Kayelekera in construction and making excellent progress
annual report
20082008
Paladin Energy Ltd
The annual report covers both Paladin Energy Ltd
as an individual entity and the Group consisting of
Paladin Energy Ltd and its controlled entities.
Paladin Energy Ltd is a company limited by
shares, incorporated and domiciled in Australia. Its
registered office and principal place of business is:
Paladin Energy Ltd
Grand Central, 1st Floor, 26 Railway Road
SUBIACO WA 6008
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 are available on our website
www.paladinenergy.com.au.
Pictures left to right: (1) and (2) Kayelekera
Contents
Corporate Values
Paladin Snapshot
Chairman’s Letter
Executive Team
Nuclear Power – The Essential Partner
Management Discussion and Analysis
Review of Operations
Financial Review
Sustainable Development
Corporate Governance
Directors’ Report
Remuneration Report
Contents of The Financial Report
Consolidated Income Statements
Consolidated Balance Sheets
Consolidated Statements of Changes In Equity
Parent Entity Statements of Changes In Equity
Consolidated Cash Flow Statements
Notes to The Consolidated Financial Statements
Directors’ Declaration
Independent Audit Report
Additional Information
2
4
6
8
10
14
20
35
42
47
55
59
69
70
71
72
73
74
75
144
145
147
Directors
Non-executive Chairman
Mr Rick Crabb
Managing Director
Mr John Borshoff
Non-executive Directors
Mr Sean Llewelyn
Mr Ian Noble
Mr Donald Shumka
Company Secretary
Ms Gillian Swaby
Registered Office
Grand Central, 1st Floor, 26 Railway Road
Subiaco Western Australia 6008
(PO Box 201, Subiaco, 6904)
Telephone:
Facsimile:
Email:
Web:
(+61 8) 9381 4366
(+61 8) 9381 4978
paladin@paladinenergy.com.au
www.paladinenergy.com.au
Share Register
Australia
Computershare Investor Services Pty Ltd
Level 2, 45 St Georges Terrace
Perth Western Australia 6000
Telephone:
Facsimile:
(+61 8) 9323 2000
(+61 8) 9323 2033
Canada
Computershare Investor Services Inc
100 University Avenue, 9th Floor
Toronto Ontario M5J 2Y1
Telephone:
Facsimile:
(+1) 1 800 564 6253 or 1 514 982 7555
(+1) 1 888 453 0330 or 416 263 9394
corporate directory
Investor Relations
Australia – Corporate Office
Ms Gillian Swaby
Grand Central, 1st Floor, 26 Railway Road
Subiaco Western Australia 6008
(PO Box 201, Subiaco, 6904)
Telephone:
Facsimile:
Email:
(+61 8) 9381 4366
(+61 8) 9381 4978
gillian.swaby@paladinenergy.com.au
North America
Mr Greg Taylor
Ontario Canada
Business/Cell: (+1) 905 337 7673 / (+1) 416 605 5120
Facsimile:
Email:
(+1) 905 844 6532
greg.taylor@paladinenergy.com.au
Auditors
Ernst & Young
11 Mounts Bay Road
Perth Western Australia 6000
Stock Exchange Listings
Australian Securities Exchange and
Toronto Stock Exchange
Code: PDN
Munich, Berlin, Stuttgart and Frankfurt Stock
Exchanges
Code: PUR
Namibian Stock Exchange
Code: NM-PDN
Paladin Energy Ltd
1
Pictures left to right: (1) Supporting the local community, Malawi (2) Langer Heinrich
Achieving across the spectrum
with a clear and enduring
commitment to become a major
global uranium supplier
2
Annual Report 2008
corporate values
(cid:115)(cid:0)
(cid:35)(cid:82)(cid:69)(cid:65)(cid:84)(cid:69)(cid:0)shareholder wealth and develop the considerable opportunities it has
generated to become a major player in the global uranium supply market.
(cid:115)(cid:0) (cid:47)(cid:80)(cid:69)(cid:82)(cid:65)(cid:84)(cid:69) with a safe best practice philosophy having due regard for the environment.
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:50)(cid:69)(cid:87)(cid:65)(cid:82)(cid:68) employee performance and provide a fulfilling work environment.
(cid:35)(cid:79)(cid:78)(cid:84)(cid:82)(cid:73)(cid:66)(cid:85)(cid:84)(cid:69) to the growth and prosperity of the countries in which Paladin operates
by conducting operations in an efficient and effective manner and by seeking out
opportunities for expansion.
(cid:50)(cid:69)(cid:83)(cid:80)(cid:79)(cid:78)(cid:68) to the attitudes and expectations of the communities in which it operates as
part of its corporate social responsibility obligations.
(cid:115)(cid:0)
(cid:33)(cid:67)(cid:84)(cid:0)with integrity, honesty and cultural sensitivity in all of its dealings.
Paladin Energy Ltd
3
paladin snapshot
Valhalla
Manyingee
Angela
In Construction
Kayelekera
4 Year Production Outlook
ACTUAL
FORECAST
8.4
9.3
6.6
3.6
1.71
Mlb
U3O8
10
9
8
7
6
5
4
3
2
1
0
2007/08
2008/09
2009/10
2010/11
2011/12
4
Annual Report 2008
In Production and Expansion
Langer Heinrich Uranium
Mining Operation
Langer Heinrich Production
Kayelekera Production
Mergers and Acquisitions
New Project Acquisitions
Future Projects
Oobagooma
Database Utilisation
Strong Project Pipeline
highlights
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:33)(cid:67)(cid:72)(cid:73)(cid:69)(cid:86)(cid:73)(cid:78)(cid:71)(cid:0)stated operational objectives at Langer Heinrich, Namibia
(cid:115)
planning 3.1Mlb U3O8 for 12 months ending June 2009
substantial resource upgrade to support long mine life
(cid:115)
(cid:35)(cid:79)(cid:78)(cid:83)(cid:84)(cid:82)(cid:85)(cid:67)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)mine at Kayelekera, Malawi
(cid:115)
commissioning from January 2009
(cid:37)(cid:88)(cid:80)(cid:65)(cid:78)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)at Langer Heinrich
(cid:115)
commissioning Stage II from January 2009
(cid:115)
commence Stage III expansion in 2009 to reach 6Mlb pa
(cid:35)(cid:79)(cid:78)(cid:84)(cid:73)(cid:78)(cid:85)(cid:69)(cid:68)(cid:0)growth of project pipeline
(cid:115)
Angela Project (NT)
(cid:35)(cid:79)(cid:78)(cid:84)(cid:73)(cid:78)(cid:85)(cid:73)(cid:78)(cid:71)(cid:0)evaluation of further M&A opportunities on defined strategic expansion path
(cid:33)(cid:71)(cid:71)(cid:82)(cid:69)(cid:83)(cid:83)(cid:73)(cid:86)(cid:69)(cid:0)exploration leading to significant expansion of resource base
(cid:37)(cid:83)(cid:84)(cid:65)(cid:66)(cid:76)(cid:73)(cid:83)(cid:72)(cid:73)(cid:78)(cid:71)(cid:0)an integrated uranium trading entity
(cid:35)(cid:65)(cid:83)(cid:72)(cid:0)position US$337M and a strong balance sheet
Paladin Energy Ltd
5
progress with excellence
Kayelekera
6
Annual Report 2008
chairman’s letter
It is now widely accepted that those involved in the
nuclear fuel cycle are contributing positively to the
goal of reducing greenhouse gas emissions.
The Paladin Board: Gillian Swaby, Sean Llewelyn, Donald Shumka, Rick Crabb, Ian Noble and John Borshoff.
The central theme of my 2007 Chairman’s letter was the
emergence of Paladin Energy as a uranium producer.
It has been a challenging year since then, particularly in
the commodity and equity markets. However, I am firmly of
the view that Paladin Energy remains well poised for strong
future growth as a key player in the global uranium supply
industry.
As is documented elsewhere in this Annual Report, the
prominence of nuclear fuel to generate electricity is
growing. It is now widely accepted that those involved in
the nuclear fuel cycle are contributing positively to the goal
of reducing greenhouse gas emissions.
Langer Heinrich has now been operational for over 18
months and notwithstanding some teething problems, we
now have confidence in achieving nameplate production.
Given the considerable technical, environment and social
issues involved in bringing a uranium mine into operation,
this has been a fantastic achievement. It is a credit to
the Langer Heinrich teams (both the ‘builders’ led by Jim
Morgan and the ‘operators’ led by Wyatt Buck) and on
behalf of my Board and shareholders, I thank them all.
Moreover, the Company is well advanced on engineering
and construction for Stage II of Langer Heinrich, to take
annual production to 3.7 million pounds uranium oxide per
annum. Having regard to the long-term resource base in
the Langer Heinrich deposit and the world demand for new
production, the Company quickly moved to planning and
preliminary engineering design for the Stage III expansion,
to further materially increase annual production.
Concurrent with the substantial activity at Langer Heinrich,
steady progress has been made on construction of the
Kayelekera Mine in Malawi. Commissioning and production
ramp-up will commence early 2009, with annual scheduled
production of 3.3 million pounds uranium oxide to be
reached in 2010. This project is a major economic driver for
Malawi and with an onsite construction workforce of around
1,250 people (some 75% of whom are Malawian) is already
having a significant positive impact on the wonderful
people of that country.
The Kayelekera construction project recently achieved
2,000,000 man-hours lost time injury free. This is a positive
reflection on management’s commitment to health and
safety and also on the manner in which the Malawian
workforce has adopted the Company’s world’s best
practice requirements.
Considerable work was also undertaken on the Company’s
cornerstone Australian uranium project, in Mount Isa,
which is steadily progressing to present to the Queensland
government as an important economic project for that
State and which will contribute positively to satisfying world
demand for carbon free electricity generation.
The award to Paladin Energy and its joint venturer, Cameco
Australia Pty Ltd, by the Northern Territory government
of the Angela/Pamela project has given the Company a
superb base from which to launch its Australian uranium
production aspirations (upon meeting appropriate
feasibility and regulatory requirements for the Angela/
Pamela project).
The timely raising of US$325 million by a convertible note
issue in February 2008 is a key component to my opening
observation that Paladin Energy is well placed for future
opportunities. The Company has a strong commitment
to both organic and inorganic growth in an orderly and
sustainable fashion. The Board and senior management
have therefore, over the past year in particular, continuously
reflected upon growth opportunities within the evolving
uranium supply space.
I anticipate that the forthcoming 12 months or so will reveal
further fascinating developments both for the industry at
large and Paladin Energy in particular.
Paladin’s Corporate Social Responsibility ethos requires us
to consider the interests of host societies by taking account
of the effect of our activities on key stakeholders, including
employees, local suppliers, communities, governments
and interested non-government organisations, as well as
our impact on the environment. In so doing, Paladin looks
beyond its minimum statutory obligation to comply with
relevant legislation and voluntarily seeks to take steps
to improve the quality of life of its employees and their
families, as well as for the local community and host society
at large.
On behalf of my Board and shareholders I again extend
my sincere thanks to John Borshoff and all Paladin Energy
Group employees for their ongoing valuable contribution to
our Company.
Mr Rick Crabb
Chairman
Paladin Energy Ltd
7
executive team
During the past year the Executive Team was further strengthened with the appointments of additional highly experienced
management personnel. Paladin is an emerging global uranium supply and mining company and requires the best staff
possible to grow and develop the Company to its full stated potential.
Mr John Borshoff
Managing Director
Ms Gillian Swaby
Company Secretary
Mr Wyatt Buck
General Manager – Production &
Langer Heinrich Operations
Mr James Eggins
Mr Dustin Garrow
General Manager
– Sales and Contract Administration
Executive General Manager
– Marketing
Mr Brendan O’Hara
General Manager
– Special Projects & Risk
8
Annual Report 2008
Mr David Marsh
General Manager
– Technical Project Development
Mr Simon Solomons*
Executive General Manager
– Operations Development
Mr Andrew (Jim) Morgan
General Manager
– Project Construction
Mr Ed Becker
General Manager
– Geology & Exploration
Ms Cathy Gupanis*
General Manager
– Sustainable Development
Mr Greg Walker*
General Manager
– International Affairs
* New appointments
Paladin Energy Ltd
9
moving from strength to strength
Pictures left to right: (1) and (2) Kayelekera
nuclear power
– the essential partner
Nearly every aspect of development – from reducing poverty to improving
health care – requires reliable access to modern energy services. Faced
with a growing shortfall of energy and rising fossil fuel prices, many
countries are now looking to nuclear power as a way to increase the
diversity of their energy supplies. A factor driving the renewed interest in
nuclear power is that it emits almost no greenhouse gases.
(Annual Report 2007, International Atomic Energy Agency (GC(52)9, p1)
10
Annual Report 2008
Communities around the world are confronting difficult
energy choices.
Rising oil prices are a warning that the era of cheap
and abundant transport fuel may be drawing to a close.
Universal concern about climate change and the impact
of global warming is forcing a re-appraisal of the use of
carbon-emitting fossil fuel in the energy generation sector
of most economies. Rapid and massive economic growth
in China and India, and significant economic reform in
Eastern Europe and parts of Latin America are increasing
demand for global energy fuels as well as driving up the
prices of raw materials and food. In this context it is no
surprise that nuclear energy is emerging as the major low
cost, reliable, low carbon, large scale energy technology
for the 21st century.
Nuclear Power Today
Nuclear power is not a new technology. With over fifty years
of commercial operation, nuclear power reactors are now
an established part of global electricity production. Critics
of the industry tend to overlook the significant, and in many
countries quite indispensable contribution existing nuclear
power plants already make to energy production.
It is the excellent performance of the operating reactor
fleet which forms the solid foundation for the expansion of
nuclear power in the years ahead.
In 2007 there were 439 nuclear power reactors operating
in 30 countries. The proportion of nuclear electricity to
total electricity production varies, but 19 countries are
dependent on nuclear power for more than 15% of their
electricity production and several countries are more than
50% dependent.
Worldwide, nuclear power produced 16% of total electricity
production, a factor that has been almost constant over the
past 20 years.
While it is true that reactor building slowed down
considerably during the nineties, especially in Europe and
the USA, this did not significantly reduce nuclear power’s
share of electricity production because many reactor
operators were able to systematically raise output from
existing plants. The most graphic example of this is in the
USA where improvement to reactor output in the period
1990 to 2002 was the equivalent of building 25 new power
plants.
Paladin Energy Ltd
11
Nuclear Power – The Essential Partner
Pictures left to right: (1) and (2) Langer Heinrich
The next wave of nuclear power plants will be driven by the twin
imperatives of meeting aggressive energy demand in a severely
carbon-constrained environment.
Nuclear Power Tomorrow
There are presently 35 reactors under construction. 34
of these new plants are additions to existing fleets in 12
countries and have been in the planning process for many
years. Completion of these plants is really the end of the
“first phase” of nuclear reactor construction, commissioned
in a different world for less urgent needs.
The next wave of nuclear power plants will be driven by the
twin imperatives of meeting aggressive energy demand in
a severely carbon-constrained environment.
The challenge presented by economic growth cannot be
understated. According to the OECD’s International Energy
Agency, total world primary energy demand grew by 54%
between 1980 and 2004, and is projected to continue
to grow at the same rate (about 1.6% per year) to 2030.
Electricity growth will be even stronger and is projected to
double from 2004 to 2030 due primarily to population and
economic growth in the developing world.
If the current energy fuels mix (coal 40%, oil 10%, natural
gas 15%, hydro and others 19%) is not changed, then the
world’s CO2 emissions from energy production will rise by
55% in direct contravention of the International Panel on
Climate Change’s 2007 recommendation that the world
reduce CO2 emissions by between 50% to 80% of 2000
levels by 2050.
As governments and international agencies grapple
with climate change policies it is becoming increasingly
obvious that nuclear power has a vital and possibly pivotal
role in achieving significant energy de-carbonisation.
The International Energy Agency’s “Energy Technology
Perspectives” (OECD/IEA 2008) identified a need for 32
gigawatts of new nuclear capacity each year between now
and 2050 as a key component of power sector carbon
abatement. This implies building up to 1,000 new nuclear
power plants over the next 42 years. Similar conclusions
have been reached by independent studies worldwide.
The next wave of nuclear power plants will be different.
12
Annual Report 2008
Strong Growth Needs More Uranium Supply
from Mining
Countries with existing fleets will inevitably add more. In the
USA applications for up to 34 new reactors are expected
by 2010 under the strong endorsement of both presidential
candidates. China, India, and Russia have announced
substantial new reactor construction plans. Japan and
Korea have re-affirmed their long-term commitment to
nuclear power and will continue ambitious plant building.
Pressing energy imperatives mean new countries will
inevitably join the nuclear power industry, and those who
abandoned nuclear power will think again. Italy, which
abandoned operating nuclear plants in the eighties, has
announced it will resume construction within five years. In
Germany the pledge to phase out nuclear power by 2021
is under serious questioning for the first time as the wisdom
of shutting down 17 reactors producing up to 30% of the
nation’s electricity seems increasingly short-sighted.
Countries as diverse as Vietnam, Indonesia, the United Arab
Emirates, Egypt, Morocco, Syria, Jordan, Saudi Arabia, and
Turkey are now seriously studying nuclear power.
The potential for a massive expansion of the world’s nuclear
power fleet presents particular challenges for the reactor
vendors and the fuel supply industry.
Paladin has consistently maintained that while there are
adequate uranium resources to underpin the new nuclear
power age, the supply-demand balance will be severely
stretched for many years to come because uranium
production will continue to lag reactor requirements.
Restrictions on uranium mining and development in
some countries, long licensing lead times, complex tax or
regulatory systems, all work together to retard rapid growth
in natural uranium output. Buyers, who have become
accustomed to a wide range of supply choices, including
an abundance of secondary material, may face a tighter
market with more competition for limited strategic supply.
Paladin Energy Ltd
13
developing innovative capability
Pictures left to right: (1), (2) and (3) Kayelekera
management discussion
and analysis
The past year was distinguished by dynamic
achievement across the entire Company.
14
Annual Report 2008
The following Management Discussion and Analysis
(MD&A) for Paladin Energy Ltd (Paladin or the Company)
should be read in conjunction with the Directors’ Report
and the audited Financial Report for the year ended
30 June 2008. The effective date of this report is 11
September 2008.
The financial information presented in this MD&A has been
prepared in accordance with applicable International
Financial Reporting Standards (IFRS), other mandatory
professional reporting requirements and the Corporations
Act 2001.
In addition to these Australian requirements further
information has been included in the Consolidated
Financial Statements for the year ended 30 June 2008 in
order to comply with applicable Canadian securities law, as
the Company is listed on the Toronto Stock Exchange.
Additional information relating to the Company,
including public announcements, is available at
www.paladinenergy.com.au.
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.
Overview
The Company operates in the minerals resources industry
focused on the development and operation of uranium
projects in Africa and Australia, as well as pursuing
evaluation and acquisition opportunities throughout the
world. The Company is incorporated under the laws of
Western Australia with a primary share market listing on the
Australian Securities Exchange and additional listings on
the Toronto Stock Exchange in Canada; and Munich, Berlin,
Stuttgart and Frankfurt Stock Exchanges in Europe, and on
the Namibian Stock Exchange.
The past year was distinguished by dynamic achievement
across the entire Company.
The Langer Heinrich Uranium Mine (Langer Heinrich) in
Namibia emerged from a protracted production ramp-
up period to report production of 1.71Mlb U3O8 for the
year and reached design output in June 2007. As a
consequence, Langer Heinrich has reported an operating
profit of US$11.0M and is now performing in accordance
with the Company’s expectations. Work on the Stage II
expansion at Langer Heinrich which will increase annual
production from 2.6Mlb U3O8 to 3.7Mlb U3O8 is on budget
and on schedule for completion by the end of 2008. The
Company is proud of the achievement of everyone at
Langer Heinrich and we are confident that we have built a
significant new, robust, long-life, uranium production facility
which will generate consistently good rewards for our
shareholders and benefit other stakeholders.
The Kayelekera Uranium Project (Kayelekera) in Malawi is
also making outstanding progress towards commissioning
and ramp-up beginning in January 2009. At the time of
this Report, the project was 61% complete, with all major
construction and procurement contracts awarded. The
construction workforce peaked at around 1,500 persons of
whom at least 75% were Malawians. A team of experienced
senior professional operations staff have been recruited in
readiness for progressive hand-over from construction to
operations. The Company’s obligations to the community
have not been neglected. A comprehensive community
development program is in place which enables trained
personnel to provide direct support and assistance
to communities in areas of general health, HIV/AIDS
education and prevention, nutritional awareness, and
agricultural development and training.
Paladin Energy Ltd
15
Management Discussion and Analysis
Pictures left to right: (1) Langer Heinrich offices, Swakopmund, Namibia (2) and (3) Yellowcake
The Company is also assisting in the design and will
fund a new water supply project to provide a significantly
upgraded potable water supply to the 45,000 people living
in the Karonga region. The Government of Malawi has
generously agreed that the new water supply system will
be named after Garnet Halliday who died tragically in an
aircraft accident in Malawi in 2007.
Despite turbulent financial markets during the past year, the
Company successfully raised US$325M in a Convertible
Bond issue in March 2008 and enjoys a strong balance
sheet with net assets of US$1.4Bn including US$337M in
cash at the end of the financial year.
The outlook for the nuclear industry has never looked
better. Nuclear power is now firmly on the agenda as a
core strategy for low carbon electricity production, not only
in countries which already have nuclear power plants, but
also in many other countries, most of which will inevitably
proceed with some form of nuclear electricity.
The Company is committed to its strategy of progressive
development of its uranium resources, complemented by
strategic M&A activity, supported by opportunities arising
from its new marketing entity, Paladin Nuclear, to establish
a global footprint underpinned by significant uranium
production to meet the growing demand for nuclear fuel.
Health & Safety
Paladin is committed to working with its employees and
contractors to create a safe working environment across
its operations. It is extremely pleasing to note that at
Kayelekera, the first major mining development in Malawi,
Paladin and its contractors have completed more than
2,000,000 man-hours lost time injury free.
At Langer Heinrich only 4 LTIs were recorded, all of a
relatively minor nature. The Company continues to place
the health and safety of its workers as top priority and is
proud of the safety record achieved.
Corporate Social Responsibility
In addition to creating shareholder wealth, Paladin’s core
values address contributing to the growth and prosperity
of host countries and responding positively to community
needs and expectations.
Paladin seeks to meet its Corporate Social Responsibility
undertakings through the following actions:
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:51)(cid:84)(cid:65)(cid:75)(cid:69)(cid:72)(cid:79)(cid:76)(cid:68)(cid:69)(cid:82)(cid:0)(cid:35)(cid:79)(cid:78)(cid:83)(cid:85)(cid:76)(cid:84)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:26) Paladin understands
the linkages and interdependencies between the
Company and its stakeholders and encourages
communication with stakeholders at local, national
and international levels.
(cid:37)(cid:84)(cid:72)(cid:73)(cid:67)(cid:65)(cid:76)(cid:0)(cid:34)(cid:85)(cid:83)(cid:73)(cid:78)(cid:69)(cid:83)(cid:83)(cid:0)(cid:34)(cid:69)(cid:72)(cid:65)(cid:86)(cid:73)(cid:79)(cid:85)(cid:82)(cid:26) Internally and externally,
ethical behaviour is reinforced through a formal
ethical code and non-tolerance of corrupt and
unethical behaviour or practices.
(cid:51)(cid:79)(cid:67)(cid:73)(cid:65)(cid:76)(cid:0)(cid:33)(cid:67)(cid:67)(cid:79)(cid:85)(cid:78)(cid:84)(cid:65)(cid:66)(cid:73)(cid:76)(cid:73)(cid:84)(cid:89)(cid:26) Paladin believes that the
Company is accountable to stakeholders for its social
impacts and effectively monitors and reports social
performance.
(cid:35)(cid:79)(cid:77)(cid:77)(cid:85)(cid:78)(cid:73)(cid:84)(cid:89)(cid:0)(cid:36)(cid:69)(cid:86)(cid:69)(cid:76)(cid:79)(cid:80)(cid:77)(cid:69)(cid:78)(cid:84)(cid:26) Paladin actively supports
a range of community social development and local
business development initiatives in consultation with
local communities.
Operations – Langer Heinrich Uranium Mine,
Namibia
The 2007/2008 financial year saw the first full year of
production with 1.71Mlb U3O8 produced to 30 June
2008. The operation now employs 190 people directly
and a further 200 people indirectly through contracting
companies.
16
Annual Report 2008
During the ramp-up phase a number of improvements were
made to the plant with the aim of de-bottlenecking portions
of the plant and increasing processing capacity. A number
of these improvements have now been incorporated into
the Stage II upgrade with the intention of lifting production
to 3.7Mlb U3O8 per year.
During April 2008 a localised rain event flooded a portion
of the pit. Work had already commenced on the next stage
of mining and no production interruption occurred. No
other significant safety or environmental incidents occurred
during the year.
In June 2008 studies began on an updated resource
estimation following the completion of 17,731m of RC
drilling from 717 holes. The resource upgrade represents
a 64% increase in metal content over the previous Mineral
Resource and now stands at 56.4Mt at a grade of 0.06%
U3O8 containing 32,858t U3O8 in the Measured and
Indicated categories. The Mineral Resource also contains
70.7Mt at a grade of 0.06% U3O8 containing 41,557t U3O8
in the Inferred category. Figures are quoted at a 250ppm
U3O8 cut-off grade.
The project has an enviable safety record having recently
achieved 2,000,000 man-hours lost time injury free. Paladin
is clearly developing skills and a work culture focussed
on exceptionally high safety standards and environmental
awareness within the local construction workforce. This
will provide a firm platform from which the operational
workforce can develop.
Some key developments to date are the construction of
the site’s main access roads, completion of the planned
earthworks and good progress with the in-plant civil
and steel erection works. Major activities such as the
completion of the on-site 10 MW power station and erection
of the SAG mill’s main rotating components are providing a
good indication that the project is on track for completion
this year.
A grade control drilling programme of approximately
13,000m has been undertaken to allow more accurate
scheduling of material from the pit with open pit mining
having commenced in June 2008. It is planned to have
approximately 65,000t of ore feed available by the
scheduled commissioning date.
Langer Heinrich sold 1.41Mlb U3O8 with a gross value
of over US$93.8 million during the year. Problems
encountered with matching shipping availability to
production that occurred in the previous year have now
been resolved and, as a consequence, Langer Heinrich’s
business performance has improved markedly.
Resource definition drilling to accurately define the limits
of the orebody and upgrade the Inferred Resources to
Indicated and Measured status – comprising 6,458m and
95 holes – was completed during December 2007 and
upgrade resource and reserve estimation is currently being
carried out.
Development – Kayelekera Uranium Project,
Malawi
Paladin has made significant progress in the project
development phase of Kayelekera. The project is now
61% complete with all major construction and procurement
contracts having been awarded.
The project remains on schedule and within budget and
it is expected that the operation to be commissioning
during January 2009. The construction project currently
employees a workforce of around 1,250 people with 75% of
these workers being Malawians.
Exploration was commenced on four Exclusive Prospecting
Licences (EPL) to the east, west and south of the
Kayelekera mining lease. To date this exploration has
been limited to ground follow-up of previously identified
airborne radiometric targets with scout drilling of some
of the prospects planned to start in September 2008. A
new airborne radiometric survey covering all of the Karoo
sediments on Paladin’s EPL’s was flown in the September
2008 quarter.
Paladin Energy Ltd
17
Management Discussion and Analysis
Pictures left to right: (1), (2) and (3) Kayelekera
Exploration and Evaluation
Corporate
In Queensland at the Mount Isa uranium project, Paladin,
through the Isa Uranium Joint Venture operating committee,
approved a budget of A$8M for the financial year. This
budget allowed the development of a drilling plan of 147
drill holes for a total of 50,000m at the Valhalla project. This
program was aimed at ensuring that the majority of the
upper 400m of the resource falls into the Measured and
Indicated Resource categories. In addition, a number of
drill lines have been planned to test for the expected strike
extension of the mineralisation.
Following drilling completion in late 2007, a new resource
estimate for the Skal uranium deposit has been completed.
The Inferred Mineral Resource now stands at 7.6Mt at
a grade of 508ppm U3O8 for 3,781t U3O8 at a cut-off
of 250ppm. Geological mapping, as well as ground
radiometric and magnetic surveys are expected to further
extend the Skal deposit.
Following a drilling program completed in late 2007,
a new resource estimate has been undertaken for the
Bigrlyi Uranium Project with the results announced in
February 2008. The new estimate has increased the
Indicated Resource to 2.3Mt at a grade of 1,739ppm for
4,053t U3O8 and Inferred Resources to 5.2Mt at a grade
of 1,250ppm for 6,537t U3O8 at a 500ppm cut-off grade. A
scoping study undertaken by Energy Metals in July 2008
indicated that the project is viable with a potential annual
production of approximately 1.5Mlb U3O8. The Joint Venture
has approved an ongoing drill program of approximately
15,000m RC and 2,000m diamond drilling as well as a
small grade control programme to define the lateral extent
of the mineralisation.
In February 2008 a joint venture between Paladin Energy
Minerals NL and Cameco Australia Pty Ltd was awarded
the Angela project located 25km south of Alice Springs
in the Northern Territory. Work is presently under way to
digitise all of the existing historic data which has been
located within Paladin’s uranium database to enable the
Joint Venture to rapidly advance the project. At the present
time the Joint Venture partners are awaiting the granting of
Exploration Licences by the Northern Territory government.
The Company issued US$325M in convertible bonds on
11 March 2008 with an underlying coupon rate of 5%,
maturing on 11 March 2013 and with a conversion price of
US$6.59 for Company shares. Proceeds are being used to
further advance Kayelekera, establish a uranium marketing
subsidiary, fund opportunities as they arise for acquisitions
and corporate growth, and for general corporate purposes.
Australia’s Uranium Politics
Australia’s policies on the mining and export of uranium
continue to follow the trend of greater bipartisan
acceptance of mining between the major political parties.
At the National Conference in April 2007, the federal
Australian Labor Party abandoned its traditional opposition
to the development of new uranium mines. The outcome
of the decision was that the approval or prohibition
of uranium mining is now a matter for each state. The
Labour governments of South Australia and the Northern
Territory are receptive to new uranium projects. The Labor
governments of the states of Queensland and Western
Australia have maintained the status quo under which
uranium mines are prohibited.
The Labor Party was elected to federal government
in November 2007. Its policy is to encourage further
development of the uranium industry. It has renewed
funding for the Uranium Industry Framework and (in a time
of sharply increased budgetary constraint) has committed
A$10.6 million over four years to develop its goals for the
uranium industry.
Earlier this year, the Federal Resources Minister, The Hon
Martin Ferguson, was quoted in the media as saying that
uranium will play an important role in powering nuclear
reactors in other countries wanting to cut their greenhouse
gas emissions, that uranium has a bright future and that it
is going to lead to increased export earnings for Australia
and jobs. He went on to say that “Queensland and Western
Australia, at a point, will fall into line. The uranium industry
will open up.”
18
Annual Report 2008
Current Market and Long-Term Uranium Outlook
Management Team Development
Paladin has continued to build an executive team with
substantial uranium and resource industry experience
operating over a wide spectrum of activities covering
production, operations development and construction,
technical (geology, engineering, metallurgical,
environmental and radiological), marketing, corporate and
finance – all in a global context.
M&A Activities
Paladin continues to evaluate uranium opportunities as part
of its stated strategic objective to achieve an appropriate
global production footprint. The Company is considering
both specific advanced project opportunities and corporate
acquisitions where good assets with clear production
potential are identified that show value accretion potential.
In the past year the uranium market, as measured by
the commonly used published prices for the spot market
and the long-term market, has softened from its highest
point in June 2007. The Company believes that current
price levels are a temporary phenomenon, influenced
only in part by interactions of primary buyers and sellers.
The short-term uranium market has been affected by
deteriorating credit markets worldwide, which may have
stimulated some liquidation of inventories accumulated
by financial participants during 2006 and 2007. There is
evidence that some utilities have now met their immediate
forward requirements and so will not need to return to the
market until 2010 or 2011, which may have absorbed some
momentum from the market over the last year. However,
there remain significant unfilled requirements amongst a
regionally diverse range of utilities which will begin to apply
pressure to the market over the next few years.
The Company believes that sections of the industry tend to
over-estimate future uranium production, both from existing
and new sources, and under-estimate the widening supply-
demand gap.
Future unfilled requirements from the operating fleet will be
exaggerated by the need to purchase fresh core material
for the significant new reactor build planned worldwide.
Primary uranium production will continue to lag demand as
producers grapple with rising capital and operating costs,
licensing and regulatory delays, and unforeseen technical
challenges.
Paladin Energy Ltd
19
Management Discussion and Analysis
Pictures left to right: (1) Transporting yellowcake product from Langer Heinrich (2) Kayelekera construction and (3) Kayelekera pre-strip mining
Review of Operations
Paladin’s total Mineral Resource inventory includes 69,600t U3O8 (153.4Mlb of U3O8) at 0.071% U3O8 in the Indicated and
Measured categories, a 14% increase from that reported in the previous year. Paladin also holds 67,900t of U3O8 (149.7Mlb of
U3O8) at 0.06% U3O8 in the Inferred Resource category, a 70% increase from that reported for the previous year. A summary of
the status of each of the advanced projects is detailed in the following table. This table does not include Inferred Resources from
Bikini, Andersons and Watta deriving from Paladin’s 81.99% ownership of Summit Resources Ltd.
Paladin Uranium Project Summary
Criteria
Langer Heinrich Kayelekera Manyingee Oobagooma
Project*
Project*
Project**
Project
Valhalla
Deposit*
Skal
Project
Bigrlyi
Deposit*
Angela
Deposit
Paladin
equity
100%
85%
100%
100%
91%
91%
42.06%
50%
Location
Namibia,
Malawi,
Southern
Africa
Southern
Africa
West
Pilbara,
Western
Australia
West
Kimberley,
Western
Australia
Queensland, Queensland, Northern
Territory,
Australia
Australia
Australia
Northern
Territory,
Australia
Deposit
Type
Calcrete
Sandstone
Sandstone
Sandstone Metasomatic Metasomatic Sandstone
Sandstone
15.3Mt @
0.09% U3O8
(13,630t
U3O8)
30.0Mlb
3.4Mt @
0.06% U3O8
(2,040t
U3O8)
4.5Mlb
-
-
7.9Mt @
0.1% U3O8
(8,080t
U3O8)
17.8Mlb
5.5Mt @
0.05% U3O8
(2,810t
U3O8)
6.2Mlb
-
21.3Mt @
0.08% U3O8
(16,900t
U3O8)
37.2Mlb
12Mt @
0.075% U3O8
(9,000t
U3O8)
19.8Mlb
7.6Mt @
0.05% U3O8
(3,781t
U3O8)
8.5Mlb
-
-
2.3Mt @
0.17% U3O8
(4,053t
U3O8)
8.9Mlb
5.2Mt @
0.13% U3O8
(6,537t
U3O8)
14.4Mlb
Measured 56.4Mt @
& Indicated 0.06% U3O8
Resources
(32,858t
U3O8)
72.4Mlb
70.7Mt @
0.06% U3O8
(41,557t
U3O8)
91.6Mlb
Inferred
Resource
Historic
Resources
(non-JORC
compliant)
-
-
-
-
-
-
8.3Mt @
0.12%-
0.14%
U3O8
(9,950t
U3O8)
21.9Mlb
11Mt @
0.1%-
0.13%
U3O8
(12,000-
13,000t
U3O8)
26-28Mlb
Mining
Method
Conventional
open pit
Conventional
open pit
In-Situ
Leach
In-Situ
Leach
Open pit /
Under
ground
Open pit /
Under
ground
Open pit / Open pit /
Under
ground
Under
ground
Previous
Owners
Gencor Limited Central
(South African Electricity
Mining
Company)
and Acclaim
Generating
Board
(UK utility)
Cogema
(French
utility)
Cogema
(French
utility)
20
Annual Report 2008
Queensland Queensland AGIP
Mines Ltd
Mines Ltd
Australia
Pty Ltd
Uranerz
Australia
Pty Ltd
Paladin Uranium Project Summary (continued)
Criteria
Langer Heinrich Kayelekera Manyingee Oobagooma
Project*
Project*
Project**
Project
Valhalla
Deposit*
Skal
Project
Bigrlyi
Deposit*
Angela
Deposit
Activity
Periods
1973 –
1980,
1999 to
present
Project
Status
Stage II
development
underway
Project
Globally
Significance first new
uranium
mine and
mill in a
decade.
Timeframe Production
1982 –
1990,
1998 to
present
1979 –
1988
Acquired
1998
Construction On hold.
commenced. Feasibility
Study in
readiness.
1982 –
1985
Acquired
1998
On hold.
Resource
definition
drilling
required.
One of only Large
three
Australian
advanced
ISL projects.
resource
potential.
Significant
contributor
to Malawi
economy
3.3Mlb
U3O8/pa
production.
1968 –
1972,
1997 to
present
Resource
definition
drilling in
progress.
Large
uranium
resource.
1970 –
1980,
2005 to
present
Resource
definition
drilling in
progress.
1974 –
1983,
2005 to
present
Resource
definition
drilling in
progress.
Large
uranium
resource.
Initial JORC
resource.
High
uranium
grades.
Vanadium
credits.
1972 –
1983
Data
compilation
resource
validation
in progress.
Large
uranium
resource.
Commissioning 3 year
to commence staged
in early 2009
11 year
feasibility
study
required.
commenced
in 2007. 27
year project
life. Expansion project life.
to 3.7Mlb/pa
from end 2008
underway.
2 year
reserve /
resource
drilling
required.
dependent
on
Development Development Prefeasibility Prefeasibility
dependent
on
Queensland Queensland
Government Government
U Policy
changes.
Study to
follow
resource
validation.
Study if
sufficient
resources.
U Policy
changes.
Resources are quoted inclusive of any reserves that may be applicable.
Resources detailed above in all cases represent 100% of the resource – not the participant’s share.
* JORC (2004) & NI 43-101 Compliant.
** JORC (1999) Compliant.
For Valhalla and Skal, Paladin’s interest is based on 50% deriving from the Mount. Isa Joint Venture and 41% via Paladin’s 81.99% ownership of Summit
Resources Ltd.
Paladin Energy Ltd
21
Management Discussion and Analysis
Review of Operations
22
Annual Report 2008
NAMIBIA
Langer Heinrich Uranium Project
The Langer Heinrich Uranium Mine in Namibia is owned
100% by Paladin through its wholly owned Namibia
subsidiary Langer Heinrich Uranium (Pty) Ltd. Paladin
purchased the Langer Heinrich Project in August 2002.
Langer Heinrich is a surficial, calcrete type uranium
deposit containing a Mineral Resource of 74,415t U3O8 at
a grade of 0.06% U3O8 (250ppm U3O8 cut-off grade) in
seven mineralised zones designated Detail 1 to 7, within a
15km length of a contiguous paleodrainage system. The
deposit is located in the Namib Desert, 80km from the
major seaport of Walvis Bay. The attached figure shows
the location of the uranium mineralisation along the length
of the Langer Heinrich valley.
Following the completion of a 717 hole, 17,731m RC
drilling campaign to infill a major portion of Details 1 and
2 as well as close off the majority of the remaining Details,
an updated Mineral Resource has been estimated for the
deposit. The updated resource announced on 28 August
(cid:45)(cid:73)(cid:78)(cid:69)(cid:82)(cid:65)(cid:76)(cid:0)(cid:50)(cid:69)(cid:83)(cid:79)(cid:85)(cid:82)(cid:67)(cid:69)(cid:0)(cid:69)(cid:83)(cid:84)(cid:73)(cid:77)(cid:65)(cid:84)(cid:69)(cid:0)(cid:8)(cid:68)(cid:69)(cid:80)(cid:76)(cid:69)(cid:84)(cid:69)(cid:68)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:77)(cid:73)(cid:78)(cid:73)(cid:78)(cid:71)(cid:9)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:36)(cid:69)(cid:84)(cid:65)(cid:73)(cid:76)(cid:83)(cid:0)(cid:17)(cid:0)(cid:84)(cid:79)(cid:0)(cid:23)(cid:26)(cid:13)
2008 represents a significant uplift to the previous resource
announced in early 2006 with an increase of 68% in tonnes
and 3% decrease in grade combining to produce a 64%
increase in contained metal. The new Mineral Resource is
detailed below at a cut-off grade of 250ppm U3O8 .
Langer Heinrich Exploration (EPL3500)
EPL3500 abuts the Langer Heinrich Mining Lease to
the west and includes the sediment covered behind the
western extension of the mineralised Langer Heinrich
palaeochannel.
Exploration of the EPL started in 2008 with a helicopter
borne EM survey to better define the palaeochannel.
Widespaced follow-up drilling started on the EPL in May.
Early results indicate that the channel widens considerably
when entering EPL3500 causing the uranium mineralisation
to disperse, resulting in low grade and thin mineralisation.
A total of 31 holes including 2,919m were drilled. Five holes
intersected greater than 200ppm U3O8 all at 1m thickness
varying from 271 to 504ppm U3O8.
250ppm Cut-off
Measured Resources
Indicated Resources
Measured + Indicated
Inferred Resources
Mt
32.8
23.6
56.4
70.7
Grade % U3O8
t U3O8
Mlb U3O8
0.06
0.06
0.06
0.06
19,582
13,276
32,858
41,557
43.158
29.260
72.418 (46% increase)
91.591 (64% increase)
(Figures may not add due to rounding and are quoted inclusive of any Reserves)
Paladin Energy Ltd
23
In recent months the ion exchange, product precipitation
and product drying sections of the plant has performed
well, demonstrating consistent operation at or above
design capacities.
During the period under review the construction work
on the Stage II plant upgrade started in various areas
within the plant. The operations and construction teams
work closely together with no unnecessary interruptions
to production being experienced as a result of the
construction activities.
In summary the Langer Heinrich operation is running well,
with critical areas for attention in the plant now identified
and the necessary procedures have been put in place to
ensure their effective management.
MALAWI
Management Discussion and Analysis
Review of Operations
Pictures left to right: (1) Langer Heinrich (2), (3) and (4) Kayelekera
Operations
The 2007/8 financial year was the first full year of
production for the processing plant and in December 2007
the plant achieved its first month of full design production.
Consistency in production through the plant also improved
throughout the year and the plant is now continuously
producing in line with its original design capacity.
The operation now has approximately 190 employees
directly employed with another 200 people employed
by contractors supplying outsourced services such as
mining, reagent supplies, transport, security, engineering
services and general site services. No significant safety or
environmental incidents occurred during the year.
During the ramp-up process continuous improvements
were made to the plant. The improvements were successful
in de-bottlenecking areas of the plant and this contributed
significantly to the improved results experienced during the
latter half of the financial year.
Mining activities, through the contract miner, Karibib
Mining and Construction Company, progressed very well
throughout the year with above schedule production rates
being achieved. Mining has now advanced to the next
stage (Pit B) to the west of the starter pit (Pit A).
In April 2008 Pit A was flooded during a rain event.
Fortunately the preparation of the next stage of mining
was well advanced at the time and plant operations
were not impacted by this flood. This did however aid
the management in gaining a better understanding of
the possible impact of periodic rain events and has
subsequently led to modification to pit development and
tailings facility designs. The rain water that is recovered
from Pit A is currently being used in the processing plant
to offset water purchased from Namibia Water Corporation
Limited (NamWater).
The operation of the spiral heat exchangers has remained
a challenge throughout the year. The original set of spiral
heat exchangers have been progressively replaced during
the year following a successful insurance claim. The
functioning of these units remains pivotal to the successful
operation of the plant and a dedicated maintenance team
has been formed to address these issues.
24
Annual Report 2008
Kayelekera Uranium Project
Mineral Resources and Reserves
Kayelekera is located in northern Malawi, 40km west (by
road) of the provincial town of Karonga and 12km south of
the main road that connects Karonga with the township of
Chitipa to the west.
The JORC (2004) and NI 43-101 Code compliant Mineral
Resource base (comprising both arkose and mudstone
components) used for the BFS pit optimisation work is
summarised in Table 1:-
Kayelekera is a sandstone hosted uranium deposit
associated with the Permian Karoo sediments and is
hosted by the Kayelekera member of the North Rukuru
sediments of the Karoo. The mineralisation is associated
with seven variably oxidised, coarse grained arkoses,
separated by shales and chocolate coloured mudstones.
Uranium mineralisation occurs as lenses within these
arkose units the lowest of which is at a depth of
approximately 130m.
Kayelekera is currently owned 100% by Paladin through its
wholly owned subsidiary Paladin (Africa) Ltd (PAL). Paladin
will transfer a 15% shareholding in PAL to the Government
of Malawi under the terms of the Development Agreement
signed between PAL and the Government in February
2007.
After completing a Development Agreement with the
Malawi Government and a Bankable Feasibility Study
(BFS) together with an Environmental Impact Assessment,
the Mining Licence, ML 152, covering 5,550 hectares
was granted in April 2007 for a period of fifteen years.
Construction started in June 2007.
The Project is designed to give an annual production of
3.3Mlb U3O8 from the processing of 1.5Mtpa of sandstone
and associated ores by grinding, acid leaching, resin-
in-pulp extraction, precipitation and drying to produce
saleable product.
(cid:52)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:17)(cid:26)(cid:0)(cid:45)(cid:73)(cid:78)(cid:69)(cid:82)(cid:65)(cid:76)(cid:0)(cid:50)(cid:69)(cid:83)(cid:79)(cid:85)(cid:82)(cid:67)(cid:69)(cid:83)(cid:0)(cid:73)(cid:78)(cid:67)(cid:76)(cid:85)(cid:83)(cid:73)(cid:86)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:47)(cid:82)(cid:69)(cid:0)(cid:50)(cid:69)(cid:83)(cid:69)(cid:82)(cid:86)(cid:69)(cid:83)
Jorc
Category
Cut-Off Resource Grade
%U3O8
%U3O8
Mt
U3O8
Kt
Measured
Indicated
Measured
+Indicated
0.03
0.03
2.2
13.1
0.12
0.083
2.7
10.9
15.3
0.088
13.6
Inferred
0.03
3.4
0.060
2.0
0.06
0.06
Measured
Indicated
Measured
+Indicated
Inferred
0.06
1.6
7.0
8.6
1.2
0.16
0.12
2.5
8.2
0.13
10.7
0.09
1.1
The BFS results utilising the Measured and Indicated
resources stated above (using a blend of 83% arkose and
17% mudstone) and estimated using a uranium price of
US$30/lb U3O8 for pit optimisation purposes resulted in Ore
Reserves as shown in Table 2.
(cid:52)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:18)(cid:26)(cid:0)(cid:47)(cid:82)(cid:69)(cid:0)(cid:50)(cid:69)(cid:83)(cid:69)(cid:82)(cid:86)(cid:69)(cid:83)(cid:12)(cid:0)(cid:65)(cid:82)(cid:75)(cid:79)(cid:83)(cid:69)(cid:0)(cid:67)(cid:85)(cid:84)(cid:13)(cid:79)(cid:70)(cid:70)(cid:0)(cid:20)(cid:16)(cid:16)(cid:80)(cid:80)(cid:77)(cid:12)(cid:0)(cid:77)(cid:85)(cid:68)(cid:83)(cid:84)(cid:79)(cid:78)(cid:69)(cid:0)(cid:67)(cid:85)(cid:84)(cid:13)(cid:79)(cid:70)(cid:70)(cid:0)(cid:22)(cid:16)(cid:16)(cid:80)(cid:80)(cid:77)
Type
Arkose
Mudstone
Total
Tonnes
Mt
1.60
0.18
1.78
Proved
Grade
%U3O8
0.14
0.15
0.14
Metal
kt
Tonnes
Mt
2.27
0.28
2.54
7.80
0.91
8.70
Probable
Grade
%U3O8
0.098
0.13
0.10
Total
Grade
%U3O8
0.11
0.14
Metal
kt
9.9
1.5
Metal
kt
Tonnes
Mt
9.40
1.10
7.6
1.2
8.8
10.50
0.11
11.4
Paladin Energy Ltd
25
Management Discussion and Analysis
Review of Operations
Pictures left to right: (1), (2) and (3) Kayelekera
Additional marginal material within the pit design,
not included in the Ore Reserves but expected to be
processed at end of mine life (i.e. years 8 to 11), is shown
in Table 3. This consists of arkose above 200ppm,
mudstone above 400ppm and Inferred Resources
contained within the pit design.
(cid:52)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:19)(cid:26)(cid:0)(cid:45)(cid:65)(cid:82)(cid:71)(cid:73)(cid:78)(cid:65)(cid:76)(cid:0)(cid:77)(cid:73)(cid:78)(cid:69)(cid:82)(cid:65)(cid:76)(cid:73)(cid:83)(cid:69)(cid:68)(cid:0)(cid:77)(cid:65)(cid:84)(cid:69)(cid:82)(cid:73)(cid:65)(cid:76)(cid:0)(cid:67)(cid:79)(cid:78)(cid:84)(cid:65)(cid:73)(cid:78)(cid:69)(cid:68)(cid:0)(cid:87)(cid:73)(cid:84)(cid:72)(cid:73)(cid:78)(cid:0)
the pit design (Non-JORC)
Type
Arkose
Mudstone
Total
Tonnes
Mt
Grade
% U3O8
Metal
kt
5.7
0.7
6.4
0.03
0.08
0.04
2.0
0.5
2.5
Resource Drilling
Resource definition drilling to accurately define the limits
of the ore body and upgrade the Inferred Resources to
Indicated and Measured status - comprising 6,458m in
95 holes - was completed during December 2007. An
upgraded resource and reserve estimation is currently
being carried out.
Kayelekera Exploration
Exploration commenced on four Exclusive Prospecting
Licences east, west and south of the Kayelekera Mining
Lease, EPLs 168,169 and 170 (granted 12 December
2005) and EPL 225 (granted 12 December 2007).
Exploration on EPLs 169,170 and 225 began with follow-up
of airborne radiometric anomalies as defined by a previous
helicopter radiometric survey.
Ground follow-up identified an extensive target at the
Mpata Prospect on EPL170, 18km northwest of the
Kayelekera minesite. Radiometric anomalies were found to
be associated with two distinct arkose units along a strike
length of 3km. Scout drilling of the Prospect is planned to
start in September 2008.
26
Annual Report 2008
Geological mapping and prospecting commenced on EPL
169 in the Juma area, 4 to 8km south of the minesite where
a new exploration camp has been established. Initial
ground work identified prospective reduced and oxidised
strata showing anomalous radiometric response.
A new airborne radiometric survey covering all Karoo
sediments on Paladin’s EPLs was flown in the September
2008 quarter.
Project Development
Paladin has made significant progress with the project
development phase of Kayelekera. The project is now
61% complete with all major construction and procurement
contracts having been awarded.
The project remains on schedule and within budget
and expects the operation to be commissioning during
January 2009. The construction project currently engages
a workforce of around 1,250 persons with 75% of these
workers being Malawians.
The project has achieved an enviable safety record having
recently achieved 2,000,000 man-hours lost time injury
free. Paladin is clearly developing the skills and a culture
of exceptionally high safety standards and environmental
awareness within the local workforce during the project
construction phase. This will provide a firm platform from
which the operational workforce can develop.
Some key developments to date are the construction
of the site’s main access roads, completion of the plant
earthworks and good progress with the in-plant civil
and steel erection works. Major activities such as the
completion of the on-site 10 Megawatt power station and
erection of the SAG mill’s main rotating components are
providing a good indication that the project is on track for
completion this year.
Mining activities have also commenced and pit
development, haul roads and run-of-mine terrace works are
all progressing smoothly.
The engineering, procurement and construction
management (EPCM) consultant is Engineering and
Projects Company (E&PC), a large South African based
experienced EPCM contractor associated with Griniker
LTA, one of Africa’s largest construction companies.
Paladin has provided an experienced owner’s team to
oversee the development of the project and the Operations
Manager and a number of other highly experienced
operational staff are fully established at the site to assist
with the technical and safety aspects of developing a
uranium mining operation.
The project has committed over US$171M to date and is
ahead of schedule with its procurement activities. Despite
a more prolonged wet season during the past year, the
project is on track to deliver on its schedule and budget
objectives.
Pre-Operations
A grade control drilling program of approximately 13,000m
was undertaken to define reserves for the first 18 months
of mining. At the time of writing, not all assay results were
available but results to date show a strong correlation to the
resource model used in the Bankable Feasibility Study.
Open pit mining commenced in June 2008 to develop
initial stockpiles with the first blast occurring on 24 July
2008. Mining plans have scheduled the availability of
approximately 65,000t of plant feed ore by the scheduled
commissioning date.
A skilled operational team has been recruited, led by Bob
Wyka (an ex-Cameco General Manager – Operations)
with necessary business and operating processes being
developed for implementation in late 2008. This group is
ready to assist E&PC in the commissioning of the plant and
then seamlessly accept full responsibility at the operational
handover during the March to June quarter of 2009.
Production ramp-up is scheduled over the 2009 calendar
year with full design operating capacity expected to be
achieved by December 2009.
The following key site activities currently being progressed
are:
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:80)(cid:73)(cid:84)(cid:0)(cid:68)(cid:69)(cid:86)(cid:69)(cid:76)(cid:79)(cid:80)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:68)(cid:82)(cid:65)(cid:73)(cid:78)(cid:65)(cid:71)(cid:69)(cid:0)(cid:77)(cid:65)(cid:78)(cid:65)(cid:71)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:67)(cid:79)(cid:78)(cid:84)(cid:82)(cid:79)(cid:76)(cid:83)(cid:0)
eg stormwater drains, culverts, sediment traps;
(cid:87)(cid:79)(cid:82)(cid:75)(cid:70)(cid:79)(cid:82)(cid:67)(cid:69)(cid:0)(cid:82)(cid:69)(cid:67)(cid:82)(cid:85)(cid:73)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:65)(cid:83)(cid:83)(cid:79)(cid:67)(cid:73)(cid:65)(cid:84)(cid:69)(cid:68)(cid:0)(cid:84)(cid:82)(cid:65)(cid:73)(cid:78)(cid:73)(cid:78)(cid:71)(cid:27)
(cid:68)(cid:69)(cid:86)(cid:69)(cid:76)(cid:79)(cid:80)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:79)(cid:70)(cid:0)(cid:47)(cid:80)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:80)(cid:79)(cid:76)(cid:73)(cid:67)(cid:73)(cid:69)(cid:83)(cid:12)(cid:0)(cid:80)(cid:82)(cid:79)(cid:67)(cid:69)(cid:68)(cid:85)(cid:82)(cid:69)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)
systems; and
(cid:78)(cid:69)(cid:71)(cid:79)(cid:84)(cid:73)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:77)(cid:65)(cid:74)(cid:79)(cid:82)(cid:0)(cid:82)(cid:69)(cid:65)(cid:71)(cid:69)(cid:78)(cid:84)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:67)(cid:79)(cid:78)(cid:83)(cid:85)(cid:77)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:83)(cid:85)(cid:80)(cid:80)(cid:76)(cid:89)(cid:0)
contracts.
QUEENSLAND
Summit Resources (Aust) Pty Ltd (SRA), a wholly owned
subsidiary of Summit Resources Ltd (Summit), operates the
Isa Uranium Joint Venture (IUJV) as well as the Mount Isa
North Uranium Project. These areas cover approximately
1,827km2 and host a number of uranium – vanadium
deposits and resources including the Valhalla and Skal
deposits.
Isa Uranium Joint Venture
Summit Resources (Aust) Pty Ltd 50% and Manager
Mount Isa Uranium Pty Ltd 50%
The IUJV covers ground containing the Valhalla and Skal
uranium deposits 40km north of Mount Isa in Queensland.
Participants in the Joint Venture are SRA and Mount Isa
Uranium Pty Ltd (MIU), each holding a 50% interest with
SRA acting as manager.
MIU is a wholly owned subsidiary of Valhalla Uranium
Ltd (VUL), a formerly listed public company and now a
wholly owned subsidiary of Paladin. Following Paladin’s
successful takeover of VUL in 2006 and Paladin’s
acquisition of 81.9% of the issued capital in SMM earlier
this year Paladin’s effective participating interest in the IUJV
is now 90.95%.
Ground subject to the IUJV covers 17km2 at Valhalla and
10km2 at Skal. These two areas lie within a much larger
holding of contiguous tenements of 1,827km2 held 100%
and managed by SRA.
The IUJV operating committee has approved a budget of
A$8M (US$7M) for the financial year 2008/09. This amount
includes an extensive drilling program, metallurgical and
hydrogeological test work as well as environmental and
radiation baseline studies. The drilling program at Valhalla
and Skal is aimed at extending the existing resource
envelopes along strike and improving the current resource
classification.
Paladin Energy Ltd
27
Management Discussion and Analysis
Review of Operations
It is anticipated that this drilling will be completed in the
September 2008 Quarter which will allow for the estimation
of an updated Mineral Resource in the December 2008
Quarter.
A Mineral Resource estimate conforming to the JORC
guidelines, shown in Table 4, was prepared by SRA and
reported during 2006.
(cid:52)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:20)(cid:26)(cid:0)(cid:54)(cid:65)(cid:76)(cid:72)(cid:65)(cid:76)(cid:76)(cid:65)(cid:0)(cid:50)(cid:69)(cid:83)(cid:79)(cid:85)(cid:82)(cid:67)(cid:69)(cid:0)(cid:51)(cid:84)(cid:65)(cid:84)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:8)(cid:82)(cid:69)(cid:83)(cid:79)(cid:85)(cid:82)(cid:67)(cid:69)(cid:83)(cid:0)(cid:81)(cid:85)(cid:79)(cid:84)(cid:69)(cid:68)(cid:0)(cid:65)(cid:84)(cid:0)(cid:17)(cid:16)(cid:16)(cid:5)(cid:9)
Jorc
Category
Indicated
Inferred
Cut-Off Resource Grade
%U3O8
%U3O8
Mt
Metal
kt
0.023
0.023
21.3
12.0
Indicated
0.064
11.2
Inferred
0.064
5.1
0.080
0.075
0.11
0.11
16.9
9.0
12.6
6.0
Isa North Project Area
Valhalla Uranium Deposit
The Valhalla uranium deposit is located 40km northwest
of Mount Isa on Exploration Permit for Minerals (EPM)
9221. Previous drilling by Queensland Mines Ltd in the
1960’s, and SRA in the 1990’s and 2000’s, established a
combined Measured, Indicated and Inferred Resource of
56Mlb of U3O8 grading 0.14%. Substantial widths of high
grade uranium mineralisation in albite-carbonate-hematite
breccias and mylonites as well as altered mafic schists
have been intersected in the latest drilling at Valhalla. The
deposit is hosted within basalts and basaltic sediments
of the Eastern Creek Volcanics, trends north–south, is
approximately 800m in strike length and is open to the
south and at depth.
The drilling plan for 2007/08 included approximately
147 drill holes at Valhalla for a total of 50,000m including
33,000m RC and 17,000m diamond drilling. The program
was aimed at ensuring that the majority of the upper 400m
of the resource will fall into the Measured and Indicated
Resource categories. This depth has been targeted as it
is the current economic limit of any open pit development
and extension into areas that would be mined from
underground is not seen as a priority at this time.
In addition, a number of 80m spaced drill lines have
been planned to test the expected strike extension of
the mineralisation and add to the Inferred portion of the
resource. Radiometric down-hole logging will and has been
used to check all drill hole samples in conjunction with
geochemical assaying of selected drill holes for verification.
28
Annual Report 2008
The SRA Mineral Resource estimate for the Valhalla
deposit was independently checked and verified prior to
announcement.
The resource at Valhalla remains open to the north and
south along strike, and down plunge. Along with near
surface metallurgical diamond drilling, resource drilling will
now be targeted at extending the resource along strike and
down plunge.
Metallurgical test work to establish the metallurgical flow
sheet, recoveries and metallurgical compatibility with the
Skal uranium deposit is ongoing.
Skal Uranium Deposit
A Mineral Resource estimate conforming to the JORC
guidelines for the Skal deposit located 32km north of Mount
Isa city on EPM14048 has been completed. This estimate
covered all three identified Skal mineralised zones, Skal
South, Skal North and Skal Far North, adjacent to the
historic King George copper workings.
All three zones are structurally controlled, southerly
plunging shoots with an accompanying low grade halo and
have significant surface expression.
The Mineral Resource at Skal is estimated to be:
Inferred Mineral Resource at 250ppm U3O8 cut-off grade
Tonnes
Grade U3O8
(ppm)
Metal U3O8
(t)
Metal U3O8
(lb)
7.6M
508
3,781
8.5M
The current Mineral Resource estimate compares very
favourably to the historic Skal resource of approximately
11Mlb U3O8, reported at a slightly lower cut-off grade, as
the current Mineral Resource has only been estimated
to approximately 200m depth whilst the previous historic
resource appears to have been extrapolated to over 300m
depth. Documentation on the historic resource indicates
that approximately 36% of the resource tonnes were
located below 200mRL. It is likely that future drilling to
extend the resource at depth and replace the historic QML
holes will result in a re-classification and extension of the
Skal Mineral Resource.
The geological mapping of the prospect was expanded
and ground radiometric and magnetic surveys were
completed. This will enable planning for further drilling at
the known mineralisation and exploration drilling of the
currently untested Skal East prospect.
Mount Isa North Uranium Project
Summit Resources (Aust) Pty Ltd 100% and Operator
The Project is located 10 to 70km North and East of Mount
Isa. It contains numerous uranium anomalies, most of
which still have to be investigated thoroughly.
Over the year SRA completed two airborne radiometric and
magnetic surveys covering close to 100% of the tenement
holdings at close line spacings. The results are currently
being evaluated and will help to focus exploration in
2008/09.
A Mineral Resource estimate conforming to the JORC
guidelines for the Bikini uranium deposit located 36km
north of Mount Isa on EPM 9221 has been completed in
2008. The estimate covered the original Bikini deposit as
well as the south western extension which was historically
known as Pile and is based on SRA drilling only.
The current Mineral Resource estimate for the Bikini
uranium deposit is:
Inferred Mineral Resource at 250ppm U3O8 cut-off grade
Tonnes
Grade U3O8
(ppm)
Metal U3O8
(t)
Metal U3O8
(lb)
10.1M
517
5,216
11.5M
The Bikini deposit now has a strike length in excess of
1,100m with mineralisation extending from surface to a
depth of over 400m and is structurally complex with a
characteristic southerly plunge.
The Mineral Resource has been classified as an Inferred
Resource, primarily due to drill spacing and it is expected
that any future infill drilling will lead to an uplift in the
resource classification. Details of this resource estimation is
given on the announcement made by Summit and can be
viewed at www.summitresources.com.au.
Resource Status Mount Isa Region – All Projects
The Indicated Mineral Resources attributable to Paladin
in the Mount Isa Region now stand at 33.9Mlb U3O8 with
attributable Inferred Mineral Resources standing at 41.9Mlb
U3O8. This translates to an overall increase of 30% in the
Mount Isa Uranium Project JORC compliant resource
base. As advised the Valhalla resource upgrade will be
completed at the end of 2008 after the current drilling has
been carried out and is expected to further increase the
growing resource base at Mount Isa. Details of individual
Mineral Resources, conforming to the JORC code, for the
deposits quoted are as follows:
(cid:52)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:21)(cid:26)(cid:0)(cid:41)(cid:78)(cid:68)(cid:73)(cid:86)(cid:73)(cid:68)(cid:85)(cid:65)(cid:76)(cid:0)(cid:42)(cid:47)(cid:50)(cid:35)(cid:0)(cid:67)(cid:79)(cid:77)(cid:80)(cid:76)(cid:73)(cid:65)(cid:78)(cid:84)(cid:0)(cid:45)(cid:73)(cid:78)(cid:69)(cid:82)(cid:65)(cid:76)(cid:0)(cid:50)(cid:69)(cid:83)(cid:79)(cid:85)(cid:82)(cid:67)(cid:69)(cid:0)(cid:108)(cid:71)(cid:85)(cid:82)(cid:69)(cid:83)(cid:0)(cid:81)(cid:85)(cid:79)(cid:84)(cid:69)(cid:68)(cid:0)(cid:79)(cid:78)(cid:0)(cid:17)(cid:16)(cid:16)(cid:5)(cid:0)(cid:66)(cid:65)(cid:83)(cid:73)(cid:83)
Deposit
Valhalla
Skal
Bikini
Andersons
Watta
Total
Total Resource
Attributable to Paladin
Cut-off ppm U3O8
Mt Grade ppm
t U3O8
Mt
Grade ppm
t U3O8
Indicated Resources
Inferred Resources
Paladin Share
230
250
250
230
230
21.3
800
16,900
21.3
19.38
800
800
16,900
15,379
(33.9Mlb)
12.0
7.6
10.1
2.0
4.2
35.9
31.20
750
508
517
1,010
410
607
607
9,000
3,800
5,200
2,100
1,700
21,800
19,028
(41.9Mlb)
91.0%
91.0%
82.0%
82.0%
82.0%
Paladin Energy Ltd
29
Management Discussion and Analysis
Review of Operations
Pictures left to right: (1), (2) and (3) Queensland
Georgina Basin Project
Mount Isa South
SRA holds 16 granted EPM’s and one further application,
together covering 12,000km2 of the Georgina Basin to
the west of the Mount Isa Inlier in northwest Queensland.
This Project was subject to a joint venture with Newland
Resources Ltd (Newland) under which Newland could earn
a 50% joint venture interest subject to certain terms and
conditions.
In April 2008, SRA agreed to sell the Georgina Basin
tenements to Newland for a combination of cash and
shares in Newland. The joint venture agreement has been
terminated and assignment of the tenements to Newland
will be completed in the near future.
The Georgina Basin Project is at a very early stage of
exploration and SRA decided that it should focus its efforts
on its very prospective Isa North Project.
OTHER PROJECTS (NON-URANIUM)
Mount Isa South, May Downs, Constance Range and
Mount Kelly comprise the non-uranium projects of SRA.
A brief description of these projects is included below.
In December 2007, SRA entered into an agreement with
unlisted UK company MM Mining Plc for the farm-out of
80% of SRA’s interest in these tenements. SRA will retain a
20% interest in these projects, will retain the uranium rights
and will be free carried through to any decision to mine. To
earn its interest, MM Mining Plc (which will be the Manager)
must spend A$10 million within the next 2 years.
In return, SRA will receive A$5 million, 20 million ordinary
shares (approximately 31% of the shares in MM Mining
Plc), 20 million options exercisable at GPB 0.15 with an
expiration date of December 2012 and a further 20 million
ordinary shares if there is a decision to mine.
Over recent years, the focus of Summit has shifted to its
uranium projects to the point that these projects have
assumed increased significance. This Joint Venture will
position Summit to concentrate its management time, in
partnership with Paladin, on its exciting uranium projects.
30
Annual Report 2008
The Mount Isa South Project comprises over 1,970km2 of
prospective Proterozoic terrane along the Mount Isa Paroo
Fault (MIPF) from 40km to 160km south of Mount Isa.
To date five of the EPM’s have been granted and the
remaining four EPM applications are expected to be
granted in the coming months. Glengarry Resources
Ltd has a 10% carried interest to mine development in
EPM14233.
May Downs
The May Downs Project is comprised of three granted
EPM’s covering 1,217km2 35km west of Mount Isa.
The potential for gold mineralisation in shale sequences
along the 12km Golden Fault structure was drill tested in
2005. Several holes intersected narrow zones of anomalous
gold generally associated with elevated copper values.
Constance Range
In the late 1950’s and early 1960’s BHP identified in excess
of 200Mt of iron ore (non JORC) in a number of deposits,
hosted by the Train Range Ironstone member of the Middle
Proterozoic Mullera Formation, in the area. BHP also
identified 38Mt of phosphate rock at Babbling Brook Hill
and a further 11Mt at Riversleigh.
The Constance Range Project covers 900km2 in six EPMs,
with a further EPM application of 100km2 expected to be
granted in the coming months. The tenements are centered
30km southwest to 45km northwest of Zinifex’s Century zinc
mine in far northwest Queensland.
Mount Kelly
EPM14694 of 13km2 near CopperCo’s Mount Kelly
copper gold discovery, 95km northwest of Mount Isa, was
granted in October 2005. The target here is copper gold
mineralisation in middle Proterozoic shales along northwest
trending fault structures.
Satellite imagery and geophysical survey data has been
acquired for the area. A review of all previous exploration is
underway and field mapping and geochemical sampling to
delineate drill targets are planned.
NORTHERN TERRITORY
Indicated Mineral Resources
Bigrlyi Uranium Joint Venture
Energy Metals Limited 53.7% and Manager
Northern Territory Uranium Pty Ltd 42.1%
Southern Cross Exploration NL 4.2%
The Bigrlyi Uranium Joint Venture covers ten granted
Exploration Retention Licences located approximately
390km northwest of Alice Springs in the Northern Territory.
Participants in the Joint Venture are Energy Metals Limited
(53.7% and Manager), Northern Territory Uranium Pty
Ltd (a wholly owned subsidiary of Paladin) (42.1%) and
Southern Cross Exploration NL (4.2%).
Bigrlyi is located on the northern margin of the
Neoproterozoic to Paleozoic Ngalia Basin in central
Australia. Uranium mineralisation at Bigrlyi is confined to
a specific narrow horizon within the lower Mount Eclipse
Sandstone for which a local stratigraphic succession has
been defined. The principal 16 uranium occurrences at
Bigrlyi were discovered in 1973 in the course of regional
exploration managed by Central Pacific Minerals NL
on behalf of various joint venture partners including
Magellan Petroleum Australia Ltd, Agip Nucleare Pty Ltd,
Urangesellschaft GmbH & Co. and the Atomic Energy
Commission.
In March 2008 Energy Metals Limited announced
a new resource for the Bigrlyi deposit based on the
drilling completed in the 2007 program. The result was
a substantial increase in contained U3O8 as well as a
significant lift in vanadium. The increase was primarily due
to extension of the resource along strike particularly in
Anomaly 15 and the area between Anomaly 4 and Anomaly
7. The inclusion of a number of additional vanadium results
has now allowed for the proper estimation of a vanadium
resource.
The current Mineral Resource for Bigrlyi stands at 4,053t
(8.9Mlb) U3O8 in the Indicted category and 6,537t
(14.4Mlb) U3O8 in the Inferred category.
Cut-Off
(ppm U3O8)
Tonnes
U3O8
(ppm)
V2O5
(ppm)
U3O8
(t)
V2O5
(t)
500
2,330,600
1,739
2,429
4,053 5,660
1,000
1,508,000
2,288
2,877
3,450 4,339
Inferred Mineral Resources
Cut-Off
(ppm U3O8)
Tonnes
U3O8
(ppm)
V2O5
(ppm)
U3O8
(t)
V2O5
(t)
500
5,230,900
1,250
2,705
6,537 14,149
1,000
2,527,100
1,819
3,661
4,596 9,251
In mid July Energy Metals Limited announced the results of
the scoping study undertaken by Paladin on its behalf. The
study was designed to aid in drill planning and attempted
to define a minimum economic size for the deposit. The
results indicate that the project is viable, with potential
annual production rates of approximately 1.5Mlb U3O8,
over a 10 year period from a number of open pits. An
underground option was also assessed, and has been
reported by Energy Metals Limited, but it is expected that
this is not likely to be a priority target in the near future.
Results from the metallurgical test work being undertaken
by ANSTO appear to be very promising with good
recoveries from acid leach of 94-98%, with reasonable
acid consumption values. Coarse grinding studies have
indicated the possibility of lowering the acid consumption
without appreciably reducing uranium recoveries. Tests
using a range of variables suggested optimum acid leach
conditions yielded extraction rates of 94-95% uranium and
45% vanadium over 8 to 12 hours. Recoveries from alkaline
leach test work were also good at 93%.
The Joint Venture has approved an ongoing drilling
program of approximately 15,000m RC and 2,000m
diamond and it is probable that a small grade control
pattern will be drilled at either Anomaly 4 or Anomaly
15 to validate the modeling of the lateral extent of the
mineralisation. Funds have also been set aside for
preliminary environmental studies and local Aboriginal
engagement.
Paladin Energy Ltd
31
Management Discussion and Analysis
Review of Operations
Pictures left to right: (1) and (2) Queensland
Angela Joint Venture
Cameco Australia Pty Ltd 50% and Manager
Paladin Energy Minerals NL 50%
The Angela Uranium Project is located 15km south of Alice
Springs Airport in the Northern Territory. Access is by dirt
road from the airport.
In February 2008 the Northern Territory Government
advised the 50:50 Joint Venture between Paladin Energy
Minerals NL and Cameco Australia Pty Ltd (operator) that it
had been awarded the Angela-Pamela Project which gave
the Joint Venture the right to lodge an exploration licence
application over the Angela and Pamela uranium deposits,
located near Alice Springs in the Northern Territory. The
Joint Venture’s bid was selected from a highly competitive
field. The licence application is now progressing through
the administrative procedures set out in the Northern
Territory’s Mining Act.
The Angela Uranium Project Joint Venture parties
have committed to a comprehensive confirmatory and
exploration work programme as well as a pre-feasibility
study which if successful, will then progress to a Bankable
Feasibility Study and an Environmental Impact Assessment.
Extensive evaluation work was undertaken on the Angela
and Pamela uranium deposits by Uranerz Australia Pty Ltd
between 1972 and 1983. Historic uranium mineralisation
defined at the time comprised approximately 12,000t to
13,000t of U3O8 in the general range of 0.10% to 0.13%
U3O8 and remains open at depth and laterally. Paladin
owns all the original drill hole data for the deposit, including
geology, geochemistry, downhole gamma surveys and
feasibility studies. This information, together with Paladin’s
extensive in-house knowledge of the deposits, will enable
the Joint Venture to move rapidly into the pre-feasibility
assessment.
Cameco, the Project Manager, has opened an office and
is starting to set up facilities to support the project in
Alice Springs. Cameco has been successful in attracting
a senior project manager with experience in bringing a
uranium project to development.
Angela is a very exciting project for Paladin and offers the
Company the opportunity to develop a mine in the Northern
Territory, which has a very positive policy on uranium
development. It will fully complement Paladin’s Mount Isa
project, which is currently scheduled for development post
2012.
32
Annual Report 2008
WESTERN AUSTRALIA
Manyingee Uranium Project
Paladin Energy Minerals NL 100%
The Manyingee Uranium Project is located in the northwest
of Western Australia, 1,100km north of Perth and 85km
inland from the coastal township of Onslow. The property is
comprised of three mining leases covering 1,307 hectares.
Paladin purchased the Manyingee Project in 1998 from
Afmeco Mining and Exploration Pty Ltd (AFMEX), a
subsidiary company of Cogema of France. Paladin’s 100%
interest in Manyingee is held through its wholly owned
subsidiary, Paladin Energy Minerals NL.
AFMEX (previously named Total Mining Australia Pty Ltd)
discovered uranium mineralisation at Manyingee in 1973
during regional exploration. Between 1973 and 1984 some
400 holes were drilled and this established the extent and
continuity of the sediment hosted uranium mineralisation
in permeable sandstone in palaeochannels. Field trials
by AFMEX demonstrated that the Manyingee sandstone
hosted uranium deposit is amenable to extraction by in-situ
recovery (ISR).
The Manyingee Project contains JORC (1999) Code
compliant Mineral Resources as shown in Table 6:
(cid:52)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:22)(cid:26)(cid:0)(cid:45)(cid:65)(cid:78)(cid:89)(cid:73)(cid:78)(cid:71)(cid:69)(cid:69)(cid:0)(cid:50)(cid:69)(cid:83)(cid:79)(cid:85)(cid:82)(cid:67)(cid:69)(cid:0)(cid:51)(cid:84)(cid:65)(cid:84)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)
Jorc
Category
(1999)
Indicated
Inferred
Total
Cut-Off Resource Grade
%U3O8
%U3O8
Mt
U3O8
Kt
0.03
0.03
7.9
5.5
0.10
0.05
8.1
2.8
13.4
0.08
10.9
The current State Government of Western Australia
maintains a policy that it will not grant approval for mining
or processing uranium in the State. As a result of this
policy, Paladin has deferred feasibility studies and other
work on the Manyingee Project for some time. It is Paladin’s
belief that changing views about global energy supplies
will lead to a change of policy in Western Australia at some
time in the future that will allow development of Manyingee
to proceed.
Oobagooma Uranium Project
Paladin Energy Minerals NL 100%
The Oobagooma Project, beneficially held 100% by
Paladin, is located in the West Kimberley region of Western
Australia, 1,900km north-north-east of Perth and 75km
north east of the regional centre of Derby. The project is
comprised of two long-standing applications for exploration
licences covering 452km2.
In 1998 Paladin acquired a call option in relation to the
purchase of the Oobagooma Project and, in turn, granted
a put option to the original holder of the Project. Exercise
of both options is subject to the exploration licences being
granted by the State. The exploration licences are situated
on freehold land owned by the Commonwealth Government
and used by the military for training purposes. Consent of
the Commonwealth Government and the Department of
Defence will be required before the mining tenements can
be granted.
The Oobagooma project area was explored by AFMEX in
the period from 1983 to 1986 during which time extensive
zones of uranium mineralisation were discovered. An
estimate of the uranium resources using geostatistical
methods was carried out by AFMEX. This work was done
before the JORC Code had been formulated and was thus
not carried out in accordance with the Code. The AFMEX
historical estimate is shown in Table 7:
(cid:52)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:23)(cid:26)(cid:0)(cid:47)(cid:79)(cid:66)(cid:65)(cid:71)(cid:79)(cid:79)(cid:77)(cid:65)(cid:0)(cid:40)(cid:73)(cid:83)(cid:84)(cid:79)(cid:82)(cid:73)(cid:67)(cid:65)(cid:76)(cid:0)(cid:50)(cid:69)(cid:83)(cid:79)(cid:85)(cid:82)(cid:67)(cid:69)(cid:0)(cid:51)(cid:84)(cid:65)(cid:84)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)
Non-Jorc
Cut-Off Resource Grade
% U3O8
% U3O8
Mt
U3O8
kt
Historic
Resources
0.03
8.3
0.12
10.0
As with Manyingee, current Sate Government policy
towards uranium mining in Western Australia precludes
further investigation of the Oobagooma uranium deposit at
this stage. 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 preparation
of a JORC compliant resource estimate. The mineralisation
in this sandstone hosted uranium deposit is open and
potential exists to increase the currently known resource
base. The style of mineralisation is believed to be
amenable to recovery of uranium by ISR methods.
SOUTH AUSTRALIA
Quasar Uranium Joint Venture
Paladin Energy Ltd 15-20%
Quasar Resources Pty Ltd 80% and Manager
The Joint Venture with Quasar Resources Pty Ltd,
established in 2001, encompasses two exploration licences
covering 1,051km2 in the northeast of South Australia.
Paladin holds a 15% free carried interest in Exploration
Licence 3903 at Mount Yerila and a 20% free carried
interest in Exploration Licence 4134 at Petermorra. The
Joint Venture is managed by Quasar Resources Pty Ltd,
a wholly owned subsidiary of Heathgate Resources Pty
Ltd, operator of the Beverley ISR uranium mine which is
situated immediately south of the Joint Venture tenements.
Heathgate Resources Pty Ltd is an Australian subsidiary of
General Atomics of the USA.
The two exploration licences are located in the northern
part of the Curnamona Province, a 90,000km2 block of
shallow to outcropping basement rocks that extends from
Olary, in the northeast of South Australia, 450km north east
of Adelaide, to east of Broken Hill across the New South
Wales border. The exploration licences are considered
prospective for palaeochannel uranium mineralisation
similar to that found and successfully developed at
Beverley. Quasar is actively exploring the Joint Venture
tenements and has conducted a number of drilling
campaigns on the ground.
Paladin Energy Ltd
33
Management Discussion and Analysis
Review of Operations
Kayelekera
URANIUM DATABASE
Paladin 100%
Paladin owns a substantial uranium database, compiled
over 30 years of investigations by the international uranium
mining house Uranerzbergbau in Germany, incorporating
all aspects of the uranium mining and exploration industry
worldwide and including detailed exploration data for
Africa and Australia.
Uniquely among Australian exploration companies, the
primary focus of Paladin’s activities for the past years has
been uranium. In that time the Company has maintained
and expanded the library of databases and it now
holds a considerable amount of technical, geological,
metallurgical, geophysical and geochemical data including
country specific information such as mining laws or
investment conditions comprising an estimated 60,000
individual books, documents, reports, reprints, and maps
kept as hardcopies, microfiche and a rapidly growing
library of electronic files.
The geology resource database is managed in an
integrated relational database system readily available for
processing of exploration and mining data.
It is this database that held all of Angela/Pamela technical
information that Paladin believes gave the Cameco Paladin
Joint Venture the competitive edge to win the tender
to acquire this important project. This underpins the
significance of this asset for project generation.
The Company continues to evaluate opportunities for
acquiring additional uranium projects assisted by the
database.
34
Annual Report 2008
INVESTMENTS
Deep Yellow Ltd (DYL)
Paladin Energy Ltd 15.3%
DYL is a dedicated uranium exploration company listed
on the Australian Securities Exchange and the Namibian
Stock Exchange with exploration holdings in Namibia and
Australia.
Through its wholly owned Namibian subsidiary, Reptile
Uranium Namibia (Pty) Ltd, DYL is actively exploring for
uranium on its four 100% owned Exclusive Prospecting
Licences covering 2,872km2 in the Namib Naukluft
Desert Park inland from Walvis Bay and south and west
of Paladin’s Langer Heinrich Uranium Mine. Six RC and
one diamond rig is being used to drill between 15,000
and 20,000 metre per month on three different projects
within these tenements. Additional JORC Code resource
announcements are due from September.
In Australia DYL is focused on uranium exploration in
the Mount Isa district in northwest Queensland and the
Tanami Arunta Province in the Northern Territory. Both RC
and diamond drilling is underway on a number of these
projects.
Paladin’s equity in DYL increased to 14.34% on 8 August
2007 via an entitlement issue and subscription to the
subsequent shortfall. The additional investment totalled
A$20.7M (US$17.8M).
Subsequent to year end, Paladin’s equity in DYL increased
further to 15.3% following the exercise of 12,500,000
unlisted options at a cost of A$1,012,500.
Financial Review
Income Statements
Revenue from
continuing operations
Gross profit/(loss)
Exploration and
evaluation expenses
Other expenses net
of other income
Finance costs
Share of loss of an
associate
Income tax benefit
Minority interests
Loss after tax from continuing
operations attributable to
the ordinary equity holders of
the Company
Loss per share
– basic and diluted
Year Ended 30 June
2007
US$M
2008
US$M
101.9
11.2
35.5
(0.8)
(13.1)
(7.4)
(35.7)
(30.7)
(28.5)
(13.0)
(0.2)
7.0
1.2
-
11.7
0.4
(36.0)
(37.6)
US$
US$
(0.06)
(0.07)
Revenue from Continuing Operations increased to
US$101.9 million for the year ended 30 June 2008 as
a result of sales of uranium of US$93.8 million from a
full year of production from Langer Heinrich Uranium
Project (LHUP). Total sales volume was 1,411,000lb of
which 1,226,000lb was met with LHUP production and
185,000lb by the use of third party uranium purchased
during the quarter ended 30 June 2007. Cash receipts from
customers for the year ended 30 June 2008 were lower
than sales at US$68.4million as a consequence of timing of
invoice receipts. US$28.7million was received in July 2008.
Gross Profit in 2008 of US$35.5 million is higher than in
2007 as a consequence of a full year of operations at
LHUP. In 2007 LHUP production costs were capitalised
to 31 March 2007. The sale of 185,000lb of third party
uranium did not impact gross profit as sales contract
provisions were recognised at 30 June 2007 and 30
September 2007 for the loss on sale. A one-off sales
contracts expense for 2008 of US$2.9 million is recognised
in the category of Other Expenses. Cost of sales includes a
credit of US$2.0 million for the period relating to recognition
of a value for stockpile inventory as a consequence of
improved plant performance from 30 June 2007.
Exploration and Evaluation Expenditure increased in 2008
to US$13.1 million primarily as a result of expenditure on
the Valhalla/Skal, Isa North, Bigrlyi, Langer Heinrich and
Kayelekera Uranium Projects. Of this total, US$7.9 million
was spent on the Valhalla/Skal joint venture project.
Other Expenses and Income increased in 2008 to US$35.7
million as a result of higher corporate/marketing costs,
share based payments, a one-off sales contracts expense
of US$2.9 million recognised for third party uranium at
30 September 2007, and foreign exchange loss; despite
lower employee benefits expenses. The higher costs relate
to both the growth of the Paladin Group (“the Group”)
and the expanded corporate capability in the last year
to facilitate future growth. The foreign exchange loss
was mainly attributable to the translation of monetary
assets and liabilities in Namibian dollars relating to the
LHUP. Employee benefits expense for the 2007 period
included a discretionary payment to a key management
person relating to the 2004 to 2006 formative period of the
Company.
Finance Costs of US$30.7 million in 2008 relates to interest
payable on the US$250 million convertible bonds issued
15 December 2006, the US$325 million convertible bonds
issued 11 March 2008, and the Langer Heinrich project
finance facilities. During the year ended 30 June 2007
finance costs for the LHUP were capitalised as part of the
costs of construction and, as a consequence, finance costs
only related to the US$250 million convertible bonds.
Income Tax Benefit of US$7.0 million relates to the
recognition of additional Namibian deferred tax assets, the
recognition of Malawian deferred tax assets, the reversal
of deferred tax liabilities relating to the convertible bonds
over the term of the respective bonds, and the reversal of
deferred tax liabilities on sale of Non-Uranium Properties
and Georgina Basin Project of Summit Resources Ltd.
Minority Interests credit of US$1.2 million has been
recorded in 2008 attributable to the 18.1% of Summit
Resources Ltd not owned by the Group.
Despite the higher gross profit the loss after tax for the year
ended 30 June 2008 of US$36.0 million was approximately
the same as the loss after tax for the year ended 30 June
2007 of US$37.6 million; as a result of increased investment
in exploration and evaluation expenditure, higher finance
costs and other expenses.
Paladin Energy Ltd
35
Management Discussion and Analysis
Financial Review
Summary of Quarterly Financial Results
Total revenues
Loss after tax
Basic and diluted loss per share
Total revenues
Loss after tax
Basic and diluted loss per share
2008
Total
US$M
101.9
(36.0)
(0.06)
2007
Total
US$M
11.2
(37.6)
(0.07)
2008
Jun Qtr
US$M
38.9
(1.9)
(0.01)
2007
Jun Qtr
US$M
6.7
(17.4)
(0.03)
2008
Mar Qtr
US$M
15.3
(8.4)
(0.01)
2007
Mar Qtr
US$M
3.1
(11.4)
(0.02)
2007
Dec Qtr
US$M
19.4
(11.2)
(0.02)
2006
Dec Qtr
US$M
0.9
(4.9)
2007
Sep Qtr
US$M
28.3
(14.5)
(0.02)
2006
Sep Qtr
US$M
0.5
(3.9)
(0.01)
(0.01)
Total revenues have increased for each of the quarters in
2008 when compared to the equivalent period in 2007 as a
result of the commencement of operations at the LHUP. In
2007 Langer Heinrich production costs were capitalised to
31 March 2007.
Loss after tax has decreased each quarter in 2008 as a
consequence of the increase in gross profit due to the
Langer Heinrich operations. The loss after tax for the
September and December quarters of 2007 represents a
substantial increase over the equivalent period in 2006 due
to the increased investment in exploration and evaluation
expenditure, higher other expenses and finance costs.
Loss Per Share
The Loss per Share noted on the Income Statements
reflected the underlying result for the specific reported
periods and the additional shares issued in 2008 compared
to 2007.
Segment Disclosure
In the Namibian geographical segment the Group reflected
a profit after tax of US$11.0 million as a consequence of
the increased sales volume for the year and an income
tax benefit for the period. The Malawian geographical
segment loss after tax of US$0.5 million relates to costs
of legal action commenced by a group of Malawian Civil
Society Organisations which settled during the year,
exploration and evaluation expenditure, corporate costs
and an income tax benefit for the period. In the Australian
geographical segment the Group reflected the remaining
Income Statement activities.
36
Annual Report 2008
Balance Sheets
30 June 2008 30 June 2007
US$M
US$M
Total current assets
Total non current assets
447.9
2,115.2
233.4
1,825.0
Total assets
2,563.1
2,058.4
Total current liabilities
54.1
Total non current liabilities
1,079.7
Total liabilities
1,133.8
29.0
721.1
750.1
Net Assets
1,429.3
1,308.3
Current Assets have increased to US$447.9 million at 30
June 2008 attributable to an increase in cash, trade and
other receivables and inventories.
Cash has increased to US$337.6 million at 30 June 2008 as
a result of the issue of US$325 million in convertible bonds
on 11 March 2008; cash was utilised during the year for the
construction of the Kayelekera Uranium Project, exploration
and evaluation project expenditure, additional Deep Yellow
Ltd share investment, finance costs, and corporate costs
for the year ended 30 June 2008.
Of the US$337.6 million held in cash as at 30 June 2008,
US$249.7 million has been invested in short-term US$
treasury bonds and the balance of cash is held with banks.
Trade and other receivables have increased to US$40.0
million during the year ended 30 June 2008 mainly as a
result of trade receivables relating to US$28.7 million in
uranium sales and the US$3.0 million receivable from the
sale of non-uranium properties and the Georgina Basin
Project of Summit Resources Ltd.
Inventories have increased to US$68.9 million at 30 June
2008. Inventories produced by the LHUP have increased
by US$23.8 million primarily as a result of both higher
production levels despite the lower cost of production per
lb due to the improved plant operating efficiencies and the
recognition of a US$8.6 million value for stockpiles in the
nine months (resulting from both a US$2.0 million credit to
cost of sales and a US$6.6 million reduction in property,
plant and equipment assets). The US$24.7 million of third
party uranium purchased during the quarter ended 30 June
2007 and still on hand at 30 June 2007 was sold during the
six months ended 31 December 2007. Paladin Nuclear Ltd,
the Group’s newly-established marketing entity, purchased
uranium totalling US$31.8 million in June 2008, which will
be retained for future transactions by Paladin Nuclear Ltd.
Non Current Assets have increased to US$2,115.2 million
at 30 June 2008 mainly attributable to mine construction
at the Kayelekera Uranium Project and positive foreign
exchange movement on the A$ exploration assets. At
30 June 2008 the Group holds 159,058,461 shares and
12,500,000 options in Deep Yellow Ltd (14.34% interest)
with a market value of US$41.1 million. These options were
exercised after year end at a price of 8.1 Australian cents
to further increase the Group’s stake in Deep Yellow Ltd.
The acquisition of Summit Resources Ltd on 27 April
2007 resulted in the recognition of an A$1,689.1 million
exploration and evaluation expenditure asset as part of
the allocation of the consideration paid. During the year
ended 30 June 2008 the allocation of the acquisition value
to projects was completed and resulted in the following
allocation: Valhalla/Skal Projects (50% share) A$1,273.5
million, Isa North Project A$405.9 million, Georgina Basin
Project A$1.3 million, Other Projects Non-Uranium A$8.4
million. The allocation of this acquisition value in US$
has increased from US$1,433.4 million at 30 June 2007
to US$1,613.0 million at 30 June 2008 mainly due to the
foreign exchange translation of the A$ asset, despite the
sale of non-uranium properties and the Georgina Basin
Project of Summit Resources Ltd. The foreign exchange
translation movement is taken to the Foreign Currency
Translation Reserve.
Current Liabilities have increased from US$29.0 million to
US$54.1 million at 30 June 2008 as a result of construction
activities for the Kayelekera Uranium Project, Langer
Heinrich project finance facilities repayments, increased
exploration and evaluation expenditure on the Valhalla/
Skal, Isa North, Kayelekera and Langer Heinrich Uranium
Projects; despite no sales contracts provision recognised
at 30 June 2008.
Non Current Liabilities have increased from US$721.1
million to US$1,079.7 million at 30 June 2008 mainly
attributable to the issue of US$325 million convertible
bonds on 11 March 2008, the recognition of a deferred tax
liability on that issue, and an increase in existing deferred
tax liabilities from a positive foreign exchange movement
on A$ liabilities.
On 11 March 2008, the Group issued US$325 million
in convertible bonds with an underlying coupon rate of
5.0%, maturity 11 March 2013 and a conversion price of
US$6.59. Under accounting standards these convertible
bonds are treated as a liability (underlying bond) and an
equity instrument (conversion rights into Paladin shares).
On issue, US$307.1 million was allocated to a non current
liability (underlying effective interest rate of 7.13%) and
US$17.8 million to a non-distributable convertible bonds
reserve. A deferred tax liability for the bonds of US$5.4
million has been recognised through reserves. This is set
out in further detail in Note 19 to the Financial Statements.
At 30 June 2008 the Langer Heinrich project finance
facilities have been drawn down to US$66.3 million
following principal repayments of US$4.6 million (current
US$12.2 million and non current US$54.1 million) to fund
construction, commissioning and ramp-up activities,
leaving available facilities of US$Nil at 30 June 2008.
The deferred tax liability relating to the recognition of
acquired exploration and evaluation expenditure from the
allocation of consideration paid for Summit Resources
Ltd has increased to US$479.0 million due to the foreign
exchange movement of the A$ liability despite the sale of
non-uranium properties and the Georgina Basin Project of
Summit Resources Ltd.
Segment Disclosure
In the Balance Sheet at 30 June 2008 the Group reflected
an increase in the Australian geographical segment assets
and liabilities as a result of the foreign exchange movement
on the A$ exploration assets, increased cash as a result of
the issue of US$325 million in convertible bonds, foreign
exchange movement on A$ deferred tax liabilities and
the additional convertible bond liability. For the Namibian
geographical segment an increase occurred in assets
and liabilities attributable to the operation, and exploration
and evaluation activities for the LHUP. For the Malawi
geographical segment an increase occurred in assets and
liabilities as a result of mine construction, and exploration
and evaluation activities for the Kayelekera Uranium
Project.
Paladin Energy Ltd
37
Management Discussion and Analysis
Financial Review
Statements of Changes In Equity
Year Ended 30 June
2007
US$M
2008
US$M
Total equity at the beginning
of the financial year
1,308.3
91.0
Loss for the year ended 30 June,
after minority interests
Movement in reserves,
net of foreign currency
Movement in equity,
net of foreign currency
(36.0)
(37.6)
(10.7)
70.9
13.1
959.2
Foreign currency translation
155.8
40.1
Minority interests, net of
foreign currency
Total Equity at the End
of the Financial Year
(1.2)
184.7
1,429.3
1,308.3
Loss for the Year Ended 30 June 2008 is discussed under
the Income Statements’ section and is a slight decrease
from the loss in the comparative period.
Foreign Currency Translation Reserve relates to the
translation of subsidiaries with Australian dollar functional
currencies into the Group presentation currency of US
dollars on an ongoing basis and for the comparative
period.
Movement in Other Reserves in 2008 of a US$10.7 million
decrease relates to the revaluation decrement attributable
to the decrease in Deep Yellow Ltd share price from the
prior period (net of tax and foreign exchange movements)
which more than offset the recognised value of unlisted
employee options and the creation of the non-distributable
reserve of US$17.8 million from the issue of US$325 million
of convertible bonds on 11 March 2008. Unlisted employee
options exercised during the year amounted to 11,060,000
with exercise prices ranging from A$1.00 to A$2.80.
11,291,620 employee options were granted and 833,218
were cancelled during the year with exercise prices
ranging from A$4.50 to A$5.37 per share.
Movement in Equity in 2008 of a US$13.1 million increase
relates to the exercise of unlisted employee options. The
number of fully paid ordinary shares on issue at 30 June
2008 is 613,497,369, an increase of 11,060,000 during the
period.
Share options of 19,077,072 remain outstanding at 30 June
2008 to the employees, and consultants directly engaged
in corporate, mine construction, operations, exploration
and evaluation work.
38
Annual Report 2008
Minority Interests recognised during the year relate
to the 18.1% interest in Summit Resources Ltd not
owned. The Development Agreement for the Kayelekera
Uranium Project signed on 23 February 2007 entitles the
Government of Malawi to a 15% equity interest in Paladin
(Africa) Ltd, the owner of the project, in exchange for
reductions of 2.5% in corporate tax, nil rent resource tax
payable and royalty offsets. No minority interests have
been reflected for this as at 30 June 2008 as Paladin
(Africa) Ltd is in a net liability position as a consequence
of the Group’s policy to previously expense exploration
and evaluation expenditure prior to the decision made to
proceed to development.
Cash Flow Statements
Net cash outflow from operating
activities
Net cash outflow from investing
activities
Net cash inflow from financing
activities
Year Ended 30 June
2007
US$M
2008
US$M
(18.4)
(38.6)
(150.9)
(122.0)
324.0
298.7
Net increase in cash held
154.7
138.1
Cash at the beginning of
financial year
Effects of exchange rate changes
182.8
0.1
43.6
1.1
Cash at the End of the Financial Year
337.6
182.8
Net Cash Outflow from Operating Activities was US$18.4
million in 2008 primarily due to uranium sales receipts of
US$68.4 million being more than offset by payments to
suppliers and employees of US$77.1 million relating to
the mine operations at the LHUP, the growth of the Group
and expanded corporate capability, interest payments on
project finance facilities and a US$5.6 million bi-annual
interest payment on the US$250 million convertible bonds
maturing 15 December 2011.
Net Cash Outflow from Investing Activities was US$150.9
million in 2008 as a result of mine construction at the
Kayelekera Uranium Project, exploration and evaluation
project expenditure, the acquisition of additional
investments in Deep Yellow Ltd and the third party uranium
purchases; despite receipts of US$4.0 million from the sale
of non-uranium properties and Georgina Basin Project of
Summit Resources Ltd and insurance claims at the LHUP.
Net Cash Inflow from Financing Activities of US$324.0
million in 2008 is attributable to US$4.3 million drawn under
the project finance facilities for the LHUP, proceeds from
the exercise of 11,060,000 unlisted employee options and
the issue of US$325 million in convertible bonds; despite
US$11.2 million in establishment costs for the convertible
bonds and Kayelekera Uranium Project finance facilities
and the repayment of US$4.6 million of the project finance
facilities for Langer Heinrich. The inflow was higher than
in 2007 due to the increased proceeds received from
convertible bonds in 2008 (US$325 million) compared to
the convertible bonds issued in 2007 (US$250 million).
Net Increase in Cash in 2008 was US$154.7 million, an
increase over the previous corresponding period in 2007
of US$138.1 million as a result of the higher proceeds from
the issue of convertible bonds, despite increased cash
outflows from operating and investing activities.
Effects of Exchange Rate Changes are a gain of US$0.1
million for 2008 against a US$1.1 million gain for 2007, due
to exchange rate fluctuations.
The Cash at 30 June 2008 of US$337.6 million represents
a significant increase in cash to the comparative period of
2007.
Liquidity and Capital Resources
The Group’s principal source of liquidity as at 30 June 2008
is cash of US$337.6 million (30 June 2007 – US$182.8
million). Of this amount US$249.7 million has been
invested in short-term US$ treasury bonds and the balance
of cash held with banks.
The Group’s principal sources of cash for the year ended
30 June 2008 were proceeds from the issue of US$325
million in convertible bonds, uranium sales receipts, project
finance facilities drawdowns, interest received from cash
investments, proceeds from exercise of unlisted employee
options, and sale of non-uranium properties and the
Georgina Basin Project of Summit Resources Ltd.
The Group has in place Langer Heinrich project finance
facilities of US$66.3 million following principal repayments
of US$4.6 million, leaving available facilities to draw down
of US$Nil.
For the Kayelekera Uranium Project the Group has
accepted credit committee approved offers of financing
totalling US$167 million, consisting of a seven year Project
Finance Facility of US$145 million, a Standby Cost Overrun
Facility of US$12 million and a Performance Bond Facility
of US$10 million. The facilities are being provided by
Société Générale Corporate and Investment Banking (as
intercreditor agent and commercial lender), Nedbank
Capital a division of Nedbank Limited (ECIC lender) and
The Standard Bank of South Africa Ltd (as ECIC facility
agent and lender). Drawdown on the financing is subject
to completion of legal documentation and fulfilment of other
conditions precedent usual for this type of funding.
The following is a summary of the Group’s outstanding
commitments as at 30 June 2008:
Total Less than 1 to 5yrs Unknown
Payments due
by period
US$M
1 yr
US$M
US$M
US$M
Tenements
2.6
Mine construction
61.0
Operating leases
6.4
2.6
61.0
0.4
-
-
3.3
Manyingee
acquisition costs
0.7
-
-
Total commitments
70.7
64.0
3.3
-
-
2.7
0.7
3.4
In relation to the Manyingee Uranium Project, the
acquisition terms provide for a payment of A$0.75 million
(US$0.7 million) by the Group to the vendors when all
project development approvals are obtained.
In addition to the outstanding commitments above, the
Group 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$0.75 million (US$0.7 million) and are subject to
the Western Australian Department of Minerals & Energy
granting tenements comprising 2 exploration licence
applications. The A$0.75 million (US$0.7 million) is payable
by the Group 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 Group has no other off balance sheet arrangements.
Outstanding Share Information
As at 11 September 2008 Paladin had 613,997,369 fully
paid ordinary shares issued and outstanding. The following
table sets out the fully paid ordinary outstanding shares
and those issuable under the Company Executive Share
Option Plan and in relation to the Convertible Bonds:
As at 11 September 2008
Outstanding shares
Issuable under Executive Share
Option Plan
Issuable in relation to the
US$250 million Convertible Bonds
Issuable in relation to the
US$325 million Convertible Bonds
Total
Number
613,997,369
17,946,455
32,530,904
49,317,147
713,791,875
Paladin Energy Ltd
39
Management Discussion and Analysis
Financial Review
Pictures left to right: (1), (2) and (3) Langer Heinrich
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 following:
carrying value or impairment of inventories, financial
investments, property, plant and equipment, intangibles,
mineral properties and deferred tax assets, carrying value
of rehabilitation, mine closure, sales contracts provisions
and deferred tax liabilities, calculation of share based
payments expense and assessment of reserves.
Financial Instruments
At 30 June 2008 the Group has exposure to interest rate
risk which is the risk that the Group’s financial position will
be adversely affected by movements in interest rates that
will increase the cost of floating rate project finance debt or
opportunity losses that may arise on fixed rate convertible
bonds in a falling interest rate environment. Interest rate
risk on cash and short-term deposits is not considered
to be a material risk due to the short-term nature of these
financial instruments.
The Group’s main foreign currency translation risk is
for monetary assets and liabilities of the Namibian and
Malawian operations. These are deemed to have a
functional currency of United States dollars, and the
Group has adopted a presentation currency of United
States dollars therefore eliminating any foreign currency
translation risk for non-monetary assets and liabilities. The
Group also has significant foreign currency translation risk
for non-monetary assets and liabilities of the Australian
exploration and evaluation operations as these are deemed
to have a functional currency of Australian dollars, and
the Group has adopted a presentation currency of United
States dollars. The Group has no significant monetary
foreign currency assets and liabilities apart from Namibian
dollar cash, receivables, payables and provisions and
Australian dollar cash, payables and deferred tax liabilities.
40
Annual Report 2008
The Group 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 2008 no payments were
made to Director related entities. Directors of the Group
receive standard personal based compensation.
Disclosure Controls
The Group has applied its Disclosure Control Policy to the
preparation of the Consolidated Financial Statements for
the year ended 30 June 2008 and associated Management
Discussion and Analysis. An evaluation of the Group’s
disclosure controls and procedures used has been
undertaken and concluded that the disclosure controls and
procedures were effective.
Internal Controls
The Group has designed appropriate internal controls
over financial reporting (ICFR) and ensured that these
were in place for the year ended 30 June 2008. An
evaluation of the design of ICFR has concluded that it is
adequate to prevent a material misstatement of the Group’s
Consolidated Financial Statements as at 30 June 2008.
During the year the Group continued to have an internal
audit function externally contracted to Deloitte Touche
Tohmatsu. Internal audit reports and follow-up reviews were
completed during the year and the Group continues to
address their recommendations.
The resultant changes to ICFR have improved and will
continue to improve the Group’s framework of internal
control in relation to financial reporting.
Resources Upgrade for Langer Heinrich Uranium Project
On the 28 August 2008, the Company announced an
updated Mineral Resource estimate for the LHUP. Following
the drilling of 717 RC holes for a total of 17,751m in all
Details at Langer Heinrich, a new Mineral Resource of
56.4Mt at a grade of 0.06% U3O8 for 32,858t (72.4Mlb)
U3O8 in the Measures and Indicated categories and 70.7Mt
at a grade of 0.06% U3O8 for 41,557t (91.6Mlb) U3O8 in
the Inferred category was estimated. The total resource
for Langer Heinrich now stands at some 74,415t (164Mlb)
U3O8. The Directors believe a considerable amount of
these Inferred Resources will be able to be converted to
Measured and Indicated Resource categories following
additional drilling in the future. Ore Reserve studies are
currently underway and are expected to be completed in
the near future.
Increased Holding in Summit Resources Ltd
On 28 August 2008, the Company acquired an additional
3,378,733 shares in Summit Resources Ltd pursuant
to a renounceable rights issue and 289,739 shares via
subscription for the shortfall of the rights issue. The
additional investment totalled A$9.1 million (US$8.6
million). After these acquisitions the Company now holds
81.99% of Summit Resources Ltd.
Subsequent Events
Since the end of the financial year, the Directors are not
aware of any other matter or circumstance not otherwise
dealt with in this report or the Financial Statements, that
has significantly or may significantly affect the operations
of the Group, the results of those operations or the state of
affairs of the Group in subsequent years with the exception
of the following, the financial effects of which have not been
provided for in the 30 June 2008 Financial Report:
Allotment of Shares and Issue of Employee Options
On 3 July 2008 the Company announced the granting of
450,000 unlisted incentive options, exercisable at A$5.27
vesting after 3 years, subject to performance conditions
as outlined in the Executive Share Option Plan, with a 5
year expiry and the allotment of 400,000 fully paid ordinary
shares after the exercise of employee options. On 10
September 2008 the Company announced the allotment
of 100,000 fully paid ordinary shares after the exercise of
employee options.
Appointment of Mr Ross Glossop
On 10 July 2008, the Company announced the
appointment of Mr Ross Glossop as Chief Financial Officer
(CFO) of the Paladin group of companies. Mr Glossop
has over 25 years of experience in the resources industry,
where he has held positions in internal audit, treasury, and
finance with increasing managerial responsibilities.
Increased Holding in Deep Yellow Ltd
On 28 July 2008, the Group acquired an additional
12,500,000 shares in Deep Yellow Ltd pursuant to the
exercise of 12,500,000 options exercisable at 8.1 Australian
cents. The additional investments totalled A$1.0 million
(US$1.0 million). After this acquisition the Group now holds
15.30% of Deep Yellow Ltd.
Paladin Energy Ltd
41
forging stronger relationships
Pictures left to right: (1) and (2) Working with local farmers, Malawi (3) Children’s Christmas Party, Kayelekera 2007
sustainable development
Paladin looks beyond its minimum statutory obligation to comply
with relevant legislation and voluntarily seeks to take steps to
improve the quality of life of its employees and their families, as
well as for the local community and host society at large.
42
Annual Report 2008
Health And Safety
Paladin is committed to working with its employees and
contractors to create a safe working environment across
its operations. In 2007, the Langer Heinrich construction
program was concluded with only one Lost Time Injury
(LTI) recorded over a period of 1.35 million worked hours.
To-date, Paladin and its Kayelekera contractors have
completed more than 2 million worked hours without a
single LTI. This is a remarkable achievement considering
Kayelekera’s status as the first major mining development
in Malawi and the fact that the local workforce has only the
most basic construction experience.
Paladin’s commitment to safety has been noted by
the Government of Malawi, traditional chiefs and local
inhabitants alike. Malawi’s Director of Safety in the Ministry
of Energy and Mines, Mr Hlale Nyangulu, addressing a
function held at Kayelekera in July to celebrate 1.5 million
LTI-free hours, said: “This is a very rare achievement and,
as Government, we are happy that safety requirements and
regulations are adhered to the maximum at this new mine.”
In Namibia, Langer Heinrich employees and contractors
each recorded four LTI’s, for the year ending June, 2008.
Included in the contractor figures is an off-site light vehicle
incident not normally included in LTI records, however
considered appropriate and in-line with a management
initiative to improve transportation safety in and around the
community. The balance of the recorded on-site injuries
were of a relatively minor nature including knee and ankle
strains requiring short periods of rest. The reporting of
safety incidents is robust at the Langer Heinrich operation
allowing management to properly assess incidents and
take appropriate actions to reduce both frequency and
severity of safety incidents into the future.
Environment
Policy and Standards
Paladin is committed to ensure that effective environmental
management is planned and undertaken for all aspects of
its operations. The approach to environmental management
is guided by our Environmental Policy that promotes a
standard of excellence for environmental performance
across its operations. The key points of our policy include:
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:67)(cid:79)(cid:77)(cid:80)(cid:76)(cid:73)(cid:65)(cid:78)(cid:67)(cid:69)(cid:0)(cid:87)(cid:73)(cid:84)(cid:72)(cid:0)(cid:65)(cid:80)(cid:80)(cid:76)(cid:73)(cid:67)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:69)(cid:78)(cid:86)(cid:73)(cid:82)(cid:79)(cid:78)(cid:77)(cid:69)(cid:78)(cid:84)(cid:65)(cid:76)(cid:0)(cid:76)(cid:69)(cid:71)(cid:73)(cid:83)(cid:76)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:27)
(cid:68)(cid:69)(cid:86)(cid:69)(cid:76)(cid:79)(cid:80)(cid:73)(cid:78)(cid:71)(cid:0)(cid:83)(cid:84)(cid:65)(cid:78)(cid:68)(cid:65)(cid:82)(cid:68)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:83)(cid:89)(cid:83)(cid:84)(cid:69)(cid:77)(cid:83)(cid:0)(cid:84)(cid:79)(cid:0)(cid:73)(cid:68)(cid:69)(cid:78)(cid:84)(cid:73)(cid:70)(cid:89)(cid:12)(cid:0)(cid:65)(cid:83)(cid:83)(cid:69)(cid:83)(cid:83)(cid:0)
and manage environmental risk;
(cid:67)(cid:79)(cid:78)(cid:84)(cid:73)(cid:78)(cid:85)(cid:79)(cid:85)(cid:83)(cid:0)(cid:73)(cid:77)(cid:80)(cid:82)(cid:79)(cid:86)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:73)(cid:78)(cid:0)(cid:69)(cid:78)(cid:86)(cid:73)(cid:82)(cid:79)(cid:78)(cid:77)(cid:69)(cid:78)(cid:84)(cid:65)(cid:76)(cid:0)
performance;
(cid:67)(cid:79)(cid:77)(cid:77)(cid:85)(cid:78)(cid:73)(cid:67)(cid:65)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)(cid:69)(cid:78)(cid:86)(cid:73)(cid:82)(cid:79)(cid:78)(cid:77)(cid:69)(cid:78)(cid:84)(cid:65)(cid:76)(cid:0)(cid:82)(cid:69)(cid:83)(cid:80)(cid:79)(cid:78)(cid:83)(cid:73)(cid:66)(cid:73)(cid:76)(cid:73)(cid:84)(cid:89)(cid:0)(cid:84)(cid:79)(cid:0)
employees and contractor;
(cid:69)(cid:70)(cid:70)(cid:69)(cid:67)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:67)(cid:79)(cid:78)(cid:83)(cid:85)(cid:76)(cid:84)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:87)(cid:73)(cid:84)(cid:72)(cid:0)(cid:83)(cid:84)(cid:65)(cid:75)(cid:69)(cid:72)(cid:79)(cid:76)(cid:68)(cid:69)(cid:82)(cid:83)(cid:27)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)
(cid:73)(cid:78)(cid:83)(cid:80)(cid:69)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:65)(cid:85)(cid:68)(cid:73)(cid:84)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:69)(cid:78)(cid:86)(cid:73)(cid:82)(cid:79)(cid:78)(cid:77)(cid:69)(cid:78)(cid:84)(cid:65)(cid:76)(cid:0)
performance.
Paladin is establishing internal Environmental Standards
to be adhered to by all of its operational subsidiaries.
Operational compliance with the Standards will form part of
the Corporate Audit Programme.
Environmental Management System
Each operating site is required to develop and implement
an Environmental Management System (EMS) that is
consistent with the requirements of ISO14001:2004.
Langer Heinrich has developed an EMS based on the
ISO standard and is implementing the system across the
site operations. Langer Heinrich has also commenced the
verification and certification process for the EMS.
The Kayelekera environmental team is developing the
various components of the EMS for operations. Once
operational teams are on site and operations commence
the EMS will be implemented across all operational
departments.
Paladin Energy Ltd
43
Sustainable Development
Pictures left to right: (1), (2) and (3) Environmental Management, Kayelekera (4) Local children, Malawi
As part of the EMS, Environmental Management Plans
(EMP) are prepared and submitted for review by
Government and other stakeholders. The review processes
for both Langer Heinrich and Kayelekera include technical
reviews of the Management Plans by the appropriate
international financial lending institutions.
A Construction EMP was prepared for Kayelekera and
implemented to manage the potential environmental
impacts from construction. To prepare for operations,
an Operational EMP has been drafted containing details
on the mine and the management programmes to be
implemented to minimise potential impacts.
Inspection and Audit Programme
Inspection and audit programmes have been established
to ensure that the environmental performance of Paladin’s
operations is reviewed, audited and reported to the Board.
These programmes will ensure that there is not only
compliance with regulatory and Paladin requirements but
also with the Equator Principles and other appropriate
industry standards, as well as those standards specific to
the uranium industry.
Water
Water resource is a major issue that requires management
at most mining operations. This is particularly relevant
to Paladin’s operations as Langer Heinrich is located in
a desert environment where water supply is limited, and
Kayelekera is located in a high rainfall area where the
management of surface water runoff is paramount.
Paladin has developed a Standard for Water Use and
Water Quality to ensure that its operations apply efficient,
safe and sustainable use of water and protect the water
resources and ecosystems around its sites. Both sites
have prepared detailed water balances, flow models and
proposed water management strategies to ensure that
Paladin’s objective is met.
Tailings
Tailings management continues to be a high priority
at Paladin’s sites beginning with defining acceptable
properties of the tailings and ensuring appropriate design
of tailings storage facilities (TSF).
Specialist tailings facility engineers have been engaged
by both sites to design, define operational practice and
propose management of the TSFs to ensure that effective
management of tailings is undertaken and the potential
impacts of the tailings and TSF are minimised. Independent
and internationally recognised uranium tailings experts
have conducted reviews of the design, construction and
operations of the TSF and continue to provide an ongoing
external review role. This process ensures that tailings
storage on site meets both industry standards and those
specific for uranium tailings.
Closure
Mine closure planning is a key component of Paladin’s
commitment to the environment. A Closure Standard
has been developed for all developing and operational
sites to comply with. The intent of this is to ensure that
Paladin’s sites are left in a safe and stable manner with
environmental impacts minimised so that tenements can
be relinquished without future liability to the Company,
Government or the community.
Social Mandate
With construction of the Kayelekera Project in Malawi
nearing completion and the Stage II expansion of Langer
Heinrich underway in Namibia, Paladin’s presence and
stature in southern Africa is growing significantly.
Paladin’s social mandate is a reflection of its corporate
reputation and the values others see Paladin and its
representatives exhibit in the way they do business.
Maintaining corporate standing requires not only
continuing technical and commercial excellence, but also
demonstrated sensitivity towards host communities.
44
Annual Report 2008
Our People
HIV & AIDS
Paladin’s workforce has increased significantly in the past
12 months and continues to grow as permanent staff for
Kayelekera are recruited. The Paladin Group’s directly-
employed workforce now exceeds 275 people. The Langer
Heinrich workforce includes 198 employees, plus a further
200 personnel working for mining and security contractors.
Fewer than 5% are non-Namibian. The Kayelekera
construction workforce currently numbers around 1,250
people, of whom some 75% are Malawian nationals,
providing a much-needed skills boost to that country. The
permanent operating workforce at Kayelekera is expected
to number 350 people, most of whom will be Malawian.
Paladin’s Head Office team of senior management and
specialist support staff numbers 47 people, while a
further 21 geologists and support staff are employed in
the Group’s Mount Isa exploration office. Paladin Nuclear
Limited currently employs three people, located in Perth
and Denver, Colorado.
A scheme to provide study assistance was introduced
at Langer Heinrich during 2008 and several employees
have already commenced formal studies, including four
employees enrolled for management development under
Langer Heinrich’s succession planning programme.
Paladin rewards employee performance and aligns the
interests of its employees with those of its shareholders
by offering participation in a share incentive scheme. In
February 2008, the Company extended this scheme to
include permanent employees of Langer Heinrich Uranium
(Pty) Ltd in what is believed to be a first initiative for the
Namibian mining industry. In what is a difficult environment
for recruitment of staff due to the global resources boom
and shortage of uranium experience, Paladin has been
pleased to be considered an employee of choice and has
been fortunate in attracting a high calibre of employees.
The Kayelekera Environmental Impact Assessment
(EIA) identified HIV/AIDS as a significant on-going issue
which Paladin would need to address in developing and
operating the Kayelekera Project. The HIV/AIDS pandemic
has hit Malawi particularly hard – the United Nations’
UNAIDS 2008 Report estimates that, of a population of
nearly 14 million, almost one million people in Malawi were
living with HIV at the end of 2007.
HIV/AIDS is also a serious issue in Namibia. At Langer
Heinrich, five employees volunteered during the year
to train as peer educators for the Company’s HIV/AIDS
awareness programme. Peer educators received initial and
advanced training on HIV/AIDS awareness and prevention
in a programme co-ordinated by the Namibian Chamber of
Mines, of which Langer Heinrich is an active member.
Paladin has also joined BHP-Billiton, Rio Tinto and nine
other mining companies in supporting the Virax Southern
Africa HIV Therapeutic Vaccine Project. Virax is an
Australian bio-pharmaceutical company engaged in
the development of treatments for cancer and chronic
infectious diseases, such as HIV/AIDS. Virax has
developed the VIR201 HIV vaccine, which is designed to
treat HIV-infected people by lowering their HIV virus levels.
To-date, VIR201 is understood to be one of the only such
therapeutic vaccines from around the world to have
been successfully tested in two fully-controlled human
clinical trials (both conducted in Australia). These trials
demonstrated the vaccine to be safe, with no side-
effects and provided strongly encouraging evidence of
suppression of HIV virus levels in HIV-infected patients.
Paladin has contributed $US150,000 towards the initial cost
of further trials, which the Company hopes will lead to the
release of a cheaper, more effective vaccine to improve
the life expectancy and well-being of the HIV-positive
population, in both Namibia and Malawi and elsewhere.
Paladin Energy Ltd
45
Sustainable Development
Pictures left to right: (1) and (2) Working with the community, Malawi
Working with Communities
The development of the Kayelekera Project will make a very
substantial fiscal contribution to Malawi and will open up
opportunities for employment and improvements to social
infrastructure in the economically-depressed Northern
Region of the country. Kayelekera is currently the single
most important development project in Malawi, which is
among the poorest countries in the world.
Our Social Responsibility vision is to work to address four
key areas of need within the Kayelekera region. These are:
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:40)(cid:69)(cid:65)(cid:76)(cid:84)(cid:72)(cid:0)(cid:41)(cid:83)(cid:83)(cid:85)(cid:69)(cid:83)(cid:0)(cid:8)(cid:66)(cid:69)(cid:67)(cid:65)(cid:85)(cid:83)(cid:69)(cid:0)(cid:40)(cid:41)(cid:54)(cid:15)(cid:33)(cid:41)(cid:36)(cid:51)(cid:12)(cid:0)(cid:84)(cid:85)(cid:66)(cid:69)(cid:82)(cid:67)(cid:85)(cid:76)(cid:79)(cid:83)(cid:73)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)
malaria are the major killers in Malawi, as elsewhere
in southern Africa);
(cid:38)(cid:79)(cid:79)(cid:68)(cid:0)(cid:48)(cid:82)(cid:79)(cid:68)(cid:85)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:8)(cid:66)(cid:69)(cid:67)(cid:65)(cid:85)(cid:83)(cid:69)(cid:0)(cid:76)(cid:65)(cid:67)(cid:75)(cid:0)(cid:79)(cid:70)(cid:0)(cid:73)(cid:82)(cid:82)(cid:73)(cid:71)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)
subsistence farming leads to crop failure and famine)
(cid:37)(cid:68)(cid:85)(cid:67)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:8)(cid:84)(cid:72)(cid:69)(cid:0)(cid:70)(cid:79)(cid:85)(cid:78)(cid:68)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:83)(cid:84)(cid:79)(cid:78)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:65)(cid:0)(cid:80)(cid:82)(cid:79)(cid:68)(cid:85)(cid:67)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)
fulfilling life) and
(cid:34)(cid:85)(cid:83)(cid:73)(cid:78)(cid:69)(cid:83)(cid:83)(cid:0)(cid:36)(cid:69)(cid:86)(cid:69)(cid:76)(cid:79)(cid:80)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:8)(cid:84)(cid:79)(cid:0)(cid:67)(cid:82)(cid:69)(cid:65)(cid:84)(cid:69)(cid:0)(cid:69)(cid:77)(cid:80)(cid:76)(cid:79)(cid:89)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)
opportunities and grow local businesses which can
supply Paladin and others with goods and services).
Six Civil Society Organisations (CSOs) had commenced an
action against the Company and the Government of Malawi
in May 2007 in response to concerns over the Project
approval process.
The settlement between the six CSOs and Paladin in
November 2007 resolved outstanding social issues of
concern and was concluded on a positive and amicable
basis, enabling construction at Kayelekera to proceed
without interruption or modification.
Under the February 2007 Development Agreement with the
Government of Malawi, Paladin undertook to spend $US10
million on community development and infrastructure
projects in the Kayelekera region. It was subsequently
agreed that US$8.2 million of the US$10 million would
be applied to the urgently-needed upgrading of the
community water supply at Karonga, the nearest major
town to the Kayelekera Project. This Project is expected
to be completed by mid-2009. Paladin will spend a further
US$1.8 million to fund health and education infrastructure
projects agreed in consultation with the local community.
46
Annual Report 2008
Paladin has undertaken to be accountable by providing the
Government of Malawi with regular reports on work done
and monies expended under its Community Development
Program.
Other initiatives include:
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:69)(cid:83)(cid:84)(cid:65)(cid:66)(cid:76)(cid:73)(cid:83)(cid:72)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:53)(cid:82)(cid:65)(cid:78)(cid:73)(cid:85)(cid:77)(cid:0)(cid:44)(cid:73)(cid:65)(cid:73)(cid:83)(cid:79)(cid:78)(cid:0)(cid:35)(cid:79)(cid:77)(cid:77)(cid:73)(cid:84)(cid:84)(cid:69)(cid:69)(cid:0)(cid:8)(cid:53)(cid:44)(cid:41)(cid:35)(cid:47)(cid:9)(cid:0)
as the medium for on-going community consultation;
(cid:65)(cid:83)(cid:83)(cid:73)(cid:83)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)(cid:73)(cid:78)(cid:0)(cid:68)(cid:69)(cid:86)(cid:69)(cid:76)(cid:79)(cid:80)(cid:73)(cid:78)(cid:71)(cid:0)(cid:73)(cid:77)(cid:80)(cid:82)(cid:79)(cid:86)(cid:69)(cid:68)(cid:0)(cid:65)(cid:71)(cid:82)(cid:73)(cid:67)(cid:85)(cid:76)(cid:84)(cid:85)(cid:82)(cid:65)(cid:76)(cid:0)
production practices with an expatriate agricultural
consultant working with local farmers to upgrade
skills;
(cid:80)(cid:82)(cid:79)(cid:86)(cid:73)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:65)(cid:67)(cid:67)(cid:69)(cid:83)(cid:83)(cid:0)(cid:84)(cid:79)(cid:0)(cid:67)(cid:76)(cid:69)(cid:65)(cid:78)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:83)(cid:65)(cid:70)(cid:69)(cid:0)(cid:87)(cid:65)(cid:84)(cid:69)(cid:82)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:65)(cid:0)
significant portion of the community and improved
teacher-pupil ratio at the primary school, which
Paladin supports financially;
(cid:77)(cid:65)(cid:73)(cid:78)(cid:84)(cid:65)(cid:73)(cid:78)(cid:73)(cid:78)(cid:71)(cid:0)(cid:65)(cid:0)(cid:68)(cid:79)(cid:67)(cid:84)(cid:79)(cid:82)(cid:13)(cid:83)(cid:84)(cid:65)(cid:70)(cid:70)(cid:69)(cid:68)(cid:0)(cid:77)(cid:69)(cid:68)(cid:73)(cid:67)(cid:65)(cid:76)(cid:0)(cid:67)(cid:76)(cid:73)(cid:78)(cid:73)(cid:67)(cid:0)(cid:79)(cid:78)(cid:13)(cid:83)(cid:73)(cid:84)(cid:69)(cid:0)(cid:65)(cid:84)(cid:0)
Kayelekera, which caters for the medical needs of its
employees, including employees living in Kayelekera
village. As a consequence, some 22 per cent of the
Kayelekera village population now has access to
reliable health care. Paladin has undertaken to build
a new community health clinic in Kayelekera; and
(cid:65)(cid:83)(cid:83)(cid:73)(cid:83)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)(cid:73)(cid:78)(cid:0)(cid:68)(cid:69)(cid:86)(cid:69)(cid:76)(cid:79)(cid:80)(cid:73)(cid:78)(cid:71)(cid:0)(cid:73)(cid:77)(cid:80)(cid:82)(cid:79)(cid:86)(cid:69)(cid:68)(cid:0)(cid:65)(cid:71)(cid:82)(cid:73)(cid:67)(cid:85)(cid:76)(cid:84)(cid:85)(cid:82)(cid:65)(cid:76)(cid:0)
production practices and supporting local
communities through construction of wells and
sinking boreholes.
Langer Heinrich supports certain initiatives that have
long-term benefits to Namibia, specifically aimed towards
education and skills development. This involves funding
at a local school level together with providing financial
assistance for a youth development programme aimed at
identifying high performing students who would otherwise
have limited resources to enable them to further develop
their skills. This programme requires very high levels
of commitment from the students and is proving highly
successful. In addition Langer Heinrich is working closely
with a local artisan training facility whereby students are
provided with practical training at the mine site, and senior
artisans are made available to the college as lecturers
whilst at the same time the usual lecturers spend time
working on the mine site to expose them to the latest
technology and practices.
The Paladin Board (clockwise from top left): Ian Noble, Gillian Swaby,
Sean Llewelyn, Donald Shumka, John Borshoff and Rick Crabb
corporate governance
statement
Paladin Energy Ltd
47
Corporate Governance Statement
Corporate Governance Framework
Information will be communicated to shareholders by:
The Board of Directors of Paladin Energy Ltd is responsible
for the corporate governance of the Group.
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 Securities
Exchange (ASX) and in Canada on the Toronto Stock
Exchange (TSX). In formulating the governance framework,
the regulatory requirements in both Australia and Canada
have been taken into account.
The Company has complied with each of the Eight
Corporate Governance Principles and the corresponding
Recommendations as published by the ASX Corporate
Governance Council. Further the Company also complies
with the Ontario Securities Commission’s corporate
governance requirements as set out in National Instrument
58-101.
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.paladinenergy.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.
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:69)(cid:78)(cid:83)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:72)(cid:65)(cid:84)(cid:0)(cid:80)(cid:85)(cid:66)(cid:76)(cid:73)(cid:83)(cid:72)(cid:69)(cid:68)(cid:0)(cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:79)(cid:84)(cid:72)(cid:69)(cid:82)(cid:0)(cid:83)(cid:84)(cid:65)(cid:84)(cid:85)(cid:84)(cid:79)(cid:82)(cid:89)(cid:0)
reports are prepared in accordance with applicable
laws and industry best practice;
(cid:69)(cid:78)(cid:83)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:68)(cid:73)(cid:83)(cid:67)(cid:76)(cid:79)(cid:83)(cid:85)(cid:82)(cid:69)(cid:0)(cid:79)(cid:70)(cid:0)(cid:70)(cid:85)(cid:76)(cid:76)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:84)(cid:73)(cid:77)(cid:69)(cid:76)(cid:89)(cid:0)(cid:73)(cid:78)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)
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;
(cid:80)(cid:82)(cid:79)(cid:86)(cid:73)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:68)(cid:69)(cid:84)(cid:65)(cid:73)(cid:76)(cid:69)(cid:68)(cid:0)(cid:82)(cid:69)(cid:80)(cid:79)(cid:82)(cid:84)(cid:83)(cid:0)(cid:70)(cid:82)(cid:79)(cid:77)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:35)(cid:72)(cid:65)(cid:73)(cid:82)(cid:77)(cid:65)(cid:78)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)
Managing Director at the Annual General Meeting;
(cid:80)(cid:76)(cid:65)(cid:67)(cid:73)(cid:78)(cid:71)(cid:0)(cid:65)(cid:76)(cid:76)(cid:0)(cid:77)(cid:65)(cid:84)(cid:69)(cid:82)(cid:73)(cid:65)(cid:76)(cid:0)(cid:73)(cid:78)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:82)(cid:69)(cid:76)(cid:69)(cid:65)(cid:83)(cid:69)(cid:68)(cid:0)(cid:84)(cid:79)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)
market (including notices of meeting and explanatory
materials) on the Company’s website as soon as
practical following release;
(cid:80)(cid:76)(cid:65)(cid:67)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:7)(cid:83)(cid:0)(cid:77)(cid:65)(cid:82)(cid:75)(cid:69)(cid:84)(cid:0)(cid:65)(cid:78)(cid:78)(cid:79)(cid:85)(cid:78)(cid:67)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)
financial data for the preceding three years on its
website. Earlier announcements are available on
request; and
(cid:80)(cid:82)(cid:79)(cid:86)(cid:73)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:33)(cid:78)(cid:78)(cid:85)(cid:65)(cid:76)(cid:0)(cid:50)(cid:69)(cid:80)(cid:79)(cid:82)(cid:84)(cid:0)(cid:73)(cid:78)(cid:0)(cid:65)(cid:0)(cid:104)(cid:85)(cid:83)(cid:69)(cid:82)(cid:0)(cid:70)(cid:82)(cid:73)(cid:69)(cid:78)(cid:68)(cid:76)(cid:89)(cid:118)(cid:0)
electronic format 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.
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.
48
Annual Report 2008
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 time 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. This was
particularly relevant given the progress towards becoming
a uranium supplier and, in the last quarter of the 2005
financial year, Board membership underwent a major
restructure.
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
Corporate Governance and Principles 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.
Meetings of the Board
The Board meets formally at least four times a year (each
over a 2 day period) and on other occasions, as required.
On the day preceding the Board meeting, members of
senior management attend and make presentations to the
Board covering all aspects of the Company’s operations.
Non-executive Directors are able to meet without the
Managing Director and management being present, as
considered appropriate. Each of the four principle Board
meetings provided this opportunity.
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 as part of the budget review
process in May 2008. The Managing Director encourages
full access to executive Managers by the Board to ensure
transparency at a senior management level and Non-
executive Directors are encouraged to visit the Company’s
operations.
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 of Directors to
retire by rotation at that Annual General Meeting. Directors
cannot hold office for a period in excess of three years
without submitting themselves for re-election. Retiring
Directors are eligible for re-election by shareholders.
Details of those Directors seeking re-election at the 2008
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 14 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. The Board considers that Mr
Borshoff’s uranium experience and Mr Crabb’s international
resource law experience remains valuable at Board level
during this critical stage of the Company’s development.
Paladin Energy Ltd
49
Corporate Governance Statement
Pictures left to right: (1), (2) and (3) Kayelekera
Nomination and Appointment of New Directors
Evaluation of Board Performance
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:-
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:41)(cid:78)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:12)(cid:0)(cid:83)(cid:84)(cid:82)(cid:65)(cid:84)(cid:69)(cid:71)(cid:73)(cid:67)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:79)(cid:80)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:65)(cid:76)(cid:0)
position of the Company;
(cid:33)(cid:0)(cid:67)(cid:79)(cid:77)(cid:80)(cid:82)(cid:69)(cid:72)(cid:69)(cid:78)(cid:83)(cid:73)(cid:86)(cid:69)(cid:0)(cid:76)(cid:69)(cid:84)(cid:84)(cid:69)(cid:82)(cid:0)(cid:79)(cid:70)(cid:0)(cid:65)(cid:80)(cid:80)(cid:79)(cid:73)(cid:78)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:87)(cid:72)(cid:73)(cid:67)(cid:72)(cid:0)(cid:83)(cid:69)(cid:84)(cid:83)(cid:0)
out the Company’s expectations on acceptance of
the position;
(cid:33)(cid:0)(cid:87)(cid:82)(cid:73)(cid:84)(cid:84)(cid:69)(cid:78)(cid:0)(cid:83)(cid:84)(cid:65)(cid:84)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:87)(cid:72)(cid:73)(cid:67)(cid:72)(cid:0)(cid:83)(cid:69)(cid:84)(cid:83)(cid:0)(cid:79)(cid:85)(cid:84)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:68)(cid:85)(cid:84)(cid:73)(cid:69)(cid:83)(cid:12)(cid:0)(cid:82)(cid:73)(cid:71)(cid:72)(cid:84)(cid:83)(cid:0)
and responsibilities they undertake on becoming
a Director together with material detailing the
operations, policies and practices of the Company;
and
(cid:35)(cid:79)(cid:80)(cid:73)(cid:69)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:80)(cid:82)(cid:69)(cid:86)(cid:73)(cid:79)(cid:85)(cid:83)(cid:0)(cid:77)(cid:73)(cid:78)(cid:85)(cid:84)(cid:69)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:34)(cid:79)(cid:65)(cid:82)(cid:68)(cid:0)(cid:77)(cid:69)(cid:69)(cid:84)(cid:73)(cid:78)(cid:71)(cid:83)(cid:0)
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.
50
Annual Report 2008
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.
An evaluation of the performance of the Board was carried
out in the last quarter of the 2008 financial year. This
process involved completion of individual questionnaires
focused on process, structure, effectiveness and
contributions. Responses to the questionnaire were
collated and discussed by the Board in an open forum and
recommendations for improvement 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 familiarise 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.
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
Board Committees
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 November 2008.
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.
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
The Audit Committee assists the Board in discharging
its responsibilities to ensure that the Company complies
with appropriate and effective accounting, auditing,
internal control and compliance and reporting practices in
accordance with the Audit Committee Charter.
The role of the Audit Committee is to:
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:45)(cid:79)(cid:78)(cid:73)(cid:84)(cid:79)(cid:82)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:73)(cid:78)(cid:84)(cid:69)(cid:71)(cid:82)(cid:73)(cid:84)(cid:89)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:0)(cid:83)(cid:84)(cid:65)(cid:84)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)
Company, reviewing significant financial reporting
judgments;
(cid:50)(cid:69)(cid:86)(cid:73)(cid:69)(cid:87)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:35)(cid:79)(cid:77)(cid:80)(cid:65)(cid:78)(cid:89)(cid:7)(cid:83)(cid:0)(cid:73)(cid:78)(cid:84)(cid:69)(cid:82)(cid:78)(cid:65)(cid:76)(cid:0)(cid:108)(cid:78)(cid:65)(cid:78)(cid:67)(cid:73)(cid:65)(cid:76)(cid:0)(cid:67)(cid:79)(cid:78)(cid:84)(cid:82)(cid:79)(cid:76)(cid:0)
system and, unless expressly addressed by a
separate risk committee or by the Board itself, risk
management systems;
(cid:45)(cid:79)(cid:78)(cid:73)(cid:84)(cid:79)(cid:82)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:82)(cid:69)(cid:86)(cid:73)(cid:69)(cid:87)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:69)(cid:70)(cid:70)(cid:69)(cid:67)(cid:84)(cid:73)(cid:86)(cid:69)(cid:78)(cid:69)(cid:83)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)
Company’s internal audit function;
(cid:45)(cid:79)(cid:78)(cid:73)(cid:84)(cid:79)(cid:82)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:82)(cid:69)(cid:86)(cid:73)(cid:69)(cid:87)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:69)(cid:88)(cid:84)(cid:69)(cid:82)(cid:78)(cid:65)(cid:76)(cid:0)(cid:65)(cid:85)(cid:68)(cid:73)(cid:84)(cid:0)(cid:70)(cid:85)(cid:78)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)
including matters concerning appointment and
remuneration, independence and non-audit services;
and
(cid:48)(cid:69)(cid:82)(cid:70)(cid:79)(cid:82)(cid:77)(cid:0)(cid:83)(cid:85)(cid:67)(cid:72)(cid:0)(cid:79)(cid:84)(cid:72)(cid:69)(cid:82)(cid:0)(cid:70)(cid:85)(cid:78)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:65)(cid:83)(cid:0)(cid:65)(cid:83)(cid:83)(cid:73)(cid:71)(cid:78)(cid:69)(cid:68)(cid:0)(cid:66)(cid:89)(cid:0)(cid:76)(cid:65)(cid:87)(cid:12)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)
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:-
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:36)(cid:79)(cid:78)(cid:65)(cid:76)(cid:68)(cid:0)(cid:51)(cid:72)(cid:85)(cid:77)(cid:75)(cid:65)(cid:0)(cid:110)(cid:0)(cid:35)(cid:72)(cid:65)(cid:73)(cid:82)(cid:77)(cid:65)(cid:78)(cid:0)(cid:8)(cid:65)(cid:80)(cid:80)(cid:79)(cid:73)(cid:78)(cid:84)(cid:69)(cid:68)(cid:0)(cid:25)(cid:0)(cid:42)(cid:85)(cid:76)(cid:89)(cid:0)(cid:18)(cid:16)(cid:16)(cid:23)(cid:9)
Non-executive, Independent Director
(George Pirie undertook this role to the date of his
resignation , 9 July 2007)
(cid:51)(cid:69)(cid:65)(cid:78)(cid:0)(cid:44)(cid:76)(cid:69)(cid:87)(cid:69)(cid:76)(cid:89)(cid:78)(cid:0)(cid:110)(cid:0)(cid:46)(cid:79)(cid:78)(cid:13)(cid:69)(cid:88)(cid:69)(cid:67)(cid:85)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:36)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)
Independent Director
(cid:41)(cid:65)(cid:78)(cid:0)(cid:46)(cid:79)(cid:66)(cid:76)(cid:69)(cid:0)(cid:110)(cid:0)(cid:46)(cid:79)(cid:78)(cid:13)(cid:69)(cid:88)(cid:69)(cid:67)(cid:85)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:36)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)
Independent Director
Paladin Energy Ltd
51
Corporate Governance Statement
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 each quarterly meeting and on other occasions
where circumstances warrant. At the discretion of the
Chairman, having regard to the nature of the agenda,
relevant members of management may be invited to attend
meetings.
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.
Nomination Committee
The responsibilities of the Nomination Committee include:-
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:50)(cid:69)(cid:86)(cid:73)(cid:69)(cid:87)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:83)(cid:73)(cid:90)(cid:69)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:67)(cid:79)(cid:77)(cid:80)(cid:79)(cid:83)(cid:73)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:79)(cid:70)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:34)(cid:79)(cid:65)(cid:82)(cid:68)(cid:0)
and making recommendations to the Board on any
appropriate changes;
(cid:36)(cid:69)(cid:86)(cid:69)(cid:76)(cid:79)(cid:80)(cid:73)(cid:78)(cid:71)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:80)(cid:76)(cid:65)(cid:78)(cid:78)(cid:73)(cid:78)(cid:71)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:73)(cid:68)(cid:69)(cid:78)(cid:84)(cid:73)(cid:70)(cid:89)(cid:73)(cid:78)(cid:71)(cid:12)(cid:0)(cid:65)(cid:83)(cid:83)(cid:69)(cid:83)(cid:83)(cid:73)(cid:78)(cid:71)(cid:0)
and enhancing Director competencies;
(cid:45)(cid:65)(cid:75)(cid:73)(cid:78)(cid:71)(cid:0)(cid:82)(cid:69)(cid:67)(cid:79)(cid:77)(cid:77)(cid:69)(cid:78)(cid:68)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:0)(cid:79)(cid:78)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:65)(cid:80)(cid:80)(cid:79)(cid:73)(cid:78)(cid:84)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)
removal of Directors;
(cid:37)(cid:86)(cid:65)(cid:76)(cid:85)(cid:65)(cid:84)(cid:73)(cid:78)(cid:71)(cid:0)(cid:34)(cid:79)(cid:65)(cid:82)(cid:68)(cid:0)(cid:80)(cid:69)(cid:82)(cid:70)(cid:79)(cid:82)(cid:77)(cid:65)(cid:78)(cid:67)(cid:69)(cid:0)(cid:83)(cid:79)(cid:0)(cid:84)(cid:72)(cid:65)(cid:84)(cid:0)(cid:73)(cid:78)(cid:68)(cid:73)(cid:86)(cid:73)(cid:68)(cid:85)(cid:65)(cid:76)(cid:0)
and collective performance is regularly and fairly
assessed; and
(cid:48)(cid:82)(cid:79)(cid:86)(cid:73)(cid:68)(cid:73)(cid:78)(cid:71)(cid:0)(cid:78)(cid:69)(cid:87)(cid:0)(cid:36)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)(cid:83)(cid:0)(cid:87)(cid:73)(cid:84)(cid:72)(cid:0)(cid:65)(cid:78)(cid:0)(cid:73)(cid:78)(cid:68)(cid:85)(cid:67)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:73)(cid:78)(cid:84)(cid:79)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)
Company and provide all Directors with access to on
going education relevant to their position.
The Chairman of the Board chairs the Nomination
Committee. The Board considers that given the importance
of Board composition, it is appropriate that all members of
the Board are members of the Nomination Committee.
There were no meetings of the Nomination Committee
during the reporting period. This was due to there being no
change in Board membership during the year.
Remuneration Committee
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:-
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:50)(cid:69)(cid:77)(cid:85)(cid:78)(cid:69)(cid:82)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:80)(cid:65)(cid:67)(cid:75)(cid:65)(cid:71)(cid:69)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:69)(cid:88)(cid:69)(cid:67)(cid:85)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:36)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)(cid:83)(cid:12)(cid:0)
Non-executive Directors and senior executives; and
(cid:37)(cid:77)(cid:80)(cid:76)(cid:79)(cid:89)(cid:69)(cid:69)(cid:0)(cid:73)(cid:78)(cid:67)(cid:69)(cid:78)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:69)(cid:81)(cid:85)(cid:73)(cid:84)(cid:89)(cid:0)(cid:66)(cid:65)(cid:83)(cid:69)(cid:68)(cid:0)(cid:80)(cid:76)(cid:65)(cid:78)(cid:83)(cid:0)
including the appropriateness of performance
hurdles and total payments proposed.
52
Annual Report 2008
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
given the increasing complexity of the Paladin Group and
such factors as fees paid to 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:-
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:50)(cid:73)(cid:67)(cid:75)(cid:0)(cid:35)(cid:82)(cid:65)(cid:66)(cid:66)(cid:0)(cid:110)(cid:0)(cid:35)(cid:72)(cid:65)(cid:73)(cid:82)(cid:77)(cid:65)(cid:78)
Non-executive, Independent Director
(cid:51)(cid:69)(cid:65)(cid:78)(cid:0)(cid:44)(cid:76)(cid:69)(cid:87)(cid:69)(cid:76)(cid:89)(cid:78)(cid:0)(cid:110)(cid:0)(cid:46)(cid:79)(cid:78)(cid:13)(cid:69)(cid:88)(cid:69)(cid:67)(cid:85)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:36)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)
Independent Director
(cid:36)(cid:79)(cid:78)(cid:65)(cid:76)(cid:68)(cid:0)(cid:51)(cid:72)(cid:85)(cid:77)(cid:75)(cid:65)(cid:0)(cid:110)(cid:0)(cid:46)(cid:79)(cid:78)(cid:13)(cid:69)(cid:88)(cid:69)(cid:67)(cid:85)(cid:84)(cid:73)(cid:86)(cid:69)(cid:0)(cid:36)(cid:73)(cid:82)(cid:69)(cid:67)(cid:84)(cid:79)(cid:82)(cid:0)
(appointed 10 August 2007)
Independent Director
(George Pirie undertook this role to the date of his
resignation , 9 July 2007)
The number of meetings of the Remuneration Committee
during the reporting period and the names on the
attendance record is set out in the Directors’ Report.
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 2008 Annual
Report, including financial statements.
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 Securities
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 Financial Officer.
Risk Management
The Company has established policies on risk oversight
and management and has a risk management and internal
control system to manage the Company’s material business
risks. The Company has developed its risk management
policy in line with the implementation of the risk
management system and a risk management framework.
The Company’s Risk Management Policy is to identify,
assess, evaluate, monitor and mitigate risks which are
considered unacceptable to the Company. Operational
business controls have been identified and are in place
to ensure unwanted threats to the business are managed.
Paladin has also developed the business environment for
managers and senior personnel to assess risks and make
sound business decisions. Whilst all personnel have a
responsibility to identify and report to management risks
which may materially affect the Company, the Managing
Director has the overall responsibility for the management
of risk in the Company. The Managing Director is assisted
by the heads of operational business units who “champion”
risks within the business unit. Paladin has adopted the
Australian and New Zealand Standard 4360:2004, “Risk
Management” in managing the risk management process.
The risk management system is designed and
implemented by the Managing Director, with assistance
from senior executives, and is subject to the review of the
Board of Directors.
The Company maintains a Risk Register, which sets out
all of the enterprise risks that have been identified and
includes an assessment of the risk (risks analysed and
evaluated), and treatment plans to mitigate risks. The risk
register has been compiled and is subject to periodic
review by the Managing Director and senior management
to ensure adequate risk control measures have been
identified. An operational risk assessment system is in
place at the Langer Heinrich and Kayelekera operations,
which is continuously reviewed and updated.
Paladin is committed to continual improvement of the
risk management process and procedures to ensure the
highest return to shareholders and stakeholders.
Environment
The Company promotes an excellent standard of
environmental performance across its business. The
Company seeks to prevent, minimise, mitigate and
remediate any harmful effects of its operations on
the environment and strives to achieve continuous
improvement in environmental performance. The Company
has adopted an Environmental Policy which includes
compliance with all applicable environmental laws as a
minimum standard, development and implementation
of Environmental Management Systems, preparation of
Environmental and Radiological Management Plans and
Standards to identify, assess and manage environmental
risks, ensuring that its employees and contractors are
aware of their environmental responsibilities, consulting
with government and other stakeholders in relation to
the Company’s operations and proposed projects, and
undertaking regular audits and reviews and reporting on
environmental performance.
Safety and Occupational Health
The safety, health and wellbeing of employees, contractors
and the community are of core value to Paladin’s
operations. A healthy workforce contributes to business
success and the Company’s aim is for zero injuries. The
Company will encourage safe behaviour by employees
and contractors, establish a mindset that injuries are
preventable, provide safety education and training, and
conduct safety risk assessments. The safety and health
performance of Paladin will be measured through internal
and external internationally recognised auditing and
reporting processes.
Securities Ownership and Dealings
The Company has a Policy for Trading in Company
Securities which is binding on all Directors and employees.
The Policy was updated and subsequently approved
by the Board on 22 August 2008. This was due to the
Company’s progress from explorer to producer and to
keep the Company at the forefront of best practice in
corporate governance. Prescribed ‘blackout’ periods have
been introduced, during which all Directors, officers and
employees will be prohibited from dealing in the Company’s
securities. This is in addition to the overriding prohibition
against dealing in the Company’s securities when a person
is in possession of inside information. In addition, all
Directors, officers and employees will need to complete an
application form to gain the written acknowledgement of
either; the Chairman, Managing Director or the Company
Secretary before they deal in the Company’s securities.
Paladin Energy Ltd
53
Corporate Governance Statement
Pictures left to right: (1) Kayelekera, (2) and (3) Langer Heinrich
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:
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:40)(cid:69)(cid:76)(cid:80)(cid:0)(cid:68)(cid:69)(cid:84)(cid:69)(cid:67)(cid:84)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:65)(cid:68)(cid:68)(cid:82)(cid:69)(cid:83)(cid:83)(cid:0)(cid:85)(cid:78)(cid:65)(cid:67)(cid:67)(cid:69)(cid:80)(cid:84)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)(cid:67)(cid:79)(cid:78)(cid:68)(cid:85)(cid:67)(cid:84)(cid:27)
(cid:40)(cid:69)(cid:76)(cid:80)(cid:0)(cid:80)(cid:82)(cid:79)(cid:86)(cid:73)(cid:68)(cid:69)(cid:0)(cid:69)(cid:77)(cid:80)(cid:76)(cid:79)(cid:89)(cid:69)(cid:69)(cid:83)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:67)(cid:79)(cid:78)(cid:84)(cid:82)(cid:65)(cid:67)(cid:84)(cid:79)(cid:82)(cid:83)(cid:0)(cid:87)(cid:73)(cid:84)(cid:72)(cid:0)(cid:65)(cid:0)
supportive working environment in which they feel
able to raise issues of legitimate concern to them
and to the Company; and
(cid:40)(cid:69)(cid:76)(cid:80)(cid:0)(cid:80)(cid:82)(cid:79)(cid:84)(cid:69)(cid:67)(cid:84)(cid:0)(cid:80)(cid:69)(cid:79)(cid:80)(cid:76)(cid:69)(cid:0)(cid:87)(cid:72)(cid:79)(cid:0)(cid:82)(cid:69)(cid:80)(cid:79)(cid:82)(cid:84)(cid:0)(cid:85)(cid:78)(cid:65)(cid:67)(cid:67)(cid:69)(cid:80)(cid:84)(cid:65)(cid:66)(cid:76)(cid:69)(cid:0)
conduct in good faith.
The Company has a firm commitment to protecting the
privacy of any personal information that it collects and
holds and recognises 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.
The Company’s policy also prohibits hedging of options
granted under share options plans. This relates to both
vested and unvested options. Prohibited hedging
practices include put/call arrangements over “in money”
options to hedge against a future drop in share price. The
Board considers such hedging to be against the spirit
of a share option plan and inconsistent with shareholder
objectives.
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:
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:115)(cid:0)
(cid:37)(cid:83)(cid:84)(cid:65)(cid:66)(cid:76)(cid:73)(cid:83)(cid:72)(cid:0)(cid:65)(cid:0)(cid:77)(cid:73)(cid:78)(cid:73)(cid:77)(cid:85)(cid:77)(cid:0)(cid:71)(cid:76)(cid:79)(cid:66)(cid:65)(cid:76)(cid:0)(cid:83)(cid:84)(cid:65)(cid:78)(cid:68)(cid:65)(cid:82)(cid:68)(cid:0)(cid:79)(cid:70)(cid:0)(cid:67)(cid:79)(cid:78)(cid:68)(cid:85)(cid:67)(cid:84)(cid:0)(cid:66)(cid:89)(cid:0)
which all Paladin employees are expected to abide;
(cid:48)(cid:82)(cid:79)(cid:84)(cid:69)(cid:67)(cid:84)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)(cid:66)(cid:85)(cid:83)(cid:73)(cid:78)(cid:69)(cid:83)(cid:83)(cid:0)(cid:73)(cid:78)(cid:84)(cid:69)(cid:82)(cid:69)(cid:83)(cid:84)(cid:83)(cid:0)(cid:79)(cid:70)(cid:0)(cid:48)(cid:65)(cid:76)(cid:65)(cid:68)(cid:73)(cid:78)(cid:12)(cid:0)(cid:73)(cid:84)(cid:83)(cid:0)
employees and customers;
(cid:45)(cid:65)(cid:73)(cid:78)(cid:84)(cid:65)(cid:73)(cid:78)(cid:0)(cid:48)(cid:65)(cid:76)(cid:65)(cid:68)(cid:73)(cid:78)(cid:7)(cid:83)(cid:0)(cid:82)(cid:69)(cid:80)(cid:85)(cid:84)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:73)(cid:78)(cid:84)(cid:69)(cid:71)(cid:82)(cid:73)(cid:84)(cid:89)(cid:27)(cid:0)(cid:65)(cid:78)(cid:68)
(cid:38)(cid:65)(cid:67)(cid:73)(cid:76)(cid:73)(cid:84)(cid:65)(cid:84)(cid:69)(cid:0)(cid:67)(cid:79)(cid:77)(cid:80)(cid:76)(cid:73)(cid:65)(cid:78)(cid:67)(cid:69)(cid:0)(cid:66)(cid:89)(cid:0)(cid:48)(cid:65)(cid:76)(cid:65)(cid:68)(cid:73)(cid:78)(cid:0)(cid:69)(cid:77)(cid:80)(cid:76)(cid:79)(cid:89)(cid:69)(cid:69)(cid:83)(cid:0)(cid:87)(cid:73)(cid:84)(cid:72)(cid:0)
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.
54
Annual Report 2008
building our reputation
directors’ report
The Directors present their report on the Group consisting
of Paladin Energy Ltd and the entities it controlled at the
end of, or during, the year ended 30 June 2008.
Paladin Energy Ltd
55
Directors’ Report
Directors
The following persons were Directors of Paladin Energy Ltd
(Company) and were in office for this entire period unless
otherwise indicated:
Mr Rick Crabb
(Non-executive Chairman)
Mr John Borshoff
(Managing Director)
Mr Sean Llewelyn
(Non-executive Director)
Mr Ian Noble
(Non-executive Director)
Mr Donald Shumka (Non-executive Director),
Mr George Pirie
appointed 9 July 2007
(Non-executive Director),
resigned 9 July 2007
Principal Activity
The principal activity of the Group was exploration,
evaluation, development and operation of uranium projects
in Africa and Australia.
Review and Results of Operations
A detailed operational and financial review of the Group is
set out on pages 20 to 41 of this report under the section
entitled Management Discussion and Analysis.
The Groups loss after tax for the year is US$36.0 million
(2007:US$37.6 million) representing a decrease of 4% from
the previous year.
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 Group during the financial year not otherwise dealt with
in this report or listed below.
On 11 March 2008, the Company issued US$325 million in
convertible bonds with an underlying coupon rate of 5.0%,
maturity 11 March 2013 and a conversion price of US$6.59
for Company shares.
56
Annual Report 2008
Significant Events After The Balance Sheet Date
Since the end of the financial period, the Directors are not
aware of any other matter or circumstance not otherwise
dealt with in this report or the Financial Statements, that
has significantly or may significantly affect the operations
of the Group, the results of those operations or the state of
affairs of the Group in subsequent years with the exception
of the following, the financial effects of which have not been
provided for in the 30 June 2008 Financial Report:
Allotment of Shares and Issue of Employee Options
On 3 July 2008 the Company announced the granting of
450,000 unlisted incentive options, exercisable at A$5.27
vesting after 3 years, subject to performance conditions
as outlined in the Executive Share Option Plan, with a 5
year expiry and the allotment of 400,000 fully paid ordinary
shares after the exercise of employee options. On 10
September 2008 the Company announced the allotment
of 100,000 fully paid ordinary shares after the exercise of
employee options.
Appointment of Mr Ross Glossop
On 10 July 2008, the Company announced the
appointment of Mr Ross Glossop as Chief Financial Officer
(CFO) of the Paladin group of companies. Mr Glossop
has over 25 years of experience in the resources industry,
where he has held positions in internal audit, treasury, and
finance with increasing managerial responsibilities.
Increased Holding in Deep Yellow Ltd
On 28 July 2008, the Group acquired an additional
12,500,000 shares in Deep Yellow Ltd pursuant to the
exercise of 12,500,000 options exercisable at 8.1 Australian
cents. The additional investments totalled A$1.0 million
(US$1.0 million). After this acquisition the Group now holds
15.30% of Deep Yellow Ltd.
Resources Upgrade for Langer Heinrich Uranium
Project
On the 28 August 2008, the Company announced an
updated Mineral Resource estimate for the LHUP. Following
the drilling of 717 RC holes for a total of 17,751m in all
Details at Langer Heinrich, a new Mineral Resource of
56.4Mt at a grade of 0.06% U3O8 for 32,858t (72.4Mlb)
U3O8 in the Measured and Indicated categories and 70.7Mt
at a grade of 0.06% U3O8 for 41,557t (91.6Mlb) U3O8 in
the Inferred category was estimated. The total resource
for Langer Heinrich now stands at some 74,415t (164Mlb)
U3O8. The Directors believe a considerable amount of
these Inferred Resources will be able to be converted to
Measured and Indicated Resource categories following
additional drilling in the future. Ore Reserve studies are
currently underway and are expected to be completed in
the near future.
Increased Holding in Summit Resources Ltd
Information on Directors
On 28 August 2008, the Company acquired an additional
3,378,733 shares in Summit Resources Ltd pursuant
to a renounceable rights issue and 289,739 shares via
subscription for the shortfall of the rights issue. The
additional investment totalled A$9.1 million (US$8.6
million). After these acquisitions the Company now holds
81.99% of Summit Resources Ltd.
Likely Developments
Likely developments in the operations of the Group
constituted by the Company and the entities it controls
from time to time are set out under the section entitled
Management, Discussion and Analysis.
Environmental Regulations
The Group is subject to significant environmental regulation
in respect to its exploration, evaluation, development
and operational activities for uranium projects under
the laws of the countries in which its activities are
conducted. The Group currently has an operation in
Namibia, a development in Malawi and exploration
projects in Australia. The Group’s Policy is to comply with
all applicable environmental laws and regulations in the
countries in which it conducts business.
Specific environmental regulations contained within the
approvals and licences for the exploration, development
and operation apply to the activities conducted at each
site. In addition there are many other international and
industry standards applied to the Group’s activities,
including those specified for the global uranium industry.
These environmental laws, regulations and standards relate
to environmental factors such as radiation, water, flora,
fauna, air quality, noise, waste management and pollution
control.
The Directors are not aware of any environmental matters
which would have a significant adverse effect on the
Group.
Mr Rick Wayne Crabb (Non-executive Chairman) Age 51
B. Juris (Hons), LLB, MBA, FAICD
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.
He has advised on all legal aspects including financing,
marketing, government agreements and construction
contracts for many resource development projects in
Australia and Africa. Mr Crabb now focuses on his public
company directorships and investments. He has been
involved as a director and strategic shareholder in a
number of successful public companies. He is presently
also a director of Golden Rim Resources Ltd (since 2001),
Ashburton Minerals Ltd (since 1999), Otto Energy Ltd
(since 2004), Port Bouvard Ltd (since 1996) and Royal
Resources Limited (since 2004).
Mr Crabb was appointed a director on 8 February 1994
and Chairman on 27 March 2003.
Former directorships of listed companies in last
three years
ST Synergy Ltd from 2001 to 2005
Aldershot Resources Ltd from 2004 to 2005
Thundelarra Exploration Ltd from 2003 to 2007
Special Responsibilities
Chairman of the Board
Chairman of Remuneration Committee from 1 June 2005
Chairman of Nomination Committee from 1 June 2005
Paladin Energy Ltd
57
Directors’ Report
Mr John Borshoff (Managing Director) Age 63
B.Sc., F.AusIMM, FAICD
Mr Donald Shumka (Non-executive Director) Age 66
B.A., MBA
Mr Borshoff is a geologist who has been involved in the
Australian and African exploration and mining industry
for over 30 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. The
primary focus of the Uranerz Group was the search and
development of uranium with the company operating
extensively throughout Australia, North America and Africa.
He has extensive knowledge of the uranium industry and
experience in company management, strategic planning
and administration. He serves on a number of industry
organisations including the board of the Australian Uranium
Association, he is Chair of that associations Code of
Practice working committee.
Mr Borshoff founded Paladin Energy Ltd and was
appointed a Director on 24 September 1993.
Special Responsibilities
Managing Director
Member of Nomination Committee from 1 June 2005
Mr Sean Reveille Llewelyn (Non-executive Director)
Age 60
LL.B
Mr Llewelyn first qualified as a solicitor in Australia
and England, however he has worked in the finance
and merchant banking industries for more than 20
years 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
many 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
58
Annual Report 2008
Mr Shumka is Vancouver based and is the President
and Managing Director of Walden Management Ltd., a
consulting firm specialising in natural resources. From
1989 to 2004, he was Managing Director, Investment
Banking with CIBC World Markets and Raymond James
Ltd. Prior to 1989, Mr Shumka was Vice President, Finance
and Chief Financial Officer of West Fraser Timber Co. Ltd.,
one of Canada’s largest forest products companies. He
holds a Bachelor of Arts Degree in Economics from the
University of British Columbia and a Master of Business
Administration Degree from Harvard University. He
currently sits on the boards of Eldorado Gold Corporation
and Magma Energy Corporation.
Mr Shumka was appointed to the Board on 9 July 2007.
Special Responsibilities
Chairman of Audit Committee from 9 July 2007
Member of Remuneration Committee from 10 August 2007
Member of Nomination Committee from 10 August 2007
Mr Ian Urquhart Noble (Non-executive Director) Age 67
BSc (Metallurgy), F.AusIMM, 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
Interests In The Shares and Options of The
Company
Resignation, Election and Continuation In Office
of Directors
As at date of this report, the interests of the Directors in the
shares and options of Paladin Energy Ltd were:
Number of
Options over
Ordinary Shares Ordinary Shares
Number of
Mr Rick Crabb
5,581,528*
-
Mr John Borshoff
21,591,394
2,750,000
Mr Ian Noble
21,000
-
All other directors do not have an interest in shares and
options of Paladin Energy Ltd.
* Refer to Note 24 To The Consolidated Financial Statements, Key
Management Personnel, in respect of events surrounding the
decreased shareholding.
Company Secretary
Ms Gillian Swaby Age 48
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.
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. She currently serves as a
Non-executive Director on Deep Yellow Limited, in which
Paladin holds a 15.30% interest at 28 July 2008.
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:
In accordance with the Constitution of the Company, Mr
Sean Llewelyn retires by rotation at the Annual General
Meeting and, being eligible, offers himself for re-election.
Remuneration Report (Audited)
This remuneration report outlines the director and executive
remuneration arrangements of the Company and the Group
in accordance with the requirements of the Corporations
Act 2001 and its Regulations. For the purposes of this
report, key management personnel (KMP) of the Group
are defined as those persons having authority and
responsibility for planning, directing and controlling the
major activities of the Company and the Group, directly
or indirectly, including any director whether executive or
otherwise) of the parent company, and includes the five
executives in the Parent and the Group receiving the
highest remuneration.
For the purposes of this report, the term ‘executive’
encompasses the managing director, senior executives,
general managers and secretaries of the Parent and the
Group.
Details of Key Management Personnel (Including The
Five Highest Executives of The Company and The
Group)
Compensation of Key Management Personnel
i) Compensation Policy (audited)
The Remuneration Committee, on behalf of the Board
of Directors, monitors compensation of Directors and
Executives of the Company.
Generally, compensation is provided by the Company to
its Executives (including the Managing Director), 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.
Board of
Directors’ meetings
Audit Committee
meetings
Remuneration
Committee meetings
Nomination
Committee meetings
Number
attended
Number
eligible
to attend
Number
attended
Number
eligible
to attend
Number
attended
Number
eligible
to attend
Number
attended
Number
eligible
to attend
9
9
8
8
7
9
9
9
9
9
-
-
4
5
5
-
-
5
5
5
2
-
2
2
-
2
-
2
2
-
-
-
-
-
-
-
-
-
-
-
Name
Mr Rick Crabb
Mr John Borshoff
Mr Sean Llewelyn
Mr Donald Shumka
Mr Ian Noble
Paladin Energy Ltd
59
Directors’ Report
The compensation programme for the Executives of the
Company is designed to ensure that the level and form of
compensation achieves certain objectives, including:
(a)
attracting and retaining talented, qualified and
effective Executives;
(b) motivating their short and long-term performance;
and
As the Company has only recently entered the production
phase, the overall level of compensation does not focus
on the earnings of the Company. The Board is, however,
cognisant of general shareholder concern that long-term
equity-based reward for key staff should be linked to the
achievement by the Company of a performance condition.
Accordingly, options granted are subject to performance
conditions which must be satisfied before the options vest.
(c)
aligning their interests with those of the Company’s
shareholders.
Directors’ Fees
In line with Corporate Governance principles, Non-
executive Directors are remunerated solely by way of
fees and statutory superannuation. The total pool of fees
available is set by shareholders in general meeting.
Following an extensive review with the assistance of
external specialist remuneration consultants to both revise
the share option plan and determine parameters for the
payment of cash bonuses, the new Executive Share Option
Plan was approved by shareholders at the 2006 Annual
General Meeting. This plan is designed to increase the
motivation of key staff and create a stronger link between
increasing shareholder value and employee reward.
Company Performance
The overall level of compensation takes into account the
growth in shareholder wealth of the Company. The chart
below compares, assuming an initial investment of A$100,
the yearly percentage change in the cumulative total
shareholder return on the Company’s Ordinary Shares
against the cumulative total shareholder return of the
S&P/ASX 200 Index for the Company’s five most recently
completed financial years.
The Company
S&P 200 Index
)
D
U
A
(
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
–
Jun-03
Jun-04
Jun-05
Jun-06
Jun-07
Jun-08
30
June
2004
A$
30
June
2005
A$
30
June
2006
A$
30
30
June June
2007 2008
A$
A$
The Company
1,227 10,682 37,364 75,091 58,273
S&P/ASX 200 Index
117 141 168 207
172
60
Annual Report 2008
At the 2007 Annual General Meeting, shareholders
approved an increase in the total pool of fees available to
be paid to Non-executive Directors to A$900,000. Given the
growth of the Company such an increase was considered
necessary to attract and retain directors of a calibre
required to effectively guide and monitor the business of
the Company and to remunerate them appropriately for the
expectations placed upon them both by the Company and
the regulatory environment in which it operates.
Fees payable to Non-executive Directors are set at
A$160,000 per annum each, effective 1 February 2008,
inclusive of any superannuation obligations. Exceptions to
this fee structure are the Chairman of the Audit Committee
who receives an additional A$20,000 per annum, and
the Chairman of the Board who receives an additional
A$165,000 per annum. The increased fees were arrived
at on the basis of a review by external independent
remuneration consultants looking at companies with similar
market capitalisation.
Compensation paid to the Managing Director is set out
under (iv) Contracts for Services.
In addition, the Company’s Constitution provides for
additional compensation 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 compensate such
Director in accordance with such services or exertions,
and such compensation may be either in addition to or in
substitution for the Directors’ fees referred to above.
Executives
Base Salary
The first step to attracting and retaining talented, qualified
and effective Executives is paying base salaries which
are competitive in the markets in which the Company
operates. Competitive salary information on companies
of a comparable size in the resource industry is compiled
from a variety of sources, including surveys conducted by
independent consultants and national and international
publications. In addition, external remuneration consultants
are involved in the process of salary determination.
Expatriate Benefits
Share Incentive Option Plan
Executives who are required to fulfil their responsibilities
as an expatriate receive benefits which may include health
insurance, housing and car allowances, educational fees
and tax advisory services.
Short-term Cash Bonus
The Company provides short-term bonuses to Executives
of up to 20% of base salary. The short-term cash bonuses
are entirely discretionary however the following measures
are taken into account where these are applicable to the
specific Executive:
(a)
production performance;
(b) project development performance;
(c)
additional uranium resources delineated;
(d) performance of the Company in meeting its various
other objectives;
(e)
financial performance of the Company; and
(f)
such other matters determined by the Remuneration
Committee in its discretion.
Specific targets for individuals have not been set.
On an annual basis, as part of the remuneration review
process and taking into account both the individuals the
Company’s performance, the Remuneration Committee in
accordance with its charter, determines the amount, if any,
of the short-term bonus to be paid.
In respect of the Managing Director, a bonus of up to
100% of base salary can be achieved, to be determined
by the Remuneration Committee having consideration to
outcomes achieved during the year.
Outcomes to be considered include:
-
-
-
-
-
-
-
Continued nameplate (or better) production at
Langer Heinrich;
Kayelekera construction continuing on schedule and
within budget;
continued high safety and environmental
achievements;
continued good social programmes in Karonga
region;
development of the Paladin Nuclear Ltd business
model;
successful M&A activity;
ongoing improvement (to handle corporate growth)
of organisational structure, controls, reporting and
infrastructure; and
-
impact on total shareholder return.
The above measures have been selected to align
the interests of Executives with shareholders. The
Remuneration Committee is responsible for assessing
whether the measures are met.
The Company believes that encouraging its key employees
to become shareholders is the best way of aligning their
interests with those of its shareholders. Equity participation
is accomplished through the Company’s Executive Share
Option Plan which was approved by shareholders in
November 2006. This replaced the previous plan and the
Board believes that grants made under this Plan provide a
powerful tool to achieve the following objectives:-
-
-
-
-
enable the Company to recruit and retain the talented
people needed to achieve the Company’s business
objectives;
link the reward of key staff with the achievement of
strategic goals and the long-term performance
of the Company;
align the financial interests of Plan participants with
those of the shareholders; and
provide incentives to Plan participants to focus on
superior performance that creates shareholder
value.
The Board determines the number of options offered to
an employee by reference to their base package and
the option value, based on the binomial tree method with
reference to the following formula:-
Number of Options =
Base Package x Stretch LTI%
Option value (based on the
binomial tree model)
The resultant number of options may be adjusted, at the
Board’s discretion, to deal with any special circumstances
or other factors.
“Stretch LTI” refers to the long-term incentive percentage
of the Base Package that allows the maximum number of
options to vest (i.e. become able to be exercised) if the
performance condition is satisfied to the maximum.
The “binomial tree model” for determining the option value
is the mathematical model used in accordance with the
International Financial Reporting Standards.
By way of example, the stretch LTI is, in the case of the
Managing Director, 180%; and senior executives 100%.
Information on the Option Plan is set out under Note 29
Share Based Payment Plan. During the financial year, a
number of options were granted to attract high calibre
executives, in what continues to be a highly competitive
and tight market for human capital. These options granted
during the year included specific vesting periods.
The Company’s policy prohibits hedging of options granted
under share option plans. Prohibited hedging practices
include put/call arrangements over “in money” options
to hedge against a future drop in share price. The Board
considers such hedging to be against the spirit of a share
option plan and inconsistent with shareholder objectives.
Paladin Energy Ltd
61
Directors’ Report
ii) Compensation of Key Management Personnel for the year ended 30 June 2008 (Consolidated and Company)
Short-term
Post
Share
Employment Based
Payment
Total Total (3)
Total
Total
Perfor- Perfor-
mance mance
Related Related
Salary
& fees
A$’000
Non
Cash
bonus Monetary
Benefits
A$’000 A$’000
A$’000
Other Superan- Options
nuation
A$’000
A$’000 A$’000 US$’000 A$’000
%
Directors
Mr Rick Crabb
256
-
Mr John Borshoff
1,587
600
Mr Sean Llewelyn
Mr George Pirie
Mr Ian Noble
Mr Donald Shumka
127
2
127
151
-
-
-
-
Subtotal
2,250
600
Executives
Ms Gillian Swaby
Mr Ron Chamberlain
Mr Wyatt Buck
-
272
341
Mr James Eggins
317
35
20
50
20
-
30
50
-
50
50
-
-
-
575
302
247
211
427
143
34
157
-
3,026
5,276
305
905
Mr Dustin Garrow
Mr David Marsh
Mr Brendan O’Hara
Mr Simon Solomons
Mr Andrew Morgan
Mr Eduard Becker
Ms Cathy Gupanis
Mr Greg Walker
Mr Ross Glossop
Subtotal
Total
-
-
-
-
-
-
-
-
-
10
-
-
-
-
22
-
-
-
8
-
40
40
-
-
-
-
-
-
-
390 (1)
-
-
-
-
-
-
-
-
-
-
-
-
13
13
11
-
11
-
48
-
13
41
13
-
13
13
7
13
7
2
7
-
-
269
240
-
-
3,145
5,345
4,779
3,745
70.1
-
-
-
-
138
2
138
151
123
2
123
135
-
-
-
-
-
-
-
-
3,145
6,043
5,402
3,745
229
170
598
462
501
953
854
225
544
115
30 (2)
168
15 (2)
654
475
1,040
812
1,076
585
425
930
726
962
1,298
1,161
1,164
1,041
465
1,034
315
66
340
15
416
925
282
59
304
13
264
190
648
482
501
983
904
225
594
165
30
168
40.4
40.0
62.3
59.4
46.6
75.7
77.7
48.4
57.4
52.4
45.5
49.4
15
100.0
390
129
4,864
8,754
7,829
5,169
390
177
8,009
14,797 13,231
8,914
(1) Other represents fees paid for company secretarial services to a company of which Ms Gillian Swaby is a director and shareholder.
(2) Options were granted on acceptance of the position prior to commencement
(3) Exchange rate used in average for year US$ 1= AU$ 1.11832
62
Annual Report 2008
ii) Compensation of Key Management Personnel for the year ended 30 June 2007 (Consolidated and Company)
Short-term
Post
Share
Employment Based
Payment
Total Total (4)
Total
Total
Perfor- Perfor-
mance mance
Related Related
Non
Cash
bonus Monetary
Benefits
A$’000 A$’000
A$’000
Other Superan- Options
nuation
A$’000
A$’000 A$’000 US$’000 A$’000
%
Salary
& fees
A$’000
202
921
95
109
95
Directors
Mr Rick Crabb
Mr John Borshoff
Mr Sean Llewelyn
Mr George Pirie
Mr Ian Noble
-
600
-
-
-
Subtotal
1,422
600
Executives
Mr Garnet Halliday (deceased) 355
150
Ms Gillian Swaby
Mr Ron Chamberlain
-
232
Mr Wyatt Buck
315
Mr James Eggins
340
Mr Dustin Garrow
Mr David Marsh
Mr Brendan O’Hara
266
280
180
50
20
30
35
-
38
5
-
-
-
-
-
-
-
-
-
21
-
178 (1)
302 (2)
-
-
-
- 5,249 (3)
127
-
-
-
-
-
-
-
-
-
13
13
9
-
9
-
215
169
-
-
1,098
2,632
2,064
1,698
64.5
-
-
-
104
109
104
82
85
82
-
-
-
-
-
-
44
1,098
3,164
2,482
1,698
9
-
13
-
13
-
13
12
60
-
55
167
692
407
432
543
319
339
150
105
187
1,136
1,502
1,178
1,166
532
554
1,354
1,052
920
722
6,069
4,760
567
554
1,812
1,421
1,392
1,249
980
1,057
4,850
13,083
10,262
5,178
21.7
25.8
43.3
77.6
61.6
9.1
76.8
84.6
Subtotal
Total
1,968
328
148
5,729
3,390
928
148
5,729
104
5,948
16,247
12,744
6,876
(1) Other represents a death benefit.
(2) Other represents fees paid for company secretarial services to a company of which Ms Gillian Swaby is a director and shareholder.
(3) Other represents a discretionary payment relating to the 2004 to 2006 formative period for the Company.
(4) Exchange rate used in average for year US$1 = AU$ 1.27493
(cid:73)(cid:73)(cid:73)(cid:9)(cid:0) (cid:35)(cid:79)(cid:77)(cid:80)(cid:69)(cid:78)(cid:83)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:66)(cid:89)(cid:0)(cid:35)(cid:65)(cid:84)(cid:69)(cid:71)(cid:79)(cid:82)(cid:89)(cid:26)(cid:0)(cid:43)(cid:69)(cid:89)(cid:0)(cid:45)(cid:65)(cid:78)(cid:65)(cid:71)(cid:69)(cid:77)(cid:69)(cid:78)(cid:84)(cid:0)(cid:48)(cid:69)(cid:82)(cid:83)(cid:79)(cid:78)(cid:78)(cid:69)(cid:76)
Short-Term
Post Employment
Share-Based Payment
Consolidated
Parent Entity
2008
US$’000
2007
US$’000
2008
US$’000
2007
US$’000
5,911
158
7,162
7,998
81
4,655
5,553
121
6,627
7,710
81
3,774
13,231
12,744
12,301
11,565
Paladin Energy Ltd
63
Directors’ Report
iv) Contracts for Services
Remuneration and other terms of employment for the
Key Management Personnel are normally formalised in
contracts for services.
All contracts with Key Management Personnel may be
terminated early by either party providing between 3 to 6
months written notice or providing payments in lieu of the
notice period (based on fixed component of remuneration).
On termination notice by the Company, any options that
have vested, or that will vest during the notice period,
will be released. Options that have not yet vested will be
forfeited.
Mr John Borshoff, Managing Director
Mr Dustin Garrow, Executive General Manager
– Marketing
Term of agreement – no fixed term.
Base salary, of A$550,000, increased to A$600,000
effective 1 January 2008.
No termination benefit is specified in the agreement.
Mr Brendan O’Hara, General Manager
– Special Projects & Risk
Term of agreement – no fixed term.
Base salary, inclusive of superannuation, of A$220,000,
increased to A$300,000 effective 1 January 2008.
Term of agreement – 2 years commencing 1 March 2008.
No termination benefit is specified in the agreement.
Base salary, inclusive of superannuation, of A$1,400,000
increased to A$1,800,000 effective 1 January 2008.
Payment of a benefit on retirement or 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 was approved by the
Company shareholders on 9 November 2005.
Ms Gillian Swaby, Company Secretary
No contract for service exists for Ms Gillian Swaby and fees
are paid in the ordinary course of business for company
secretarial services to a company of which Ms Gillian
Swaby is a director and shareholder.
Mr Ron Chamberlain, Chief Financial Officer
(Resigned 18th July 2008)
Term of agreement – no fixed term.
Mr David Marsh, General Manager
– Technical Project Development
Term of agreement – no fixed term.
Base salary, inclusive of superannuation, of A$300,000,
increased to A$330,000 effective 1 January 2008.
No termination benefit is specified in the agreement.
Mr Ross Glossop, Chief Financial Officer
(Commenced 18th July 2008)
Term of agreement – no fixed term.
Base salary, inclusive of superannuation of A$425,000.
No termination benefit is specified in the agreement.
Options were granted on acceptance of the position prior
to his commencement on 18th July 2008.
Base salary, inclusive of superannuation, of A$250,000
increased to A$320,000 effective 1 January 2008.
Mr Simon Solomons, Executive General Manager –
Operations Development (Commenced 12th January 2008)
No termination benefit is specified in the agreement.
Term of agreement – no fixed term.
Base salary, inclusive of superannuation of A$430,000.
No termination benefit is specified in the agreement.
Mr Andrew Morgan, General Manager Project
Construction (Commenced 1st July 2007,
formerly on contract for 2 years)
Term of agreement – no fixed term.
Base salary, inclusive of superannuation of A$366,666 plus
20% expatriate allowance increased to A$400,000 plus
10% expatriate allowance effective 1 January 2008.
No termination benefit is specified in the agreement.
Mr Wyatt Buck, General Manager
– Production & Langer Heinrich Operations
Term of agreement – no fixed term.
Base salary, inclusive of superannuation, of A$280,000 +
10% expatriate allowance increased to A$400,000 effective
1 January 2008.
No termination benefit is specified in the agreement.
Mr James Eggins, General Manager
– Sales and Contract Administration
Term of agreement – no fixed term.
Base salary, inclusive of superannuation, of A$320,000
increased to A$340,000 effective 1 January 2008.
No termination benefit is specified in the agreement.
64
Annual Report 2008
Mr Ed Becker, General Manager – Geology & Exploration
(Promoted 1st January 2008)
Term of agreement – no fixed term.
Remuneration for all parties referred to above includes
provision of an annual discretionary bonus and initial and
ongoing discretionary grant of options.
Base salary, inclusive of superannuation of A$300,000.
(cid:86)(cid:9)(cid:0) (cid:35)(cid:79)(cid:77)(cid:80)(cid:69)(cid:78)(cid:83)(cid:65)(cid:84)(cid:73)(cid:79)(cid:78)(cid:0)(cid:47)(cid:80)(cid:84)(cid:73)(cid:79)(cid:78)(cid:83)(cid:26)(cid:0)(cid:39)(cid:82)(cid:65)(cid:78)(cid:84)(cid:69)(cid:68)(cid:0)(cid:65)(cid:78)(cid:68)(cid:0)(cid:86)(cid:69)(cid:83)(cid:84)(cid:69)(cid:68)(cid:0)(cid:68)(cid:85)(cid:82)(cid:73)(cid:78)(cid:71)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)
No termination benefit is specified in the agreement.
Ms Cathy Gupanis, General Manager – Sustainable
Development (Commenced 1st May 2008, formerly a
consultant for 10 years)
Term of agreement – no fixed term.
Base salary, inclusive of superannuation of A$218,625.
No termination benefit is specified in the agreement.
Mr Greg Walker, General Manager – International Affairs
(Commenced 7th January 2008)
Term of agreement – no fixed term.
Base salary, inclusive of superannuation of A$325,000.
No termination benefit is specified in the agreement.
year (Consolidated and Company)
During the financial year options were granted as equity
compensation benefits under the long-term incentive
plan to certain Key Management Personnel. The options
were issued at no consideration. Each option entitles the
holder to subscribe for one fully paid ordinary share in the
entity at the exercise price. The contractual life of each
option granted is five years (2007: five years). There are
no cash settlement alternatives. No options have been
granted since the end of the year to the Key Management
Personnel listed below. For further details relating to the
options, refer to Note 29.
Vested
Granted
Terms & Conditions for each Grant
30 June 2008
No.
No.
Fair Value Exercise
per option Price per
at grant
date (A$)
(Note 29) (Note 29)
option
(A$)
Grant
Date
Expiry
Date
First
Last
Exercise Exercise
Date
Date
Directors
Mr John Borshoff
Executives
1,250,000
29/01/08
A$2.90
A$4.50
29/01/13
29/01/11 29/01/13
Ms Gillian Swaby
-
258,785
29/01/08
A$2.66
A$4.50
29/01/13
29/01/11 29/01/13
Mr Ron Chamberlain
200,000
100,545
29/01/08
A$2.66
A$4.50
29/01/13
29/01/11 29/01/13
Mr Wyatt Buck
Mr James Eggins
Mr Dustin Garrow
Mr David Marsh
500,000
201,533
29/01/08
A$2.66
A$4.50
29/01/13
29/01/11 29/01/13
650,000
146,698
29/01/08
A$2.66
A$4.50
29/01/13
29/01/11 29/01/13
600,000
266,199
29/01/08
A$2.66
A$4.50
29/01/13
29/01/11 29/01/13
500,000
140,654
29/01/08
A$2.66
A$4.50
29/01/13
29/01/11 29/01/13
Mr Brendan O’Hara
500,000
216,480
29/01/08
A$2.66
A$4.50
29/01/13
29/01/11 29/01/13
Mr Simon Solomons
-
600,000
29/01/08
A$2.66
A$4.50
29/01/13
29/01/11 29/01/13
Mr Andrew Morgan
150,000
235,296
29/01/08
A$2.66
A$4.50
29/01/13
29/01/11 29/01/13
Mr Eduard Becker
Ms Cathy Gupanis
Mr Greg Walker
Mr Ross Glossop
-
-
-
208,925
29/01/08
A$2.66
A$4.50
29/01/13
29/01/11 29/01/13
25,000
18/04/08
A$2.61
A$4.59
18/04/13
18/04/11 18/04/13
450,000
29/01/08
A$2.66
A$4.50
29/01/13
29/01/11 29/01/13
450,000
18/06/08
A$3.01
A$5.27
18/06/13
18/06/11 18/06/13
Total
3,100,000
4,550,115
Paladin Energy Ltd
65
Directors’ Report
Vested
Granted
Terms & Conditions for each Grant
30 June 2007
No.
No.
Directors
Fair Value Exercise
per option Price per
at grant
date (A$)
(Note 29) (Note 29)
option
(A$)
Grant
Date
Expiry
Date
First
Last
Exercise Exercise
Date
Date
Mr John Borshoff
-
1,500,000
1/02/07
A$5.27
A$8.77
1/02/12
1/02/10
1/02/12
Executives
Ms Gillian Swaby
Mr Ron Chamberlain
Mr Wyatt Buck
Mr James Eggins
Mr Dustin Garrow
Mr David Marsh
Mr Brendan O’Hara
Mr Brendan O’Hara
-
-
75,000
35,700
1/02/07
A$5.27
A$8.77
1/02/12
1/02/10
1/02/12
1/02/07
A$4.65
A$8.77
1/02/12
1/02/10
1/02/12
500,000
150,000
1/02/07
A$4.65
A$8.77
1/02/12
1/02/10
1/02/12
-
-
-
-
-
100,000
1/02/07
A$4.65
A$8.77
1/02/12
1/02/10
1/02/12
78,570
1/02/07
A$4.65
A$8.77
1/02/12
1/02/10
1/02/12
100,000
1/02/07
A$4.65
A$8.77
1/02/12
1/02/10
1/02/12
1,000,000
5/07/06
A$1.96
A$5.50
5/07/09
5/01/08
5/07/09
31,400
1/02/07
A$4.65
A$8.77
1/02/12
1/02/10
1/02/12
Total
500,000
3,070,670
vi) Shares Issued on exercise of Compensation Options (Consolidated and Company)
30 June 2008
No.
Shares issued
Directors
Mr John Borshoff
Mr Rick Crabb
Executives
Ms Gillian Swaby
Mr Ron Chamberlain
Total
3,750,000
3,250,000
2,750,000
200,000
9,750,000
Paid per share
(Note 29)
A$
A$1.00
A$1.00
A$1.00
A$2.80
Unpaid per share
A$
-
-
-
-
No other Key Management Personnel exercised options during the year ended 30 June 2008.
30 June 2007
No.
Shares issued
Executives
Mr Ron Chamberlain
Mr Ron Chamberlain
Mr Garnet Halliday
Mr Garnet Halliday
Mr James Eggins
Mr Dustin Garrow
Total
500,000
300,000
2,000,000
1,000,000
350,000
400,000
4,550,000
Paid per share
(Note 29)
A$
A$1.00
A$1.25
A$1.00
A$1.25
A$1.00
A$1.00
Unpaid per share
A$
-
-
-
-
-
-
No other Key Management Personnel exercised options during the year ended 30 June 2007.
66
Annual Report 2008
Value at
exercise date
A$
23,100,000
20,020,000
18,700,000
1,282,000
Value at
exercise date
A$
3,990,000
1,248,000
14,240,000
7,120,000
1,456,000
1,816,000
vii) Options granted as part of remuneration
Value of options
granted during
the year
A$000
Value of options
exercised during
the year
A$000
Value of options
lapsed during
the year
A$000
% Remuneration
consisting of
for the year
A$000
John Borshoff
Gillian Swaby
Ron Chamberlain
Wyatt Buck
James Eggins
Dustin Garrow
David Marsh
Brendan O’Hara
Simon Solomons
Andrew Morgan
Eduard Becker
Cathy Gupanis
Greg Walker
Ross Glossop
3,625
688
267
536
390
708
374
576
1,596
626
556
65
1,197
1,354
948
670
288
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
58.8%
35.0%
35.8%
57.5%
56.9%
46.6%
73.4%
73.4%
48.4%
52.6%
36.5%
45.5%
49.4%
100.0%
There were no alterations to the terms and conditions of options granted as remuneration since their grant date.
The outstanding balance of Ron Chamberlain’s unvested options was forfeited following his resignation from the company, on
10 July 2008.
The maximum grant, which will be payable assuming that all service and performance criteria are met, is equal to the number
of options granted multiplied by the fair value at the grant date. The minimum grant payable assuming that service and
performance criteria are not met is zero.
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
13 January 2006
19 January 2006
16 February 2006
27 April 2006
5 July 2006
20 July 2006
1 February 2007
29 January 2008
15 February 2008
15 February 2008
18 April 2008
18 June 2008
Total
13 January 2009
13 January 2009
13 January 2009
28 April 2009
5 July 2009
5 July 2009
1 February 2012
29 January 2013
15 February 2011
15 February 2013
18 April 2013
18 June 2013
A$2.80
A$2.80
A$2.80
A$5.50
A$5.50
A$5.50
A$8.77
A$4.50
A$5.37
A$5.37
A$4.59
A$5.27
820,000
500,000
1,100,000
1,565,000
600,000
400,000
2,697,970
7,588,485
700,000
450,000
1,075,000
450,000
17,946,455
No option holder has any right under the options to participate in any other share issue of the Company or of any other entity.
Paladin Energy Ltd
67
Directors’ Report
Shares Issued as a Result of The Exercise of Options
During the financial year, directors, employees and consultants have exercised options to acquire 11,060,000 fully paid
ordinary shares in Paladin Energy Ltd at a weighted average price of A$1.06. Since the end of the financial year, a further
500,000 options have been exercised, at a weighted average price of A$4.96.
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.
Rounding
The amounts contained in this report, the Financial Report and the Management, Discussion and Analysis have been rounded
to the nearest US$100,000 (where rounding is applicable) under the option available to the Company under ASIC Class Order
98/0100. The Company is an entity to which the Class Order applies.
Auditor
Ernst & Young were appointed auditors for the Company on 21 June 2005, which was approved by shareholders at the 2005
Annual General Meeting on 9 November 2005.
Auditor Independence and Non-Audit Services
The Directors received the following declaration from the auditor of Paladin Energy Ltd.
Auditor’s Independence Declaration to The Directors of Paladin Energy Ltd
In relation to our audit of the financial report of Paladin Energy Ltd for the year ended 30 June 2008, 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
Non-Audit Services
V W Tidy
Partner
Perth
11 September 2008
The following non-audit and assurance services were provided by the Company’s auditor, Ernst & Young. The Directors are
satisfied that the provision of non-audit and assurance services is compatible with the general standard of independence for
auditors imposed by the Corporations Act. The nature and scope of each type of non-audit and assurance service provided
means that auditor independence was not compromised.
Ernst & Young received or are due to receive US$335,000 for the year ended 30 June 2008 for the provision of taxation
services.
Signed in accordance with a resolution of the Directors.
Mr John Borshoff
Managing Director
Perth, Western Australia
11 September 2008
68
Annual Report 2008
financial report
Contents
note
title
page
note
title
page
Consolidated Income Statements
Consolidated Balance Sheets
Consolidated Statements of
Changes in Equity
Parent Entity Statements of
Changes in Equity
Consolidated Cash Flow Statements
Notes to the Consolidated
Financial Statements
Note 1.
Corporate Information
Note 2.
Summary of Significant
Accounting Policies
Note 3.
Segment Information
Note 4.
Revenues and Expenses
Note 5.
Income Tax
Note 6.
Cash and Cash Equivalents
Note 7.
Trade and Other Receivables
Note 8.
Inventories
Note 9.
Investments Held for Trading
Note 10. Other Financial Assets
Note 11.
Investment in Associate
Note 12. Deferred Borrowing Costs
Note 13.
Property, Plant and Equipment
Note 14. Mine Development
70
71
72
73
74
75
75
75
92
93
95
98
99
100
100
101
102
103
104
106
Note 15.
Exploration and Evaluation
Expenditure
Note 16.
Intangible Assets
Note 17.
Trade and Other Payables
Note 18.
Unearned Revenue
Note 19.
Interest Bearing Loans and
Borrowings
Note 20.
Provisions
Note 21. Contributed Equity and Reserves
Note 22. Minority Interests
Note 23.
Financial Instruments
Note 24. Key Management Personnel
Note 25. Auditors’ Remuneration
Note 26. Commitments and Contingencies
Note 27.
Employee Benefits
Note 28. Related Parties
Note 29.
Share-Based Payment Plan
107
111
111
112
112
114
116
123
123
131
134
135
137
137
137
Note 30.
Interests In Jointly Controlled Assets 140
Note 31. Business Combination and
Asset Acquisition
141
Note 32.
Events After The Balance Sheet Date 142
Note 33. Non-Cash Financing and
Investment Activities
Note 34.
Earnings Per Share
143
143
Paladin Energy Ltd
69
consolidated income statements
for the year ended 30 June 2008
Revenue from continuing operations
Revenue
Cost of sales
Gross profit/(loss)
Other income
Exploration and evaluation expenses
Other expenses
Finance costs
Share of loss of an associate
Loss before income tax benefit
Notes
4(a)
4(c)
4(b)
15
4(e)
4(d)
11(b)
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
101.9
(66.4)
35.5
-
(13.1)
(35.7)
(30.7)
(0.2)
(44.2)
11.2
(12.0)
(0.8)
0.1
(7.4)
(28.6)
(13.0)
-
11.2
- -
11.2
-
- -
(28.5)
(27.1)
- -
10.8
10.8
0.1
(28.0)
(11.1)
(49.7)
(44.4)
(28.2)
Income tax benefit
5
7.0
11.7
2.6
1.2
Loss after tax from continuing operations
(37.2)
(38.0)
(41.8)
(27.0)
Minority interests
22
1.2
0.4
- -
Loss after tax from continuing operations
attributable to the ordinary equity holders of
the Company
(36.0)
(37.6)
(41.8)
(27.0)
Earnings per share
US$
US$
Loss from continuing operations attributable
to ordinary equity holders – basic and diluted
34
(0.06)
(0.07)
The above Consolidated Income Statements should be read in conjunction with the accompanying notes.
70
Annual Report 2008
consolidated balance sheets
as at 30 June 2008
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Financial assets held for trading
TOTAL CURRENT ASSETS
Non current assets
Trade and other receivables
Other financial assets
Investment in associate
Deferred borrowing costs
Property, plant and equipment
Mine development
Exploration and evaluation expenditure
Deferred tax asset
Intangible assets
TOTAL NON CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Unearned revenue
Interest bearing loans and borrowings
Provisions
TOTAL CURRENT LIABILITIES
Non current liabilities
Trade and other payables
Unearned revenue
Interest bearing loans and borrowings
Deferred tax liabilities
Provisions
TOTAL NON CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
Equity
Contributed equity
Reserves
Accumulated losses
Parent interests
Minority interests
TOTAL EQUITY
Notes
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
6
7
8
9
7
10
11
12
13
14
15
5
16
17
18
19
20
17
18
19
5
20
21(a)
21(d)
22
337.6
40.0
68.9
1.4
447.9
-
41.7
2.6
1.7
229.5
12.2
1,797.9
13.0
16.6
2,115.2
2,563.1
41.4
0.2
11.0
1.5
54.1
-
0.5
571.5
499.3
8.4
1,079.7
1,133.8
1,429.3
1,088.4
234.1
(101.0)
1,221.5
207.8
1,429.3
182.8
12.6
38.0
-
233.4
-
60.3
-
0.2
133.1
2.0
1,601.4
10.4
17.6
1,825.0
2,058.4
13.8
0.2
4.4
10.6
29.0
-
0.6
269.2
448.2
3.1
721.1
750.1
317.4
9.4
- -
- -
326.8
218.6
1,019.7
- -
- -
17.8
- -
- -
- -
- -
1,256.1
1,582.9
7.5
- -
- -
1.0
8.5
1.0
- -
517.4
10.8
0.1 -
529.3
537.8
169.7
4.2
173.9
81.3
1,027.3
17.3
1,125.9
1,299.8
2.8
0.5
3.3
2.7
209.2
16.1
228.0
231.3
1,308.3
1,045.1
1,068.5
1,075.3
113.2
(65.0)
1,088.4
56.3
(99.6)
1,075.3
51.0
(57.8)
1,123.5
1,045.1
1,068.5
184.8
- -
1,308.3
1,045.1
1,068.5
The above Consolidated Balance Sheets should be read in conjunction with the accompanying notes.
Paladin Energy Ltd
71
-
-
-
-
-
-
consolidated statements of changes in equity
for the year ended 30 june 2008
Notes
Contributed
Equity
US$M
Reserves
US$M
Accumulated Minority
Interests
US$M
Losses
US$M
Total
US$M
112.3
5.1
(26.4)
CONSOLIDATED
At 1 July 2006
Changes in fair value of available-for-sale
financial assets
Loss for the year ended
Recognised value of unlisted employee
options over vesting period
Exercise of unlisted employee options
21(b)
1.8
Contributions of equity, net of
transactions costs
Convertible bonds – equity component
Foreign currency translation
Functional currency transition adjustment
Income tax on items taken directly to equity
Acquisition of Summit Resources Ltd
Recognition of minority interests on
acquisition of Summit Resources Ltd
21(b)
957.4
-
-
3.8
-
-
-
(37.6)
(0.4)
-
-
-
-
-
-
0.1
-
-
-
91.0
37.5
(38.0)
6.2
-
957.4
37.8
33.6
6.5
(23.7)
14.9
185.1
185.1
-
-
-
-
-
-
(1.0)
-
-
-
37.5
-
6.2
(1.8)
-
37.8
33.5
3.7
(23.7)
14.9
-
At 30 June 2007
1,075.3
113.2
(65.0)
184.8
1,308.3
1,075.3
113.2
(65.0) 184.8
1,308.3
CONSOLIDATED
At 1 July 2007
Changes in fair value of available-
for-sale financial assets
Loss for the year ended
Recognised value of unlisted employee
options over vesting period
Exercise of unlisted employee options
21(b)
2.6
Contributions of equity, net of
transactions costs
Convertible bonds – equity component
Foreign currency translation
21(b)
10.5
-
-
Income tax on items taken directly to equity
-
(44.6)
-
10.6
(2.6)
-
17.8
131.6
8.1
-
(36.0)
-
(1.2)
(44.6)
(37.2)
-
-
-
-
-
-
-
-
-
-
24.2
-
10.6
-
10.5
17.8
155.8
8.1
At 30 June 2008
1,088.4
234.1
(101.0)
207.8
1,429.3
The above Consolidated Statements of Changes in Equity should be read in conjunction with the accompanying notes.
72
Annual Report 2008
parent entity statements of changes in equity
for the year ended 30 june 2008
Notes
Contributed
Equity
US$M
Reserves
US$M
Accumulated
Losses
US$M
Total
US$M
PARENT ENTITY
At 1 July 2006
Change in fair value of available-for-sale
financial assets
Loss for the year ended
Recognised value of unlisted employee options
over vesting period
Exercise of unlisted employee options
Contributions of equity, net of transactions costs
21(b)
21(b)
Convertible bonds – equity component
Foreign currency translation
Functional currency transition adjustment
Income tax on items taken directly to equity
At 30 June 2007
PARENT ENTITY
At 1 July 2007
112.3
2.0
(29.9)
84.4
-
-
-
1.8
957.4
-
-
3.8
-
18.6
-
6.2
(1.8)
-
37.8
2.0
3.1
(16.9)
-
(27.0)
-
-
-
-
-
(0.9)
-
18.6
(27.0)
6.2
-
957.4
37.8
2.0
6.0
(16.9)
1,075.3
51.0
(57.8)
1,068.5
1,075.3
51.0
(57.8)
1,068.5
Change in fair value of available-for-sale
financial assets
Loss for the year ended
Recognised value of unlisted employee options
over vesting period
Exercise of unlisted employee options
Contributions of equity, net of transactions costs
Convertible bonds – equity component
Foreign currency translation
Income tax on items taken directly to equity
21(b)
21(b)
-
-
-
2.6
10.5
-
-
-
At 30 June 2008
1,088.4
(28.4)
-
-
(41.8)
(28.4)
(41.8)
10.6(1)
(2.6)
-
17.8
4.7
3.2
56.3
-
-
-
-
-
-
10.6
-
10.5
17.8
4.7
3.2
(99.6)
1,045.1
(1) Recognised value of unlisted employee options over vesting period is larger than the share-based payments expense disclosed in Note 4(e) due
to US$1.8 million expense allocated to the subsidiaries.
The above Parent Entity Statements of Changes in Equity should be read in conjunction with the accompanying notes.
Paladin Energy Ltd
73
consolidated cash flow statements
for the year ended 30 june 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Interest received from controlled entities
Interest paid
Other income
NET CASH OUTFLOW FROM
OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Exploration and evaluation expenditure
Payments for property, plant and equipment
Loans to controlled entities
Loans from controlled entities
Payments for available-for-sale financial assets
Payments for controlled entities
net of cash acquired
10(a)
Proceeds on sale of property, plant & equipment
Proceeds on sale of tenements
Proceeds from sale of available-for-sale investments
Notes
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
68.4
(77.1)
7.5
-
(17.4)
0.2
-
(38.2)
6.8
-
(7.2)
-
- -
(17.2)
(11.4)
6.5
3.2
(11.3)
- -
6.3
3.6
(5.6)
6(a)
(18.4)
(38.6)
(18.8)
(7.1)
(11.7)
(99.6)
- -
-
(17.8)
-
1.9
2.1
-
(8.6)
(88.9)
-
(13.2)
21.3
0.2
-
0.6
- -
(1.1)
(154.3)
12.3
(15.7)
-
- -
- -
-
- -
(18.7)
(56.7)
2.6
(12.3)
(5.5)
0.6
Payments for third party uranium
(25.8)
(33.4)
NET CASH OUTFLOW FROM INVESTING ACTIVITIES
(150.9)
(122.0)
(158.8)
(90.0)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of share options
Equity fundraising costs
Convertible bonds and project finance facility
establishment costs
Repayment of borrowings
Proceeds from borrowings
Proceeds from convertible bonds
NET CASH INFLOW FROM FINANCING ACTIVITIES
NET INFLOW IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the beginning
of the financial year
Effects of exchange rate changes on cash
and cash equivalents
CASH AND CASH EQUIVALENTS AT END OF
THE FINANCIAL PERIOD
10.5
-
(11.2)
(4.6)
4.3
325.0
324.0
154.7
7.4
(0.3)
(8.0)
-
49.6
250.0
298.7
138.1
10.5
-
7.4
(0.3)
(9.7)
(7.9)
- -
- -
325.0
325.8
148.2
250.0
249.2
152.1
182.8
43.6
169.7
16.6
0.1
1.1
(0.5)
1.0
6
337.6
182.8
317.4
169.7
The above Consolidated Cash Flow Statements should be read in conjunction with the accompanying notes.
74
Annual Report 2008
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 1. Corporate Information
The financial report of Paladin Energy Ltd for the year ended 30 June 2008 was authorised for issue in accordance with a
resolution of the Directors on 22 August 2008, subject to final drafting and audit.
Paladin Energy Ltd is a company limited by shares incorporated and domiciled in Australia whose shares are publicly traded
on the Australian Securities Exchange with additional listings on the Toronto Stock Exchange in Canada; Munich, Berlin,
Stuttgart and Frankfurt Stock Exchanges in Europe; and the Namibian Stock Exchange in Africa.
The nature of the operations and principal activities of the Group are described in Management Discussion and Analysis on
pages 14 to 41.
Note 2. Summary of Significant Accounting Policies
(a)
Basis of preparation
The financial report is a general purpose financial report, which complies with the requirements of the Corporations
Act 2001 and Australian Accounting Standards and other authoritative pronouncements of the Australian
Accounting Standards Board. The financial report complies with International Financial Reporting Standards. The
financial report has also been prepared on a historical cost basis, except for available-for-sale investments and
financial assets held for trading, which have been measured at fair value.
In addition to these Australian requirements further information has been included in the Consolidated Financial
Statements for the year ended 30 June 2008 in order to comply with applicable Canadian securities law, as the
Company is listed on the Toronto Stock Exchange.
The financial report is presented in United States dollars and all values are rounded to the nearest hundred
thousand dollars (US$100,000) unless otherwise stated under the option available to the Company under Australian
Securities and Investments Commission (ASIC) Class Order 98/100. The Company is an entity to which the class
order applies.
(b)
Statement of compliance
The following Australian Accounting Standards that have recently been issued or amended but are not yet effective,
have not been applied by Paladin Energy Ltd:
Reference Title
Summary
AASB
2007-2
Amendments to
Australian Accounting
Standards arising
from AASB
Interpretation 12
[AASB 1, AASB
117, AASB 118,
AASB 120, AASB,
121 AASB 127,
AASB 131 &
AASB 139]
Amending standard
issued as a
consequence of
AASB Interpretation
12 Service
Concession
Arrangements.
Application
Date for
Group*
1 July 2008
Application
Date of
Standard
1 January
2008
Impact on Group
Financial report
As the Group
currently has no
service concession
arrangements or
public-private-
partnerships (PPP)
it is expected that
this Interpretation
will have no impact
on its financial
report.
Paladin Energy Ltd
75
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 2. Summary of Significant Accounting Policies (continued)
(b)
Statement of compliance (continued)
Reference Title
Summary
AASB
2007-3
Amending standard
issued as a
Amendments to
Australian Accounting
Standards arising from consequence of
AASB 8 [AASB 5,
AASB 6, AASB 102,
AASB 107, AASB 119,
AASB 127, AASB 134,
AASB 136, AASB 1023
& AASB 1038]
AASB 8 Operating
Segments.
Application
Date of
Standard
1 January
2009
AASB
2007-6
Amendments to
Australian Accounting
Standards arising
from AASB 123
[AASB 1, AASB 101,
AASB 107, AASB 111,
AASB 116& AASB
138 and Interpretations
1 & 12]
1 January
2009
Amending standard
issued as a
consequence of
AASB 123 (revised)
Borrowing Costs
AASB
2007-8
Amendments to
Australian Accounting
Standards arising from
AASB 101
1 January
2009
Amending standard
issued as a
consequence of
revisions to AASB 101
Presentation of
Financial Statements
76
Annual Report 2008
Impact on Group
Financial report
Application
Date for
Group*
1 July 2009
AASB 8 is a
disclosure standard
so will have no direct
impact on the amounts
included in the
Group’s Financial
Statements. However,
the new standard
may have an
impact on the segment
disclosures included
in the Group’s
financial report.
1 July 2009
The Group does
currently construct
qualifying assets
which are financed
by borrowings,
however, the revised
no impact as it is
consistent with the
current consistent
with the current
Group policy.
1 July 2009
The amendments
are expected to only
affect the presentation
of the Group’s financial
report and will not
have a direct impact
on the measurement
and recognition of
amounts under the
current AASB 101.
The Group has not
determined at this stage
whether to present
the new statement of
comprehensive income
as a single or two
statements.
Note 2. Summary of Significant Accounting Policies (continued)
(b)
Statement of compliance (continued)
Reference Title
Summary
AASB
2008-1
AASB
2008-2
AASB
2008-3
AASB 3
(revised)
Amendments to
Australian Accounting
Standards-Share-
based Payments:
Vesting Conditions and non-vesting condition
Cancellations [AASB 2]
The amendments to
AASB 2 requires
instances where a
failure to satisfy a
that is within the control
of either the entity or
the counterparty to
be accounted for as
a cancellation
Amendments to
Australian Accounting
Standardss-Puttable
Financial Instruments
and Obligations
arising on Liquidation
[AASB 7, AASB 101,
AASB 132, AASB 139
and Interpretation 2]
The amending
standard introduces
an exception to the
definition of financial
liability to classify as
equity instruments
certain puttable financial
instruments that impose
on an entity an obligation
to deliver to another party
a pro rata share of the
net assets of the entity
only on liquidation of
the entity.
Amending standard
issued as a
consequence of
Amendments to
Australian Accounting
Standards Arising from
AASB 3 and AASB 127 AASB 3 revisions to
[AASBs 1, 2, 4, 5, 7,
101, 107, 112, 114,
116, 121, 129, 131,
132, 133, 134, 136,
137, 138 & 139 and
Interpretations 9 & 107]
Business Combinations
and AASB 127
Consolidated and
Separate Financial
Statements.
Business Combinations The revised standard
introduces a number
of changes in
accounting for business
combinations that will
impact the amount of
goodwill recognised,
the results in the period
that an acquisition
occurs, and future
revenues reported
Application
Date of
Standard
1 January
2009
Impact on Group
Financial report
Application
Date for
Group*
1 July 2009
The Group Share
Option Plan does
not include any vesting
conditions that are
within the control of
either the entity or the
counterparty, and as
such, is not expected
to impact the Group’s
financial report.
1 January
2009
The Group does not 1 July 2009
engage in puttable
financial instruments
and as such, is not
expected to impact
the Group’s financial
report
1 July
2009
The Group will assess 1 July 2009
the impact this may
have on future
financial report.
1 July
2009
Refer to AASB
2008-3 above
1 July 2009
Paladin Energy Ltd
77
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 2. Summary of Significant Accounting Policies (continued)
(b)
Statement of compliance (continued)
Reference
Title
Summary
AASB 8
Operating Segments This new standard will
replace AASB 114
Segment Reporting
and adopts a
management approach
to segment reporting.
Application
Date of
Standard
Impact on Group
Financial report
1 January
2009
Refer to AASB
2007-3 above.
Application
Date for
Group*
1 July 2009
AASB 101
(revised)
Presentation of
Financial Statements of comprehensive
Introduces a statement
1 January
2009
Refer to AASB
2007-8 above
1 July 2009
income. Other
revisions include
impacts on the
presentation of items
in the statement of
changes in equity,
new presentation
requirements for
restatements or
reclassifications of
items in the Financial
Statements, changes
in the presentation
requirements for
dividends and changes
to the titles of the
Financial Statements.
The amendments to
AASB 123 require that
all borrowing costs
associated with a
qualifying asset must
be capitalised.
The revised standard
allows a change in
the ownership interest
of a subsidiary (that
does not result in loss
of control) to be
accounted for as an
equity transaction and
will have no impact on
goodwill nor will it give
rise to a gain or loss.
AASB 123
(revised)
Borrowing Costs
AASB 127
(revised)
Consolidated and
Separate Financial
Statements
1 January
2009
Refer to AASB
2007-6 above.
1 July 2009
1 July
2009
Refer to AASB
2008-3 above
1 July 2009
AASB
Interpretation an Arrangement
contains a Lease
4 (revised)
Determining whether The revised Interpretation 1 January
Refer to AASB
2007-2 above
1 July 2008
specifically scopes out
arrangements that fall
within the scope of
AASB Interpretation 12.
2008
78
Annual Report 2008
Note 2. Summary of Significant Accounting Policies (continued)
(b)
Statement of compliance (continued)
Reference
Title
Summary
Application
Date of
Standard
Impact on Group
Financial report
Application
Date for
Group*
Customer Loyalty
AASB
Interpretation Programmes
13
Deals with the accounting 1 July
for customer loyalty
2008
programmes, which are
used by companies to
provide incentives to their
customers to buy their
products or use their
services
Service Concession Requires disclosure of
AASB
Interpretation Arrangements:
129
Disclosures
1 January
2008
provisions or significant
features necessary to
assist in assessing the
amount, timing and
certainty of future cash
flows and the nature and
extent of the various rights
and obligations involved.
These disclosures apply to
both grantors and operators.
Amendments Cost of an Investment The main amendments
to International in a Subsidiary,
Reporting
Standards
Jointly Controlled
Entity or Associate
1 January
of relevance to Australian 2009
entities are those made
to IAS 27deleting the ‘cost
method’ and requiring all
dividends from Subsidiary,
jointly controlled entity or
associate to be recognised
in profit or loss in an entity’s
separate Financial Statements
(i.e., parent company
accounts). The distinction
between pre-and post-
acquisition profits is no
longer required. However,
the payment of such dividends
requires the entity to consider
whether there is an indicator
of impairment.
AASB 127 has also been
Amended to effectively
allow the cost of an
investment in a subsidiary,
in limited reorganisations,
to be based on the previous
carrying amount of the
subsidiary (that is, share of
equity) rather than its fair value.
The Group does not 1 July 2008
have any customer
loyalty programmes
and as such this
interpretation is not
expected to have any
impact on the Group’s
financial report
Refer to AAASB
2007-2 above
1 July 2008
1 July 2009
Recognising all
dividends received
from subsidiaries jointly
controlled Financial
entities and associates
as income will likely
give rise to greater
income being
recognised by the
parent entity after
adoption of these.
amendments.
In addition, if the Group
enters into any group
reorganisation
establishing new
parent entities, an
assessment will need
to be made to
determine if the
reorganisation meets
the conditions
imposed to be
effectively accounted
for on a carry-over
basis’rather than at
fair value.
Paladin Energy Ltd
79
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 2. Summary of Significant Accounting Policies (continued)
(b)
Statement of compliance (continued)
Reference
Title
Summary
Application
Date of
Standard
Impact on Group
Financial report
Application
Date for
Group*
IFRSs
Amendments Improvement to
to
International
Financial
Reporting
Standards
IFRIC 15**
Agreements for the
Construction of
Real Estate
IFRIC 16**
Hedges of a Net
Investment in a
Foreign Operation
The Group has not 1 July 2009
yet determined the
extent of the impact
of the amendments,
The improvement project 1 January
is an annual project that
2009
provides a mechanism
except
for making non-urgent,
for
but necessary,
amendments if any.
to IFRS 5,
amendments to IFRSs.
The IASB has separated which are
the amendments in two
parts: Part 1 deals
with the changes the
IASB identified resulting
in accounting changes;
Part II deals with either
terminology or editorial
amendments that the
IASB believes will have
minimal impact.
effective
from July 1
2009
1 January
2009
The Group does not 1 July 2009
enter into agreements
to provide construction
services to the buyer’s
specifications and as
such this interpretation
is not expected to
have any impact on
the Group’s financial
report.
1 January
2009
The Group does not 1 July 2009
engage in hedging
net investments in
foreign operations and
as such, is not expected
to impact the Group’s
financial report.
This interpretation
proposes that when the
real estate developer is
providing construction
services tothe buyer’s
specifications, revenue
can be recorded only
as construction
progresses. Otherwise,
revenue should be
recognised on
completion of the
relevant real estate unit.
This interpretation
proposes that the
hedged risk in a hedge
of a net investment in
a foreign operation is the
foreign currency risk
arising between the
functional currency of the
net investment and the
functional currency of
any parent entity.
This also applies to
foreign operations in the
form of joint ventures,
associates or branches.
* designates the beginning of the applicable annual reporting period
** pronouncements that have been issued by the IASB and IFRIC but have not yet been issued by the AASB
80
Annual Report 2008
Note 2. Summary of Significant Accounting Policies (continued)
(c)
Basis of consolidation
The Consolidated Financial Statements incorporate the assets and liabilities of all subsidiaries of Paladin Energy
Ltd (Company or Parent Entity) as at 30 June 2008 and the results of all subsidiaries for the twelve months then
ended. Paladin Energy Ltd and its subsidiaries together are referred to in this financial report as the Group or the
Consolidated Entity.
Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to
govern the financial and operating policies, generally accompanying a shareholding of more than one half of the
voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be
consolidated from the date on which control is transferred out of the Group.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group (refer to
Note 2(j)).
Intercompany transactions, balances and unrealised gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the
asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency
with the policies adopted by the Group.
(d)
Significant accounting judgements, estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of
future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of certain assets and liabilities within the next annual reporting period are:
(i)
Net realisable value of inventories
The Group reviews the carrying value of inventories regularly to ensure that their cost does not exceed net
realisable value. In determining net realisable value various factors are taken into account including sales
prices and costs to complete inventories to their final form.
(ii)
Impairment of property, plant and equipment; and intangibles
The Group determines whether property, plant and equipment; and intangibles are impaired at least on a
quarterly basis. This requires an estimation of the recoverable amount of cash-generating units to which the
property, plant and equipment; and intangibles are allocated.
(iii)
Available-for-sale financial assets and financial assets held for trading
The Group measures the fair value of available-for-sale financial assets by reference to the fair value of the
equity instruments at the date at which they are valued. The fair value of the unlisted securities is determined
using valuation techniques. Such techniques include using recent arm’s length market transactions, net
asset values and by an external valuer using a binomial model.
(iv)
Carrying value of exploration and evaluation expenditure
The Group reviews the carrying value of exploration and evaluation expenditure at least on a quarterly basis.
This requires judgement as to the status of the individual projects and their future economic value.
(v)
Deferred tax assets and liabilities
The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations.
Significant judgement is required in determining deferred tax assets and liabilities. There are many
transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course
of business.
Paladin Energy Ltd
81
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 2. Summary of Significant Accounting Policies (continued)
(d)
Significant accounting judgements, estimates and assumptions (continued)
(vi) Mine closure provision
The value of this provision represents the discounted value of the present obligation to restore, dismantle
and close the mine. The discounted value reflects a combination of management’s assessment of the cost
of performing the work required, the timing of the cash flows and the discount rate. A change in any, or a
combination, of the three key assumptions used to determine the provision could have a material impact to
the carrying value of the provision.
(vii)
Share based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value
of the equity instruments at the date at which they are granted. The fair value is determined by an external
valuer using a binomial model using assumptions detailed in Note 29.
(viii)
Proved and probable reserves
The Group uses the concept of a life of mine as an accounting value to determine such things as
depreciation rates and the appropriate period to discount mine closure provisions. In determining life of
mine the proved and probable reserves measured in accordance with the 2004 edition of the Joint Ore
Reserves Committee (JORC) Code specific to a mine are taken into account which by their very nature
require judgements, estimates and assumptions.
(e)
Segment reporting
A geographical segment is a group of assets and operations engaged in providing products or services within
a particular economic environment and is subject to risks and returns that are different from those of segments
operating in other economic environments. A business segment is a group of assets and operations engaged in
providing products or services that are subject to risks and returns that are different to those of other business
segments.
(f)
Foreign currency translation
(i)
Functional and presentation currency
Items included in the Financial Statements of each of the Group’s entities are measured using the
currency of the primary economic environment in which the entity operates (‘the functional currency’).
The Consolidated Financial Statements are presented in United States dollars (US dollars), which is the
Company’s functional and presentation currency from 1 December 2006. Prior to this date the functional
and presentation currency for was Australian dollars. In December 2006 there were several factors which
produced a change in functional currency for the majority of the Group to US dollars. These included
completion of construction and commissioning at the LHUP, issue of US$250 million convertible bonds,
conversion of excess group cash into US dollars resulting in derivation of US interest revenue, and
redesignation of all intercompany group loans into US dollars. The presentation currency for a company is
the currency in which the company chooses to present its financial reports. As the functional currency of
the Company and the majority of the Group changed on 1 December 2006 to US dollars, the Company has
decided to change the presentation currency for financial reporting to US dollars in order to better reflect the
Group’s financial position and financial performance.
(ii)
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of
such transactions and from the translation at year end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the Income Statement. Translation differences on
available-for-sale financial assets are included in the available-for-sale reserve.
82
Annual Report 2008
Note 2. Summary of Significant Accounting Policies (continued)
(f)
Foreign currency translation (continued)
(iii)
Group companies
Some Group entities have a functional currency of United States dollars which is consistent with the
presentation currency of this financial report. For all other group entities the functional currency has been
translated into US dollars for presentation purposes. Assets and liabilities are translated using exchange
rates prevailing at the balance sheet date; revenues and expenses are translated using average exchange
rates prevailing for the income statement year; and equity transactions are translated at exchange rates
prevailing at the dates of transactions. The resulting difference from translation is recognised in a foreign
currency translation reserve.
The following material operating subsidiaries have a US dollar functional currency:
–
–
–
–
Paladin Finance Pty Ltd
Paladin (Africa) Ltd
Langer Heinrich Uranium (Pty) Ltd
Paladin Nuclear Ltd
The following material operating subsidiaries have a Australian dollar functional currency:
–
–
–
–
Northern Territory Uranium Pty Ltd
Mount Isa Uranium Pty Ltd
Paladin Energy Minerals NL
Summit Resources (Aust) Pty Ltd
(g)
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue
are net of duties and taxes paid. Revenue is recognised for the major business activities as follows:
(i)
Sale of uranium
Revenue from sale of uranium is recognised when title of the product passes from the Consolidated Entity
pursuant to an enforceable contract, when selling prices are known or can be reasonably estimated and
when the product is in a form that requires no further treatment by the Consolidated Entity.
(ii)
Interest revenue
Interest revenue from investments in cash and US Treasury Bonds is recognised in the Income Statement
as interest accrues using the effective interest method. This is a method of calculating the amortised cost
of a financial asset and allocating the interest income over the relevant period using the effective interest
rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to the net carrying amount of the financial asset.
(iii)
Database licence revenue
Licence revenue generated from granting third parties access to proprietary database information on
mineral property regions is recognised in the Income Statement on a straight line basis over the licence
term.
(h)
Income tax
The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based
on the notional income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in
the Financial Statements, and to unused tax losses.
Paladin Energy Ltd
83
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 2. Summary of Significant Accounting Policies (continued)
(h)
Income tax (continued)
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when
the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively
enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and
taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain
temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability
is recognised in relation to these temporary differences if they arose in a transaction, other than a business
combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and
tax bases of investments in controlled entities where the Parent Entity is able to control the timing of the reversal of
the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly
in equity.
Paladin Energy Ltd and all its wholly-owned Australian resident entities are part of a tax-consolidated group under
Australian tax law. The head entity, Paladin Energy Ltd and the controlled entities in the tax consolidated group
continue to account for their own current and deferred tax amounts. The Group has applied the group allocation
approach in determining the appropriate amount of current taxes and deferred taxes to allocate to members of
the tax consolidated group. In addition to its own current and deferred tax amounts, Paladin Energy Ltd also
recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and
unused tax credits assumed from controlled entities in the tax consolidated group. Assets or liabilities arising
under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or
payable to other entities in the group. Any difference between the amounts assumed and amounts receivable or
payable under the tax funding agreement are recognised as a contribution to (or distribution from) wholly-owned tax
consolidated entities.
(i)
Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified
as operating leases.
Incentives received on entering into operating leases are recognised as liabilities. Lease payments are allocated
between rental expense and reduction of the lease incentive liability on a straight line basis over the period of the
lease.
(j)
Acquisitions of assets
The purchase method of accounting is used to account for all acquisitions of assets (including business
combinations) regardless of whether equity instruments or other assets are acquired. Cost is measured as the
fair value of the assets given, shares issued or liabilities incurred or assumed at the date of exchange plus costs
directly attributable to the acquisition. Where equity instruments are issued in an acquisition, the value of the
instruments is their published market price as at the date of exchange. Transaction costs arising on the issue of
equity instruments are recognised directly in equity.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The
excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired
is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary
acquired, the difference is recognised directly in the Income Statement, but only after a reassessment of the
identification and measurement of the net assets acquired.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted
to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate,
being the rate at which a similar borrowing could be obtained from an independent financier under comparable
terms and conditions.
84
Annual Report 2008
Note 2. Summary of Significant Accounting Policies (continued)
(k)
Impairment of assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment.
Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by
which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an
asset’s fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable cash flows (cash generating units).
(l)
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short
term, highly liquid investments with original maturities of three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.
(m)
Trade and other receivables
Trade receivables, which generally have 30 day terms, are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method, less an allowance for any uncollectible amounts.
Collectability of trade receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible are
written off when identified. An allowance for doubtful debts is raised when there is objective evidence that the
group will not be able to collect the debt. Financial difficulties of the debtor, default payments or debts more than
60 days overdue are considered objective evidence of impairment.
(n)
Inventories
Consumable stores inventory are valued at the lower of cost and net realisable value using the average cost
method, after appropriate allowances for redundant and slow moving items.
Finished goods and work in progress inventory are valued at the lower of cost and net realisable value using the
average cost method. Cost is derived on an absorption costing basis including both fixed and variable production
costs and attributable overheads incurred up to the delivery point where legal title to the product passes. No
accounting value is attributed to ore in situ or stockpiles containing ore at less than the cut-off grade.
Any inventory produced during the pre-production phase is recognised at net realisable value and deducted from
capitalised development costs.
The costs of production include labour costs, materials and contractor expenses which are directly attributable to
the extraction and processing of ore (including any recognised expense of stripping costs); the depreciation of
property, plant and equipment used in the extraction and processing of ore; and production overheads.
(o)
Investments and other financial assets
The Group classifies its investments in the following categories: loans and receivables, held-to-maturity investments,
available-for-sale financial assets and financial assets held for trading. The classification depends on the purpose
for which the investments were acquired. Management determines the classification of its investments at initial
recognition and re-evaluates this designation at each reporting date.
(i)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. They arise when the Group provides money, goods or services directly to a
debtor with no intention of selling the receivable. They are included in current assets, except for those with
maturities greater than 12 months after the balance sheet date which are classified as non current assets.
Loans and receivables are included in receivables in the Balance Sheet. Loans and receivables are carried
at amortised cost using the effective interest method.
Paladin Energy Ltd
85
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 2. Summary of Significant Accounting Policies (continued)
(o)
Investments and other financial assets (continued)
(ii)
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and
fixed maturities that the Group’s management has the positive intention and ability to hold to maturity. Held-
to-maturity investments are carried at amortised cost using the effective interest method.
(iii)
Available-for-sale financial assets
Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives
that are either designated in this category or not classified in any of the other categories. They are included
in non current assets unless management intends to dispose of the investment within 12 months of the
balance sheet date.
Purchases and sales of investments are recognised on trade-date which is the date on which the Group
commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction
costs. Financial assets are de-recognised when the rights to receive cash flows from the financial assets
have expired or have been transferred and the Group has transferred substantially all the risks and rewards
of ownership.
Available-for-sale financial assets are subsequently carried at fair value. Unrealised gains and loss
which arise from changes in the fair value of non monetary securities classified as available-for-sale are
recognised in equity in the available-for-sale reserve. When securities classified as available-for-sale are
sold or impaired, the accumulated fair value adjustments are included in the Income Statement as gains and
losses from investment securities.
(iv)
Financial assets held for trading
Financial assets are classified as held for trading if they are derivative instruments or acquired for the
purpose of selling in the near term. Gains or losses on investments held for trading are recognised in the
Income Statement.
Fair value of financial instruments
The fair values of quoted investments are based on current bid prices. If the market for a financial asset
is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques.
These include reference to the fair values of recent arm’s length transactions, involving the same instruments
or other instruments that are substantially the same, discounted cash flow analysis, and option pricing
models refined to reflect the issuer’s specific circumstances.
Impairment of financial instruments
The Group assesses at each balance date whether there is objective evidence that a financial asset or
group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a
significant or prolonged decline in the fair value of a security below its cost is considered in determining
whether the security is impaired. If any such evidence exists for available-for-sale financial assets, the
cumulative loss which is measured as the difference between the acquisition cost and the current fair value,
less any impairment loss on that financial asset previously recognised in profit and loss – is removed from
equity and recognised in the Income Statement.
(p)
Interests in jointly controlled assets
The Group has interests in joint ventures that are jointly controlled assets. A joint venture is a contractual
arrangement whereby two or more parties undertake an economic activity that is subject to joint control. A jointly
controlled asset involves use of assets and other resources of the venturers rather than establishment of a separate
entity. The Group recognises its interest in jointly controlled assets by recognising its interest in the assets and the
liabilities of the joint venture. The Group also recognises the expenses that it incurs and its share of the income that
it earns from the sale of goods or services by jointly controlled assets.
86
Annual Report 2008
Note 2. Summary of Significant Accounting Policies (continued)
(q)
Fair value estimation
The fair value of financial assets must be estimated for recognition and measurement or for disclosure purposes.
The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and
available-for-sale securities) is based on quoted market prices at the balance sheet date. The quoted market price
used for financial assets held by the Group is the current bid price.
The fair value of financial instruments that are not traded in an active market (for example, unlisted securities) is
determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are
based on market conditions existing at each balance date. Estimated discounted cash flows are used to determine
the fair value of most financial instruments.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to
approximate their fair values.
(r)
Property, plant and equipment
All property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure
that is directly attributable to the acquisition of the items. Cost may also include transfers from equity of any gains/
losses on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of
the item can be measured reliably. All other repairs and maintenance are charged to the Income Statement during
the financial period in which they are incurred.
Property, plant and equipment costs include both the costs associated with construction of equipment associated
with establishment of an operating mine, and the estimated costs of dismantling and removing the asset and
restoring the site on which it is located.
Land is not depreciated. Depreciation on other assets is calculated using the straight line method to allocate their
cost amount, net of their residual values, over their estimated useful lives, as follows:
-
-
-
-
-
Buildings
Databases
Plant and equipment
20 years
10 years
3 6 years
Leasehold improvements
2-5 years
Mine plant and equipment
lesser of life of mine and life of asset
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amounts. These are included
in the Income Statement. When revalued assets are sold, it is Group policy to transfer the amounts included in other
reserves in respect of those assets to retained earnings.
(s)
Mine development
Pre-production costs are deferred as development costs until such time as the asset is able to be used as intended
by management. Post-production costs are recognised as a cost of production.
Overburden cost is capitalised and depreciated over the expected useful life of the relevant pit. Stripping costs are
recognised as a production cost as incurred.
Paladin Energy Ltd
87
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 2. Summary of Significant Accounting Policies (continued)
(t)
Exploration and evaluation expenditure
Exploration and evaluation expenditure is charged against earnings as incurred.
Exploration and evaluation expenditure is allocated separately to specific areas 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. Such
expenditure comprises net direct costs and an appropriate portion of related overhead expenditure directly related
to activities in the area of interest.
Costs related to the acquisition of properties that contain Mineral Resources are allocated separately to specific
areas of interest. These costs are capitalised until the viability of the area of interest is determined.
If no mineable ore body is discovered, capitalised acquisition costs are expensed in the period in which it is
determined that the area of interest has no future economic value.
When a decision to proceed to development is made the exploration and evaluation capitalised to that area
is transferred to mine development within property, plant and equipment. All costs subsequently incurred to
develop a mine prior to the start of mining operations within the area of interest are capitalised and carried at cost.
These costs include expenditure incurred to develop new ore bodies within the area of interest, to define further
mineralisation in existing areas of interest, to expand the capacity of a mine and to maintain production.
Capitalised amounts for an area of interest may be written down if discounted future cash flows related to the area of
interest are projected to be less than its carrying value.
(u)
Intangibles
Intangible assets acquired separately or in a business combination are initially measured at cost. The cost of
an intangible asset acquired in a business combination is its fair value as at the date of acquisition. Following
initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated
impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not
capitalised and expenditure is recognised in the Income Statement in the year in which the expenditure is incurred.
The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives
are amortised over the useful life and tested for impairment whenever there is an indication that the intangible asset
may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful
life is reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of
consumption of future economic benefits embodied in the asset are accounted for prospectively by changing the
amortisation period or method, as appropriate, which is a change in accounting estimate. The amortisation expense
on the intangible assets with finite lives is recognised in profit or loss in the expense category consistent with the
function of the intangible asset.
Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash-
generating unit level. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life
is reviewed each reporting period to determine whether indefinite life assessment continues to be supportable. If
not, the change in the useful life assessment from indefinite to finite is accounted for as a change in an accounting
estimate and is thus accounted for on a prospective basis.
A summary of the policies applied to the Group’s intangible assets is as follows:
Right to use water and power supply
Useful lives
Finite
Amortisation method used
Amortised over the life of the mine on a straight-line basis
88
Annual Report 2008
Note 2. Summary of Significant Accounting Policies (continued)
(u)
Intangibles (continued)
Impairment testing
Annually and more frequently when an indication of impairment exists. The amortisation method is reviewed at each
financial year-end.
The rights to use water and power supply have been granted for a minimum of 17 years by the relevant utilities with
the option of renewal without significant cost at the end of this period.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset and are recognised in the Income Statement when the
asset is derecognised.
(v)
Trade and other payables
Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services
provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes
obliged to make future payments in respect of the purchase of these goods and services. The amounts are
unsecured and are usually paid within 30 days of recognition.
(w)
Interest bearing loans and borrowings
Bank loan borrowings are initially recognised at fair value, net of transaction costs incurred. Bank loan borrowings
are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and
the redemption amount is recognised in the Income Statement over the period of the borrowings using the effective
interest method.
The component of convertible bonds that exhibits characteristics of a borrowing is recognised as a liability in the
balance sheet, net of transaction costs. On issue of convertible bonds, the fair value of the liability component is
determined using a market rate for an equivalent non-convertible bond and this amount is carried as a long-term
liability on the amortised cost basis until extinguished on conversion or redemption. The increase in the liability due
to the passage of time is recognised as a finance cost. The remainder of the proceeds is allocated to a convertible
bond reserve that is recognised and included in shareholders’ equity. The carrying amount of the reserve is not
remeasured in subsequent years.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the
liability for at least 12 months after the balance sheet date.
(x)
Borrowing costs
Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that
is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed as
incurred including the unwinding of discounts related to mine closure provisions, and amortisation of ancillary costs
incurred in connection with the arrangement of borrowings.
The capitalisation rate used to determine the amount of borrowing costs to be capitalised is the weighted average
interest rate applicable to the entity’s outstanding borrowings during the year.
(y)
Employee benefits
(i)
Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick
leave expected to be settled within 12 months of the reporting date are recognised in other payables in
respect of employees’ services up to the reporting date and are measured at the amounts expected to be
paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the
leave is taken and measured at the rates paid or payable.
Paladin Energy Ltd
89
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 2. Summary of Significant Accounting Policies (continued)
(y)
Employee benefits (continued)
(ii)
Long service leave
The liability for long service leave is recognised in the provision for employee benefits and measured as
the present value of expected future payments to be made in respect of services provided by employees
up to the reporting date. Consideration is given to expected future wage and salary levels, experience of
employee departures and periods of service. Expected future payments are discounted using market yields
at the reporting date on national government bonds with terms to maturity and currency that match, as
closely as possible, the estimated future cash outflows.
(iii)
Share-based payments
Share-based compensation benefits were provided to employees via the Paladin Energy Ltd Employee
Share Incentive Option Plan (ESOP). Following the implementation of the Paladin Energy Ltd Executive
Share option Plan (EXSOP) detailed in Note 29, no further options will be issued pursuant to the ESOP.
The fair value of options granted under both the ESOP after 7 November 2002 and the EXSOP are
recognised as an employee benefit expense with a corresponding increase in equity. The fair value
is measured at grant date and recognised over the period during which the employees become
unconditionally entitled to the options.
The fair value at grant date is independently determined using the Cox, Ross and Rubinstein Binomial
Tree option pricing 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 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. The Monte Carlo method is used to model the future value of the
Company’s shares and the movement of the comparator companies’ Total Shareholder Return on the various
vesting dates associated with vesting requirements of the options.
Non-market vesting conditions are included in assumptions about the number of options that are expected
to become exercisable. At each balance sheet date, the entity revises its estimate of the number of options
that are expected to become exercisable. The employee benefit expense recognised each period takes into
account the most recent estimate.
Upon the exercise of options, the balance of the share-based payments reserve relating to those options is
transferred to share capital.
(z)
Mine closure and rehabilitation
Mine closure and restoration costs include the costs of dismantling and demolition of infrastructure or
decommissioning, the removal of residual material and the remediation of disturbed areas specific to the
infrastructure. Mine closure costs are provided for in the accounting period when the obligation arising from the
related disturbance occurs, whether this occurs during the mine development or during the production phase,
based on the net present value of estimated future costs.
As the value of the provision for mine closure represents the discounted value of the present obligation to restore,
dismantle and close the mine, the increase in this provision due to the passage of time is recognised as a borrowing
cost. The discount rate used is a pre-tax rate that reflects the current market assessment of the time value of money
and the risks specific to the liability.
Provision is made for rehabilitation work when the obligation arises and this is recognised as a cost of production or
development. The rehabilitation costs, provided for are the present value of the estimated costs to restore operating
locations. The value of the provision represents the discounted value of the current estimate to restore and the
discount rate used is the pre-tax rate that reflects the current market assessments of the time value of money and
the risks specific to the liability.
90
Annual Report 2008
Note 2. Summary of Significant Accounting Policies (continued)
(aa)
Onerous contracts
A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a
contract are lower than the unavoidable cost of meeting the obligations under the contract. The provision is stated
at the present value of the future net cash outflows expected to be incurred in respect of the contract.
(ab)
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.
(ac)
Earnings per share
(i)
Basic earnings per share
Basic earnings per share are calculated by dividing the profit attributable to equity holders of the Company
by the weighted average number of ordinary shares outstanding during the period.
(ii)
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to
take into account the after income tax effect of interest and other financing costs associated with dilutive
potential ordinary shares and the weighted average number of shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary shares.
(ad)
Investments in associates
The Group’s investment in its associates is accounted for using the equity method of accounting in the Consolidated
Financial Statements and at cost in the parent. The associates are entities over which the Group has significant
influence and that are neither subsidiaries nor joint ventures.
The Group generally deems they have significant influence if they have over 20% of the voting rights. Under the
equity method, investments in the associates are carried in the Consolidated Balance Sheet at cost plus post-
acquisition changes in the Group’s share of net assets of the associates. Goodwill relating to an associate is
included in the carrying amount of the investment and is not amortised. After application of the equity method,
the Group determines whether it is necessary to recognise any impairment loss with respect to the Group’s net
investment in associates.
The Group’s share of its associates’ post-acquisition profits or losses is recognised in the Income Statement and
its share of post acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition
movements are adjusted against the carrying amount of the investment. Dividends receivable from associates are
recognised in the parent entity’s Income Statement, while in the Consolidated Financial Statements they reduce the
carrying amount of the investment.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any
unsecured long-term receivables and loans, the Group does not recognise further losses, unless it has incurred
obligations or made payments on behalf of the associate. If an associate uses accounting policies other than those
of the Group for like transactions and events in similar circumstances, adjustments shall be made to conform the
associate’s accounting policies to those of the Group.
Paladin Energy Ltd
91
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 3. Segment Information
The Group’s primary segment reporting format is geographical segments as the Group’s risks and rates of return are affected
predominately by differences in the particular economic environments in which it operates. The Group does not separately
disclose any financial information for business segments (secondary reporting) as it only operates in the resource industry.
Geographical segments – primary reporting
The Company operates in Australia, Namibia and Malawi. The principal activity in these locations is the exploration, evaluation,
development, construction and operation of uranium projects.
The Group’s geographical segments are determined based on the location of the Group’s assets.
The following tables present revenue, expenditure and certain asset information regarding geographical segments for the
years ended 30 June 2008 and 30 June 2007.
Year Ended
30 June 2008
Sales to external customers
Other revenue
Total segment revenue
(Loss)/Profit from continuing operations
before income tax benefit
Income tax benefit
(Loss)/Profit from continuing operations
after income tax benefit/segment result
Total assets/segment assets
Segment liabilities
Acquisitions of non current assets
Cash flow information
Net cash (outflow)/inflow from operating activities
Net cash outflow from investing activities
Net cash inflow/(outflow) from financing activities
Non cash expenses:
Depreciation and amortisation
Inventory impairment reversal
Sales contract impairment provision
Share based payments
Finance costs
Australia
US$M
Namibia
US$M
Malawi
US$M
Consolidated
US$M
-
7.7
7.7
(52.1)
4.4
(47.7)
2,232.0
1,106.2
21.0
(29.8)
(56.8)
325.4
0.7
-
-
8.9
11.8
93.8
0.4
94.2
9.8
1.2
11.0
220.7
12.0
14.0
12.3
(13.5)
-
10.0
(2.0)
2.9
1.2
0.5
-
-
-
(1.9)
1.4
(0.5)
110.4
15.6
94.4
(0.9)
(80.6)
(1.4)
0.2
-
-
0.5
-
93.8
8.1
101.9
(44.2)
7.0
(37.2)
2,563.1
1,133.8
129.4
(18.4)
(150.9)
324.0
10.9
(2.0)
2.9
10.6
12.3
92
Annual Report 2008
Australia
US$M
Namibia
US$M
Malawi
US$M
Consolidated
US$M
Note 3. Segment Information (continued)
Year Ended
30 June 2007
Sales to external customers
Other revenue
Total segment revenue
-
7.8
7.8
3.3
0.1
3.4
Loss from continuing operations
before income tax benefit
(23.7)
(21.8)
Income tax benefit
1.3
10.4
Loss from continuing operations after
income tax benefit/segment result
Total assets/segment assets
Segment liabilities
Acquisitions of non current assets
Cash flow information
Net cash outflow from operating activities
Net cash outflow from investing activities
Net cash inflow/(outflow) from financing activities
Non cash expenses:
Depreciation and amortisation
Inventory impairment losses
Sales contract impairment provision
Share based payments
Finance costs
Note 4. Revenues and Expenses
(22.4)
1,882.3
732.3
1,434.9
(25.7)
(45.7)
298.9
0.3
-
-
6.2
5.2
(11.1)
163.0
16.3
64.0
(12.9)
(64.9)
-
1.8
3.3
7.8
-
0.1
-
-
-
(4.2)
-
(4.2)
13.1
1.5
8.2
-
(11.4)
(0.2)
-
-
-
-
-
3.3
7.9
11.2
(49.7)
11.7
(38.0)
2,058.4
750.1
1,507.1
(38.6)
(122.0)
298.7
2.1
3.3
7.8
6.2
5.3
(a)
Revenue
Sale of uranium (1)
Interest income from non-related parties
Interest income from wholly owned Group
Database licence revenue
Other revenue
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
93.8
6.9
-
0.2
1.0
3.3
7.6
-
0.2
0.1
- -
5.8
3.3
- -
2.1
101.9
11.2
11.2
7.1
3.6
0.1
10.8
(1)
Includes US$14.0 million (2007: US$3.3 million) relating to uranium sales of 185,000lb (2007:65,000lb) which were met by use of third
party uranium purchased during the quarter ended 30 June 2007.
Paladin Energy Ltd
93
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 4. Revenues and Expenses (continued)
(b)
Other income
Net gain on disposal of available for sale investments
Total other income
(c)
Cost of sales (1)
Cost of production
Royalties
Depreciation – property, plant and equipment
Amortisation – intangibles
Product distribution costs
Total cost of sales
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
-
-
(53.8)(2)
(1.6)
(9.0)
(1.0)
(1.0)
0.1
0.1
(9.7)
(0.3)
(1.6)
(0.2)
(0.2)
(66.4)
(12.0)
-
-
- -
- -
- -
- -
- -
-
0.1
0.1
-
(1)
(2)
Includes a credit of US$2.0 million (2007: US$Nil) relating to recognition of a value for stockpiles as a consequence of improved
operating performance from 30 June 2007. In total US$8.6 million was attributed to stockpile values during the year – recognised as
both a US$2.0 million credit to cost of sales and a US$6.5 million reduction in property, plant and equipment.
Includes US$14.0 million (2007: US$3.3 million) expense relating to use of 185,000lb (2007:65,000lb) of third party uranium
purchased during the year ended 30 June 2007 which was sold in the year ended 30 June 2008.
(d)
Finance costs
Interest expense
Non-cash convertible bond interest
Mine closure provision discount interest expense
Facility costs
Total finance costs
(e)
Other expenses
Corporate and marketing costs
Employee benefits expense(2)
Share-based payments expense
Minimum lease payments – operating lease
Write down of intercompany receivables
Write down of intercompany investments
Sales contracts expense (1)
Foreign exchange loss (net)
Depreciation – property, plant and equipment
Loss on sale of property, plant and equipment
(18.4)
(8.6)
(0.5)
(3.2)
(30.7)
(11.5)
(5.6)
(10.6)
(0.1)
-
-
(2.9)
(3.7)
(0.9)
(0.4)
(7.7)
(4.1)
(0.1)
(1.1)
(16.3)
(8.6)
- -
(2.2)
(13.0)
(27.1)
(5.6)
(7.3)
(6.2)
(0.2)
-
-
(7.8)
(1.0)
(0.3)
(0.2)
(8.6)
(5.3)
(8.9)
(0.1)
(4.8)
(0.1) -
-
(0.1)
(0.6)
- -
(6.1)
(4.1)
(0.9)
(11.1)
(4.6)
(6.8)
(6.2)
(0.2)
(9.9)
-
(0.1)
(0.2)
Total other expenses
(35.7)
(28.6)
(28.5)
(28.0)
(1) The sales contracts expense is attributable to the requirement to meet future Langer Heinrich sales commitments by use of the
remaining 35,000lb of third party uranium purchased during the year ended 30 June 2007.
(2) Employee benefits expense for the 2007 year included a discretionary payment of A$5.2m to a key management person relating to
the 2004 to 2006 formative period of the Company.
94
Annual Report 2008
Note 5. Income Tax
(a)
Income tax benefit
Current income tax
Current income tax credit
Deferred income tax
Tax benefits not brought to account as future
income tax benefits
Prior year tax benefits brought to account as
current income tax
Foreign exchange movement
Income tax benefit reported in the Income Statement
(b)
Numerical reconciliation of income
tax benefit to prima facie tax payable
Loss from continuing operations before
income tax expense
Tax at the Australian tax rate of 30% (2007 – 30%)
Tax effect of amounts which are not deductible
(taxable) in calculating taxable income:
Share-based payments
Other expenditure not allowable
Specific tax expenditure allowable
Difference in overseas tax rates
Prior year tax benefits not recognised now recouped
Current year tax benefits not recognised
Foreign exchange movement
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
(42.5)
(14.7)
(8.2)
(6.8)
40.0
5.5
5.6
5.6
-
(4.5)
(7.0)
(44.2)
(13.3)
2.7
-
(0.4)
(11.0)
0.5
(2.4)
10.4
(4.5)
(2.5)
-
- -
- -
(11.7)
(2.6)
(1.2)
(49.7)
(14.9)
(44.4)
(13.3)
(28.2)
(8.5)
1.9
0.1
(0.3)
2.7
-
(0.4)
(13.2)
(11.0)
(1.5)
(2.5)
5.5
-
- -
0.2 -
8.2
-
1.9
0.1
(0.3)
(6.8)
5.6
-
Income tax benefit reported in the Income Statement
(7.0)
(11.7)
(2.6)
(1.2)
Paladin Energy Ltd
95
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 5. Income Tax (continued)
(c)
Deferred income tax
Deferred tax liabilities
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
Accelerated prepayment deduction for tax purposes
Accelerated stores and consumables deduction for
tax purposes
(0.3)
(0.2)
(0.1)
(0.6)
- -
- -
Revaluations of available-for-sale investments
to fair value
Foreign currency differences on available-for-sale
investments
Accelerated deduction for debt establishment and
interest costs
Accelerated depreciation for tax purposes
Exploration expenditure
Recognition of fair value of acquired exploration and
evaluation expenditure
Foreign currency differences on fair value of
acquired exploration and evaluation expenditure
-
(13.5)
2.1
(6.2)
0.2
(1.0)
0.3
(0.3)
(56.4)
(6.5)
(2.5)
(20.8)
-
(425.8)
(425.8)
(53.2)
-
-
- -
- -
- -
- -
- -
- -
Delayed revenue recognition for tax purposes
-
Recognition of convertible bond for accounting purposes
(12.9)
Gross deferred tax liabilities
Set off of deferred tax assets
(556.6)
57.3
(0.1)
(10.1)
(473.2)
25.0
(12.9)
(10.8)
- -
(10.1)
(16.1)
Net deferred tax liabilities
(499.3)
(448.2)
(10.8)
(16.1)
Deferred tax assets
Revenue losses available for offset against future
taxable income
95.3
32.8
16.4
Equity raising costs
Foreign currency balances
Provision for sales contracts
Provision for audit services
Investment cash acquisition costs for
accounting purposes
Provisions for employee benefits
Provision for mine rehabilitation
Provisions for write down of intercompany receivables
Provisions for write down of intercompany investments
Gross deferred tax assets
Set off against deferred tax liabilities
Deferred tax assets not recognised as not probable
Net deferred tax assets recognised
0.5
6.5
-
0.1
-
0.4
0.1
-
-
102.9
(57.3)
(32.6)
13.0
0.9
0.6
2.9
-
0.9
0.2
-
-
-
38.3
(25.0)
(2.9)
10.4
0.5
- -
- -
0.1 -
- -
0.4
- -
9.2
0.4
27.0
- -
(27.0)
-
5.4
0.9
0.2
9.4
0.4
16.3
(16.3)
-
96
Annual Report 2008
Note 5. Income Tax (continued)
(c)
Deferred income tax (continued)
The net deferred tax assets recognised are attributable to Langer Heinrich Uranium (Pty) Ltd, a Namibian company
that owns the LHUP and Paladin (Africa) Ltd, a Malawian company that owns the Kayelekera Uranium Project. The
utilisation of the net deferred tax assets is dependent upon future taxable profits in excess of profits arising from
reversal of existing temporary differences and Langer Heinrich Uranium (Pty) Ltd and Paladin (Africa) Ltd have
suffered losses in the current and preceding periods in Namibia and Malawi respectively. The recognition of the
net deferred tax assets is supported by the production ramp-up at the LHUP and the Bank Feasibility Study for the
Kayelekera Uranium Project.
(d)
Tax losses
Australian unused tax losses for which no deferred
tax asset has been recognised
Namibian unused tax losses for which no deferred
tax asset has been recognised
Malawian unused tax losses for which no deferred
tax asset has been recognised
Total unused tax losses for which no deferred
tax asset has been recognised
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
105.6
27.8
54.9
18.0
-
-
-
2.7
- -
- -
105.6
30.5
54.9
18.0
Potential tax benefit at tax rates between 30% - 37.5%
31.7
9.2
16.5
5.4
This benefit for tax losses will only be obtained if:
(i)
(ii)
(iii)
the Consolidated Entity derives future assessable income of a nature and of an amount sufficient to enable
the benefit from the deductions for the losses to be realised;
the Consolidated Entity continues to comply with the conditions for deductibility imposed by tax legislation;
and
no changes in tax legislation adversely affect the Consolidated Entity in realising the benefit from the
deductions for the losses.
(e)
Members of the tax consolidation group and the tax sharing arrangements
Paladin Energy Ltd and its 100% owned Australian resident subsidiaries formed a tax consolidated group (the
Group) with effect from 1 July 2003. Paladin Energy Ltd is the head entity of the Group. Members of the Group have
entered into a tax sharing agreement that provides that the head entity will be liable for all taxes payable by the
Group from the consolidation date. The parties have agreed to apportion the head entity’s taxation liability within the
Group based on each contributing member’s share of the Group’s taxable income.
Paladin Energy Ltd
97
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 6. Cash and Cash Equivalents
Cash at bank and in hand
Short-term bank deposits
US$ treasury bonds
Total cash and cash equivalents
Consolidated
Parent Entity
2008
US$M
2007
US$M
15.5
72.4
249.7
337.6
4.3
19.4
159.1
182.8
2008
US$M
1.4
66.3
249.7
317.4
2007
US$M
0.4
10.2
159.1
169.7
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Short-term deposits are made for varying periods of between one day and three months, depending on the
immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates.
At 30 June 2008, the Group had available US$Nil (2007: US$4.4million) of undrawn committed borrowing facilities in
respect of which all conditions precedent have been met.
(a)
Reconciliation of net loss after tax to net
cash flows from operating activities
Net loss
(37.2)
(38.0)
(41.8)
(27.0)
Adjustments for
Depreciation and amortisation
Exploration expenditure
Provision for non-recovery of intercompany loan
Provision for non-recovery of intercompany investments
Loss on disposal of property, plant and equipment
Profit on sale of investments
Database licence revenue
Net exchange differences
Share options expensed
Non-cash financing costs
Changes in assets and liabilities
Increase in prepayments
Increase in trade and other receivables
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions
Decrease in borrowings
(Increase)/decrease in inventories
Decrease in deferred tax liabilities
Increase in deferred tax assets
10.9
13.1
-
-
0.4
-
(0.2)
3.7
10.6
12.3
(0.8)
(26.0)
5.1
(6.7)
(3.9)
7.3
(4.4)
2.1
7.4
-
-
0.2
(0.1)
(0.2)
1.0
6.2
5.3
(0.2)
(6.1)
(12.2)
8.5
-
(0.9)
(1.2)
(2.6)
(10.4)
0.6
- -
4.8
0.1 -
- -
-
- -
0.1
8.9
10.8
- -
(4.7)
4.5
0.5
- -
- -
(2.6)
- -
0.2
9.9
(0.1)
0.1
6.2
5.0
(2.5)
1.9
0.4
(1.2)
Net cash from operating activities
(18.4)
(38.6)
(18.8)
(7.1)
(b)
Disclosure of financing facilities
Refer to Note 19.
98
Annual Report 2008
Note 7. Trade and Other Receivables
Current
Trade receivables - (a)
Less provision for doubtful debts
Net trade receivables
Interest receivable
Prepayments
GST and VAT - (b)
Sundry debtors - (c)
Total current receivables
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
28.7
-
28.7
0.1
1.1
5.0
5.1
40.0
3.3
-
3.3
0.8
0.3
6.6
1.6
12.6
- -
-
- -
-
0.1
0.3
9.0
9.4
-
0.8
0.2
2.1
1.1
4.2
(a)
(b)
(c)
Trade receivables are non-interest bearing and are generally on 30 day terms. An allowance for doubtful
debts is made when there is objective evidence that a trade receivable is impaired. An allowance of US$Nil
(2007: US$Nil) has been recognised as an expense for the current year for specific debtors for which such
evidence exists.
GST and VAT debtor relates to Australia, Namibia and Malawi. Interest is not normally charged and collateral
is not normally obtained.
Sundry debtors include a A$3.1 million (US$3.0 million) (2007: A$Nil/US$Nil) debtor due from the sale of
non-uranium properties and Georgina Basin Project held by Summit Resources Ltd. Interest is not normally
charged and collateral is not normally obtained. Sundry debtors includes amounts receivable by the
Company from subsidiaries US$9.0 million (2007: US$1.0 million).
Non Current
Unsecured loans to wholly owned Group - (d)
Less provision for non-recovery
Net unsecured loans to the wholly owned Group
Net other receivables
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
-
-
-
-
-
-
-
-
249.2
(30.6)
218.6
218.6
107.1
(25.8)
81.3
81.3
(d)
Of the unsecured loans to the wholly owned Group, the Company charges interest only on the loan to
Paladin Finance Pty Ltd. The interest rate payable is the one month US$ LIBOR plus 2% (2007: one month
US$ LIBOR plus 2%). In the year ending 30 June 2008 the average rate charged was 6.19% (11.87% for
1 July 2006 to 30 November 2006 and 7.32% from 1 December 2006 to 30 June 2007) and disclosure of
interest revenue earned is set out in Note 4(a).
The other unsecured loans are repayable on demand however the Company, for the foreseeable future, has
no intention of demanding repayment until the subsidiary has the capacity to repay.
Paladin Energy Ltd
99
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 8. Inventories
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
Stores and spares (at cost)
Stockpiles (at cost) (1)
Work-in-progress (at cost)
Work-in-progress (at net realisable value)
Finished goods (at cost) – third party uranium purchased
Finished goods (at cost)
Finished goods (at net realisable value)
3.9
13.4
5.6
-
31.8
14.2
-
1.8
-
-
2.1
24.7
-
9.4
Total inventories at the lower of cost and net
realisable value
68.9
38.0
- -
- -
- -
- -
- -
- -
- -
- -
(1) Value now recognised for stockpile as a consequence of lower cost of production of the LHUP from 30 June 2007. In total US$8.6
million was attributed to stockpile values during the financial year from the improved operating performance.
(a)
Inventory expense
Inventories sold recognised as an expense for the year ended 30 June 2008 totalled US$66.4 million (2007: US$8.7
million) for the Group and US$Nil (2007: US$Nil) for the Company. This expense has been included in the cost of
sales – refer Note 4(c). Impairment of inventories included in the cost of sales for the Consolidated Entity is US$Nil
(2007: US$3.3 million).
Note 9. Investments Held For Trading
Current
At fair value
Options – unlisted
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
1.4
1.4
-
-
- -
- -
The Consolidated Entity has an investment in MM Mining Plc (MMM), an unlisted public UK company that explores
for base metals. At 30 June 2008 the Consolidated Entity holds 20 million (2007:Nil) warrants. Each warrant entitles
it to acquire one fully paid ordinary share in MMM at an exercise price of 15 GB pence. Each warrant expires on 31
December 2012
As MMM is unlisted the options have been valued using the Black and Scholes option pricing methodology using
the net assets per share method to determine the appropriate underlying value.
100
Annual Report 2008
Note 10. Other Financial Assets
Non Current
Investments in controlled entities – (a)
Less provision for non-recovery
Net investment in controlled entities
Available-for-sale financial assets – (b)
Total non current other financial assets
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
-
-
-
41.7
41.7
-
-
-
60.3
60.3
994.4
(1.3)
993.1
26.6
994.4
(1.2)
993.2
34.1
1,019.7
1,027.3
(a)
Investments in material controlled entities
Name
Country of
Incorporation
Investment
Percentage
Interest Held
Cost Of Parent
Entity’s
Interest
2008
%
2007
%
2008
US$M
2007
US$M
Paladin Finance Pty Ltd (i)(ii)
Paladin Energy Minerals NL (i)
Eden Creek Pty Ltd (i)(ii)
Paladin (Africa) Ltd (iii)
Langer Heinrich Uranium (Pty) Ltd
Valhalla Uranium Ltd (i)(vii)
Northern Territory Uranium Pty Ltd (ii)(iv)
Mount Isa Uranium Pty Ltd (ii)(iv)
Paladin Nuclear Ltd (i)(viii)
Summit Resources Ltd (i)(ix)
Summit Resources (Aust) Pty Ltd (ii)(v)
Pacific Mines Ltd (vi)
Australia
Australia
Australia
Malawi
Namibia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100
100
100
85*
100
100
100
100
100
81.9
81.9
81.9
Total investments in controlled entities
Less provision for non-recovery of investments
100
100
100
85*
100
100
100
100
100
81.9
81.9
81.9
37.2
1.3
37.2
- -
1.3
- -
- -
153.2
153.2
- -
- -
- -
802.7
802.7
- -
- -
994.4
(1.3)
994.4
(1.2)
Net investments in controlled entities
993.1
993.2
(*) The Development Agreement for the Kayelekera Uranium Project signed on 23 February 2007 provides the Government of Malawi
with 15% of Paladin (Africa) Ltd, owner of the project, in exchange for a reduction of 2.5% in corporate tax, nil rent resource tax and
royalty offsets.
All investments comprise ordinary shares and all shares held are unquoted, with the exception of Summit Resources Ltd’s shares
which are quoted on the Australian Securities Exchange.
(i) Held by Paladin Energy Ltd
(ii) These entities are not required to prepare or lodge audited accounts
(iii) Held by Paladin Energy Minerals NL
(iv) Held by Valhalla Uranium Ltd
(v) Held by Summit Resources Ltd
(vi) Held by Summit Resources (Aust) Pty Ltd
(vii) Acquired on 7 September 2006 with the eventual issue of 37,974,256 Paladin shares plus US$1.7 million in transaction costs
(viii) Incorporated on 27 April 2007
(ix) Acquired majority interest on 27 April 2007 with the eventual issue of 101,157,400 Paladin shares plus US$3.8 million in transaction
costs
Paladin Energy Ltd
101
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 10. Other Financial Assets (continued)
(a)
Investments in material controlled entities (continued)
Acquisition Disclosure
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
Inflow of cash on acquisition of controlled entities
Cash balances acquired
Less: Cash consideration
Net inflow/(outflow) of cash
-
-
-
26.8
(5.5)
21.3
- -
-
-
(5.5)
(5.5)
Included in the net inflow of cash is US$1.9 million from the acquisition of Valhalla Uranium Ltd and US$19.4 million
from the acquisition of Summit Resources Ltd – refer Note 31.
(b)
Available-for-sale financial assets
The Consolidated Entity has an investment in Deep Yellow Ltd (Deep Yellow) and at 30 June 2008 holds
159,058,461 (2007: 117,585,704) fully paid ordinary shares and 12,500,000 unlisted securities exercisable at 8.1
Australian cents on or before 31 July 2008 (2007: 12,500,000 unlisted securities exercisable at 8.1 Australian cents
on or before 31 July 2008).
The holding of these fully paid ordinary shares represents 14.34% interest at 30 June 2008 (2007: 12% interest) of
the ordinary shares of Deep Yellow, a uranium explorer listed on ASX. The market value of the shares and unlisted
securities in Deep Yellow at 30 June 2008 is A$42.7 million (US$41.1 million) (2007: A$76.5 million/ US$59.9 million)
based on a share price of 25.5 Australian cents per share (2007: 55 Australian cents).
Refer to Note 32 in relation to an increase in the interest in Deep Yellow after Balance Sheet date pursuant to the
exercise of options.
The Consolidated Entity also holds minor investments in other companies.
Note 11. Investment in Associate
(a)
Investment details
Unlisted
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
MM Mining Plc – ownership 35%
Investment in associate
2.6
2.6
-
-
- -
- -
The Consolidated Entity has an investment in MM Mining Plc (MMM), an unlisted UK company that explores base
metals. At 30 June 2008 it holds 20 million (2007:Nil) fully paid ordinary shares. This is in addition to the warrants
held as disclosed in Note 9. As MMM is unlisted the value per share method has been used to determine the
appropriate underlying value.
102
Annual Report 2008
Note 11. Investment in Associate (continued)
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
(b)
Movements in the carrying amount of the Group’s
investment in associate
MM Mining Plc
At 1 July 2007
Investment in associate
Shares of losses after income tax
At 30 June 2008
(c)
Summarised financial information
The following table illustrates summarised financial
information relating to the Group’s associate
Extract from the associate’s balance sheet:
Current assets
Non current assets
Current liabilities
Non current liabilities
Net assets
Share of associate’s net assets
Extract from the associate’s income statement
Revenue
Net loss
Contingent liabilities relating to the associate
Share of contingent liabilities incurred jointly with
other investors
-
2.8
(0.2)
2.6
0.3
10.8
11.1
(3.5)
-
(3.5)
7.6
2.6
-
0.6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- -
- -
- -
- -
- -
- -
- -
- -
-
- -
- -
- -
- -
- -
- -
Note 12. Deferred Borrowing Costs
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
Non Current
Deferred borrowing costs
1.7
0.2
- -
Deferred borrowing costs represent the initial capitalised costs of establishing project finance for the Kayelekera
Uranium Project.
Paladin Energy Ltd
103
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 13. Property, Plant and Equipment
Consolidated
Parent Entity
Plant and equipment – at cost (1)
Less provision for depreciation
Total plant and equipment
Technical database – at cost
Less provision for amortisation
Total technical database
Land and buildings - at cost
Less provision for depreciation
Total land and buildings
Construction work in progress – at cost
Total non current property, plant and equipment
2008
US$M
125.8
(10.5)
115.3
0.9
(0.9)
-
5.3
(0.2)
5.1
109.1
229.5
2007
US$M
124.1
(2.4)
121.7
0.7
(0.6)
0.1
3.4
(0.2)
3.2
8.1
2008
US$M
18.9
(1.1)
17.8
2007
US$M
17.8
(0.5)
17.3
- -
- -
- -
- -
- -
- -
- -
133.1
17.8
17.3
(1) Reduction of US$6.6 million (2007: US$Nil) occurred during the year ended 30 June 2008 relating to the recognition of value for
stockpiles as a consequence of lower cost of production of the LHUP from 30 June 2007.
Property, plant and equipment pledged as security for liabilities
Refer to Note 19 for information on property, plant and equipment pledged as security.
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
Databases
Land and Construction
Building
US$M
US$M
US$M
US$M
Work in
Progress
US$M
Consolidated – 2008
Carrying amount at start of year
Additions
Depreciation and amortisation expense
Disposals
133.1
106.8
(8.4)
(2.3)
Foreign currency translation reserve
0.3
121.7
3.9
(8.1)
(2.3)
0.1
Carrying amount at end of year
229.5
115.3
Parent Entity – 2008
Carrying amount at start of year
Additions
17.3
1.1
Depreciation and amortisation expense
(0.6)
Carrying amount at end of year
17.8
17.3
1.1
(0.6)
17.8
0.1
-
(0.1)
-
-
-
-
-
-
-
3.2
1.9
(0.2)
-
0.2
5.1
-
-
-
-
8.1
101.0
-
-
-
109.1
-
-
-
-
104
Annual Report 2008
Note 13. Property, Plant and Equipment (continued)
Total
Plant and
Equipment
Databases
Land and Construction
Building
Work in
Progress
US$M
US$M
US$M
US$M
US$M
Consolidated – 2007
Carrying amount at start of year
Additions
Acquisition of subsidiary (Note 31)
Depreciation and amortisation expense
Disposals
Re-classification to intangibles
Re-classification of assets
58.7
88.7
1.4
(1.8)
(0.3)
(17.8)
-
Functional currency transition adjustment (1) 4.3
Foreign currency translation reserve
(0.1)
0.4
20.6
0.5
(1.6)
(0.1)
-
101.8
0.1
-
0.1
-
-
-
-
-
-
-
-
0.2
-
0.9
(0.2)
(0.2)
-
2.5
-
-
Carrying amount at end of year
133.1
121.7
0.1
3.2
Parent Entity - 2007
Carrying amount at start of year
Additions
0.3
17.2
Depreciation and amortisation expense
(0.2)
Carrying amount at end of year
17.3
0.3
17.2
(0.2)
17.3
-
-
-
-
-
-
-
-
58.0
68.1
-
-
-
(17.8)
(104.3)
4.2
(0.1)
8.1
-
-
-
-
(1) Adjustment relates to the transition from a functional and presentation currency of Australian dollars to a functional and presentation
currency of United States dollars.
Paladin Energy Ltd
105
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 14. Mine Development
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
Mine development
Less provision for depreciation
Total mine development
Carrying amount at start of year
Additions
Depreciation and amortisation expense
Reallocation from exploration
Carrying amount at end of year
13.8
(1.6)
12.2
2.0
4.8
(1.5)
6.9
12.2
2.1
(0.1)
2.0
-
0.5
(0.1)
1.6
2.0
- -
- -
- -
- -
- -
- -
- -
- -
Canadian securities law requires the following description of the Consolidated Entity’s interests in mineral property
tenements:
Langer Heinrich Uranium Project (Namibia) – Paladin 100%
The LHUP consists of one mining licence – ML 140 – covering 4,375 hectares in the Namib Naukluft Desert 180km
west of Windhoek, the capital of Namibia, and 80km east of the major seaport of Walvis Bay. The licence was
granted on 26 July 2005 for a 25 year term expiring on 25 August 2030. Rights conferred by the licence include
the right to mine and sell base and rare metals and nuclear fuel groups of minerals and to carry out prospecting
operations. The project was purchased from Acclaim Uranium NL (now Aztec Resources Ltd) in August 2002. The
LHUP is owned through a wholly owned Namibian entity, Langer Heinrich Uranium (Pty) Ltd.
Construction of the processing plant was commenced in late 2005 with staged commissioning being completed in
December 2006. Following an extended ramp-up phase the plant and mine achieved nameplate production in late
2007. Work has commenced on the Stage II plant upgrade with planning underway for a further Stage III upgrade.
Langer Heinrich Uranium (Pty) Ltd also holds an exclusive prospecting licence, EPL 3500 covering 30 sq. km. to the
west of the mining licence.
Kayelekera Uranium Project (Malawi) – Paladin 85%
The Kayelekera Uranium Project consists of one mining licence - ML 152 – covering 5,550 hectares in northern
Malawi 650km north of Lilongwe, the capital of Malawi, and 40km west of the provincial town of Karonga on the
shore of Lake Malawi. The licence was granted on 2 April 2007 for a fifteen year term expiring on 1 April 2022.
Rights conferred by the licence include the exclusive right to mine and sell uranium and associated minerals. The
Consolidated Entity acquired its interest in the Kayelekera Uranium Project in February 1998 when it entered into
a joint venture with Balmain Resources Pty Ltd, a private company based in Perth, Western Australia. In 2000 the
Consolidated Entity increased its interest in the Kayelekera Project to 90% and in July 2005 acquired the remaining
10% interest held by Balmain Resources Pty Ltd. Paladin’s interest in the Kayelekera Uranium Project is held
through a Malawian entity, Paladin (Africa) Ltd.
A Development Agreement has been enacted between the Government of Malawi and Paladin (Africa) Ltd in
which Paladin received certain taxation and royalty concessions and in return the Government of Malawi received
a free carried interest in the project of 15% thus reducing Paladin’s share to 85%. Subsequent to the Development
Agreement and the acceptance of the project Environmental Impact Assessment the Government of Malawi granted
the mining licence covering the project area to Paladin (Africa) Ltd. Construction of the plant was commenced in
2007 with staged commissioning expected to be completed by December 2008. Mining to develop initial stockpiles
was started in mid 2008.
Paladin (Africa) Ltd also holds four exclusive prospecting licences in northern Malawi covering 1,298 sq.km.
surrounding and to the south of the Kayelekera mining licence.
106
Annual Report 2008
Note 15. Exploration and Evaluation Expenditure
Canadian securities law requires the following description of the Consolidated Entity’s interests in mineral property
tenements:
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, 1,100km north of Perth, the State capital and 90km 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$0.75 million is payable to AFMEX
when all development approvals have been obtained. Royalties of 2.5% for the first 2,000t of uranium oxide and
1.5% for the following 2,000t 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 452 sq.km. in
the West Kimberley region of northern Western Australia, 1,900km north-north-east of Perth, the State capital and
70km 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 overlie 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$0.75 million 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.
Bigrlyi Uranium Project (Australia) – Paladin 42.06%
The Bigrlyi Uranium Project lies in the Northern Territory of Australia approximately 320km north west of Alice
Springs and is comprised of ten exploration retention licences (ERLs 46-55) covering 1,214 hectares. These
tenements were originally granted in 1983 and have been subject to 5 yearly renewals since 1988. The project is
now a Joint Venture between Energy Metals Limited 53.74%, Southern Cross Exploration NL 4.20% and Northern
Territory Uranium Pty Ltd 42.06% (100% owned by Paladin Energy Ltd) with Energy Metals Limited being operator
and manager. Resource definition drilling is ongoing at the project and an Initial Scoping Study was released in
November 2007 with an Updated Scoping Study released in July 2008.
The Bigrlyi uranium deposit was originally discovered by Agip Australia Pty Ltd in the mid 1970’s before being
transferred to Central Pacific Minerals NL in the early 1980’s. Ore Reserve studies were carried out during the 1980’s
and 1990’s but no drilling was undertaken until recently. During 2005/2006 a drilling campaign was undertaken
by the Joint Venture partners which resulted in an initial JORC Resource. Resource definition drilling on the project
during 2007 has resulted in an updated resource. The Joint Venture has completed a number of scoping studies to
assess the viability of the project with drill planning for 2008 based on these outcomes.
Isa Uranium Joint Venture (Australia) – Paladin 90.9%
The Isa Uranium Joint Venture in Northern Queensland is a 50:50 joint venture between Summit Resources (Aust)
Pty Ltd (Paladin Energy Ltd 81.9% ownership) and Mount Isa Uranium Pty Ltd (Paladin Energy Ltd 100% ownership)
with Summit Resources (Aust) Pty Ltd being the operator and manager. The Isa Uranium Joint Venture covers of
two defined blocks of land totalling 27 sq.km. containing the Vahalla and Skal uranium deposits. Paladin’s effective
equity in the Isa Uranium Joint Venture was increased from 50% to 90.9% following the acquisition of 81.9% of
Summit Resources Ltd in 2007.
Paladin Energy Ltd
107
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 15. Exploration and Evaluation Expenditure (continued)
Valhalla Uranium Deposit
The Valhalla Uranium Deposit is situated on Exploration Permit for Minerals 9221 (EPM 9221) and is located some
40km North of Mount Isa and straddles the Barkly Highway. EPM 9221 was originally granted to Summit Resources
(Aust) Pty Ltd in 1993 but the ground had previously been worked on by Mount Isa Mines Limited and Queensland
Mines Limited from the mid 1950’s to the early 1970’s. Queensland Mines Limited, in particular, conducted extensive
exploration over the Valhalla ground between 1968 and 1972 including the estimation of resources and reserves.
Queensland Mines Limited allowed the tenement to lapse in 1991 and the ground was subsequently acquired
by Summit Resources (Aust) Pty Ltd in 1992. During 2008 resource definition drilling was commenced to enable
completion of a detailed scoping study.
Skal Uranium Deposit
The Skal Uranium Deposit is located approximately 8km southeast of the Valhalla Uranium Deposit and 32km
north of Mount Isa. Skal was originally discovered by Mount Isa Mines Limited in the mid 1950’s and was subject
to mapping and drilling at that time. Queensland Mines Limited acquired the project in the 1960’s and conducted
further drilling resulting in an estimation of a resource for the project. The deposit is situated on Exploration Permit
for Minerals 14048 and the Isa Uranium Joint Venture re-commenced drilling in 2005. An initial JORC compliant
resource estimate was completed in mid 2008.
Summit Resources Ltd (Australia) – Paladin 81.9%
Paladin acquired an 81.9% interest in Summit Resources Ltd as a result of a takeover bid which closed on 1 June
2007. Summit Resources Ltd holds a large number of exploration tenements surrounding and to the north of Mount
Isa in Northern Queensland. Other than the Andersons, Bikini & Watta Projects, for which JORC resource estimates
have been completed, limited exploration activities have taken place on these tenements in recent years and as
such they are not considered material to Paladin at this point in time.
Angela and Pamela Projects (Australia) – Paladin 50%
In early 2008 the Northern Territory Government advised that the Angela Project Joint Venture (Paladin 50% and
Cameco 50%) had been selected to explore the Angela and Pamela uranium deposits located near Alice Springs in
the Northern Territory. Exploration licence applications are now underway through the normal procedures set out in
the Northern Territory Mining Act and it is anticipated that this process will be completed by late 2008.
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.
Environmental contingency
The Consolidated Entity’s exploration, evaluation, development and operation activities are subject to various
national, 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.
108
Annual Report 2008
Note 15. Exploration and Evaluation Expenditure (continued)
The following table details the expenditures on interests in mineral properties by area of interest for the year ended 30 June 2008:
Areas of interest
Valhalla/Skal
Projects(1)
Isa North Georgina
Project(1)
Basin
Projects Non Project
Other
Bigrlyi Kayelekera Langer Other
Total
US$M
US$M
US$M
US$M
US$M
Project(1) Uranium(1)
Project Heinrich Uranium
Project Projects
US$M US$M
US$M
US$M
Balance 30 June 2007
1,227.896
344.437
1.178
7.124
15.065
4.560
Acquisition property
payments
Project exploration and
evaluation expenditure
Tenement costs
Labour
Consultants and
contractors
Materials and utilities
Transportation and
communications
Outside services
Legal and accounting
Camp expenses
Overheads
-
-
1.213
0.353
0.184
0.209
5.327
-
0.049
0.301
Joint venture contributions
-
-
-
-
0.061
0.383
0.049
0.016
0.086
0.642
0.002
0.015
0.048
-
0.377
0.149
0.063
0.001
-
0.001
0.002
-
0.075
0.045
0.001
0.002
0.010
0.039
0.003
-
0.001
0.005
(1.317)
-
Other expenses
0.215
0.053
0.001
0.001
-
-
0.031
0.003
0.006
0.009
-
-
-
0.023
2.372
0.003
-
0.001
0.430
0.032
0.068
0.170
0.544
(0.015)
0.012
0.025
-
0.341
-
-
-
-
-
-
-
-
-
-
-
-
1.129 1,601.389
-
-
0.038
0.286
0.042
0.019
0.043
0.020
0.015
0.050
-
0.552
2.537
0.543
0.296
0.527
7.574
0.012
0.091
0.453
1.055
0.004
0.618
1.021
-
Total expenditure
7.851
1.355
(0.722)
0.181
2.447
1.608
1.021
0.517
14.258
Exploration expenditure
expensed
Exploration expenditure
capitalised
Cost of tenements sold
Foreign exchange
differences
Transferred to Mine
Development
(7.851)
(1.355)
(0.463)
(0.181)
(2.447)
(0.290)
-
(0.517)
(13.104)
-
-
-
-
(1.185)
-
-
(7.350)
-
-
161.914
45.420
0.007
0.226
1.987
1.318
1.021
-
-
-
-
-
-
1.154
(7.350)
0.150 209.704
Balance 30 June 2008
1,389.810
389.857
-
-
-
-
-
-
-
(5.878)
(1.021)
-
(6.899)
17.052
-
-
1.279 1,797.998
(1) Allocation of the Summit Group acquisition value was completed during the year, and as a consequence the comparatives have been restated.
Summit has a 50% interest in the Valhalla/Skal Projects with the other 50% interest held by the Paladin Group. As a consequence of the takeover
of the Summit Group, the above table now reflects 100% of the Valhalla/Skal Projects with the minority interest reflected on the face of the Balance
Sheet.
Paladin Energy Ltd
109
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 15. Exploration and Evaluation Expenditure (continued)
The following table details the expenditures on interests in mineral properties by area of interest for the year ended 30 June 2007:
Areas of interest
Valhalla/Skal
Projects(1)
Isa North Georgina
Project(1)
Basin
Projects Non Project
Other
Bigrlyi Kayelekera Langer Other
Total
US$M
US$M
US$M
US$M
US$M
Project(1) Uranium(1)
Project Heinrich Uranium
Project Projects
US$M US$M
US$M
US$M
Balance 30 June 2006
-
-
-
-
-
4.223
1.149
0.972
6.344
1,216.352
344.363
1.178
7.122
13.908
-
-
-
1,582.923
Acquisition property
payments
Project exploration and
evaluation expenditure
Tenement costs
Labour
Consultants and
contractors
Materials and utilities
Transportation and
communications
Outside services
Legal and accounting
Camp expenses
Overheads
(0.016)
(0.031)
0.062
-
0.022
-
-
0.009
0.043
0.004
0.162
0.006
0.030
0.016
0.789
-
0.002
0.001
-
0.016
0.065
-
0.004
0.027
-
0.016
0.030
0.067
0.001
0.005
0.142
-
0.003
0.003
-
-
-
-
0.006
0.017
-
-
-
-
-
-
0.005
0.443
0.566
0.122
0.312
2.168
0.185
0.098
0.048
1.345
-
0.001
0.034
0.050
0.107
0.002
0.039
0.005
0.011
0.029
0.059
0.254
-
-
0.107
0.002
0.017
-
-
0.048
-
0.044
0.783
0.824
0.169
0.447
3.380
0.292
0.134
0.140
1.439
Joint venture contributions
0.671
-
(0.577)
Other expenses
0.026
0.001
-
0.001
-
0.103
0.008
0.005
0.144
Total expenditure
0.786
1.011
(0.462)
0.265
1.368
4.050
0.351
0.427
7.796
Exploration expenditure
expensed
Exploration expenditure
capitalised
Foreign exchange
differences
Transferred to Property,
Plant & Equipment
(0.786)
(1.011)
0.462
(0.265)
(1.368)
(4.050)
-
(0.427)
(7.445)
-
-
11.544
0.074
-
-
-
-
-
-
-
-
0.351
-
0.351
0.002
1.157
0.337
0.083
0.157
13.354
-
-
-
(1.583)
-
(1.583)
Balance 30 June 2007
1,227.896
344.437
1.178
7.124
15.065
4.560
-
1.129 1,601.389
(1) Allocation of the Summit Group acquisition value was completed during the year, and as a consequence the comparatives have been restated.
Summit has a 50% interest in the Valhalla/Skal Projects with the other 50% interest held by the Paladin Group. As a consequence of the takeover
of the Summit Group, the above table now reflects 100% of the Valhalla/Skal Projects with the minority interest reflected on the face of the Balance
Sheet.
110
Annual Report 2008
Note 16. Intangible Assets
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
(a)
Reconciliation of carrying amount at the
beginning and end of the period
At 1 July
Net of accumulated amortisation
Reclassification from property, plant and equipment
Amortisation
At 30 June
17.6
-
(1.0)
-
17.8
(0.2)
Net of accumulated amortisation
16.6
17.6
At 30 June
Cost – right to supply of power and water
Accumulated amortisation
Net carrying amount of non current intangible assets
17.8
(1.2)
16.6
17.8
(0.2)
17.6
- -
- -
- -
- -
- -
- -
- -
Amortisation of US$1.0 million (2007: US$0.2 million) is included in costs of sales in the Income Statement.
(b)
Description of the Group’s intangible assets
(i)
Right to supply of power
Langer Heinrich Uranium Pty Ltd has entered into a contract with NamPower in Namibia for the right to
access power at the Langer Heinrich mine. In order to obtain this right, the power line connection to the
mine was funded by Langer Heinrich, however, ownership of the power line rests with NamPower. The
amount funded is being amortised over the life of mine on a straight–line basis.
(ii)
Right to supply of water
Langer Heinrich Uranium Pty Ltd has entered into a contract with NamWater in Namibia for the right to
access water at the Langer Heinrich mine. In order to obtain this right, the water pipeline connection to the
mine was funded by Langer Heinrich; however, ownership of the pipeline rests with NamWater. The amount
funded is being amortised over the life of mine on a straight-line basis.
Note 17. Trade and Other Payables
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
Current
Trade and other payables
Total current payables
Trade payables are non-interest bearing and are
normally settled on 60 day terms.
Non Current
41.4
41.4
13.8
13.8
Unsecured loans from wholly owned Group Companies -
Total non current payables
-
-
-
7.5
7.5
1.0
1.0
2.8
2.8
2.7
2.7
The unsecured loans from wholly owned Group Companies are interest free and have no fixed terms of repayment,
however, the companies for the foreseeable future have no intention of demanding repayment.
Paladin Energy Ltd
111
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 18. Unearned Revenue
Current
Unearned revenue
Non current
Unearned revenue
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
0.2
0.5
0.2
0.6
- -
- -
Unearned revenue represents the database licence revenue received from Deep Yellow Ltd for the use of the Frome
Basin database from 15 July 2005 for a period of 6 years.
Note 19. Interest Bearing Loans and Borrowings
Current
Secured bank loan
Non current
Unsecured convertible bonds
Unsecured convertible bonds
Secured bank loan
Total non current
Maturity
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
11.0
4.4
- -
2011
2013
2012
218.4
299.0
54.1
571.5
209.2
-
60.0
269.2
218.4
299.0 -
- -
517.4
209.2
209.2
The figures above include deferred borrowing costs
Fair value disclosures
Details of the fair value of the Group’s interest bearing liabilities are set out in Note 23.
Unsecured convertible bonds
On 15 December 2006, the Company issued US$250 million in convertible bonds with an underlying coupon rate of
4.5%, maturity 15 December 2011 and a conversion price of US$7.685 for Company shares.
In disclosing the convertible bonds in the Consolidated Financial Statements, the Company has accounted for them
in accordance with Australian Accounting Standards. Under these standards the convertible bonds are essentially
both a liability (underlying bond) and an equity instrument (conversion rights into Company shares).
Based on this allocation of the convertible bonds, US$212.2 million has been initially allocated to interest bearing
loans and borrowings in non-current liabilities (underlying effective interest rate of 8.75%) and US$37.8 million to
non-distributable convertible bond reserve in equity. A deferred tax liability of US$11.3 million has been recognised
through reserves which relates to the equity component of the bond and this deferred tax liability reverses to the
Income Statement over the term of the bond.
On 11 March 2008, the Company issued US$325 million in convertible bonds with an underlying coupon rate of
5.0%, maturity 11 March 2013 and a conversion price of US$6.59 for Company shares.
In disclosing the convertible bonds in the Consolidated Financial Statements, the Company has accounted for them
in accordance with Australian Accounting Standards. Under these standards the convertible bonds are treated as
both a liability (underlying bond) and an equity instrument (conversion rights into Company shares).
Based on this treatment of the convertible bonds, US$307.1 million has been allocated to interest bearing loans
and borrowings in non-current liabilities (underlying effective interest rate of 7.13%) and US$17.8 million to non-
distributable convertible bond reserve in equity. A deferred tax liability for the bonds of US$5.4 million has been
recognised through reserves which relates to the equity component of the bond and this deferred tax liability
reverses to the Income Statement over the term of the bond.
112
Annual Report 2008
Note 19. Interest Bearing Loans and Borrowings (continued)
Secured bank loan
During the year ended 30 June 2006 the Consolidated Entity completed project finance facilities amounting to
US$71 million for construction of the LHUP. The financing has been provided by Société Générale Australia Branch
(as lead arranger), Nedbank Capital and Standard Bank Plc and consists of a 7 year Project Finance Facility of
US$65 million and a Standby Cost Overrun Facility of US$6 million. The Project Finance Facility bears interest at
the London Interbank Offered Rate (LIBOR) plus 3.5% up to and including practical completion of the project, and
the interest cost reduces to LIBOR plus 2.5% after practical completion. No requirement for political risk insurance
exists under the terms of the Project Finance Facility. The facilities are secured with fixed and floating charges over
the assets of Langer Heinrich Uranium (Pty) Ltd and its immediate holding companies. Paladin Energy Ltd has
provided a project completion guarantee as part of the facilities.
At 30 June 2008 US$66.3 million (2007: US$66.6 million) had been drawn of the project finance facilities, following
principal repayments of US$4.6M, leaving available facilities of US$Nil (2007: US$4.4 million).
Deferred borrowing costs capitalised during the year relating to establishment of facilities
Consolidated Entity – US$9.9 million (2007: US$8.3 million)
Parent Entity – US$9.8 million (2007: US$8.0 million)
100% of borrowing costs incurred for the construction of any qualifying asset are capitalised.
Financing facilities available
At reporting date, the following financing facilities had been negotiated and were available:
Total facilities:
Unsecured convertible bonds
Secured bank loans
Facilities used at reporting date
Unsecured convertible bonds
Secured bank loans
Facilities unused at reporting date
Unsecured convertible bonds
Secured bank loans
Total facilities
Facilities used at reporting date
Facilities unused at reporting date
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
575.0
66.3
641.3
575.0
66.3
641.3
-
-
-
641.3
-
641.3
250.0
71.0
321.0
250.0
66.6
316.6
-
4.4
4.4
316.6
4.4
321.0
575.0
- -
575.0
575.0
- -
575.0
- -
575.0
- -
575.0
250.0
250.0
250.0
250.0
-
-
250.0
250.0
Paladin Energy Ltd
113
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 19. Interest Bearing Loans and Borrowings (continued)
Assets pledged as security
The carrying amounts of assets pledged as security for non current interest bearing liabilities (secured bank loans)
are:
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
Current
Floating charge
- Cash and cash equivalents
- Trade and other receivables
-
Inventories
Total current assets pledged as security
Non current
- Property, plant and equipment
- Exploration and evaluation expenditure
- Deferred tax asset
-
Intangible assets
Total non current assets pledged as security
Total assets pledged as security
14.4
35.8
37.1
87.3
109.6
-
11.6
16.6
137.8
225.1
2.6
7.7
13.4
23.7
108.3
-
10.4
17.6
136.3
160.0
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
0.5
0.5
-
-
1.5
1.5
0.1
4.4
3.9
8.4
2.0
7.8
0.8
10.6
0.1
-
3.0
3.1
- -
- -
1.0
1.0
0.1 -
- -
- -
0.1 -
Note 20. Provisions
Current
Rehabilitation
Sales contracts
Employee benefits (Note 27)
Total current provisions
Non Current
Employee benefits (Note 27)
Rehabilitation provision
Mine closure
Total non current provisions
114
Annual Report 2008
Note 20. Provisions (continued)
For a description of the nature and timing of cash flows associated with the above provisions, refer to section (b)
below :
(a)
Movements in provisions
Movements in each class of provision during the financial year, other than provisions relating to employee benefits,
are set out below :-
Sales
Rehabilitation Contracts
US$M
US$M
Mine
Closure
US$M
Total
US$M
2.0
2.6
-
(0.2)
4.4
-
4.4
4.4
2.0
-
2.0
7.8
-
(7.8)
-
-
-
-
-
7.8
-
7.8
3.0
1.3
-
(0.4)
3.9
-
3.9
3.9
-
3.0
3.0
12.8
3.9
(7.8)
(0.6)
8.3
-
8.3
8.3
9.8
3.0
12.8
Consolidated
At 1 July 2007
Arising during the year
Utilised
Foreign currency movements
At 30 June 2008
Current 2008
Non current 2008
Current 2007
Non current 2007
(b)
Nature and timing of provisions
(i)
Rehabilitation
A provision for rehabilitation has been recorded in relation to the LHUP. A provision is made for rehabilitation
work when the obligation arises and this is recognised as a cost of production or development as
appropriate.
In 2007 the intention was to commence rehabilitation work on the original pit. Subsequently it was
determined that the lifespan of this pit will be much longer than anticipated which has resulted in the liability
changing from current to non current.
(ii)
Sales contracts
A provision for sales contracts is recognised when the expected benefits to be derived by the Group from a
sales contract are lower than the unavoidable cost of meeting the obligations under the sales contract. The
provision is stated at the present value of the future net cash outflows expected to be incurred in respect of
the contract. At 30 June 2007 a US$7.8 million sales contract provision was recognised attributable to the
requirement to meet July 2007 Langer Heinrich sales commitments by use of third party uranium purchases.
This provision was fully utilised during the year (refer to Note 4(e)(1)).
(iii)
Mine closure
A provision for mine closure has been recorded in relation to the LHUP for the costs of dismantling and
demolition of infrastructure or decommissioning, the removal of residual material and the remediation of
disturbed areas specific to the infrastructure to a state acceptable to various authorities. Final mine closure
is not expected until the cessation of operations, currently estimated to be beyond 2020.
(iv)
Employee benefits
Refer to Note 27.
Paladin Energy Ltd
115
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 21. Contributed Equity and Reserves
(a)
Issued and paid up capital
Number of Shares
2007
2008
Consolidated/
Parent Entity
2008
US$M
2007
US$M
Ordinary shares
Issued and fully paid
613,497,369
602,437,369
1,088.4
1,075.3
Effective 1 July 1998, the Corporations legislation in place abolished the concepts of authorised capital and par
value shares. Accordingly, the Company does not have authorised capital or par value in respect of its issued
shares.
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
(b)
Movements in ordinary shares on issue
Date
Number of
Shares
Issue
Price
A$
Exchange
Rate
US$ : A$
Balance 30 June 2006
454,235,713
July 2006
July 2006
Option conversions
Option conversions
August 2006
Option conversions
September 2006
Option conversions
September 2006
Option conversions
September 2006
Valhalla acquisition
October 2006
Valhalla acquisition
October 2006
Option conversions
November 2006
Option conversions
November 2006
Option conversions
November 2006
Option conversions
December 2006
Functional currency
Transition adjustment (1)
December 2006
Option conversions
January 2007
Option conversions
March 2007
Summit acquisition
April 2007
April 2007
May 2007
June 2007
June 2007
Option conversions
Summit acquisition
Summit acquisition
Summit acquisition
Option conversions
Transfer from reserves
Less: Share issue costs
350,000
300,000
400,000
600,000
6,000
37,151,830
822,426
3,400,000
2,090,000
1,000,000
4,000
590,000
30,000
691,117
275,000
71,633,205
27,825,681
1,007,397
25,000
1.00
1.25
1.00
1.00
1.50
5.09
5.09
1.00
1.00
1.25
1.50
1.00
2.80
9.52
1.00
9.70
9.04
8.60
1.00
Balance 30 June 2007
602,437,369
Total
US$M
112.3
0.3
0.3
0.3
0.5
-
1.27647
1.27647
1.27647
1.27647
1.27647
1.27647
148.1
1.27647
1.27647
1.27647
1.27647
1.27647
1.27175
1.26855
1.24395
1.23753
1.20060
1.21269
1.21219
1.21215
3.3
2.6
1.6
1.0
-
3.8
0.4
0.1
5.3
0.3
579.0
207.4
7.2
-
1.8
(0.3)
1,075.3
(1) Adjustment relates to the transition from a functional and presentation currency of Australian dollars to functional and presentation
currency of United States dollars – refer Note 2(f)(i).
116
Annual Report 2008
Note 21. Contributed Equity and Reserves (continued)
(b)
Movements in ordinary shares on issue (continued)
Date
Number of
Shares
Issue
Price
A$
Exchange
Rate
US$ : A$
Total
US$M
Balance 30 June 2007
602,437,369
1,075.3
September 2007
Option conversions
November 2007
Option conversions
November 2007
Option conversions
December 2007
Option conversions
April 2008
April 2008
June 2008
June 2008
June 2008
Option conversions
Option conversions
Option conversions
Option conversions
Option conversions
Transfer from reserves
250,000
50,000
3,270,000
7,000,000
100,000
94,600
90,000
200,000
5,400
1.00
1.00
1.00
1.00
1.50
2.80
1.50
2.80
2.80
1.22122
1.08369
1.08369
1.12974
1.09343
1.09343
1.04671
1.04671
1.04671
0.2
0.1
3.0
6.2
0.1
0.3
0.1
0.5
-
2.6
Balance 30 June 2008
613,497,369
1,088.4
(c)
Issued options
(i)
Exercisable at A$1.00, on or before 30 November 2007
(granted 30 November 2004)
Balance at 1 July
Exercised during year
Balance at 30 June
Number of Options
2007
2008
3,570,000
(3,570,000)
8,050,000
(4,480,000)
-
3,570,000
Vest on positive outcome for LHUP Bankable Feasibility Study together with completion of acceptable project
funding. Vesting conditions were met by 30 June 2006.
In July 2006 350,000 options above were exercised raising A$350,000 (US$274,194) in contributed equity and at
the time of exercise the shares had a market value of A$1,456,000.
In August 2006 400,000 options above were exercised raising A$400,000 (US$313,364) in contributed equity and at
the time of exercise the shares had a market value of A$1,816,000.
In September 2006 600,000 options above were exercised raising A$600,000 (US$470,046) in contributed equity
and at the time of exercise the shares had a market value of A$2,640,000.
In October 2006 150,000 options above were exercised raising A$150,000 (US$117,512) in contributed equity and
at the time of exercise the shares had a market value of A$866,500.
In November 2006 2,090,000 options above were exercised raising A$2,090,000 (US$1,637,328) in contributed
equity and at the time of exercise the shares had a market value of A$14,880,800.
In December 2006 590,000 options above were exercised raising A$590,000 (US$463,928) in contributed equity
and at the time of exercise the shares had a market value of A$4,708,200.
In April 2007 275,000 options above were exercised raising A$275,000 (US$222,217) in contributed equity and at
the time of exercise the shares had a market value of A$2,655,500.
In June 2007 25,000 options above were exercised raising A$25,000 (US$20,625) in contributed equity and at the
time of exercise the shares had a market value of A$206,500.
Paladin Energy Ltd
117
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 21. Contributed Equity and Reserves (continued)
(c)
Issued options (continued)
In September 2007 250,000 options above were exercised raising A$250,000 (US$204,713) in contributed equity
and at the time of exercise the shares had a market value of A$1,450,000.
In November 2007 50,000 options above were exercised raising A$50,000 (US$46,139) in contributed equity and at
the time of exercise the shares had a market value of A$358,500.
In November 2007 3,270,000 options above were exercised raising A$3,270,000 (US$3,017,468) in contributed
equity and at the time of exercise the shares had a market value of A$22,236,000.
(ii)
Exercisable at A$1.00, on or before 20 December 2007
(granted 20 December 2004)
Balance at 1 July
Exercised during year
Number of Options
2007
2008
7,000,000
(7,000,000)
10,250,000
(3,250,000)
Balance at 30 June
-
7,000,000
Vest on positive outcome for LHUP Bankable Feasibility Study together with completion of acceptable project
funding. Vesting conditions were met by 30 June 2006.
In October 2006 3,250,000 options above were exercised raising A$3,250,000 (US$2,546,084) in contributed equity
and at the time of exercise the shares had a market value of A$16,737,500.
In December 2007 7,000,000 options above were exercised raising A$7,000,000 (US$6,196,116) in contributed
equity and at the time of exercise the shares had a market value of -A$43,120,000
(iii)
Exercisable at A$1.25, on or before 30 November 2007
(granted 30 November 2004)
Balance at 1 July
Exercised during year
Balance at 30 June
Number of Options
2007
2008
-
1,300,000
- (1,300,000)
- -
Vest on positive outcome for LHUP Bankable Feasibility Study together with completion of acceptable project
funding. Vesting conditions were met by 30 June 2006.
In July 2006 300,000 options above were exercised raising A$375,000 (US$293,779) in contributed equity and at
the time of exercise the shares had a market value of A$1,248,000.
In November 2006 1,000,000 options above were exercised raising A$1,250,000 (US$979,263) in contributed equity
and at the time of exercise the shares had a market value of A$7,120,000.
(iv)
Exercisable at A$1.50, on or before 15 July 2008
(granted 15 July 2005)
Balance at 1 July
Exercised during year
Balance at 30 June
118
Annual Report 2008
Number of Options
2007
2008
190,000
(190,000)
200,000
(10,000)
-
190,000
Note 21. Contributed Equity and Reserves (continued)
(c)
Issued options (continued)
Vest on positive outcome for LHUP Bankable Feasibility Study together with completion of acceptable project
funding. Vesting conditions were met by 30 June 2006.
In September 2006 6,000 options above were exercised raising A$9,000 (US$7,051) in contributed equity and at the
time of exercise the shares had a market value of A$26,400.
In November 2006 4,000 options above were exercised raising A$6,000 (US$4,700) in contributed equity and at the
time of exercise the shares had a market value of A$27,000.
In April 2008 100,000 options above were exercised raising A$150,000 (US$137,183) in contributed equity and at
the time of exercise the shares had a market value of A$430,000.
In June 2008 90,000 options above were exercised raising A$135,000 (US$128,976) in contributed equity and at the
time of exercise the shares had a market value of A$536,400.
Number of Options
2007
2008
(v)
Exercisable at A$2.80, on or before 13 January 2009 (granted 13 January 2006 to
16 February 2006) (900,000 vest 13 January 2007 and 1,950,000 vest 13 January 2008).
Balance at 1 July
Exercised during year
Balance at 30 June
2,820,000
(300,000)
2,850,000
(30,000)
2,520,000
2,820,000
In January 2007 30,000 options above were exercised raising A$84,000 (US$66,217) in contributed equity and at
the time of exercise the shares had a market value of A$261,000.
In April 2008 94,600 options above were exercised raising A$264,880 (US$242,247) in contributed equity and at the
time of exercise the shares had a market value of A$406,780.
In June 2008 205,400 options above were exercised raising A$575,120 (US$549,455) in contributed equity and at
the time of exercise the shares had a market value of A$1,224,184.
(vi)
Exercisable at A$5.50, on or before 28 April 2009 (granted 27 April 2006)
(782,500 vest 31 October 2007 and 782,500 vest 31 October 2008).
Balance at 1 July
Balance at 30 June
Number of Options
2007
2008
1,565,000
1,565,000
1,565,000
1,565,000
(vii) Exercised at A$5.50 on or before 5 July 2009 (granted 5 July 2006 to 20 July 2006)
(700,000 vest 5 January 2008 and 700,000 vest 5 January 2009).
Balance at 1 July
Granted during year
Balance at 30 June
1,400,000 -
-
1,400,000
1,400,000
1,400,000
(viii)
Exercisable at A$8.77 on or before 1 February 2012 (granted 1 February 2007)
(2,733,670 vest 1 February 2010)
Balance at 1 July
Granted during year
Balance at 30 June
2,733,670 -
-
2,733,670
2,733,670
2,733,670
Paladin Energy Ltd
119
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 21. Contributed Equity and Reserves (continued)
(c)
Issued options (continued)
(ix)
Exercisable at A$8.77 on or before 29 June 2012 (granted 29 June 2007)
(400,000 vest 29 June 2010)
Balance at 1 July
Granted during year
Lapsed during year
Balance at 30 June
(x)
Exercisable at A$4.50 on or before 29 Jan 2013 (granted 29 Jan 2008)
(8,541,620 vest 29 Jan 2011)
Balance at 1 July
Granted during year
Lapsed during year
Balance at 30 June
(xi)
Exercisable at A$5.37 on or before 15 Feb 2011(granted 15 Feb 2008)
(700,000 vest 15 Feb 2009)
Balance at 1 July
Granted during year
Balance at 30 June
(xii)
Exercisable at A$5.37 on or before 15 Feb 2013 (granted 15 Feb 2008)
(525,000 vest 15 Feb 2011)
Balance at 1 July
Granted during year
Lapsed during year
Balance at 30 June
(xiii) Exercisable at A$4.59 on or before 18 April 2013 (granted 18 April 2008)
(1,075,000 vest 18 April 2011)
Balance at 1 July
Granted during year
Balance at 30 June
(xiv) Exercisable at A$5.27 on or before 18 June 2013 (granted 18 June 2008)
(450,000 vest 18 June 2011)
Balance at 1 July
Granted during year
Balance at 30 June
Number of Options
2007
2008
400,000 -
-
400,000
(400,000) -
-
400,000
- -
8,541,620 -
(408,212) -
8,133,402 -
-
- -
700,000 -
700,000 -
- -
525,000 -
(25,000)
500,000 -
- -
1,075,000 -
1,075,000 -
- -
450,000 -
450,000 -
120
Annual Report 2008
Note 21. Contributed Equity and Reserves (continued)
(d)
Reserves
Listed
option
application
reserve
US$M
Share
based
payments
reserve
US$M
Available
for sale
reserve
Convertible Acquisition Total
Foreign
bond non-
currency
translation distributable
reserve
US$M
reserve
US$M
reserve
US$M
US$M
US$M
CONSOLIDATED
At 1 July 2006
Net unrealised
movement on available
-for-sale investments
Share based payments
Functional currency
transition adjustment
Foreign currency
translation
Convertible bonds
– equity component
Acquisition of Summit
Resources Ltd
-
-
-
-
-
-
Income tax
-
0.1
5.0
3.4
(3.4)
-
-
-
-
-
-
4.4
-
37.5
-
-
-
-
3.7
0.3
3.2
30.0
-
-
-
-
-
(12.4)
-
-
-
37.8
-
(11.3)
Net unrealised
movement on available
-for-sale investments
Share based payments
Foreign currency
translation
Convertible bonds
– equity component
Income tax
-
-
-
-
-
-
8.1
-
-
-
At 30 June 2008
0.1
17.8
(44.6)
-
-
-
7.0
124.6
-
-
-
-
13.4
7.5
-
-
17.8
(5.4)
-
-
-
-
-
-
5.1
37.5
4.4
3.7
33.5
37.8
14.9
-
14.9
(23.7)
-
-
-
-
-
(44.6)
8.1
131.6
17.8
8.0
At 30 June 2007
0.1
9.7
31.7
30.3
26.5
14.9
113.2
154.9
38.9
14.9
234.1
Paladin Energy Ltd
121
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 21. Contributed Equity and Reserves (continued)
(d)
Reserves (continued)
Listed
option
Share
based
application payments
reserve
US$M
reserve
US$M
Available
for sale
reserve
US$M
Convertible
bond non-
distributable
reserve
US$M
Foreign
currency
translation
reserve
US$M
Total
US$M
PARENT
At 1 July 2006
Functional currency transition
adjustment
Foreign currency translation
Convertible bonds – equity component
Income tax
Net unrealised movement on available
-for-sale investments
Share based payments
0.1
-
-
-
-
-
-
At 30 June 2007
0.1
Foreign currency translation
Convertible bonds – equity component
Income tax
Net unrealised movement on available
-for-sale investments
Share based payments
-
-
-
-
-
At 30 June 2008
0.1
Nature and purpose of reserves
Listed option application reserve
5.0
-
0.3
-
-
-
4.4
9.7
-
-
-
-
8.1
17.8
-
-
1.7
-
(5.6)
18.6
-
14.7
4.7
-
8.5
(28.4)
-
-
-
-
37.8
(11.3)
-
-
26.5
-
17.8
(5.4)
-
-
(0.5)
38.9
(3.1)
2.0
3.1
-
-
-
-
-
-
-
-
-
-
-
-
3.1
2.0
37.8
(16.9)
18.6
4.4
51.0
4.7
17.8
3.1
(28.4)
8.1
56.3
This 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.
Share based payments reserve
This reserve is used to record the value of equity benefits provided to Directors, employees and consultants as part
of their remuneration. Refer to Note 29 for further details on share based payments.
Available-for-sale reserve
This reserve records the fair value changes on the available-for-sale financial assets as set out in Note 10(b).
Foreign currency translation reserve
This reserve is used to record exchange differences arising on translation of the group entities that do not have a
functional currency of United States dollars and have been translated into United States dollars for presentation
purposes, as described in Note 2(f).
Convertible bond non-distributable reserve
This reserve records the equity portion of the convertible bonds issued on 15 December 2006 and on 11 March
2008, as described in Note 19.
Acquisition reserve
This reserve recognises the difference in value of investments in Summit Resources Ltd, at the share price on the
date control was obtained (27 April 2007), and the share price on the date of acquisitions after the date of control.
122
Annual Report 2008
Note 22. Minority Interests
Minority interests comprise:
Share capital
Opening accumulated losses
Reserves
Current period loss
Total minority interests
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
11.0
(6.9)
204.9
(1.2)
207.8
11.0
(6.5)
180.7
(0.4)
184.8
- -
- -
- -
- -
- -
The minority interests recognised during the year relate to the 18.1% interest in Summit Resources Ltd not acquired
from the takeover bid that closed on 1 June 2007. No minority interests have been reflected for the 15% of
Paladin (Africa) Ltd to which the Government of Malawi is entitled as this company is in a net liability position as a
consequence of the policy to expense previous exploration and evaluation expenditure prior to the decision made
to proceed to development.
Note 23. Financial Instruments
(a)
Financial risk management objectives & policies
The Group’s management of financial risk is aimed at ensuring net cash flows are sufficient to:
•
•
Meet all its financial commitments and;
Maintain the capacity to fund corporate growth activities
The Group monitors its forecast financial position on a regular basis.
Market, liquidity and credit risk (including foreign exchange, commodity price and interest rate risk) arise in the
normal course of the Group’s business. These risks are managed under Board approved directives which underpin
treasury practices and processes. The Group’s principal financial instruments, comprise interest bearing debt,
US treasury bills (a negotiable US government security with a maturity of less than one year that pays no periodic
interest, but yields the difference between its par value and its discounted purchase price), cash and short-term
deposits. Other financial instruments include trade receivables and trade payables, which arise directly from
operations.
The Group’s forecast financial risk position with respect to key financial objectives and compliance with treasury
practice are regularly reported to the Board.
(b)
Market risk
(i)
Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency
exposures.
Foreign exchange risk arises from future commitments, assets and liabilities that are denominated in a
currency that is not the Group’s functional currency.
The Group’s borrowings and deposits are largely denominated in US dollars. Currently there are no foreign
exchange hedge programmes in place, however, the Group treasury function manages the purchase of
foreign currency to meet operational requirements.
Paladin Energy Ltd
123
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 23. Financial Instruments (continued)
(b)
Market risk (continued)
(i)
Foreign exchange risk (continued)
The financial instruments exposed to movements in the US dollar / Australian dollar are as follows:
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial and other assets
Financial liabilities
Trade and other payables
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
6.9
4.0
42.7
53.6
6.8
6.8
10.7
3.9
59.9
1.5
9.3
26.1
74.5
36.9
6.1
6.1
3.2
3.2
0.4
3.3
33.6
37.3
2.9
2.9
The financial instruments exposed to movements in the US dollar/Namibian dollar are as follows:
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial and other assets
Financial liabilities
Trade and other payables
3.2
6.2
-
9.4
8.5
8.5
2.4
4.3
-
6.7
5.7
5.7
- -
- -
- -
- -
- -
- -
The following table summarises the sensitivity of financial instruments held at balance date to movements in
the exchange rate of the Australian dollar to the US dollar and the Namibian dollar to the US dollar, with all
other variables held constant. The 5% sensitivity is based on reasonably possible changes, over a financial
year, using the observed range of actual historical rates for the preceding 5 year period.
Impact on Profit
Impact on Equity
Parent Entity
Consolidated
2008
2008 2007
2007
US$M US$M US$M US$M US$M US$M US$M US$M
Parent Entity
2007
2008
Consolidated
2007
2008
Post – Tax gain/(loss)
USD/AUD +5%
USD/AUD -5%
Post – Tax gain/(loss)
USD/NAD +5%
USD/NAD -5%
(0.8)
(1.1)
(1.1)
(1.1)
(0.7)
(1.1)
0.9
1.2
1.2
1.3
0.8
1.3
-
-
-
-
-
-
-
-
-
-
-
-
- -
- -
- -
- -
124
Annual Report 2008
Note 23. Financial Instruments (continued)
(b)
Market risk (continued)
(ii)
Interest rate risk
Interest rate risk is the risk that the Group’s financial position will be adversely affected by movements in
interest rates that will increase the cost of floating rate debt or opportunity losses that may arise on fixed
rate borrowings in a falling interest rate environment. Interest rate risk on cash and short-term deposits is not
considered to be a material risk due to the short-term nature of these financial instruments.
The Group’s main interest rate risk arises from long-term debt. Floating rate debt exposes the Group to cash
flow interest rate risk and fixed rate debt exposes the Group to fair value interest rate risk. All other financial
assets and liabilities in the form of receivables, investments in shares, payables and provisions, are non
interest bearing.
The Group currently does not engage in any hedging or derivative transactions to manage interest rate risk.
The financial instruments exposed to movements in interest rates are as follows:
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Interest- bearing liabilities
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
337.5
-
337.5
66.3
66.3
182.8
-
182.8
66.6
66.6
317.4
106.1
423.5
- -
- -
169.7
47.2
216.9
The following table summarises the sensitivity of the fair value of financial instruments held at balance sheet
date, following a movement to LIBOR, with all other variables held constant. The 1% sensitivity is based on
reasonably possible changes over a financial year, using the observed range of actual historical rates for
the preceding 5 year period. The sensitivity analysis below excludes impact on borrowing costs arising from
interest bearing liabilities as these are capitalised as part of long-term qualifying development projects.
Post-Tax Gain/(Loss)
LIBOR +1%
LIBOR -1%
Impact on Profit
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
1.8
(1.8)
0.8
(0.8)
3.0
(3.0)
1.5
(1.5)
Paladin Energy Ltd
125
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 23. Financial Instruments (continued)
(b)
Market risk (continued)
(iii)
Market price risk
Price risk is the risk that the Group’s financial position will be adversely affected by movements in the market
value of its available-for-sale financial assets.
The financial instruments exposed to movements in market value are as follows:
Financial assets
Other financial assets
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
41.7
60.3
26.6
34.1
No impact on profit as movement in the market price is taken to the reserve.
The following table summarises the sensitivity of financial instruments held at balance date to movements
in the market price of available-for-sale financial instruments, with all other variables held constant the 10%
sensitivity is based on reasonable possible changes, over a financial year, using the observed range of
actual historical prices for 2008 and 2007.
Post-Tax Gain/(Loss)
Market price +10%
Market price -10%
(c)
Liquidity risk
Impact on Equity
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
4.1
(4.1)
6.5
(6.5)
2.5
(2.5)
3.4
(3.4)
The liquidity position of the Group is managed to ensure sufficient liquid funds are available to meet our financial
commitments in a timely and cost effective manner.
The Group Treasury Function continually reviews our liquidity position including cash flow forecasts to determine
the forecast liquidity position and maintain appropriate liquidity levels. Notes 23 (e) and (f) detail the repayment
obligations in respect of the amount of the facilities.
The ageing of payables at the reporting date was as follows:
2008
CONSOLIDATED
Trade and other payables
Loans and borrowings
Interest payable
Total payables
PARENT ENTITY
Trade and other payables
Loans and borrowings
Interest payable
Total payables
126
Annual Report 2008
Total
US$M
41.4
641.3
145.3
828.0
7.5
575.0
131.4
713.9
Payables ageing analysis
6-12 mths
US$M
1-5 years
US$M
6 mths
US$M
41.4
5.6
16.3
63.3
7.5
-
13.7
21.2
-
6.6
16.1
22.7
-
-
13.7
13.7
-
629.1
112.9
742.0
-
575.0
104.0
679.0
>5 year
US$M
-
-
-
-
-
-
-
-
Note 23. Financial Instruments (continued)
(c)
Liquidity risk (continued)
2007
CONSOLIDATED
Trade and other payables
Loans and borrowings
Interest payable
Total payables
PARENT ENTITY
Trade and other payables
Loans and borrowings
Interest payable
Total payables
Total
US$M
13.8
316.6
81.4
411.8
2.8
250.0
61.6
314.4
Payables ageing analysis
6-12 mths
US$M
1-5 years
US$M
6 mths
US$M
13.8
-
8.7
22.5
2.8
-
5.6
8.4
-
4.6
8.4
-
307.7
64.3
13.0
372.0
-
-
5.6
5.6
-
250.0
50.4
300.4
>5 year
US$M
-
4.3
-
4.3
-
-
-
(d)
Credit risk
Credit risk is the risk that a contracting entity will not complete its obligation under a financial instrument that will
result in a financial loss to the Group. The carrying amount of financial assets represents the maximum credit
exposure. The Group trades only with recognised, credit worthy third parties. In addition, receivable balances are
monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.
The maximum exposure to credit risk at the reporting date was as follows:
Current
Trade receivables
Other receivables – controlled entities
Other receivables – other entities
Non Current
Unsecured loans to wholly owned group
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
28.7
-
5.2
33.9
-
33.9
3.3
-
2.4
5.7
-
5.7
-
-
9.0
9.0
-
9.0
-
-
1.9
1.9
-
1.9
Paladin Energy Ltd
127
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 23. Financial Instruments (continued)
(d)
Credit risk (continued)
The ageing of receivables at the reporting date was as follows:
2008
CONSOLIDATED
Trade receivables
Other receivables
Total receivables
PARENT ENTITY
Other receivables
Unsecured loans to wholly owned group
Total receivables
2007
CONSOLIDATED
Trade receivables
Other receivables
Total receivables
PARENT ENTITY
Other receivables
Total
US$M
28.7
5.2
33.9
9.0
-
9.0
3.3
2.4
5.7
1.9
Unsecured loans to wholly owned group
-
Total receivables
1.9
(e)
Financing facilities
Bonds
Unsecured convertible bonds
Receivables ageing analysis
6-12 mths
US$M
1-5 years
US$M
6 mths
US$M
28.7
5.2
33.9
9.0
-
9.0
3.3
2.4
5.7
1.9
-
1.9
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
>5 year
US$M
-
-
-
-
-
-
-
-
-
-
-
-
On 15 December 2006, the Company issued US$250 million in convertible bonds with an underlying coupon rate of
4.5%, maturity 15 December 2011 and a conversion price of US$7.685 for Company shares.
On 11 March 2008, the Company issued US$325 million in convertible bonds with an underlying coupon rate of
5.0%, maturity 11 March 2013 and a conversion price of US$6.59 for Company shares.
Secured bank loan
During the year ended 30 June 2006 the Consolidated Entity completed project finance facilities amounting to
US$71 million for construction of the LHUP. The financing has been provided by Société Générale Australia Branch
(as lead arranger), Nedbank Capital and Standard Bank Plc and consists of a 7 year Project Finance Facility of
US$65 million and a Standby Cost Overrun Facility of US$6 million. The Project Finance Facility bears interest at
the London Interbank Offered Rate (LIBOR) plus 3.5% up to and including practical completion of the project, and
the interest cost reduces to LIBOR plus 2.5% after practical completion. No requirement for political risk insurance
exists under the terms of the Project Finance Facility. The facilities are secured with fixed and floating charges over
the assets of Langer Heinrich Uranium (Pty) Ltd and its immediate holding companies. Paladin Energy Ltd has
provided a project completion guarantee as part of the facilities.
At 30 June 2008 US$66.3 million (2007: US$66.6 million) had been drawn of the project finance facilities leaving
available facilities of US$Nil (2007: US$4.4 million). A principal repayment of US$4.6 million was paid during the
year.
128
Annual Report 2008
Note 23. Financial Instruments (continued)
(e)
Financing facilities (continued)
In disclosing the convertible bonds in the Consolidated Financial Statements, the Company has accounted for them
in accordance with Australian Accounting Standards. Under these standards the convertible bonds are treated as
both a liability (underlying bond) and an equity instrument (conversion rights into Company shares).
Financing facilities available
At reporting date, the following financing facilities had been negotiated and were available:
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
Total facilities:
Unsecured convertible bonds
Secured bank loans
Facilities used at reporting date
Unsecured convertible bonds
Secured bank loans
Facilities unused at reporting date
Secured bank loans
Total facilities
Facilities used at reporting date
Facilities unused at reporting date
Repayment obligations in respect of the amount of
the facilities utilised are as follows:
Due:
No later than one year
Later than one year but not later than two years
Later than two years but not later than three
Later than three years but not later than four
Later than four years but not later than five
Later than five years
Total
575.0
66.3
641.3
575.0
66.3
641.3
-
-
641.3
-
641.3
12.2
14.2
15.2
266.2
333.5
-
641.3
250.0
71.0
321.0
250.0
66.6
316.6
4.4
4.4
316.6
4.4
321.0
5.6
12.2
14.2
15.2
266.2
3.2
316.6
575.0
-
575.0
575.0
-
575.0
-
-
575.0
-
575.0
-
-
-
250.0
325.0
-
575.0
250.0
-
250.0
250.0
-
250.0
-
-
250.0
-
250.0
-
-
-
-
250.0
-
250.0
Paladin Energy Ltd
129
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 23. Financial Instruments (continued)
(f)
Receivables & payables
The fair value of financial assets must be estimated for recognition and measurement or for disclosure purposes.
The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and
available-for-sale securities) is based on quoted market prices at the balance sheet date. The quoted market price
used for financial assets held by the Group is the current bid price.
The fair value of financial instruments that are not traded in an active market (for example, unlisted securities) is
determined using valuation techniques. Such techniques include using recent arm’s length market transactions and
net asset values and by an external valuer using a binomial model.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to
approximate their fair values.
(g)
Capital management
The Group treasury function is responsible for our capital management. This involves the use of corporate
forecasting models which facilitates analysis of the Group’s financial position including cash flow forecasts to
determine the future capital management requirements. Group treasury monitors gearing and compliances with
various contractual financial covenants. The gearing ratio as at balance date is 19%. The company’s project finance
facility is subject to various financial undertakings including a negative pledge, debt service coverage ratio, loan life
coverage ratio and project life coverage ratio. At the time of reporting, the company was in compliance with all of
the facility’s financial undertakings.
(h)
Fair value of financial assets and financial liabilities
The fair value representing the mark to market of a financial asset or a financial liability is the amount at which
the asset could be exchanged or liability settled in a current transaction between willing parties after allowing for
transaction costs.
The fair values of cash and cash equivalents, trade and other receivables and trade and other payables
approximate to their carrying values, as a result of their short maturity or because they carry floating rates of
interest.
The fair value of financial instruments traded in active markets such as publicly traded available-for-sale securities
and the convertible bonds are based on quoted market prices at the balance sheet date. The quoted market price
used for financial instruments held by the Group is the current bid price.
The fair value of financial instruments that are not traded in an active market such as unlisted securities is
determined using valuation techniques. Such techniques include using recent arm’s length market transactions, net
asset values and by an external valuer using a binomial model.
All financial assets and liabilities where the fair value does not approximate to the carrying value are as follows:
Consolidated / Parent Entity
2008
US$M
2007
US$M
Carrying
amount
Fair
value
Carrying
amount
Fair
value
Convertible bonds
532.1
637.9
216.3
304.9
(i)
Commodity price risk
Uranium is not traded in any significant volume on global commodity exchanges. The Consolidated Entity has
customer sales contracts in place for 7.7Mlb for delivery over the period 2007 to 2012.
The contracted selling price is determined by a formula which references common industry published prices for
spot and term contracts and is subject to an escalating floor price and also escalating ceiling prices.
Uranium purchased by the trading entity, Paladin Nuclear Limited, is valued at US$31.8m at the lower of cost and
net realisable value in accordance with our accounting policy for inventories.
130
Annual Report 2008
Note 24. Key Management Personnel
(a)
Details of Key Management Personnel
(i)
Directors
Mr Rick Crabb
Chairman (Non-executive)
Mr John Borshoff
Managing Director
Mr Sean Llewelyn
Director (Non-executive)
Mr George Pirie
Director (Non-executive) (Resigned 9 July 2007)
Mr Ian Noble
Director (Non-executive)
Mr Donald Shumka
Director (Non-executive) (Appointed 9 July 2007)
(ii)
Executives
Ms Gillian Swaby
Company Secretary
Mr Ron Chamberlain Chief Financial Officer (Resigned 18 July 2008)
Mr Ross Glossop
Chief Financial Officer (Appointed 18 July 2008)
Mr Wyatt Buck
General Manager – Production & Langer Heinrich Operations
Mr James Eggins
General Manager – Sales and Contract Administration
Mr Dustin Garrow
Executive General Manager – Marketing
Mr David Marsh
General Manager – Technical Project Development
Mr Brendan O’Hara General Manager – Special Projects & Risk
Mr Simon Solomons
Executive General Manager – Operations Development
(Appointed 12th January 2008)
Mr Andrew Morgan General Manager – Project Construction (Appointed 1 July 2007)
Mr Ed Becker
General Manager – Geology & Exploration (Promoted 1 January 2008)
Ms Cathy Gupanis
General Manager – Sustainable Development (Appointed 1 May 2008)
Mr Greg Walker
General Manager – International Affairs (Appointed 7 January 2008)
(b)
Compensation of Key Management Personnel: compensation by category
Short-term
Post employment
Share-based payment
Consolidated
Parent Entity
2008
US$’000
2007
US$’000
2008
US$’000
2007
US$’000
5,911
158
7,162
7,998
81
4,665
5,553
121
6,627
7,710
81
3,774
13,231
12,744
12,301
11,565
Paladin Energy Ltd
131
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 24. Key Management Personnel
(c)
Option Holdings of Key Management Personnel (Consolidated and Parent Entity)
Balance at
beginning
of period
01 Jul 07 Remuneration Exercised Other #
Balance at
end of
Options Net Change period
Granted as
Vested/
30 Jun 08 Exercisable Exercisable
Not vested/
Not
30 June 2008
Directors
Mr Rick Crabb
3,250,000
-
(3,250,000)
Mr John Borshoff
5,250,000
1,250,000
(3,750,000)
Executives
Ms Gillian Swaby
2,825,000
258,785
(2,750,000)
Mr Ron Chamberlain
235,700
100,545
(200,000)
Mr Wyatt Buck
1,150,000
201,533
Mr James Eggins
750,000
146,698
Mr Dustin Garrow
678,570
266,199
Mr David Marsh
1,100,000
140,654
Mr Brendan O’Hara
1,031,400
216,480
Mr Simon Solomons
Mr Andrew Morgan
Mr Eduard Becker
Ms Cathy Gupanis
Mr Greg Walker
Mr Ross Glossop
-
-
-
-
-
-
600,000
235,296
208,925
25,000
450,000
450,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,750,000
-
-
- 2,750,000
333,785
136,245
-
-
333,785
136,245
1,351,533 1,000,000
351,533
896,698
650,000
246,698
944,769
600,000
344,769
1,240,654
500,000
740,654
1,247,880
500,000
747,880
600,000
-
600,000
450,000
685,296
150,000
535,296
47,050
255,975
175,000
200,000
-
-
450,000
450,000
-
-
-
-
255,975
200,000
450,000
450,000
Total
16,270,670
4,550,115
(9,950,000)
672,050 11,542,835 3,144,769 8,398,066
# Relates to holdings prior to appointment as a Key Management Personnel
Balance at
beginning
of period
Granted as
01 Jul 06 Remuneration Exercised
Balance at
end of
Options Net Change period
Other
Vested/
30 Jun 07 Exercisable Exercisable
Not vested/
Not
30 June 2007
Directors
Mr Rick Crabb
3,250,000
-
Mr John Borshoff
3,750,000
1,500,000
-
-
Executives
Mr Garnet Halliday
3,000,000
-
(3,000,000)
Ms Gillian Swaby
2,750,000
75,000
-
Mr Ron Chamberlain
1,000,000
35,700
(800,000)
Mr Wyatt Buck
1,000,000
150,000
-
Mr James Eggins
1,000,000
100,000
(350,000)
Mr Dustin Garrow
1,000,000
78,570
(400,000)
Mr David Marsh
1,000,000
100,000
Mr Brendan O’Hara
-
1,031,400
-
-
-
-
-
-
-
-
-
-
-
-
3,250,000 3,250,000
-
5,250,000 3,750,000 1,500,000
-
-
-
2,825,000 2,750,000
75,000
235,700
-
235,700
1,150,000
500,000
650,000
750,000
678,570
1,100,000
1,031,400
-
-
750,000
678,570
- 1,100,000
- 1,031,400
Total
17,750,000
3,070,670
(4,550,000)
- 16,270,670 10,250,000 6,020,670
132
Annual Report 2008
Note 24. Key Management Personnel (continued)
(d)
Shareholdings of Key Management Personnel (Consolidated and Parent Entity)
Shares held in Paladin Energy Ltd (number)
30 June 2008
Directors
Mr Rick Crabb
Mr John Borshoff
Mr Ian Noble
Executives
Ms Gillian Swaby
Mr Ron Chamberlain
Mr Wyatt Buck
Mr James Eggins
Mr David Marsh
Mr Simon Solomons
Mr Eduard Becker
Total
Balance
01 Jul 07 Remuneration
Granted as On Exercise Net Change
of Options
Other
Balance
30 June 08
8,964,746
18,091,394
16,000
10,216,140
400,000
-
325,000
9,050
-
-
38,022,330
-
-
-
-
-
-
-
-
-
-
-
3,250,000
(6,633,218)(1)
5,581,528
3,750,000
(250,000) 21,591,394
-
5,000
21,000
2,750,000
200,000
(7,875,000)(1)
-
5,091,140
600,000
16,350
16,350
(75,000)
250,000
2,700
1,000
11,750
1,000
550,000
550,000
-
-
-
-
-
9,950,000
(14,258,168) 33,714,162
(1) Between 11 and 14 April 2008, a secured creditor of Lift Capital Pty Limited in the exercise of (purported) rights, sold 6,383,218 and
7,875,000 ordinary shares on behalf of Mr Rick Crabb and his associates and Ms Gillian Swaby respectively. No consideration was
received by Mr Rick Crabb or his associates or Ms Swaby from this involuntary sale. Legal action for the recovery of these shares
which were sold without their consent or authority is being pursued.
No other Key Management Personnel held shares during the year ended 30 June 2008.
Mr Eduard Becker commenced as a Key Management Person on 1 January 2008 and as such this fact has been
reflected in the net change other column.
30 June 2007
Directors
Mr Rick Crabb
Mr John Borshoff
Mr Ian Noble
Executives
Mr Garnet Halliday
Ms Gillian Swaby
Mr Ron Chamberlain
Mr James Eggins
Mr Dustin Garrow
Mr David Marsh
Total
Balance
01 Jul 06 Remuneration
Granted as On Exercise Net Change
of Options
Other
Balance
30 June 07
8,964,746
18,091,394
16,000
125,000
10,216,140
-
25,000
-
-
37,438,280
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,964,746
18,091,394
16,000
3,000,000
(3,125,000)
-
-
800,000
350,000
400,000
-
-
10,216,140
(400,000)
(50,000)
(400,000)
9,050
400,000
325,000
-
9,050
4,550,000
(3,965,950) 38,022,330
No other Key Management Personnel held shares during the year ended 30 June 2007.
Mr Garnet Halliday deceased on 8 March 2007 and as such is no longer required to be disclosed in the above table
and this fact has been reflected in the net change other column.
All equity transactions with Key Management Personnel other than those arising from the exercise of remuneration
options have been entered into under terms and conditions no more favourable than those the Consolidated Entity
would have adopted if dealing at arm’s length.
Paladin Energy Ltd
133
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 24. Key Management Personnel (continued)
(e)
Other Transactions and Balances with Key Management Personnel
Fees paid in the normal course of business in 2008 for company secretarial services totalling US$380,034 (2007:
US$235,878) were paid/payable (balance outstanding at 30 June 2008 and included in trade creditors US$Nil
(2007: US$24,594)) to a company of which Ms Gillian Swaby is a director and shareholder. All amounts are
excluding GST.
Fees paid in the normal course of business in 2008 for marketing consulting services totalling US$Nil (2007:
US$130,571) were paid/payable (balance outstanding at 30 June 2008 and included in trade creditors US$Nil
(2007: US$Nil)) to a company of which Mr Dustin Garrow is a director and shareholder.
Amounts recognised at the reporting date in relation to other transactions:
Consolidated / Parent Entity
Liabilities
Current liabilities
Trade and other payables
Expenses
Other expenses
2008
US$000
2007
US$000
-
25
380
366
Note 25. Auditors’ Remuneration
The auditor of the Paladin Energy Ltd Group
is Ernst & Young.
Consolidated
Parent Entity
2008
US$000
2007
US$000
2008
US$000
2007
US$000
Amounts received or due and receivable by
Ernst & Young (Australia) for:
• Audit or review of the financial report of the entity
and any other entity in the consolidated Group
• Other assurance services:
Compilation report
Convertible bonds comfort letter
• Taxation services:
Tax compliance services
International tax consulting
Tax advice on mergers and acquisitions
Other tax advice
Sub-total
Amounts received or due and receivable by related
practices of Ernst & Young (Australia) for:
• Audit or review of the financial report of subsidiaries
• Other assurance services:
Malawi Development Agreement
• Taxation services:
Tax compliance services
International tax consulting
Amounts received or due and receivable by non
Ernst & Young audit firms for:
• Audit or review of the financial report of subsidiaries
• Taxation services:
Tax compliance services
• Other Non- Audit Services
480
255
419
206
3
-
99
27
171
10
790
23
5
18
-
836
-
17
52
69
12
53
-
109
25
23
477
18
3
8
2
3
-
99
27
171
10
729
-
-
-
-
12
53
-
109
25
23
428
-
-
-
-
508
729
428
17
1
-
18
-
-
-
-
-
-
-
-
134
Annual Report 2008
Note 26. Commitments and Contingencies
There were no outstanding commitments or contingencies, which are not disclosed in the Financial Report of the Consolidated
Entity and the Company as at 30 June 2008 other than:
(a)
Tenements
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
Commitments for tenements contracted for at the
reporting date but not recognised as liabilities, payable:
Within one year
Later than one year but not later than 5 years -
More than 5 years
Total tenements commitment
2.6
-
2.6
2.6
-
-
2.6 -
-
-
-
-
-
-
-
These include commitments relating to tenement lease rentals and, the minimum expenditure requirements of the
Namibia, Malawi, Western Australian, South Australian, Northern Territory and Queensland Mines Departments
attaching to the tenements and are subject to re-negotiation upon expiry of the exploration leases or when
application for a mining licence is made.
These are necessary in order to maintain the tenements in which the Consolidated Entity and other parties are
involved. All parties are committed to meet the conditions under which the tenements were granted in accordance
with the relevant mining legislation in Namibia, Malawi and Australia.
(b)
Mine construction commitments
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
Commitments for mine construction contracted for at the
reporting date but not recognised as liabilities, payable:
Within one year
Later than one year but not later than 5 years -
More than 5 years
Total mine construction
61.0
-
61.0
9.3
-
-
9.3 -
-
-
-
-
-
-
-
These commitments in 2008 relate to mine construction in Malawi and Stage II at the LHUP (2007: Malawi).
(c)
Operating lease commitments
The Group has entered into various property leases relating to rental of offices and residential accommodation.
These non-cancellable leases have remaining terms of between 1 and 3 years. All leases include a clause to enable
upward revision of rental charge on an annual basis according to prevailing market conditions.
Future minimum rentals payable under non-cancellable operating leases as at 30 June are as follows:
Within one year
Later than one year but not later than 5 years
More than 5 years
Total operating lease commitment
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
0.4
3.3
2.7
6.4
0.2
0.3
-
0.5
0.2
3.2
2.7
6.1
0.2
0.3
-
0.5
Paladin Energy Ltd
135
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 26. Commitments and Contingencies (continued)
(d)
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$0.75 million (US$0.7 million) and are subject to the Department of Minerals & Energy
granting tenements comprising 2 exploration licence applications. The A$0.75 million (US$0.7 million) 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$0.75
million (US$0.7 million) by the Consolidated Entity to the vendors when all project development approvals are further
obtained.
(e)
Bank guarantees
As at 30 June 2008 the Group has outstanding US$57,630 (A$60,000) (2007: US$50,906 / A$60,000) as a current
guarantee provided by a bank for the corporate office lease.
(f)
Legal actions
(i)
Mount Isa Uranium Joint Venture
On the 3 August 2007 the Company’s wholly owned subsidiary, MIU entered into a settlement agreement
with respect to proceedings which had been commenced by Summit Resources (Aust) Pty Ltd (which
had, by the time of the settlement, become ultimately 81.9% owned by the Company) against MIU and
the unrelated entity, Resolute Pty Ltd (Summit Proceedings). The Summit Proceedings related to alleged
breaches of confidentiality provisions in the Mount Isa Uranium Project joint venture agreement. If
successful, Summit Resources (Aust) Pty Ltd would be entitled to the transfer of MIU’s 50% interest in the
Mount Isa Uranium Project joint venture for 85% of its market value.
Areva NC (Australia) Pty Ltd (Areva), being a 10.01% shareholder of the parent company of Summit
Resources (Aust) Pty Ltd subsequently applied to the Supreme Court of Western Australia for, relevantly,
orders under Section 237 of the Corporations Act 2001 to be granted leave to intervene in and effectively
re-open the Summit Proceedings, notwithstanding the settlement. The Areva intervention proceedings are
ongoing and are listed for a trial commencing on 1 December 2008.
The Company does not expect the Areva intervention proceedings to be successful. In any event, even if
the Summit Proceedings are re-opened as a consequence of the Areva intervention proceedings, Company
has always remained confident that the Summit Proceedings could be successfully defended. Further, the
Company has the benefit of an indemnity from Resolute Mining Ltd (the parent of Resolute Pty Ltd) and an
ultimate 81.9% interest in Summit Resources (Aust) Pty Ltd. As a consequence, a change in the ownership
of the 50% interest in the Mount Isa Uranium joint venture from MIU to Summit Resources (Aust) Pty Ltd
would not be of significance to the Company.
(ii)
Kayelekera Uranium Project, Malawi – Civil Societies’ Action
All six Malawian Civil Society Organisations that commenced legal proceedings against Paladin Africa
Ltd and the Government of Malawi have settled their action on a positive and amicable basis. The legal
proceedings were formally withdrawn during the quarter ended 31 December 2007.
136
Annual Report 2008
Note 27. Employee Benefits
Provision for annual leave and long service leave
aggregate employment benefit liabilities
Employee numbers
Average number of employees during the financial year
Superannuation
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
1.6
0.9
1.1
0.5
Number
Number
47
41
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 29.
Note 28. Related Parties
(a)
Subsidiaries
Interests in subsidiaries are set out in Note 10(a).
(b)
Ultimate parent
The ultimate Parent Entity in the wholly owned Group is Paladin Energy Ltd.
(c)
Key management personnel
Details relating to key management personnel can be found at Note 24.
(d)
Transactions with subsidiaries
Transactions entered into with subsidiaries during the years ended 30 June 2008 and 2007 consisted of:
(a)
(b)
(c)
(d)
sundry debtors receivable by the Company (Note 7(c));
loans advanced by the Company (Note 7(d));
loans advanced to the Company (Note 17);
the payment of interest on the loans advanced by the Company (Note 4(a)).
Note 29. Share-Based Payment Plan
The share-based payment plans are described below. There have been no cancellations or modifications to any of the plans
during 2008 and 2007.
(a)
Types of share-based payment plans
Employee Share Incentive Option Plan (ESOP)
On 23 March 2004, the Directors approved the ESOP.
Staff eligible to participate in the plan were those who had been continuously employed by the Company for a
period of at least one year.
Options were granted under the plan for no consideration. Options were granted for a three year period, and
100% of each new tranche became exercisable after one year of the date of grant. Entitlements to the options
were vested as soon as they become exercisable and performance conditions had been met. There were no cash
settlement alternatives. Options granted under the plan carried no dividend or voting rights.
Following implementation of the EXSOP detailed below, no further options will be issued pursuant to the ESOP.
Paladin Energy Ltd
137
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 29. Share-Based Payment Plan (continued)
(a)
Types of share-based payment plans (continued)
Executive Share Option Plan (EXSOP)
On 21 November 2006, the EXSOP was approved by shareholders at the Company’s Annual General Meeting. The
number of shares that may be issued under the EXSOP must not exceed 5% of the total number of shares on issue.
Share options are granted to employees under the EXSOP which is designed to create a stronger link between
increasing shareholder value and employee reward. Under the EXSOP, the exercise price of the options is set at the
market price of the shares on the date of grant and performance is measured by comparing the Company’s Total
Shareholder Return (‘TSR’) (share price appreciation plus dividends reinvested) with a group of peer companies.
The Company’s performance will be measured over three years from the date of grant. To the extent that maximum
performance is not achieved under the performance condition, performance will be retested every six months
following the first three years until the end of the fourth year.
In assessing whether the TSR hurdle for each grant has been met, the Group receives independent data from an
external advisor, who provides both the Group’s TSR growth from the commencement of each grant and that of the
pre-selected peer group. The peer group chosen for comparison is the resource companies in the S&P/ASX200
Index at the date of grant This peer group reflects the Group’s competitors for capital and talent.
The Group’s performance against the hurdle is determined according to Paladin Energy Ltd’s ranking against the
peer group TSR growth over the performance period.
•
•
•
•
when Paladin Energy Ltd is ranked over the 75th percentile, 100% of the share options will vest;
for rankings above the 50th and below the 75th percentile, the percentage of options to vest will be pro-rata
between 50% and 100%;
when Paladin Energy Ltd is ranked at the 50th percentile, 50% of the share options will vest;
when Paladin Energy Ltd is ranked below the 50th percentile the share options will not vest.
When a participant ceases employment prior to the vesting of their share options, the share options are forfeited
unless cessation of employment is due to termination initiated by the Group or death. In the event of a change of
control all the awards will vest and may be exercised by the participant.
The contractual life of each option granted is five years. There are no cash settlement alternatives.
The expense recognised in the Income Statement in relation to share-based payments is disclosed in Note 4(e).
(b)
Summaries of options granted under ESOP and EXSOP arrangements:
The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of and movements in
share options issued during the year:
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at the end of the year
Exercisable at the end of the year
2008
No.
19,678,670
11,291,620
(833,218)
(11,060,000) 1
-
19,077,072
4,002,500
2008
WAEP
A$
3.18
4.63
6.58
1.06
-
5.12
3.80
2007
No.
24,215,000
4,533,670
-
2007
WAEP
A$
1.52
7.76
-
(9,070,000) 2 1.04
-
19,678,670
11,630,000
-
3.18
1.14
1. The weighted average share price at the date of exercise is A$6.31
2. The weighted average share price at the date of exercise is A$6.03
138
Annual Report 2008
Note 29. Share-Based Payment Plan (continued)
(b)
Summaries of options granted under ESOP and EXSOP arrangements (continued)
The outstanding balance as at 30 June 2008 represented by:
Date options granted
Exercisable
Expiry date
Exercise price
of options
Number under
option
13 January 2006
13 January 2006
19 January 2006
16 February 2006
16 February 2006
27 April 2006
27 April 2006
5 July 2006
5 July 2006
20 July 2006
20 July 2006
13 January 07
13 January 08
13 January 08
13 January 07
13 January 08
31 October 07
31 October 08
5 January 2008
5 January 2009
5 January 2008
5 January 2009
13 January 2009
13 January 2009
13 January 2009
13 January 2009
13 January 2009
28 April 2009
28 April 2009
5 July 2009
5 July 2009
5 July 2009
5 July 2009
1 February 2007
29 January 2008
1 February 2010
1 February 2012
29 January 2011
29 January 2013
15 February 2008
15 February 2009
15 February 2011
15 February 2008
15 February 2011
15 February 2013
18 April 2008
18 June 2008
Total
18 April 2011
18 June 2011
18 April 2013
18 June 2013
A$2.80
A$2.80
A$2.80
A$2.80
A$2.80
A$5.50
A$5.50
A$5.50
A$5.50
A$5.50
A$5.50
A$8.77
A$4.50
A$5.37
A$5.37
A$4.59
A$5.27
170,000
650,000
600,000
600,000
500,000
782,500
782,500
500,000
500,000
200,000
200,000
2,733,670
8,133,402
700,000
500,000
1,075,000
450,000
19,077,072
Please refer to Outstanding Share Information table in the Management Discussion & Analysis for movements since
the year end.
(c)
Weighted average remaining contractual life
The weighted average remaining contractual life for the share options outstanding as at 30 June 2008 is between 1
and 3 years (2007: 1 and 3 years).
(d)
Range of exercise price
The range of exercise prices for options outstanding at the end of the year was A$2.80 – A$8.77
(2007: A$1.00 – A$8.77).
(e)
Weighted average fair value
The weighted average fair value of options granted during the year was A$2.73 (2007: A$4.04).
(f)
Option pricing model: ESOP and EXSOP
The fair value of the equity-settled share options granted under the option plan is estimated as at the date of grant
using a binominal model taking into account the terms and conditions upon which the options were granted.
Paladin Energy Ltd
139
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 29. Share-Based Payment Plan (continued)
(f)
Option pricing model: ESOP and EXSOP (continued)
The following table lists the inputs to the model used for the years ended 30 June 2008 and 30 June 2007:
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of option (years)
Option exercise price ($)
2008
Nil%
2007
Nil%
66% - 77%
60% - 81%
6.22% - 6.87%
5.81% - 6.44%
1.75 - 5 years
2.5 - 5 years
A$4.50 - A$5.37
A$5.50 - A$8.77
Weighted average share price at grant date ($)
A$4.64 - A$5.95
A$4.16 - A$9.07
The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that
may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends,
which may also not necessarily be the actual outcome. No other features of options granted were incorporated into
the measurement of fair value.
The fair value of the cash-settled options is measured at the grant date using the Cox, Ross and Rubinstein Binomial
Tree option pricing model taking into account the terms and conditions upon which the instruments were granted.
The services received are recognised over the expected vesting period. The Monte Carlo method is used to model
the future value of the Company’s shares and the movement of the comparator companies’ Total Shareholder Return
on the various vesting dates associated with vesting requirements of the options.
Note 30. Interests In Jointly Controlled Assets
(a)
Joint venture details
Mount Isa Uranium Joint Venture
The Mount Isa Uranium Joint Venture, which includes the Valhalla and Skal uranium deposits, is involved in the
identification of and exploration for uranium resources in Queensland, Australia. Summit Resources (Australia) Pty
Ltd (SRA) is manager and operator, holding a 50% interest. MIU holds the other 50% interest. Paladin Energy Ltd
ultimately owns 81.9% of SRA and 100% of MIU.
Bigrlyi Uranium Joint Venture
The Bigrlyi Uranium Joint Venture is involved in the identification of and exploration for uranium resources in the
Northern Territory, Australia. The joint venture is between Energy Metals Ltd 53.74%, Southern Cross Exploration
NL 4.2% and Northern Territory Uranium Pty Ltd (NTU) 42.06% (NTU is 100% owned by Paladin Energy Ltd) with
Energy Metals Ltd as manager and operator of the joint venture.
Other joint ventures
The Consolidated Entity also has a number of other 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 expensed in
accordance with the accounting policy stated in Note 2(t) and no revenue is generated. The Consolidated Entity’s
share of the assets and liabilities in respect of these joint ventures is not material.
(b)
Assets utilised in the Mount Isa Joint Venture and Bigrlyi Uranium Joint Venture
The Group’s share of the assets utilised in these jointly controlled assets, which are included in the Consolidated
Financial Statements, are as follows:
Non current assets
Exploration and evaluation expenditure
Total assets
140
Annual Report 2008
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
185.5
185.5
164.0
164.0
-
-
-
-
Note 30. Interests In Jointly Controlled Assets (continued)
(b)
Assets utilised in the Mount Isa Joint Venture and Bigrlyi Uranium Joint Venture (continued)
The interests of MIU in the Mount Isa Uranium Joint Venture and of NTU in the Bigrlyi Uranium Joint Venture were
acquired on 7 September 2006 and include the allocation of the acquisition value.
The interest of SRA in the Mount Isa Uranium Joint Venture was acquired on 27 April 2007 and include the allocation
of the acquisition value.
(c)
Commitments relating to the joint venture
Share of tenement commitments (Note 26)
(d)
Impairment
Consolidated
Parent Entity
2008
US$M
-
2007
US$M
-
2008
US$M
-
2007
US$M
-
No assets employed in the jointly controlled assets were impaired during the year (2007: US$Nil).
Note 31. Business Combination and Asset Acquisition
During the year no significant business combinations were completed.
Acquisition of Summit Resources Ltd
During the year ended 30 June 2007 Paladin Energy Ltd acquired 81.9% of the issued share capital of Summit
Resources Ltd, a public company based in Australia and listed on the Australian Securities Exchange involved in
the exploration for uranium resources.
Initial recognition of the acquisition of Summit Resources Ltd in the Consolidated Financial Statements for the year
ended 30 June 2007 was determined provisionally, according to IFRS 3. The short period between the acquisition
date and the preparation of the annual report for the year ended 30 June 2007 only allowed for the completion of
provisional fair value measurements required by IFRS 3.
The fair value measurements were completed during the year ended 30 June 2008 which did not result in any
adjustments.
The cost of acquisition has been allocated as follows (provisional vs. final figures):
Consolidated
Provisional Values
Recognised on Acquisition
US$M
Final Values
Recognised on Acquisition
US$M
Cash and cash equivalents
Trade and other receivables
Plant and equipment
Capitalised exploration and evaluation expenditure
Trade and other payables
Deferred tax liability
Net assets
Minority interests
Fair value of net identifiable assets acquired
Cost of the combination:
Shares issued, at fair value
Direct costs relating to the acquisition
Total cost of the combination
23.2
1.1
1.6
1,402.6
1,428.5
14.2
415.7
429.9
998.6
(181.0)
817.6
813.8
3.8
817.6
23.2
1.1
1.6
1,402.6
1,428.5
14.2
415.7
429.9
998.6
(181.0)
817.6
Paladin Energy Ltd
141
notes to the consolidated financial statements
for the year ended 30 June 2008
Note 32. Events After The Balance Sheet Date
Since the end of the financial year, the Directors are not aware of any other matter or circumstance not otherwise
dealt with in this report or the Financial Statements, that has significantly or may significantly affect the operations
of the Consolidated Entity, the results of those operations or the state of affairs of the Consolidated Entity in
subsequent years with the exception of the following, the financial effects of which have not been provided for in the
30 June 2008 Financial Report:
Allotment of Shares and Issue of Employee Options
On 3 July 2008 the Company announced the granting of 450,000 unlisted incentive options, exercisable at A$5.27
vesting after 3 years, subject to performance conditions as outlined in the Executive Share Option Plan, with a
5 year expiry and the allotment of 400,000 fully paid ordinary shares after the exercise of employee options. On
10 September the Company announced the allotment of 100,000 fully paid ordinary shares after the exercise of
employee options.
Appointment of Mr Ross Glossop
On 10 July 2008, the Company announced the appointment of Mr Ross Glossop as Chief Financial Officer (CFO) of
the Paladin group of companies. Mr Glossop has over 25 years of experience in the resources industry, where he
has held positions in internal audit, treasury, and finance with increasing managerial responsibilities.
Increased Holding in Deep Yellow Ltd
On 28 July 2008, the Consolidated Entity acquired an additional 12,500,000 shares in Deep Yellow Ltd pursuant to
the exercise of 12,500,000 options exercisable at 8.1 Australian cents. The additional investments totalled A$1.0
million (US$1.0 million). After this acquisition the Consolidated Entity now holds 15.30% of Deep Yellow Ltd.
Resources Upgrade for Langer Heinrich Uranium Project
On the 28 August 2008, the Company announced an updated Mineral Resource estimate for the LHUP. Following
the drilling of 717 RC holes for a total of 17,751m in all Details at Langer Heinrich, a new Mineral Resource of 56.4Mt
at a grade of 0.06% U3O8 for 32,858t (72.4Mlb) U3O8 in the Measured and Indicated categories and 70.7Mt at
a grade of 0.06% U3O8 for 41,557t (91.6Mlb) U3O8 in the Inferred category was estimated. The total resource
for Langer Heinrich now stands at some 74,415t (164Mlb) U3O8. The Directors believe a considerable amount of
these Inferred Resources will be able to be converted to Measured and Indicated Resource categories following
additional drilling in the future. Ore Reserve studies are currently underway and are expected to be completed in
the near future.
Increased Holding in Summit Resources Ltd
On 28 August 2008, the company acquired an additional 3,378,733 shares in Summit Resources Ltd pursuant to
a renounceable rights issue and 289,739 shares via subscription for the shortfall of the rights issue. The additional
investment totalled A$9.1 million (US$8.6 million). After these acquisitions the Company now holds 81.99% of
Summit Resources Ltd.
142
Annual Report 2008
Note 33. Non-Cash Financing and Investment Activities
Non-Cash Financing and Investment Activities
Issue of shares to acquire 100% of
Valhalla Uranium Ltd
Issue of shares to acquire 81.9% of
Summit Resources
Note 34. Earnings Per Share
(i)
Basic earnings per share
Consolidated
Parent Entity
2008
US$M
2007
US$M
2008
US$M
2007
US$M
-
-
151.4
798.9
-
-
151.4
798.9
Basic earnings per share are calculated by dividing the profit attributable to equity holders of the Company
by the weighted average number of ordinary shares outstanding during the period.
(ii)
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to
take into account the after income tax effect of interest and other financing costs associated with dilutive
potential ordinary shares and the weighted average number of shares assumed to have been issued for
no consideration in relation to dilutive potential ordinary shares. Diluted earnings per share is the same as
basic earnings per share in 2008 and 2007 as the Consolidated Entity is in a loss position.
The following reflects the income and share data used in the basic and diluted earnings per share computations:
Net loss attributable to ordinary equity holders of the Parent from
continuing operations
Weighted average number of ordinary shares for basic earnings
per share
Weighted average number of options issuable under the Company
Executive Share Option Plan and in relation to the Convertible Bonds
that could be potentially dilutive
Consolidated
2008
US$M
2007
US$M
(36.0)
(37.6)
2008
#
2007
#
608,341,416 511,189,193
14,746,269
19,233,595
Paladin Energy Ltd
143
directors’ declaration
In accordance with a resolution of the Directors of Paladin Energy Ltd, I state that:
1.
In the opinion of the Directors:
(a)
the financial report 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 Corporations Act 2001, including:
(i)
giving a true and fair view of the Company’s and Consolidated Entity’s financial position as at 30
June 2008 and of their performance for the year ended on that date; and
(ii)
complying with Accounting Standards and Corporation Regulations 2001;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.
2.
This declaration has been made after receiving the declarations required to be made to the Directors in accordance
with sections 295A of the Corporations Act 2001 for financial period ending 30 June 2008.
On behalf of the Board
Mr John Borshoff
Managing Director
Perth, Western Australia
11 September 2008
144
Annual Report 2008
independent auditor’s report
to the members of Paladin Energy Ltd
Report on the Financial Report
We have audited the accompanying financial report of Paladin Energy Ltd, which comprises the balance sheet as at 30 June
2008, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a
summary of significant accounting policies, other explanatory notes and the directors’ declaration of the consolidated entity
comprising the company and the entities it controlled at the year’s end or from time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance
with the Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001.
This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of
the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate
accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 2, the directors also
state that the financial report, comprising the financial statements and notes, complies with International Financial Reporting
Standards as issued by the International Accounting Standards Board.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance
with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements
relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report.
The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the
financial report, whether due to fraud or error. In making those risk assessments, we consider internal controls relevant to the
entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Independence
In conducting our audit we have met the independence requirements of 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. In
addition to our audit of the financial report, 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.
Auditor’s Opinion
In our opinion:
1.
the financial report of Paladin Energy Ltd is in accordance with the Corporations Act 2001, including:
i
ii
giving a true and fair view of the financial position of Paladin Energy Ltd and the consolidated entity at 30
June 2008 and of their performance for the year ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and
the Corporations Regulations 2001.
2.
the financial report also complies with International Financial Reporting Standards as issued by the International
Accounting Standards Board.
Paladin Energy Ltd
145
independent auditor’s report
to the members of Paladin Energy Ltd
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 60 to 69 of the directors’ report for the year ended 30 June 2008.
The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based
on our audit conducted in accordance with Australian Auditing Standards.
Auditor’s Opinion
In our opinion the Remuneration Report of Paladin Energy Ltd for the year ended 30 June 2008, complies with section 300A of
the Corporations Act 2001.
Ernst & Young
V W Tidy
Partner
Perth
11 September 2008
146
Annual Report 2008
additional information
Pursuant to the Listing Requirements of Australian Securities Exchange Limited as at 11 September 2008:
(a)
Distribution and number of holders
Range
1
1,001
5,001
10,001
-
-
-
-
1,000
5,000
10,000
100,000
100,001 -
maximum
296 shareholders hold less than a marketable parcel of shares issued
(b)
The twenty largest shareholders hold 78.04% of the total shares issued.
Holder
CDS & Co
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
Cede & Co
Citicorp Nominees Pty Limited
ANZ Nominees Limited
J P Morgan Nominees Australia Limited
Aylworth Holdings Pty Ltd
UBS Wealth Management Australia Nominee Pty Ltd
HSBC Custody Nominees (Australia) Limited-GSE ECSA
Ms Gillian Swaby
HSBC Custody Nominees (Australia) Limited – A/C 3
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited – A/C 2
Merrill Lynch (Australia) Nominees Pty Limited
Estate Mr James U Blanchard Iii
Mrs Deborah Lakshmi Halliday
Cogent Nominees Pty Limited
Mr John Borshoff
Mr Zaccaria Rossi & Mrs Thelma Rossi
No. of Shares
141,456,542
94,965,330
48,050,222
36,431,615
32,982,925
28,783,310
24,298,055
19,486,237
18,814,268
5,111,690
4,000,000
3,887,093
3,597,356
3,372,269
2,788,159
2,777,778
2,500,000
2,335,100
1,725,157
1,701,000
Total Holders
10,001
9,298
1,984
1,469
178
22,930
%
23.04
15.47
7.83
5.93
5.37
4.69
3.96
3.17
3.06
0.83
0.65
0.63
0.59
0.55
0.45
0.45
0.41
0.38
0.28
0.28
(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.
479,064,106
78.04
Paladin Energy Ltd
147
additional information
(d)
Tenements held
URANIUM PROJECTS
Project
Tenements
Interest %
JV Partner/s
Operator Note
NAMIBIA – AFRICA
Langer Heinrich
Gawib
MALAWI – AFRICA
Kayelekera
Chilumba
Chilongo
Mpata
Mapambo
1 MLI
1 EPL
1 MLI
1 EPL
1 EPL
1 EPL
1 EPL
100.00%
100.00%
85.00%
85.00%
85.00%
85.00%
85.00%
-
-
-
-
-
-
-
QUEENSLAND (See Note 2)
Isa North
11 EPMs
81.99%
(see Note 3)
3 EPMs
3 MDLs
(A)
(A)
81.90%
-
81.99%
(see Note 3)
NORTHERN TERRITORY
Bigrlyi
Walbiri
Malawiri
Minerva
10 ERLs
20 MCs
2 MLs
1 ERL
1 ERL
(A)
(A)
(A)
(A)
42.06%
) Energy Metals Limited
42.06%
)- Southern Cross Exploration NL
42.06%
)
58.13%
Energy Metals Limited
47.96%
Energy Metals Limited
12 ERLs
(A) 100.00%
1
1
1
1
1
3
3
LHU
LHU
PAL
PAL
PAL
PAL
PAL
SRA
SRA
SRA
EME
EME
EME
EME
EME
NTU
Beatrice South
Mount Gilruth
Angela and Pamela
1 EL
1 EL
1 EL
1 EL
(A)
(A)
(A)
(A)
33.33%
Afmeco Mining and Exploration Pty Ltd
Afmeco
33.33%
Afmeco Mining and Exploration Pty Ltd
Afmeco
50.00%
Cameco Australia Pty Ltd
50.00%
Cameco Australia Pty Ltd
Cameco
Cameco
WESTERN AUSTRALIA
Manyingee
Spinifex Well
Oobagooma
Ponton
3 MLs
1 EL
100.00%
100.00%
4 ELs
(A) 100.00%
1 EL
(A) 100.00%
-
-
-
-
SOUTH AUSTRALIA
PEM
PEM
PEM
PEM
Petermorra
Mt Yerila
1 EL
1 EL
20.00%
Quasar Resources Pty Ltd
15.00%
Quasar Resources Pty Ltd
Quasar
Quasar
J E Risinger
148
Annual Report 2008
(d)
Tenements held (continued)
NON-URANIUM PROJECTS
Project
Tenements
Interest %
JV Partner/s
Operator Note
QUEENSLAND (See Note 2)
Western Isa Joint Venture
Isa South
4 EPMs
81.99%
MM Mining Pty Ltd
4 EPMs
(A)
81.99%
MM Mining Pty Ltd
1 EPM
73.71%
MM Mining Pty Ltd
Glengarry Resources Limited
May Downs
Mount Kelly
Constance Range
3 EPMs
1 EPM
5 EPMs
1 EPM
81.99%
81.99%
81.99%
MM Mining Pty Ltd
MM Mining Pty Ltd
MM Mining Pty Ltd
0.00%
MM Mining Pty Ltd
Bowthorn Syndicate
1 EPM
(A)
0.00%
MM Mining Pty Ltd
Bowthorn Syndicate
4
5
5
MMM
MMM
MMM
MMM
MMM
MMM
MMM
MMM
MMM
MMM
SOUTH AUSTRALIA
Reaphook JV
1 EL
7.50%
Perilya Limited
Perilya
Signature Resources NL
Operators
EME
LHU
MIU
Energy Metals Limited
Langer Heinrich Uranium (Pty) Limited
Mount Isa Uranium Pty Ltd
MMM
MM Mining Pty Ltd
Northern Territory Uranium Pty Ltd
Paladin (Africa) Limited
Paladin Energy Minerals NL
Summit Resources (Aust) Pty Ltd
NTU
PAL
PEM
SRA
Notes
Paladin Equity
Note
0%
100%
100%
31.25%
100%
85%
100%
81.99%
4
1
2
1. Paladin Energy Ltd currently holds 100% equity in Paladin (Africa) Limited; however 15% equity in that company is to be transferred
to the Government of Malawi pursuant to the terms of the Development Agreement for the Kayelekera Uranium Project between the
Government of Malawi, Paladin (Africa) Limited and Paladin Energy Minerals NL.
2. Paladin’s interest in these tenements is held by virtue of Paladin Energy Ltd’s 81.99% equity holding in Summit Resources Limited
which in turn holds 100% equity interest in Summit Resources (Aust) Pty Ltd and Pacific Mines Limited.
3. The Vallhalla and Skal uranium deposits lie within the Isa North tenement block within defined blocks of land (17 km2 and 10 km2
respectively) subject to the Isa Uranium Joint Venture between Summit Resources (Aust) Pty Ltd (50% and Operator) and Mount Isa
Uranium Pty Ltd (50%). Paladin’s interest is an effective 91% deriving from the 50% interest in the Mount Isa Uranium Joint Venture
and 41% via Paladin’s 81.99% ownership of Summit Resources Ltd.
4. MM Mining Pty Ltd can earn 80% equity in the Western Isa Joint Venture tenements through expenditure of A$10 million within two
years of commencement (10 December 2007). Summit Resources Limited holds 20 million fully paid shares or 31.25% of the issued
capital in MM Mining Plc, the UK registered parent of MM Mining Pty Ltd.
5. Pacific Mines Limited can earn 70% equity in the two Constance Range tenements held by the Bowthorn Syndicate through
expenditure of A$620,000 over 5 years.
Tenement Types
EL
EPL
EPM
ERL
Exploration Licence (Australia)
Exclusive Prospecting Licence (Africa)
Exploration Permit for Minerals (Australia)
Exploration Retention Licence (Australia)
MC
ML
MLI
(A)
Mineral Claim (Australia)
Mining Lease (Australia)
Mining Licence (Africa)
Pending Application
Langer Heinrich in production and expansion
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
www.paladinresources.com.au
I
i
n
s
g
h
t
C
o
m
m
u
n
c
a
i
t
i
o
n
&
D
e
s
g
n
i