
1,728,745
1,626,000
1,605,157
1,600,355
%
16.46
14.30
9.39
5.46
5.24
3.85
3.63
3.13
2.03
1.68
1.45
1.02
0.93
0.89
0.81
0.64
0.50
0.47
0.47
0.47
(c)
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.
250,548,581
72.82
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Additional Information
Pursuant to the Listing Requirements of Australian Stock Exchange Limited as at 31 August 2005:
(d)
Tenements held –
URANIUM PROJECTS
Project
Tenement
Interest %
JV Partner/s
Operator
NAMIBIA – AFRICA
Langer Heinrich
1 MLI
100%
MALAWI – AFRICA
Kayelekera
1 EPL
100%
WESTERN AUSTRALIA
Manyingee
Oobagooma
SOUTH AUSTRALIA
Petermorra
Mt Yerila
3 ML’s
4 EL(A)’s
100%
100%
1 EL
1 EL
20%
15%
NON-URANIUM PROJECTS
-
-
-
-
-
-
-
-
Quasar Resources Pty Ltd
Quasar Resources Pty Ltd
Quasar Resources Pty Ltd
Red Metal Limited
J E Risinger
Quasar Resources Pty Ltd
Red Metal Limited
SOUTH AUSTRALIA
Mt Lofty Ranges
Reaphook JV
1 EL
1 EL
90%
7.5%
Absolut Resources Corporation Paladin Resources Ltd
Perilya Limited
Signature Resources NL
Perilya Limited
Tenement Types
EL
Exploration Licence (Australia)
EL(A) Exploration Licence Application (Australia)
EPL
Exclusive Prospecting Licence (Malawi)
ML Mining Lease (Australia)
MLI Mining Licence (Namibia)
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DIRECTORS
Mr Rick Crabb
Mr John Borshoff
Mr Sean Llewelyn
Mr George Pirie
Mr Ian Noble
Ms Gillian Swaby
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Company Secretary
REGISTERED OFFICE
Grand Central, 1st Floor,
26 Railway Road, Subiaco
Western Australia 6008
(PO Box 201, Subiaco, 6904)
Telephone: (+61 8) 9381 4366
Facsimile: (+61 8) 9381 4978
Email: paladin@paladinresources.com.au
Web: www.paladinresources.com.au
SHARE REGISTERS
Australia - Head Office
Computershare Investor Services Pty Ltd
Level 2, 45 St Georges Terrace
Perth Western Australia 6000
Telephone: (+61 8) 9323 2000
Facsimile: (+61 8) 9323 2033
North America
Computershare Investor Services Pty Ltd
100 University Avenue, 11th Floor
Toronto Ontario M5J 2Y1
Telephone: (+1) 416 263 9200
Facsimile: (+1) 416 263 9261
INVESTOR RELATIONS
Australia - Head Office
Ms Gillian Swaby
Grand Central, 1st Floor,
26 Railway Road, Subiaco
Western Australia 6008
(PO Box 201, Subiaco, 6904)
Telephone: (+61 8) 9381 4366
Facsimile: (+61 8) 9381 4978
Email: gillian.swaby@paladinresources.com.au
North America
Mr Greg Taylor
Ontario, Canada
Business/Cell: (416) 605 5120
Facsimile: (905) 844 6532
Email: greg.taylor@paladinresources.com.au
AUDITORS
Ernst & Young
11 Mounts Bay Road, Perth
Western Australia 6000
SOLICITORS TO THE COMPANY
Blakiston & Crabb
1202 Hay Street, West Perth
Western Australia 6005
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STOCK EXCHANGE LISTINGS
Australian Stock Exchange and Toronto Stock
Exchange
Munich, Berlin, Stuttgart and Frankfurt Stock
Exchanges
Code: PDN
Code: PUR
C O N T E N T S
Company Objectives
Company Performance
Chairman’s Letter
Company Snapshot
The Nuclear Advance
Management Discussion and Analysis
Review of Operations
Financial Review
Corporate Governance Statement
Directors’ Report
Remuneration Report
Auditor’s Independence Declaration
Contents of the Financial Report
Statements of Financial Performance
Statements of Financial Position
Statements of Cash Flows
Notes to the Financial Report
Directors’ Declaration
Independent Audit Report - Australia
Auditors’ Report - Canada
Additional Information
2
3
4
6
7
10
11
20
25
31
36
44
46
47
48
49
50
88
89
90
91
The Annual 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. 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.
Paladin Resources Ltd
www.paladinresources.com.au
Another very exciting year.
Paladin Resources Ltd
Grand Central, 1st Floor,
26 Railway Road, Subiaco
Western Australia 6008
Telephone: (+61 8) 9381 4366
Facsimile: (+61 8) 9381 4978
Email: paladin@paladinresources.com.au
Web: www.paladinresources.com.au
Paladin Resources Ltd
2005 Annual Report